EXCLUSIVE LICENSE AGREEMENT
DRAFT — August 18, 2023
Prepared by Calderwood & Harkness LLP
Privileged & Confidential — Subject to Contract
EXCLUSIVE LICENSE AGREEMENT
This Exclusive License Agreement (this "Agreement") is entered into as of [●], 2023 (the "Effective Date"),
BY AND BETWEEN:
Penterra Pharmaceuticals Corp., a Delaware corporation, with its principal place of business at 400 Pharma Drive, Suite 800, Princeton, NJ 08540 ("Licensor" or "Penterra");
and
Meridian Bio Therapeutics Limited, a Hong Kong limited company (Company Registration No. 2847631), with its principal place of business at 18/F, Blossom Tower, 88 Queen's Road Central, Hong Kong SAR ("Licensee" or "Meridian").
Each of Penterra and Meridian is sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Penterra is a specialty pharmaceutical company publicly traded on the Nasdaq Global Select Market (ticker: PNTR), engaged in the discovery, development, and commercialization of innovative pharmaceutical products for the treatment of immunological and dermatological diseases;
WHEREAS, Penterra is the sole and exclusive owner of certain patents, know-how, trademarks, and other intellectual property rights relating to the proprietary small-molecule compound designated PPC-4187, a selective Janus kinase 1 (JAK1) inhibitor with the proposed International Nonproprietary Name (INN) of Penteracitinib, for the treatment of moderate-to-severe atopic dermatitis in adults;
WHEREAS, Penterra has completed a Phase IIb clinical trial (Study PPC-4187-201; 420 patients enrolled across 48 clinical sites in the United States and Canada) with positive topline results announced in June 2023, demonstrating statistically significant improvement versus placebo on the primary endpoint of EASI-75 response at Week 16 (p<0.001), with a favorable safety and tolerability profile;
WHEREAS, the Compound is currently formulated as 25 mg and 50 mg film-coated tablets for oral administration, with the manufacturing process validated and commercially scalable at Alkerra Manufacturing Inc., located at 5200 Meridian Parkway, Research Triangle Park, NC 27713;
WHEREAS, Meridian is a pharmaceutical company with extensive commercialization capabilities across the Asia-Pacific region, maintaining regulatory approvals and established commercial infrastructure in the People's Republic of China (through the National Medical Products Administration, or NMPA), Japan (through the Pharmaceuticals and Medical Devices Agency, or PMDA), South Korea (through the Ministry of Food and Drug Safety, or MFDS), Australia (through the Therapeutic Goods Administration, or TGA), and additional ASEAN markets;
WHEREAS, Penterra desires to grant to Meridian, and Meridian desires to obtain from Penterra, an exclusive license to develop, manufacture, and commercialize the Licensed Product in the Territory (as defined herein) on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
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ARTICLE 1 — DEFINITIONS
As used in this Agreement, the following terms shall have the meanings ascribed to them below. Capitalized terms used but not defined in this Article 1 shall have the meanings assigned to them elsewhere in this Agreement.
1.1 "Affiliate" means, with respect to a Party, any entity that directly or indirectly controls, is controlled by, or is under common control with such Party. For purposes of this definition, "control" means (a) the direct or indirect ownership of fifty percent (50%) or more of the outstanding voting securities of such entity, or (b) the direct or indirect power to direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract, or otherwise. For the avoidance of doubt, neither Penterra nor Meridian shall be deemed an Affiliate of the other Party solely by reason of this Agreement.
1.2 "Annual Net Sales" means the aggregate Net Sales of Licensed Products in the Territory during a Calendar Year.
1.3 "BLA" means a Biologics License Application filed with a Regulatory Authority (or equivalent regulatory submission, including a New Drug Application or marketing authorization application, as applicable under the regulatory framework of the relevant jurisdiction in the Territory) seeking Regulatory Approval for the commercial manufacture, distribution, and sale of a Licensed Product.
1.4 "Calendar Quarter" means each successive period of three (3) consecutive calendar months ending on March 31, June 30, September 30, and December 31 of each Calendar Year; provided that (a) the first Calendar Quarter following the Effective Date shall begin on the Effective Date and end on the last day of the then-current Calendar Quarter, and (b) the last Calendar Quarter shall end on the effective date of termination or expiration of this Agreement.
1.5 "Calendar Year" means each successive period of twelve (12) consecutive calendar months commencing on January 1 and ending on December 31; provided that (a) the first Calendar Year following the Effective Date shall begin on the Effective Date and end on December 31 of the year in which the Effective Date occurs, and (b) the last Calendar Year shall end on the effective date of termination or expiration of this Agreement.
1.6 "Change of Control" means, with respect to a Party, any of the following events: (a) a merger, consolidation, or similar business combination transaction involving such Party in which such Party is not the surviving entity, or in which the holders of voting securities of such Party immediately prior to such transaction hold less than fifty percent (50%) of the voting securities of the surviving entity; (b) the sale, transfer, exclusive license, or other disposition of all or substantially all of the assets of such Party; or (c) the acquisition, directly or indirectly, by any person or entity (or group of persons or entities acting in concert) of more than fifty percent (50%) of the outstanding voting securities of such Party.
1.7 "Clinical Data" means all data, results, analyses, reports, case report forms, and other information arising from or generated in connection with any pre-clinical study or clinical trial relating to the Compound or the Licensed Product, including without limitation all data and results from Study PPC-4187-201, and all investigator brochures, clinical study reports, statistical analyses, and safety databases relating thereto.
1.8 "CMC Documentation" means all chemistry, manufacturing, and controls documentation relating to the Compound or the Licensed Product, including but not limited to drug substance and drug product specifications, manufacturing batch records, analytical methods and method validation reports, stability data and protocols, process validation reports, reference standard characterization data, impurity profiles, and all related regulatory submissions.
1.9 "Commercially Reasonable Efforts" means, with respect to a Party's obligation to develop, obtain Regulatory Approval for, or commercialize the Licensed Product, efforts and resources consistent with those that a similarly situated pharmaceutical company of comparable size, resources, and capabilities would devote to a product of similar market potential, profit potential, and strategic value at a similar stage of its product life cycle, taking into account, without limitation, issues of safety and efficacy, product profile, the proprietary position of the product (including patent coverage and regulatory exclusivity), the regulatory environment, the competitive landscape, and the profitability of the applicable product in light of pricing and reimbursement issues. It is understood that such efforts shall be determined on a market-by-market basis for each country in the Territory and shall be measured by the overall pattern of activities undertaken with respect to the Licensed Product, and not on a month-by-month or quarter-by-quarter basis.
1.10 "Compound" means the chemical compound designated PPC-4187 (proposed International Nonproprietary Name (INN): Penteracitinib), a selective Janus kinase 1 (JAK1) inhibitor, including all salts, esters, hydrates, solvates, polymorphs, crystalline forms, amorphous forms, prodrugs, metabolites, isomers, and enantiomers thereof.
1.11 "Confidential Information" means all proprietary and confidential information, data, know-how, trade secrets, and other information of a confidential nature disclosed by or on behalf of one Party (the "Disclosing Party") to the other Party (the "Receiving Party") in connection with this Agreement, whether disclosed orally, in writing, electronically, or by any other means, including without limitation scientific, technical, financial, business, commercial, legal, and regulatory information. Confidential Information shall include the terms and conditions of this Agreement and the existence and content of all negotiations between the Parties. The exceptions and permitted disclosures applicable to Confidential Information are set forth in Article 11.
1.12 "Control" or "Controlled" means, with respect to any intellectual property right, that a Party (a) owns such intellectual property right or (b) has a license or other right to such intellectual property right, in each case with the ability to grant to the other Party access, a license, or a sublicense (as applicable) to such intellectual property right on the terms and conditions set forth in this Agreement, without violating the terms of any then-existing agreement or arrangement with any Third Party.
1.13 "Development Milestone" means each milestone event described in Section 5.2 of this Agreement.
1.14 "Effective Date" has the meaning set forth in the preamble of this Agreement.
1.15 "EU5" means, collectively, Germany, France, Italy, Spain, and the United Kingdom.
1.16 "First Commercial Sale" means, with respect to a Licensed Product and a country in the Territory, the first sale for value of such Licensed Product to a Third Party (other than an Affiliate or Sublicensee) in such country following receipt of Regulatory Approval for such Licensed Product in such country. Sales or transfers of Licensed Product for compassionate use, named patient programs, expanded access programs, clinical trial purposes, or indigent patient programs shall not constitute a First Commercial Sale.
1.17 "Generic Product" means a pharmaceutical product that (a) is approved by a Regulatory Authority in the Territory, (b) contains the same active pharmaceutical ingredient as the Licensed Product, (c) is approved for the same indication as the Licensed Product (i.e., moderate-to-severe atopic dermatitis in adults), and (d) is approved on the basis of a finding of bioequivalence or biosimilarity to the Licensed Product (or to a reference-listed drug containing the Compound), without reliance on the Clinical Data or regulatory filings of Penterra or Meridian.
1.18 "Good Manufacturing Practice" or "GMP" means the then-current good manufacturing practices required by the applicable Regulatory Authority for the manufacture, processing, packing, testing, and holding of pharmaceutical products, including, as applicable, the requirements set forth in 21 C.F.R. Parts 210 and 211, ICH Q7, ICH Q10, and any equivalent requirements promulgated by the NMPA, PMDA, MFDS, TGA, or other Regulatory Authorities in the Territory.
1.19 "Joint Patent Committee" or "JPC" means the committee established pursuant to Section 3.3 of this Agreement.
1.20 "Joint Steering Committee" or "JSC" means the committee established pursuant to Section 3.2 of this Agreement.
1.21 "Know-How" means Penterra's proprietary unpatented information, inventions, discoveries, data, processes, methods, techniques, formulations, specifications, materials, and other information relating to the Compound or the Licensed Product, including without limitation manufacturing processes, analytical methods, formulation data, stability data, CMC Documentation, and quality control procedures, as further described in Schedule B attached hereto.
1.22 "Licensed IP" means, collectively, the Licensed Patents, the Licensed Know-How, and the Licensed Trademarks.
1.23 "Licensed Know-How" means the Know-How listed and described in Schedule B attached hereto, as such Schedule B may be updated from time to time by mutual written agreement of the Parties.
1.24 "Licensed Patents" means the patents and patent applications listed in Schedule A attached hereto, and any continuations, continuations-in-part, divisionals, reissues, reexaminations, inter partes reviews, post-grant reviews, extensions (including any Patent Term Extension), supplementary protection certificates, and foreign equivalents thereof, including any patents issuing from the patent applications listed in Schedule A and any patents or patent applications claiming priority to any of the foregoing.
1.25 "Licensed Product" means any pharmaceutical product containing the Compound as an active ingredient, alone or in combination with one or more other active ingredients, in any formulation, dosage form, dosage strength, or mode of administration.
1.26 "Licensed Trademarks" means the trademarks listed in Schedule C attached hereto, including the PENTECLAR mark (U.S. Registration No. 6,789,012) and all registrations and applications for registration of such marks in the Territory, together with all goodwill associated therewith.
1.27 "Losses" means any and all damages, losses, liabilities, obligations, judgments, settlements, fines, penalties, costs, and expenses (including reasonable attorneys' fees and costs, expert witness fees, and costs of investigation and litigation) of any kind or nature.
1.28 "MFN Adjustment Payment" has the meaning set forth in Section 5.8 of this Agreement.
1.29 "MFN Floor Price" has the meaning set forth in Section 5.8 of this Agreement.
1.30 "NDA" means a New Drug Application filed with a Regulatory Authority (or any equivalent regulatory submission, including a marketing authorization application, drug registration application, or similar filing under the regulatory framework of the relevant jurisdiction in the Territory) seeking Regulatory Approval for the commercial manufacture, distribution, and sale of a Licensed Product.
1.31 "Net Sales" means, with respect to a Licensed Product, the gross amount invoiced by Meridian, its Affiliates, and its Sublicensees for sales of such Licensed Product to Third Parties in the Territory in bona fide, arm's-length transactions, less the following customary deductions to the extent actually incurred, allowed, paid, accrued, or specifically allocated, in each case in accordance with IFRS or GAAP (as applicable) consistently applied:
(a) trade, quantity, and cash discounts actually allowed and taken;
(b) rebates, chargebacks, and retroactive price adjustments actually allowed or granted to managed care organizations, group purchasing organizations, pharmacy benefit managers, wholesalers, distributors, governmental authorities, or other customers;
(c) credits, allowances, and adjustments actually granted for damaged, defective, returned, recalled, or rejected Licensed Product;
(d) sales taxes, value-added taxes, excise taxes, use taxes, duties, customs duties, and other governmental charges and assessments imposed on the sale, transportation, delivery, or use of the Licensed Product (excluding income taxes and franchise taxes);
(e) freight, transportation, handling, postage, and insurance charges related to the delivery of Licensed Product to Third Party purchasers, to the extent separately stated on the invoice or otherwise documented;
(f) government-mandated price reductions, compulsory rebates, and price controls imposed by applicable law or regulation in the Territory; and
(g) amounts written off as uncollectible after reasonable collection efforts, in accordance with the Receiving Party's customary accounting practices.
For the avoidance of doubt, Net Sales shall not include (i) sales or transfers of Licensed Product between or among Meridian and its Affiliates or Sublicensees for purposes of resale (provided that Net Sales shall include the subsequent resale to a Third Party end user), (ii) Licensed Product distributed as free samples, for compassionate use, named patient programs, expanded access programs, indigent patient programs, or clinical trial purposes, or (iii) Licensed Product used for non-clinical research or quality control purposes.
In the event that a Licensed Product is sold in a country in the Territory as part of a bundle or combination with other products or services not covered by this Agreement, Net Sales for such Licensed Product shall be calculated by multiplying the gross amount invoiced for the bundle by a fraction, the numerator of which is the average standalone selling price of the Licensed Product in such country and the denominator of which is the sum of the average standalone selling prices of all products and services in such bundle, each determined over the applicable Calendar Quarter. If no standalone selling price exists for the Licensed Product in such country, the Parties shall negotiate in good faith an appropriate allocation through the JSC.
1.32 "Patent Term Extension" or "PTE" means any extension of the term of a patent under applicable law, including without limitation extensions pursuant to 35 U.S.C. § 156, supplementary protection certificates (SPCs) under European Regulation (EC) No 469/2009, patent term restorations under Japanese Patent Act Article 67(2), and any similar extensions available under the laws of any country in the Territory.
1.33 "Phase III Trial" means a human clinical trial of a Licensed Product, the principal purpose of which is to establish the safety and efficacy of such Licensed Product in the target patient population with sufficient statistical power to support Regulatory Approval by the applicable Regulatory Authority, as generally described in 21 C.F.R. § 312.21(c) or the equivalent regulatory guidance in the applicable Territory country.
1.34 "Regulatory Approval" means all approvals, licenses, registrations, certifications, or authorizations of any Regulatory Authority that are necessary for the lawful commercial manufacture, marketing, distribution, pricing, reimbursement, and sale of a Licensed Product in a given country or regulatory jurisdiction, including, where applicable, pricing and reimbursement approvals to the extent required before commercial sale may commence.
1.35 "Regulatory Authority" means any national, supranational, regional, state, or local governmental or regulatory authority, agency, department, bureau, commission, council, or other body responsible for granting Regulatory Approvals or otherwise regulating the development, manufacture, distribution, marketing, pricing, reimbursement, or sale of pharmaceutical products in the Territory, including without limitation the NMPA (China), PMDA (Japan), MFDS (South Korea), TGA (Australia), Medsafe (New Zealand), the Health Sciences Authority (Singapore), the Thai Food and Drug Administration, the Drug Control Authority (Malaysia), the Badan Pengawas Obat dan Makanan (Indonesia), the Philippine Food and Drug Administration, the Drug Administration of Vietnam, and the Taiwan Food and Drug Administration.
1.36 "Regulatory Milestone" means each milestone event described in Section 5.3 of this Agreement.
1.37 "Retained Territory" means all countries, territories, and jurisdictions worldwide other than the Territory, including without limitation the United States and its territories and possessions, Canada, the member states of the European Union, the member states of the European Economic Area (EEA), the United Kingdom, Switzerland, all countries in Latin America and the Caribbean, the Middle East, Africa, the Russian Federation, the Commonwealth of Independent States (CIS), India, Pakistan, Bangladesh, and all other countries and territories not included in the Territory.
1.38 "Royalty Term" has the meaning set forth in Section 5.5(b) of this Agreement.
1.39 "Sales Milestone" means each milestone event described in Section 5.4 of this Agreement.
1.40 "Sublicensee" means a Third Party that is granted a sublicense by Meridian (or by a permitted sublicensee of Meridian) under and subject to Section 2.3 of this Agreement to exercise any of the rights granted to Meridian under this Agreement.
1.41 "Technology Transfer" means the transfer of manufacturing process know-how, analytical methods, CMC Documentation, and related technical information from Penterra to Meridian (or Meridian's designated contract manufacturer in the Territory) as described in Article 6 of this Agreement.
1.42 "Territory" means the countries and territories listed in Schedule D attached hereto, which shall include: the People's Republic of China (including Hong Kong Special Administrative Region and Macau Special Administrative Region), Japan, the Republic of Korea, Australia, New Zealand, Singapore, Thailand, Malaysia, Indonesia, the Philippines, Vietnam, and Taiwan.
1.43 "Third Party" means any person or entity other than a Party or an Affiliate of a Party.
1.44 "United States" or "U.S." means the United States of America, including its territories and possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands).
ARTICLE 2 — GRANT OF LICENSE
2.1 Exclusive License Grant.
(a) Subject to the terms and conditions of this Agreement, Penterra hereby grants to Meridian an exclusive license (even as to Penterra, except as expressly set forth in Section 2.2), with the right to sublicense (subject to Section 2.3), under the Licensed Patents, the Licensed Know-How, and the Licensed Trademarks, to develop, have developed, make, have made, use, sell, offer for sale, import, export (solely for importation into the Territory), and otherwise commercialize Licensed Products in the Territory for the treatment of moderate-to-severe atopic dermatitis in adults (the "Field").
(b) The license granted pursuant to Section 2.1(a) is exclusive within the Territory for the Field, meaning that during the term of this Agreement, Penterra shall not (i) grant any Third Party a license under the Licensed IP to develop, manufacture, or commercialize Licensed Products in the Territory for the Field, or (ii) itself develop, manufacture, or commercialize Licensed Products in the Territory for the Field, except as expressly retained under Section 2.2.
(c) For the avoidance of doubt, Penterra retains all rights to the Compound and the Licensed IP outside the Territory and outside the Field, including the right to develop, manufacture, and commercialize the Compound and Licensed Products in the Retained Territory for any and all indications, and in the Territory for any indication other than moderate-to-severe atopic dermatitis in adults.
2.2 Retained Rights.
(a) Penterra hereby expressly retains all rights to the Compound and the Licensed IP in the Retained Territory for all indications, including without limitation the right to grant licenses to Third Parties in the Retained Territory.
(b) Penterra retains all rights to develop, manufacture, and commercialize the Compound and Licensed Products for all indications outside the Field worldwide, including in the Territory; provided that Penterra shall not commercialize the Compound or any Licensed Product in the Territory for the treatment of moderate-to-severe atopic dermatitis in adults during the term of this Agreement.
(c) Penterra retains the right to conduct worldwide research activities relating to the Compound, including pre-clinical studies and clinical trials, for purposes outside the Territory or outside the Field, including multi-regional clinical trials that may include clinical sites in Territory countries; provided that Penterra shall provide Meridian with reasonable prior notice of any clinical trial activities conducted in the Territory and shall coordinate with Meridian through the JSC to the extent such activities may affect Meridian's development or commercialization activities.
(d) Penterra retains the right to manufacture and supply active pharmaceutical ingredient (PPC-4187 API) and reference standard as set forth in the Supply Agreement to be entered into concurrently with this Agreement.
2.3 Sublicensing.
(a) Meridian shall have the right to grant sublicenses under the license granted in Section 2.1 to Third Parties within the Territory; provided that each such sublicense shall require the prior written consent of Penterra, which consent shall not be unreasonably withheld, conditioned, or delayed. In evaluating any proposed sublicense, Penterra may consider, among other factors, the proposed Sublicensee's financial capability, technical expertise, regulatory track record, and commercial infrastructure in the relevant country or countries within the Territory.
(b) Each sublicense agreement entered into by Meridian shall contain terms and conditions that are no less protective of Penterra's rights and interests than the corresponding terms and conditions of this Agreement, including without limitation obligations relating to the most favored nation pricing obligation set forth in Section 5.8, indemnification obligations, confidentiality obligations, audit rights, and quality standards. Each sublicense agreement shall expressly provide that it is subject to, and subordinate to, the terms and conditions of this Agreement.
(c) Meridian shall provide Penterra with a complete copy of each proposed sublicense agreement (which may be redacted to remove commercially sensitive financial terms unrelated to Penterra's rights) not less than thirty (30) days prior to the proposed execution date, together with a written summary of the key terms of such sublicense. Penterra shall notify Meridian in writing within twenty (20) Business Days following receipt of such copy whether Penterra consents to the proposed sublicense.
(d) Notwithstanding any sublicense granted hereunder, Meridian shall remain fully responsible for the performance of each of its Sublicensees as if such performance were Meridian's own, and any act or omission of a Sublicensee that would constitute a breach of this Agreement if performed by Meridian shall be deemed a breach of this Agreement by Meridian.
(e) Meridian shall pay to Penterra fifty percent (50%) of all sublicense income received by Meridian (or its Affiliates) from Sublicensees in connection with sublicenses granted under this Section 2.3, including without limitation upfront payments, license fees, milestone payments, royalties, and any other consideration of any kind (whether in cash, equity, or other form of value), net of Meridian's documented, reasonable, out-of-pocket development costs directly attributable to the development of the Licensed Product in such Sublicensee's territory within the Territory. Such payments shall be made within forty-five (45) days following Meridian's receipt of the applicable sublicense income, accompanied by a written report detailing the amounts received and any applicable deductions.
2.4 No Implied Licenses.
Except as expressly set forth in this Agreement, no rights or licenses are granted by either Party to the other Party by implication, estoppel, or otherwise under any intellectual property rights owned or controlled by such Party, whether existing as of the Effective Date or arising thereafter. All rights not expressly granted herein are reserved to the granting Party.
2.5 Exclusivity Covenant.
(a) During the term of this Agreement, Penterra shall not, and shall cause its Affiliates not to, directly or indirectly develop, manufacture, market, promote, distribute, sell, or otherwise commercialize any pharmaceutical product (other than the Licensed Product) containing a selective JAK1 inhibitor as an active ingredient for the treatment of moderate-to-severe atopic dermatitis in adults in the Territory (a "Competing Product").
(b) During the term of this Agreement, Meridian shall not, and shall cause its Affiliates not to, directly or indirectly develop, manufacture, market, promote, distribute, sell, or otherwise commercialize any Competing Product in the Retained Territory.
(c) For the avoidance of doubt, nothing in this Section 2.5 shall restrict either Party from acquiring or being acquired by a Third Party that has an existing program involving a Competing Product, provided that, within ninety (90) days following the closing of such acquisition, the acquiring or acquired entity divests or discontinues such Competing Product program in the applicable restricted territory.
ARTICLE 3 — GOVERNANCE
3.1 General.
The Parties shall establish the governance committees described in this Article 3 to oversee the development, regulatory, intellectual property, and commercialization activities contemplated by this Agreement. Each governance committee shall serve in an advisory and oversight capacity and shall operate in accordance with the procedures set forth in this Article 3. Neither governance committee shall have the authority to amend, modify, or waive any provision of this Agreement.
3.2 Joint Steering Committee (JSC).
(a) Establishment and Composition. Within thirty (30) days of the Effective Date, the Parties shall establish a Joint Steering Committee (the "JSC") composed of three (3) senior representatives designated by each Party (for a total of six (6) members). Each Party may replace any of its JSC representatives at any time upon written notice to the other Party. Each Party shall designate one of its representatives to serve as its lead representative on the JSC.
(b) Initial Representatives. The initial representatives of Penterra on the JSC shall be: (i) Leland J. Cho, Senior Vice President, Business Development; (ii) Dr. Priya Nandakumar, Vice President, intellectual Property; and (iii) one additional representative to be designated by Penterra in writing prior to the first JSC meeting. The initial representatives of Meridian on the JSC shall be: (i) Angela C.Y. Fong, Chief Executive Officer; (ii) Dr. Kenji Morimoto, Chief Medical Officer; and (iii) one additional representative to be designated by Meridian in writing prior to the first JSC meeting.
(c) Meetings. The JSC shall meet at least once per Calendar Quarter, with meetings alternating between video conference and in-person meetings. In-person meetings shall rotate between Princeton, New Jersey and Hong Kong SAR. Additional meetings may be convened by either Party upon reasonable notice. Each Party may invite non-member attendees (including employees, consultants, and advisors) to JSC meetings, subject to the confidentiality obligations of Article 11. The chairperson of the JSC shall alternate between Party representatives on an annual basis, with Penterra's lead representative serving as chairperson for the first year.
(d) Responsibilities. The JSC shall:
(i) oversee and monitor all development, regulatory, and commercialization activities for the Licensed Product in the Territory;
(ii) review and approve any proposed amendments to the Development Plan (Schedule E);
(iii) review and discuss Meridian's commercialization strategy, including pricing, market access, and launch plans;
(iv) oversee and monitor the progress of the Technology Transfer;
(v) serve as a forum for the exchange of information between the Parties regarding the Licensed Product;
(vi) coordinate the Parties' efforts with respect to regulatory interactions in the Territory;
(vii) review and discuss any safety issues or pharmacovigilance matters relating to the Licensed Product; and
(viii) perform such other functions as may be assigned to the JSC by mutual written agreement of the Parties.
(e) Decision-Making. The JSC shall endeavor to make all decisions by consensus. In the event that the JSC is unable to reach consensus on any matter after good-faith discussion at two (2) consecutive JSC meetings, the matter shall be resolved as follows: (i) with respect to matters relating to global intellectual property strategy, Penterra shall have the tie-breaking vote; and (ii) with respect to Territory-specific commercialization matters (including pricing, marketing, and promotional activities), Meridian shall have the tie-breaking vote; provided that Meridian's tie-breaking vote shall not be exercised in a manner that is inconsistent with the most favored nation pricing obligation set forth in Section 5.8. All other disputes that cannot be resolved by the JSC shall be escalated in accordance with Article 14.
(f) First Meeting. The first meeting of the JSC shall be held within sixty (60) days of the Effective Date.
3.3 Joint Patent Committee (JPC).
(a) Establishment and Composition. Within sixty (60) days of the Effective Date, the Parties shall establish a Joint Patent Committee (the "JPC") composed of two (2) representatives designated by each Party (for a total of four (4) members). Each Party may replace any of its JPC representatives at any time upon written notice to the other Party.
(b) Responsibilities. The JPC shall:
(i) oversee and coordinate the prosecution, filing, and maintenance of the Licensed Patents in the Territory;
(ii) coordinate patent enforcement and defense activities in the Territory, including the engagement and oversight of outside patent counsel;
(iii) monitor third-party patent activities that may be relevant to the Licensed Product in the Territory;
(iv) coordinate with Whitford & Cascade Insurance Brokers (Penterra's patent prosecution counsel) and any Territory-specific patent counsel engaged by either Party; and
(v) review and advise on patent term extension and supplementary protection certificate strategies in the Territory.
(c) Meetings. The JPC shall meet at least semi-annually, or more frequently as reasonably required by either Party. Meetings may be conducted by video conference or in person.
(d) Decision-Making. Penterra shall have the tie-breaking vote on all matters relating to global patent strategy, including decisions that may affect the validity, scope, or enforceability of Licensed Patents outside the Territory. Meridian shall have meaningful input on Territory-specific prosecution decisions, and Penterra shall give due consideration to Meridian's views on such matters.
3.4 Expenses.
Each Party shall bear its own internal costs and expenses associated with its participation in JSC and JPC meetings, including travel, lodging, and personnel costs. Any external costs incurred in connection with JSC or JPC activities (such as consultant fees) shall be borne by the Party engaging such consultant, unless otherwise agreed in writing.
ARTICLE 4 — DEVELOPMENT AND REGULATORY
4.1 Development Responsibilities.
(a) Meridian shall be responsible, at its sole cost and expense, for all development activities for the Licensed Product in the Territory necessary to obtain Regulatory Approval in the Territory, including without limitation the design, conduct, and completion of Phase III clinical trials, bioequivalence and bridging studies (if required by applicable Regulatory Authorities), and any additional clinical or non-clinical studies required or requested by Regulatory Authorities in the Territory.
(b) Meridian shall use Commercially Reasonable Efforts to develop the Licensed Product in the Territory in accordance with the Development Plan attached hereto as Schedule E. Meridian shall conduct all development activities in accordance with all applicable laws, regulations, and guidelines, including Good Clinical Practice (GCP) guidelines, and shall maintain complete and accurate records of all development activities.
(c) Meridian shall provide the JSC with quarterly written reports summarizing the status of development activities in the Territory, including clinical trial progress, enrollment status, safety findings, and anticipated timelines for completion of key milestones.
4.2 Development Plan.
The initial Development Plan is attached hereto as Schedule E and outlines, among other things, the proposed Phase III trial design (including study endpoints, patient populations, and comparator arms), anticipated timelines for trial initiation and enrollment completion in each Major Market Country, clinical development strategy for secondary Territory countries, and the anticipated timeline for NDA/BLA submissions to the NMPA and PMDA. Any material amendments to the Development Plan shall require the prior approval of the JSC.
4.3 Development Diligence.
Meridian shall use Commercially Reasonable Efforts to achieve the following development milestones within the timelines specified below:
(a) Meridian shall initiate a Phase III Trial (defined as dosing of the first patient in such trial) in at least one country in the Territory within eighteen (18) months of the Effective Date.
(b) Meridian shall submit an NDA or BLA to at least one of the NMPA (China) or the PMDA (Japan) within forty-eight (48) months of the Effective Date.
If Meridian fails to meet either of the foregoing development diligence obligations within the applicable timeframe (as may be extended by force majeure or other circumstances beyond Meridian's reasonable control), Penterra shall have the right, upon ninety (90) days' written notice to Meridian, to convert the exclusive license granted in Section 2.1 to a non-exclusive license in the applicable country, unless Meridian demonstrates to Penterra's reasonable satisfaction that such failure was due to circumstances beyond Meridian's reasonable control and that Meridian has a credible plan to achieve such milestone within a reasonable additional period.
4.4 Regulatory Responsibilities.
(a) Meridian shall be solely responsible, at its sole cost and expense, for all regulatory filings, correspondence, submissions, and interactions with Regulatory Authorities in the Territory relating to the Licensed Product, including the preparation and filing of all NDA/BLA applications, marketing authorization applications, and pricing and reimbursement applications.
(b) All Regulatory Approvals for the Licensed Product in the Territory shall be filed in, and held in, the name of Meridian or the name of Meridian's applicable Affiliate in each country, as appropriate under local regulatory requirements. In the event of termination of this Agreement, Meridian's obligations with respect to such Regulatory Approvals shall be governed by Section 12.6.
(c) Meridian shall keep Penterra reasonably informed of all material regulatory developments in the Territory relating to the Licensed Product, including the status of regulatory submissions, any material communications from Regulatory Authorities (including requests for additional information, pre-approval inspection findings, and advisory committee meetings), and the receipt of Regulatory Approvals or regulatory rejections. Meridian shall provide Penterra with copies of all material correspondence with Regulatory Authorities in the Territory within ten (10) Business Days of receipt or submission, as applicable.
(d) Japan-specific regulatory filings and regulatory interactions with the PMDA may be coordinated with Nakamura & Takeda Law Offices, Tokyo, Japan, or such other regulatory counsel as Meridian may engage from time to time with the prior approval of the JSC (not to be unreasonably withheld).
4.5 Clinical Data Sharing.
(a) Within thirty (30) days of the Effective Date, Penterra shall provide Meridian with complete access to all existing Clinical Data in Penterra's possession or control relating to the Compound and the Licensed Product, including without limitation the complete data package from Study PPC-4187-201 (including clinical study reports, statistical analysis plans, datasets, case report forms, safety databases, and all supporting documentation), investigator brochures, pre-clinical study reports, pharmacokinetic and pharmacodynamic data, and CMC Documentation.
(b) Each Party shall promptly share with the other Party all clinical data, regulatory data, and safety data relating to the Compound or the Licensed Product generated by such Party (or its Affiliates or Sublicensees) after the Effective Date. Such data sharing shall be conducted in a manner consistent with applicable data privacy and protection laws and regulations.
(c) Each Party shall have the right to reference and use the other Party's Clinical Data and regulatory filings in connection with its own regulatory filings in its respective territory, subject to the terms and conditions of this Agreement and applicable law.
4.6 Regulatory Cooperation.
Penterra shall provide reasonable cooperation and assistance to Meridian in connection with Meridian's regulatory filings and interactions with Regulatory Authorities in the Territory, including without limitation providing access to Penterra's scientific, medical, regulatory, and quality personnel, responding to reasonable requests for information, participating in regulatory meetings as reasonably requested by Meridian, and providing letters of access or right-of-reference to Penterra's drug master files and regulatory submissions. Penterra's cooperation obligations under this Section 4.6 shall be at Penterra's own expense for the first two (2) years following the Effective Date; thereafter, Meridian shall reimburse Penterra for reasonable out-of-pocket costs and internal personnel costs (at an hourly rate to be agreed by the Parties) incurred by Penterra in providing such cooperation.
ARTICLE 5 — FINANCIAL TERMS
5.1 Upfront Payment.
Within five (5) Business Days following the Effective Date, Meridian shall pay to Penterra, through the escrow mechanism set forth in the Escrow Agreement, a non-refundable, non-creditable upfront payment of Eighteen Million United States Dollars ($18,000,000) (the "Upfront Payment"). The Escrow Agreement shall be substantially in the form attached hereto as Exhibit A and shall be entered into among Penterra, Meridian, and Velthorn National Bank, N.A. (the "Escrow Agent") concurrently with the execution of this Agreement. The Upfront Payment shall be released from escrow to Penterra in accordance with the release conditions set forth in the Escrow Agreement. For the avoidance of doubt, the Upfront Payment shall not be refundable under any circumstances, including termination of this Agreement for any reason.
5.2 Development Milestone Payments.
Meridian shall pay to Penterra the following non-refundable, non-creditable milestone payments within thirty (30) days of the first achievement of each of the following Development Milestone events:
Total potential Development Milestone payments: Thirty-Two Million United States Dollars ($32,000,000).
Each Development Milestone payment shall be payable only once, regardless of the number of Licensed Products developed, the number of Phase III Trials conducted, the number of NDA/BLA submissions made, the number of indications pursued, or the number of countries in the Territory in which development activities are conducted. Meridian shall provide Penterra with written notice of the achievement of each Development Milestone within ten (10) Business Days following such achievement.
5.3 Regulatory Milestone Payments.
Meridian shall pay to Penterra the following non-refundable, non-creditable milestone payments within thirty (30) days of the first achievement of each of the following Regulatory Milestone events:
Total potential Regulatory Milestone payments: Twenty-Five Million United States Dollars ($25,000,000).
Each Regulatory Milestone payment shall be payable only once, regardless of the number of Licensed Products approved, the number of dosage forms or dosage strengths approved, or the number of Regulatory Approvals received in such country. Meridian shall provide Penterra with written notice of the receipt of each Regulatory Approval within five (5) Business Days following such receipt.
5.4 Commercial / Sales Milestone Payments.
Meridian shall pay to Penterra the following non-refundable, non-creditable, one-time milestone payments within forty-five (45) days following the end of the Calendar Year in which Annual Net Sales of Licensed Products in the Territory first achieve the applicable threshold:
Total potential Commercial Milestone payments: Forty-Five Million United States Dollars ($45,000,000).
Each Commercial Milestone payment shall be payable only once, and the achievement of a higher-tier Commercial Milestone shall not obligate Meridian to pay any lower-tier Commercial Milestone that has not yet been achieved. For the avoidance of doubt, if Annual Net Sales first exceed $100,000,000 in a Calendar Year without having previously exceeded $50,000,000, both the $10,000,000 and $15,000,000 Commercial Milestone payments shall become due and payable.
5.5 Royalties.
(a) Tiered Royalty Rates. During the Royalty Term, Meridian shall pay to Penterra royalties on Annual Net Sales of Licensed Products in the Territory at the following tiered rates:
For the avoidance of doubt, the foregoing royalty rates are incremental (i.e., each rate applies only to the portion of Annual Net Sales within the applicable tier). By way of example, if Annual Net Sales in a Calendar Year are $175,000,000, the royalty payable would be calculated as follows: (i) 8% × $50,000,000 = $4,000,000; plus (ii) 11% × $100,000,000 = $11,000,000; plus (iii) 14% × $25,000,000 = $3,500,000; for a total royalty of $18,500,000.
(b) Royalty Term. Royalties shall be payable on a country-by-country basis in the Territory during the period commencing on the date of the First Commercial Sale of a Licensed Product in such country and ending on the later of: (i) the date of expiration of the last-to-expire Valid Claim of a Licensed Patent that covers the composition of matter, method of use, or method of manufacture of the Licensed Product in such country; or (ii) twelve (12) years from the date of the First Commercial Sale of a Licensed Product in such country (the "Royalty Term"). For purposes of this Section 5.5(b), a "Valid Claim" means a claim of an issued and unexpired Licensed Patent that has not been held unpatentable, invalid, or unenforceable by a court or other governmental agency of competent jurisdiction from which no appeal can be or has been taken, and that has not been disclaimed, abandoned, or admitted to be invalid or unenforceable through reissue, reexamination, inter partes review, post-grant review, or otherwise.
(c) Post-Patent Royalty Reduction. Following the expiration of all Licensed Patents containing a Valid Claim covering the Licensed Product in a given country in the Territory, but during the remaining portion of the twelve (12)-year period described in Section 5.5(b)(ii) above, the royalty rates applicable to Net Sales in such country shall be reduced by fifty percent (50%). Accordingly, during such post-patent period, the applicable royalty rates shall be: (i) 4% on Annual Net Sales up to and including $50,000,000; (ii) 5.5% on Annual Net Sales greater than $50,000,000 up to and including $150,000,000; and (iii) 7% on Annual Net Sales greater than $150,000,000.
(d) Minimum Annual Royalty. Beginning in the Calendar Year immediately following the Calendar Year in which the First Commercial Sale of a Licensed Product occurs in any country in the Territory, and continuing for each subsequent Calendar Year during the Royalty Term, Meridian shall pay to Penterra a minimum annual royalty of Two Million United States Dollars ($2,000,000) (the "Minimum Annual Royalty"). The Minimum Annual Royalty shall be fully creditable against earned royalties payable by Meridian for the same Calendar Year. If the earned royalties payable by Meridian for a Calendar Year are less than the Minimum Annual Royalty, Meridian shall pay the shortfall within sixty (60) days after the end of such Calendar Year.
(e) Generic Entry Reduction. If, during any Calendar Quarter, one or more Generic Products achieve an aggregate market share of thirty percent (30%) or more by volume (based on unit sales) in a given country in the Territory, the royalties otherwise payable by Meridian on Net Sales of Licensed Products in such country shall be reduced by forty percent (40%) for such Calendar Quarter and for each subsequent Calendar Quarter in which such condition continues to persist. For the avoidance of doubt, if the aggregate market share of Generic Products falls below thirty percent (30%) by volume in a subsequent Calendar Quarter, the full (unreduced) royalty rates shall again apply for such subsequent Calendar Quarter. Meridian shall provide Penterra with reasonable evidence supporting any claim that Generic Products have achieved the requisite market share threshold.
5.6 Royalty Reports and Payments.
(a) Within forty-five (45) days after the end of each Calendar Quarter, Meridian shall deliver to Penterra a written royalty report setting forth in reasonable detail, on a country-by-country basis within the Territory: (i) the gross amounts invoiced for sales of Licensed Products; (ii) an itemized listing of all deductions from gross amounts to arrive at Net Sales (broken down by category); (iii) the resulting Net Sales; (iv) the applicable royalty rate(s) and the royalty amounts due; and (v) any applicable currency conversions.
(b) Royalty payments shall be due and payable concurrently with the delivery of each quarterly royalty report.
(c) All payments under this Agreement shall be made in United States Dollars. For purposes of calculating Net Sales and royalty payments, any amounts invoiced in currencies other than United States Dollars shall be converted to United States Dollars at the average daily exchange rate for the applicable Calendar Quarter as published in the Eastern Edition of The Wall Street Journal (or, if such rate is no longer published, such other widely recognized source as the Parties may agree). If The Wall Street Journal does not publish an exchange rate for a particular currency, the conversion shall be made using the applicable exchange rate published by the Federal Reserve Bank of New York.
5.7 Audits.
(a) Penterra shall have the right, at its own expense (subject to Section 5.7(c) below), to have an independent certified public accounting firm of nationally or internationally recognized standing, reasonably acceptable to Meridian, audit and examine Meridian's (and its Affiliates' and Sublicensees') books and records insofar as they relate to the determination of Net Sales, royalties, milestone payments, sublicense income, and other amounts payable under this Agreement. Such audit right may be exercised not more than once per Calendar Year, upon at least thirty (30) days' prior written notice to Meridian, and shall be conducted during normal business hours at Meridian's principal place of business or such other location where such books and records are maintained. The accounting firm shall be required to enter into a confidentiality agreement with Meridian prior to conducting such audit.
(b) Meridian shall maintain, and shall cause its Affiliates and Sublicensees to maintain, complete and accurate books and records regarding Net Sales, royalties, and other amounts payable under this Agreement for a period of not less than three (3) Calendar Years following the Calendar Year to which such books and records relate.
(c) If any audit conducted pursuant to this Section 5.7 reveals an underpayment by Meridian of amounts due to Penterra under this Agreement in excess of five percent (5%) of the amounts actually paid for the audited period, then (i) Meridian shall bear the reasonable cost of such audit, and (ii) Meridian shall promptly pay to Penterra the amount of such underpayment, together with interest thereon calculated in accordance with Section 5.10 from the date such amounts were originally due until the date of payment. If any audit reveals an overpayment by Meridian, Penterra shall promptly credit or refund such overpayment to Meridian.
5.8 Most Favored Nation Pricing.
(a) MFN Floor Price Obligation. Meridian shall not offer, sell, distribute, or cause any of its Affiliates or Sublicensees to offer, sell, or distribute Licensed Products in any country in the Territory at a net price (defined as the weighted average net selling price per unit after deducting all discounts, rebates, chargebacks, and other price concessions) that is more than fifteen percent (15%) below the lowest net price at which Penterra (or its licensees in the Retained Territory) sells the Licensed Product in the United States or any EU5 country (Germany, France, Italy, Spain, or the United Kingdom) for the same dosage strength and comparable pack size during the same Calendar Quarter (the "MFN Floor Price").
(b) MFN Adjustment Payment. If Meridian breaches the most favored nation pricing obligation set forth in Section 5.8(a) in any Calendar Quarter, Penterra shall be entitled to receive from Meridian an MFN Adjustment Payment equal to the product of (i) the difference between the MFN Floor Price and the actual net price charged by Meridian (or its Affiliate or Sublicensee) in such country during such Calendar Quarter, multiplied by (ii) the total number of units of Licensed Product sold by Meridian (or its Affiliate or Sublicensee) in such country during such Calendar Quarter (the "MFN Adjustment Payment"). The MFN Adjustment Payment shall be in addition to, and not in lieu of, any royalties otherwise payable under Section 5.5.
(c) Quarterly Reconciliation. The most favored nation pricing obligation shall be reviewed and reconciled on a quarterly basis. Within forty-five (45) days following the end of each Calendar Quarter, Meridian shall provide Penterra with a written report setting forth the weighted average net price for each dosage strength and pack size of the Licensed Product sold in each country in the Territory during such Calendar Quarter, together with supporting documentation. Penterra shall concurrently provide Meridian with the applicable reference prices in the United States and the EU5 countries. The reconciliation methodology is further described in Schedule F attached hereto.
(d) Government-Mandated Price Controls. In the event that government-mandated price controls, reimbursement rates, or similar regulatory requirements in any country in the Territory compel Meridian to price the Licensed Product below the MFN Floor Price, the Parties shall engage in good-faith consultation through the JSC to determine an appropriate adjustment to the MFN Floor Price for such country. Any such adjustment shall take into account the specific regulatory constraints applicable in such country and shall be documented in a written amendment to Schedule F.
5.9 Taxes.
(a) All payments due to Penterra under this Agreement are exclusive of any taxes, levies, duties, or governmental charges of any kind.
(b) Meridian shall be responsible for any withholding taxes imposed by the laws of any jurisdiction on payments made to Penterra under this Agreement. If any such withholding is required, Meridian shall (i) deduct the required withholding amount from the payment due to Penterra, (ii) remit such withheld amounts to the appropriate governmental authority in a timely manner, and (iii) provide Penterra with official tax receipts or other documentation evidencing such withholding within thirty (30) days following the date of payment. Payments subject to the provisions of the income tax treaty between the United States and Hong Kong (currently providing for a zero percent (0%) withholding rate on royalties) shall not be subject to additional withholding, provided that Penterra provides Meridian with such tax forms and documentation as may be required to claim treaty benefits. Notwithstanding the foregoing, payments made by Meridian through or on behalf of Meridian Pharma (Shanghai) Co., Ltd. or any other Affiliate of Meridian organized in the People's Republic of China shall be subject to applicable PRC withholding tax (currently at a rate of ten percent (10%), unless reduced by an applicable bilateral tax treaty), and Meridian shall gross up all such payments to the extent required to ensure that Penterra receives the full amount otherwise due.
(c) Each Party shall cooperate with the other Party to minimize the overall withholding tax burden on payments under this Agreement, and each Party shall provide such forms, certificates, and documentation as may be reasonably requested by the other Party to obtain any available reduction in or exemption from withholding taxes.
(d) Meridian shall be solely responsible for all Territory-based value-added tax (VAT), goods and services tax (GST), consumption tax, and similar indirect taxes imposed on the sale, importation, manufacture, distribution, or commercialization of Licensed Products in the Territory.
(e) Transfer Pricing. The Parties shall establish and maintain contemporaneous transfer pricing documentation consistent with the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, as amended from time to time, for all intercompany transactions under this Agreement, including API supply, technology transfer, and royalty payments. The Parties shall cooperate in good faith to ensure that all intercompany pricing is consistent with the arm's-length principle and shall promptly notify each other of any transfer pricing audit or inquiry by any tax authority relating to transactions under this Agreement.
5.10 Late Payments.
Any amounts payable under this Agreement that are not paid when due shall accrue interest at a rate equal to the lesser of (a) one and one-half percent (1.5%) per month (compounded monthly) and (b) the maximum rate permitted by applicable law, calculated from the date such payment was originally due until the date of actual payment. The accrual of interest under this Section 5.10 shall not limit any other rights or remedies available to the non-breaching Party under this Agreement or at law or in equity.
5.11 Total Deal Value Summary.
The total potential consideration payable by Meridian to Penterra under this Agreement (exclusive of royalties, sublicense income sharing, and MFN Adjustment Payments) is One Hundred Twenty Million United States Dollars ($120,000,000), comprised of:
(a) Upfront Payment: $18,000,000;
(b) Development Milestone payments: $32,000,000;
(c) Regulatory Milestone payments: $25,000,000; and
(d) Commercial Milestone payments: $45,000,000;
plus tiered royalties on Net Sales of Licensed Products in the Territory as set forth in Section 5.5.