CELLDEX THERAPEUTICS, INC.
FORM 10-K
(Annual Report)
Filed 03/07/18 for the Period Ending 12/31/17
Address
Telephone
CIK
53 FRONTAGE ROAD
SUITE 220
HAMPTON, NJ, 08827
908-200-7500
0000744218
Symbol CLDX
SIC Code
Industry
2835 - In Vitro and In Vivo Diagnostic Substances
Biotechnology & Medical Research
Sector Healthcare
Fiscal Year
12/31
http://www.edgar-online.com
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Distribution and use of this document restricted under EDGAR Online, a division of Donnelley Financial Solutions, Terms of Use.
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TABLE
OF
CONTENTS
Table
of
ContentsUNITED
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
Washington,
D.C.
20549FORM
10-KCommission
File
Number
000-15006CELLDEX
THERAPEUTICS,
INC.
(Exact
name
of
registrant
as
specified
in
its
charter)Delaware
13-3191702(State
or
other
jurisdiction
of
incorporation
ororganization)
(I.R.S.
Employer
Identification
No.)Perryville
III
Building,
53
Frontage
Road,
Suite
220,
Hampton,
New
Jersey
08827
(Address
of
principal
executive
offices)
(Zip
Code)Registrant's
telephone
number,
including
area
code:
(908)
200-7500Securities
registered
pursuant
to
Section
12(b)
of
the
Act:Title
of
Class:
Name
of
Each
Exchange
on
WhichRegistered:Common
Stock,
par
value
$.001
NASDAQ
Global
MarketSecurities
registered
pursuant
to
Section
12(g)
of
the
Act:
None
Indicate
by
check
mark
if
the
registrant
is
a
well-known
seasoned
issuer,
as
defined
in
Rule
405
of
the
Securities
Act.
Yes
o
No
ý
Indicate
by
check
mark
if
the
registrant
is
not
required
to
file
reports
pursuant
to
Section
13
or
Section
15(d)
of
the
Act.
Yes
o
No
ý
Indicate
by
check
mark
whether
the
registrant:
(1)
has
filed
all
reports
required
to
be
filed
by
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934during
the
preceding
12
months
(or
for
such
shorter
period
that
the
registrant
was
required
to
file
such
reports),
and
(2)
has
been
subject
to
such
filing
requirementsfor
the
past
90
days.
Yes
ý
No
o
Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
and
posted
on
its
corporate
Web
site,
if
any,
every
Interactive
Data
File
required
tobe
submitted
and
posted
pursuant
to
Rule
405
of
Regulation
S-T
(§232.405
of
this
chapter)
during
the
preceding
12
months
(or
for
such
shorter
period
that
theregistrant
was
required
to
submit
and
post
such
files).
Yes
ý
No
o
Indicate
by
check
mark
if
disclosure
of
delinquent
filers
pursuant
to
Item
405
of
Regulation
S-K
(§229.405
of
this
Chapter)
is
not
contained
herein,
and
willnot
be
contained,
to
the
best
of
registrant's
knowledge,
in
definitive
proxy
or
information
statements
incorporated
by
reference
in
Part
III
of
this
Form
10-K
or
anyamendment
to
this
Form
10-K.
ý
Indicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer,
smaller
reporting
company,
or
anemerging
growth
company.
See
the
definitions
of
"large
accelerated
filer,"
"accelerated
filer,"
"smaller
reporting
company"
and
"emerging
growth
company"
inRule
12b-2
of
the
Exchange
Act.
(Check
one):(Mark
one)
ý
ANNUAL
REPORT
PURSUANT
TO
SECTION
13
OR
15(D)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934For
the
fiscal
year
ended
December
31,
2017oro
TRANSITION
REPORT
PURSUANT
TO
SECTION
13
OR
15(D)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934Large
accelerated
filer
o
Accelerated
filer
ý
Non-accelerated
filer
o
(Do
not
check
if
a
smaller
reporting
company)
Smaller
reporting
company
oEmerging
growth
company
o
If
an
emerging
growth
company,
indicate
by
check
mark
if
the
registrant
has
elected
not
to
use
the
extended
transition
period
for
complying
with
any
new
orrevised
financial
accounting
standards
provided
pursuant
to
Section
13(a)
of
the
Exchange
Act.
o
Indicate
by
check
mark
whether
the
registrant
is
a
shell
company
(as
defined
in
Rule
12b-2
of
the
Act).
Yes
o
No
ý
The
aggregate
market
value
of
the
registrant's
common
stock
held
by
non-affiliates
as
of
June
30,
2017
was
$313
million.
Exclusion
of
shares
held
by
anyperson
should
not
be
construed
to
indicate
that
such
person
possesses
the
power,
direct
or
indirect,
to
direct
or
cause
the
actions
of
the
management
or
policies
ofthe
registrant,
or
that
such
person
is
controlled
by
or
under
common
control
with
the
registrant.
The
number
of
shares
of
common
stock
outstanding
at
February
28,
2018
was
141,073,668
shares.DOCUMENTS
INCORPORATED
BY
REFERENCE
Portions
of
the
definitive
Proxy
Statement
for
our
2018
Annual
Meeting
of
Stockholders
are
incorporated
by
reference
into
Part
III
of
this
Report.
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
ANNUAL
REPORT
ON
FORM
10-K
FOR
THE
FISCAL
YEAR
ENDED
DECEMBER
31,
2017TABLE
OF
CONTENTS
i
Page
Part
I
Item
1.
Business
1
Item
1A.
Risk
Factors
31
Item
1B.
Unresolved
Staff
Comments
58
Item
2.
Properties
58
Item
3.
Legal
Proceedings
58
Item
4.
Mine
Safety
Disclosures
58
Part
II
Item
5.
Market
for
Registrant's
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases
of
EquitySecurities
59
Item
6.
Selected
Financial
Data
60
Item
7.
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
62
Item
7A.
Quantitative
and
Qualitative
Disclosures
About
Market
Risk
85
Item
8.
Financial
Statements
and
Supplementary
Data
86
Item
9.
Changes
in
and
Disagreements
With
Accountants
on
Accounting
and
Financial
Disclosure
118
Item
9A.
Controls
and
Procedures
118
Item
9B.
Other
Information
119
Part
III
Item
10.
Directors,
Executive
Officers
and
Corporate
Governance
119
Item
11.
Executive
Compensation
119
Item
12.
Security
Ownership
of
Certain
Beneficial
Owners
and
Management
and
Related
Stockholder
Matters
119
Item
13.
Certain
Relationships
and
Related
Transactions,
and
Director
Independence
119
Item
14.
Principal
Accountant
Fees
and
Services
120
Part
IV
Item
15.
Exhibits,
Financial
Statement
Schedules
121
Item
16.
Form
10-K
Summary
125
Signatures
126
Table
of
Contents Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:
This
Annual
Report
on
Form
10-K
contains
forward-lookingstatements
made
pursuant
to
the
safe
harbor
provisions
of
the
Private
Securities
Litigation
Reform
Act
of
1995
under
Section
27A
of
the
Securities
Act
of
1933,
asamended,
and
Section
21E
of
the
Securities
Exchange
Act
of
1934,
as
amended.
Forward-looking
statements
include
statements
with
respect
to
our
beliefs,
plans,objectives,
goals,
expectations,
anticipations,
assumptions,
estimates,
intentions
and
future
performance,
and
involve
known
and
unknown
risks,
uncertainties
andother
factors,
which
may
be
beyond
our
control
and
which
may
cause
our
actual
results,
performance
or
achievements
to
be
materially
different
from
future
results,performance
or
achievements
expressed
or
implied
by
such
forward-looking
statements.
All
statements
other
than
statements
of
historical
fact
are
statements
thatcould
be
forward-looking
statements.
You
can
identify
these
forward-looking
statements
through
our
use
of
words
such
as
"may,"
"will,"
"can,"
"anticipate,""assume,"
"should,"
"indicate,"
"would,"
"believe,"
"contemplate,"
"expect,"
"seek,"
"estimate,"
"continue,"
"plan,"
"point
to,"
"project,"
"predict,"
"could,""intend,"
"target,"
"potential"
and
other
similar
words
and
expressions
of
the
future.
There
are
a
number
of
important
factors
that
could
cause
the
actual
results
to
differ
materially
from
those
expressed
in
any
forward-looking
statement
made
byus.
These
factors
include,
but
are
not
limited
to:•our
ability
to
successfully
complete
research
and
further
development,
including
animal,
preclinical
and
clinical
studies,
and,
if
we
obtain
regulatoryapproval,
commercialization
of
glembatumumab
vedotin
(also
referred
to
as
CDX-011)
and
other
drug
candidates
and
the
growth
of
the
markets
forthose
drug
candidates;
•our
ability
to
raise
sufficient
capital
to
fund
our
clinical
studies
and
to
meet
our
liquidity
needs,
on
terms
acceptable
to
us,
or
at
all.
If
we
are
unableto
raise
the
funds
necessary
to
meet
our
liquidity
needs,
we
may
have
to
delay
or
discontinue
the
development
of
one
or
more
programs,
discontinueor
delay
ongoing
or
anticipated
clinical
trials,
license
out
programs
earlier
than
expected,
raise
funds
at
significant
discount
or
on
other
unfavorableterms,
if
at
all,
or
sell
all
or
part
of
our
business;
•our
ability
to
negotiate
strategic
partnerships,
where
appropriate,
for
our
programs,
which
may
include,
glembatumumab
vedotin;
•our
ability
to
manage
multiple
clinical
trials
for
a
variety
of
drug
candidates
at
different
stages
of
development;
•the
cost,
timing,
scope
and
results
of
ongoing
safety
and
efficacy
trials
of
glembatumumab
vedotin,
and
other
preclinical
and
clinical
testing;
•the
cost,
timing
and
uncertainty
of
obtaining
regulatory
approvals
for
our
drug
candidates;
•the
availability,
cost,
delivery
and
quality
of
clinical
management
services
provided
by
our
clinical
research
organization
partners;
•the
availability,
cost,
delivery
and
quality
of
clinical
and
commercial-grade
materials
produced
by
our
own
manufacturing
facility
or
supplied
bycontract
manufacturers,
suppliers
and
partners,
who
may
be
the
sole
source
of
supply;
•our
ability
to
develop
and
commercialize
products
before
competitors
that
are
superior
to
the
alternatives
developed
by
such
competitors;
•our
ability
to
develop
technological
capabilities,
including
identification
of
novel
and
clinically
important
targets,
exploiting
our
existing
technologyplatforms
to
develop
new
drug
candidates
and
expand
our
focus
to
broader
markets
for
our
existing
targeted
immunotherapeutics;ii Table
of
Contents•our
ability
to
realize
the
anticipated
benefits
from
the
acquisition
of
Kolltan
and
to
operate
the
combined
business
efficiently;
•our
ability
to
adapt
our
proprietary
antibody-targeted
technology,
or
APC
Targeting
Technology™,
to
develop
new,
safe
and
effective
therapeuticsfor
oncology
and
infectious
disease
indications;
•our
ability
to
protect
our
intellectual
property
rights,
including
the
ability
to
successfully
defend
patent
oppositions
filed
against
a
European
patentrelated
to
technology
we
use
in
varlilumab,
and
our
ability
to
avoid
intellectual
property
litigation,
which
can
be
costly
and
divert
management
timeand
attention;
and
•the
factors
listed
under
"Risk
Factors"
in
this
Annual
Report
on
Form
10-K
All
forward-looking
statements
are
expressly
qualified
in
their
entirety
by
this
cautionary
notice.
You
are
cautioned
not
to
place
undue
reliance
on
anyforward-looking
statements,
which
speak
only
as
of
the
date
of
this
report
or
the
date
of
the
document
incorporated
by
reference
into
this
report.
We
have
noobligation,
and
expressly
disclaim
any
obligation,
to
update,
revise
or
correct
any
of
the
forward-looking
statements,
whether
as
a
result
of
new
information,
futureevents
or
otherwise.
We
have
expressed
our
expectations,
beliefs
and
projections
in
good
faith,
and
we
believe
they
have
a
reasonable
basis.
However,
we
cannotassure
you
that
our
expectations,
beliefs
or
projections
will
result
or
be
achieved
or
accomplished.iii Table
of
ContentsPART
I
Item
1.
BUSINESS
Overview
Celldex
Therapeutics,
Inc.,
which
we
refer
to
as
"Celldex,"
"we,"
"us,"
"our"
or
the
"Company,"
is
a
biopharmaceutical
company
focused
on
the
developmentand
commercialization
of
several
immunotherapy
technologies
and
other
cancer-targeting
biologics.
Our
drug
candidates,
including
antibodies,
antibody-drugconjugates
and
other
protein-based
therapeutics,
are
derived
from
a
broad
set
of
complementary
technologies
which
have
the
ability
to
engage
the
human
immunesystem
and/or
directly
inhibit
tumors
to
treat
specific
types
of
cancer
or
other
diseases.
Our
latest
stage
drug
candidate,
glembatumumab
vedotin
(also
referred
to
as
CDX-011)
is
a
targeted
antibody-drug
conjugate
in
a
randomized,
Phase
2b
studyfor
the
treatment
of
triple
negative
breast
cancer
and
a
Phase
2
study
for
the
treatment
of
metastatic
melanoma.
Varlilumab
(also
referred
to
as
CDX-1127)
is
animmune
modulating
antibody
that
is
designed
to
enhance
a
patient's
immune
response
against
cancer.
We
established
proof
of
principle
in
a
Phase
1
study
withvarlilumab,
which
supported
the
initiation
of
combination
studies
in
various
indications.
CDX-3379,
a
human
monoclonal
antibody
designed
to
block
the
activityof
ErbB3
(HER3),
is
in
Phase
2
development
in
combination
with
cetuximab
for
the
treatment
of
head
and
neck
squamous
cell
carcinoma.
We
also
have
a
numberof
earlier
stage
drug
candidates
in
clinical
development,
including
CDX-014,
an
antibody-drug
conjugate
targeting
renal
and
ovarian
cancers;
CDX-1140,
a
humanmonoclonal
antibody
targeted
to
CD40,
a
key
activator
of
immune
response;
CDX-301,
an
immune
cell
mobilizing
agent
and
dendritic
cell
growth
factor;
andCDX-1401,
a
targeted
immunotherapeutic
aimed
at
antigen
presenting
cells,
or
APCs,
for
cancer
indications.
Our
drug
candidates
address
market
opportunities
forwhich
we
believe
current
therapies
are
inadequate
or
non-existent.
We
are
building
a
fully
integrated,
commercial-stage
biopharmaceutical
company
that
develops
important
therapies
for
patients
with
unmet
medical
needs.Our
program
assets
provide
us
with
the
strategic
options
to
either
retain
full
economic
rights
to
our
innovative
therapies
or
seek
favorable
economic
terms
throughadvantageous
commercial
partnerships.
This
approach
allows
us
to
maximize
the
overall
value
of
our
technology
and
product
portfolio
while
best
ensuring
theexpeditious
development
of
each
individual
product.
The
following
table
reflects
Celldex-sponsored
clinical
studies
that
we
are
actively
pursuing
at
this
time.
All
programs
are
currently
fully
owned
by
Celldex.1Product
(generic)
Indication/Field
Status
SponsorGlembatumumab
vedotin
Triple
negative
breast
cancer
Phase
2b
CelldexGlembatumumab
vedotin
Metastatic
melanoma
(single-agent,
with
varlilumab
or
CPI
(1)
or
CDX-301)
Phase
2
CelldexVarlilumab
Multiple
solid
tumors
(with
Opdivo®)
Phase
2
Celldex
(2)CDX-3379
Head
and
neck
squamous
cell
cancer
(with
Erbitux®)
Phase
2
CelldexCDX-014
Renal
cell
and
ovarian
carcinomas
Phase
1
CelldexCDX-1140
Multiple
solid
tumors
Phase
1
Celldex(1)checkpoint
inhibitor;
(2)BMS
collaboration Table
of
Contents
We
also
routinely
work
with
external
parties,
such
as
government
agencies,
to
collaboratively
advance
our
drug
candidates.
The
following
pipeline
reflectsclinical
trials
of
our
drug
candidates
being
actively
pursued
by
outside
organizations.
In
addition
to
the
studies
listed
below,
we
also
have
an
Investigator
InitiatedResearch
(IIR)
program
with
six
studies
ongoing
with
our
drug
candidates
and
additional
studies
currently
under
consideration.
Our
future
success
depends
upon
many
factors,
including
our
ability,
and
that
of
any
licensees
and
collaborators
that
we
may
have,
to
successfully
develop,obtain
regulatory
approval
for
and
commercialize
our
drug
candidates,
as
well
as
any
related
companion
diagnostic
tests.
We
have
had
no
commercial
revenuesfrom
sales
of
our
drug
candidates,
and
we
have
had
a
history
of
operating
losses.
It
is
possible
that
we
may
not
be
able
to
successfully
develop,
obtain
regulatoryapproval
for,
or
commercialize,
our
drug
candidates,
and
we
are
subject
to
a
number
of
risks
that
you
should
be
aware
of
before
investing
in
us.
These
risks
aredescribed
more
fully
in
"Item
1A.
Risk
Factors."Clinical
Development
ProgramsGlembatumumab Vedotin
Glembatumumab
vedotin
is
an
antibody-drug
conjugate,
or
ADC,
that
consists
of
a
fully
human
monoclonal
antibody,
CR011,
linked
to
a
potent
cell-killingdrug,
monomethyl
auristatin
E,
or
MMAE.
The
CR011
antibody
specifically
targets
glycoprotein
NMB,
referred
to
as
gpNMB,
that
is
over-expressed
in
a
varietyof
cancers
including
breast
cancer,
melanoma,
non-small
cell
lung
cancer,
uveal
melanoma
and
osteosarcoma,
among
others.
The
ADC
technology,
comprised
ofMMAE
and
a
stable
linker
system
for
attaching
it
to
CR011,
was
licensed
from
Seattle
Genetics,
Inc.
and
is
the
same
as
that
used
in
the
marketed
productAdcetris®.
The
ADC
is
designed
to
be
stable
in
the
bloodstream.
Following
intravenous
administration,
glembatumumab
vedotin
targets
and
binds
to
gpNMB,
andupon
internalization
into
the
targeted
cell,
glembatumumab
vedotin
is
designed
to
release
MMAE
from
CR011
to
produce
a
cell-killing
effect.
Glembatumumabvedotin
is
being
studied
across
multiple
indications
in
company-sponsored
trials
and
in
collaborative
studies
with
external
parties.
The
U.S.
Food
and
DrugAdministration,
or
FDA,
has
granted
fast
track
designation
to
glembatumumab
vedotin
for
the
treatment
of
advanced,
refractory/resistant
gpNMB-expressing
breastcancer.
A
companion
diagnostic
is
in
development
for
certain
indications,
and
we
expect
that,
if
necessary,
such
a
companion
diagnostic
must
be
approved
by
theFDA
or
certain
other
foreign
regulatory
agencies
before
glembatumumab
vedotin
may
be
commercialized
in
those
indications.
Treatment
of
Metastatic
Breast
Cancer:
Glembatumumab
vedotin
has
been
evaluated
for
the
treatment
of
metastatic
breast
cancer
(MBC)
in
multiplestudies
including
a
single-arm
Phase
1/2
study
(
Journal of Clinical Oncology, September
2014);
a
randomized,
controlled
Phase
2b
study
compared
toInvestigator's
Choice
chemotherapy
in
patients
with
gpNMB-positive
MBC
called
EMERGE
(
Journal of Clinical Oncology, April
2015);
and
the
ongoingrandomized,
controlled
Phase
2b
study
in
patients
with
triple
negative,
gpNMB
overexpressing
breast
cancer,
called
METRIC.
We
expect
to
report
topline
primaryendpoint
data
from
the
METRIC
study
during
the
second
quarter
of
2018.
The
most
recent
data
presented
for
glembatumumab
vedotin
in
breast
cancer
are
from
the
EMERGE
study,
the
randomized,
multi-center
Phase
2b
study
in
124patients
with
heavily
pre-treated,
advanced,
gpNMB-positive
breast
cancer.
Patients
were
randomized
(2:1)
to
receive
either2Product
(generic)
Indication/Field
Status
SponsorGlembatumumab
vedotin
Uveal
melanoma
Phase
2
NCI
(CRADA)Glembatumumab
vedotin
Squamous
cell
lung
cancer
Phase
2
PrECOG,
LLCCDX-1401/CDX-301
Malignant
melanoma
Phase
2
NCI
(CRADA)CDX-1401/Tecentriq®/SGI-110
Ovarian
cancer
Phase
1
NCI
(CRADA)Varlilumab/Opdivo®
B-cell
malignancies
Phase
2
NCI
(CRADA) Table
of
Contentsglembatumumab
vedotin
or
single-agent
Investigator's
Choice
chemotherapy.
Patients
randomized
to
receive
Investigator's
Choice
were
allowed
to
cross
over
toreceive
glembatumumab
vedotin
following
disease
progression.
Activity
endpoints
included
response
rate,
progression-free
survival
(PFS)
and
overall
survival(OS).
The
final
study
results,
as
shown
below,
suggested
that
glembatumumab
vedotin
induced
significant
response
rates
compared
to
currently
available
therapiesin
patient
subsets
with
advanced,
refractory
breast
cancers
with
high
gpNMB
expression
(expression
in
at
least
25%
of
tumor
cells)
and
in
patients
with
triplenegative
breast
cancer.
The
OS
and
PFS
of
patients
treated
with
glembatumumab
vedotin
were
also
observed
to
be
greatest
in
patients
with
high
gpNMBexpression
and,
in
particular,
in
patients
with
triple
negative
breast
cancer
who
also
had
high
gpNMB
expression.
Adverse
events
prominent
with
theglembatumumab
vedotin
arm
included
rash
and
peripheral
neuropathy,
while
hematologic
toxicity
was
more
frequent
and
severe
in
the
Investigator's
Choice
arm.EMERGE:
Overall
Response
Rate
and
Disease
Control
Data
(Intent-to-Treat
Population)
EMERGE:
Progression-Free
Survival
(PFS)
and
Overall
Survival
(OS)
Data
In
December
2013,
we
initiated
METRIC,
a
randomized,
controlled
(2:1)
Phase
2b
study
of
glembatumumab
vedotin
versus
Xeloda®
in
patients
with
triplenegative
breast
cancer
that
over-expresses
gpNMB.
Clinical
trial
study
sites
were
opened
to
enrollment
across
the
U.S.,
Canada,
Australia
and
the
European
Union.The
METRIC
protocol
was
amended
in
late
2014
based
on
feedback
from
clinical
investigators
conducting
the
study
that
the
eligibility
criteria
for
study
entry
werelimiting
their
ability
to
enroll
patients
they
felt
were
clinically
appropriate.
In
addition,
we
had
spoken
to
country-specific
members
of
the
European
MedicinesAgency,
or
EMA,
and
believed
an
opportunity
existed
to
expand
the
study
into
the
EU.
The
amendment
expanded
patient
entry
criteria
to
position
it
for
thepossibility
of
full
marketing
approval
with
global
regulators,
including
the
EMA,
and
to
support
improved
enrollment
in
the
study.
The
primary
endpoint
of
thestudy
is
PFS,
defined
as
the
time
from
randomization
to
the
earlier
of
disease
progression
or
death
due
to
any
cause.
PFS
is
an
established
endpoint
for
full
approvalregistration
studies
in
this
patient
population
in
both
the
U.S.
and
the
EU.
The
sample
size
(n=300)
and
the
secondary
endpoint
of
OS
remained
unchanged.
Sinceimplementation
of
these
changes,
both
the
FDA
and
central
European
regulatory
authorities
have
reviewed
the
protocol
design,
and
we
believe
the
METRIC
studycould
potentially
support
marketing
approval
in
both
the
U.S.
and
Europe
dependent
upon
data
results
and
review.3
High
gpNMB
Expression
Triple
Negative
and
gpNMB
Over-Expression
Glembatumumab
Vedotin
Investigator's
Choice
Glembatumumab
Vedotin
Investigator's
Choice
(n=23)
(n=11)
(n=10)
(n=6)
Response
Rate
30%
9%
40%
0%Disease
Control
Rate
65%
27%
90%
17%Tumor response assessed by RECIST 1.1, inclusive of response observed at a single time point.
High
gpNMB
Expression
Triple
Negative
and
gpNMB
Over-Expression
Glembatumumab
Vedotin
Investigator's
Choice
Glembatumumab
Vedotin
Investigator's
Choice
Median
PFS
(months)
2.8
1.5
3.5
1.5
p=0.18
p=0.0017
Median
OS
(months)
10.0
5.7
10.0
5.5
p=0.31
p=0.003
Table
of
Contents
Enrollment
(n=327)
in
METRIC
was
completed
in
August
2017.
The
study
calls
for
203
progression
events
for
evaluation
of
the
primary
endpoint,
which
willbe
assessed
based
on
an
independent,
central
reading
of
patient
scans.
The
sum
of
the
data,
including
the
secondary
endpoints
of
response
rate,
OS,
DOR
andsafety,
will
be
important
in
assessing
clinical
benefit.
Based
on
the
current
rate
of
progression
events
in
the
study,
the
Company
projects
that
topline
primaryendpoint
data
should
be
available
in
the
second
quarter
of
2018.
Efforts
to
ensure
delivery
of
manufactured
drug
that
is
ready
for
commercialization
and
a
companion
diagnostic
are
underway.
While
we
have
made
andcontinue
to
make
progress
on
these
fronts,
we
have
made
the
decision
to
stage
some
of
the
more
costly
work
in
these
areas
to
begin
after
we
have
received
resultsfrom
the
study.
While
this
step
will
extend
the
timeline
to
complete
our
regulatory
submissions,
we
believe
this
is
the
most
prudent
use
of
our
funds
as
we
seek
toadvance
our
pipeline
overall.
Assuming
positive
data,
we
plan
to
work
with
the
FDA
on
a
regulatory
strategy
that
would
support
submitting
a
Biologics
LicenseApplication
(BLA)
in
the
second
half
of
2019.
Treatment
of
Metastatic
Melanoma:
Glembatumumab
vedotin
has
been
evaluated
for
the
treatment
of
unresectable
stage
III
or
IV
metastatic
melanomain
two
studies
including
a
single-arm
Phase
1/2
open-label
study
and
an
ongoing
multi-cohort
Phase
2
study.
Results
from
the
Phase
1/2
study
were
published
in
theJournal of Clinical Oncology in
September
2014.
The
most
recent
data
for
glembatumumab
vedotin
in
metastatic
melanoma
are
from
the
ongoing
Phase
2
study.
This
study
currently
includes
four
single
armcohorts:
(1)
a
single-agent
cohort
(enrollment
completed;
data
presented
at
ASCO
2017),
(2)
a
combination
cohort
with
varlilumab
(enrollment
completed;
datapresented
at
SITC
2017),
(3)
a
combination
cohort
with
an
approved
checkpoint
inhibitor
(i.e.,
Opdivo®
or
Keytruda®)
following
progression
on
the
checkpointinhibitor
alone
(enrollment
completed;
follow-up
continues),
and
(4)
a
combination
cohort
with
CDX-301
(enrollment
ongoing).
The
primary
endpoint
for
each
cohort
is
ORR,
except
the
fourth
cohort
which
is
assessing
safety
and
tolerability
in
anticipation
of
additional
combinations.Secondary
endpoints
include
analyses
of
PFS,
DOR,
OS,
retrospective
investigation
of
whether
the
anticancer
activity
of
glembatumumab
vedotin
is
dependentupon
the
degree
of
gpNMB
expression
in
tumor
tissue
and
safety
of
both
the
monotherapy
and
combination
regimens.
We
presented
mature
data
from
the
single-agent
cohort
in
an
oral
presentation
at
the
American
Society
of
Clinical
Oncology
(ASCO)
Annual
Meeting
in
June2017.
The
cohort
enrolled
62
evaluable
patients
with
unresectable
stage
IV
melanoma.
All
patients
had
been
heavily
pre-treated
(median
prior
therapies
=
3;
range1-8)
and
had
progressed
during
or
after
checkpoint
inhibitor
therapy,
and
almost
all
patients
had
received
both
ipilimumab
(n=58;
94%)
and
anti-PD-1/anti-PD-L1(n=58;
94%)
therapy.
Twelve
patients
presented
with
BRAF
mutation,
and
fifteen
had
prior
treatment
with
BRAF
or
BRAF/MEK
targeted
agents.
Median
OS
forall
patients
was
9.0
months
(95%
CI:
6.1,
13.0).
The
primary
endpoint
of
the
cohort
(threshold
of
6
or
more
objective
responses
in
52
evaluable
patients)
wasexceeded.
7
of
62
(11%)
patients
experienced
a
confirmed
response.
One
patient
experienced
a
complete
response
(CR),
and
six
patients
experienced
partialresponses
(PR).
An
additional
three
patients
also
experienced
single
timepoint
PRs.
The
median
DOR
was
6.0
months.
A
52%
disease
control
rate
(patients
withoutprogression
for
greater
than
three
months)
was
demonstrated,
and
median
PFS
for
all
patients
was
4.4
months.
Consistent
with
previous
studies
in
melanoma
andbreast
cancer,
early
development
of
rash
was
associated
with
greater
clinical
benefit,
including
more
prolonged
PFS
and
OS.
The
safety
profile
was
consistent
withprior
studies
of
glembatumumab
vedotin
with
rash,
neutropenia
and
neuropathy
experienced
as
the
most
significant
adverse
events.
Pre-treatment
tumor
tissue
wasavailable
for
59
patients.
All
samples
were
gpNMB
positive,
and
78%
of
patients
had
tumors
with
100%
of
their
epithelial
cells
expressing
gpNMB.
Given
both
thehigh
level
of
expression
and
the
intensity
of
expression
across
this
patient
population,
identifying
a
potential
population
for
gpNMB4 Table
of
Contentsenrichment
is
not
feasible;
therefore,
all
patients
with
metastatic
melanoma
could
be
evaluated
as
potential
candidates
for
treatment
with
glembatumumab
vedotinin
future
studies.
Data
from
the
second
cohort,
combining
glembatumumab
vedotin
and
varlilumab,
were
presented
at
the
Society
for
Immunotherapy
of
Cancer's
(SITC)32nd
Annual
Meeting
in
November
2017.
The
cohort
enrolled
34
patients
with
unresectable
stage
IV
melanoma.
All
patients
had
been
heavily
pre-treated
(medianprior
therapies
=
3;
range
1-8)
and
had
progressed
during
or
after
checkpoint
inhibitor
(CPI)
therapy
(median
prior
CPI
therapies
=
2;
range
1-4).
Almost
allpatients
had
received
ipilimumab
(n=26;
76%)
and/or
anti-PD-1/anti-PD-L1
(n=34;
100%)
therapy.
Nine
patients
presented
with
BRAF
mutation,
and
eleven
hadprior
treatment
with
BRAF
or
BRAF/MEK
targeted
agents.
Median
PFS
for
all
patients
was
2.6
months
(95%
CI:
1.4,
2.8),
and
median
OS
for
all
patients
was6.4
months
(95%
CI:
3.2,
8.3).
One
of
31
patients
eligible
for
response
evaluation
experienced
a
confirmed
partial
response
(3%),
and
an
additional
two
patientsalso
experienced
single
timepoint
partial
responses.
52%
of
patients
experienced
stable
disease
(minimum
of
six
or
more
weeks).
A
19%
disease
control
rate(patients
without
progression
for
greater
than
three
months)
was
demonstrated.
The
safety
profile
was
consistent
with
prior
studies
of
glembatumumab
vedotin,
andthere
was
no
evidence
of
additive
toxicity
associated
with
the
combination.
Biological
effects
of
varlilumab
were
consistent
with
prior
observations
and
did
notappear
to
be
impacted
by
the
addition
of
an
ADC.
Modest
clinical
benefit
in
the
combination
could
be
due
to
multiple
factors,
including
potential
lack
of
sensitivityto
immunotherapy
in
patients
with
checkpoint
refractory
disease,
many
of
whom
progressed
so
rapidly
that
they
experienced
a
very
short
duration
of
varlilumabtreatment
(median
2
doses);
a
possible
dearth
of
antigen
presenting
cells
in
tumors;
and
the
potential
for
immune
checkpoint
molecules
to
remain
unblockedwithout
checkpoint
inhibitor
therapy.
Future
cohorts
are
designed
to
address
some
of
these
potential
factors.
No
significant
correlation
between
rash
and
outcomewas
observed
but
will
continue
to
be
monitored
in
future
cohorts.
Treatment
of
Other
Indications:
We
have
entered
into
a
collaborative
relationship
with
PrECOG,
LLC,
which
represents
a
research
network
establishedby
the
Eastern
Cooperative
Oncology
Group
(ECOG),
under
which
PrECOG,
LLC,
is
conducting
an
open-label
Phase
1/2
study
in
patients
with
unresectablestage
IIIB
or
IV,
gpNMB-expressing,
advanced
or
metastatic
squamous
cell
carcinoma
(SCC)
of
the
lung,
who
have
progressed
on
prior
platinum-basedchemotherapy.
This
study
opened
to
enrollment
in
April
2016
and
is
ongoing.
The
study
includes
a
dose-escalation
phase
followed
by
a
two-stage
Phase
2
portion(Simon
two-stage
design).
The
Phase
1,
dose-escalation
portion
of
the
study
is
designed
to
assess
the
safety
and
tolerability
of
glembatumumab
vedotin
at
varyingdose
levels.
The
first
stage
of
the
Phase
2
portion
plans
to
enroll
approximately
20
patients,
and
if
at
least
two
patients
achieve
a
partial
response
or
completeresponse,
a
second
stage
may
enroll
an
additional
15
patients.
The
primary
objective
of
the
Phase
2
portion
of
the
study
is
to
assess
the
anti-tumor
activity
ofglembatumumab
vedotin
in
squamous
cell
lung
cancer
as
measured
by
ORR.
Secondary
objectives
of
the
study
include
analyses
of
safety
and
tolerability
andfurther
assessment
of
anti-tumor
activity
across
a
broad
range
of
endpoints.
We
have
also
entered
into
a
Cooperative
Research
and
Development
Agreement,
or
CRADA,
with
the
National
Cancer
Institute,
or
NCI,
under
which
NCI
issponsoring
a
Phase
2
study
of
glembatumumab
vedotin
in
uveal
melanoma.
The
study
is
a
single-arm,
open-label
study
in
patients
with
locally
recurrent
ormetastatic
uveal
melanoma.
The
study
has
a
two-stage
design
with
a
pre-specified
activity
threshold
necessary
in
the
first
stage
to
progress
enrollment
to
the
secondstage.
The
primary
outcome
measure
is
ORR.
Secondary
outcome
measures
include
change
in
gpNMB
expression
on
tumor
tissue
via
immunohistochemistry,safety,
OS
and
PFS.
Data
from
this
study
were
presented
at
the
9
th
World
Congress
of
Melanoma
in
October
2017.
Two
(6%)
objective
responses
were
observedin
31
patients
to
date,
and
35%
of
patients
experienced
stable
disease
greater
than
100
days
(median
5.5
months).
The
disease
control
rate
(response
rate
+
stabledisease)
for
all
patients
on
study
was
noteworthy
at
61%.
Median
PFS
was
3.2
months,
and
median
OS
was
11.8
months.
For
patients5 Table
of
Contentswho
experienced
either
a
partial
response
or
stable
disease,
median
PFS
was
5.5
months,
and
median
OS
had
not
yet
been
reached.
The
NCI
is
conductingexploratory
immune
correlates
to
provide
insight
into
target
saturation,
antigen
release
and
potential
combination
strategies.Varlilumab
Varlilumab
is
a
fully
human
monoclonal
agonist
antibody
that
binds
to
and
activates
CD27,
a
critical
co-stimulatory
molecule
in
the
immune
activationcascade.
We
believe
varlilumab
works
primarily
by
stimulating
T
cells,
an
important
component
of
a
person's
immune
system,
to
attack
cancer
cells.
Restrictedexpression
and
regulation
of
CD27
enables
varlilumab
specifically
to
activate
T
cells,
resulting
in
an
enhanced
immune
response
with
the
potential
for
a
favorablesafety
profile.
In
preclinical
studies,
varlilumab
has
been
shown
to
directly
kill
or
inhibit
the
growth
of
CD27
expressing
lymphomas
and
leukemias
in
in vitro andin vivo models.
We
have
entered
into
license
agreements
with
the
University
of
Southampton,
UK
for
intellectual
property
to
use
anti-CD27
antibodies
and
withMedarex
(acquired
by
Bristol-Myers
Squibb
Company,
or
BMS)
for
access
to
the
UltiMab
technology
to
develop
and
commercialize
human
antibodies
to
CD27.Varlilumab
was
initially
studied
as
a
single-agent
to
establish
a
safety
profile
and
assess
immunologic
and
clinical
activity
in
patients
with
cancer,
but
we
believethe
greatest
opportunity
for
varlilumab
is
as
an
immune
activator
in
combination
with
other
agents.
Currently,
we
are
focusing
our
efforts
on
a
Phase
1/2
clinicaltrial
being
conducted
in
collaboration
with
BMS
and
their
PD-1
immune
checkpoint
inhibitor,
Opdivo.
Varlilumab
has
also
been
explored
in
other
combinationstudies,
including
with
glembatumumab
vedotin,
and
is
being
studied
in
ongoing
and
planned
investigator-sponsored
and
collaborative
studies.
Single-Agent
Phase
1
Study:
In
an
open-label
Phase
1
study
of
varlilumab
in
patients
with
selected
malignant
solid
tumors
or
hematologic
cancers,varlilumab
demonstrated
an
acceptable
safety
profile
and
induced
immunologic
activity
in
patients
that
is
consistent
with
both
its
proposed
mechanism
of
actionand
data
in
preclinical
models.
A
total
of
90
patients
were
dosed
in
the
study
at
multiple
clinical
sites
in
the
U.S.
In
both
the
solid
tumor
and
hematologic
doseescalations,
the
pre-specified
maximum
dose
level
(10
mg/kg)
was
reached
without
identification
of
a
maximum
tolerated
dose
(MTD).
The
majority
of
adverseevents,
or
AEs,
related
to
treatment
have
been
mild
to
moderate
(Grade
1/2)
in
severity,
and
no
significant
immune-mediated
adverse
events
typically
associatedwith
checkpoint
blockade
have
been
observed.
Durable,
multi-year
clinical
benefit
was
demonstrated
in
select
patients
without
additional
anticancer
therapy,including
a
complete
response
in
a
patient
with
Hodgkin
lymphoma
(ongoing
at
last
follow-up
at
2.8
years)
and
a
partial
response
in
a
patient
with
renal
cellcarcinoma
(ongoing
at
last
follow-up
at
3.7
years).
In
addition,
a
patient
with
renal
cell
carcinoma
that
experienced
significant
stable
disease
(4+
years)subsequently
achieved
a
partial
response
maintained
through
last
follow-up
at
4.6+
years
without
additional
anticancer
therapy.
Twelve
patients
experienced
stabledisease
up
to
14
months.
Final
results
from
the
study
in
patients
with
solid
tumors
were
published
in
the
Journal of Clinical Oncology in
April
2017.
Phase
1/2
Varlilumab/Opdivo®
Combination
Study:
In
2014,
we
entered
into
a
clinical
trial
collaboration
with
Bristol-Myers
Squibb
to
evaluate
thesafety,
tolerability
and
preliminary
efficacy
of
varlilumab
and
Opdivo,
Bristol-Myers
Squibb's
PD-1
immune
checkpoint
inhibitor,
in
a
Phase
1/2
study.
Under
theterms
of
this
clinical
trial
collaboration,
Bristol-Myers
Squibb
made
a
one-time
payment
to
us
of
$5.0
million,
and
the
companies
amended
the
terms
of
our
existinglicense
agreement
with
Medarex
(acquired
by
Bristol-Myers
Squibb)
related
to
our
CD27
program
whereby
certain
future
milestone
payments
were
waived
andfuture
royalty
rates
were
reduced
that
may
have
been
due
from
us
to
Medarex.
In
return,
Bristol-Myers
Squibb
was
granted
a
time-limited
right
of
first
negotiationif
we
wish
to
out-license
varlilumab.
The
companies
also
agreed
to
work
exclusively
with
each
other
to
explore
anti-PD-1
antagonist
antibody
and
anti-CD27agonist
antibody
combination
regimens.
The
clinical
trial
collaboration
provides
that
the
companies
will
share
development
costs
and
that
we
will
be
responsiblefor
conducting
the
Phase
1/2
study.6 Table
of
Contents
The
Phase
1/2
study
was
initiated
in
January
2015
and
is
being
conducted
in
adult
patients
with
multiple
solid
tumors
to
assess
the
safety
and
tolerability
ofvarlilumab
at
varying
doses
when
administered
with
Opdivo,
followed
by
a
Phase
2
expansion
to
evaluate
the
activity
of
the
combination
in
disease
specificcohorts.
Data
(n=36)
from
the
Phase
1
dose-escalation
portion
of
the
study
were
presented
in
an
oral
presentation
at
the
American
Society
of
Clinical
Oncology
AnnualMeeting
in
June
2017.
The
majority
of
patients
had
PD-L1
negative
tumor
at
baseline
and
presented
with
stage
IV,
heavily
pre-treated
disease.
80%
of
patientsenrolled
presented
with
refractory
or
recurrent
colorectal
(n=21)
or
ovarian
cancer
(n=8),
a
population
expected
to
have
minimal
response
to
checkpoint
blockade.The
primary
objective
of
the
Phase
1
portion
of
the
study
was
to
evaluate
the
safety
and
tolerability
of
the
combination.
The
combination
was
well
tolerated
at
allvarlilumab
dose
levels
tested
without
any
evidence
of
increased
autoimmunity
or
inappropriate
immune
activation.
Marked
changes
in
the
tumor
microenvironmentincluding
increased
infiltrating
CD8+
T
cells
and
increased
PD-L1
expression,
which
have
been
shown
to
correlate
with
a
greater
magnitude
of
treatment
effectfrom
checkpoint
inhibitors
in
other
clinical
studies,
were
observed.
Additional
evidence
of
immune
activity,
such
as
increase
in
inflammatory
chemokines
anddecrease
in
T
regulatory
cells,
was
also
noted.
Notable
disease
control
was
also
observed
(stable
disease
or
better
for
at
least
3
months),
considering
the
stage
IVpatient
population
contained
mostly
(80%)
colorectal
and
ovarian
cases:
0.1
mg/kg
varlilumab
+
240
mg
Opdivo:
1/5
(20%),
1
mg/kg
varlilumab
+
240
mgOpdivo:
5/15
(33%)
and
10
mg/kg
varlilumab
+
240
mg
Opdivo:
6/15
(40%).
Three
partial
responses
(PR)
were
observed.
A
patient
with
PD-L1
negative,
MMR
proficient
(MSI-low)
colorectal
cancer,
typically
unlikely
to
respond
tocheckpoint
blockade
monotherapy,
achieved
a
confirmed
PR
(95%
decrease
in
target
lesions)
and,
following
completion
of
combination
treatment,
continues
toreceive
treatment
with
Opdivo
monotherapy
at
31+
months.
A
patient
with
low
PD-L1
(5%
expression)
squamous
cell
head
and
neck
cancer
achieved
a
confirmedPR
(59%
shrinkage)
and
experienced
PFS
of
6.7
months.
A
patient
with
PD-L1
negative
ovarian
cancer
experienced
a
single
timepoint
PR
(49%
shrinkage)
butdiscontinued
treatment
to
a
dose-limiting
toxicity
(immune
hepatitis,
an
event
known
to
be
associated
with
checkpoint
inhibition
therapy).
A
subgroup
analysis
wasconducted
in
patients
with
ovarian
cancer
based
on
an
observed
increase
of
PD-L1
and
tumor-infiltrating
lymphocytes
in
this
patient
population.
In
patients
withpaired
baseline
and
on-treatment
biopsies
(n=13),
only
15%
were
PD-L1
positive
(
³
1%
tumor
cells)
at
baseline
compared
to
77%
during
treatment
(p=0.015).Patients
with
increased
tumor
PD-L1
expression
and
tumor
CD8
T
cells
correlated
with
better
clinical
outcome
with
treatment
(stable
disease
or
better).
The
Phase
2
portion
of
the
study
opened
to
enrollment
in
April
2016
and
completed
enrollment
in
January
2018
with
cohorts
in
colorectal
cancer
(n=21),ovarian
cancer
(n=58),
head
and
neck
squamous
cell
carcinoma
(n=24),
renal
cell
carcinoma
(n=14)
and
glioblastoma
(n=22).
The
primary
objective
of
the
Phase
2cohorts
is
ORR,
except
glioblastoma,
where
the
primary
objective
is
the
rate
of
12-month
OS.
Secondary
objectives
include
pharmacokinetic
assessments,determining
the
immunogenicity
of
varlilumab
when
given
in
combination
with
Opdivo,
evaluating
alternate
dosing
schedules
of
varlilumab
and
further
assessingthe
anti-tumor
activity
of
combination
treatment.
We
plan
to
work
with
Bristol-Myers
Squibb
to
present
data
from
the
study
at
future
medical
meetings
in
2018.
Third-Party
Sponsored
Studies:
We
have
also
entered
into
a
CRADA
with
the
NCI
under
which
NCI
is
sponsoring
a
Phase
2
study
of
varlilumab
incombination
with
nivolumab
in
relapsed
or
refractory
aggressive
B-cell
lymphomas.
Patients
receive
either
nivolumab
alone
or
the
combination.
The
primaryoutcome
measure
is
ORR.
Secondary
outcome
measures
include
DOR,
safety,
PFS
and
OS.
The
study
opened
to
enrollment
in
January
2018
and
is
expected
toenroll
106
patients.7 Table
of
ContentsCDX-3379
CDX-3379
is
a
human
monoclonal
antibody
with
half-life
extension
designed
to
block
the
activity
of
ErbB3
(HER3).
We
believe
ErbB3
may
be
an
importantreceptor
regulating
cancer
cell
growth
and
survival
as
well
as
resistance
to
targeted
therapies
and
is
expressed
in
many
cancers,
including
head
and
neck,
thyroid,breast,
lung
and
gastric
cancers,
as
well
as
melanoma.
We
believe
the
proposed
mechanism
of
action
for
CDX-3379
sets
it
apart
from
other
drugs
in
development
inthis
class
due
to
its
ability
to
block
both
ligand-independent
and
ligand-dependent
ErbB3
signaling
by
binding
to
a
unique
epitope.
It
has
a
favorable
pharmacologicprofile,
including
a
longer
half-life
and
slower
clearance
relative
to
other
drug
candidates
in
this
class.
We
believe
CDX-3379
also
has
potential
to
enhance
anti-tumor
activity
and/or
overcome
resistance
in
combination
with
other
targeted
and
cytotoxic
therapies
to
directly
kill
tumor
cells.
Tumor
cell
death
and
the
ensuingrelease
of
new
tumor
antigens
has
the
potential
to
serve
as
a
focus
for
combination
therapy
with
immuno-oncology
approaches,
even
in
refractory
patients.
CDX-3379
has
been
evaluated
in
three
Phase
1
studies
for
the
treatment
of
multiple
solid
tumors
that
express
ErbB3
and
is
currently
being
evaluated
is
a
Phase
2
study
incombination
with
cetuximab
in
cetuximab-resistant,
advanced
head
and
neck
squamous
cell
carcinoma.
The
most
recent
data
for
CDX-3379
were
reported
from
a
Phase
1a/1b
study
conducted
in
solid
tumors.
The
study
included
a
single-agent,
dose-escalationportion
and
combination
expansion
cohorts.
The
single-agent,
dose-escalation
portion
of
the
study
did
not
identify
an
MTD,
and
there
were
no
dose
limitingtoxicities.
The
most
common
adverse
events
included
rash
and
diarrhea
and
were
predominantly
grade
1
or
2.
Four
combination
arms
across
multiple
tumor
typeswere
added
to
evaluate
CDX-3379
with
several
drugs
that
target
EGFR,
HER2
or
BRAF.
They
include
combinations
with
Erbitux®
(n=16),
Tarceva®
(n=8),Zelboraf®
(n=9)
and
Herceptin®
(n=10).
Patients
had
advanced
disease
and
were
generally
heavily
pretreated.
Across
the
combination
arms,
the
most
frequentadverse
events
were
diarrhea,
nausea,
rash
and
fatigue.
Objective
responses
were
observed
in
the
Erbitux
and
Zelboraf
combination
arms.
In
the
Erbitux
arm,
therewas
one
durable
complete
response
in
a
patient
with
head
and
neck
cancer,
who
had
been
previously
treated
with
Erbitux
and
was
refractory.
In
the
Zelboraf
arm,there
were
two
partial
responses
in
patients
who
had
lung
cancer,
one
of
whom
had
been
previously
treated
with
Tafinlar®
and
was
considered
refractory,
as
wellas
a
single
timepoint
partial
response
in
a
patient
with
thyroid
cancer.
Initial
data
were
presented
at
the
American
Society
of
Clinical
Oncology
Annual
Meeting
inJune
2016.
We
have
initiated
an
open-label
Phase
2
study
in
combination
with
Erbitux
in
approximately
30
patients
with
human
papillomavirus
(HPV)
negative,
Erbitux-resistant,
advanced
head
and
neck
squamous
cell
carcinoma
who
have
previously
been
treated
with
an
anti-PD1
checkpoint
inhibitor,
a
population
with
limitedoptions
and
a
particularly
poor
prognosis.
We
opened
the
study
to
enrollment
in
November
2017.
The
primary
objective
of
the
study
is
objective
response
rate.Second
objectives
include
assessments
of
clinical
benefit
response
(CBR),
DOR,
PFS
and
OS,
and
safety
and
pharmacokinetics
associated
with
the
combination.CDX-014
CDX-014
is
a
human
monoclonal
ADC
that
targets
T
cell
immunoglobulin
and
mucin
domain
1,
or
TIM-1.
TIM-1
expression
is
upregulated
in
severalcancers,
most
notably
renal
cell
and
ovarian
carcinomas,
and
is
associated
with
a
more
malignant
phenotype
of
renal
cell
carcinoma
(RCC)
and
tumor
progression.TIM-1
has
restricted
expression
in
healthy
tissues,
making
it
potentially
amenable
to
an
ADC
approach.
The
TIM-1
antibody
is
linked
to
MMAE
using
SeattleGenetics'
proprietary
technology.
The
ADC
is
designed
to
be
stable
in
the
bloodstream
but
to
release
MMAE
upon
internalization
into
TIM-1-expressing
tumorcells,
resulting
in
a
targeted
cell-killing
effect.
CDX-014
has
shown
anti-tumor
activity
in
preclinical
models
of
ovarian
and
renal
cancers.8 Table
of
Contents
In
July
2016,
we
announced
that
enrollment
had
opened
in
a
Phase
1/2
study
of
CDX-014
to
patients
with
both
clear
cell
and
papillary
RCC.
In
January
2018,we
amended
the
protocol,
converting
the
study
to
Phase
1,
expanding
enrollment
to
include
patients
with
ovarian
clear
cell
carcinoma
and
enabling
the
evaluationof
alternate
dosing
regimens.
Enrollment
is
ongoing.
The
study
includes
a
dose-escalation
portion
across
three
separate
cohorts
to
determine
the
MTD
followed
byexpansion
cohorts
of
up
to
15
patients
each
to
assess
the
preliminary
anti-tumor
activity
of
CDX-014,
as
measured
by
objective
response
rate.
Secondary
objectivesinclude
safety
and
tolerability,
pharmacokinetics,
immunogenicity
and
additional
measures
of
anti-tumor
activity.CDX-1140
CDX-1140
is
a
fully
human
antibody
targeted
to
CD40,
a
key
activator
of
immune
response
which
is
found
on
dendritic
cells,
macrophages
and
B
cells
and
isalso
expressed
on
many
cancer
cells.
Potent
CD40
agonist
antibodies
have
shown
encouraging
results
in
early
clinical
studies;
however,
systemic
toxicityassociated
with
broad
CD40
activation
has
limited
their
dosing.
CDX-1140
has
unique
properties
relative
to
other
CD40
agonist
antibodies:
potent
agonist
activityis
independent
of
Fc
receptor
interaction,
contributing
to
more
consistent,
controlled
immune
activation;
CD40L
binding
is
not
blocked,
leading
to
potentialsynergistic
effects
of
agonist
activity
near
activated
T
cells
in
lymph
nodes
and
tumors;
and
the
antibody
does
not
promote
cytokine
production
in
whole
bloodassays.
CDX-1140
has
shown
direct
anti-tumor
activity
in
preclinical
models
of
lymphoma.
Preclinical
studies
of
CDX-1140
clearly
demonstrate
strong
immuneactivation
effects
and
low
systemic
toxicity
and
support
the
design
of
the
Phase
1
study
to
rapidly
identify
the
dose
for
characterizing
single-agent
and
combinationactivity.
We
initiated
a
Phase
1
study
of
CDX-1140
in
November
2017.
This
study,
which
is
expected
to
enroll
up
to
approximately
105
patients
with
recurrent,
locallyadvanced
or
metastatic
solid
tumors,
is
designed
to
determine
the
MTD
during
a
dose-escalation
phase
(0.01
to
3.0
mg/kg
once
every
four
weeks
until
confirmedprogression
or
intolerance)
and
to
recommend
a
dose
level
for
further
study
in
a
subsequent
expansion
phase.
The
expansion
is
designed
to
further
evaluate
thetolerability
and
biologic
effects
of
selected
dose(s)
of
CDX-1140
in
specific
tumor
types.
Secondary
objectives
include
assessments
of
safety
and
tolerability,pharmacodynamics,
pharmacokinetics,
immunogenicity
and
additional
measures
of
anti-tumor
activity,
including
clinical
benefit
rate.
We
believe
that
the
potentialfor
CDX-1140
will
be
best
defined
in
combination
studies
with
other
immunotherapies
or
conventional
cancer
treatments.CDX-301
CDX-301,
a
recombinant
FMS-like
tyrosine
kinase
3
ligand,
or
Flt3L,
is
a
hematopoietic
cytokine
that
uniquely
expands
dendritic
cells
and
hematopoieticstem
cells
in
combination
with
other
agents
to
potentiate
the
anti-tumor
response.
Depending
on
the
setting,
cells
expanded
by
CDX-301
promote
either
enhancedor
permissive
immunity.
CDX-301
is
in
clinical
development
for
multiple
cancers,
in
combination
with
vaccines,
adjuvants
and
other
treatments
that
release
tumorantigens.
We
licensed
CDX-301
from
Amgen
Inc.
in
March
2009
and
believe
CDX-301
may
hold
significant
opportunity
for
synergistic
development
incombination
with
other
proprietary
molecules
in
our
portfolio.
A
Phase
1
study
of
CDX-301
evaluated
seven
different
dosing
regimens
of
CDX-301
to
determine
the
appropriate
dose
for
further
development
based
onsafety,
tolerability
and
biological
activity.
The
data
from
the
study
were
consistent
with
previous
clinical
experience
and
demonstrated
that
CDX-301
has
anacceptable
safety
profile
to
date
and
can
mobilize
hematopoietic
stem
cell
(HSC)
populations
in
healthy
volunteers.9 Table
of
Contents
CDX-301's
potential
activity
is
being
explored
in
investigator
sponsored
and
collaborative
studies.
A
Phase
2
study
of
CDX-301
in
combination
with
CDX-1401
is
being
conducted
in
malignant
melanoma
by
the
Cancer
Immunotherapy
Trials
Network
(CITN)
under
a
CRADA
with
the
Cancer
Therapy
EvaluationProgram
of
the
NCI.
This
study
was
designed
to
determine
the
activity
of
CDX-1401
with
or
without
CDX-301
in
melanoma.
The
primary
outcome
measure
of
thestudy
is
immune
response
to
NY-ESO-1.
Secondary
outcome
measures
include
analysis
and
characterization
of
peripheral
blood
mononuclear
cells
(dendritic
cells,T
cells,
natural
killer
cells,
etc.),
additional
immune
monitoring,
safety
and
clinical
outcomes
(survival
and
time
to
tumor
recurrence).
Enrollment
is
complete,
andinitial
results
were
presented
at
the
2016
American
Society
of
Clinical
Oncology
(ASCO)
Annual
Meeting.
The
data
confirmed
that
CDX-1401
is
capable
ofdriving
NY-ESO-1
immunity
and
further
demonstrated
the
potential
of
CDX-301
as
a
combination
agent
for
enhancing
tumor
specific
immune
responses.
The
NCIand
CITN
are
planning
to
enroll
additional
cohorts
to
investigate
alternative
regimens
of
CDX-301.
CDX-301
is
also
being
studied
in
a
combination
cohort
with
glembatumumab
vedotin
in
a
Phase
2
study
in
metastatic
melanoma
(opened
to
enrollment
inJanuary
2018)
and
is
being
studied
in
ongoing
and
planned
investigator-sponsored
and
collaborative
studies.CDX-1401
CDX-1401,
developed
from
our
APC
Targeting
Technology,
is
an
NY-ESO-1-antibody
fusion
protein
for
immunotherapy
in
multiple
solid
tumors.
CDX-1401,
which
is
administered
with
an
adjuvant,
is
composed
of
the
cancer-specific
antigen
NY-ESO-1
fused
to
a
fully
human
antibody
that
binds
to
DEC-205
forefficient
delivery
to
dendritic
cells.
Delivery
of
tumor-specific
proteins
directly
to
dendritic
cells
in vivo elicits
potent,
broad,
anti-tumor
immune
responses
acrosspopulations
with
different
genetic
backgrounds.
In
humans,
NY-ESO-1
has
been
detected
in
20%
to
30%
of
melanoma,
lung,
esophageal,
liver,
gastric,
ovarian
andbladder
cancers,
and
up
to
70%
of
synovial
sarcomas,
thus
representing
a
broad
opportunity.
CDX-1401
is
being
developed
for
the
treatment
of
malignantmelanoma
and
a
variety
of
solid
tumors
which
express
the
cancer
antigen
NY-ESO-1.
Preclinical
studies
have
shown
that
CDX-1401
treatment
results
in
activationof
human
T
cell
responses
against
NY-ESO-1.
We
completed
a
Phase
1
study
of
CDX-1401
which
assessed
the
safety,
immunogenicity
and
clinical
activity
of
escalating
doses
of
CDX-1401
with
TLRagonists
(resiquimod
and/or
poly-ICLC)
in
45
patients
with
advanced
malignancies
refractory
to
all
available
therapies.
Results
were
published
in
ScienceTranslational Medicine in
April
2014.
CDX-1401's
potential
activity
is
being
explored
in
investigator
sponsored
and
collaborative
studies.
A
Phase
2
study
of
CDX-1401
in
combination
with
CDX-301
is
being
conducted
in
malignant
melanoma
by
the
CITN
under
a
CRADA
with
the
Cancer
Therapy
Evaluation
Program
of
the
NCI.
This
study
was
designed
todetermine
the
activity
of
CDX-1401
with
or
without
CDX-301
in
melanoma.
The
primary
outcome
measure
of
the
study
is
immune
response
to
NY-ESO-1.Enrollment
is
complete,
and
initial
results
were
presented
at
the
2016
ASCO
Annual
Meeting.
The
data
confirmed
that
CDX-1401
is
capable
of
driving
NY-ESO-1immunity
and
further
demonstrated
the
potential
of
CDX-301
as
a
combination
agent
for
enhancing
tumor
specific
immune
responses.
The
NCI
and
CITN
areplanning
to
enroll
additional
cohorts
to
investigate
alternative
regimens
of
CDX-301.
In
September
2017,
a
randomized,
open-label
Phase
1/2
study
of
CDX-1401
in
combination
with
atezolizumab
and
SGI-110
opened
to
enrollment
in
recurrentovarian,
fallopian
tube,
or
primary
peritoneal
cancer.
This
study
is
being
conducted
under
a
CRADA
with
the
NCI
Division
of
Cancer
Treatment
and
Diagnosis
andis
designed
to
determine
the
activity
of
atezolizumab
alone,
atezolizumab
plus
SGI-110
and
atezolizumab
plus
SGI-110
plus
CDX-1401.
The
primary
outcome
ofthe
Phase
1
dose-escalation
study
is
safety
and
only
evaluates
atezolizumab
alone
and
in
combination
with
SGI-110.10 Table
of
ContentsThe
Phase
2
portion
of
the
study
is
expected
to
add
CDX-1401.
The
primary
outcome
of
the
Phase
2
portion
of
the
study
is
a
comparison
of
PFS
between
the
threecohorts.
Other
studies
are
ongoing
and
planned
through
investigator-sponsored
and
collaborative
agreements.Anti-KIT Program: CDX-0158 and CDX-0159
KIT
activation
is
implicated
in
many
disease
processes
including
some
cancers,
neurofibromatosis,
mast
cell-related
diseases
and
autoimmune
diseases.
Weconducted
a
Phase
1
dose-escalation
study
of
CDX-0158,
a
humanized
monoclonal
antibody
that
is
a
potent
inhibitor
of
wildtype
KIT,
in
28
patients
with
advancedrefractory
GIST
and
other
KIT
positive
tumors
with
doses
up
to
15
mg/kg.
No
evidence
of
myelosuppression,
an
effect
commonly
associated
with
KIT
inhibition,was
observed
in
this
study.
Approximately
two-thirds
of
the
patients
on
study
had
infusion
reactions
that
were
manageable
with
pre-medication
and
longer
infusiontimes.
The
biomarker
data
showed
evidence
of
dose-related
KIT
engagement,
and
two
patients
experienced
partial
metabolic
responses
on
fluorodeoxyglucose(FDG)-PET
scan;
however,
these
PET
responses
were
not
associated
with
tumor
shrinkage.
Given
the
infusion
reactions,
modifications
have
been
introduced
into
the
Fc
portion
of
the
CDX-0158
antibody
to
prevent
these
interactions,
which
shouldeliminate
the
potential
for
Fc
receptor
mediated
agonist
activity.
This
second-generation
version,
called
CDX-0159,
also
includes
modifications
to
increase
the
half-life
of
the
antibody,
giving
it
an
additional
advantage
over
CDX-0158.
CDX-0159
is
being
fully
developed
in-house
with
the
intention
of
replacing
CDX-0158
inclinical
development.
We
expect
manufacturing
and
IND-enabling
efforts
for
CDX-0159
will
be
completed
in
2018.Development
StrategyImmunotherapy Platform:
We
believe
there
is
untapped
potential
in
immunotherapy
that
can
be
captured
through
the
right
combination
and/or
sequence
of
therapeutic
agents.Immunotherapy
approaches
have
encountered
difficulties
when
following
standard
drug
development.
The
mechanisms
of
action
are
complex;
activity
is
generallynot
dependent
on
highest
tolerated
dose;
and
patient
response
is
highly
variable.
Our
understanding
of
the
immune
system,
cancer's
effect
on
immune
mediatedmechanisms
and
the
impact
of
conventional
therapies
on
the
immune
system
provide
a
new
rationale
for
combining
therapies
that
may
lead
to
significant
clinicalbenefit
for
patients
with
cancer
or
other
diseases.
Our
intent
is
to
leverage
this
knowledge
and
the
availability
of
good,
tested
products
that
may
not
have
optimal
clinical
activity
as
a
monotherapy,
but
whichwe
believe
may
be
very
effective
in
combination
approaches.
Our
goal
is
to
design
and
develop
targeted
products
that
maximize
the
efficacy
of
immunotherapyregimens
through
combinations
of
therapeutic
agents
in
significant
and
growing
markets.
We
establish
governmental
and
corporate
alliances
to
fund
developmentwhen
appropriate
and
intend
to
commercialize
our
products
either
through
our
own
direct
selling
efforts
or,
for
products
which
we
cannot
develop
ourselvesthrough
to
commercialization,
through
corporate
partners.
This
approach
allows
us
to
maximize
the
overall
value
of
our
technology
and
product
portfolios
whilebest
ensuring
the
expeditious
development
of
each
individual
product.
Factors
that
may
significantly
harm
our
commercial
success,
and
ultimately
the
market
price
of
our
common
stock,
include
but
are
not
limited
to,announcements
of
technological
innovations
or
new
commercial
products
by
our
competitors,
disclosure
of
unsuccessful
results
of
clinical
testing
or
regulatoryproceedings
and
governmental
approvals,
adverse
developments
in
patent
or
other
proprietary
rights,
public
concern
about
the
safety
of
products
developed
by
usand
general
economic
and
market
conditions.
See
"Item
1A.
Risk
Factors."11 Table
of
ContentsPartnerships
We
may
enter
into
co-development
and
commercialization
partnerships
for
any
of
our
programs
where
appropriate,
including
glembatumumab
vedotin.
In
thepast,
we
have
entered
into
collaborative
partnership
agreements
with
pharmaceutical
and
other
companies
and
organizations
that
provided
financial
and
otherresources,
including
capabilities
in
research,
development,
manufacturing,
and
sales
and
marketing,
to
support
our
research
and
development
programs
and
mayenter
into
more
of
them
in
the
future.
Partnership
agreements
may
terminate
without
benefit
to
us
if
the
underlying
products
are
not
fully
developed.
If
we
fail
to
meet
our
obligations
under
theseagreements,
they
could
terminate,
and
we
might
need
to
enter
into
relationships
with
other
collaborators
and
to
spend
additional
time,
money
and
other
valuableresources
in
the
process.
We
cannot
predict
whether
our
collaborators
will
continue
their
development
efforts
or,
if
they
do,
whether
their
efforts
will
achievesuccess.
Many
of
our
collaborators
face
the
same
kinds
of
risks
and
uncertainties
in
their
businesses
that
we
face.
A
delay
or
setback
to
a
partner
will,
at
aminimum,
delay
the
commercialization
of
any
affected
drug
candidates,
and
may
ultimately
prevent
it.
Moreover,
any
partner
could
breach
its
agreement
with
us
orotherwise
not
use
best
efforts
to
promote
our
products.
A
partner
may
choose
to
pursue
alternative
technologies
or
products
that
compete
with
our
technologies
ordrug
candidates.
In
either
case,
if
a
partner
failed
to
successfully
develop
one
of
our
drug
candidates,
we
would
need
to
find
another
partner.
Our
ability
to
do
sowould
depend
upon
our
legal
right
to
do
so
at
the
time
and
whether
the
product
remained
commercially
viable.Research
Collaboration
and
License
Agreements
We
have
entered
into
license
agreements
whereby
we
have
received
licenses
or
options
to
license
technology,
specified
patents
and/or
patent
applications.These
license
and
collaboration
agreements
generally
provide
for
royalty
payments
equal
to
specified
percentages
of
product
sales,
annual
license
maintenancefees,
continuing
patent
prosecution
costs
and
potential
future
milestone
payments
to
third
parties
upon
the
achievement
of
certain
development,
regulatory
and/orcommercial
milestones.
Summarized
below
are
our
significant
research
collaboration
and
license
agreements
for
our
later-stage
drug
candidates.Medarex, Inc. (Medarex), which was acquired by Bristol-Myers Squibb Company (BMS)
We
and
Medarex
have
entered
into
an
assignment
and
license
agreement,
as
amended,
that
provides
for
the
assignment
of
certain
patent
and
other
intellectualproperty
rights
and
a
license
to
certain
Medarex
technology
related
to
the
Company's
APC
Targeting
Technology™
and
an
anti-mannose
receptor
product.
Underthe
terms
of
the
agreement,
we
may
be
required
to
pay
royalties
in
the
low-single
digits
on
any
net
product
sale
of
a
licensed
royalty-bearing
product
or
anti-mannose
product
to
Medarex
until
the
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenth
anniversary
of
the
first
commercial
sale
ofsuch
licensed
product.
Under
a
license
agreement
with
Medarex,
as
amended,
we
acquired
access
to
the
UltiMab
technology
to
develop
and
commercialize
human
antibodies
toCD27,
including
varlilumab.
We
may
be
required
to
pay
Medarex
royalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
sales
with
respect
to
thedevelopment
and
commercialization
of
varlilumab
until
the
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenth
anniversary
of
the
firstcommercial
sale
of
such
licensed
product.Rockefeller University (Rockefeller)
Under
a
license
agreement
with
Rockefeller,
we
acquired
the
exclusive
worldwide
rights
to
human
DEC-205
receptor,
with
the
right
to
sublicense
thetechnology.
The
license
grant
is
exclusive
except
that12 Table
of
ContentsRockefeller
may
use
and
permit
other
nonprofit
organizations
to
use
the
human
DEC-205
receptor
patent
rights
for
educational
and
research
purposes.
We
may
berequired
to
pay
Rockefeller
milestones
of
up
to
$3.8
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
of
a
product
targeting
thelicensed
receptor
and
royalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
sales
with
respect
to
development
and
commercialization
of
the
humanDEC-205
receptor.University of Southampton, UK (Southampton)
Under
a
license
agreement
with
Southampton,
we
acquired
the
rights
to
develop
human
antibodies
towards
CD27,
a
potentially
important
target
forimmunotherapy
of
various
cancers.
We
may
be
required
to
pay
Southampton
milestones
of
up
to
approximately
$1.0
million
upon
obtaining
first
approval
forcommercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
with
respect
to
development
and
commercialization
ofvarlilumab.Amgen Inc. (Amgen)
Under
a
license
agreement
with
Amgen,
we
acquired
the
exclusive
rights
to
CDX-301
and
CD40
ligand,
or
CD40L.
CDX-301
and
CD40L
are
immunemodulating
molecules
that
increase
the
numbers
and
activity
of
immune
cells
that
control
immune
responses.
We
may
be
required
to
pay
Amgen
milestones
of
upto
$0.9
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
withrespect
to
development
and
commercialization
of
the
technology
licensed
from
Amgen,
including
CDX-301.Amgen Fremont
Under
a
license
agreement
with
Amgen
Fremont,
we
acquired
rights
to
develop
fully-human
monoclonal
antibody
therapeutics.
In
May
2009,
an
amendmentto
the
license
agreement
was
entered
into
related
to
our
exclusive
rights
to
develop
and
commercialize
glembatumumab
vedotin,
CDX-014
and
antibodies
to
10other
licensed
antigens.
Under
the
amendment,
we
and
Amgen
Fremont
agreed
to
modify
the
terms
of
our
existing
cross-license
of
antigens
whereby
our
amendedlicense
is
fully
paid-up
and
royalty-free.Seattle Genetics, Inc. (Seattle Genetics)
Under
a
license
agreement
with
Seattle
Genetics,
we
acquired
the
rights
to
proprietary
ADC
technology,
with
the
right
to
sublicense,
for
use
with
ourproprietary
antibodies
for
the
potential
treatment
of
cancer.
Under
the
terms
of
the
agreement,
we
have
the
responsibility
to
use
commercially
reasonable
efforts
todevelop,
commercialize
and
market
such
treatment.
In
furtherance
of
these
responsibilities,
technical
assistance
from
Seattle
Genetics
is
available
to
us
asnecessary.
We
may
be
required
to
pay
Seattle
Genetics
milestones
of
up
to
$5.0
million
and
$8.5
million
for
glembatumumab
vedotin
and
CDX-014,
respectively,upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
mid-single
digits
on
any
net
product
sales
with
respect
todevelopment
and
commercialization
of
these
drug
candidates.
The
term
of
the
agreement
varies
country
to
country
and
may
be
until
the
later
of
the
expiration
ofthe
last
relevant
patent
or
the
tenth
anniversary
of
the
first
commercial
sale.
The
agreement
allows
us
to
terminate
with
prior
written
notice,
with
both
parties
beingable
to
terminate
the
agreement
for
an
uncured
material
breach
or
insolvency
of
the
other
party.Yale University (Yale)
Under
a
license
agreement
with
Yale,
we
may
be
required
to
make
a
one-time
payment
to
Yale
of
$3.0
million
with
respect
to
each
therapeutic
or
prophylacticreceptor
tyrosine
kinase
(RTK)
royalty-bearing
product,
including
CDX-3379,
that
achieves
a
specified
commercial
milestone.
In
addition,
we13 Table
of
Contentsmay
be
required
to
pay
a
low
single-digit
royalty
on
annual
worldwide
net
sales
of
each
RTK
royalty-bearing
product,
including
CDX-3379.
Unless
earlierterminated
by
us
or
Yale,
the
Yale
license
agreement
is
due
to
expire
no
later
than
May
2038
but
may
expire
earlier
on
a
country-by-country
basis
under
specifiedcircumstances.MedImmune, LLC (MedImmune)
Under
an
agreement
with
MedImmune,
we
have
an
exclusive
license,
with
the
right
to
sublicense,
to
specified
patent
rights
and
know-how
that
are
controlledby
MedImmune
and
relate
to
the
research,
development,
manufacture
and
commercialization
of
CDX-3379.
We
may
be
required
to
pay
Medimmune
up
to$45.0
million
upon
obtaining
specified
regulatory
and
development
milestones
in
the
first
indication
of
CDX-3379.
In
addition,
we
may
be
required
to
payMedImmune
one-time
milestone
payments
of
up
to
$125.0
million
if
specified
annual
net
sale
thresholds
are
met
related
to
the
first
indication
of
CDX-3379.
Wemay
also
be
required
to
pay
MedImmune
a
tiered
royalty
on
annual
net
sales
of
CDX-3379
at
rates
ranging
from
high
single-digit
to
low
teens
percentages.
Theseroyalties
may
be
reduced
in
specified
circumstances
and
are
payable
on
a
product-by-product
and
country-by-country
basis
until
the
later
to
occur
of
ten
years
afterthe
first
commercial
sale
of
the
product
in
that
country
and
the
expiration
of
MedImmune's
patent
rights
that
cover
the
sale
of
the
product
in
that
country.
We
mayalso
be
required
to
pay
specified
royalties
on
annual
net
sales
of
CDX-3379
at
a
rate
in
the
low
single
digits
to
certain
other
third
parties
from
whom
MedImmunelicensed
certain
intellectual
property.Competition
The
biotechnology
and
pharmaceutical
industry
is
intensely
competitive
and
subject
to
rapid
and
significant
technological
change.
Many
of
the
products
thatwe
are
attempting
to
develop
and
commercialize
will
be
competing
with
existing
therapies.
Other
companies
are
pursuing
the
development
of
new
therapies
thattarget
the
same
diseases
and
conditions
that
we
are
targeting
and
may
compete
directly
with
our
drug
candidates.
We
face
competition
from
companies,
majoruniversities
and
research
institutions
in
the
United
States
and
abroad,
including
a
number
of
large
pharmaceutical
companies,
as
well
as
firms
specialized
in
thedevelopment
and
production
of
vaccines,
adjuvants
and
immunotherapeutic
delivery
systems.
Some
of
our
competitors
possess
substantially
greater
financial,technical
and
human
resources
than
we
possess.
Competitors
that
we
are
aware
of
that
have
initiated
a
pivotal
study
or
have
obtained
marketing
approval
for
a
potential
competitive
drug/device
forglembatumumab
vedotin
in
the
treatment
of
breast
cancer
include
AbbVie,
Astellas,
AstraZeneca,
Bristol-Myers
Squibb,
Immunomedics,
Merck,
NektarTherapeutics,
Novartis,
Pfizer,
Roche,
and
Tesaro.
Our
competitors
may
utilize
discovery
technologies
and
techniques
or
partner
with
collaborators
in
order
to
develop
products
more
rapidly
or
successfully
thanus
or
our
collaborators
are
able
to.
In
addition,
some
competitors
have
significantly
greater
experience
than
we
have
in
conducting
preclinical
and
nonclinicaltesting
and
human
clinical
trials
of
drug
candidates,
scaling
up
manufacturing
operations
and
obtaining
regulatory
approvals
of
drugs
and
manufacturing
facilities.Accordingly,
our
competitors
may
succeed
in
obtaining
regulatory
approval
for
drugs
more
rapidly
than
we
do.
If
we
obtain
regulatory
approval
and
commencecommercial
sales
of
our
drug
candidates,
we
also
will
compete
with
respect
to
manufacturing
efficiency
and
sales
and
marketing
capabilities,
areas
in
which
wecurrently
have
limited
experience.
In
addition,
academic
institutions,
government
agencies
and
other
public
and
private
organizations
conducting
research
may
seek
patent
protection
withrespect
to
potentially
competitive
products
or
technologies
and
may
establish
exclusive
collaborative
or
licensing
relationships
with
our
competitors.
Moreover,technology
controlled
by
third
parties
that
may
be
advantageous
to
our
business
may
be14 Table
of
Contentsacquired
or
licensed
by
our
competitors,
thereby
preventing
us
from
obtaining
technology
on
commercially
reasonable
terms,
if
at
all.
We
will
also
compete
for
theservices
of
third
parties
that
may
have
already
developed
or
acquired
internal
biotechnology
capabilities
or
made
commercial
arrangements
with
otherbiopharmaceutical
companies
to
target
the
diseases
on
which
we
have
focused
both
in
the
U.S.
and
outside
of
the
U.S.
We
also
face
competition
in
recruiting
and
retaining
highly
qualified
scientific
personnel
and
consultants
and
in
the
development
and
acquisition
oftechnologies.
Our
competitive
position
will
depend
upon
our
ability
to
attract
and
retain
qualified
personnel,
obtain
patent
protection
or
otherwise
develop
proprietaryproducts
or
processes
and
secure
sufficient
capital
resources
for
the
often
lengthy
period
between
technological
conception
and
commercial
sales.
We
will
requiresubstantial
capital
resources
to
complete
development
of
some
or
all
of
our
drug
candidates,
obtain
the
necessary
regulatory
approvals
and
successfullymanufacture
and
market
our
drug
candidates.
In
order
to
secure
capital
resources,
we
anticipate
having
to
sell
additional
capital
stock,
which
would
dilute
existingstockholders.
We
may
also
attempt
to
obtain
funds
through
research
grants
and
agreements
with
commercial
collaborators.
However,
these
types
of
funding
areuncertain
because
they
are
at
the
discretion
of
the
organizations
and
companies
that
control
the
funds.
As
a
result,
we
may
not
receive
any
funds
from
grants
orcollaborations.
Alternatively,
we
may
borrow
funds
from
commercial
lenders,
likely
at
high
interest
rates,
which
would
increase
the
risk
of
any
investment
in
us.Manufacturing
We
are
a
research
and
development
company
and
have
limited
experience
in
commercial
manufacturing.
Our
ability
to
conduct
late-stage
clinical
trials,
aswell
as
manufacture
and
commercialize
our
drug
candidates,
depends
on
the
ability
of
Contract
Manufacturing
Organizations
(CMOs)
to
manufacture
our
drugcandidates
on
a
large
scale
at
a
competitive
cost
and
in
accordance
with
current
Good
Manufacturing
Practices
(cGMP)
and
U.S.
and
foreign
regulatoryrequirements,
as
applicable.
We
also
rely
on
CMOs
for
packaging,
labeling,
storage
and
shipping
of
drug
product.
In
order
for
us
to
establish
our
own
commercialmanufacturing
facility,
we
would
require
substantial
additional
funds
and
would
need
to
hire
and
retain
significant
additional
personnel
and
comply
with
extensivecGMP
regulations
applicable
to
such
a
facility.
The
commercial
manufacturing
facility
would
also
need
to
be
licensed
for
the
production
of
our
drug
candidates
bythe
FDA.
We
therefore
work
with
CMOs
under
established
manufacturing
arrangements
that
comply
with
the
FDA's
requirements
and
other
regulatory
standards,although
there
is
no
assurance
that
the
manufacturing
will
be
successful.
To
date,
we
have
utilized
CMOs
for
the
manufacture
of
clinical
trial
supplies
of
glembatumumab
vedotin.
In
2017,
we
successfully
transferred
the
monoclonalantibody
(mAb)
intermediate
manufacturing
process
and
manufactured
a
cGMP
batch
at
Patheon
Biologics
in
Brisbane,
Australia.
Piramal
Healthcare
UK
Ltd.manufactures
the
antibody-drug
conjugate
with
the
vcMMAE
linker-toxin.
The
drug
substance
is
then
filled
and
packaged
at
our
drug
product
commercialmanufacturer,
BSP
Pharma.
We
rely
on
MilliporeSigma
for
supplying
suitable
quantities
of
vcMMAE.
Any
manufacturing
failures
or
delays
by
ourglembatumumab
vedotin
contract
manufacturers
or
suppliers
of
materials
could
cause
delays
in
our
glembatumumab
vedotin
clinical
studies,
including
theMETRIC
study
and/or
a
biologics
license
application
(BLA)
filing
and,
if
regulatory
approval
is
obtained,
commercial
launch
of
glembatumumab
vedotin.
We
operate
our
own
cGMP
manufacturing
facility
in
Fall
River,
Massachusetts,
to
produce
drug
substance
for
our
current
and
planned
early-stage
clinicaltrials.
Our
Fall
River
manufacturing
facility
has
250L
and
1000L
bioreactor
capacity
and
is
able
to
manufacture
in
compliance
with
FDA
regulations,
allowing
usto
distribute
drug
candidates
to
clinical
sites
in
the
U.S.
for
early-stage
clinical15 Table
of
Contentstrials.
We
currently
manufacture
CDX-1140,
CDX-301
and
CDX-1401
drug
substance
and
CDX-014
mAb
intermediate
in
our
Fall
River
facility
for
our
currentand
planned
Phase
1
and
Phase
2
clinical
trials.
CDX-014,
an
ADC,
is
then
manufactured
by
Lonza
(Visp).
We
expect
that
our
existing
clinical
supplies
of
CDX-3379
and
varlilumab
will
be
sufficient
to
carry
out
our
current
planned
clinical
development.
Additional
manufacturing
options
are
under
review
and
may
involveutilization
of
the
Fall
River
facility
and/or
a
CMO.
All
products
are
then
filled
and
packaged
at
contract
manufacturers.
Any
manufacturing
failures
or
complianceissues
at
contract
manufacturers
could
cause
delays
in
our
Phase
1
and
Phase
2
clinical
studies
for
these
drug
candidates.
The
manufacturing
processes
for
our
drug
candidates
and
immunotherapeutic
delivery
systems
utilize
known
technologies.
We
believe
that
the
drugcandidates
we
currently
have
under
development
can
be
scaled
up
to
permit
manufacture
in
commercial
quantities.
However,
there
can
be
no
assurance
that
we
willnot
encounter
difficulties
in
scaling
up
the
manufacturing
processes.
While
we
believe
that
there
is
currently
sufficient
capacity
worldwide
for
the
production
of
our
potential
products
through
CMOs,
establishing
long-termrelationships
with
contract
manufacturers
and
securing
multiple
sources
for
the
necessary
quantities
of
clinical
and
commercial
materials
required
can
be
achallenge
due
to
increasing
industry
demand
for
CMO
services.
Qualifying
the
initial
source
of
clinical
and
ultimately
commercial
material
is
a
time
consumingand
expensive
process
due
to
the
highly
regulated
nature
of
the
pharmaceutical/biotech
industry.
These
costs
may
be
mitigated
by
the
economies
of
scale
realized
incommercial
manufacture
and
product
sales.
The
key
difficulty
in
qualifying
more
than
one
source
for
each
product
is
the
duplicated
time
and
expense
in
doing
sowithout
the
potential
to
mitigate
these
costs
if
the
secondary
source
is
never
utilized.
We
currently
rely
on
sole
suppliers
for
key
components
of
our
drug
candidates,
including
vcMMAE
for
glembatumumab
vedotin
and
CDX-014
and
Hiltonol®for
CDX-1401.
While
we
work
with
the
suppliers
of
these
key
components
to
ensure
continuity
of
supply,
no
assurance
can
be
given
that
these
efforts
will
besuccessful.
In
addition,
due
to
regulatory
requirements
relating
to
the
qualification
of
suppliers,
we
may
not
be
able
to
establish
additional
or
replacement
sourceson
a
timely
basis
or
without
excessive
cost.
If
our
suppliers
were
to
terminate
our
arrangements
or
fail
to
meet
our
supply
needs
we
might
be
forced
to
delay
ourdevelopment
programs
or
we
could
face
disruptions
in
the
distribution
and
sale
of
any
drugs
for
which
we
obtain
regulatory
approval.
Use
of
third-party
manufacturers
limits
our
control
over
and
ability
to
monitor
the
manufacturing
process.
As
a
result,
we
may
not
be
able
to
detect
a
variety
ofproblems
that
may
arise
and
may
face
additional
costs
in
the
process
of
interfacing
with
and
monitoring
the
progress
of
our
contract
manufacturers.
If
third-partymanufacturers
fail
to
meet
our
manufacturing
needs
in
an
acceptable
manner,
we
would
face
delays
and
additional
costs
while
we
develop
internal
manufacturingcapabilities
or
find
alternate
third-party
manufacturers.
It
may
not
be
possible
to
have
multiple
third-party
manufacturers
ready
to
supply
us
with
needed
material
atall
or
without
incurring
significant
costs.Commercial
Organization
We
have
a
focused
commercial
team
with
broad
experience
in
marketing,
sales,
distribution
and
product
reimbursement.
We
have
also
developed
thecapability
to
provide
current
and
future
market
insights
to
our
research
and
development
organization
regarding
glembatumumab
vedotin
and
our
earlier-stage
drugcandidates.
In
the
future,
we
may
choose
to
expand
our
commercial
team
and
build
a
full-scale
commercial
organization
which
we
believe
could
provide
us
theopportunity
to
retain
marketing
rights
to
our
drug
candidates
and
commercialize
such
products
ourselves
where
we
deem
appropriate
or
pursue
strategicpartnerships
to
develop,
sell,
market
and
distribute
our
drug
candidates
where
we
deem
appropriate.
We
may
also
choose
to
enter
into
strategic
partnerships
todevelop,
sell,
market
and
distribute
our
other
drug
candidates,
including
glembatumumab
vedotin.16 Table
of
ContentsPatents,
Licenses
and
Proprietary
Rights
In
general,
our
intellectual
property
strategy
is
to
protect
our
technology
by
filing
patent
applications
and
obtaining
patent
rights
covering
our
own
technology,both
in
the
United
States
and
in
foreign
countries
that
we
consider
important
to
our
business.
In
addition,
we
have
acquired
and
will
seek
to
acquire
as
needed
ordesired,
exclusive
rights
of
others
through
assignment
or
license
to
complement
our
portfolio
of
patent
rights.
We
also
rely
on
trade
secrets,
unpatented
know-howand
technological
expertise
and
innovation
to
develop
and
maintain
our
competitive
position.Patents
The
successful
development
and
marketing
of
products
by
us
will
depend
in
part
on
our
ability
to
create
and
maintain
intellectual
property,
including
patentrights.
We
are
the
owner
or
exclusive
licensee
to
proprietary
patent
positions
in
the
areas
of
immunotherapy
technologies,
vaccine
technologies,
antibodytechnologies
and
complement
inhibitor
technology.
Although
we
continue
to
pursue
patent
protection
for
our
products,
no
assurance
can
be
given
that
any
pendingapplication
will
issue
as
a
patent,
that
any
issued
patent
will
have
a
scope
that
will
be
of
commercial
benefit
or
that
we
will
be
able
to
successfully
enforce
ourpatent
position
against
infringers.
We
routinely
review
our
patent
portfolio
and
adjust
our
strategies
for
prosecution
and
maintenance
of
individual
cases
accordingto
a
number
of
factors,
including
program
priorities,
stage
of
development
and
patent
term.
We
own
or
license
rights
under
more
than
300
granted
patents
and
national
and
regional
patent
applications
in
the
U.S.
and
in
major
international
territoriescovering
inventions
relating
to
our
business.
The
key
patents
and
patent
applications
owned
by
us
or
licensed
to
us
that
we
consider
important
to
our
businessinclude
the
following
(the
indicated
and
estimated
patent
expiry
dates
are
the
estimated
expirations
if
all
maintenance
fees
and
annuities
are
paid
when
due,
and
donot
include
any
possible
additional
terms
for
Patent
Term
Extensions
(PTEs)
or
Supplementary
Protection
Certificates
(SPCs),
if
these
may
be
secured
in
duecourse):•Our
patent
portfolio
for
glembatumumab
vedotin
includes
issued
patents
in
the
U.S.,
Europe,
Japan,
Australia
and
Canada.
If
maintained
to
full
termin
due
course,
these
would
have
estimated
patent
expiry
dates
in
2025.
In
addition,
patent
rights
relating
to
the
toxin
and
conjugation
technologyused
in
glembatumumab
vedotin
have
been
licensed
from
Seattle
Genetics.
The
patent
rights
from
Seattle
Genetics
include
issued
patents
inAustralia,
Canada,
Europe,
the
U.S.
and
Japan
which
include
composition
of
matter
claims
relating
to
the
toxin
and
conjugation
technology.
Ifmaintained
to
full
term
in
due
course,
the
main
Seattle
Genetics
patent
rights
would
have
estimated
patent
expiry
dates
ranging
from
2023
in
Europeto
2026
in
the
U.S.
•We
have
licensed
rights
from
the
University
of
Southampton
under
issued
U.S.,
European
and
Japanese
patents
and
under
a
pending
patentapplication
in
Canada
relating
to
the
technology
used
in
varlilumab.
Further
patent
applications
are
also
pending
in
the
U.S.,
Europe
and
Japan.
Ifand
where
issued
and
maintained
to
full
term
in
due
course,
these
would
have
estimated
patent
expiry
dates
in
2027.
In
July
2013,
the
United
StatesPatent
and
Trademark
Office
issued
a
patent
to
the
University
of
Southampton,
that
we
have
an
exclusive
license
to
under
our
license
agreement,which
broadly
supports
varlilumab.
The
patent
includes
18
claims
covering
various
methods
of
treating
cancer
using
agonistic
anti-human
CD27antibodies
and
relates,
among
other
things,
directly
to
our
CD27
antibody
program
and
therapeutic
uses
of
varlilumab.
In
September
2014,
twoEuropean
patent
oppositions
were
filed
against
the
University
of
Southampton
European
patent,
and
at
a
hearing
on
November
23,
2016
theEuropean
Patent
Office
(EPO)
revoked
the
European
patent
on
the
ground
of
lack
of
inventive
step.
The
University
of
Southampton
has
filed
anappeal
against
this
decision,
and
we
intend
to
defend
the
European
patent
vigorously
in
cooperation
with
the
University
of
Southampton.
This
EPO17 Table
of
Contentsdecision
does
not
affect
the
later
filed
Celldex
patents
and
applications
for
varlilumab.
We
also
have
an
issued
U.S.
patent
which
covers
varlilumabas
a
composition
of
matter.
If
maintained
to
full
term
this
patent
would
have
an
estimated
patent
expiry
date
in
2034
(including
additional
term
dueto
Patent
Term
Adjustment).
We
also
have
corresponding
patent
applications
in
the
major
international
territories
which,
if
issued
and
maintained
tofull
term
in
due
course,
would
have
estimated
patent
expiry
dates
in
2031.•We
have
issued
U.S.
patents
relating
to
the
technology
used
in
CDX-1401
(including
claims
covering
CDX-1401
as
compositions
of
matter)
whichhave
estimated
patent
expiry
dates
in
at
least
2028
(not
including
increases
of
term
due
to
Patent
Term
Adjustment).
We
have
a
correspondingissued
European
patent
and
further
patents
and
pending
patent
applications
in
other
international
territories
(including
Japan,
Australia,
Canada,China,
India,
Republic
of
Korea
and
certain
other
countries)
relating
to
the
technology
used
in
CDX-1401
which,
if
and
where
issued
andmaintained
to
full
term
in
due
course,
would
have
estimated
patent
expiry
dates
in
2028.
•The
U.S.
patent
for
the
technology
used
in
CDX-301
has
an
estimated
expiration
date
in
2020.
•Our
patent
portfolio
for
CDX-014
includes
rights
under
issued
U.S.,
European,
Australian
and
Canadian
patents
and
a
pending
patent
application
inJapan.
If
and
where
issued
and
maintained
to
full
term
in
due
course,
these
filings
would
have
estimated
patent
expiry
dates
in
at
least
2024
(notincluding
increases
of
term
due
to
Patent
Term
Adjustment
in
the
U.S.).
In
addition,
patent
rights
relating
to
toxin
and
conjugation
technology
havebeen
licensed
from
Seattle
Genetics.
The
patent
rights
from
Seattle
Genetics
include
issued
patents
in
Australia,
Canada,
Europe,
the
U.S.
and
Japanwhich
include
composition
of
matter
claims
relating
to
the
toxin
and
conjugation
technology.
If
maintained
to
full
term
in
due
course,
the
mainSeattle
Genetics
patent
rights
would
have
estimated
patent
expiry
dates
ranging
from
2023
in
Europe
to
2026
in
the
U.S.
•We
have
exclusively
licensed
a
portfolio
of
patents
and
patent
applications
relating
to
particular
ErbB3
inhibitors
from
MedImmune.
These
patentsand
patent
applications
include
claims
directed
to
particular
anti-ErbB3
antibody
compositions
of
matter,
including
CDX-3379
compositions
ofmatter,
and
methods
of
using
such
antibodies.
Patents
have
been
issued
in
the
U.S.,
Japan,
Russia
and
New
Zealand
which
have
estimated
patentexpiry
dates
in
2032.
Patent
applications
in
this
portfolio
are
pending
in
Europe,
Australia,
Canada,
China,
India,
Republic
of
Korea
and
certainother
countries,
and
any
patents
that
may
issue
from
these
applications
would
also
have
estimated
patent
expiry
dates
in
2032.
•We
own
a
family
of
patents
and
patent
applications
directed
to
anti-KIT
receptor
antibody
compositions
of
matter
and
methods
of
using
suchantibodies.
U.S.
patents
have
been
issued,
and
foreign
counterparts
are
pending
in
Europe,
Japan,
Australia,
Canada,
China,
India,
Republic
ofKorea
and
certain
other
countries.
If
and
where
issued
the
foregoing
would
have
estimated
patent
expiry
dates
ranging
from
at
least
2032
to
2033(not
including
increases
of
term
due
to
Patent
Term
Adjustment
in
the
U.S.).
We
also
have
pending
U.S.
and
European
patent
applications
directedto
use
of
anti-KIT
receptor
antibodies
for
treatment
of
particular
eosinophil
or
mast
cell
related
disorders,
including
neurofibromatosis.
Any
patentsthat
issue
based
on
the
latter
patent
applications
would
have
estimated
patent
expiry
dates
in
at
least
2035.
•We
acquired
rights
to
a
portfolio
of
patents
and
patent
applications
related
to
the
"TAM
family"
of
RTKs
(comprised
of
Tyro3,
AXL
and
MerTK)receptors
which
are
in-licensed
from,
or
co-owned
with,
the
Salk
Institute
for
Biological
Studies.
For
example,
we
have
an
exclusive
license
to
twoissued
U.S.
patents
directed
to
TAM
receptor
inhibition
to
treat
infections
and
to
a
U.S.
patent
application
directed
to
methods
for
the
modulation
ofthe
immune
response
via
targeting
TAM
receptors.
Foreign
counterparts
to
these
patents
and
this
patent
application
are18 Table
of
Contentspending
in
Europe
and
Canada.
If
and
where
issued
the
foregoing
would
have
estimated
patent
expiry
dates
in
at
least
2028.
There
can
be
no
assurance
that
patent
applications
owned
by
or
licensed
to
us
will
result
in
granted
patents
or
that,
if
granted,
the
resultant
patents
will
affordprotection
against
competitors
with
similar
technology.
It
is
also
possible
that
third
parties
may
obtain
patents
or
other
proprietary
rights
that
may
be
necessary
oruseful
to
us.
In
cases
where
third
parties
are
first
to
invent
a
particular
product
or
technology,
it
is
possible
that
those
parties
will
obtain
patents
that
will
besufficiently
broad
to
prevent
us
from
using
important
technology
or
from
further
developing
or
commercializing
important
drug
candidates
and
immunotherapeuticsystems.
If
licenses
from
third
parties
are
necessary
but
cannot
be
obtained,
commercialization
of
the
covered
products
might
be
delayed
or
prevented.
Even
if
theselicenses
can
be
obtained,
they
would
probably
require
us
to
pay
ongoing
royalties
and
other
costs,
which
could
be
substantial.
Although
a
patent
has
a
statutory
presumption
of
validity
in
the
United
States,
the
issuance
of
a
patent
is
not
conclusive
as
to
validity
or
as
to
the
enforceablescope
of
the
patent
claims.
The
validity
or
enforceability
of
a
patent
after
its
issuance
by
the
Patent
and
Trademark
Office
can
be
challenged
in
litigation.
As
abusiness
that
uses
a
substantial
amount
of
intellectual
property,
we
face
a
heightened
risk
of
intellectual
property
litigation.
If
the
outcome
of
the
litigation
isadverse
to
the
owner
of
the
patent,
third
parties
may
then
be
able
to
use
the
invention
covered
by
the
patent
without
authorization
or
payment.
There
can
be
noassurance
that
our
issued
patents
or
any
patents
subsequently
issued
to
or
licensed
by
us
will
not
be
successfully
challenged
in
the
future.
In
addition,
there
can
beno
assurance
that
our
patents
will
not
be
infringed
or
that
the
coverage
of
our
patents
will
not
be
successfully
avoided
by
competitors
through
design
innovation.
We
are
aware
that
others,
including
universities
and
companies,
have
filed
patent
applications
and
have
been
granted
patents
in
the
United
States
and
othercountries
which
claim
subject
matter
potentially
useful
or
necessary
to
the
commercialization
of
our
products.
The
ultimate
scope
and
validity
of
existing
or
futurepatents
which
have
been
or
may
be
granted
to
third
parties,
and
the
availability
and
cost
of
acquiring
rights
in
those
patents
necessary
to
the
manufacture,
use
orsale
of
our
products
presently
cannot
be
determined
by
us.
Third
parties
may
have
or
may
obtain
valid
and
enforceable
patents
or
proprietary
rights
that
could
block
us
from
developing
products
using
our
technology,including:•certain
patents
and
applications
in
the
United
States
and
foreign
countries
covering
particular
antigens
and
antigenic
fragments
targeted
by
ourcurrent
drug
candidates,
including
CDX-1401;
•certain
patents
and
pending
applications
related
to
particular
receptors
and
other
molecules
on
dendritic
cells
and
macrophages
that
may
be
usefulfor
generating
monoclonal
antibodies
and
can
be
employed
in
our
APC
Targeting
Technology;
•a
United
States
patent
owned
by
Genentech,
Inc.,
relating
to
the
production
of
recombinant
antibodies
in
host
cells;
•certain
patents
held
by
third
parties
relating
to
antibody
expression
in
particular
types
of
host
cells;
and
•a
United
States
patent
and
certain
pending
applications
assigned
to
Aduro
Biotech
Holdings
relating
to
anti-CD27
antibodies.
•We
are
also
aware
of
a
third-party
European
patent
that
relates
to
use
of
ErbB3
antibodies
for
treatment
of
hyperproliferative
disorders,
includingcancer.
Counterparts
of
this
patent
have
also
issued
in
Australia
and
Japan.
As
a
result
of
an
opposition
proceeding,
the
European
patent
wasrevoked
in
its
entirety.
The
owner
of
the
European
patent
has
appealed
the
decision
in
the
opposition
proceeding.
We
do
not
know
if
the
appeal
willsucceed,
or,
if
successful,
whether
the19 Table
of
Contentsscope
of
claims,
post-appeal,
would
be
relevant
to
our
activities.
Should
the
appeal
be
successful
and
a
license
be
necessary
for
our
program
thattargets
ErbB3,
we
cannot
predict
whether
we
would
be
able
to
obtain
such
a
license,
or,
if
a
license
were
available,
whether
it
would
be
available
oncommercially
reasonable
terms.
If
the
appeal
results
in
patents
having
a
valid
claim
relevant
to
our
use
of
ErbB3
antibodies
and
a
license
under
thepatents
is
unavailable
on
commercially
relevant
terms,
or
at
all,
our
ability
to
commercialize
CDX-3379
in
Europe
may
be
impaired
or
delayed.
Wewould
vigorously
defend
ourselves,
but
we
cannot
predict
whether
the
patents
would
be
found
valid,
enforceable
or
infringed.
We
also
continue
tomonitor
counterparts
in
other
jurisdictions
which
may
entail
comparable
risks
to
us
in
these
other
jurisdictions.
In
addition
to
the
patents
referred
to
in
the
previous
paragraphs,
there
may
be
other
patent
applications
and
issued
patents
belonging
to
competitors
that
mayrequire
us
to
alter
our
drug
candidates
and
immunotherapeutic
delivery
systems,
pay
licensing
fees
or
cease
some
of
our
activities.
If
our
drug
candidates
conflictwith
patents
that
have
been
or
may
be
granted
to
competitors,
universities
or
others,
the
patent
owners
could
bring
legal
action
against
us
claiming
damages
andseeking
to
enjoin
manufacturing
and
marketing
of
the
patented
products.
If
any
of
these
actions
is
successful,
in
addition
to
any
potential
liability
for
damages,
wecould
be
required
to
obtain
a
license
in
order
to
continue
to
manufacture
or
market
the
affected
products.
There
can
be
no
assurance
that
we
would
prevail
in
anysuch
action
or
that
any
license
required
under
any
such
third-party
patent
would
be
made
available
on
acceptable
terms
or
at
all.
We
believe
that
there
may
besignificant
litigation
in
the
biotechnology
industry
regarding
patent
and
other
intellectual
property
rights.
If
we
become
involved
in
that
litigation,
we
couldconsume
substantial
resources.Licenses
We
have
entered
into
several
significant
license
agreements
relating
to
technologies
that
are
being
developed
by
us.
In
general,
these
institutions
have
grantedus
an
exclusive
worldwide
license
(with
right
to
sublicense)
to
make,
use
and
sell
products
embodying
the
licensed
technology,
subject
to
the
reservation
by
thelicensor
of
a
non-exclusive
right
to
use
the
technologies
for
non-commercial
research
purposes.
Generally,
the
term
of
each
license
is
through
the
expiration
of
thelast
of
the
patents
issued
with
respect
to
the
technologies
covered
by
the
license
and/or
a
specified
period
from
first
commercial
sale
on
a
territory-by-territorybasis.
We
have
generally
agreed
to
use
reasonable
efforts
to
develop
and
commercialize
licensed
products
and
to
achieve
specified
milestones
and
pay
license
fees,milestone
payments
and
royalties
based
on
the
net
sales
of
the
licensed
products
or
to
pay
a
percentage
of
sublicense
income.
If
we
breach
our
obligations,
thelicensor
has
the
right
to
terminate
the
license,
and,
in
some
cases,
convert
the
license
to
a
non-exclusive
license.
Generally,
we
control
and
are
responsible
for
thecost
of
defending
the
patent
rights
of
the
technologies
that
we
license.Proprietary Rights
We
also
rely
on
unpatented
technology,
trade
secrets
and
confidential
information,
and
no
assurance
can
be
given
that
others
will
not
independently
developsubstantially
equivalent
information
and
techniques
or
otherwise
gain
access
to
our
know-how
and
information,
or
that
we
can
meaningfully
protect
our
rights
insuch
unpatented
technology,
trade
secrets
and
information.
We
require
each
of
our
employees,
consultants
and
advisors
to
execute
a
confidentiality
agreement
atthe
commencement
of
an
employment
or
consulting
relationship
with
us.
The
agreements
generally
provide
that
all
inventions
conceived
by
the
individual
in
thecourse
of
employment
or
in
providing
services
to
us
and
all
confidential
information
developed
by,
or
made
known
to,
the
individual
during
the
term
of
therelationship
shall
be
the
exclusive
property
of
us
and
shall
be
kept
confidential
and
not
disclosed
to
third
parties
except
in
limited
specified
circumstances.
Therecan
be
no
assurance,
however,
that
these20 Table
of
Contentsagreements
will
provide
meaningful
protection
for
our
information
in
the
event
of
unauthorized
use
or
disclosure
of
such
confidential
information.Government
Regulation
Our
activities
and
products
are
significantly
regulated
by
a
number
of
governmental
entities,
including
the
U.S.
Food
and
Drug
Administration,
or
FDA,
in
theUnited
States
and
by
comparable
authorities
in
other
countries.
These
entities
regulate,
among
other
things,
the
manufacture,
testing,
safety,
effectiveness,
labeling,documentation,
advertising
and
sale
of
our
products.
We
must
obtain
regulatory
approval
from
the
FDA
and
comparable
authorities
in
other
countries,
asapplicable,
for
our
drug
candidates
before
we
can
commercialize
such
drugs
in
the
U.S.
and
foreign
jurisdictions.
Product
development
within
this
regulatoryframework
takes
a
number
of
years
and
involves
the
expenditure
of
substantial
resources.
Many
drug
candidates
that
initially
appear
promising
ultimately
do
notreach
the
market
because
they
are
found
to
be
unsafe
or
ineffective
when
tested.
Our
inability
to
commercialize
a
product
would
impair
our
ability
to
earn
futurerevenues.FDA Approval Process
In
the
United
States,
the
FDA
regulates
drugs
and
biological
products
under
the
Federal
Food,
Drug,
and
Cosmetic
Act,
or
FDCA,
the
Public
Health
ServiceAct,
or
PHSA,
and
implementing
regulations.
The
process
of
obtaining
regulatory
approvals
and
the
subsequent
compliance
with
appropriate
federal,
state,
localand
foreign
statutes
and
regulations
requires
the
expenditure
of
substantial
time
and
financial
resources.
Failure
to
comply
with
the
applicable
United
Statesrequirements
at
any
time
during
the
product
development
process,
approval
process
or
after
approval
may
subject
an
applicant
to
a
variety
of
administrative
orjudicial
sanctions,
such
as
the
FDA's
refusal
to
approve
pending
applications,
withdrawal
of
an
approval,
imposition
of
a
clinical
hold,
issuance
of
untitled
orwarning
letters,
product
recalls,
product
seizures,
total
or
partial
suspension
of
production
or
distribution
injunctions,
fines,
refusals
of
government
contracts,restitution,
disgorgement
of
profits,
civil
penalties
and
criminal
prosecution.
The
process
required
by
the
FDA
before
a
drug
or
biological
product
may
be
marketed
in
the
United
States
generally
involves
the
following:•completion
of
preclinical
laboratory
tests,
animal
studies
and
formulation
studies
in
compliance
with
the
FDA's
good
laboratory
practice,
or
GLP,regulations;
•submission
to
the
FDA
of
an
investigational
new
drug,
or
IND,
application
which
must
become
effective
before
human
clinical
trials
may
begin;
•approval
by
an
independent
institutional
review
board,
or
IRB,
at
each
clinical
site
before
each
trial
may
be
initiated;
•performance
of
adequate
and
well-controlled
human
clinical
trials
in
accordance
with
good
clinical
practices,
or
GCP,
to
establish
the
safety
andefficacy
of
the
proposed
drug
or
biological
product
for
each
indication;
•submission
to
the
FDA
of
a
new
drug
application,
or
NDA,
or
a
biologics
license
application,
or
BLA,
as
applicable;
•satisfactory
completion
of
an
FDA
advisory
committee
review,
if
applicable;
•satisfactory
completion
of
an
FDA
inspection
of
the
manufacturing
facility
or
facilities
at
which
the
product
is
produced
to
assess
compliance
withcGMP
requirements
and
to
assure
that
the
facilities,
methods
and
controls
are
adequate
to
preserve
the
drug's
identity,
strength,
quality
and
purity;and21 Table
of
Contents•FDA
review
and
approval
of
the
NDA
or
BLA.
We
expect
that
all
of
our
clinical
drug
candidates
will
be
subject
to
review
as
biological
products
under
BLA
standards.
Data
obtained
at
any
stage
of
testing
is
susceptible
to
varying
interpretations,
which
could
delay,
limit
or
prevent
regulatory
approval.
Moreover,
during
theregulatory
process,
new
or
changed
drug
approval
policies
may
cause
unanticipated
delays
or
rejection
of
our
product.
We
may
not
obtain
necessary
regulatoryapprovals
within
a
reasonable
period
of
time,
if
at
all,
or
avoid
delays
or
other
problems
in
testing
our
products.
Moreover,
even
if
we
received
regulatory
approvalfor
a
product,
the
approval
may
require
limitations
on
use,
which
could
restrict
the
size
of
the
potential
market
for
the
product.Clinical Trials
The
FDA
provides
that
human
clinical
trials
may
begin
30
days
after
receipt
and
review
of
an
IND
application,
unless
the
FDA
requests
additional
informationor
changes
to
the
study
protocol
within
that
period.
An
IND
must
be
sponsored
and
filed
for
each
of
our
proposed
drug
candidates.
Authorization
to
conduct
clinicaltrials
in
no
way
assures
that
the
FDA
will
ultimately
approve
the
product.
Clinical
trials
are
generally
conducted
in
three
sequential
phases.
In
a
Phase
1
trial,
theproduct
is
given
to
a
small
number
of
patients
to
test
for
safety
(adverse
effects),
determine
a
recommended
Phase
2
dose(s)
and
evaluate
any
signals
of
efficacy.Phase
2
trials
are
conducted
on
a
limited
group
of
the
target
patient
population;
safety,
optimal
dosage
and
efficacy
are
studied.
A
Phase
3
trial
is
performed
in
alarge
patient
population,
generally
over
a
wide
geographic
area
to
provide
evidence
for
the
safety
and
efficacy
of
the
product.
The
FDA
maintains
and
exercisesoversight
authority
throughout
the
clinical
trial
process.
A
product's
safety
and
effectiveness
in
one
clinical
trial
is
not
necessarily
indicative
of
its
safety
and
effectiveness
in
another
clinical
trial.
Moreover,
we
maynot
discover
all
potential
problems
with
a
product
even
after
completing
clinical
trials
on
it.
Some
of
our
products
and
technologies
have
undergone
only
preclinicaltesting.
As
a
result,
we
do
not
know
whether
they
are
safe
or
effective
for
humans.
Also,
regulatory
authorities
may
decide,
contrary
to
our
findings,
that
a
productis
unsafe
or
not
as
effective
in
actual
use
as
its
clinical
trial
results
indicated.
This
could
prevent
the
product's
widespread
use,
require
its
withdrawal
from
themarket
or
expose
us
to
liability.
The
FDA
or
the
sponsor
may
suspend
or
terminate
a
clinical
trial
at
any
time
on
various
grounds,
including
a
finding
that
thepatients
are
being
exposed
to
an
unacceptable
health
risk.
Similarly,
an
IRB
can
suspend
or
terminate
approval
of
a
clinical
trial
at
its
institution
if
the
clinical
trialis
not
being
conducted
in
accordance
with
the
IRB's
requirements
or
if
the
drug
has
been
associated
with
unexpected
serious
harm
to
patients.
Any
such
actioncould
materially
harm
us.
Clinical
trials
are
critical
to
the
success
of
our
products
but
are
subject
to
unforeseen
and
uncontrollable
delay,
including
delay
inenrollment
of
patients.
Any
delay
in
clinical
trials
could
delay
our
commercialization
of
a
product.Marketing Approval
Assuming
successful
completion
of
the
required
clinical
testing,
the
results
of
the
preclinical
and
clinical
studies,
together
with
detailed
information
relating
tothe
product's
pharmacology,
chemistry,
manufacture,
controls
and
proposed
labeling,
among
other
things,
are
submitted
to
the
FDA
as
part
of
an
NDA
or
BLArequesting
approval
to
market
the
product
for
one
or
more
indications.
FDA
approval
of
the
NDA
or
BLA
is
required
before
marketing
of
the
product
may
begin
inthe
United
States.
Under
federal
law,
the
submission
of
most
NDAs
and
BLAs
is
additionally
subject
to
a
substantial
application
user
fee
and
the
sponsor
of
anapproved
NDA
or
BLA
is
also
subject
to
annual
prescription
drug
program
fees.22 Table
of
Contents
The
FDA
conducts
a
preliminary
review
of
all
NDAs
and
BLAs
within
the
first
60
days
after
receipt
before
accepting
them
for
filing
based
on
the
agency'sthreshold
determination
that
they
are
sufficiently
complete
to
permit
substantive
review.
The
FDA
may
request
additional
information
rather
than
accept
an
NDAor
BLA
for
filing.
In
this
event,
the
application
must
be
resubmitted
with
the
additional
information.
The
resubmitted
application
is
also
subject
to
review
beforethe
FDA
accepts
it
for
filing.
Once
the
submission
is
accepted
for
filing,
the
FDA
begins
an
in-depth
substantive
review.
The
FDA
has
agreed
to
specifiedperformance
goals
in
the
review
of
NDAs
and
BLAs.
Most
such
applications
for
non-priority
products
are
reviewed
within
ten
to
twelve
months
after
filing,
andmost
applications
for
priority
review
products,
that
is,
drugs
and
biologics
that
the
FDA
determines
represent
a
significant
improvement
over
existing
therapy,
arereviewed
in
six
to
eight
months
after
filing.
The
review
process
may
be
extended
by
the
FDA
for
three
additional
months
to
consider
certain
late-submittedinformation
or
clarification
regarding
information
already
provided
in
the
submission.
The
FDA
may
also
refer
applications
for
novel
drugs
or
biological
productsor
products
that
present
difficult
questions
of
safety
or
efficacy
to
an
advisory
committee,
typically
a
panel
that
includes
clinicians
and
other
experts,
for
review,evaluation
and
a
recommendation
as
to
whether
the
application
should
be
approved.
The
FDA
is
not
bound
by
the
recommendations
of
an
advisory
committee,
butit
considers
such
recommendations
carefully
when
making
decisions.
Before
approving
an
NDA
or
BLA,
the
FDA
typically
will
inspect
the
facility
or
facilities
where
the
product
is
manufactured.
The
FDA
will
not
approve
anapplication
unless
it
determines
that
the
manufacturing
processes
and
facilities
are
in
compliance
with
cGMP
requirements
and
adequate
to
assure
consistentproduction
of
the
product
within
required
specifications.
In
addition,
before
approving
an
NDA
or
BLA,
the
FDA
will
typically
inspect
one
or
more
clinical
sites
toassure
compliance
with
GCP
and
integrity
of
the
clinical
data
submitted.
The
testing
and
approval
processes
require
substantial
time,
effort
and
financial
resources,
and
each
may
take
many
years
to
complete.
Data
obtained
fromclinical
activities
are
not
always
conclusive
and
may
be
susceptible
to
varying
interpretations
that
could
delay,
limit
or
prevent
regulatory
approval.
The
FDA
maynot
grant
approval
on
a
timely
basis,
or
at
all.
We
may
encounter
difficulties
or
unanticipated
costs
in
our
efforts
to
develop
our
drug
candidates
and
securenecessary
governmental
approvals,
which
could
delay
or
preclude
us
from
marketing
our
products.
After
the
FDA's
evaluation
of
the
NDA
or
BLA
and
inspection
of
the
manufacturing
facilities,
the
FDA
may
issue
an
approval
letter
or
a
complete
responseletter.
An
approval
letter
authorizes
commercial
marketing
of
the
drug
or
biological
product
with
specific
prescribing
information
for
specific
indications.
Acomplete
response
letter
generally
outlines
the
deficiencies
in
the
submission
and
may
require
substantial
additional
testing
or
information
in
order
for
the
FDA
toreconsider
the
application.
If
and
when
those
deficiencies
have
been
addressed
to
the
FDA's
satisfaction
in
a
resubmission
of
the
NDA,
the
FDA
will
issue
anapproval
letter.
The
FDA
has
committed
to
reviewing
such
resubmissions
in
two
or
six
months
depending
on
the
type
of
information
included.
Even
withsubmission
of
this
additional
information,
the
FDA
ultimately
may
decide
that
the
application
does
not
satisfy
the
regulatory
criteria
for
approval.
Even
if
the
FDA
approves
a
product,
it
may
limit
the
approved
indications
for
use
for
the
product,
require
that
contraindications,
warnings
or
precautions
beincluded
in
the
product
labeling,
require
that
post-approval
studies,
including
Phase
4
clinical
trials,
be
conducted
to
further
assess
a
drug's
safety
after
approval,require
testing
and
surveillance
programs
to
monitor
the
product
after
commercialization,
or
impose
other
conditions,
including
distribution
restrictions
or
otherrisk
management
mechanisms,
which
can
materially
affect
the
potential
market
and
profitability
of
the
product.
The
FDA
may
prevent
or
limit
further
marketing
ofa
product
based
on
the
results
of
post-market
studies
or
surveillance
programs.
After
approval,
many
types
of
changes
to
the
approved
product,
such
as
changes
inindications,
manufacturing
changes
and
labeling,
are
subject
to
further
testing
requirements
and
FDA
review
and
approval.23 Table
of
ContentsSpecial Regulatory Procedures Fast track designation —The
FDA
is
required
to
facilitate
the
development
and
expedite
the
review
of
drugs
and
biologics
that
are
intended
for
the
treatmentof
a
serious
or
life-threatening
disease
or
condition
and
that
demonstrate
the
potential
to
address
unmet
medical
needs.
Under
the
fast
track
program,
the
sponsor
ofa
new
drug
or
biologic
candidate
may
request
the
FDA
to
designate
the
product
for
a
specific
indication
as
a
fast
track
product,
concurrent
with
or
after
the
filing
ofthe
IND
for
the
drug
candidate.
A
drug
that
receives
fast
track
designation
is
eligible
for
some
or
all
of
the
following:
(i)
more
frequent
meetings
with
the
FDA
todiscuss
the
drug's
development
plan
and
ensure
collection
of
appropriate
data
needed
to
support
drug
approval;
(ii)
more
frequent
written
communication
from
theFDA
about
such
things
as
the
design
of
the
proposed
clinical
trials
and
use
of
biomarkers;
(iii)
eligibility
for
accelerated
approval
and
priority
review,
if
relevantcriteria
are
met;
and
(iv)
Rolling
Review,
which
means
that
a
drug
company
can
submit
completed
sections
of
its
BLA
or
NDA
for
review
by
the
FDA,
rather
thanwaiting
until
every
section
of
the
NDA
or
BLA
is
completed
before
the
entire
application
can
be
reviewed.
This
rolling
review
is
available
if
the
applicant
providesand
the
FDA
approves
a
schedule
for
the
submission
of
the
remaining
information
and
the
applicant
pays
applicable
user
fees.
However,
the
FDA's
time
periodgoal
for
reviewing
a
fast
track
application
does
not
begin
until
the
last
section
of
the
NDA
or
BLA
is
submitted.
In
addition,
the
fast
track
designation
may
bewithdrawn
by
the
FDA
if
it
believes
that
the
designation
is
no
longer
supported
by
data
emerging
in
the
clinical
trial
process. Priority review —Under
FDA
policies,
a
drug
candidate
may
be
eligible
for
priority
review.
The
priority
review
program
provides
for
expedited
review
or
anNDA
or
BLA,
typically
within
a
six
to
eight
month
time
frame
from
the
time
a
complete
application
is
accepted
for
filing.
Products
regulated
by
the
FDA's
Centerfor
Drug
Evaluation
and
Research,
or
CDER,
are
eligible
for
priority
review
if
they
provide
a
significant
improvement
compared
to
marketed
products
in
thetreatment,
diagnosis
or
prevention
of
a
disease.
Products
regulated
by
the
FDA's
Center
for
Biologics
Evaluation
and
Research,
or
CBER,
are
eligible
for
priorityreview
if
they
provide
a
significant
improvement
in
the
safety
or
effectiveness
of
the
treatment,
diagnosis
or
prevention
of
a
serious
or
life-threatening
disease.
Afast
track
designated
drug
candidate
could
be
eligible
for
priority
review
if
supported
by
clinical
data
at
the
time
of
the
BLA
or
NDA
submission. Accelerated approval —Under
the
law
and
the
FDA's
accelerated
approval
regulations,
the
FDA
may
approve
a
drug
or
biologic
for
a
serious
or
life-threatening
illness
that
provides
meaningful
therapeutic
benefit
to
patients
over
existing
treatments
based
on
a
surrogate
endpoint
that
is
reasonably
likely
to
predictclinical
benefit.
Surrogate
endpoints
can
often
be
measured
more
easily
or
more
rapidly
than
clinical
endpoints.
A
drug
candidate
approved
on
this
basis
is
subjectto
rigorous
post-marketing
compliance
requirements,
including
the
completion
of
Phase
4
or
post-approval
clinical
trials
to
confirm
the
effect
on
the
clinicalendpoint.
Failure
to
conduct
required
post-approval
studies,
or
confirm
a
clinical
benefit
during
post-marketing
studies,
would
allow
the
FDA
to
withdraw
the
drugfrom
the
market
on
an
expedited
basis.
All
promotional
materials
for
drug
candidates
approved
under
accelerated
regulations
are
subject
to
prior
review
by
theFDA. Breakthrough therapy designation —The
FDA
is
also
required
to
expedite
the
development
and
review
of
the
application
for
approval
of
drugs
that
areintended
to
treat
a
serious
or
life-threatening
disease
or
condition
where
preliminary
clinical
evidence
indicates
that
the
drug
candidate
may
demonstrate
substantialimprovement
over
existing
therapies
on
one
or
more
clinically
significant
endpoints.
Under
the
breakthrough
therapy
program,
the
sponsor
of
a
new
drug
candidatemay
request
that
the
FDA
designate
the
drug
candidate
for
a
specific
indication
as
a
breakthrough
therapy
concurrent
with,
or
after,
the
filing
of
the
IND
for
thedrug
candidate. Orphan drug designation —Under
the
Orphan
Drug
Act,
the
FDA
may
grant
orphan
drug
designation
to
a
drug
or
biologic
intended
to
treat
a
rare
disease
orcondition,
which
is
generally24 Table
of
Contentsdefined
as
a
disease
or
condition
that
affects
fewer
than
200,000
individuals
in
the
United
States.
Orphan
drug
designation
does
not
convey
any
advantage
in,
orshorten
the
duration
of,
the
regulatory
review
and
approval
process.
The
first
NDA
or
BLA
applicant
to
receive
FDA
approval
for
a
particular
active
ingredient
totreat
a
particular
disease
with
FDA
orphan
drug
designation
is
entitled
to
a
seven-year
exclusive
marketing
period
in
the
United
States
for
that
product,
for
thatindication.
During
the
seven-year
exclusivity
period,
the
FDA
may
not
approve
any
other
applications
to
market
the
same
drug
or
biologic
for
the
same
orphanindication,
except
in
limited
circumstances.
Among
the
other
benefits
of
orphan
drug
designation
are
tax
credits
for
certain
research
and
a
waiver
of
the
NDA
orBLA
application
user
fee.Pediatric information
Under
the
Pediatric
Research
Equity
Act
of
2003,
an
NDA,
BLA
or
supplement
to
an
NDA
or
BLA
must
contain
data
that
are
adequate
to
assess
the
safetyand
effectiveness
of
the
drug
or
biological
product
for
the
claimed
indications
in
all
relevant
pediatric
subpopulations,
and
to
support
dosing
and
administration
foreach
pediatric
subpopulation
for
which
the
product
is
safe
and
effective.
The
FDA
may,
on
its
own
initiative
or
at
the
request
of
the
applicant,
grant
deferrals
forsubmission
of
some
or
all
pediatric
data
until
after
approval
of
the
product
for
use
in
adults,
or
full
or
partial
waivers
from
the
pediatric
data
requirements.
Underthe
Food
and
Drug
Administration
Safety
and
Innovation
Act,
or
FDASIA,
the
FDA
has
additional
authority
to
take
action
against
manufacturers
not
adhering
topediatric
study
requirements.
Unless
otherwise
required
by
regulation,
the
pediatric
data
requirements
do
not
apply
to
products
with
orphan
drug
designation.Post Approval
Any
drug
or
biological
products
manufactured
or
distributed
by
us
pursuant
to
FDA
approvals
are
subject
to
pervasive
and
continuing
regulation
by
the
FDA,including,
among
other
things,
requirements
relating
to
recordkeeping,
periodic
reporting,
product
sampling
and
distribution,
advertising
and
promotion
andreporting
of
adverse
experiences
with
the
product.
After
approval,
most
changes
to
the
approved
product,
such
as
adding
new
indications
or
other
labeling
claimsare
subject
to
prior
FDA
review
and
approval.
The
FDA
may
impose
a
number
of
post-approval
requirements
as
a
condition
of
approval
of
an
NDA
or
BLA.
For
example,
the
FDA
may
require
post-marketing
testing,
including
Phase
4
clinical
trials,
and
surveillance
to
further
assess
and
monitor
the
product's
safety
and
effectiveness
after
commercialization.Regulatory
approval
of
oncology
products
often
requires
that
patients
in
clinical
trials
be
followed
for
long
periods
to
determine
the
overall
survival
benefit
of
thedrug
or
biologic.
In
addition,
drug
and
biologic
manufacturers
and
other
entities
involved
in
the
manufacture
and
distribution
of
approved
drugs
and
biological
products
arerequired
to
register
their
establishments
with
the
FDA
and
state
agencies
and
are
subject
to
periodic
unannounced
inspections
by
the
FDA
and
these
state
agenciesfor
compliance
with
cGMP
requirements.
The
FDA
was
also
granted
new
inspection
authorities
under
FDASIA.
Changes
to
the
manufacturing
process
are
strictlyregulated
and
often
require
prior
FDA
approval
before
being
implemented.
FDA
regulations
also
require
investigation
and
correction
of
any
deviations
from
cGMPand
impose
reporting
and
documentation
requirements
upon
us
and
any
third-party
manufacturers
that
we
may
decide
to
use.
Accordingly,
manufacturers
mustcontinue
to
expend
time,
money
and
effort
in
the
areas
of
production
and
quality
control
to
maintain
cGMP
compliance.
Once
an
approval
is
granted,
the
FDA
may
withdraw
the
approval
if
compliance
with
regulatory
requirements
and
standards
is
not
maintained
or
if
problemsoccur
after
the
product
reaches
the
market.
Later
discovery
of
previously
unknown
problems
with
a
product,
including
adverse
events
of
unanticipated
severity
orfrequency,
or
with
manufacturing
processes,
or
failure
to
comply
with25 Table
of
Contentsregulatory
requirements,
may
result
in
revisions
to
the
approved
labeling
to
add
new
safety
information,
imposition
of
post-market
studies
or
clinical
trials
to
assessnew
safety
risks
or
imposition
of
distribution
or
other
restrictions
under
a
Risk
Evaluation
and
Mitigation
Strategy
program.
Other
potential
consequences
include,among
other
things:•restrictions
on
the
marketing
or
manufacturing
of
the
product,
complete
withdrawal
of
the
product
from
the
market
or
product
recalls;
•fines,
untitled
and
warning
letters
or
holds
on
post-approval
clinical
trials;
•refusal
of
the
FDA
to
approve
pending
applications
or
supplements
to
approved
applications,
or
suspension
or
revocation
of
product
licenseapprovals;
•product
seizure
or
detention,
or
refusal
to
permit
the
import
or
export
of
products;
or
•consent
decrees,
injunctions
or
the
imposition
of
civil
or
criminal
prosecution.
The
FDA
strictly
regulates
marketing,
labeling,
advertising
and
promotion
of
products
that
are
placed
on
the
market.
Drugs
and
biologics
may
be
promotedonly
for
the
approved
indications
and
in
accordance
with
the
provisions
of
the
approved
label.
The
FDA,
the
Office
of
the
Inspector
General
of
Health
and
HumanServices
and
other
agencies
actively
enforce
the
laws
and
regulations
prohibiting
the
promotion
of
off
label
uses,
and
a
company
that
is
found
to
have
improperlypromoted
off
label
uses
may
be
subject
to
significant
liability.Biosimilars Law
The
Biologics
Price
Competition
and
Innovation
Act
of
2009,
or
BPCIA,
amended
the
PHSA
to
provide
for
an
abbreviated
approval
pathway
for
biologicalproducts
that
demonstrate
biosimilarity
to
a
previously-approved
biological
product.
The
BPCIA
establishes
criteria
for
determining
that
a
product
is
biosimilar
toan
already-licensed
biologic,
or
reference
product,
and
establishes
a
process
by
which
an
abbreviated
BLA
for
a
biosimilar
product
is
submitted,
reviewed
andapproved.
The
BPCIA
provides
periods
of
exclusivity
that
protect
a
reference
product
from
biosimilars
competition.
Under
the
BPCIA,
the
FDA
may
not
accept
abiosimilar
application
for
review
until
four
years
after
the
date
of
first
licensure
of
the
reference
product,
and
the
biosimilar
may
not
be
licensed
until
12
years
afterthe
reference
product's
approval.
Additionally,
the
BPCIA
establishes
procedures
by
which
the
biosimilar
applicant
may
provide
information
about
its
applicationand
product
to
the
reference
product
sponsor,
and
by
which
information
about
potentially
relevant
patents
is
shared
and
litigation
over
patents
may
proceed
inadvance
of
approval.
The
BPCIA
also
provides
a
period
of
exclusivity
for
the
first
biosimilar
to
be
determined
by
the
FDA
to
be
interchangeable
with
the
referenceproduct.
The
BPCIA
applies
to
our
drug
candidates
and
could
be
applied
to
allow
approval
of
biosimilars
to
our
products.
Because
the
BPCIA
is
a
relatively
new
law,
we
anticipate
that
its
contours
will
be
defined
as
the
statute
is
implemented
over
a
period
of
years.
This
likely
willbe
accomplished
by
a
variety
of
means,
including
FDA
issuance
of
guidance
documents,
proposed
regulations,
lawsuits
and
the
FDA's
decisions
in
the
course
ofconsidering
specific
applications.
Such
evolution
may
significantly
affect
the
impact
of
the
BPCIA
on
both
reference
product
and
biosimilar
sponsors.21st Century Cures Act
On
December
13,
2016,
Congress
passed
the
21st
Century
Cures
Act,
or
the
Cures
Act.
The
Cures
Act
is
designed
to
modernize
and
personalize
health
care,spur
innovation
and
research,
and
streamline
the
discovery
and
development
of
new
therapies
through
increased
federal
funding
of
particular
programs.
Itauthorizes
increased
funding
for
the
FDA
to
spend
on
innovation
projects,
including
for
certain
oncology-directed
research.
The
new
law
also
amends
the
PublicHealth
Service
Act
to
reauthorize
and
expand
funding
for
the
National
Institutes
of
Health.26 Table
of
Contents
Because
the
Cures
Act
has
only
recently
been
enacted,
its
potential
effect
on
our
business
remains
unclear
with
the
exception
of
a
provision
requiring
that
wepost
our
policies
on
the
availability
of
expanded
access
programs
for
individuals.
In
addition,
the
Cures
Act
includes
provisions
that
may
be
beneficial
to
us
in
thefuture,
including
a
requirement
that
the
FDA
assess
and
publish
guidance
on
the
use
of
novel
clinical
trial
designs,
the
use
of
real
world
evidence
in
applications,the
availability
of
summary
level
review
for
supplemental
applications
for
certain
indications
and
the
qualification
of
drug
development
tools.
Because
theseprovisions
allow
the
FDA
several
years
to
develop
these
policies,
their
effects
on
us,
if
any,
could
be
delayed.
The
Cures
Act
also
authorizes
funding
for
the
"Cancer
Moonshot"
initiative.
The
Cancer
Moonshot
initiative's
strategic
goals
encourage
inter-agencycooperation
and
fund
research
and
innovation
to
catalyze
new
scientific
breakthroughs,
bring
new
therapies
to
patients
and
strengthen
prevention
and
diagnosis.This
initiative
aims
to
stimulate
drug
development
through
the
creation
of
a
public-private
partnership
with
20
to
30
pharmaceutical
and
biotechnology
companiesto
expedite
cancer
researchers'
access
to
investigational
agents
and
approved
drugs.
This
partnership
is
designed
to
permit
researchers
to
obtain
drugs
and
othertechnologies
from
a
preapproved
"formulary"
list
without
having
to
negotiate
with
each
company
for
individual
research
projects.
We
will
continue
to
monitorthese
developments
to
assess
their
potential
impacts
on
our
business.Companion Diagnostic Review and Approval
We
expect
that
some
of
our
drug
candidates,
including
glembatumumab
vedotin,
will
rely
on
the
use
of
a
companion
diagnostic.
Companion
diagnostics
aresubject
to
regulation
by
the
FDA
and
comparable
foreign
regulatory
authorities
as
medical
devices
and
require
separate
clearance
or
approval
prior
to
theircommercialization.
Based
on
recent
FDA
guidance
documents
and
the
FDA's
past
treatment
of
companion
diagnostics,
we
believe
that
the
FDA
will
likely
requireone
or
more
of
our
in vitro companion
diagnostics
to
obtain
Premarket
Approval
Application,
or
PMA,
in
conjunction
with
approval
of
the
related
drug
candidate.The
receipt
and
timing
of
PMA
approval
may
have
a
significant
effect
on
the
receipt
and
timing
of
commercial
approval
for
such
drug
candidates.
Currently
werely
on
third-party
collaborators
to
develop
companion
diagnostics
for
our
drug
candidates.
The
PMA
process
is
similar
to
the
NDA
and
BLA
processes
and
is
costly,
lengthy
and
uncertain.
PMA
applications
must
be
supported
by
valid
scientificevidence,
which
typically
requires
extensive
data,
including
technical,
preclinical,
clinical
and
manufacturing
data,
to
demonstrate
to
the
FDA's
satisfaction
thesafety
and
effectiveness
of
the
device.
For
diagnostic
tests,
a
PMA
application
typically
includes
data
regarding
analytical
and
clinical
validation
studies.
As
part
ofits
review
of
the
PMA,
the
FDA
will
conduct
a
pre-approval
inspection
of
the
manufacturing
facility
or
facilities
to
ensure
compliance
with
the
Quality
SystemRegulation,
or
QSR,
which
requires
manufacturers
to
follow
design,
testing,
control,
documentation
and
other
quality
assurance
procedures.
If
the
FDA
evaluationsof
both
the
PMA
application
and
the
manufacturing
facilities
are
favorable,
the
FDA
will
either
issue
an
approval
letter
or
an
approvable
letter,
which
usuallycontains
a
number
of
conditions
that
must
be
met
in
order
to
secure
the
final
approval
of
the
PMA.
If
the
FDA's
evaluation
of
the
PMA
or
manufacturing
facilitiesis
not
favorable,
the
FDA
will
deny
approval
of
the
PMA
or
issue
a
not
approvable
letter.
A
not
approvable
letter
will
outline
the
deficiencies
in
the
application
and,where
practical,
will
identify
what
is
necessary
to
make
the
PMA
approvable.
The
FDA
may
also
determine
that
additional
clinical
trials
are
necessary,
in
whichcase
the
PMA
approval
may
be
delayed
while
the
trials
are
conducted
and
then
the
data
submitted
in
an
amendment
to
the
PMA.
Furthermore,
even
after
PMA
approval
is
obtained,
numerous
regulatory
requirements
apply
to
the
manufacturer
of
the
companion
diagnostic.
The
FDAenforces
these
requirements
by
inspection
and
market
surveillance.
These
requirements
include:
the
QSR,
labeling
regulations,
the
FDA's
general
prohibitionagainst
promoting
products
for
unapproved
or
"off
label"
uses,
the
medical
device
reporting
regulation,
and
the
reports
of
corrections
and
removals
regulation.
Ifthe
FDA
finds
a
violation,
it
can27 Table
of
Contentsinstitute
a
wide
variety
of
enforcement
actions,
ranging
from
a
public
warning
letter
to
more
severe
sanctions
such
as:
fines,
injunctions
and
civil
penalties;
recall
orseizure
of
products;
operating
restrictions,
partial
suspension
or
total
shutdown
of
production;
refusing
requests
for
PMA
of
new
products;
and
withdrawing
PMAsalready
granted.Federal and State Fraud and Abuse, Data Privacy and Security and Transparency Laws
In
addition
to
FDA
restrictions
on
marketing
and
promotion
of
pharmaceutical
products,
several
other
types
of
federal
and
state
laws
have
been
applied
torestrict
certain
marketing
business
practices
in
the
biopharmaceutical
and
medical
device
industries
in
recent
years.
These
laws
include,
without
limitation,
stateand
federal
anti-kickback
statutes
and
false
claims
statutes
and
false
claims
laws,
data
privacy
and
security
laws,
as
well
as
transparency
laws
regarding
paymentsor
other
items
of
value
provided
to
health
care
providers.
Applicable
state
law
may
be
broader
in
scope
than
federal
law
and
may
apply
regardless
of
payor,
inaddition
to
items
and
services
reimbursed
under
Medicaid
and
other
state
programs.
If
our
operations
are
found
to
be
in
violation
of
any
of
the
health
regulatorylaws
described
above
or
any
other
laws
that
apply
to
us,
we
may
be
subject
to
penalties,
including
potentially
significant
criminal
and
civil
and/or
administrativepenalties,
damages,
fines,
disgorgement,
imprisonment,
exclusion
from
participation
in
government
health
care
programs,
contractual
damages,
reputational
harm,administrative
burdens,
diminished
profits
and
future
earnings,
and
the
curtailment
or
restructuring
of
our
operations,
any
of
which
could
adversely
affect
ourability
to
operate
our
business
and
our
results
of
operations.
To
the
extent
that
any
of
our
products
are
sold
in
a
foreign
country,
we
may
be
subject
to
similarforeign
laws,
which
may
include,
for
instance,
applicable
post-marketing
requirements,
including
safety
surveillance,
anti-fraud
and
abuse
laws
and
implementationof
corporate
compliance
programs
and
reporting
of
payments
or
transfers
of
value
to
health
care
professionals.
In
addition,
the
United
States
Foreign
Corrupt
Practices
Act,
or
FCPA,
prohibits
corporations
and
individuals
from
engaging
in
certain
activities
to
obtain
orretain
business
or
to
influence
a
person
working
in
an
official
capacity.
It
is
illegal
to
pay,
offer
to
pay
or
authorize
the
payment
of
anything
of
value
to
any
officialof
another
country,
government
staff
member,
political
party
or
political
candidate
in
an
attempt
to
obtain
or
retain
business
or
to
otherwise
influence
a
personworking
in
that
capacity.
In
many
countries,
the
health
care
professionals
we
may
interact
with
may
meet
the
FCPA's
definition
of
a
foreign
government
official.Foreign Regulation
In
order
to
market
any
therapeutic
or
diagnostic
product
outside
of
the
United
States,
we
need
to
comply
with
numerous
and
varying
regulatory
requirementsof
other
countries
regarding
safety
and
efficacy
and
governing,
among
other
things,
clinical
trials,
marketing
authorization,
commercial
sales
and
distribution
of
ourproducts.
Whether
or
not
we
obtain
FDA
approval
for
a
product,
we
need
to
obtain
the
necessary
approvals
by
the
comparable
regulatory
authorities
of
foreigncountries
before
we
can
commence
clinical
trials
or
marketing
of
the
product
in
those
countries.
The
approval
process
varies
from
country
to
country
and
caninvolve
additional
product
testing
and
additional
administrative
review
periods.
The
time
required
to
obtain
approval
in
other
countries
might
differ
from
and
belonger
than
that
required
to
obtain
FDA
approval.
Regulatory
approval
in
one
country
does
not
ensure
regulatory
approval
in
another,
but
a
failure
or
delay
inobtaining
regulatory
approval
in
one
country
may
negatively
impact
the
regulatory
process
in
others.
Under
the
EU
regulatory
system,
we
will
submit
most
of
our
marketing
authorization
applications
under
the
centralized
procedure.
The
centralized
procedureis
compulsory
for
medicines
produced
by
biotechnology,
or
are
for
the
treatment
of
cancer,
or
officially
designated
as
'orphan
medicines.'
The
centralizedprocedure
provides
for
the
grant
of
a
single
marketing
authorization
that
is
valid
for
all
EU
member
states.
As
in
the
United
States,
we
may
apply
for
designation
ofa
drug
candidate
as
an28 Table
of
Contentsorphan
drug
for
the
treatment
of
a
specific
indication
in
the
EU
before
the
application
for
marketing
authorization
is
made.
The
EMA
grants
orphan
medicinalproduct
designation
to
promote
the
development
of
products
that
may
offer
therapeutic
benefits
for
life-threatening
or
chronically
debilitating
conditions
affectingnot
more
than
five
in
10,000
people
in
the
EU.
Orphan
drugs
in
Europe
enjoy
economic
and
marketing
benefits,
including
a
10-year
market
exclusivity
period
forthe
approved
indication,
but
not
for
the
same
product,
unless
another
applicant
can
show
that
its
product
is
safer,
more
effective
or
otherwise
clinically
superior
tothe
orphan-designated
product.Other Regulatory Processes
From
time
to
time,
legislation
is
drafted,
introduced
and
passed
in
Congress
that
could
significantly
change
the
statutory
provisions
governing
the
testing,approval,
manufacturing
and
marketing
of
products
regulated
by
the
FDA.
In
addition
to
new
legislation,
FDA
regulations
and
policies
are
often
revised
or
interpreted
by
the
agency
in
ways
that
may
significantly
affect
our
businessand
our
products.
It
is
impossible
to
predict
whether
further
legislative
changes
will
be
enacted
or
whether
FDA
regulations,
guidance,
policies
or
interpretationswill
change
or
what
the
effect
of
such
changes,
if
any,
may
be.Third-Party
Payor
Coverage
and
Reimbursement
Significant
uncertainty
exists
as
to
the
coverage
and
reimbursement
status
of
any
drug
products
for
which
we
obtain
regulatory
approval.
Sales
of
any
of
ourdrug
candidates,
if
approved,
will
depend,
in
part,
on
the
extent
to
which
the
costs
of
the
drugs
will
be
covered
by
third-party
payors,
including
government
healthprograms
such
as
Medicare
and
Medicaid,
as
well
as
commercial
health
insurers,
such
as
managed
care
organizations.
The
process
for
determining
reimbursementrates
is
separate
from
the
payor
coverage
decision.
Therefore,
despite
obtaining
coverage,
reimbursement
rates
may
be
lower
than
expected,
which
can
result
inlarger
out-of-pocket
payments
for
the
patient.
In
order
to
secure
coverage
and
reimbursement
for
any
drug
that
might
be
approved
for
sale,
we
need
to
conduct
analyses
and
pharmaco-economic
studies
inorder
to
demonstrate
the
incremental
medical
benefit
over
and
above
the
generally-accepted
standard
of
care
and
cost-effectiveness
of
the
drug.
Our
drugcandidates
may
not
be
considered
medically
necessary,
provide
insufficient
incremental
medical
benefit,
or
may
not
be
deemed
cost-effective.
A
payor's
decision
toprovide
coverage
for
a
drug
product
does
not
imply
that
an
adequate
reimbursement
rate
will
be
approved.
The
containment
of
health
care
costs
has
become
a
priority
of
federal,
state
and
foreign
governments,
and
the
prices
of
drugs
have
been
a
focus
in
this
effort.Third-party
payors
are
increasingly
challenging
the
prices
charged
for
medical
products
and
services
and
examining
the
medical
necessity
and
cost-effectiveness
ofmedical
products
and
services,
in
addition
to
their
safety
and
efficacy.
If
these
third-party
payors
do
not
consider
our
drugs
to
be
cost-effective
compared
to
otheravailable
therapies,
they
may
not
cover
our
drugs
after
approval
as
a
benefit
under
their
plans
or,
if
they
do,
the
level
of
reimbursement
and/or
restrictions
informulary
placement
may
be
such
that
they
would
significantly
limit
projected
sales
volumes.
In
addition
to
third-party
payors,
we
will
also
need
to
negotiateformulary
placement
with
hospitals,
health
systems
and
certain
independent
delivery
networks.
Such
negotiations
may
be
more
protracted
than
anticipated
and
maybe
compromised
because
of
similar
considerations,
relating
to
insufficient
incremental
medical
benefit
and/or
cost-effectiveness.29 Table
of
Contents
Pricing
and
reimbursement
schemes
vary
widely
from
country
to
country.
For
example,
certain
EU
member
states
may
approve
a
specific
price
and
volumefor
a
drug
product
after
which
incremental
revenues
or
profits
need
to
be
paid
back
by
way
of
rebates.
They
may
also
institutionalize
utilization
restrictions,
curbphysicians'
drug
budgets,
provide
conditional
reimbursement
schemes
that
require
additional
evidence
to
be
generated
post-marketing
authorization,
etc.
Thedownward
pressure
on
health
care
costs
in
general,
particularly
prescription
drugs,
has
been
particularly
evident
in
EU
markets,
for
some
time,
with
evidencepointing
to
increasing
pressures
on
the
horizon.
As
a
result,
increasingly
high
barriers
are
being
erected
to
the
pricing
and
reimbursement
of
new
drugs,
despiteregulatory
efforts
to
bring
drugs
to
market
sooner.
In
addition,
cross-border
trade
has
existed
for
some
time
in
the
EU,
allowing
pharmacies
in
one
country
toimport,
at
a
lower
price,
drug
from
another
country,
further
exerting
pricing
pressures
across
the
EU.
There
can
be
no
assurance
that
any
country
that
has
pricecontrols
or
reimbursement
limitations
for
drug
products
will
allow
favorable
reimbursement
and
pricing
arrangements
for
any
of
our
drugs.
The
marketability
of
any
drugs
for
which
we
receive
regulatory
approval
for
commercial
sale
may
suffer
if
third-party
payors
and/or
hospital
administratorsfail
to
provide
adequate
coverage,
reimbursement
or
formulary
placement.
Coverage
policies,
third-party
reimbursement
rates
and
drug
pricing
regulations
maychange
in
the
future.
In
particular,
uncertainty
within,
and
over
the
long
term,
of
the
Patient
Protection
and
Affordable
Care
Act,
or
PPACA,
in
the
U.S.,
may
meanthat
coverage,
reimbursement
and
pricing
structures
available
today
may
be
different
in
the
future.
In
addition,
the
States
may
continue
to
consider
legislation
oftheir
own
which
could
further
restrict
the
ability
to
freely
price
drugs
and/or
curb
utilization
in
the
U.S.
Even
if
favorable
coverage
and
reimbursement
status
isattained
for
one
or
more
drugs
for
which
we
receive
regulatory
approval,
less
favorable
coverage
policies
and
reimbursement
rates
may
be
implemented
in
thefuture.Employees
As
of
December
31,
2017,
we
employed
197
employees
(192
full-time,
3
part-time
and
2
interns),
38
of
whom
have
Ph.D.
and/or
M.D.
degrees.
Of
theseemployees,
167
were
engaged
in
or
directly
support
research
and
development
activities.
We
believe
that
our
employee
relations
are
good.
We
believe
that
ourfuture
success
will
depend
in
large
part
on
our
ability
to
attract
and
retain
experienced
and
skilled
employees.Research
and
Development
We
have
dedicated
a
significant
portion
of
our
resources
to
our
efforts
to
develop
our
drug
candidates.
We
incurred
research
and
development
expenses
of$96.2
million,
$102.7
million
and
$100.2
million
during
the
years
ended
December
31,
2017,
2016
and
2015,
respectively.
We
anticipate
that
a
significant
portionof
our
operating
expenses
will
continue
to
be
related
to
research
and
development
in
2018
as
we
continue
to
advance
our
drug
candidates
through
clinicaldevelopment.Corporate
and
Available
Information
We
are
incorporated
in
Delaware.
In
February
2016,
we
formed
a
wholly-owned
subsidiary,
Celldex
Therapeutics
Europe
GmbH,
in
Zug,
Switzerland,
whichwas
liquidated
in
June
2017.
In
July
2016,
we
formed
a
wholly-owned
subsidiary,
Celldex
Australia
Pty
Ltd
in
Brisbane,
Australia.
Our
website
is
located
at
http://www.celldex.com. On
our
website,
investors
can
obtain,
free
of
charge,
a
copy
of
our
Annual
Report
on
Form
10-K,
QuarterlyReports
on
Form
10-Q,
Current
Reports
on
Form
8-K,
other
reports
and
any
amendments
thereto
filed
or
furnished
pursuant
to
Section
13(a)
or
15(d)
of
theExchange
Act
of
1934,
as
amended,
as
soon
as
reasonably
practicable
after
we
file
such
material
electronically
with,
or
furnish
it
to,
the
Securities
and
ExchangeCommission,30 Table
of
Contentsor
SEC.
None
of
the
information
posted
on
our
website
is
incorporated
by
reference
into
this
Annual
Report.Item
1A.
RISK
FACTORS
You
should
consider
carefully
these
risk
factors
together
with
all
of
the
information
included
or
incorporated
by
reference
in
this
Annual
Report
in
addition
toour
financial
statements
and
the
notes
to
our
financial
statements.
This
section
includes
forward-looking
statements.
The
following
is
a
discussion
of
the
risk
factors
that
we
believe
are
material
to
us
at
this
time.
These
risks
and
uncertainties
are
not
the
only
ones
facing
us,
andthere
may
be
additional
matters
that
we
are
unaware
of
or
that
we
currently
consider
immaterial.
All
of
these
could
adversely
affect
our
business,
results
ofoperations,
financial
condition
and
cash
flows.Risks
Related
to
Our
Financial
Condition
and
Capital
RequirementsWe currently have no product revenue and will need to raise capital to operate our business.
To
date,
we
have
generated
no
product
revenue
and
cannot
predict
when
and
if
we
will
generate
product
revenue.
We
had
an
accumulated
deficit
of$812.5
million
as
of
December
31,
2017.
Until,
and
unless,
we
complete
clinical
trials
and
further
development,
and
receive
approval
from
the
FDA
and
otherregulatory
authorities,
for
our
drug
candidates,
we
cannot
sell
our
drugs
and
will
not
have
product
revenue.
We
expect
to
spend
substantial
funds
to
continue
theresearch,
development
and
testing
of
our
products
that
are
in
the
preclinical
and
clinical
testing
stages
of
development
and
to
prepare
to
commercialize
products
inanticipation
of
FDA
approval.
Therefore,
for
the
foreseeable
future,
we
will
have
to
fund
all
of
our
operations
and
development
expenditures
from
cash
on
hand,equity
or
debt
financings,
licensing
fees
and
grants.
Additional
financing
will
be
required
to
meet
our
liquidity
needs.
If
we
do
not
succeed
in
raising
additionalfunds
on
acceptable
terms,
we
might
not
be
able
to
complete
planned
preclinical
and
clinical
trials
or
obtain
approval
of
any
drug
candidates
from
the
FDA
andother
regulatory
authorities.
In
addition,
we
could
be
forced
to
discontinue
product
development,
reduce
or
forego
sales
and
marketing
efforts,
forego
attractivebusiness
opportunities
or
curtail
operations.
Any
additional
sources
of
financing
could
involve
the
issuance
of
our
equity
securities,
which
would
have
a
dilutiveeffect
on
our
stockholders.
No
assurance
can
be
given
that
additional
financing
will
be
available
to
us
when
needed
on
acceptable
terms,
or
at
all.
We
cannot
be
certain
that
we
will
achieve
or
sustain
profitability
in
the
future.
Failure
to
achieve
profitability
could
diminish
our
ability
to
sustain
operations,pay
dividends
on
our
common
stock,
obtain
additional
required
funds
and
make
required
payments
on
our
present
or
future
indebtedness.We expect to incur future losses and we may never become profitable.
We
have
incurred
operating
losses
of
$121.5
million,
$132.9
million
and
$129.5
million
during
2017,
2016
and
2015,
respectively,
and
expect
to
incur
anoperating
loss
in
2018
and
beyond.
We
believe
that
operating
losses
will
continue
in
2018
and
beyond
because
we
are
planning
to
incur
significant
costs
associatedwith
the
clinical
development
of
our
drug
candidates
and
manufacturing
of
commercial
supply
to
prepare
for
the
potential
commercial
launch
of
glembatumumabvedotin
if
regulatory
approval
is
obtained.
During
the
years
ended
December
31,
2017,
2016
and
2015,
we
incurred
$21.1
million,
$24.9
million
and
$36.3
millionin
clinical
trial
expense
and
$11.4
million,
$18.3
million
and
$14.8
million
in
contract
manufacturing
expense.
Our
net
losses
have
had
and
will
continue
to
have
anadverse
effect
on,
among
other
things,
our
stockholders'
equity,
total
assets
and
working
capital.
We
expect
that
losses
will
fluctuate
from
quarter
to
quarter
andyear
to
year,
and
that
such
fluctuations
may
be
substantial.
We
cannot
predict
when
we
will
become
profitable,
if
at
all.31 Table
of
ContentsWe will need additional capital to fund our operations, including the development, manufacture and potential commercialization of our drug candidates. If wedo not have or cannot raise additional capital when needed, we may be unable to develop and ultimately commercialize our drug candidates successfully.
We
expect
to
incur
significant
costs
as
we
develop
our
drug
candidates.
In
particular,
the
continuing
development
and
commercialization
of
glembatumumabvedotin
and
our
other
drug
candidates
requires
additional
capital
beyond
our
current
resources.
As
of
December
31,
2017,
we
had
cash,
cash
equivalents
andmarketable
securities
of
$139.4
million.
During
the
next
twelve
months
and
beyond,
we
will
take
further
steps
to
raise
additional
capital
to
fund
our
liquidity
needs.Our
capital
raising
activities
may
include,
but
may
not
be
limited
to,
one
or
more
of
the
following:•licensing
of
drug
candidates
with
existing
or
new
collaborative
partners;
•possible
business
combinations;
•issuance
of
debt;
or
•issuance
of
common
stock
or
other
securities
via
private
placements
or
public
offerings.
While
we
may
seek
capital
through
a
number
of
means,
there
can
be
no
assurance
that
additional
financing
will
be
available
on
acceptable
terms,
if
at
all,
andour
negotiating
position
in
capital-raising
efforts
may
worsen
as
existing
resources
are
used.
There
is
also
no
assurance
that
we
will
be
able
to
enter
into
furthercollaborative
relationships.
Additional
equity
financing
may
be
dilutive
to
our
stockholders;
debt
financing,
if
available,
may
involve
significant
cash
paymentobligations
and
covenants
that
restrict
our
ability
to
operate
as
a
business;
and
licensing
or
strategic
collaborations
may
result
in
royalties
or
other
terms
whichreduce
our
economic
potential
from
drug
candidates
under
development.
If
we
are
unable
to
raise
the
funds
necessary
to
meet
our
long-term
liquidity
needs,
wemay
have
to
delay
or
discontinue
the
development
of
one
or
more
programs,
discontinue
or
delay
the
build-out
of
our
commercial
infrastructure
and
ourcommercial
planning
and
preparation
activities,
discontinue
or
delay
ongoing
or
anticipated
clinical
trials,
license
out
programs
earlier
than
expected,
raise
funds
atsignificant
discount
or
on
other
unfavorable
terms,
if
at
all,
or
sell
all
or
part
of
our
business.Our stockholders may be subject to substantial dilution if we elect to pay future milestone consideration to the former Kolltan stockholders in shares ofcommon stock. If we elect to pay future milestone consideration in cash we would likely need to raise additional capital.
The
merger
agreement
between
us
and
Kolltan
provides
that
in
the
event
that
certain
specified
preclinical
and
clinical
development
milestones
related
toKolltan's
development
programs
and/or
Celldex's
development
programs
and
certain
commercial
milestones
related
to
Kolltan's
drug
candidates
are
achieved,
wewill
be
required
to
pay
Kolltan's
former
stockholders
milestone
payments
of
up
to
$172.5
million,
which
milestone
payments
may
be
made,
at
our
sole
election,
incash,
in
shares
of
our
common
stock
or
a
combination
of
both,
although
we
are
required
to
maintain
a
certain
percentage
of
the
overall
consideration
paid
inCelldex
common
stock
to
satisfy
certain
tax
requirements
under
the
merger
agreement.
We
may
require
additional
capital
to
fund
any
milestone
payments
in
cash,depending
on
the
facts
and
circumstances
at
the
time
such
payments
become
due.
If
we
elect
to
pay
the
milestones
in
shares
of
our
common
stock,
our
stockholderswould
experience
substantial
dilution.U.S. federal income tax reform could adversely affect us.
On
December
22,
2017,
the
Tax
Cuts
and
Jobs
Act
("TCJA")
was
enacted,
leading
to
significant
changes
to
U.S.
tax
law.
Among
other
provisions,
the
TCJAlowered
the
U.S.
federal
corporate
income
tax
rate
from
35%
to
21%,
limited
the
deduction
for
net
operating
losses
to
80%
of
taxable
income
while
providing
thatnet
operating
loss
carryovers
for
years
after
2017
will
not
expire,
imposed
a
mandatory
one-time
transition
tax
on
previously
deferred
foreign
earnings
andeliminated
or
reduced32 Table
of
Contentscertain
income
tax
deductions.
The
estimated
impact
of
the
TCJA
is
based
on
our
management's
current
knowledge
and
assumptions,
and
recognized
impacts
couldbe
materially
different
from
current
estimates
based
on
our
actual
results
and
our
further
analysis
of
the
new
law.
We
have
revalued
our
net
deferred
tax
assets
andliabilities
at
the
newly
enacted
U.S.
federal
rate,
and
we
recognized
a
tax
benefit
of
$19.1
million
during
the
year
ended
December
31,
2017
related
to
the
TCJA.We
continue
to
examine
the
impact
this
tax
reform
legislation
may
have
on
our
business.Risks
Related
to
Development
and
Regulatory
Approval
of
Drug
CandidatesOur long term success depends heavily on our ability to fund and complete the research and development activities and obtain regulatory approval for ourprogram assets, including our lead drug candidate, glembatumumab vedotin.
We
are
particularly
dependent
on
the
future
success
of
glembatumumab
vedotin
because
it
is
our
most
advanced
drug
candidate.
Only
a
small
minority
of
allresearch
and
development
programs
ultimately
result
in
commercially
successful
drugs.
Clinical
failure
can
occur
at
any
stage
of
clinical
development.
Forexample,
in
March
2016,
we
decided
to
discontinue
ACT
IV,
a
randomized
Phase
3
clinical
study
of
Rintega
in
patients
with
newly
diagnosed
EGFRvIII-positiveglioblastoma,
based
on
the
determination
by
the
independent
Data
Safety
and
Monitoring
Board
that
continuation
of
the
ACT
IV
study
would
not
reach
statisticalsignificance
for
overall
survival
in
patients
with
minimal
residual
disease,
the
primary
endpoint
of
the
study,
because
both
the
Rintega
arm
and
the
control
armwere
performing
on
par
with
each
other.
Clinical
trials
may
produce
negative
or
inconclusive
results,
and
we
may
decide,
or
regulators
may
require
us,
to
conductadditional
clinical
or
preclinical
trials.
In
addition,
data
obtained
from
trials
are
susceptible
to
varying
interpretations,
and
regulators
may
not
interpret
our
data
asfavorably
as
we
do,
which
may
delay,
limit
or
prevent
regulatory
approval.
Success
in
preclinical
testing
and
early
clinical
trials
does
not
ensure
that
later
clinicaltrials
will
generate
the
same
results
or
otherwise
provide
adequate
data
to
demonstrate
the
efficacy
and
safety
of
a
drug
candidate.
We
will
need
substantial
additional
financing
to
complete
the
development
of
glembatumumab
vedotin
and
our
other
drug
candidates.
Further,
even
if
wecomplete
the
development
of
glembatumumab
vedotin
or
any
of
our
other
drug
candidates
and
gain
marketing
approvals
from
the
FDA
and
comparable
foreignregulatory
authorities
in
a
timely
manner,
we
cannot
be
sure
that
such
drug
candidate
will
be
commercially
successful
in
the
pharmaceutical
market.
If
the
results
ofclinical
trials,
the
anticipated
or
actual
timing
of
marketing
approvals,
or
the
market
acceptance
of
glembatumumab
vedotin
or
any
other
drug
candidate,
ifapproved,
do
not
meet
the
expectations
of
investors
or
public
market
analysts,
the
market
price
of
our
common
stock
would
likely
decline.We may enter into collaboration agreements for the licensing, development and ultimate commercialization of some of our drug candidates including, whereappropriate, for our lead drug candidates. In such cases, we will depend greatly on our third-party collaborators to license, develop and commercialize suchdrug candidates, and they may not meet our expectations.
We
may
enter
into
co-development
and
commercialization
partnerships
for
our
drug
candidates
where
appropriate,
including
glembatumumab
vedotin.
Theprocess
of
identifying
collaborators
and
negotiating
collaboration
agreements
for
the
licensing,
development
and
ultimate
commercialization
of
some
of
our
drugcandidates
may
cause
delays
and
increased
costs.
We
may
not
be
able
to
enter
into
collaboration
agreements
on
terms
favorable
to
us
or
at
all.
Furthermore
some
ofthose
agreements
may
give
substantial
responsibility
over
our
drug
candidates
to
the
collaborator.
Some
collaborators
may
be
unable
or
unwilling
to
devotesufficient
resources
to
develop
our
drug
candidates
as
their
agreements
require.
They
often
face
business
risks
similar
to
ours,
and
this
could
interfere
with
theirefforts.
Also,
collaborators
may
choose
to
devote
their
resources
to
products
that
compete
with
ours.
If
a
collaborator
does
not
successfully
develop
any
one
of
ourproducts,
we
will
need
to
find
another33 Table
of
Contentscollaborator
to
do
so.
The
success
of
our
search
for
a
new
collaborator
will
depend
on
our
legal
right
to
do
so
at
the
time
and
whether
the
product
remainscommercially
viable.
If
we
enter
into
collaboration
agreements
for
one
or
more
of
our
lead
drug
candidates,
the
success
of
such
drug
candidates
will
depend
in
great
part
upon
ourand
our
collaborators'
success
in
promoting
them
as
superior
to
other
treatment
alternatives.
We
believe
that
our
drug
candidates
can
be
proven
to
offer
diseasetreatment
with
notable
advantages
over
drugs
in
terms
of
patient
compliance
and
effectiveness.
However,
there
can
be
no
assurance
that
we
will
be
able
to
provethese
advantages
or
that
the
advantages
will
be
sufficient
to
support
the
successful
commercialization
of
our
drug
candidates.Our drug candidates are subject to extensive regulatory scrutiny.
All
of
our
drug
candidates
are
at
various
stages
of
development,
and
our
activities
and
drug
candidates
are
significantly
regulated
by
a
number
ofgovernmental
entities,
including
the
FDA
in
the
United
States
and
by
comparable
authorities
in
other
countries.
These
entities
regulate,
among
other
things,
themanufacture,
testing,
safety,
effectiveness,
labeling,
documentation,
advertising
and
sale
of
drugs
and
drug
candidates.
We
or
our
partners
must
obtain
regulatoryapproval
for
a
drug
candidate
in
all
of
these
areas
before
we
can
commercialize
any
of
our
drug
candidates.
Product
development
within
this
regulatory
frameworktakes
a
number
of
years
and
involves
the
expenditure
of
substantial
resources.
This
process
typically
requires
extensive
preclinical
and
clinical
testing,
which
maytake
longer
or
cost
more
than
we
anticipate,
and
may
prove
unsuccessful
due
to
numerous
factors.
Many
drug
candidates
that
initially
appear
promising
ultimatelydo
not
reach
the
market
because
they
are
found
to
be
unsafe
or
ineffective
when
tested.
Companies
in
the
pharmaceutical,
biotechnology
and
immunotherapeuticdrug
industries
have
suffered
significant
setbacks
in
advanced
clinical
trials,
even
after
obtaining
promising
results
in
earlier
trials.
Our
inability
to
commercialize
adrug
candidate
would
impair
our
ability
to
earn
future
revenues.If our drug candidates do not pass required tests for safety and effectiveness, we will not be able to obtain regulatory approval and derive commercial revenuefrom them.
In
order
to
succeed,
we
will
need
to
obtain
regulatory
approval
for
our
drug
candidates.
The
FDA
has
not
approved
any
of
our
drug
candidates
for
sale
to
date.Our
drug
candidates
are
in
various
stages
of
preclinical
and
clinical
testing.
Preclinical
tests
are
performed
at
an
early
stage
of
a
product's
development
and
provideinformation
about
a
drug
candidate's
safety
and
effectiveness
on
laboratory
animals.
Preclinical
tests
can
last
years.
If
a
product
passes
its
preclinical
testssatisfactorily
and
we
determine
that
further
development
is
warranted,
we
would
file
an
IND
application
for
the
product
with
the
FDA,
and
if
the
FDA
gives
itsapproval,
we
would
begin
Phase
1
clinical
tests.
Phase
1
testing
generally
lasts
between
6
and
24
months.
If
Phase
1
test
results
are
satisfactory
and
the
FDA
givesits
approval,
we
can
begin
Phase
2
clinical
tests.
Phase
2
testing
generally
lasts
between
6
and
36
months.
If
Phase
2
test
results
are
satisfactory
and
the
FDA
givesits
approval,
we
can
begin
Phase
3
pivotal
studies.
Phase
3
studies
generally
last
between
12
and
48
months.
Once
clinical
testing
is
completed
and
a
BLA
or
NDAis
filed
with
the
FDA,
it
may
take
more
than
a
year
to
receive
FDA
approval.
In
all
cases
we
must
show
that
a
drug
candidate
is
both
safe
and
effective
before
the
FDA,
or
drug
approval
agencies
of
other
countries
where
we
intend
to
sellthe
product,
will
approve
it
for
sale.
Our
research
and
testing
programs
must
comply
with
drug
approval
requirements
both
in
the
United
States
and
in
othercountries,
since
we
are
developing
our
lead
drug
candidates
with
the
intention
to,
or
could
later
decide
to,
commercialize
them
both
in
the
U.S.
and
abroad.
Aproduct
may
fail
for
safety
or
effectiveness
at
any
stage
of
the
testing
process.
A
major
risk
we
face
is
the
possibility
that
none
of
our
products
under
developmentwill
come
through
the
testing
process
to
final
approval
for
sale,
with
the
result
that
we
cannot
derive
any
commercial
revenue
from
them
after
investing
significantamounts
of
capital
in
multiple
stages
of
preclinical
and
clinical
testing.34 Table
of
ContentsSuccess in early clinical trials does not ensure that later clinical trials will be successful, and we cannot assure you that our current METRIC study or anyother clinical trials that we may conduct will demonstrate consistent or adequate efficacy and safety to obtain regulatory approval.
The
results
of
preclinical
studies
and
early
clinical
trials
may
not
be
predictive
of
the
results
of
later-stage
clinical
trials,
and
interim
results
of
a
clinical
trialdo
not
necessarily
predict
final
results.
In
particular,
the
results
of
the
clinical
trials
of
glembatumumab
vedotin
conducted
to
date
may
not
be
predictive
of
theresults
of
our
METRIC
study.
Data,
our
interpretation
of
data
and
results
for
our
earlier
clinical
studies
of
glembatumumab
vedotin
for
the
treatment
of
metastaticbreast
cancer
do
not
ensure
that
we
will
achieve
similar
results
in
our
METRIC
study.
Preclinical
and
clinical
data
are
susceptible
to
various
interpretations
andanalyses,
and
many
companies
that
have
believed
their
drug
candidates
performed
satisfactorily
in
preclinical
studies
and
early-stage
clinical
trials
have
nonethelessfailed
to
replicate
such
results
in
later-stage
clinical
trials
and
subsequently
failed
to
obtain
marketing
approval.
Drug
candidates
in
later-stage
clinical
trials
mayfail
to
show
the
desired
safety
and
efficacy
despite
having
progressed
through
preclinical
and
initial
clinical
trials,
even
if
certain
analyses
of
primary
or
secondaryendpoints
in
those
early
trials
showed
trends
towards
efficacy.
Later-stage
clinical
trials
with
larger
numbers
of
patients
or
longer
durations
of
therapy
may
alsoreveal
safety
concerns
that
were
not
identified
in
earlier
smaller
or
shorter
trials.
Our
failure
to
demonstrate
efficacy
and
safety
data
sufficient
to
support
marketingapproval
for
glembatumumab
vedotin
or
any
of
our
other
drug
candidates
would
substantially
harm
our
business,
prospectus,
financial
condition
and
results
ofoperations.We may be unable to manage multiple late-stage clinical trials for a variety of drug candidates simultaneously.
As
our
current
clinical
trials
progress,
we
may
need
to
manage
multiple
late-stage
clinical
trials
simultaneously
in
order
to
continue
developing
all
of
ourcurrent
products.
The
management
of
late-stage
clinical
trials
is
more
complex
and
time
consuming
than
early-stage
trials.
Typically,
early-stage
trials
involveseveral
hundred
patients
in
no
more
than
10
to
30
clinical
sites.
Late-stage
(Phase
3)
trials
may
involve
up
to
several
thousand
patients
in
up
to
several
hundredclinical
sites
and
may
require
facilities
in
several
countries.
Therefore,
the
project
management
required
to
supervise
and
control
such
an
extensive
program
issubstantially
larger
than
early-stage
programs.
As
the
need
for
these
resources
is
not
known
until
some
months
before
the
trials
begin,
it
is
necessary
to
recruit
largenumbers
of
experienced
and
talented
individuals
very
quickly.
If
the
labor
market
does
not
allow
this
team
to
be
recruited
quickly,
the
sponsor
is
faced
with
adecision
to
delay
the
program
or
to
initiate
it
with
inadequate
management
resources.
This
may
result
in
recruitment
of
inappropriate
patients,
inadequatemonitoring
of
clinical
investigators
and
inappropriate
handling
of
data
or
data
analysis.
Consequently
it
is
possible
that
conclusions
of
efficacy
or
safety
may
not
beacceptable
to
permit
filing
of
a
BLA
or
NDA
for
any
one
of
the
above
reasons
or
a
combination
of
several.Product testing is critical to the success of our drug candidates but subject to delay or cancellation if we have difficulty enrolling patients.
As
our
portfolio
of
drug
candidates
moves
from
preclinical
testing
to
clinical
testing,
and
then
through
progressively
larger
and
more
complex
clinical
trials,we
will
need
to
enroll
an
increasing
number
of
patients
with
the
appropriate
characteristics.
At
times
we
have
experienced
difficulty
enrolling
patients,
and
we
mayexperience
more
difficulty
as
the
scale
of
our
clinical
testing
program
increases.
The
factors
that
affect
our
ability
to
enroll
patients
are
largely
uncontrollable
andinclude
principally
the
following:•the
nature
of
the
clinical
test;
•the
size
of
the
patient
population;35 Table
of
Contents•patients'
willingness
to
receive
a
placebo
or
less
effective
treatment
on
the
control
arm
of
a
clinical
study;
•the
distance
between
patients
and
clinical
test
sites;
and
•the
eligibility
criteria
for
the
trial.
If
we
cannot
enroll
patients
as
needed,
our
costs
may
increase,
or
we
may
be
forced
to
delay
or
terminate
testing
for
a
product.We may have delays in completing our clinical trials, and we may not complete them at all.
We
have
not
completed
the
clinical
trials
necessary
to
obtain
FDA
approval
to
market
glembatumumab
vedotin
or
any
of
our
other
drug
candidates
indevelopment.
Clinical
trials
for
glembatumumab
vedotin
or
any
of
our
other
products
in
development
may
be
delayed
or
terminated
as
a
result
of
many
factors,including
the
following:•difficulty
in
enrolling
patients
in
our
clinical
trials;
•patients
failing
to
complete
clinical
trials
due
to
dissatisfaction
with
the
treatment,
side
effects
or
other
reasons;
•failure
by
regulators
to
authorize
us
to
commence
a
clinical
trial;
•suspension
or
termination
by
regulators
of
clinical
research
for
many
reasons,
including
concerns
about
patient
safety
or
failure
of
our
contractmanufacturers
to
comply
with
cGMP
requirements;
•delays
or
failure
to
obtain
clinical
supply
for
our
products
necessary
to
conduct
clinical
trials
from
contract
manufacturers,
including
commercialgrade-clinical
supply
for
our
Phase
3
clinical
trials;
•drug
candidates
demonstrating
a
lack
of
efficacy
during
clinical
trials;
•inability
to
continue
to
fund
clinical
trials
or
to
find
a
partner
to
fund
the
clinical
trials;
•competition
with
ongoing
clinical
trials
and
scheduling
conflicts
with
participating
clinicians;
and
•delays
in
completing
data
collection
and
analysis
for
clinical
trials.
Any
delay
or
failure
to
complete
clinical
trials
and
obtain
FDA
approval
for
our
drug
candidates
could
have
a
material
adverse
effect
on
our
cost
to
developand
commercialize,
and
our
ability
to
generate
revenue
from,
a
particular
drug
candidate.If serious adverse or unacceptable side effects are identified during the development of our drug candidates, we may need to abandon or limit our developmentof some of our drug candidates.
If
our
drug
candidates
are
associated
with
serious
adverse
events
or
undesirable
side
effects
in
clinical
trials
or
have
characteristics
that
are
unexpected,
wemay
need
to
abandon
their
development
or
limit
development
to
more
narrow
uses
or
subpopulations
in
which
the
serious
adverse
events,
undesirable
side
effectsor
other
characteristics
are
less
prevalent,
less
severe
or
more
acceptable
from
a
risk-benefit
perspective.
In
pharmaceutical
development,
many
drugs
that
initiallyshow
promise
in
early-stage
testing
for
treating
cancer
are
later
found
to
cause
side
effects
that
prevent
further
development
of
the
drug.
Currently
marketedtherapies
for
the
treatment
of
cancer
are
generally
limited
to
some
extent
by
their
toxicity.
In
addition
some
of
our
drug
candidates
would
be
chronic
therapies
or
beused
in
pediatric
populations,
for
which
safety
concerns
may
be
particularly
important.
Use
of
our
drug
candidates
as
monotherapies
may
also
result
in
adverseevents
consistent
in
nature36 Table
of
Contentswith
other
marketed
therapies.
In
addition,
when
used
in
combination
with
other
marketed
therapies,
our
drug
candidates
may
exacerbate
adverse
events
associatedwith
the
marketed
therapy.We may expend our resources to pursue a particular drug candidate or indication and forgo the opportunity to capitalize on drug candidates or indications thatmay ultimately be more profitable or for which there is a greater likelihood of success.
Because
we
have
limited
financial
and
managerial
resources,
we
intend
to
focus
on
developing
drug
candidates
for
specific
indications
that
we
identify
asmost
likely
to
succeed,
in
terms
of
both
their
potential
for
regulatory
approval
and
commercialization.
As
a
result,
we
may
forego
or
delay
pursuit
of
opportunitieswith
other
drug
candidates
or
for
other
indications
that
may
prove
to
have
greater
commercial
potential.
Our
resource
allocation
decisions
may
cause
us
to
fail
to
capitalize
on
viable
commercial
drugs
or
profitable
market
opportunities.
Our
spending
on
currentand
future
research
and
development
programs
and
drug
candidates
for
specific
indications
may
not
yield
any
commercially
viable
drug
candidates.
If
we
do
notaccurately
evaluate
the
commercial
potential
or
target
market
for
a
particular
drug
candidate,
we
may
relinquish
valuable
rights
to
that
drug
candidate
throughcollaboration,
licensing
or
other
royalty
arrangements
in
cases
in
which
it
would
have
been
more
advantageous
for
us
to
retain
sole
development
andcommercialization
rights
to
the
drug
candidate.Failure to successfully validate, develop and obtain regulatory approval for companion diagnostics for certain of our drug candidates, including our lead drugcandidate glembatumumab vedotin, could harm our drug development strategy and operational results.
As
an
element
of
our
clinical
development
approach,
we
may
seek
to
screen
and
identify
subsets
of
patients
that
express
a
certain
biomarker
or
that
have
acertain
genetic
alteration
who
may
derive
meaningful
benefit
from
our
development
drug
candidates.
To
achieve
this,
one
or
more
of
our
drug
developmentprograms
may
be
dependent
on
the
development
and
commercialization
of
a
companion
diagnostic
by
us
or
by
third-party
collaborators.
For
example,
we
haveengaged
third-party
collaborators
to
develop
a
commercially
suitable
companion
diagnostic
test
to
identify
patients
that
over
express
gpNMB
for
use
in
certainindications
with
glembatumumab
vedotin
and
such
companion
diagnostic
may
encounter
technical
hurdles
to
development
and
would
require
separate
approval
bythe
FDA,
for
which
we
must
rely
on
our
third-party
collaborator
to
obtain.
Companion
diagnostics
are
developed
in
conjunction
with
clinical
programs
for
theassociated
drug
candidate.
Companion
diagnostics
are
subject
to
regulation
as
medical
devices
and
must
themselves
be
approved
for
marketing
by
the
FDA
orcertain
other
foreign
regulatory
agencies
before
the
related
drug
candidate
may
be
commercialized.
The
approval
of
a
companion
diagnostic
as
part
of
the
productlabel
will
limit
the
use
of
the
drug
candidate
to
only
those
patients
who
express
the
specific
biomarker
it
was
developed
to
detect.
We
or
our
third-partycollaborators
may
also
experience
delays
in
developing
a
sustainable,
reproducible
and
scalable
manufacturing
process
or
transferring
that
process
to
commercialpartners
or
negotiating
insurance
reimbursement
for
such
companion
diagnostic,
all
of
which
may
prevent
us
from
completing
our
clinical
trials
or
commercializingour
drugs
on
a
timely
or
profitable
basis,
if
at
all.
To
date,
the
FDA
has
required
premarket
approval
of
all
companion
diagnostics
for
cancer
therapies.
We
and
our
third-party
collaborators
may
encounterdifficulties
in
developing
and
obtaining
approval
for
these
companion
diagnostics.
Any
delay
or
failure
by
us
or
third-party
collaborators
to
develop
or
obtainregulatory
approval
of
a
companion
diagnostic
could
delay
or
prevent
approval
of
our
related
drug
candidates
or,
if
regulatory
approval
is
obtained,
delay
or
limitour
ability
to
commercialize
our
related
drug
candidates.37 Table
of
ContentsAny delay in obtaining regulatory approval would have an adverse impact on our ability to earn future revenues.
It
is
possible
that
none
of
the
drug
candidates
that
we
develop
will
obtain
the
regulatory
approvals
necessary
for
us
to
begin
commercializing
them.
The
timerequired
to
obtain
FDA
and
other
approvals
is
unpredictable
but
often
can
take
years
following
the
commencement
of
clinical
trials,
depending
upon
the
nature
ofthe
drug
candidate.
Any
analysis
we
perform
of
data
from
clinical
activities
is
subject
to
confirmation
and
interpretation
by
regulatory
authorities,
which
coulddelay,
limit
or
prevent
regulatory
approval.
Glembatumumab
vedotin
has
been
granted
fast
track
designation
by
the
FDA.
fast
track
designation
does
not
change
thestandards
for
approval,
guarantee
a
faster
review
time
as
compared
to
other
drugs
or
ensure
that
the
drug
will
ultimately
obtain
marketing
approval.
In
addition,
theFDA
may
withdraw
these
designations
at
any
time.
Any
delay
or
failure
in
obtaining
required
approvals
could
have
a
material
adverse
effect
on
our
ability
togenerate
revenues
from
the
particular
drug
candidate
including,
but
not
limited
to,
loss
of
patent
term
during
the
approval
period.
Furthermore,
if
we,
or
ourpartners,
do
not
reach
the
market
with
our
products
before
our
competitors
offer
products
for
the
same
or
similar
uses,
or
if
we,
or
our
partners,
are
not
effective
inmarketing
our
products,
our
revenues
from
product
sales,
if
any,
will
be
reduced.
We
face
intense
competition
in
our
development
activities.
We
face
competition
from
many
companies
in
the
United
States
and
abroad,
including
a
number
oflarge
pharmaceutical
companies,
firms
specialized
in
the
development
and
production
of
vaccines,
adjuvants
and
vaccine
and
immunotherapeutic
delivery
systemsand
major
universities
and
research
institutions.
Competitors
that
we
are
aware
of
that
have
initiated
a
pivotal
study
or
have
obtained
marketing
approval
for
apotential
competitive
drug/device
for
glembatumumab
vedotin
in
the
treatment
of
breast
cancer
include
AbbVie,
Astellas,
AstraZeneca,
Bristol-Myers
Squibb,Immunomedics,
Merck,
Nektar
Therapeutics,
Novartis,
Pfizer,
Roche
and
Tesaro.
Most
of
our
competitors
have
substantially
greater
resources,
more
extensive
experience
in
conducting
preclinical
studies
and
clinical
testing
and
obtainingregulatory
approvals
for
their
products,
greater
operating
experience,
greater
research
and
development
and
marketing
capabilities
and
greater
productioncapabilities
than
those
of
ours.
These
companies
might
succeed
in
obtaining
regulatory
approval
for
competitive
products
more
rapidly
than
we
can
for
ourproducts,
especially
if
we
experience
any
delay
in
obtaining
required
regulatory
approvals.A fast track designation or grant of priority review status by the FDA may not actually lead to a faster development or regulatory review or approval process.
In
the
United
States,
glembatumumab
vedotin
has
received
fast
track
designation
and
may
be
eligible
for
priority
review
status.
If
a
drug
is
intended
for
thetreatment
of
a
serious
or
life-threatening
disease
or
condition
and
the
drug
demonstrates
the
potential
to
address
unmet
medical
needs
for
this
disease
or
condition,the
drug
sponsor
may
apply
for
FDA
fast
track
designation.
If
a
drug
offers
major
advances
in
treatment,
the
drug
sponsor
may
apply
for
FDA
priority
reviewstatus.
The
FDA
has
broad
discretion
whether
or
not
to
grant
fast
track
designation
or
priority
review
status,
so
even
if
we
believe
a
particular
drug
candidate
iseligible
for
such
designation
or
status,
the
FDA
could
decide
not
to
grant
it.
Even
though
glembatumumab
vedotin
has
received
fast
track
designation
and
may
beeligible
for
priority
review
status,
we
may
not
experience
a
faster
development
process,
review
or
approval
compared
to
conventional
FDA
procedures.Furthermore,
the
FDA
may
withdraw
fast
track
designation
if
it
believes
that
the
designation
is
no
longer
supported
by
data
from
our
clinical
development
program.38 Table
of
ContentsWe have many competitors in our field, and they may develop technologies that make ours obsolete.
Biotechnology,
pharmaceuticals
and
therapeutics
are
rapidly
evolving
fields
in
which
scientific
and
technological
developments
are
expected
to
continue
at
arapid
pace.
We
have
many
competitors
in
the
U.S.
and
abroad.
Competitors
that
we
are
aware
of
that
have
initiated
a
pivotal
study
or
have
obtained
marketingapproval
for
a
potential
competitive
drug/device
for
glembatumumab
vedotin
in
the
treatment
of
breast
cancer
include
AbbVie,
Astellas,
AstraZeneca,
Bristol-Myers
Squibb,
Immunomedics,
Merck,
Nektar
Therapeutics,
Novartis,
Pfizer,
Roche
and
Tesaro.
Our
success
depends
upon
our
ability
to
develop
and
maintain
acompetitive
position
in
the
product
categories
and
technologies
on
which
we
focus.
Many
of
our
competitors
have
greater
capabilities,
experience
and
financialresources
than
we
do.
Competition
is
intense
and
is
expected
to
increase
as
new
products
enter
the
market
and
new
technologies
become
available.
Our
competitorsmay:•develop
technologies
and
products
that
are
more
effective
than
ours,
making
ours
obsolete
or
otherwise
noncompetitive;
•obtain
regulatory
approval
for
products
more
rapidly
or
effectively
than
us;
and
•obtain
patent
protection
or
other
intellectual
property
rights
that
would
block
our
ability
to
develop
competitive
products.Risks
Related
to
Commercialization
of
Our
Drug
CandidatesWe may face delays, difficulties or unanticipated costs in establishing sales, marketing and distribution capabilities or seeking a partnership for thecommercialization of our drug candidates, even if regulatory approval is obtained.
We
may
choose
to
build
a
commercial
organization
which
we
believe
could
provide
us
with
the
strategic
options
to
either
retain
full
economic
rights
to
ourdrug
candidates
or
seek
favorable
economic
terms
through
advantageous
commercial
partnerships.
As
a
result,
we
may
have
full
responsibility
forcommercialization
of
one
or
more
of
our
drug
candidates
if
and
when
they
are
approved
for
sale.
We
currently
lack
sufficient
marketing,
sales
and
distributioncapabilities
to
carry
out
this
strategy.
If
any
of
our
drug
candidates
are
approved
by
the
FDA,
we
will
need
a
drug
sales
force
with
technical
expertise
prior
to
thecommercialization
of
any
of
our
drug
candidates.
We
may
not
succeed
in
developing
such
sales
and
distribution
capabilities,
the
cost
of
establishing
such
sales
anddistribution
capabilities
may
exceed
any
product
revenue,
or
our
direct
marketing
and
sales
efforts
may
be
unsuccessful.
We
may
find
it
necessary
to
enter
intostrategic
partnerships,
co-promotion
or
other
licensing
arrangements.
To
the
extent
we
enter
into
such
strategic
partnerships,
co-promotion
or
other
licensingarrangements,
our
product
revenues
are
likely
to
be
lower
than
if
we
directly
marketed
and
sold
such
drugs,
and
some
or
all
of
the
revenues
we
receive
will
dependupon
the
efforts
of
third
parties,
which
may
not
be
successful
and
may
not
be
within
our
control.
If
we
are
unable
to
enter
into
such
strategic
partnerships,
co-promotion
or
other
licensing
arrangements
on
acceptable
terms
or
at
all,
we
may
not
be
able
to
successfully
commercialize
our
existing
and
future
drug
candidates.If
we
are
not
successful
in
commercializing
any
drug
candidates,
for
which
we
obtain
regulatory
approval,
either
on
our
own
or
through
collaborations
with
one
ormore
third
parties,
our
future
product
revenue
will
suffer,
and
we
may
never
achieve
profitability
or
become
unable
to
continue
the
operation
of
our
business.If our drug candidates for which we obtain regulatory approval do not achieve broad acceptance from physicians, patients and third-party payors, we may beunable to generate significant revenues, if any.
Even
if
we
obtain
regulatory
approval
for
our
drug
candidates,
our
approved
drugs
may
not
gain
market
acceptance
among
physicians
and
patients.
We
believethat
effectively
marketing
our
drug
candidates,
if
any
of
them
are
approved,
will
require
substantial
efforts,
both
prior
to
commercial39 Table
of
Contentslaunch
and
after
approval.
Physicians
may
elect
not
to
prescribe
our
drugs,
and
patients
may
elect
not
to
request
or
take
them,
for
a
variety
of
reasons,
including:•limitations
or
warnings
contained
in
a
drug's
FDA-approved
labeling;
•changes
in
the
standard
of
care
or
the
availability
of
alternative
drugs
for
the
targeted
indications
for
any
of
our
drug
candidates;
•limitations
in
the
approved
indications
for
our
drug
candidates;
•the
approval,
availability,
market
acceptance
and
reimbursement
for
the
companion
diagnostic,
where
applicable;
•demonstrated
clinical
safety
and
efficacy
compared
to
other
drugs;
•significant
adverse
side
effects;
•effectiveness
of
education,
sales,
marketing
and
distribution
support;
•timing
of
market
introduction
and
perceived
effectiveness
of
competitive
drugs;
•cost-effectiveness;
•adverse
publicity
about
our
drug
candidates
or
favorable
publicity
about
competitive
drugs;
•convenience
and
ease
of
administration
of
our
drug
candidates;
and
•willingness
of
third-party
payors
to
reimburse
for
the
cost
of
our
drug
candidates.
If
our
future
drugs
fail
to
achieve
market
acceptance,
we
will
not
be
able
to
generate
significant
revenues
and
may
never
achieve
profitability.Even if any of our drug candidates receive FDA approval, the terms of the approval may limit such drug's commercial potential. Additionally, even after receiptof FDA approval, such drug would be subject to substantial, ongoing regulatory requirements.
The
FDA
has
complete
discretion
over
the
approval
of
our
drug
candidates.
If
the
FDA
grants
approval,
the
scope
of
the
approval
may
limit
our
ability
tocommercialize
such
drug,
and
in
turn,
limit
our
ability
to
generate
substantial
product
revenue.
For
example,
the
FDA
may
grant
approval
contingent
on
theperformance
of
costly
post-approval
clinical
trials
or
subject
to
warnings
or
contraindications.
Additionally,
even
after
granting
approval,
the
manufacturingprocesses,
labeling,
packaging,
distribution,
adverse
event
reporting,
storage,
advertising,
promotion
and
recordkeeping
for
such
drug
will
be
subject
to
extensiveand
ongoing
regulatory
requirements.
In
addition,
manufacturers
of
our
drug
candidates
are
required
to
comply
with
cGMP
regulations,
which
include
requirementsrelated
to
quality
control
and
quality
assurance
as
well
as
the
corresponding
maintenance
of
records
and
documentation.
Further,
regulatory
authorities
must
inspectand
approve
these
manufacturing
facilities
before
they
can
be
used
to
manufacture
our
drug
candidates,
and
these
facilities
are
subject
to
continual
review
andperiodic
inspections
by
the
FDA
and
other
regulatory
authorities
for
compliance
with
cGMP
regulations.
If
we
or
a
third
party
discover
previously
unknownproblems
with
a
drug,
such
as
adverse
events
of
unanticipated
severity
or
frequency,
or
problems
with
the
facility
where
the
drug
is
manufactured,
a
regulatoryauthority
may
impose
restrictions
on
that
product,
the
manufacturer
or
us,
including
requiring
withdrawal
of
the
drug
from
the
market
or
suspension
ofmanufacturing.
If
we,
our
drug
candidates
or
the
manufacturing
facilities
for
our
drug
candidates
fail
to
comply
with
regulatory
requirements
of
the
FDA
and/orother
non-U.S.
regulatory
authorities,
we
could
be
subject
to
administrative
or
judicially
imposed
sanctions,
including
the
following:•warning
letters;
•civil
or
criminal
penalties
and
fines;40 Table
of
Contents•injunctions;
•consent
decrees;
•suspension
or
withdrawal
of
regulatory
approval;
•suspension
of
any
ongoing
clinical
studies;
•voluntary
or
mandatory
product
recalls
and
publicity
requirements;
•refusal
to
accept
or
approve
applications
for
marketing
approval
of
new
drugs;
•restrictions
on
operations,
including
costly
new
manufacturing
requirements;
or
•seizure
or
detention
of
drugs
or
import
bans.
The
regulatory
requirements
and
policies
may
change,
and
additional
government
regulations
may
be
enacted
with
which
we
may
also
be
required
to
comply.We
cannot
predict
the
likelihood,
nature
or
extent
of
government
regulation
that
may
arise
from
future
legislation
or
administrative
action,
either
in
the
UnitedStates
or
in
other
countries.
If
we
are
not
able
to
maintain
regulatory
compliance,
we
may
not
be
permitted
to
market
our
future
products
and
our
business
maysuffer.Reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance of any of our drug candidates. If there is notsufficient reimbursement for our future drugs, it is less likely that such drugs will be widely used.
Market
acceptance
and
sales
of
any
of
our
drug
candidates
for
which
we
obtain
regulatory
approval
will
depend
on
reimbursement
policies
and
may
beaffected
by
future
health
care
reform
measures
in
both
the
United
States
and
foreign
jurisdictions.
Government
authorities
and
third-party
payors,
such
as
privatehealth
insurers
and
health
maintenance
organizations,
decide
which
drugs
they
will
cover
and
establish
payment
levels.
In
addition,
government
authorities
andthese
third-party
payors
are
increasingly
attempting
to
contain
health
care
costs
by
demanding
price
discounts
or
rebates
and
limiting
both
the
types
and
variety
ofdrugs
that
they
will
cover
and
the
amounts
that
they
will
pay
for
these
drugs.
In
addition,
we
might
need
to
conduct
post-marketing
studies
in
order
to
demonstratethe
cost-effectiveness
of
any
future
drugs
to
such
payors'
satisfaction.
Such
studies
might
require
us
to
commit
a
significant
amount
of
management
time
andfinancial
and
other
resources.
Reimbursement
rates
may
vary
according
to
the
use
of
the
drug
and
the
clinical
setting
in
which
it
is
used,
may
be
based
on
payments
allowed
for
lower-costproducts
that
are
already
reimbursed,
may
be
incorporated
into
existing
payments
for
other
products
or
services
and
may
reflect
budgetary
constraints
and/orimperfections
in
Medicare
or
Medicaid
data
used
to
calculate
these
rates.
Net
prices
for
drugs
may
be
reduced
by
mandatory
discounts
or
rebates
required
bygovernment
health
care
programs.
Such
legislation,
or
similar
regulatory
changes
or
relaxation
of
laws
that
restrict
imports
of
drugs
from
other
countries,
couldreduce
the
net
price
we
receive
for
any
future
marketed
drugs.
As
a
result,
our
future
drugs
might
not
ultimately
be
considered
cost-effective.
We
cannot
be
certain
that
reimbursement
will
be
available
for
any
drug
candidates
that
we
develop.
Also,
we
cannot
be
certain
that
reimbursement
policieswill
not
reduce
the
demand
for,
or
the
price
paid
for,
any
future
drugs.
If
reimbursement
is
not
available
or
is
available
on
a
limited
basis,
we
may
not
be
able
tosuccessfully
commercialize
any
drug
candidates
that
we
develop.41 Table
of
ContentsOther factors could affect the demand for and sales and profitability of any drug candidates that we may commercialize in the future.
In
general,
other
factors
that
could
affect
the
demand
for
and
sales
and
profitability
of
our
future
drugs
include,
but
are
not
limited
to:•the
timing
of
regulatory
approval,
if
any,
of
competitive
drugs;
•our
or
any
other
of
our
partners'
pricing
decisions,
as
applicable,
including
a
decision
to
increase
or
decrease
the
price
of
a
drug,
and
the
pricingdecisions
of
our
competitors;
•government
and
third-party
payor
reimbursement
and
coverage
decisions
that
affect
the
utilization
of
our
future
drugs
and
competing
drugs;
•negative
safety
or
efficacy
data
from
new
clinical
studies
conducted
either
in
the
U.S.
or
internationally
by
any
party,
which
could
cause
the
sales
ofour
future
drugs
to
decrease
or
a
future
drug
to
be
recalled;
•the
degree
of
patent
protection
afforded
our
future
drugs
by
patents
granted
to
or
licensed
by
us
and
by
the
outcome
of
litigation
involving
our
orany
of
our
licensor's
patents;
•the
outcome
of
litigation
involving
patents
of
other
companies
concerning
our
future
drugs
or
processes
related
to
production
and
formulation
ofthose
drugs
or
uses
of
those
drugs;
•the
increasing
use
and
development
of
alternate
therapies;
•the
rate
of
market
penetration
by
competing
drugs;
and
•the
termination
of,
or
change
in,
existing
arrangements
with
our
partners.
Any
of
these
factors
could
have
a
material
adverse
effect
on
the
sales
of
any
drug
candidates
that
we
may
commercialize
in
the
future.Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally.
We
plan
to
seek
approval
for
glembatumumab
vedotin
in
Europe,
may
seek
approval
of
our
other
drug
candidates
outside
the
United
States
and
may
marketfuture
products
in
international
markets.
In
order
to
market
our
future
products
in
the
European
Economic
Area,
or
EEA,
and
many
other
foreign
jurisdictions,
wemust
obtain
separate
regulatory
approvals.
Specifically,
in
the
EEA,
medicinal
products
can
only
be
commercialized
after
obtaining
a
Marketing
Authorization,
orMA.
Before
granting
the
MA,
the
European
Medicines
Agency
or
the
competent
authorities
of
the
member
states
of
the
EEA
make
an
assessment
of
the
risk-benefitbalance
of
the
product
on
the
basis
of
scientific
criteria
concerning
its
quality,
safety
and
efficacy.
The
approval
procedures
vary
among
countries
and
can
involve
additional
clinical
testing,
and
the
time
required
to
obtain
approval
may
differ
from
thatrequired
to
obtain
FDA
approval.
Clinical
studies
conducted
in
one
country
may
not
be
accepted
by
regulatory
authorities
in
other
countries.
Approval
by
the
FDAdoes
not
ensure
approval
by
regulatory
authorities
in
other
countries,
and
approval
by
one
or
more
foreign
regulatory
authorities
does
not
ensure
approval
byregulatory
authorities
in
other
foreign
countries
or
by
the
FDA.
However,
a
failure
or
delay
in
obtaining
regulatory
approval
in
one
country
may
have
a
negativeeffect
on
the
regulatory
process
in
others.
The
foreign
regulatory
approval
process
may
include
all
of
the
risks
associated
with
obtaining
FDA
approval.
We
maynot
obtain
foreign
regulatory
approvals
on
a
timely
basis,
if
at
all.
We
may
not
be
able
to
file
for
regulatory
approvals,
and
even
if
we
file
we
may
not
receivenecessary
approvals
to
commercialize
our
products
in
any
market.42 Table
of
ContentsIf we obtain approval to commercialize any approved products outside of the United States, a variety of risks associated with international operations couldmaterially adversely affect our business.
If
our
drug
candidates
are
approved
for
commercialization
outside
of
the
United
States,
we
expect
that
we
will
be
subject
to
additional
risks
related
tointernational
operations
and
entering
into
international
business
relationships,
including:•different
regulatory
requirements
for
drug
approvals;
•reduced
protection
for
intellectual
property
rights,
including
trade
secret
and
patent
rights;
•unexpected
changes
in
tariffs,
trade
barriers
and
regulatory
requirements;
•economic
weakness,
including
inflation,
or
political
instability
in
particular
foreign
economies
and
markets;
•compliance
with
tax,
employment,
immigration
and
labor
laws
for
employees
living
or
traveling
abroad;
•foreign
taxes,
including
withholding
of
payroll
taxes;
•foreign
currency
fluctuations,
which
could
result
in
increased
operating
expenses
and
reduced
revenues,
and
other
obligations
incident
to
doingbusiness
in
another
country;
•workforce
uncertainty
in
countries
where
employment
regulations
are
different
than,
and
labor
unrest
is
more
common
than,
in
the
United
States;
•production
shortages
resulting
from
any
events
affecting
raw
material
supply
or
manufacturing
capabilities
abroad;
•business
interruptions
resulting
from
geopolitical
actions,
including
war
and
terrorism,
or
natural
disasters,
including
earthquakes,
hurricanes,
floodsand
fires;
and
•difficulty
in
importing
and
exporting
clinical
trial
materials
and
study
samples.Risks
Related
to
Reliance
on
Third
PartiesWe rely on third parties to plan, conduct and monitor our clinical tests, and their failure to perform as required would interfere with our product development.
We
rely
on
third
parties
to
conduct
a
significant
portion
of
our
clinical
development
activities.
These
activities
include
clinical
patient
recruitment
andobservation,
clinical
trial
monitoring,
clinical
data
management
and
analysis,
safety
monitoring
and
project
management.
We
conduct
project
management
andmedical
and
safety
monitoring
in-house
for
some
of
our
programs
and
rely
on
third
parties
for
the
remainder
of
our
clinical
development
activities.
If
any
of
thesethird
parties
is
unable
to
perform
in
a
quality
and
timely
manner,
and
at
a
feasible
cost,
our
clinical
studies
will
face
delays.
Further,
if
any
of
these
third
partiesfails
to
perform
as
we
expect
or
if
their
work
fails
to
meet
regulatory
standards,
our
testing
could
be
delayed,
cancelled
or
rendered
ineffective.We rely on contract manufacturers over whom we have limited control. Should the cost, delivery and quality of clinical and commercial-grade materialsmanufactured by us in our Fall River facility or supplied by contract manufacturers vary to our disadvantage, our business operations could suffer significantharm.
We
have
limited
experience
in
commercial
manufacturing.
We
rely
on
CMOs
to
manufacture
drug
substance
and
drug
product
for
our
late-stage
clinicalstudies
of
glembatumumab
vedotin
as
well
as
for
future
commercial
supplies.
Our
ability
to
conduct
late-stage
clinical
trials,
manufacture
and
commercialize
ourdrug
candidates,
if
regulatory
approval
is
obtained,
depends
on
the
ability
of
such
third
parties
to
manufacture
our
drug
candidates
on
a
large
scale
at
a
competitivecost
and
in43 Table
of
Contentsaccordance
with
cGMP
and
foreign
regulatory
requirements,
if
applicable.
We
also
rely
on
CMOs
for
filling,
packaging,
storage
and
shipping
of
drug
product.
Inorder
for
us
to
establish
our
own
commercial
manufacturing
facility,
we
would
require
substantial
additional
funds
and
would
need
to
hire
and
retain
significantadditional
personnel
and
comply
with
extensive
cGMP
regulations
applicable
to
such
a
facility.
The
commercial
manufacturing
facility
would
also
need
to
belicensed
for
the
production
of
our
drug
candidates
by
the
FDA.
For
our
most
advanced
programs,
we
are
working
with
CMOs
under
established
manufacturing
arrangements
that
comply
with
the
FDA's
requirements
andother
regulatory
standards,
although
there
is
no
assurance
that
the
manufacturing
will
be
successful.
Prior
to
approval
of
any
drug
candidate,
the
FDA
must
reviewand
approve
validation
studies
for
drug
product.
The
manufacturing
processes
for
our
drug
candidates
and
immunotherapeutic
delivery
systems
utilize
knowntechnologies.
We
believe
that
the
products
we
currently
have
under
development
can
be
scaled
up
to
permit
manufacture
in
commercial
quantities.
However,
therecan
be
no
assurance
that
we
will
not
encounter
difficulties
in
scaling
up
the
manufacturing
processes.
Significant
scale-up
of
manufacturing
may
result
inunanticipated
technical
challenges
and
may
require
additional
validation
studies
that
the
FDA
must
review
and
approve.
CMOs
may
encounter
difficulties
inscaling
up
production,
including
problems
involving
raw
material
suppliers,
production
yields,
technical
difficulties,
scaled-up
product
characteristics,
qualitycontrol
and
assurance,
shortage
of
qualified
personnel,
capacity
constraints,
changing
priorities
within
the
CMOs,
compliance
with
FDA
and
foreign
regulations,environmental
compliance,
production
costs
and
development
of
advanced
manufacturing
techniques
and
process
controls.
Any
of
these
difficulties,
if
they
occurand
are
not
overcome
to
the
satisfaction
of
the
FDA
or
other
regulatory
agency,
could
lead
to
significant
delays
and
possibly
the
termination
of
the
developmentprogram
for
such
drug
candidate.
These
risks
become
more
acute
as
we
scale
up
for
commercial
quantities,
where
a
reliable
source
of
drug
product
becomes
criticalto
commercial
success.
The
commercial
viability
of
any
of
our
drug
candidates,
if
approved,
will
depend
on
the
ability
of
our
contract
manufacturers
to
producedrug
product
on
a
large
scale.
Failure
to
achieve
this
level
of
supply
can
jeopardize
and
prevent
the
successful
commercialization
of
the
drug.
To
date,
we
have
utilized
CMOs
for
the
manufacture
of
clinical
trial
supplies
of
glembatumumab
vedotin.
In
2017,
we
successfully
transferred
the
mAbintermediate
manufacturing
process
and
manufactured
a
cGMP
batch
at
Patheon
Biologics
in
Brisbane,
Australia.
Piramal
Healthcare
UK
Ltd.
manufactures
theantibody-drug
conjugate
(ADC)
with
the
vcMMAE
linker-toxin.
The
drug
substance
is
then
filled
and
packaged
at
our
drug
product
commercial
manufacturer,
BSPPharma.
We
rely
on
MilliporeSigma
for
supplying
suitable
quantities
of
vcMMAE.
Any
manufacturing
failures
or
delays
by
our
glembatumumab
vedotin
contractmanufacturers
or
suppliers
of
materials
could
cause
delays
in
our
glembatumumab
vedotin
clinical
studies,
including
the
METRIC
study
and/or
a
BLA
filing
and,
ifregulatory
approval
is
obtained,
commercial
launch
of
glembatumumab
vedotin.
We
operate
our
own
cGMP
manufacturing
facility
in
Fall
River,
Massachusetts,
to
produce
drug
substance
for
our
current
and
planned
early-stage
clinicaltrials.
Our
Fall
River
manufacturing
facility
has
250L
and
1000L
bioreactor
capacity
and
is
able
to
manufacture
in
compliance
with
FDA
regulations,
allowing
usto
distribute
potential
products
to
clinical
sites
in
the
U.S.
for
early-stage
clinical
trials.
We
currently
manufacture
CDX-1140,
CDX-301
and
CDX-1401
drugsubstance
and
CDX-014
mAb
intermediate
in
our
Fall
River
facility
for
our
current
and
planned
Phase
1
and
Phase
2
clinical
trials.
CDX-014,
an
ADC,
is
thenmanufactured
by
Lonza
(Visp).
We
expect
that
our
existing
clinical
supplies
of
CDX-3379
and
varlilumab
will
be
sufficient
to
carry
out
our
current
plannedclinical
development.
Additional
manufacturing
options
are
under
review
and
may
involve
utilization
of
the
Fall
River
facility
and/or
a
CMO.
All
products
are
thenfilled
and
packaged
at
contract
manufacturers.
Any
manufacturing
failures
or
compliance
issues
at
contract
manufacturers
could
cause
delays
in
our
Phase
1
andPhase
2
clinical
studies
for
these
drug
candidates.44 Table
of
Contents
Our
leading
drug
candidates
require
specialized
manufacturing
capabilities
and
processes.
We
may
face
difficulty
in
securing
commitments
from
U.S.
andforeign
contract
manufacturers
as
these
manufacturers
could
be
unwilling
or
unable
to
accommodate
our
needs.
Relying
on
foreign
manufacturers
involves
peculiarand
increased
risks,
including
the
risk
relating
to
the
difficulty
foreign
manufacturers
may
face
in
complying
with
cGMP
requirements
as
a
result
of
languagebarriers,
lack
of
familiarity
with
cGMP
or
the
FDA
regulatory
process
or
other
causes,
economic
or
political
instability
in
or
affecting
the
home
countries
of
ourforeign
manufacturers,
shipping
delays,
potential
changes
in
foreign
regulatory
laws
governing
the
sales
of
our
product
supplies,
fluctuations
in
foreign
currencyexchange
rates
and
the
imposition
or
application
of
trade
restrictions.
There
can
be
no
assurances
that
contract
manufacturers
will
be
able
to
meet
our
timetable
and
requirements.
Further,
contract
manufacturers
must
operate
incompliance
with
cGMP
and
failure
to
do
so
could
result
in,
among
other
things,
the
disruption
of
product
supplies.
As
noted
above,
non-U.S.
contractmanufacturers
may
face
special
challenges
in
complying
with
cGMP
requirements,
and
although
we
are
not
currently
dependent
on
non-U.S.
collaborators
orcontract
manufacturers,
we
may
choose
or
be
required
to
rely
on
non-U.S.
sources
in
the
future
as
we
seek
to
develop
stable
supplies
of
increasing
quantities
ofmaterials
for
ongoing
clinical
trials
of
larger
scale.
Our
dependence
upon
third
parties
for
the
manufacture
of
our
products
may
adversely
affect
our
profit
marginsand
our
ability
to
develop,
manufacture,
sell
and
deliver
products
on
a
timely
and
competitive
basis.We currently rely on sole suppliers for key components of our drug candidates. Any production problems with our suppliers or other disruptions in the supplyof such components could adversely affect us.
We
currently
rely
on
sole
suppliers
for
key
components
of
our
drug
candidates,
including
vcMMAE
for
glembatumumab
vedotin
and
Hiltonol®
for
CDX-1401.
While
we
work
with
the
suppliers
of
these
key
components
to
ensure
continuity
of
supply,
no
assurance
can
be
given
that
these
efforts
will
be
successful.
Inaddition,
due
to
regulatory
requirements
relating
to
the
qualification
of
suppliers,
we
may
not
be
able
to
establish
additional
or
replacement
sources
on
a
timelybasis
or
without
excessive
cost.
If
our
suppliers
were
to
terminate
our
arrangements
or
fail
to
meet
our
supply
needs,
we
might
be
forced
to
delay
our
developmentprograms,
or
we
could
face
disruptions
in
the
distribution
and
sale
of
any
drugs
for
which
we
obtain
regulatory
approval.We currently rely on third-party collaborators to develop and commercialize companion diagnostic tests for certain of our drug candidates, including our leaddrug candidate glembatumumab vedotin.
We
do
not
have
experience
or
capabilities
in
developing,
administering,
obtaining
regulatory
approval
for,
or
commercializing
companion
diagnostic
tests
andwill
need
to
rely
in
large
part
on
third-party
collaborators
to
perform
these
functions.
Companion
diagnostic
tests
are
subject
to
regulation
by
the
FDA
and
similarregulatory
authorities
outside
of
the
United
States
as
medical
devices
and
require
separate
regulatory
approval
prior
to
commercialization.
We
are
dependent
onsuch
third-party
collaborators
to
obtain
regulatory
approval
and
commercialize
such
companion
diagnostic
tests.
Such
third-party
collaborators:•may
not
perform
its
obligations
as
expected
or
as
required
under
our
collaboration
agreement;
•may
encounter
production
difficulties
that
could
constrain
the
supply
of
the
companion
diagnostic
test;
•may
have
difficulties
gaining
acceptance
of
the
use
of
the
companion
diagnostic
test
in
the
clinical
community;
•may
not
pursue
commercialization
of
the
companion
diagnostic
test
even
if
they
receive
any
required
regulatory
approvals;45 Table
of
Contents•may
elect
not
to
continue
the
development
or
commercialization
of
the
companion
diagnostic
test
based
on
changes
in
the
third
parties'
strategicfocus
or
available
funding,
or
external
factors
such
as
an
acquisition,
that
divert
resources
or
create
competing
priorities;
•may
not
commit
sufficient
resources
to
the
marketing
and
distribution
of
the
companion
diagnostic
test;
and
•may
terminate
their
relationship
with
us.
If
such
third-party
collaborators
fail
to
develop,
obtain
regulatory
approval
or
commercialize
the
companion
diagnostic
test,
we
may
not
be
able
to
enter
intoarrangements
with
another
diagnostic
company
to
obtain
supplies
of
an
alternative
diagnostic
test
for
use
in
connection
with
the
development
andcommercialization
of
our
drug
candidates
or
do
so
on
commercially
reasonable
terms,
which
could
adversely
affect
and/or
delay
the
development
orcommercialization
of
our
drug
candidates.Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them.
Because
we
rely
on
third
parties
to
develop
our
drug
candidates,
we
must
share
trade
secrets
with
them.
We
seek
to
protect
our
proprietary
technology
in
partby
entering
into
confidentiality
agreements
and,
if
applicable,
material
transfer
agreements,
collaborative
research
agreements,
consulting
agreements
or
othersimilar
agreements
with
our
collaborators,
advisors,
employees
and
consultants
prior
to
beginning
research
or
disclosing
proprietary
information.
These
agreementstypically
restrict
the
ability
of
our
collaborators,
advisors,
employees
and
consultants
to
publish
data
potentially
relating
to
our
trade
secrets.
Our
academiccollaborators
typically
have
rights
to
publish
data,
provided
that
we
are
notified
in
advance
and
may
delay
publication
for
a
specified
time
in
order
to
secure
ourintellectual
property
rights
arising
from
the
collaboration.
In
other
cases,
publication
rights
are
controlled
exclusively
by
us,
although
in
some
cases
we
may
sharethese
rights
with
other
parties.
We
also
conduct
joint
research
and
development
programs
which
may
require
us
to
share
trade
secrets
under
the
terms
of
researchand
development
partnership
or
similar
agreements.
Despite
our
efforts
to
protect
our
trade
secrets,
our
competitors
may
discover
our
trade
secrets,
either
throughbreach
of
these
agreements,
independent
development
or
publication
of
information
including
our
trade
secrets
in
cases
where
we
do
not
have
proprietary
orotherwise
protected
rights
at
the
time
of
publication.
A
competitor's
discovery
of
our
trade
secrets
would
impair
our
competitive
position.Risks
Related
to
Business
OperationsWe depend greatly on the intellectual capabilities and experience of our key executives, commercial personnel and scientists, and the loss of any of them couldaffect our ability to develop our products.
The
loss
of
any
of
our
executive
officers
could
harm
us.
We
entered
into
employment
agreements
with
each
of
our
executive
officers,
although
an
employmentagreement
as
a
practical
matter
does
not
guarantee
retention
of
an
employee.
We
also
depend
on
our
scientific
and
clinical
collaborators
and
advisors,
all
of
whomhave
outside
commitments
that
may
limit
their
availability
to
us.
In
addition,
we
believe
that
our
future
success
will
depend
in
large
part
upon
our
ability
to
attractand
retain
highly
skilled
scientific,
managerial
and
marketing
personnel,
particularly
as
we
expand
our
activities
in
clinical
trials,
the
regulatory
approval
processand
sales
and
manufacturing.
We
routinely
enter
into
consulting
agreements
with
our
scientific
and
clinical
collaborators
and
advisors,
key
opinion
leaders
andheads
of
academic
departments
in
the
ordinary
course
of
our
business.
We
also
enter
into
contractual
agreements
with
physicians
and
institutions
who
recruitpatients
into
our
clinical
trials
on
our
behalf
in
the
ordinary
course
of
our
business.
Notwithstanding
these
arrangements,
we
face
significant
competition
for
thistype
of
personnel
from
other
companies,
research
and
academic
institutions,
government
entities
and
other
organizations.
We
cannot
predict
our
success
in
hiring
orretaining
the
personnel
we
require
for
continued
growth.46 Table
of
ContentsWe may expand our clinical development, regulatory and sales and marketing capabilities, and as a result, we may encounter difficulties in managing ourgrowth, which could disrupt our operations.
We
expect
that
if
our
drug
candidates
continue
to
progress
in
development,
we
may
require
significant
additional
investment
in
personnel,
managementsystems
and
resources,
particularly
in
the
build
out
of
our
commercial
capabilities.
To
date
we
have
hired
a
core
commercial
team
to
plan
for
potential
commerciallaunches
if
any
of
our
drug
candidates
are
approved.
Over
the
next
several
years,
we
may
experience
significant
growth
in
the
number
of
our
employees
and
thescope
of
our
operations,
particularly
in
the
areas
of
drug
development,
regulatory
affairs
and
sales
and
marketing.
To
manage
this
potential
future
growth,
we
maycontinue
to
implement
and
improve
our
managerial,
operational
and
financial
systems,
expand
our
facilities
and
continue
to
recruit
and
train
additional
qualifiedpersonnel.
Due
to
our
limited
financial
resources
and
the
limited
experience
of
our
management
team
in
managing
a
company
with
such
anticipated
growth,
wemay
not
be
able
to
effectively
manage
the
expansion
of
our
operations
or
recruit
and
train
additional
qualified
personnel.
The
physical
expansion
of
our
operationsmay
lead
to
significant
costs
and
may
divert
our
management
and
business
development
resources.
Any
inability
to
manage
growth
could
delay
the
execution
ofour
business
plans
or
disrupt
our
operations.We may not operate efficiently or realize the anticipated benefits of our acquisition of Kolltan.
The
success
of
the
Kolltan
merger
will
depend
on,
among
other
things,
the
combined
company's
ability
to
operate
efficiently
and
to
achieve
its
businessobjectives,
including
the
successful
development
of
its
drug
candidates.
Achieving
the
benefits
of
the
acquisition
will
depend
in
part
on
the
successful
developmentof
the
preclinical
and
clinical
programs
acquired
from
Kolltan.
Following
the
acquisition,
we
decided
to
modify
the
Fc
portion
of
CDX-0158
becauseapproximately
two-thirds
of
the
patients
in
the
Phase
1
dose-escalation
study
of
CDX-0158
in
patients
with
advanced
refractory
gastrointestinal
stromal
tumors,
orGIST,
and
other
KIT
positive
tumors
had
infusion
reactions.
This
second-generation
version,
called
CDX-0159,
also
includes
modifications
to
increase
the
half-lifeof
the
antibody,
giving
it
an
additional
advantage
over
CDX-0158.
We
are
developing
CDX-0159
in-house
with
the
intention
of
replacing
CDX-0158
in
clinicaldevelopment.
As
a
result
in
the
third
quarter
of
2017,
we
recorded
a
non-cash
partial
impairment
charge
of
$13.0
million
related
to
this
clinical
program
due
tochanges
in
projected
development
and
regulatory
timelines.
The
time
periods
to
receive
approvals
from
the
FDA
and
other
regulatory
agencies
are
subject
touncertainty
and
therefore
we
will
continue
to
evaluate
the
development
progress
for
the
anti-KIT
program
and
monitor
the
remaining
$27.0
million
intangible
assetfor
further
impairment.
If
we
experience
further
delays
or
do
not
successfully
develop
the
clinical
programs
acquired
from
Kolltan,
we
may
incur
furtherimpairment
charges
and
may
not
realize
the
anticipated
benefits
of
the
Kolltan
acquisition,
which
would
have
an
adverse
effect
on
our
business
prospects
andresults
of
operations.Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which couldhave a material adverse effect on our business.
We
are
exposed
to
the
risk
of
employee
fraud
or
other
misconduct.
Misconduct
by
employees
could
include
intentional
failures
to
comply
with
FDAregulations,
provide
accurate
information
to
the
FDA,
comply
with
applicable
privacy
laws,
comply
with
manufacturing
standards
we
have
established,
complywith
federal
and
state
health
care
fraud
and
abuse
laws
and
regulations,
report
financial
information
or
data
accurately
or
disclose
unauthorized
activities
to
us.
Inparticular,
sales,
marketing
and
business
arrangements
in
the
health
care
industry
are
subject
to
extensive
laws
and
regulations
intended
to
prevent
fraud,
kickbacks,self-dealing
and
other
abusive
practices.
These
laws
and
regulations
may
restrict
or
prohibit
a
wide
range
of
pricing,
discounting,
marketing
and
promotion,
salescommission,
customer
incentive
programs
and
other
business
arrangements.
Employee
misconduct
could
also
involve
the
improper
use
of
information
obtained
inthe
course
of
clinical
trials,
which
could47 Table
of
Contentsresult
in
regulatory
sanctions
and
serious
harm
to
our
reputation.
We
have
adopted
a
Code
of
Business
Conduct
and
Ethics
and
launched
a
Health
Care
Complianceprogram,
but
it
is
not
always
possible
to
identify
and
deter
employee
misconduct.
The
precautions
we
take
to
detect
and
prevent
this
activity
may
not
be
effective
incontrolling
unknown
or
unmanaged
risks
or
losses
or
in
protecting
us
from
governmental
investigations
or
other
actions
or
lawsuits
stemming
from
a
failure
to
bein
compliance
with
such
laws
or
regulations.
If
any
such
actions
are
instituted
against
us
and
we
are
not
successful
in
defending
ourselves
or
asserting
our
rights,those
actions
could
have
a
significant
effect
on
our
business
and
results
of
operations,
including
the
imposition
of
significant
fines
or
other
sanctions.We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
From
time
to
time
we
may
consider
strategic
transactions,
including
acquisitions
of
companies,
such
as
our
acquisition
of
Kolltan
in
the
fourth
quarter
of
2016,asset
purchases
and
out-licensing
or
in-licensing
of
products,
drug
candidates
or
technologies.
Additional
potential
transactions
that
we
may
consider
include
avariety
of
different
business
arrangements,
including
spin-offs,
strategic
partnerships,
joint
ventures,
restructurings,
divestitures,
business
combinations,acquisitions
of
assets
and
investments.
Any
such
transaction
may
require
us
to
incur
non-recurring
or
other
charges,
may
increase
our
near
and
long-termexpenditures
and
may
pose
significant
integration
challenges
or
disrupt
our
management
or
business,
which
could
adversely
affect
our
operations
and
financialresults.
For
example,
these
transactions
may
entail
numerous
operational
and
financial
risks,
including:•exposure
to
unknown
liabilities;
•disruption
of
our
business
and
diversion
of
our
management's
time
and
attention
in
order
to
develop
acquired
products,
drug
candidates
ortechnologies;
•incurrence
of
substantial
debt
or
dilutive
issuances
of
equity
securities
to
pay
for
acquisitions;
•higher
than
expected
acquisition
and
integration
costs;
•write-downs
of
assets
or
goodwill
or
impairment
charges;
•increased
amortization
expenses;
•difficulty
and
cost
in
combining
the
operations
and
personnel
of
any
acquired
businesses
with
our
operations
and
personnel;
•impairment
of
relationships
with
key
suppliers
or
customers
of
any
acquired
businesses
due
to
changes
in
management
and
ownership;
and
•inability
to
retain
key
employees
of
any
acquired
businesses.
Accordingly,
although
there
can
be
no
assurance
that
we
will
undertake
or
successfully
complete
any
transactions
of
the
nature
described
above,
anytransactions
that
we
do
complete
could
have
a
material
adverse
effect
on
our
business,
results
of
operations,
financial
condition
and
prospects.We may not be able to successfully integrate our existing technology or to modify our technologies to create new immunotherapeutic drugs.
If
we
are
able
to
integrate
our
acquired
assets,
such
as
Kolltan's
drug
development
programs
and
TAM
technology,
and
licensed
assets
with
ourimmunotherapy
technologies,
we
believe
these
assets
will
give
our
immunotherapeutic
drugs
a
competitive
advantage.
However,
if
we
are
unable
to
successfullyintegrate
licensed
assets,
or
other
technologies
which
we
have
acquired
or
may
acquire
in
the
future,
with
our
existing
technologies
and
potential
products
currentlyunder
development,
we
may
be
unable
to
realize
any
benefit
from
our
acquisition
of
these
assets,
or
other
technologies
which
we
have48 Table
of
Contentsacquired
or
may
acquire
in
the
future,
and
we
may
face
the
loss
of
our
investment
of
financial
resources
and
time
in
the
integration
process.
We
believe
that
our
immunotherapy
technology
portfolio
may
offer
opportunities
to
develop
immunotherapeutic
drugs
that
treat
a
variety
of
cancers
andinflammatory
and
infectious
diseases
by
stimulating
a
patient's
immune
system
against
those
diseases.
If
our
immunotherapy
technology
portfolio
cannot
be
used
tocreate
effective
immunotherapeutic
drugs
against
a
variety
of
diseases,
we
may
lose
all
or
portions
of
our
investment
in
development
efforts
for
new
drugcandidates.Our internal computer systems, or those of our CROs, CMOs, or other contractors or consultants, may fail or suffer security breaches, which could result in amaterial disruption of our drug development programs.
Despite
the
implementation
of
security
measures,
our
internal
computer
systems
and
those
of
our
CROs,
CMOs,
and
other
contractors
and
consultants
arevulnerable
to
damage
from
cyberattacks,
malicious
intrusion,
computer
viruses,
unauthorized
access,
loss
of
data
privacy,
natural
disasters,
terrorism,
war
andtelecommunication,
electrical
failures
or
other
significant
disruption.
If
such
an
event
were
to
occur
and
cause
interruptions
in
our
operations,
it
could
result
in
amaterial
disruption
of
our
drug
development
programs
and
commercialization
efforts.
For
example,
the
loss
of
clinical
study
data
from
completed
or
ongoingclinical
studies
for
any
of
our
drug
candidates
could
result
in
delays
in
our
regulatory
approval
efforts
and
significantly
increase
our
costs
to
recover
or
reproducethe
data.
To
the
extent
that
any
disruption
or
security
breach
were
to
result
in
a
loss
of
or
damage
to
our
data
or
applications
or
inappropriate
disclosure
ofconfidential
or
proprietary
information,
we
could
incur
liability
and
the
further
development
or
commercialization
of
our
drug
candidates
could
be
delayed.Our business requires us to use hazardous materials, which increases our exposure to dangerous and costly accidents.
Our
research
and
development
activities
involve
the
use
of
hazardous
chemicals,
biological
materials
and
radioactive
compounds.
Although
we
believe
thatour
safety
procedures
for
handling
and
disposing
of
hazardous
materials
comply
with
the
standards
prescribed
by
applicable
laws
and
regulations,
we
cannotcompletely
eliminate
the
risk
of
accidental
contamination
or
injury
from
these
materials.
In
the
event
of
an
accident,
an
injured
party
will
likely
sue
us
for
anyresulting
damages
with
potentially
significant
liability.
The
ongoing
cost
of
complying
with
environmental
laws
and
regulations
is
significant
and
may
increase
inthe
future.We face the risk of product liability claims, which could exceed our insurance coverage, and product recalls, each of which could deplete our cash resources.
As
a
participant
in
the
pharmaceutical,
biotechnology
and
immunotherapeutic
drug
industries,
we
are
exposed
to
the
risk
of
product
liability
claims
allegingthat
use
of
our
drug
candidates
caused
an
injury
or
harm.
These
claims
can
arise
at
any
point
in
the
development,
testing,
manufacture,
marketing
or
sale
of
ourdrug
candidates
and
may
be
made
directly
by
patients
involved
in
clinical
trials
of
our
products,
by
consumers
or
health
care
providers
or
by
individuals,organizations
or
companies
selling
our
products.
Product
liability
claims
can
be
expensive
to
defend,
even
if
the
drug
or
drug
candidate
did
not
actually
cause
thealleged
injury
or
harm.
Insurance
covering
product
liability
claims
becomes
increasingly
expensive
as
a
drug
candidate
moves
through
the
development
pipeline
tocommercialization.
Under
our
license
agreements,
we
are
required
to
maintain
clinical
trial
liability
insurance
coverage
up
to
$15
million.
However,
there
can
be
noassurance
that
such
insurance
coverage
is
or
will
continue
to
be
adequate
or
available
to
us
at
a
cost
acceptable
to
us
or
at
all.
We
may
choose
or
find
it
necessaryunder
our
collaborative
agreements
to
increase
our
insurance
coverage
in
the
future.
We
may
not
be
able
to
secure
greater
or
broader49 Table
of
Contentsproduct
liability
insurance
coverage
on
acceptable
terms
or
at
reasonable
costs
when
needed.
Any
liability
for
damages
resulting
from
a
product
liability
claimcould
exceed
the
amount
of
our
coverage,
require
us
to
pay
a
substantial
monetary
award
from
our
own
cash
resources
and
have
a
material
adverse
effect
on
ourbusiness,
financial
condition
and
results
of
operations.
Moreover,
a
product
recall,
if
required,
could
generate
substantial
negative
publicity
about
our
products
andbusiness
and
inhibit
or
prevent
development
of
our
drug
candidates
and,
if
approval
is
obtained,
commercialization
of
our
future
drugs.Risks
Related
to
Intellectual
PropertyWe license technology from other companies to develop products, and those companies could influence research and development or restrict our use of it. Inaddition, if we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights that are important to ourbusiness.
Companies
that
license
technologies
to
us
that
we
use
in
our
research
and
development
programs
may
require
us
to
achieve
milestones
or
devote
minimumamounts
of
resources
to
develop
products
using
those
technologies.
They
may
also
require
us
to
make
significant
royalty
and
milestone
payments,
including
apercentage
of
any
sublicensing
income,
as
well
as
payments
to
reimburse
them
for
patent
costs.
The
number
and
variety
of
our
research
and
development
programsrequire
us
to
establish
priorities
and
to
allocate
available
resources
among
competing
programs.
From
time
to
time
we
may
choose
to
slow
down
or
cease
ourefforts
on
particular
products.
If
in
doing
so
we
fail
to
fully
perform
our
obligations
under
a
license,
the
licensor
can
terminate
the
license
or
permit
our
competitorsto
use
the
technology.
Termination
of
these
licenses
or
reduction
or
elimination
of
our
licensed
rights
may
result
in
our
having
to
negotiate
new
or
reinstatedlicenses
with
less
favorable
terms.
Moreover,
we
may
lose
our
right
to
market
and
sell
any
products
based
on
the
licensed
technology.
The
occurrence
of
suchevents
could
materially
harm
our
business.Our ability to successfully develop and, if regulatory approval is obtained, commercialize our drug candidates may be materially adversely affected if we areunable to obtain and maintain effective intellectual property rights for our drug candidates and technologies.
Our
success
depends
in
part
on
our
ability
to
obtain
and
maintain
patent
protection
and
other
intellectual
property
protection
for
our
drug
candidates
andproprietary
technology.
We
have
sought
to
protect
our
proprietary
position
by
filing
patent
applications
in
the
United
States
and
abroad
related
to
our
drugcandidates
and
technology
that
are
important
to
our
business.
This
process
is
expensive
and
time-consuming,
and
we
may
not
be
able
to
file
and
prosecute
allnecessary
or
desirable
patent
applications
at
a
reasonable
cost
or
in
a
timely
manner.
It
is
also
possible
that
we
will
fail
to
identify
patentable
aspects
of
our
researchand
development
output
before
it
is
too
late
to
obtain
patent
protection.
Our
existing
patents
and
any
future
patents
we
obtain
may
not
be
sufficiently
broad
toprevent
others
from
using
our
technologies
or
from
developing
competing
drugs
and
technologies.
Biotechnology
patents
involve
complex
legal,
scientific
and
factual
questions
and
are
highly
uncertain.
To
date,
there
is
no
consistent
policy
regarding
thebreadth
of
claims
allowed
in
biotechnology
patents,
particularly
in
regard
to
patents
for
technologies
for
human
uses
like
those
we
use
in
our
business.
We
cannotpredict
whether
the
patents
we
or
our
licensors
seek
will
issue.
If
such
patents
are
issued,
a
competitor
may
challenge
them
and
limit
their
scope.
Moreover,
ourpatents
may
not
afford
effective
protection
against
competitors
with
similar
technology.
A
successful
challenge
to
any
one
of
our
patents
could
result
in
a
thirdparty's
ability
to
use
the
technology
covered
by
the
patent.
We
also
face
the
risk
that
others
will
infringe,
avoid
or
circumvent
our
patents.
Technology
that
welicense
from
others
is
subject
to
similar
risks
and
this
could
harm
our
ability
to
use
that
technology.
If
we,
or
a
company
that
licenses
technology
to
us,
were
not
thefirst
creator
of
an
invention
that
we
use,
our
use
of
the
underlying
product
or
technology
will
face
restrictions,
including
elimination.
For
example,
in
September2014,
two
European
patent
oppositions
were
filed
against
the
University
of50 Table
of
ContentsSouthampton
European
patent,
and
at
a
hearing
on
November
23,
2016
the
European
Patent
Office
(EPO)
revoked
the
European
patent
on
the
ground
of
lack
ofinventive
step.
We
intend
to
appeal
this
decision
and
to
defend
the
European
patent
vigorously
in
cooperation
with
the
University
of
Southampton.
This
EPOdecision
does
not
affect
the
later
filed
Celldex
patents
and
applications
for
varlilumab.
We
also
have
an
issued
U.S.
patent
which
covers
varlilumab
as
acomposition
of
matter.
If
we
must
defend
against
suits
brought
against
us
or
prosecute
suits
against
others
involving
intellectual
property
rights,
we
will
incur
substantial
costs.
Inaddition
to
any
potential
liability
for
significant
monetary
damages,
a
decision
against
us
may
require
us
to
obtain
licenses
to
patents
or
other
intellectual
propertyrights
of
others
on
potentially
unfavorable
terms.
If
those
licenses
from
third
parties
are
necessary
but
we
cannot
acquire
them,
we
would
attempt
to
design
aroundthe
relevant
technology,
which
would
cause
higher
development
costs
and
delays
and
may
ultimately
prove
impracticable.We may need to license intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonableterms.
A
third
party
may
hold
intellectual
property,
including
patent
rights,
that
are
important
or
necessary
to
the
development
of
our
drug
candidates.
It
may
benecessary
for
us
to
use
the
patented
or
proprietary
technology
of
a
third
party
to
commercialize
our
own
technology
or
drug
candidates,
in
which
case
we
would
berequired
to
obtain
a
license
from
such
third
party.
A
license
to
such
intellectual
property
may
not
be
available
or
may
not
be
available
on
commercially
reasonableterms,
which
could
have
a
material
adverse
effect
on
our
business
and
financial
condition.
We
are
aware
of
a
third-party
European
patent
that
relates
to
use
of
ErbB3
antibodies
for
treatment
of
hyperproliferative
disorders,
including
cancer.
Acounterpart
of
this
patent
has
also
issued
in
Japan
and
Australia.
As
a
result
of
an
opposition
proceeding,
the
European
patent
was
revoked
in
its
entirety.
The
ownerof
the
European
patent
has
appealed
the
decision
in
the
opposition
proceeding.
We
do
not
know
if
the
appeal
will
succeed,
or,
if
successful,
whether
the
scope
ofclaims,
post-appeal,
would
be
relevant
to
our
activities.
Should
the
appeal
be
successful
and
a
license
be
necessary
for
our
program
that
targets
ErbB3,
we
cannotpredict
whether
we
would
be
able
to
obtain
such
a
license
or,
if
a
license
were
available,
whether
it
would
be
available
on
commercially
reasonable
terms.
If
theappeal
results
in
such
third
party's
patents
having
a
valid
claim
relevant
to
our
use
of
ErbB3
antibodies
and
a
license
under
the
patents
is
unavailable
oncommercially
relevant
terms,
or
at
all,
our
ability
to
commercialize
CDX-3379
in
Europe
may
be
impaired
or
delayed.
We
would
vigorously
defend
ourselves,
butwe
cannot
predict
whether
the
patents
would
be
found
valid,
enforceable
or
infringed.
We
continue
to
monitor
counterpart
patent
applications
pending
in
otherjurisdictions,
including
the
United
States.
While
we
cannot
predict
whether
claims
will
issue
in
these
other
jurisdictions
or
whether
the
scope
of
such
claims
wouldbe
relevant
to
our
activities,
these
applications
entail
comparable
risks
to
us
in
these
other
jurisdictions.We may be unable to protect the confidentiality of our trade secrets, thus harming our business and competitive position.
We
rely
upon
trade
secrets,
including
unpatented
know-how,
technology
and
other
proprietary
information
to
develop
and
maintain
our
competitive
position,which
we
seek
to
protect,
in
part,
by
confidentiality
agreements
with
our
employees
and
our
collaborators
and
consultants.
We
also
have
agreements
with
ouremployees
that
obligate
them
to
assign
their
inventions
to
us.
However,
it
is
possible
that
technology
relevant
to
our
business
will
be
independently
developed
by
aperson
that
is
not
a
party
to
such
an
agreement.
Furthermore,
if
the
employees,
consultants
or
collaborators
that
are
parties
to
these
agreements
breach
or
violate
theterms
of
these
agreements,
we
may
not
have
adequate
remedies
for
any
such
breach
or
violation,
and
we
could
lose
our
trade
secrets
through
such
breaches
orviolations.
Further,
our
trade
secrets
could
be
disclosed,
misappropriated
or
otherwise
become51 Table
of
Contentsknown
or
be
independently
discovered
by
our
competitors.
In
addition,
intellectual
property
laws
in
foreign
countries
may
not
protect
our
intellectual
property
tothe
same
extent
as
the
laws
of
the
United
States.
If
our
trade
secrets
are
disclosed
or
misappropriated,
it
would
harm
our
ability
to
protect
our
rights
and
have
amaterial
adverse
effect
on
our
business.We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful.
Competitors
may
infringe
our
patents.
To
counter
infringement
or
unauthorized
use,
we
may
be
required
to
file
infringement
claims,
which
can
be
expensiveand
time-consuming.
In
addition,
in
an
infringement
proceeding,
a
court
may
decide
that
a
patent
of
ours
is
invalid
or
unenforceable
or
may
refuse
to
stop
the
otherparty
from
using
the
technology
at
issue
on
the
grounds
that
our
patents
do
not
cover
the
technology
in
question.
An
adverse
result
in
any
litigation
proceedingcould
put
one
or
more
of
our
patents
at
risk
of
being
invalidated
or
interpreted
narrowly.
Furthermore,
because
of
the
substantial
amount
of
discovery
required
inconnection
with
intellectual
property
litigation,
there
is
a
risk
that
some
of
our
confidential
information
could
be
compromised
by
disclosure
during
this
type
oflitigation.Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain andcould have a material adverse effect on the success of our business.
Our
commercial
success
depends
upon
our
ability
and
the
ability
of
our
collaborators
to
develop,
manufacture,
market
and
sell
our
drug
candidates
and
use
ourproprietary
technologies
without
infringing,
misappropriating
or
otherwise
violating
the
proprietary
rights
or
intellectual
property
of
third
parties.
We
may
becomeparty
to,
or
be
threatened
with,
future
adversarial
proceedings
or
litigation
regarding
intellectual
property
rights
with
respect
to
our
drug
candidates
and
technology.Third
parties
may
assert
infringement
claims
against
us
based
on
existing
patents
or
patents
that
may
be
granted
in
the
future.
If
we
are
found
to
infringe
a
third-party's
intellectual
property
rights,
we
could
be
required
to
obtain
a
license
from
such
third-party
to
continue
developing
our
drug
candidates
and
technology.However,
we
may
not
be
able
to
obtain
any
required
license
on
commercially
reasonable
terms
or
at
all.
Even
if
we
were
able
to
obtain
a
license,
it
could
be
non-exclusive,
thereby
giving
our
competitors
access
to
the
same
technologies
licensed
to
us.
We
could
be
forced,
including
by
court
order,
to
cease
developing
theinfringing
technology
or
product.
In
addition,
we
could
be
found
liable
for
monetary
damages.
Claims
that
we
have
misappropriated
the
confidential
information
ortrade
secrets
of
third
parties
can
have
a
similar
negative
impact
on
our
business.Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We
employ
individuals
who
were
previously
employed
at
universities
or
other
diagnostic
or
biopharmaceutical
companies,
including
our
competitors
orpotential
competitors.
Although
we
try
to
ensure
that
our
employees
and
consultants
do
not
use
the
proprietary
information
or
know-how
of
others
in
their
work
forus,
we
may
be
subject
to
claims
that
we
or
our
employees,
consultants
or
independent
contractors
have
inadvertently
or
otherwise
used
or
disclosed
intellectualproperty,
including
trade
secrets
or
other
proprietary
information,
of
a
former
employer
or
other
third
parties.
Litigation
may
be
necessary
to
defend
against
theseclaims.
If
we
fail
in
defending
any
such
claims,
in
addition
to
paying
monetary
damages,
we
may
lose
valuable
intellectual
property
rights
or
personnel.
Even
if
weare
successful
in
defending
against
such
claims,
litigation
could
result
in
substantial
costs
and
be
a
distraction
to
management
and
other
employees.52 Table
of
ContentsRegulatory
RisksIf our processes and systems are not compliant with regulatory requirements, we could be subject to delays in submitting BLAs, NDAs or restrictions onmarketing of drugs after they have been approved.
We
currently
are
developing
drug
candidates
for
regulatory
approval
and
are
in
the
process
of
implementing
regulated
processes
and
systems
required
toobtain
and
maintain
regulatory
approval
for
our
drug
candidates.
Certain
of
these
processes
and
systems
for
conducting
clinical
trials
and
manufacturing
materialmust
be
compliant
with
regulatory
requirements
before
we
can
apply
for
regulatory
approval
for
our
drug
candidates.
These
processes
and
systems
will
be
subjectto
continual
review
and
periodic
inspection
by
the
FDA
and
other
regulatory
bodies.
If
we
are
unable
to
achieve
compliance
in
a
timely
fashion
or
if
complianceissues
are
identified
at
any
point
in
the
development
and
approval
process,
we
may
experience
delays
in
filing
for
regulatory
approval
for
our
drug
candidates
ordelays
in
obtaining
regulatory
approval
after
filing.
In
addition,
any
later
discovery
of
previously
unknown
problems
or
safety
issues
with
approved
drugs
ormanufacturing
processes,
or
failure
to
comply
with
regulatory
requirements
may
result
in
restrictions
on
such
drugs
or
manufacturing
processes,
withdrawal
ofdrugs
from
the
market,
the
imposition
of
civil
or
criminal
penalties
or
a
refusal
by
the
FDA
and/or
other
regulatory
bodies
to
approve
pending
applications
formarketing
approval
of
new
drugs
or
supplements
to
approved
applications,
any
of
which
could
have
a
material
adverse
effect
on
our
business.
In
addition,
we
are
aparty
to
agreements
that
transfer
responsibility
for
complying
with
specified
regulatory
requirements,
such
as
filing
and
maintenance
of
marketing
authorizationsand
safety
reporting
or
compliance
with
manufacturing
requirements,
to
our
collaborators
and
third-party
manufacturers.
If
our
collaborators
or
third-partymanufacturers
do
not
fulfill
these
regulatory
obligations,
any
drugs
for
which
we
or
they
obtain
approval
may
be
subject
to
later
restrictions
on
manufacturing
orsale
or
may
even
risk
withdrawal,
which
could
have
a
material
adverse
effect
on
our
business.Even if we receive regulatory approval for a drug candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which mayresult in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
Once
regulatory
approval
has
been
granted,
the
approved
product
and
its
manufacturer
are
subject
to
continual
review
by
the
FDA
and/or
non-U.S.
regulatoryauthorities.
Any
regulatory
approval
that
we
or
our
collaboration
partners
receive
for
our
drug
candidates
may
be
subject
to
limitations
on
the
indicated
uses
forwhich
the
product
may
be
marketed
or
contain
requirements
for
potentially
costly
post-marketing
follow-up
studies
to
monitor
the
safety
and
efficacy
of
theproduct.
In
addition,
if
the
FDA
and/or
non-U.S.
regulatory
authorities
approve
any
of
our
drug
candidates,
we
will
be
subject
to
extensive
and
ongoing
regulatoryrequirements
by
the
FDA
and
other
regulatory
authorities
with
regard
to
the
labeling,
packaging,
adverse
event
reporting,
storage,
advertising,
promotion
andrecordkeeping
for
our
products.
In
addition,
manufacturers
of
our
drug
products
are
required
to
comply
with
cGMP
regulations,
which
include
requirements
relatedto
quality
control
and
quality
assurance
as
well
as
the
corresponding
maintenance
of
records
and
documentation.
Further,
regulatory
authorities
must
inspect
andapprove
these
manufacturing
facilities
before
they
can
be
used
to
manufacture
our
drug
products,
and
these
facilities
are
subject
to
continual
review
and
periodicinspections
by
the
FDA
and
other
regulatory
authorities
for
compliance
with
cGMP
regulations.
If
we
or
a
third
party
discover
previously
unknown
problems
witha
product,
such
as
adverse
events
of
unanticipated
severity
or
frequency
or
problems
with
the
facility
where
the
product
is
manufactured,
a
regulatory
authority
mayimpose
restrictions
on
that
product,
the
manufacturer
or
us,
including
requiring
withdrawal
of
the
product
from
the
market
or
suspension
of
manufacturing.
If
we,our
drug
candidates
or
the
manufacturing
facilities
for
our
drug
candidates
fail
to
comply
with
regulatory
requirements
of
the
FDA
and/or
other
non-U.S.53 Table
of
Contentsregulatory
authorities,
we
could
be
subject
to
administrative
or
judicially
imposed
sanctions,
including
the
following:•warning
letters;
•civil
or
criminal
penalties
and
fines;
•injunctions;
•consent
decrees;
•suspension
or
withdrawal
of
regulatory
approval;
•suspension
of
any
ongoing
clinical
studies;
•voluntary
or
mandatory
product
recalls
and
publicity
requirements;
•refusal
to
accept
or
approve
applications
for
marketing
approval
of
new
drugs;
•restrictions
on
operations,
including
costly
new
manufacturing
requirements;
or
•seizure
or
detention
of
drugs
or
import
bans.
The
regulatory
requirements
and
policies
may
change
and
additional
government
regulations
may
be
enacted
with
which
we
may
also
be
required
to
comply.We
cannot
predict
the
likelihood,
nature
or
extent
of
government
regulation
that
may
arise
from
future
legislation
or
administrative
action,
either
in
the
UnitedStates
or
in
other
countries.
If
we
are
not
able
to
maintain
regulatory
compliance,
we
may
not
be
permitted
to
market
our
future
products,
and
our
business
maysuffer.We may be subject, directly or indirectly, to federal and state health care fraud and abuse laws, false claims laws and health information privacy and securitylaws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
If
we
obtain
FDA
approval
for
any
of
our
drug
candidates
and
begin
commercializing
those
products
in
the
United
States,
our
operations
will
be
directly,
orindirectly
through
our
customers,
subject
to
various
federal
and
state
fraud
and
abuse
laws,
including,
without
limitation,
the
federal
Anti-Kickback
Statute
and
thefederal
False
Claims
Act.
These
laws
may
affect,
among
other
things,
our
proposed
sales,
marketing
and
education
programs.
In
addition,
we
may
be
subject
topatient
privacy
regulation
by
both
the
federal
government
and
the
states
in
which
we
conduct
our
business.
The
laws
that
may
affect
our
ability
to
operate
include:•the
federal
Anti-Kickback
Statute,
which
prohibits,
among
other
things,
persons
from
knowingly
and
willfully
soliciting,
receiving,
offering
orpaying
remuneration,
directly
or
indirectly,
to
induce,
or
in
return
for,
the
purchase
or
recommendation
of
an
item
or
service
reimbursable
under
afederal
health
care
program,
such
as
the
Medicare
and
Medicaid
programs;
•federal
civil
and
criminal
false
claims
laws
and
civil
monetary
penalty
laws,
which
prohibit,
among
other
things,
individuals
or
entities
fromknowingly
presenting,
or
causing
to
be
presented,
claims
for
payment
from
Medicare,
Medicaid
or
other
third-party
payors
that
are
false
orfraudulent;
•the
federal
Health
Insurance
Portability
and
Accountability
Act
of
1996,
or
HIPAA,
as
amended
by
the
Health
Information
Technology
forEconomic
and
Clinical
Health
Act
of
2009,
or
HITECH,
and
its
implementing
regulations,
which
impose
certain
requirements
relating
to
theprivacy,
security
and
transmission
of
individually
identifiable
health
information;
•the
federal
transparency
requirements
under
the
Patient
Protection
and
Affordable
Care
Act
of
2010
requires
manufacturers
of
drugs,
devices,biologics
and
medical
supplies
to
report
to
the54 Table
of
ContentsDepartment
of
Health
and
Human
Services
information
related
to
physician
payments
and
other
transfers
of
value
and
physician
ownership
andinvestment
interests;
and•state
law
and
foreign
law
equivalents
of
each
of
the
above
federal
laws,
such
as
anti-kickback
and
false
claims
laws
which
may
apply
to
items
orservices
reimbursed
by
any
third-party
payor,
including
commercial
insurers,
and
state
laws
governing
the
privacy
and
security
of
healthinformation
in
certain
circumstances,
many
of
which
differ
from
each
other
in
significant
ways
and
may
not
have
the
same
effect,
thus
complicatingcompliance
efforts.
Although
compliance
programs
can
mitigate
the
risk
of
investigation
and
prosecution
for
violations
of
these
laws,
the
risks
cannot
be
entirely
eliminated.
Ifour
operations
are
found
to
be
in
violation
of
any
of
the
laws
described
above
or
any
other
governmental
regulations
that
apply
to
us,
we
may
be
subject
topenalties,
including
exclusion
from
payment
by
federal
health
care
programs,
civil
and
criminal
penalties,
damages,
fines
and
the
curtailment
or
restructuring
of
ouroperations,
any
of
which
could
adversely
affect
our
ability
to
operate
our
business
and
our
results
of
operations.
Moreover,
achieving
and
sustaining
compliancewith
applicable
federal
and
state
privacy,
security
and
fraud
laws
may
prove
costly.Compliance with laws and regulations pertaining to the privacy and security of health information may be time consuming, difficult and costly, particularly inlight of increased focus on privacy issues in countries around the world, including the U.S. and the EU.
We
are
subject
to
various
domestic
and
international
privacy
and
security
regulations.
The
confidentiality,
collection,
use
and
disclosure
of
personal
data,including
clinical
trial
patient-specific
information,
are
subject
to
governmental
regulation
generally
in
the
country
that
the
personal
data
were
collected
or
used.
Inthe
United
States
were
are
subject
to
various
state
and
federal
privacy
and
data
security
regulations,
including
but
not
limited
to
HIPAA
and
as
amended
in
2014
bythe
HITECH
Act.
HIPAA
mandates,
among
other
things,
the
adoption
of
uniform
standards
for
the
electronic
exchange
of
information
in
common
health
caretransactions,
as
well
as
standards
relating
to
the
privacy
and
security
of
individually
identifiable
health
information,
which
require
the
adoption
of
administrative,physical
and
technical
safeguards
to
protect
such
information.
In
the
EU
personal
data
includes
any
information
that
relates
to
an
identified
or
identifiable
naturalperson
with
health
information
carrying
additional
obligations,
including
obtaining
the
explicit
consent
from
the
individual
for
collection,
use
or
disclosure
of
theinformation.
In
addition,
we
are
subject
to
EU
regulation
with
respect
to
protection
of
and
cross-border
transfers
of
such
data
out
of
the
EU,
and
this
regulation
willbecome
more
stringent
in
May
2018
when
the
EU's
General
Data
Protection
Regulation
(GDPR)
comes
into
effect.
Furthermore,
the
legislative
and
regulatorylandscape
for
privacy
and
data
protection
continues
to
evolve,
and
there
has
been
an
increasing
amount
of
focus
on
privacy
and
data
protection
issues.
The
UnitedStates
and
the
EU
and
its
member
states
continue
to
issue
new
privacy
and
data
protection
rules
and
regulations
that
relate
to
personal
data
and
health
information.
Compliance
with
these
laws
may
be
time
consuming,
difficult
and
costly.
If
we
fail
to
comply
with
applicable
laws,
regulations
or
duties
relating
to
the
use,privacy
or
security
of
personal
data
we
could
be
subject
to
the
imposition
of
significant
civil
and
criminal
penalties,
be
forced
to
alter
our
business
practices
andsuffer
reputational
harm.Changes in health care law and implementing regulations, including government restrictions on pricing and reimbursement, as well as health care policy andother health care payor cost-containment initiatives, may have a material adverse effect on us.
In
the
United
States
and
some
foreign
jurisdictions,
there
have
been
a
number
of
legislative
and
regulatory
changes
and
proposed
changes
regarding
the
healthcare
system
and
efforts
to
control
health
care
costs,
including
drug
prices,
that
could
have
a
significant
negative
impact
on
our
business,55 Table
of
Contentsincluding
preventing,
limiting
or
delay
regulatory
approval
of
our
drug
candidates
and
reducing
the
sales
and
profits
derived
from
our
products
once
they
areapproved.
For
example,
in
the
United
States,
the
Patient
Protection
and
Affordable
Care
Act
of
2010
("ACA")
substantially
changed
the
way
health
care
is
financed
byboth
governmental
and
private
insurers
and
significantly
affects
the
pharmaceutical
industry.
Many
provisions
of
ACA
impact
the
biopharmaceutical
industry,including
that
in
order
for
a
biopharmaceutical
product
to
receive
federal
reimbursement
under
the
Medicare
Part
B
and
Medicaid
programs
or
to
be
sold
directly
toU.S.
government
agencies,
the
manufacturer
must
extend
discounts
to
entities
eligible
to
participate
in
the
drug
pricing
program
under
the
Public
Health
ServicesAct,
or
PHS.
Since
its
enactment,
there
have
been
judicial
and
Congressional
challenges
and
amendments
to
certain
aspects
of
ACA.
There
is
continued
uncertaintyabout
the
implementation
of
ACA,
including
the
potential
for
further
amendments
to
the
ACA
and
legal
challenges
to
or
efforts
to
repeal
the
ACA.
We
cannot
be
sure
whether
additional
legislative
changes
will
be
enacted,
or
whether
government
regulations,
guidance
or
interpretations
will
be
changed,
orwhat
the
impact
of
such
changes
would
be
on
the
marketing
approvals,
sales,
pricing,
or
reimbursement
of
our
drug
candidates
or
products,
if
any,
may
be.Risks
Related
to
Our
Capital
StockOur history of losses and uncertainty of future profitability make our common stock a highly speculative investment.
We
have
had
no
commercial
revenue
to
date
from
sales
of
our
drug
candidates.
We
had
an
accumulated
deficit
of
$812.5
million
as
of
December
31,
2017.
Weexpect
to
spend
substantial
funds
to
continue
the
research
and
development
testing
of
our
drug
candidates.
In
anticipation
of
FDA
approval
of
these
products,
we
will
need
to
make
substantial
investments
to
establish
sales,
marketing,
quality
control,
regulatorycompliance
capabilities
and
commercial
manufacturing
alliances.
These
investments
will
increase
if
and
when
any
of
these
drug
candidates
receive
FDA
approval.We
cannot
predict
how
quickly
our
lead
drug
candidates
will
progress
through
the
regulatory
approval
process.
As
a
result,
we
may
continue
to
lose
money
forseveral
years.
We
cannot
be
certain
that
we
will
achieve
or
sustain
profitability
in
the
future.
Failure
to
achieve
profitability
could
diminish
our
ability
to
sustain
operations,pay
dividends
on
our
common
stock,
obtain
additional
required
funds
and
make
required
payments
on
our
present
or
future
indebtedness.Our share price has been and could remain volatile.
The
market
price
of
our
common
stock
has
historically
experienced
and
may
continue
to
experience
significant
volatility.
From
January
2017
throughDecember
2017,
the
market
price
of
our
common
stock
has
fluctuated
from
a
high
of
$4.02
per
share
in
the
first
quarter
of
2017,
to
a
low
of
$2.20
per
share
in
thesecond
quarter
of
2017.
Our
progress
in
developing
and
commercializing
our
products,
the
impact
of
government
regulations
on
our
products
and
industry,
thepotential
sale
of
a
large
volume
of
our
common
stock
by
stockholders,
our
quarterly
operating
results,
changes
in
general
conditions
in
the
economy
or
the
financialmarkets
and
other
developments
affecting
us
or
our
competitors
could
cause
the
market
price
of
our
common
stock
to
fluctuate
substantially
with
significant
marketlosses.
If
our
stockholders
sell
a
substantial
number
of
shares
of
common
stock,
especially
if
those
sales
are
made
during
a
short
period
of
time,
those
sales
couldadversely
affect
the
market
price
of
our
common
stock
and
could
impair
our
ability
to
raise
capital.
In
addition,
in
recent
years,
the
stock
market
has
experiencedsignificant
price
and
volume
fluctuations.
This
volatility
has
affected
the
market
prices
of
securities
issued
by
many
companies
for
reasons
unrelated
to
theiroperating
performance
and
may
adversely
affect
the
price
of
our
common
stock.
Adverse
changes
to56 Table
of
Contentsthe
price
of
our
common
stock
could
result
in
an
impairment
to
the
amount
recorded
to
goodwill
on
our
balance
sheet.
In
addition,
we
could
be
subject
to
asecurities
class
action
litigation
as
a
result
of
volatility
in
the
price
of
our
stock,
which
could
result
in
substantial
costs
and
diversion
of
management's
attention
andresources
and
could
harm
our
stock
price,
business,
prospects,
results
of
operations
and
financial
condition.If certain preclinical and clinical milestones are achieved, our stockholders may experience significant dilution as a result of milestone payments to formerKolltan stockholders.
The
merger
agreement
pursuant
to
which
we
acquired
Kolltan
provides
that,
in
the
event
that
certain
specified
preclinical
and
clinical
development
milestonesrelated
to
Kolltan's
development
programs
and/or
Celldex's
development
programs
and
certain
commercial
milestones
related
to
Kolltan's
drug
candidates
areachieved,
we
will
be
required
to
pay
Kolltan's
stockholders
milestone
payments
of
up
to
$172.5
million,
which
milestone
payments
may
be
made,
at
our
soleelection,
in
cash,
in
shares
of
our
common
stock
or
a
combination
of
both,
subject
to
the
provisions
of
the
merger
agreement.
The
number
of
shares
of
our
commonstock
issuable
in
connection
with
a
milestone
payment,
if
any,
will
be
determined
based
on
the
average
closing
price
per
share
of
our
common
stock
for
the
fivetrading
day
period
ending
three
calendar
days
prior
to
the
achievement
of
such
milestone.
If
we
elect
to
issue
additional
shares
of
our
common
stock,
in
lieu
ofpaying
cash,
for
such
milestone
payments,
our
stockholders
may
experience
significant
dilution.Our ability to use our net operating loss carryforwards will be subject to limitation and, under certain circumstances, may be eliminated.
Utilization
of
our
net
operating
loss
and
research
and
development
credit
carryforwards
may
be
subject
to
substantial
annual
limitation
due
to
ownershipchange
limitations
that
have
occurred
previously
or
that
could
occur
in
the
future
provided
by
Section
382
of
the
Internal
Revenue
Code
of
1986,
or
Section
382,
aswell
as
similar
state
provisions.
In
general,
an
ownership
change,
as
defined
by
Section
382,
results
from
transactions
increasing
the
ownership
of
certainshareholders
or
public
groups
in
the
stock
of
a
corporation
by
more
than
50
percentage
points
over
a
three-year
period.
In
October
2007,
June
2009,
December
2009
and
December
2013,
we
experienced
a
change
in
ownership
as
defined
by
Section
382
of
the
Internal
RevenueCode.
Historically,
we
have
raised
capital
through
the
issuance
of
capital
stock
on
several
occasions
which,
combined
with
shareholders'
subsequent
disposition
ofthose
shares,
has
resulted
in
three
changes
of
control,
as
defined
by
Section
382.
As
a
result
of
these
ownership
changes,
utilization
of
our
Federal
net
operating
losscarryforwards
is
subject
to
an
annual
limitation.
Any
unused
annual
limitation
may
be
carried
over
to
later
years,
and
the
amount
of
the
limitation
may,
undercertain
circumstances,
be
subject
to
adjustment
if
the
fair
value
of
our
net
assets
is
determined
to
be
below
or
in
excess
of
the
tax
basis
of
such
assets
at
the
time
ofthe
ownership
change,
and
such
unrealized
loss
or
gain
is
recognized
during
the
five-year
period
after
the
ownership
change.
Subsequent
ownership
changes,
asdefined
in
Section
382,
could
further
limit
the
amount
of
net
operating
loss
carryforwards
and
research
and
development
credits
that
can
be
utilized
annually
tooffset
future
taxable
income.
We
have
not
undertaken
a
study
to
assess
whether
an
ownership
change
or
multiple
ownership
changes
has
occurred
for
(i)
acquired
businesses
prior
to
theacquisition,
(ii)
the
Company
on
the
state
level,
(iii)
the
Company
since
March
2015
or
(iv)
research
and
development
credits.
If,
based
on
such
a
study,
we
were
todetermine
that
there
has
been
an
ownership
change
at
any
time
since
its
formation,
utilization
of
net
operating
loss
or
tax
credit
carryforwards
would
be
subject
toan
annual
limitation
under
Section
382.
Refer
to
Note
15,
"Income
Taxes,"
in
the
accompanying
notes
to
the
financial
statements
for
additional
discussion
on
income
taxes.57 Table
of
ContentsItem
1B.
UNRESOLVED
STAFF
COMMENTS
None.Item
2.
PROPERTIES
As
of
December
31,
2017
our
significant
leased
properties
are
described
below.Item
3.
LEGAL
PROCEEDINGS
We
are
not
currently
a
party
to
any
material
legal
proceedings.Item
4.
MINE
SAFETY
DISCLOSURES
Not
applicable.58Property
Location
Approximate
Square
Feet
Use
Lease
Expiration
DateHampton,
New
Jersey
49,600
Headquarters,
Office
and
Laboratory
July
2020(1)Needham,
Massachusetts
46,700
Office
and
Laboratory
July
2020(2)Fall
River,
Massachusetts
28,900
Manufacturing
Facility
July
2020(3)New
Haven,
Connecticut
17,700
Office
and
Laboratory
April
2019(4)(1)Lease
includes
two
renewal
options
of
five
years
each.
(2)Lease
includes
two
renewal
options
of
five
years
each.
(3)Lease
includes
two
renewal
options
of
five
years
each.
(4)Lease
includes
one
renewal
option
of
two
years. Table
of
ContentsPART
II
Item
5.
MARKET
FOR
REGISTRANT'S
COMMON
EQUITY,
RELATED
STOCKHOLDER
MATTERS
AND
ISSUER
PURCHASES
OF
EQUITYSECURITIES
Our
common
stock
currently
trades
on
the
Nasdaq
Global
Market
(NASDAQ)
under
the
symbol
"CLDX."
The
following
table
sets
forth
for
the
periodsindicated
the
high
and
low
sale
prices
per
share
for
our
common
stock,
as
reported
by
NASDAQ.
As
of
February
28,
2018,
there
were
approximately
322
shareholders
of
record
of
our
common
stock.
On
February
28,
2018
the
closing
price
of
our
commonstock,
as
reported
by
NASDAQ,
was
$2.25
per
share.
We
have
not
paid
any
dividends
on
our
common
stock
since
our
inception
and
do
not
intend
to
pay
anydividends
in
the
foreseeable
future.59Fiscal
Period
High
Low
Year
Ended
December
31,
2017
First
Quarter
$4.02
$3.05
Second
Quarter
3.65
2.20
Third
Quarter
3.14
2.27
Fourth
Quarter
3.26
2.31
Year
Ended
December
31,
2016
First
Quarter
$15.61
$2.96
Second
Quarter
5.13
3.40
Third
Quarter
4.83
3.23
Fourth
Quarter
5.02
2.85
Table
of
ContentsCELLDEX
THEAPEUTICS,
INC.,
NASDAQ
MARKET
INDEX—U.S.
AND
PEER
GROUP
INDICES
The
graph
below
compares
the
cumulative
total
stockholder
return
on
the
common
stock
for
the
period
from
December
31,
2012
through
December
31,
2017,with
the
cumulative
return
on
(i)
NASDAQ
U.S.
Benchmark
TR
Index
and
(ii)
NASDAQ
Pharmaceutical
(Subsector)
Index.
The
comparison
assumes
investmentof
$100
on
December
31,
2012
in
our
common
stock
and
in
each
of
the
indices
and,
in
each
case,
assumes
reinvestment
of
all
dividends.
The
points
on
the
graphare
as
of
December
31
of
the
year
indicated.Item
6.
SELECTED
FINANCIAL
DATA
The
following
selected
financial
data
are
derived
from
our
audited
financial
statements.
The
statement
of
operations
data
for
the
years
ended
December
31,2017,
2016
and
2015
and
the
balance
sheet
data
as
of
December
31,
2017
and
2016
have
been
derived
from
our
audited
financial
statements
included
in
Item
8
ofthis
Annual
Report
on
Form
10-K.
This
data
should
be
read
in
conjunction
with
our
audited
financial
statements
and
related
notes
which
are
included
elsewhere
inthis
Annual
Report
on
Form
10-K,
and
"Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations"
included
in
Item
7
below.60
2012
2013
2014
2015
2016
2017
Celldex
Therapeutics,
Inc.
$100
$361
$272
$234
$53
$42
NASDAQ
U.S.
Benchmark
TR
Index
$100
$133
$150
$151
$170
$207
NASDAQ
Pharmaceutical
(Subsector)
Index
$100
$136
$165
$174
$172
$205
Table
of
ContentsSTATEMENTS
OF
OPERATIONS
DATA
(In
thousands,
except
per
share
amounts)BALANCE
SHEET
DATA
(In
thousands)61
Year
Ended
December
31,
2017
2016
2015
2014
2013
REVENUE:
Product
Development
and
Licensing
Agreements
$3,153
$2,174
$1,442
$838
$160
Contracts
and
Grants
9,590
4,612
4,038
2,748
1,617
Product
Royalties
—
—
—
—
2,334
Total
Revenue
12,743
6,786
5,480
3,586
4,111
OPERATING
EXPENSE:
Research
and
Development
96,171
102,726
100,171
104,381
67,401
Royalty
—
—
—
—
2,334
Other
Operating
Expense
38,099
36,976
34,850
21,635
15,818
Total
Operating
Expense
134,270
139,702
135,021
126,016
85,553
Operating
Loss
(121,527)
(132,916)
(129,541)
(122,430)
(81,442)Investment
and
Other
Income,
Net
4,214
4,386
2,344
4,350
819
Interest
Expense
—
—
—
—
(927)Net
Loss
Before
Income
Tax
Benefit
$(117,313)$(128,530)$(127,197)$(118,080)$(81,550)Income
Tax
Benefit
24,282
—
—
—
—
Net
Loss
$(93,031)$(128,530)$(127,197)$(118,080)$(81,550)Basic
and
Diluted
Net
Loss
Per
Common
Share
$(0.72)$(1.27)$(1.31)$(1.32)$(1.02)Shares
Used
in
Calculating
Basic
and
Diluted
Net
LossPer
Common
Share
128,543
101,529
97,051
89,399
79,777
December
31,
2017
2016
2015
2014
2013
Working
Capital*
$117,020
$160,346
$264,696
$180,494
$284,839
Total
Assets
315,624
383,358
337,584
248,014
347,095
Long-Term
Liabilities
51,519
82,704
17,239
11,863
6,950
Accumulated
Deficit
(812,517)
(719,486)
(590,956)
(463,759)
(345,679)Total
Stockholders'
Equity
236,369
265,431
290,105
211,660
319,795
*Total
current
assets
less
total
current
liabilities Table
of
ContentsItem
7.
MANAGEMENT'S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS
OVERVIEW
We
are
a
biopharmaceutical
company
focused
on
the
development
and
commercialization
of
several
immunotherapy
technologies
and
other
cancer-targetingbiologics.
Our
drug
candidates,
including
antibodies,
antibody-drug
conjugates
and
other
protein-based
therapeutics,
are
derived
from
a
broad
set
of
complementarytechnologies
which
have
the
ability
to
engage
the
human
immune
system
and/or
directly
inhibit
tumors
to
treat
specific
types
of
cancer
or
other
diseases.
Our
latest
stage
drug
candidate,
glembatumumab
vedotin
(also
referred
to
as
CDX-011)
is
a
targeted
antibody-drug
conjugate
in
a
randomized,
Phase
2b
studyfor
the
treatment
of
triple
negative
breast
cancer
and
a
Phase
2
study
for
the
treatment
of
metastatic
melanoma.
Varlilumab
(also
referred
to
as
CDX-1127)
is
animmune
modulating
antibody
that
is
designed
to
enhance
a
patient's
immune
response
against
cancer.
We
established
proof
of
principle
in
a
Phase
1
study
withvarlilumab,
which
supported
the
initiation
of
combination
studies
in
various
indications.
CDX-3379,
a
human
monoclonal
antibody
designed
to
block
the
activityof
ErbB3
(HER3),
is
in
Phase
2
development
in
combination
with
cetuximab
for
the
treatment
of
head
and
neck
squamous
cell
carcinoma.
We
also
have
a
numberof
earlier
stage
drug
candidates
in
clinical
development,
including
CDX-014,
an
antibody-drug
conjugate
targeting
renal
and
ovarian
cancers;
CDX-1140,
a
humanmonoclonal
antibody
targeted
to
CD40,
a
key
activator
of
immune
response;
CDX-301,
an
immune
cell
mobilizing
agent
and
dendritic
cell
growth
factor;
andCDX-1401,
a
targeted
immunotherapeutic
aimed
at
antigen
presenting
cells,
or
APCs,
for
cancer
indications.
Our
drug
candidates
address
market
opportunities
forwhich
we
believe
current
therapies
are
inadequate
or
non-existent.
We
are
building
a
fully
integrated,
commercial-stage
biopharmaceutical
company
that
develops
important
therapies
for
patients
with
unmet
medical
needs.Our
program
assets
provide
us
with
the
strategic
options
to
either
retain
full
economic
rights
to
our
innovative
therapies
or
seek
favorable
economic
terms
throughadvantageous
commercial
partnerships.
This
approach
allows
us
to
maximize
the
overall
value
of
our
technology
and
product
portfolio
while
best
ensuring
theexpeditious
development
of
each
individual
product.
The
following
table
reflects
Celldex-sponsored
clinical
studies
that
we
are
actively
pursuing
at
this
time.
All
programs
are
currently
fully
owned
by
Celldex.
We
also
routinely
work
with
external
parties,
such
as
government
agencies,
to
collaboratively
advance
our
drug
candidates.
The
following
pipeline
reflectsclinical
trials
of
our
drug
candidates
being
actively
pursued
by
outside
organizations.
In
addition
to
the
studies
listed
below,
we
also
have
an62Product
(generic)
Indication/Field
Status
SponsorGlembatumumab
vedotin
Triple
negative
breast
cancer
Phase
2b
CelldexGlembatumumab
vedotin
Metastatic
melanoma
(single-agent,
with
varlilumab
or
CPI
(1)
or
CDX-301)
Phase
2
CelldexVarlilumab
Multiple
solid
tumors
(with
Opdivo®)
Phase
2
Celldex
(2)CDX-3379
Head
and
neck
squamous
cell
cancer
(with
Erbitux®)
Phase
2
CelldexCDX-014
Renal
cell
and
ovarian
carcinomas
Phase
1
CelldexCDX-1140
Multiple
solid
tumors
Phase
1
Celldex(1)checkpoint
inhibitor;
(2)BMS
collaboration Table
of
ContentsInvestigator
Initiated
Research
(IIR)
program
with
six
studies
ongoing
with
our
drug
candidates
and
additional
studies
currently
under
consideration.
The
expenditures
that
will
be
necessary
to
execute
our
business
plan
are
subject
to
numerous
uncertainties.
Completion
of
clinical
trials
may
take
several
yearsor
more,
and
the
length
of
time
generally
varies
substantially
according
to
the
type,
complexity,
novelty
and
intended
use
of
a
drug
candidate.
It
is
not
unusual
forthe
clinical
development
of
these
types
of
drug
candidates
to
each
take
five
years
or
more,
and
for
total
development
costs
to
exceed
$100
million
for
each
drugcandidate.
We
estimate
that
clinical
trials
of
the
type
we
generally
conduct
are
typically
completed
over
the
following
timelines:
The
duration
and
the
cost
of
clinical
trials
may
vary
significantly
over
the
life
of
a
project
as
a
result
of
differences
arising
during
the
clinical
trial
protocol,including,
among
others,
the
following:•the
number
of
patients
that
ultimately
participate
in
the
trial;
•the
duration
of
patient
follow-up
that
seems
appropriate
in
view
of
results;
•the
number
of
clinical
sites
included
in
the
trials;
•the
length
of
time
required
to
enroll
suitable
patient
subjects;
and
•the
efficacy
and
safety
profile
of
the
drug
candidate.
We
test
potential
drug
candidates
in
numerous
preclinical
studies
for
safety,
toxicology
and
immunogenicity.
We
may
then
conduct
multiple
clinical
trials
foreach
drug
candidate.
As
we
obtain
results
from
trials,
we
may
elect
to
discontinue
or
delay
clinical
trials
for
certain
drug
candidates
in
order
to
focus
our
resourceson
more
promising
drug
candidates.
An
element
of
our
business
strategy
is
to
pursue
the
research
and
development
of
a
broad
portfolio
of
drug
candidates.
This
is
intended
to
allow
us
to
diversifythe
risks
associated
with
our
research
and
development
expenditures.
To
the
extent
we
are
unable
to
maintain
a
broad
range
of
drug
candidates,
our
dependence
onthe
success
of
one
or
a
few
drug
candidates
increases.
Regulatory
approval
is
required
before
we
can
market
our
drug
candidates
as
therapeutic
products.
In
order
to
proceed
to
subsequent
clinical
trial
stages
and
toultimately
achieve
regulatory
approval,
the
regulatory
agency
must
conclude
that
our
clinical
data
are
safe
and
effective.
Historically,
the
results
from
preclinicaltesting
and
early
clinical
trials
(through
Phase
2)
have
often
not
been
predictive
of
results
obtained
in
later
clinical
trials.
A
number
of
new
drugs
and
biologics
haveshown
promising
results
in
early
clinical
trials
but
subsequently
failed
to
establish
sufficient
safety
and
efficacy
data
to
obtain
necessary
regulatory
approvals.63Product
(generic)
Indication/Field
Status
SponsorGlembatumumab
vedotin
Uveal
melanoma
Phase
2
NCI
(CRADA)Glembatumumab
vedotin
Squamous
cell
lung
cancer
Phase
2
PrECOG,
LLCCDX-1401/CDX-301
Malignant
melanoma
Phase
2
NCI
(CRADA)CDX-1401/Tecentriq®/SGI-110
Ovarian
cancer
Phase
1
NCI
(CRADA)Varlilumab/Opdivo®
B-cell
malignancies
Phase
2
NCI
(CRADA)Clinical
Phase
Estimated
Completion
PeriodPhase
1
1
-
2
YearsPhase
2
1
-
5
YearsPhase
3
1
-
5
Years Table
of
Contents
Furthermore,
our
business
strategy
includes
the
option
of
entering
into
collaborative
arrangements
with
third
parties
to
complete
the
development
andcommercialization
of
our
drug
candidates.
In
the
event
that
third
parties
take
over
the
clinical
trial
process
for
one
of
our
drug
candidates,
the
estimated
completiondate
would
largely
be
under
control
of
that
third
party
rather
than
us.
We
cannot
forecast
with
any
degree
of
certainty
which
proprietary
products,
if
any,
will
besubject
to
future
collaborative
arrangements,
in
whole
or
in
part,
and
how
such
arrangements
would
affect
our
development
plan
or
capital
requirements.
Ourprograms
may
also
benefit
from
subsidies,
grants,
contracts
or
government
or
agency-sponsored
studies
that
could
reduce
our
development
costs.
As
a
result
of
the
uncertainties
discussed
above,
among
others,
it
is
difficult
to
accurately
estimate
the
duration
and
completion
costs
of
our
research
anddevelopment
projects
or
when,
if
ever,
and
to
what
extent
we
will
receive
cash
inflows
from
the
commercialization
and
sale
of
a
product.
Our
inability
to
completeour
research
and
development
projects
in
a
timely
manner
or
our
failure
to
enter
into
collaborative
agreements,
when
appropriate,
could
significantly
increase
ourcapital
requirements
and
could
adversely
impact
our
liquidity.
These
uncertainties
could
force
us
to
seek
additional,
external
sources
of
financing
from
time
to
timein
order
to
continue
with
our
business
strategy.
Our
inability
to
raise
additional
capital,
or
to
do
so
on
terms
reasonably
acceptable
to
us,
would
jeopardize
thefuture
success
of
our
business.
During
the
past
five
years
through
December
31,
2017,
we
incurred
an
aggregate
of
$470.9
million
in
research
and
development
expenses.
The
following
tableindicates
the
amount
incurred
for
each
of
our
significant
research
programs
and
for
other
identified
research
and
development
activities
during
the
years
endedDecember
31,
2017,
2016
and
2015.
The
amounts
disclosed
in
the
following
table
reflect
direct
research
and
development
costs,
license
fees
associated
with
theunderlying
technology
and
an
allocation
of
indirect
research
and
development
costs
to
each
program.Clinical
Development
ProgramsGlembatumumab Vedotin
Glembatumumab
vedotin
is
an
antibody-drug
conjugate,
or
ADC,
that
consists
of
a
fully
human
monoclonal
antibody,
CR011,
linked
to
a
potent
cell-killingdrug,
monomethyl
auristatin
E,
or
MMAE.
The
CR011
antibody
specifically
targets
glycoprotein
NMB,
referred
to
as
gpNMB,
that
is
over-expressed
in
a
varietyof
cancers
including
breast
cancer,
melanoma,
non-small
cell
lung
cancer,
uveal
melanoma
and
osteosarcoma,
among
others.
The
ADC
technology,
comprised
ofMMAE
and
a
stable
linker
system
for
attaching
it
to
CR011,
was
licensed
from
Seattle
Genetics,
Inc.
and
is
the
same64
Year
Ended
December
31,
2017
Year
Ended
December
31,
2016
Year
Ended
December
31,
2015
(In
thousands)
Glembatumumab
vedotin
$36,873
$30,156
$19,124
Varlilumab
14,940
28,554
18,484
CDX-3379
4,167
416
—
CDX-014
2,534
3,623
5,724
CDX-1140
6,909
3,802
—
CDX-1401
836
4,323
3,385
CDX-301
1,294
4,053
2,206
Anti-KIT
Program
4,156
279
—
TAM
5,512
438
—
Rintega
1,685
15,337
43,038
Other
Programs
17,265
11,745
8,210
Total
R&D
Expense
$96,171
$102,726
$100,171
Table
of
Contentsas
that
used
in
the
marketed
product
Adcetris®.
The
ADC
is
designed
to
be
stable
in
the
bloodstream.
Following
intravenous
administration,
glembatumumabvedotin
targets
and
binds
to
gpNMB,
and
upon
internalization
into
the
targeted
cell,
glembatumumab
vedotin
is
designed
to
release
MMAE
from
CR011
to
producea
cell-killing
effect.
Glembatumumab
vedotin
is
being
studied
across
multiple
indications
in
company-sponsored
trials
and
in
collaborative
studies
with
externalparties.
The
U.S.
Food
and
Drug
Administration,
or
FDA,
has
granted
fast
track
designation
to
glembatumumab
vedotin
for
the
treatment
of
advanced,refractory/resistant
gpNMB-expressing
breast
cancer.
A
companion
diagnostic
is
in
development
for
certain
indications,
and
we
expect
that,
if
necessary,
such
acompanion
diagnostic
must
be
approved
by
the
FDA
or
certain
other
foreign
regulatory
agencies
before
glembatumumab
vedotin
may
be
commercialized
in
thoseindications.
Treatment
of
Metastatic
Breast
Cancer:
Glembatumumab
vedotin
has
been
evaluated
for
the
treatment
of
metastatic
breast
cancer
(MBC)
in
multiplestudies
including
a
single-arm
Phase
1/2
study
(
Journal of Clinical Oncology, September
2014);
a
randomized,
controlled
Phase
2b
study
compared
toInvestigator's
Choice
chemotherapy
in
patients
with
gpNMB-positive
MBC
called
EMERGE
(
Journal of Clinical Oncology, April
2015);
and
the
ongoingrandomized,
controlled
Phase
2b
study
in
patients
with
triple
negative,
gpNMB
overexpressing
breast
cancer,
called
METRIC.
We
expect
to
report
topline
primaryendpoint
data
from
the
METRIC
study
during
the
second
quarter
of
2018.
The
most
recent
data
presented
for
glembatumumab
vedotin
in
breast
cancer
are
from
the
EMERGE
study,
the
randomized,
multi-center
Phase
2b
study
in
124patients
with
heavily
pre-treated,
advanced,
gpNMB-positive
breast
cancer.
Patients
were
randomized
(2:1)
to
receive
either
glembatumumab
vedotin
or
single-agent
Investigator's
Choice
chemotherapy.
Patients
randomized
to
receive
Investigator's
Choice
were
allowed
to
cross
over
to
receive
glembatumumab
vedotinfollowing
disease
progression.
Activity
endpoints
included
response
rate,
progression-free
survival
(PFS)
and
overall
survival
(OS).
The
final
study
results,
asshown
below,
suggested
that
glembatumumab
vedotin
induced
significant
response
rates
compared
to
currently
available
therapies
in
patient
subsets
withadvanced,
refractory
breast
cancers
with
high
gpNMB
expression
(expression
in
at
least
25%
of
tumor
cells)
and
in
patients
with
triple
negative
breast
cancer.
TheOS
and
PFS
of
patients
treated
with
glembatumumab
vedotin
were
also
observed
to
be
greatest
in
patients
with
high
gpNMB
expression
and,
in
particular,
inpatients
with
triple
negative
breast
cancer
who
also
had
high
gpNMB
expression.
Adverse
events
prominent
with
the
glembatumumab
vedotin
arm
included
rashand
peripheral
neuropathy,
while
hematologic
toxicity
was
more
frequent
and
severe
in
the
Investigator's
Choice
arm.EMERGE:
Overall
Response
Rate
and
Disease
Control
Data
(Intent-to-Treat
Population)
65
High
gpNMB
Expression
Triple
Negative
and
gpNMB
Over-Expression
Glembatumumab
Vedotin
Investigator's
Choice
Glembatumumab
Vedotin
Investigator's
Choice
(n=23)
(n=11)
(n=10)
(n=6)
Response
Rate
30%
9%
40%
0%Disease
Control
Rate
65%
27%
90%
17%Tumor response assessed by RECIST 1.1, inclusive of response observed at a single time point. Table
of
ContentsEMERGE:
Progression-Free
Survival
(PFS)
and
Overall
Survival
(OS)
Data
In
December
2013,
we
initiated
METRIC,
a
randomized,
controlled
(2:1)
Phase
2b
study
of
glembatumumab
vedotin
versus
Xeloda®
in
patients
with
triplenegative
breast
cancer
that
over-expresses
gpNMB.
Clinical
trial
study
sites
were
opened
to
enrollment
across
the
U.S.,
Canada,
Australia
and
the
European
Union.The
METRIC
protocol
was
amended
in
late
2014
based
on
feedback
from
clinical
investigators
conducting
the
study
that
the
eligibility
criteria
for
study
entry
werelimiting
their
ability
to
enroll
patients
they
felt
were
clinically
appropriate.
In
addition,
we
had
spoken
to
country-specific
members
of
the
European
MedicinesAgency,
or
EMA,
and
believed
an
opportunity
existed
to
expand
the
study
into
the
EU.
The
amendment
expanded
patient
entry
criteria
to
position
it
for
thepossibility
of
full
marketing
approval
with
global
regulators,
including
the
EMA,
and
to
support
improved
enrollment
in
the
study.
The
primary
endpoint
of
thestudy
is
PFS,
defined
as
the
time
from
randomization
to
the
earlier
of
disease
progression
or
death
due
to
any
cause.
PFS
is
an
established
endpoint
for
full
approvalregistration
studies
in
this
patient
population
in
both
the
U.S.
and
the
EU.
The
sample
size
(n=300)
and
the
secondary
endpoint
of
OS
remained
unchanged.
Sinceimplementation
of
these
changes,
both
the
FDA
and
central
European
regulatory
authorities
have
reviewed
the
protocol
design,
and
we
believe
the
METRIC
studycould
potentially
support
marketing
approval
in
both
the
U.S.
and
Europe
dependent
upon
data
results
and
review.
Enrollment
(n=327)
in
METRIC
was
completed
in
August
2017.
The
study
calls
for
203
progression
events
for
evaluation
of
the
primary
endpoint,
which
willbe
assessed
based
on
an
independent,
central
reading
of
patient
scans.
The
sum
of
the
data,
including
the
secondary
endpoints
of
response
rate,
OS,
DOR
andsafety,
will
be
important
in
assessing
clinical
benefit.
Based
on
the
current
rate
of
progression
events
in
the
study,
the
Company
projects
that
topline
primaryendpoint
data
should
be
available
in
the
second
quarter
of
2018.
Efforts
to
ensure
delivery
of
manufactured
drug
that
is
ready
for
commercialization
and
a
companion
diagnostic
are
underway.
While
we
have
made
andcontinue
to
make
progress
on
these
fronts,
we
have
made
the
decision
to
stage
some
of
the
more
costly
work
in
these
areas
to
begin
after
we
have
received
resultsfrom
the
study.
While
this
step
will
extend
the
timeline
to
complete
our
regulatory
submissions,
we
believe
this
is
the
most
prudent
use
of
our
funds
as
we
seek
toadvance
our
pipeline
overall.
Assuming
positive
data,
we
plan
to
work
with
the
FDA
on
a
regulatory
strategy
that
would
support
submitting
a
Biologics
LicenseApplication
(BLA)
in
the
second
half
of
2019.
Treatment
of
Metastatic
Melanoma:
Glembatumumab
vedotin
has
been
evaluated
for
the
treatment
of
unresectable
stage
III
or
IV
metastatic
melanomain
two
studies
including
a
single-arm
Phase
1/2
open-label
study
and
an
ongoing
multi-cohort
Phase
2
study.
Results
from
the
Phase
1/2
study
were
published
in
theJournal of Clinical Oncology in
September
2014.
The
most
recent
data
for
glembatumumab
vedotin
in
metastatic
melanoma
are
from
the
ongoing
Phase
2
study.
This
study
currently
includes
four
single
armcohorts:
(1)
a
single-agent
cohort
(enrollment
completed;
data
presented
at
ASCO
2017),
(2)
a
combination
cohort
with
varlilumab
(enrollment
completed;
datapresented
at
SITC
2017),
(3)
a
combination
cohort
with
an
approved66
High
gpNMB
Expression
Triple
Negative
and
gpNMB
Over-Expression
Glembatumumab
Vedotin
Investigator's
Choice
Glembatumumab
Vedotin
Investigator's
Choice
Median
PFS
(months)
2.8
1.5
3.5
1.5
p=0.18
p=0.0017
Median
OS
(months)
10.0
5.7
10.0
5.5
p=0.31
p=0.003
Table
of
Contentscheckpoint
inhibitor
(i.e.,
Opdivo®
or
Keytruda®)
following
progression
on
the
checkpoint
inhibitor
alone
(enrollment
completed;
follow-up
continues),
and
(4)
acombination
cohort
with
CDX-301
(enrollment
ongoing).
The
primary
endpoint
for
each
cohort
is
ORR,
except
the
fourth
cohort
which
is
assessing
safety
and
tolerability
in
anticipation
of
additional
combinations.Secondary
endpoints
include
analyses
of
PFS,
DOR,
OS,
retrospective
investigation
of
whether
the
anticancer
activity
of
glembatumumab
vedotin
is
dependentupon
the
degree
of
gpNMB
expression
in
tumor
tissue
and
safety
of
both
the
monotherapy
and
combination
regimens.
We
presented
mature
data
from
the
single-agent
cohort
in
an
oral
presentation
at
the
American
Society
of
Clinical
Oncology
(ASCO)
Annual
Meeting
in
June2017.
The
cohort
enrolled
62
evaluable
patients
with
unresectable
stage
IV
melanoma.
All
patients
had
been
heavily
pre-treated
(median
prior
therapies
=
3;
range1-8)
and
had
progressed
during
or
after
checkpoint
inhibitor
therapy,
and
almost
all
patients
had
received
both
ipilimumab
(n=58;
94%)
and
anti-PD-1/anti-PD-L1(n=58;
94%)
therapy.
Twelve
patients
presented
with
BRAF
mutation,
and
fifteen
had
prior
treatment
with
BRAF
or
BRAF/MEK
targeted
agents.
Median
OS
forall
patients
was
9.0
months
(95%
CI:
6.1,
13.0).
The
primary
endpoint
of
the
cohort
(threshold
of
6
or
more
objective
responses
in
52
evaluable
patients)
wasexceeded.
7
of
62
(11%)
patients
experienced
a
confirmed
response.
One
patient
experienced
a
complete
response
(CR),
and
six
patients
experienced
partialresponses
(PR).
An
additional
three
patients
also
experienced
single
timepoint
PRs.
The
median
DOR
was
6.0
months.
A
52%
disease
control
rate
(patients
withoutprogression
for
greater
than
three
months)
was
demonstrated,
and
median
PFS
for
all
patients
was
4.4
months.
Consistent
with
previous
studies
in
melanoma
andbreast
cancer,
early
development
of
rash
was
associated
with
greater
clinical
benefit,
including
more
prolonged
PFS
and
OS.
The
safety
profile
was
consistent
withprior
studies
of
glembatumumab
vedotin
with
rash,
neutropenia
and
neuropathy
experienced
as
the
most
significant
adverse
events.
Pre-treatment
tumor
tissue
wasavailable
for
59
patients.
All
samples
were
gpNMB
positive,
and
78%
of
patients
had
tumors
with
100%
of
their
epithelial
cells
expressing
gpNMB.
Given
both
thehigh
level
of
expression
and
the
intensity
of
expression
across
this
patient
population,
identifying
a
potential
population
for
gpNMB
enrichment
is
not
feasible;therefore,
all
patients
with
metastatic
melanoma
could
be
evaluated
as
potential
candidates
for
treatment
with
glembatumumab
vedotin
in
future
studies.
Data
from
the
second
cohort,
combining
glembatumumab
vedotin
and
varlilumab,
were
presented
at
the
Society
for
Immunotherapy
of
Cancer's
(SITC)32nd
Annual
Meeting
in
November
2017.
The
cohort
enrolled
34
patients
with
unresectable
stage
IV
melanoma.
All
patients
had
been
heavily
pre-treated
(medianprior
therapies
=
3;
range
1-8)
and
had
progressed
during
or
after
checkpoint
inhibitor
(CPI)
therapy
(median
prior
CPI
therapies
=
2;
range
1-4).
Almost
allpatients
had
received
ipilimumab
(n=26;
76%)
and/or
anti-PD-1/anti-PD-L1
(n=34;
100%)
therapy.
Nine
patients
presented
with
BRAF
mutation,
and
eleven
hadprior
treatment
with
BRAF
or
BRAF/MEK
targeted
agents.
Median
PFS
for
all
patients
was
2.6
months
(95%
CI:
1.4,
2.8),
and
median
OS
for
all
patients
was6.4
months
(95%
CI:
3.2,
8.3).
One
of
31
patients
eligible
for
response
evaluation
experienced
a
confirmed
partial
response
(3%),
and
an
additional
two
patientsalso
experienced
single
timepoint
partial
responses.
52%
of
patients
experienced
stable
disease
(minimum
of
six
or
more
weeks).
A
19%
disease
control
rate(patients
without
progression
for
greater
than
three
months)
was
demonstrated.
The
safety
profile
was
consistent
with
prior
studies
of
glembatumumab
vedotin,
andthere
was
no
evidence
of
additive
toxicity
associated
with
the
combination.
Biological
effects
of
varlilumab
were
consistent
with
prior
observations
and
did
notappear
to
be
impacted
by
the
addition
of
an
ADC.
Modest
clinical
benefit
in
the
combination
could
be
due
to
multiple
factors,
including
potential
lack
of
sensitivityto
immunotherapy
in
patients
with
checkpoint
refractory
disease,
many
of
whom
progressed
so
rapidly
that
they
experienced
a
very
short
duration
of
varlilumabtreatment
(median
2
doses);
a
possible
dearth
of
antigen
presenting
cells
in
tumors;
and
the
potential
for
immune
checkpoint
molecules
to
remain
unblockedwithout
checkpoint
inhibitor
therapy.
Future
cohorts
are
designed
to67 Table
of
Contentsaddress
some
of
these
potential
factors.
No
significant
correlation
between
rash
and
outcome
was
observed
but
will
continue
to
be
monitored
in
future
cohorts.
Treatment
of
Other
Indications:
We
have
entered
into
a
collaborative
relationship
with
PrECOG,
LLC,
which
represents
a
research
network
establishedby
the
Eastern
Cooperative
Oncology
Group
(ECOG),
under
which
PrECOG,
LLC,
is
conducting
an
open-label
Phase
1/2
study
in
patients
with
unresectablestage
IIIB
or
IV,
gpNMB-expressing,
advanced
or
metastatic
squamous
cell
carcinoma
(SCC)
of
the
lung,
who
have
progressed
on
prior
platinum-basedchemotherapy.
This
study
opened
to
enrollment
in
April
2016
and
is
ongoing.
The
study
includes
a
dose-escalation
phase
followed
by
a
two-stage
Phase
2
portion(Simon
two-stage
design).
The
Phase
1,
dose-escalation
portion
of
the
study
is
designed
to
assess
the
safety
and
tolerability
of
glembatumumab
vedotin
at
varyingdose
levels.
The
first
stage
of
the
Phase
2
portion
plans
to
enroll
approximately
20
patients,
and
if
at
least
two
patients
achieve
a
partial
response
or
completeresponse,
a
second
stage
may
enroll
an
additional
15
patients.
The
primary
objective
of
the
Phase
2
portion
of
the
study
is
to
assess
the
anti-tumor
activity
ofglembatumumab
vedotin
in
squamous
cell
lung
cancer
as
measured
by
ORR.
Secondary
objectives
of
the
study
include
analyses
of
safety
and
tolerability
andfurther
assessment
of
anti-tumor
activity
across
a
broad
range
of
endpoints.
We
have
also
entered
into
a
Cooperative
Research
and
Development
Agreement,
or
CRADA,
with
the
National
Cancer
Institute,
or
NCI,
under
which
NCI
issponsoring
a
Phase
2
study
of
glembatumumab
vedotin
in
uveal
melanoma.
The
study
is
a
single-arm,
open-label
study
in
patients
with
locally
recurrent
ormetastatic
uveal
melanoma.
The
study
has
a
two-stage
design
with
a
pre-specified
activity
threshold
necessary
in
the
first
stage
to
progress
enrollment
to
the
secondstage.
The
primary
outcome
measure
is
ORR.
Secondary
outcome
measures
include
change
in
gpNMB
expression
on
tumor
tissue
via
immunohistochemistry,safety,
OS
and
PFS.
Data
from
this
study
were
presented
at
the
9
th
World
Congress
of
Melanoma
in
October
2017.
Two
(6%)
objective
responses
were
observedin
31
patients
to
date,
and
35%
of
patients
experienced
stable
disease
greater
than
100
days
(median
5.5
months).
The
disease
control
rate
(response
rate
+
stabledisease)
for
all
patients
on
study
was
noteworthy
at
61%.
Median
PFS
was
3.2
months,
and
median
OS
was
11.8
months.
For
patients
who
experienced
either
apartial
response
or
stable
disease,
median
PFS
was
5.5
months,
and
median
OS
had
not
yet
been
reached.
The
NCI
is
conducting
exploratory
immune
correlates
toprovide
insight
into
target
saturation,
antigen
release
and
potential
combination
strategies.Varlilumab
Varlilumab
is
a
fully
human
monoclonal
agonist
antibody
that
binds
to
and
activates
CD27,
a
critical
co-stimulatory
molecule
in
the
immune
activationcascade.
We
believe
varlilumab
works
primarily
by
stimulating
T
cells,
an
important
component
of
a
person's
immune
system,
to
attack
cancer
cells.
Restrictedexpression
and
regulation
of
CD27
enables
varlilumab
specifically
to
activate
T
cells,
resulting
in
an
enhanced
immune
response
with
the
potential
for
a
favorablesafety
profile.
In
preclinical
studies,
varlilumab
has
been
shown
to
directly
kill
or
inhibit
the
growth
of
CD27
expressing
lymphomas
and
leukemias
in
in vitro andin vivo models.
We
have
entered
into
license
agreements
with
the
University
of
Southampton,
UK
for
intellectual
property
to
use
anti-CD27
antibodies
and
withMedarex
(acquired
by
Bristol-Myers
Squibb
Company,
or
BMS)
for
access
to
the
UltiMab
technology
to
develop
and
commercialize
human
antibodies
to
CD27.Varlilumab
was
initially
studied
as
a
single-agent
to
establish
a
safety
profile
and
assess
immunologic
and
clinical
activity
in
patients
with
cancer,
but
we
believethe
greatest
opportunity
for
varlilumab
is
as
an
immune
activator
in
combination
with
other
agents.
Currently,
we
are
focusing
our
efforts
on
a
Phase
1/2
clinicaltrial
being
conducted
in
collaboration
with
BMS
and
their
PD-1
immune
checkpoint
inhibitor,
Opdivo.
Varlilumab
has
also
been
explored
in
other
combinationstudies,
including
with
glembatumumab
vedotin,
and
is
being
studied
in
ongoing
and
planned
investigator-sponsored
and
collaborative
studies.68 Table
of
Contents
Single-Agent
Phase
1
Study:
In
an
open-label
Phase
1
study
of
varlilumab
in
patients
with
selected
malignant
solid
tumors
or
hematologic
cancers,varlilumab
demonstrated
an
acceptable
safety
profile
and
induced
immunologic
activity
in
patients
that
is
consistent
with
both
its
proposed
mechanism
of
actionand
data
in
preclinical
models.
A
total
of
90
patients
received
varlilumab
in
the
study
at
multiple
clinical
sites
in
the
U.S.
In
both
the
solid
tumor
and
hematologicdose
escalations,
the
pre-specified
maximum
dose
level
(10
mg/kg)
was
reached
without
identification
of
a
MTD.
The
majority
of
adverse
events,
or
AEs,
relatedto
treatment
have
been
mild
to
moderate
(Grade
1/2)
in
severity,
and
no
significant
immune-mediated
adverse
events
typically
associated
with
checkpoint
blockadehave
been
observed.
Durable,
multi-year
clinical
benefit
was
demonstrated
in
select
patients
without
additional
anticancer
therapy,
including
a
complete
response
ina
patient
with
Hodgkin
lymphoma
(ongoing
at
last
follow-up
at
2.8
years)
and
a
partial
response
in
a
patient
with
renal
cell
carcinoma
(ongoing
at
last
follow-up
at3.7
years).
In
addition,
a
patient
with
renal
cell
carcinoma
that
experienced
significant
stable
disease
(4+
years)
subsequently
achieved
a
partial
response
maintainedthrough
last
follow-up
at
4.6+
years
without
additional
anticancer
therapy.
Twelve
patients
experienced
stable
disease
up
to
14
months.
Final
results
from
the
studyin
patients
with
solid
tumors
were
published
in
the
Journal of Clinical Oncology in
April
2017.
Phase
1/2
Varlilumab/Opdivo®
Combination
Study:
In
2014,
we
entered
into
a
clinical
trial
collaboration
with
Bristol-Myers
Squibb
to
evaluate
thesafety,
tolerability
and
preliminary
efficacy
of
varlilumab
and
Opdivo,
Bristol-Myers
Squibb's
PD-1
immune
checkpoint
inhibitor,
in
a
Phase
1/2
study.
Under
theterms
of
this
clinical
trial
collaboration,
Bristol-Myers
Squibb
made
a
one-time
payment
to
us
of
$5.0
million,
and
the
companies
amended
the
terms
of
our
existinglicense
agreement
with
Medarex
(acquired
by
Bristol-Myers
Squibb)
related
to
our
CD27
program
whereby
certain
future
milestone
payments
were
waived
andfuture
royalty
rates
were
reduced
that
may
have
been
due
from
us
to
Medarex.
In
return,
Bristol-Myers
Squibb
was
granted
a
time-limited
right
of
first
negotiationif
we
wish
to
out-license
varlilumab.
The
companies
also
agreed
to
work
exclusively
with
each
other
to
explore
anti-PD-1
antagonist
antibody
and
anti-CD27agonist
antibody
combination
regimens.
The
clinical
trial
collaboration
provides
that
the
companies
will
share
development
costs
and
that
we
will
be
responsiblefor
conducting
the
Phase
1/2
study.
The
Phase
1/2
study
was
initiated
in
January
2015
and
is
being
conducted
in
adult
patients
with
multiple
solid
tumors
to
assess
the
safety
and
tolerability
ofvarlilumab
at
varying
doses
when
administered
with
Opdivo,
followed
by
a
Phase
2
expansion
to
evaluate
the
activity
of
the
combination
in
disease
specificcohorts.
Data
(n=36)
from
the
Phase
1
dose-escalation
portion
of
the
study
were
presented
in
an
oral
presentation
at
the
American
Society
of
Clinical
Oncology
AnnualMeeting
in
June
2017.
The
majority
of
patients
had
PD-L1
negative
tumor
at
baseline
and
presented
with
stage
IV,
heavily
pre-treated
disease.
80%
of
patientsenrolled
presented
with
refractory
or
recurrent
colorectal
(n=21)
or
ovarian
cancer
(n=8),
a
population
expected
to
have
minimal
response
to
checkpoint
blockade.The
primary
objective
of
the
Phase
1
portion
of
the
study
was
to
evaluate
the
safety
and
tolerability
of
the
combination.
The
combination
was
well
tolerated
at
allvarlilumab
dose
levels
tested
without
any
evidence
of
increased
autoimmunity
or
inappropriate
immune
activation.
Marked
changes
in
the
tumor
microenvironmentincluding
increased
infiltrating
CD8+
T
cells
and
increased
PD-L1
expression,
which
have
been
shown
to
correlate
with
a
greater
magnitude
of
treatment
effectfrom
checkpoint
inhibitors
in
other
clinical
studies,
were
observed.
Additional
evidence
of
immune
activity,
such
as
increase
in
inflammatory
chemokines
anddecrease
in
T
regulatory
cells,
was
also
noted.
Notable
disease
control
was
also
observed
(stable
disease
or
better
for
at
least
3
months),
considering
the
stage
IVpatient
population
contained
mostly
(80%)
colorectal
and
ovarian
cases:
0.1
mg/kg
varlilumab
+
240
mg
Opdivo:
1/5
(20%),
1
mg/kg
varlilumab
+
240
mgOpdivo:
5/15
(33%)
and
10
mg/kg
varlilumab
+
240
mg
Opdivo:
6/15
(40%).69 Table
of
Contents
Three
partial
responses
(PR)
were
observed.
A
patient
with
PD-L1
negative,
MMR
proficient
(MSI-low)
colorectal
cancer,
typically
unlikely
to
respond
tocheckpoint
blockade
monotherapy,
achieved
a
confirmed
PR
(95%
decrease
in
target
lesions)
and
following
completion
of
combination
treatment,
continues
toreceive
treatment
with
Opdivo
monotherapy
at
31+
months.
A
patient
with
low
PD-L1
(5%
expression)
squamous
cell
head
and
neck
cancer
achieved
a
confirmedPR
(59%
shrinkage)
and
experienced
PFS
of
6.7
months.
A
patient
with
PD-L1
negative
ovarian
cancer
experienced
a
single
timepoint
PR
(49%
shrinkage)
butdiscontinued
treatment
to
a
dose-limiting
toxicity
(immune
hepatitis,
an
event
known
to
be
associated
with
checkpoint
inhibition
therapy).
A
subgroup
analysis
wasconducted
in
patients
with
ovarian
cancer
based
on
an
observed
increase
of
PD-L1
and
tumor-infiltrating
lymphocytes
in
this
patient
population.
In
patients
withpaired
baseline
and
on-treatment
biopsies
(n=13),
only
15%
were
PD-L1
positive
(
³
1%
tumor
cells)
at
baseline
compared
to
77%
during
treatment
(p=0.015).Patients
with
increased
tumor
PD-L1
expression
and
tumor
CD8
T
cells
correlated
with
better
clinical
outcome
with
treatment
(stable
disease
or
better).
The
Phase
2
portion
of
the
study
opened
to
enrollment
in
April
2016
and
completed
enrollment
in
January
2018
with
cohorts
in
colorectal
cancer
(n=21),ovarian
cancer
(n=58),
head
and
neck
squamous
cell
carcinoma
(n=24),
renal
cell
carcinoma
(n=14)
and
glioblastoma
(n=22).
The
primary
objective
of
the
Phase
2cohorts
is
ORR,
except
glioblastoma,
where
the
primary
objective
is
the
rate
of
12-month
OS.
Secondary
objectives
include
pharmacokinetic
assessments,determining
the
immunogenicity
of
varlilumab
when
given
in
combination
with
Opdivo,
evaluating
alternate
dosing
schedules
of
varlilumab
and
further
assessingthe
anti-tumor
activity
of
combination
treatment.
We
plan
to
work
with
BMS
to
present
data
from
the
study
at
future
medical
meetings
in
2018.
Third-Party
Sponsored
Studies:
We
have
also
entered
into
a
CRADA
with
the
NCI
under
which
NCI
is
sponsoring
a
Phase
2
study
of
varlilumab
incombination
with
nivolumab
in
relapsed
or
refractory
aggressive
B-cell
lymphomas.
Patients
receive
either
nivolumab
alone
or
the
combination.
The
primaryoutcome
measure
is
ORR.
Secondary
outcome
measures
include
DOR,
safety,
PFS
and
OS.
The
study
opened
to
enrollment
in
January
2018
and
is
expected
toenroll
106
patients.CDX-3379
CDX-3379
is
a
human
monoclonal
antibody
with
half-life
extension
designed
to
block
the
activity
of
ErbB3
(HER3).
We
believe
ErbB3
may
be
an
importantreceptor
regulating
cancer
cell
growth
and
survival
as
well
as
resistance
to
targeted
therapies
and
is
expressed
in
many
cancers,
including
head
and
neck,
thyroid,breast,
lung
and
gastric
cancers,
as
well
as
melanoma.
We
believe
the
proposed
mechanism
of
action
for
CDX-3379
sets
it
apart
from
other
drugs
in
development
inthis
class
due
to
its
ability
to
block
both
ligand-independent
and
ligand-dependent
ErbB3
signaling
by
binding
to
a
unique
epitope.
It
has
a
favorable
pharmacologicprofile,
including
a
longer
half-life
and
slower
clearance
relative
to
other
drug
candidates
in
this
class.
We
believe
CDX-3379
also
has
potential
to
enhance
anti-tumor
activity
and/or
overcome
resistance
in
combination
with
other
targeted
and
cytotoxic
therapies
to
directly
kill
tumor
cells.
Tumor
cell
death
and
the
ensuingrelease
of
new
tumor
antigens
has
the
potential
to
serve
as
a
focus
for
combination
therapy
with
immuno-oncology
approaches,
even
in
refractory
patients.
CDX-3379
has
been
evaluated
in
three
Phase
1
studies
for
the
treatment
of
multiple
solid
tumors
that
express
ErbB3
and
is
currently
being
evaluated
is
a
Phase
2
study
incombination
with
cetuximab
in
cetuximab-resistant,
advanced
head
and
neck
squamous
cell
carcinoma.
The
most
recent
data
for
CDX-3379
were
reported
from
a
Phase
1a/1b
study
conducted
in
solid
tumors.
The
study
included
a
single-agent,
dose-escalationportion
and
combination
expansion
cohorts.
The
single-agent,
dose-escalation
portion
of
the
study
did
not
identify
an
MTD,
and
there
were
no
dose
limitingtoxicities.
The
most
common
adverse
events
included
rash
and
diarrhea
and
were
predominantly
grade
1
or
2.
Four
combination
arms
across
multiple
tumor
typeswere
added
to
evaluate
CDX-3379
with
several
drugs
that
target
EGFR,
HER2
or
BRAF.
They
include
combinations70 Table
of
Contentswith
Erbitux®
(n=16),
Tarceva®
(n=8),
Zelboraf®
(n=9)
and
Herceptin®
(n=10).
Patients
had
advanced
disease
and
were
generally
heavily
pretreated.
Across
thecombination
arms,
the
most
frequent
adverse
events
were
diarrhea,
nausea,
rash
and
fatigue.
Objective
responses
were
observed
in
the
Erbitux
and
Zelborafcombination
arms.
In
the
Erbitux
arm,
there
was
one
durable
complete
response
in
a
patient
with
head
and
neck
cancer,
who
had
been
previously
treated
withErbitux
and
was
refractory.
In
the
Zelboraf
arm,
there
were
two
partial
responses
in
patients
who
had
lung
cancer,
one
of
whom
had
been
previously
treated
withTafinlar®
and
was
considered
refractory,
as
well
as
a
single
timepoint
partial
response
in
a
patient
with
thyroid
cancer.
Initial
data
were
presented
at
the
AmericanSociety
of
Clinical
Oncology
Annual
Meeting
in
June
2016.
We
have
initiated
an
open-label
Phase
2
study
in
combination
with
Erbitux
in
approximately
30
patients
with
human
papillomavirus
(HPV)
negative,
Erbitux-resistant,
advanced
head
and
neck
squamous
cell
carcinoma
who
have
previously
been
treated
with
an
anti-PD1
checkpoint
inhibitor,
a
population
with
limitedoptions
and
a
particularly
poor
prognosis.
We
opened
the
study
to
enrollment
in
November
2017.
The
primary
objective
of
the
study
is
objective
response
rate.Second
objectives
include
assessments
of
clinical
benefit
response
(CBR),
DOR,
PFS
and
OS,
and
safety
and
pharmacokinetics
associated
with
the
combination.CDX-014
CDX-014
is
a
human
monoclonal
ADC
that
targets
T
cell
immunoglobulin
and
mucin
domain
1,
or
TIM-1.
TIM-1
expression
is
upregulated
in
severalcancers,
most
notably
renal
cell
and
ovarian
carcinomas,
and
is
associated
with
a
more
malignant
phenotype
of
renal
cell
carcinoma
(RCC)
and
tumor
progression.TIM-1
has
restricted
expression
in
healthy
tissues,
making
it
potentially
amenable
to
an
ADC
approach.
The
TIM-1
antibody
is
linked
to
MMAE
using
SeattleGenetics'
proprietary
technology.
The
ADC
is
designed
to
be
stable
in
the
bloodstream
but
to
release
MMAE
upon
internalization
into
TIM-1-expressing
tumorcells,
resulting
in
a
targeted
cell-killing
effect.
CDX-014
has
shown
anti-tumor
activity
in
preclinical
models
of
ovarian
and
renal
cancers.
In
July
2016,
we
announced
that
enrollment
had
opened
in
a
Phase
1/2
study
of
CDX-014
to
patients
with
both
clear
cell
and
papillary
RCC.
In
January
2018,we
amended
the
protocol,
converting
the
study
to
Phase
1,
expanding
enrollment
to
include
patients
with
ovarian
clear
cell
carcinoma
and
enabling
the
evaluationof
alternate
dosing
regimens.
Enrollment
is
ongoing.
The
study
includes
a
dose-escalation
portion
across
three
separate
cohorts
to
determine
the
MTD
followed
byexpansion
cohorts
of
up
to
15
patients
each
to
assess
the
preliminary
anti-tumor
activity
of
CDX-014,
as
measured
by
objective
response
rate.
Secondary
objectivesinclude
safety
and
tolerability,
pharmacokinetics,
immunogenicity
and
additional
measures
of
anti-tumor
activity.CDX-1140
CDX-1140
is
a
fully
human
antibody
targeted
to
CD40,
a
key
activator
of
immune
response
which
is
found
on
dendritic
cells,
macrophages
and
B
cells
and
isalso
expressed
on
many
cancer
cells.
Potent
CD40
agonist
antibodies
have
shown
encouraging
results
in
early
clinical
studies;
however,
systemic
toxicityassociated
with
broad
CD40
activation
has
limited
their
dosing.
CDX-1140
has
unique
properties
relative
to
other
CD40
agonist
antibodies:
potent
agonist
activityis
independent
of
Fc
receptor
interaction,
contributing
to
more
consistent,
controlled
immune
activation;
CD40L
binding
is
not
blocked,
leading
to
potentialsynergistic
effects
of
agonist
activity
near
activated
T
cells
in
lymph
nodes
and
tumors;
and
the
antibody
does
not
promote
cytokine
production
in
whole
bloodassays.
CDX-1140
has
shown
direct
anti-tumor
activity
in
preclinical
models
of
lymphoma.
Preclinical
studies
of
CDX-1140
clearly
demonstrate
strong
immuneactivation
effects
and
low
systemic
toxicity
and
support
the
design
of
the
Phase
1
study
to
rapidly
identify
the
dose
for
characterizing
single-agent
and
combinationactivity.71 Table
of
Contents
We
initiated
a
Phase
1
study
of
CDX-1140
in
November
2017.
This
study,
which
is
expected
to
enroll
up
to
approximately
105
patients
with
recurrent,
locallyadvanced
or
metastatic
solid
tumors,
is
designed
to
determine
the
MTD
during
a
dose-escalation
phase
(0.01
to
3.0
mg/kg
once
every
four
weeks
until
confirmedprogression
or
intolerance)
and
to
recommend
a
dose
level
for
further
study
in
a
subsequent
expansion
phase.
The
expansion
is
designed
to
further
evaluate
thetolerability
and
biologic
effects
of
selected
dose(s)
of
CDX-1140
in
specific
tumor
types.
Secondary
objectives
include
assessments
of
safety
and
tolerability,pharmacodynamics,
pharmacokinetics,
immunogenicity
and
additional
measures
of
anti-tumor
activity,
including
clinical
benefit
rate.
We
believe
that
the
potentialfor
CDX-1140
will
be
best
defined
in
combination
studies
with
other
immunotherapies
or
conventional
cancer
treatments.CDX-301
CDX-301,
a
recombinant
FMS-like
tyrosine
kinase
3
ligand,
or
Flt3L,
is
a
hematopoietic
cytokine
that
uniquely
expands
dendritic
cells
and
hematopoieticstem
cells
in
combination
with
other
agents
to
potentiate
the
anti-tumor
response.
Depending
on
the
setting,
cells
expanded
by
CDX-301
promote
either
enhancedor
permissive
immunity.
CDX-301
is
in
clinical
development
for
multiple
cancers,
in
combination
with
vaccines,
adjuvants
and
other
treatments
that
release
tumorantigens.
We
licensed
CDX-301
from
Amgen
Inc.
in
March
2009
and
believe
CDX-301
may
hold
significant
opportunity
for
synergistic
development
incombination
with
other
proprietary
molecules
in
our
portfolio.
A
Phase
1
study
of
CDX-301
evaluated
seven
different
dosing
regimens
of
CDX-301
to
determine
the
appropriate
dose
for
further
development
based
onsafety,
tolerability
and
biological
activity.
The
data
from
the
study
were
consistent
with
previous
clinical
experience
and
demonstrated
that
CDX-301
has
anacceptable
safety
profile
to
date
and
can
mobilize
hematopoietic
stem
cell
(HSC)
populations
in
healthy
volunteers.
CDX-301's
potential
activity
is
being
explored
in
investigator
sponsored
and
collaborative
studies.
A
Phase
2
study
of
CDX-301
in
combination
with
CDX-1401
is
being
conducted
in
malignant
melanoma
by
the
Cancer
Immunotherapy
Trials
Network
(CITN)
under
a
CRADA
with
the
Cancer
Therapy
EvaluationProgram
of
the
NCI.
This
study
was
designed
to
determine
the
activity
of
CDX-1401
with
or
without
CDX-301
in
melanoma.
The
primary
outcome
measure
of
thestudy
is
immune
response
to
NY-ESO-1.
Secondary
outcome
measures
include
analysis
and
characterization
of
peripheral
blood
mononuclear
cells
(dendritic
cells,T
cells,
natural
killer
cells,
etc.),
additional
immune
monitoring,
safety
and
clinical
outcomes
(survival
and
time
to
tumor
recurrence).
Enrollment
is
complete,
andinitial
results
were
presented
at
the
2016
American
Society
of
Clinical
Oncology
(ASCO)
Annual
Meeting.
The
data
confirmed
that
CDX-1401
is
capable
ofdriving
NY-ESO-1
immunity
and
further
demonstrated
the
potential
of
CDX-301
as
a
combination
agent
for
enhancing
tumor
specific
immune
responses.
The
NCIand
CITN
are
planning
to
enroll
additional
cohorts
to
investigate
alternative
regimens
of
CDX-301.
CDX-301
is
also
being
studied
in
a
combination
cohort
with
glembatumumab
vedotin
in
a
Phase
2
study
in
metastatic
melanoma
(opened
to
enrollment
inJanuary
2018)
and
is
being
studied
in
ongoing
and
planned
investigator-sponsored
and
collaborative
studies.CDX-1401
CDX-1401,
developed
from
our
APC
Targeting
Technology,
is
an
NY-ESO-1-antibody
fusion
protein
for
immunotherapy
in
multiple
solid
tumors.
CDX-1401,
which
is
administered
with
an
adjuvant,
is
composed
of
the
cancer-specific
antigen
NY-ESO-1
fused
to
a
fully
human
antibody
that
binds
to
DEC-205
forefficient
delivery
to
dendritic
cells.
Delivery
of
tumor-specific
proteins
directly
to
dendritic
cells
in vivo elicits
potent,
broad,
anti-tumor
immune
responses
acrosspopulations
with
different
genetic
backgrounds.
In
humans,
NY-ESO-1
has
been
detected
in
20%
to
30%
of
melanoma,72 Table
of
Contentslung,
esophageal,
liver,
gastric,
ovarian
and
bladder
cancers,
and
up
to
70%
of
synovial
sarcomas,
thus
representing
a
broad
opportunity.
CDX-1401
is
beingdeveloped
for
the
treatment
of
malignant
melanoma
and
a
variety
of
solid
tumors
which
express
the
cancer
antigen
NY-ESO-1.
Preclinical
studies
have
shown
thatCDX-1401
treatment
results
in
activation
of
human
T
cell
responses
against
NY-ESO-1.
We
completed
a
Phase
1
study
of
CDX-1401
which
assessed
the
safety,
immunogenicity
and
clinical
activity
of
escalating
doses
of
CDX-1401
with
TLRagonists
(resiquimod
and/or
poly-ICLC)
in
45
patients
with
advanced
malignancies
refractory
to
all
available
therapies.
Results
were
published
in
ScienceTranslational Medicine in
April
2014.
CDX-1401's
potential
activity
is
being
explored
in
investigator
sponsored
and
collaborative
studies.
A
Phase
2
study
of
CDX-1401
in
combination
with
CDX-301
is
being
conducted
in
malignant
melanoma
by
the
CITN
under
a
CRADA
with
the
Cancer
Therapy
Evaluation
Program
of
the
NCI.
This
study
was
designed
todetermine
the
activity
of
CDX-1401
with
or
without
CDX-301
in
melanoma.
The
primary
outcome
measure
of
the
study
is
immune
response
to
NY-ESO-1.Enrollment
is
complete,
and
initial
results
were
presented
at
the
2016
ASCO
Annual
Meeting.
The
data
confirmed
that
CDX-1401
is
capable
of
driving
NY-ESO-1immunity
and
further
demonstrated
the
potential
of
CDX-301
as
a
combination
agent
for
enhancing
tumor
specific
immune
responses.
The
NCI
and
CITN
areplanning
to
enroll
additional
cohorts
to
investigate
alternative
regimens
of
CDX-301.
In
September
2017,
a
randomized,
open-label
Phase
1/2
study
of
CDX-1401
in
combination
with
atezolizumab
and
SGI-110
opened
to
enrollment
in
recurrentovarian,
fallopian
tube,
or
primary
peritoneal
cancer.
This
study
is
being
conducted
under
a
CRADA
with
the
NCI
Division
of
Cancer
Treatment
and
Diagnosis
andis
designed
to
determine
the
activity
of
atezolizumab
alone,
atezolizumab
plus
SGI-110
and
atezolizumab
plus
SGI-110
plus
CDX-1401.
The
primary
outcome
ofthe
Phase
1
dose-escalation
study
is
safety
and
only
evaluates
atezolizumab
alone
and
in
combination
with
SGI-110.
The
Phase
2
portion
of
the
study
is
expected
toadd
CDX-1401.
The
primary
outcome
of
the
Phase
2
portion
of
the
study
is
a
comparison
of
PFS
between
the
three
cohorts.
Other
studies
are
ongoing
and
planned
through
investigator-sponsored
and
collaborative
agreements.Anti-KIT Program: CDX-0158 and CDX-0159
KIT
activation
is
implicated
in
many
disease
processes
including
some
cancers,
neurofibromatosis,
mast
cell-related
diseases
and
autoimmune
diseases.
Weconducted
a
Phase
1
dose-escalation
study
of
CDX-0158,
a
humanized
monoclonal
antibody
that
is
a
potent
inhibitor
of
wildtype
KIT,
in
28
patients
with
advancedrefractory
GIST
and
other
KIT
positive
tumors
with
doses
up
to
15
mg/kg.
No
evidence
of
myelosuppression,
an
effect
commonly
associated
with
KIT
inhibition,was
observed
in
this
study.
Approximately
two-thirds
of
the
patients
on
study
had
infusion
reactions
that
were
manageable
with
pre-medication
and
longer
infusiontimes.
The
biomarker
data
showed
evidence
of
dose-related
KIT
engagement,
and
two
patients
experienced
partial
metabolic
responses
on
fluorodeoxyglucose(FDG)-PET
scan;
however,
these
PET
responses
were
not
associated
with
tumor
shrinkage.
Given
the
infusion
reactions,
modifications
have
been
introduced
into
the
Fc
portion
of
the
CDX-0158
antibody
to
prevent
these
interactions,
which
shouldeliminate
the
potential
for
Fc
receptor
mediated
agonist
activity.
This
second-generation
version,
called
CDX-0159,
also
includes
modifications
to
increase
the
half-life
of
the
antibody,
giving
it
an
additional
advantage
over
CDX-0158.
CDX-0159
is
being
fully
developed
in-house
with
the
intention
of
replacing
CDX-0158
inclinical
development.
We
expect
manufacturing
and
IND-enabling
efforts
for
CDX-0159
will
be
completed
in
2018.73 Table
of
ContentsCRITICAL
ACCOUNTING
POLICIES
AND
ESTIMATES
Our
significant
accounting
policies
are
described
in
Note
2
to
the
financial
statements
included
in
Item
8
of
this
Form
10-K.
We
believe
our
most
criticalaccounting
policies
include
accounting
for
business
combinations,
revenue
recognition,
intangible
and
long-lived
assets,
research
and
development
expenses
andstock-based
compensation
expense.
The
methods,
estimates
and
judgments
we
use
in
applying
our
most
critical
accounting
policies
have
a
significant
impact
on
the
results
we
report
in
ourfinancial
statements.
We
evaluate
our
estimates
and
judgments
on
an
ongoing
basis.
We
base
our
estimates
on
historical
experience
and
on
assumptions
that
webelieve
to
be
reasonable
under
the
circumstances.
Our
experience
and
assumptions
form
the
basis
for
our
judgments
about
the
carrying
value
of
assets
and
liabilitiesthat
are
not
readily
apparent
from
other
sources.
Actual
results
may
vary
from
what
we
anticipate
and
different
assumptions
or
estimates
about
the
future
couldmaterially
change
our
reported
results.
We
believe
the
following
accounting
policies
are
the
most
critical
to
us
in
that
they
are
important
to
the
portrayal
of
ourfinancial
statements
and
they
require
our
most
difficult,
subjective
or
complex
judgments
in
the
preparation
of
our
financial
statements:Business Combinations
We
account
for
business
combinations
under
the
acquisition
method
of
accounting.
We
record
the
fair
value
of
the
consideration
transferred
to
acquire
abusiness
to
the
tangible
assets
and
identifiable
intangible
assets
acquired
and
liabilities
assumed
on
the
basis
of
their
fair
values
at
the
date
of
acquisition.
We
assessthe
fair
value
of
assets,
including
intangible
assets
such
as
IPR&D,
using
a
variety
of
methods
including
present-value
models.
Each
asset
is
measured
at
fair
valuefrom
the
perspective
of
a
market
participant.
The
method
used
to
estimate
the
fair
values
of
IPR&D
assets
incorporates
significant
assumptions
regarding
theestimates
a
market
participant
would
make
in
order
to
evaluate
an
asset,
including
a
market
participant's
assumptions
regarding
the
probability
of
completingIPR&D
projects,
which
would
require
obtaining
regulatory
approval
for
marketing
of
the
associated
drug
candidate;
a
market
participant's
estimates
regarding
thetiming
of
and
the
expected
costs
to
complete
IPR&D
projects;
a
market
participant's
estimates
of
future
cash
flows
from
potential
product
sales;
and
the
appropriatediscount
rates
for
a
market
participant.
Transaction
costs
and
restructuring
costs
associated
with
the
transaction
are
expensed
as
incurred.
The
difference
between
the
purchase
price
and
the
fair
value
of
assets
acquired
and
liabilities
assumed
in
a
business
combination
is
recorded
to
goodwill.Goodwill
is
evaluated
for
impairment
on
an
annual
basis
during
the
third
quarter,
or
earlier
if
impairment
indicators
are
present.
We
performed
an
annualimpairment
test
of
the
goodwill
asset
as
of
July
1,
2017
and
concluded
that
the
goodwill
asset
was
not
impaired.
We
record
contingent
consideration
resulting
from
a
business
combination
at
its
fair
value
on
the
acquisition
date.
We
determine
the
fair
value
of
thecontingent
consideration
based
primarily
on
the
following
factors:•timing
and
probability
of
success
of
clinical
events
or
regulatory
approvals;
•timing
and
probability
of
success
of
meeting
clinical
and
commercial
milestones;
and
•discount
rates.
Our
contingent
consideration
liabilities
arose
in
connection
with
our
acquisition
of
Kolltan.
On
a
quarterly
basis,
we
revalue
these
obligations
and
recordincreases
or
decreases
in
their
fair
value
as
an
adjustment
to
operating
earnings.
Changes
to
contingent
consideration
obligations
can
result
from
adjustments
todiscount
rates,
accretion
of
the
discount
rates
due
to
the
passage
of
time,
changes
in
our
estimates
of
the
likelihood
or
timing
of
achieving
development
orcommercial
milestones,
changes
in74 Table
of
Contentsthe
probability
of
certain
clinical
events
or
changes
in
the
assumed
probability
associated
with
regulatory
approval.
The
assumptions
related
to
determining
the
value
of
contingent
consideration
include
a
significant
amount
of
judgment,
and
any
changes
in
the
underlyingestimates
could
have
a
material
impact
on
the
amount
of
contingent
consideration
expense
recorded
in
any
given
period.Revenue Recognition
We
recognize
revenue
when
all
of
the
following
criteria
are
met:
persuasive
evidence
of
an
arrangement
exists;
delivery
has
occurred
or
services
have
beenrendered;
the
seller's
price
to
the
buyer
is
fixed
or
determinable;
and
collectability
is
reasonably
assured.
We
have
entered
into
and
in
the
future
may
enter
into
biopharmaceutical
product
development
agreements
with
collaborative
partners
for
the
research
anddevelopment
of
therapeutic
drug
candidates.
The
terms
of
the
agreements
may
include
nonrefundable
signing
and
licensing
fees;
funding
for
research,
developmentand
manufacturing;
milestone
payments;
and
royalties
on
any
product
sales
derived
from
collaborations.
These
multiple
element
arrangements
are
analyzed
todetermine
whether
the
deliverables
can
be
separated
or
whether
they
must
be
accounted
for
as
a
single
unit
of
accounting.
In
accounting
for
these
transactions,
weallocate
revenue
to
the
various
elements
based
on
their
relative
fair
value.
The
fair
value
of
a
revenue
generating
element
can
be
based
on
current
selling
pricesoffered
by
us
or
another
party
for
current
products
or
our
best
estimate
of
a
selling
price
for
future
products.
Revenue
allocated
to
an
individual
element
isrecognized
when
all
other
revenue
recognition
criteria
are
met
for
that
element.
These
collaborative
and
other
agreements
may
contain
milestone
payments.
Revenues
from
milestones,
if
they
are
considered
substantive,
are
recognized
uponsuccessful
accomplishment
of
the
milestones.
Determining
whether
a
milestone
is
substantive
involves
judgment,
including
an
assessment
of
our
involvement
inachieving
the
milestones
and
whether
the
amount
of
the
payment
is
commensurate
to
our
performance.
If
not
considered
substantive,
milestones
are
initiallydeferred
and
recognized
over
the
remaining
period
of
the
performance
obligation.
Payments
received
to
fund
certain
research
activities
are
recognized
as
revenue
in
the
period
in
which
the
research
activities
are
performed.
Revenue
fromcontracts
and
grants
is
recognized
as
the
services
are
performed
and
recorded
as
effort
is
expended
on
the
contracted
work
and
billed
to
the
government
or
ourcontractual
partner.
Payments
received
in
advance
that
are
related
to
future
performance
are
deferred
and
recognized
as
revenue
when
the
research
projects
areperformed.
Product
royalty
revenue
consists
of
payments
received
from
licensees
for
a
portion
of
sales
proceeds
from
products
that
utilize
our
licensed
technologies
and
isrecognized
when
the
amount
of
and
basis
for
such
royalty
payments
are
reported
to
us
in
accurate
and
appropriate
form
and
in
accordance
with
the
related
licenseagreement.Intangible and Long-Lived Assets
We
evaluate
the
recoverability
of
our
long-lived
assets,
including
property
and
equipment,
and
finite-lived
intangible
assets
when
circumstances
indicate
thatan
event
of
impairment
may
have
occurred.
Determination
of
recoverability
is
based
on
an
estimate
of
undiscounted
future
cash
flows
resulting
from
the
use
of
theasset
and
its
eventual
disposition.
In
the
event
that
such
cash
flows
are
not
expected
to
be
sufficient
to
recover
the
carrying
amount
of
the
assets,
the
assets
arewritten-down
to
their
estimated
fair
values.
IPR&D
assets
acquired
in
a
business
combination
initially
are
recorded
at
fair
value
and
accounted
for
as
indefinite-lived
intangible
assets.
These
assets
arecapitalized
on
our
balance
sheets
until
either
the
project
underlying
them
is
completed
or
the
assets
become
impaired.
If
a
project
is
completed,
the75 Table
of
Contentscarrying
value
of
the
related
intangible
asset
is
amortized
over
the
remaining
estimated
life
of
the
asset
beginning
in
the
period
in
which
the
project
is
completed.
Ifa
project
becomes
impaired
or
is
abandoned,
the
carrying
value
of
the
related
intangible
asset
is
written
down
to
its
fair
value
and
an
impairment
charge
is
taken
inthe
period
in
which
the
impairment
occurs.
Discounted
cash
flow
models
are
typically
used
in
these
tests,
and
the
models
require
the
use
of
significant
estimatesand
assumptions
including
but
not
limited
to:•timing
and
costs
to
complete
the
in-process
projects;
•timing
and
probability
of
success
of
clinical
events
or
regulatory
approvals;
•estimated
future
cash
flows
from
product
sales
resulting
from
completed
products
and
in-process
projects;
and
•discount
rates
Each
IPR&D
asset
is
assessed
for
impairment
at
least
annually
or
when
impairment
indicators
are
present.
During
the
third
quarter
of
2017,
we
recorded
apartial
impairment
charge
of
$13.0
million
related
to
changes
in
projected
development
and
regulatory
timelines
regarding
the
anti-KIT
program.
The
remainingIPR&D
assets
were
assessed
for
impairment
during
2017
and
were
determined
not
to
be
impaired.
Intangible
assets
acquired
in
a
business
combination
with
a
finite
life
are
recorded
at
fair
value
and
amortized
over
the
greater
of
economic
consumption
or
ona
straight-line
basis
over
their
estimated
useful
life.Research and Development Expenses
Research
and
development
costs,
including
internal
and
contract
research
costs,
are
expensed
as
incurred.
Research
and
development
expenses
consist
mainlyof
clinical
trial
costs,
manufacturing
of
clinical
material,
toxicology
and
other
preclinical
studies,
personnel
costs,
depreciation,
license
fees
and
funding
of
outsidecontracted
research.
Clinical
trial
expenses
include
expenses
associated
with
clinical
research
organization,
or
CRO,
services.
Contract
manufacturing
expenses
include
expensesassociated
with
contract
manufacturing
organization,
or
CMO,
services.
The
invoicing
from
CROs
and
CMOs
for
services
rendered
can
lag
several
months.
Weaccrue
the
cost
of
services
rendered
in
connection
with
CRO
and
CMO
activities
based
on
our
estimate
of
costs
incurred.
We
maintain
regular
communication
withour
CROs
and
CMOs
to
assess
the
reasonableness
of
our
estimates.
Differences
between
actual
expenses
and
estimated
expenses
recorded
have
not
been
materialand
are
adjusted
for
in
the
period
in
which
they
become
known.Stock-Based Compensation Expense
We
record
stock-based
compensation
expense
for
all
stock-based
awards
made
to
employees
and
directors
based
on
the
estimated
fair
values
of
the
stock-based
awards
expected
to
vest
at
the
grant
date
and
adjust,
if
necessary,
to
reflect
actual
forfeitures.
Our
estimates
of
employee
stock
option
values
rely
on
estimatesof
future
uncertain
events.
Significant
assumptions
include
the
use
of
historical
volatility
to
estimate
the
expected
stock
price
volatility.
We
also
estimate
expectedterm
based
on
historical
exercise
patterns.
Actual
volatility
and
lives
of
options
may
be
significantly
different
from
our
estimates.
Compensation
expense
for
allstock-based
awards
to
employees
and
directors
is
recognized
using
the
straight-line
method
over
the
term
of
vesting
or
performance.
We
record
stock-based
compensation
expense
for
stock
options
granted
to
non-employees
based
on
the
fair
value
of
the
stock
options
which
is
re-measuredover
the
vesting
term
resulting
in
periodic
adjustments
to
stock-based
compensation
expense.76 Table
of
ContentsRESULTS
OF
OPERATIONSYear Ended December 31, 2017 compared with Year Ended December 31, 2016Net Loss
The
$35.5
million
decrease
in
net
loss
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,
2016,
was
primarily
the
result
of
adecrease
in
research
and
development
expenses
and
general
and
administrative
expenses
and
increases
in
contract
revenues.
The
non-cash
income
tax
benefitimpacting
net
loss
was
partially
offset
by
the
non-cash
in-process
research
and
development
impairment
charge.Revenue
The
$1.0
million
increase
in
product
development
and
licensing
agreements
revenue
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
endedDecember
31,
2016,
was
primarily
due
to
an
increase
in
reimbursable
clinical
trial
expenses
related
to
our
BMS
agreement.
The
$5.0
million
increase
in
contractsand
grants
revenue
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,
2016,
was
primarily
related
to
our
International
AIDSVaccine
Initiative
and
Frontier
Biotechnologies,
Inc.
agreements
executed
in
2017.77
Year
Ended
December
31,
Increase/
(Decrease)
Increase/
(Decrease)
2017
2016
$
%
(In
thousands)
Revenues:
Product
Development
and
Licensing
Agreements
$3,153
$2,174
$979
45%Contracts
and
Grants
9,590
4,612
4,978
108%Total
Revenue
$12,743
$6,786
$5,957
88%Operating
Expenses:
Research
and
Development
96,171
102,726
(6,555)
(6)%General
and
Administrative
25,003
35,979
(10,976)
(31)%In-Process
Research
and
Development
Impairment
13,000
—
13,000
n/a
Gain
on
Fair
Value
Remeasurement
of
ContingentConsideration
(800)
—
800
n/a
Amortization
of
Acquired
Intangible
Assets
896
997
(101)
(10)%Total
Operating
Expense
134,270
139,702
(5,432)
(4)%Operating
Loss
(121,527)
(132,916)
(11,389)
(9)%Investment
and
Other
Income,
Net
4,214
4,386
(172)
(4)%Net
Loss
Before
Income
Tax
Benefit
(117,313)
(128,530)
(11,217)
(9)%Income
Tax
Benefit
24,282
—
24,282
n/a
Net
Loss
$(93,031)$(128,530)$(35,499)
(28)% Table
of
ContentsResearch and Development Expense
Research
and
development
expenses
consist
primarily
of
(i)
personnel
expenses,
(ii)
laboratory
supply
expenses
relating
to
the
development
of
our
technology,(iii)
facility
expenses,
(iv)
license
fees
and
(v)
product
development
expenses
associated
with
our
drug
candidates
as
follows:
Personnel
expenses
primarily
include
salary,
benefits,
stock-based
compensation
and
payroll
taxes.
The
$0.4
million
increase
in
personnel
expenses
for
theyear
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,
2016,
was
primarily
due
to
an
increase
in
salaries
expense
and
headcount
related
tothe
Kolltan
acquisition
partially
offset
by
lower
stock-based
compensation
expenses.
We
expect
personnel
expenses
to
remain
relatively
consistent
over
the
nexttwelve
months,
although
there
may
be
fluctuations
on
a
quarterly
basis.
Laboratory
supplies
expenses
include
laboratory
materials
and
supplies,
services,
and
other
related
expenses
incurred
in
the
development
of
our
technology.The
$0.8
million
increase
in
laboratory
supply
expenses
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,
2016,
was
primarilydue
to
higher
laboratory
materials
and
supplies
purchases.
We
expect
laboratory
supplies
expenses
to
remain
relatively
consistent
over
the
next
twelve
months,although
there
may
be
fluctuations
on
a
quarterly
basis.
Facility
expenses
include
depreciation,
amortization,
utilities,
rent,
maintenance
and
other
related
expenses
incurred
at
our
facilities.
The
$2.3
million
increasein
facility
expenses
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,
2016,
was
primarily
due
to
the
addition
of
our
NewHaven,
CT
facility
that
we
acquired
with
the
Kolltan
acquisition
and
higher
depreciation
expense
of
$1.3
million.
In
March
2017,
we
terminated
our
lease
inBranford,
CT
and
consolidated
our
Connecticut
operations
in
our
New
Haven
facility.
We
expect
facility
expenses
to
remain
relatively
consistent
over
the
nexttwelve
months,
although
there
may
be
fluctuations
on
a
quarterly
basis
License
fee
expenses
include
annual
license
maintenance
fees
and
milestone
payments
due
upon
the
achievement
of
certain
development,
regulatory
and/orcommercial
milestones.
The
$0.9
million
decrease
in
license
fee
expenses
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,2016,
was
due
to
the
timing
of
certain
development
and/or
regulatory
milestones
achieved
by
our
drug
candidates.
We
expect
license
fee
expense
to
remainrelatively
consistent
over
the
next
twelve
months,
although
there
may
be
fluctuations
on
a
quarterly
basis.
Product
development
expenses
include
clinical
investigator
site
fees,
external
trial
monitoring
costs,
data
accumulation
costs,
contracted
research
and
outsideclinical
drug
product
manufacturing.
The
$10.1
million
decrease
in
product
development
expenses
for
the
year
ended
December
31,
2017,
as
compared
to
the
yearended
December
31,
2016,
was
primarily
due
to
lower
contract
manufacturing
and
clinical
trial
costs
of
$9.9
and
$7.6
million,
respectively,
related
to
varlilumaband
Rintega.
These
decreases
were
partially
offset
by
increases
in
(i)
glembatumumab
vedotin
contract
manufacturing
expenses
of
$2.7
million
and(ii)
glembatumumab
vedotin,
anti-KIT
and
CDX-3379
clinical
trial
costs
of
$3.6
million.
The
amount
of
product
development
expenses
incurred
over
the
nexttwelve
months
will78
Year
Ended
December
31,
Increase/
(Decrease)
2017
2016
$
%
(In
thousands)
Personnel
$36,470
$36,070
$400
1%Laboratory
Supplies
4,514
3,697
817
22%Facility
8,617
6,314
2,303
36%License
Fees
677
1,614
(937)
(58)%Product
Development
36,711
46,852
(10,141)
(22)% Table
of
Contentsbe
impacted
by
our
clinical
data
results
from
our
METRIC
clinical
study
and
their
impact
on
our
pace
of
commercial
manufacturing.General and Administrative Expense
The
$11.0
million
decrease
in
general
and
administrative
expenses
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,
2016,was
primarily
due
to
lower
commercial
planning
costs
of
$4.5
million,
lower
stock-based
compensation
of
$1.9
million
and
lower
severance
expense
related
to
theKolltan
acquisition
of
$2.6
million.
The
amount
of
general
and
administrative
expenses
incurred
over
the
next
twelve
months
will
be
impacted
by
our
clinical
dataresults
from
our
METRIC
clinical
study
and
their
impact
on
the
rate
of
expansion
of
our
commercial
operations.In-Process Research and Development Impairment
We
recorded
a
non-cash
impairment
charge
of
$13.0
million
on
the
anti-KIT
program
IPR&D
assets
acquired
from
Kolltan
during
the
year
endedDecember
31,
2017.
This
impairment
charge
was
related
to
changes
in
projected
development
and
regulatory
timelines
regarding
the
anti-KIT
program.Gain on Fair Value Remeasurement of Contingent Consideration
The
$0.8
million
gain
on
fair
value
remeasurement
of
contingent
consideration
for
the
year
ended
December
31,
2017
was
due
to
a
reduction
in
fair
valueattributed
to
milestones
related
to
our
anti-KIT
and
TAM
programs,
partially
offset
by
losses
related
to
changes
in
discount
rates,
passage
of
time
and
probabilitiesaffecting
remaining
milestones.
See
Note
4
to
the
financial
statements
included
herein
for
a
discussion
of
the
contingent
consideration
that
may
be
payable
relatedto
the
Kolltan
acquisition.Amortization Expense
Amortization
expense
for
the
year
ended
December
31,
2017
was
relatively
consistent
with
the
year
ended
December
31,
2016.
We
expect
amortizationexpense
of
acquired
intangible
assets
to
remain
consistent
over
the
next
twelve
months.Investment and Other Income, Net
The
$0.2
million
decrease
in
investment
and
other
income,
net
for
the
year
ended
December
31,
2017,
as
compared
to
the
year
ended
December
31,
2016,
wasprimarily
due
to
lower
levels
of
cash
and
investment
balances,
partially
offset
by
higher
interest
rates
on
fixed
income
investments.
We
anticipate
investmentincome
to
decrease
over
the
next
twelve
months
due
to
lower
levels
of
cash
and
investment
balances.Income Tax Benefit
We
recorded
a
non-cash
income
tax
benefit
of
$19.1
million
related
to
decreases
in
net
deferred
tax
liabilities
resulting
from
the
Tax
Cuts
and
Jobs
Act
of2017
(TCJA).
In
addition,
we
recorded
a
non-cash
income
tax
benefit
of
$5.2
million
related
to
the
partial
impairment
of
the
anti-KIT
program
IPR&D
assets.79 Table
of
ContentsYear Ended December 31, 2016 compared with Year Ended December 31, 2015Net Loss
The
$1.3
million
increase
in
net
loss
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,
was
primarily
the
result
of
anincrease
in
research
and
development
expenses
and
general
and
administrative
expenses,
offset
by
an
increase
in
investment
and
other
income
and
revenue.Revenue
The
$0.7
million
increase
in
product
development
and
licensing
agreements
revenue
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
endedDecember
31,
2015,
was
primarily
related
to
our
BMS
agreement.
The
$0.6
million
increase
in
contracts
and
grants
revenue
for
the
year
ended
December
31,
2016,as
compared
to
the
year
ended
December
31,
2015,
was
primarily
related
to
an
increase
in
grant
revenue
of
$1.2
million,
partially
offset
by
a
decrease
of$0.7
million
in
revenue
from
our
Rockefeller
University
agreement
pursuant
to
which
we
perform
research
and
development
services
for
Rockefeller.80
Year
Ended
December
31,
Increase/
(Decrease)
Increase/
(Decrease)
2016
2015
$
%
(In
thousands)
Revenues:
Product
Development
and
Licensing
Agreements
$2,174
$1,442
$732
51%Contracts
and
Grants
4,612
4,038
574
14%Total
Revenue
$6,786
$5,480
$1,306
24%Operating
Expenses:
Research
and
Development
102,726
100,171
2,555
3%General
and
Administrative
35,979
33,837
2,142
6%In-Process
Research
and
Development
Impairment
—
—
—
n/a
Gain
on
Fair
Value
Remeasurement
of
ContingentConsideration
—
—
—
n/a
Amortization
of
Acquired
Intangible
Assets
997
1,013
(16)
(2)%Total
Operating
Expense
139,702
135,021
4,681
3%Operating
Loss
(132,916)
(129,541)
3,375
3%Investment
and
Other
Income,
Net
4,386
2,344
2,042
87%Net
Loss
Before
Income
Tax
Benefit
(128,530)
(127,197)
1,333
1%Income
Tax
Benefit
—
—
—
n/a
Net
Loss
$(128,530)$(127,197)$1,333
1% Table
of
ContentsResearch and Development Expense
Research
and
development
expenses
consist
primarily
of
(i)
personnel
expenses,
(ii)
laboratory
supply
expenses
relating
to
the
development
of
our
technology,(iii)
facility
expenses,
(iv)
license
fees
and
(v)
product
development
expenses
associated
with
our
drug
candidates
as
follows:
The
$6.3
million
increase
in
personnel
expenses
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,
was
primarily
dueto
Kolltan-related
severance
expense
and
higher
stock-based
compensation
of
$0.7
million
and
$1.6
million,
respectively,
and
increased
headcount.
The
$0.7
million
decrease
in
laboratory
supply
expenses
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,
wasprimarily
due
to
lower
manufacturing
supply
purchases.
The
$0.6
million
increase
in
facility
expenses
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,
was
primarily
due
toan
increase
in
rent.
The
$0.7
million
increase
in
license
fee
expenses
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,
was
due
to
thetiming
of
certain
development
and/or
regulatory
milestones
achieved
by
our
drug
candidates.
The
$5.9
million
decrease
in
product
development
expenses
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,
wasprimarily
due
to
a
$19.9
million
decrease
in
Rintega
program
costs.
That
decrease
was
partially
offset
by
increases
in
glembatumumab
vedotin
and
varlilumabprogram
costs
of
$4.6
million
and
$9.6
million,
respectively.General and Administrative Expense
The
$2.1
million
increase
in
general
and
administrative
expenses
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,was
primarily
due
to
Kolltan-related
severance
expense,
restructuring
expense
related
to
our
decision
to
not
occupy
our
Needham,
MA
expansion
space
and
higherstock-based
compensation
of
$2.4
million,
$1.2
million
and
$0.9
million,
respectively.
Those
increases
were
partially
offset
by
lower
commercial
planning
costs
of$2.8
million.Amortization Expense
Amortization
expense
for
the
year
ended
December
31,
2016
was
consistent
compared
to
the
year
ended
December
31,
2015.Investment and Other Income, Net
The
$2.0
million
increase
in
investment
and
other
income,
net
for
the
year
ended
December
31,
2016,
as
compared
to
the
year
ended
December
31,
2015,
wasprimarily
due
to
higher
other
income
of
$1.8
million
related
to
our
sale
of
New
Jersey
tax
benefits.81
Year
Ended
December
31,
Increase/
(Decrease)
2016
2015
$
%
(In
thousands)
Personnel
$36,070
$29,774
$6,296
21%Laboratory
Supplies
3,697
4,355
(658)
(15)%Facility
6,314
5,756
558
10%License
Fees
1,614
896
718
80%Product
Development
46,852
52,776
(5,924)
(11)% Table
of
ContentsLIQUIDITY
AND
CAPITAL
RESOURCES
Our
cash
equivalents
are
highly
liquid
investments
with
a
maturity
of
three
months
or
less
at
the
date
of
purchase
and
consist
primarily
of
investments
inmoney
market
mutual
funds
with
commercial
banks
and
financial
institutions.
We
maintain
cash
balances
with
financial
institutions
in
excess
of
insured
limits.
Wedo
not
anticipate
any
losses
with
respect
to
such
cash
balances.
We
invest
our
excess
cash
balances
in
marketable
securities,
including
municipal
bond
securities,U.S.
government
agency
securities
and
high-grade
corporate
bonds
that
meet
high
credit
quality
standards,
as
specified
in
our
investment
policy.
Our
investmentpolicy
seeks
to
manage
these
assets
to
achieve
our
goals
of
preserving
principal
and
maintaining
adequate
liquidity.
The
use
of
our
cash
flows
for
operations
has
primarily
consisted
of
salaries
and
wages
for
our
employees;
facility
and
facility-related
costs
for
our
offices,laboratories
and
manufacturing
facility;
fees
paid
in
connection
with
preclinical
studies,
clinical
studies,
contract
manufacturing,
laboratory
supplies
and
services;and
consulting,
legal
and
other
professional
fees.
To
date,
the
primary
sources
of
cash
flows
from
operations
have
been
payments
received
from
our
collaborativepartners
and
from
government
entities.
The
timing
of
any
new
collaboration
agreements,
government
contracts
or
grants
and
any
payments
under
these
agreements,contracts
or
grants
cannot
be
easily
predicted
and
may
vary
significantly
from
quarter
to
quarter.
At
December
31,
2017,
our
principal
sources
of
liquidity
consisted
of
cash,
cash
equivalents
and
marketable
securities
of
$139.4
million.
We
have
hadrecurring
losses
and
incurred
a
loss
of
$93.0
million
for
the
year
ended
December
31,
2017.
Net
cash
used
in
operations
for
the
year
ended
December
31,
2017
was$99.9
million.
We
believe
that
the
cash,
cash
equivalents
and
marketable
securities
at
December
31,
2017
combined
with
the
(i)
$6.1
million
in
net
proceeds
fromsales
of
our
common
stock
under
the
Cantor
agreement
from
January
1,
2018
through
February
28,
2018
and
(ii)
anticipated
proceeds
from
future
sales
of
ourcommon
stock
under
the
Cantor
agreement,
are
sufficient
to
meet
estimated
working
capital
requirements
and
fund
planned
operations
through
2019.
This
could
beimpacted
by
our
clinical
data
results
from
our
METRIC
clinical
study
and
their
impact
on
our
pace
of
commercial
manufacturing
and
the
rate
of
expansion
of
ourcommercial
operations.
This
could
also
be
impacted
if
we
elected
to
pay
Kolltan
contingent
milestones,
if
any,
in
cash.
During
the
next
twelve
months,
we
will
take
further
steps
to
raise
additional
capital
to
meet
our
liquidity
needs.
Our
capital
raising
activities
may
include,
butmay
not
be
limited
to,
one
or
more
of
the
following:
the
licensing
of
drug
candidates
with
existing
or
new
collaborative
partners,
possible
business
combinations,issuance
of
debt,
or
the
issuance
of
common
stock
or
other
securities
via
private
placements
or
public
offerings.
While
we
may
seek
capital
through
a
number
ofmeans,
there
can
be
no
assurance
that
additional
financing
will
be
available
on
acceptable
terms,
if
at
all,
and
our
negotiating
position
in
capital-raising
efforts
mayworsen
as
existing
resources
are
used.
There
is
also
no
assurance
that
we
will
be
able
to
enter
into
further
collaborative
relationships.
Additional
equity
financingsmay
be
dilutive
to
our
stockholders;
debt
financing,
if
available,
may
involve
significant
cash
payment
obligations
and
covenants
that
restrict
our
ability
to
operateas
a
business;
and
licensing
or
strategic
collaborations
may
result
in
royalties
or
other
terms
which
reduce
our
economic
potential
from
products
underdevelopment.
Our
ability
to
continue
funding
our
planned
operations
into
and
beyond
twelve
months
from
the
issuance
date
is
also
dependent
on
the
timing
andmanner
of
payment
of
future
contingent
milestones
from
the
Kolltan
acquisition,
in
the
event
that
we
achieve
the
drug
candidate
milestones
related
to
thosepayments.
We
may
decide
to
pay
those
milestone
payments
in
cash,
shares
of
our
common
stock
or
a
combination
thereof.
If
we
are
unable
to
raise
the
fundsnecessary
to
meet
our
liquidity
needs,
we
may
have
to
delay
or
discontinue
the
development
of
one
or
more
programs,
discontinue
or
delay
ongoing
or
anticipatedclinical
trials,
license
out
programs
earlier
than
expected,
raise
funds
at
a
significant
discount
or
on
other
unfavorable
terms,
if
at
all,
or
sell
all
or
a
part
of
ourbusiness.82 Table
of
ContentsOperating Activities
Net
cash
used
in
operating
activities
was
$99.9
million
for
the
year
ended
December
31,
2017
compared
to
$113.0
million
for
the
year
ended
December
31,2016.
The
decrease
in
net
cash
used
in
operating
activities
was
primarily
due
to
an
increase
in
revenue
and
decreases
in
both
general
and
administrative
andresearch
and
development
expenses.
We
expect
that
cash
used
in
operating
activities
will
decrease
over
the
next
twelve
months,
although
there
may
be
fluctuationson
a
quarterly
basis.
Net
cash
used
in
operating
activities
was
$113.0
million
for
the
year
ended
December
31,
2016
compared
to
$98.9
million
for
the
year
ended
December
31,2015.
The
increase
in
net
cash
used
in
operating
activities
was
primarily
due
to
an
increase
in
net
loss
of
$1.3
million
and
changes
in
working
capital.
We
have
incurred
and
will
continue
to
incur
significant
costs
in
the
area
of
research
and
development,
including
preclinical
and
clinical
trials
and
clinical
drugproduct
manufacturing
as
our
drug
candidates
are
developed.
We
plan
to
spend
significant
amounts
to
progress
our
current
drug
candidates
through
the
clinical
trialand
commercialization
processes
as
well
as
to
develop
additional
drug
candidates.
As
our
drug
candidates
progress
through
the
clinical
trial
process,
we
may
beobligated
to
make
significant
milestone
payments.Investing Activities
Net
cash
provided
by
investing
activities
was
$46.5
million
for
the
year
ended
December
31,
2017
compared
to
net
cash
provided
by
investing
activities
of$68.9
million
for
the
year
ended
December
31,
2016.
The
decrease
in
net
cash
provided
by
investing
activities
was
primarily
due
to
net
sales
and
maturities
ofmarketable
securities
for
the
year
ended
December
31,
2017
of
$48.3
million
as
compared
to
net
sales
and
maturities
of
marketable
securities
of
$68.9
million
forthe
year
ended
December
31,
2016.
We
expect
that
cash
provided
by
investing
activities
will
decrease
over
the
next
twelve
months
as
we
decrease
cash
used
inoperations
which
is
funded
mainly
through
the
combination
of
net
proceeds
from
the
sales
and
maturities
of
marketable
securities,
cash
provided
by
financingactivities
and/or
new
partnerships,
although
there
may
be
significant
fluctuations
on
a
quarterly
basis.
Net
cash
provided
by
investing
activities
was
$68.9
million
for
the
year
ended
December
31,
2016
compared
to
net
cash
used
by
investing
activities
of$50.2
million
for
the
year
ended
December
31,
2015.
The
increase
in
net
cash
provided
by
investing
activities
was
primarily
due
to
net
sales
and
maturities
ofmarketable
securities
for
the
year
ended
December
31,
2016
of
$68.9
million
as
compared
to
net
purchases
of
marketable
securities
of
$45.3
million
for
the
yearended
December
31,
2015.Financing Activities
Net
cash
provided
by
financing
activities
was
$51.3
million
for
the
year
ended
December
31,
2017
compared
to
$14.5
million
for
the
year
ended
December
31,2016.
Net
proceeds
from
stock
issuances,
including
stock
issued
pursuant
to
employee
benefit
plans,
were
$51.3
million
during
the
year
ended
December
31,
2017compared
to
$14.5
million
for
the
year
ended
December
31,
2016.
Net
cash
provided
by
financing
activities
was
$14.5
million
for
the
year
ended
December
31,
2016
compared
to
$193.2
million
for
the
year
endedDecember
31,
2015.
Net
proceeds
from
stock
issuances,
including
stock
issued
pursuant
to
employee
benefit
plans,
were
$14.5
million
during
the
year
endedDecember
31,
2016
compared
to
$193.2
million
for
the
year
ended
December
31,
2015.Equity Offerings
In
December
2013,
we
filed
an
automatic
shelf
registration
statement
with
the
Securities
and
Exchange
Commission
to
register
for
sale
any
combination
of
thetypes
of
securities
described
in
the
shelf
registration
statement.
In
December
2016,
we
filed
a
new
shelf
registration
statement
with
the83 Table
of
ContentsSecurities
and
Exchange
Commission
to
register
for
sale
any
combination
of
the
types
of
securities
described
in
the
shelf
registration
statement
up
to
a
maximumaggregate
offering
price
of
$250.0
million.
Such
registration
statement
was
declared
effective
on
February
13,
2017.
In
May
2016,
we
entered
into
an
agreement
with
Cantor
Fitzgerald
&
Co.
("Cantor")
to
allow
us
to
issue
and
sell
shares
of
our
common
stock
having
anaggregate
offering
price
of
up
to
$60.0
million
from
time
to
time
through
Cantor,
acting
as
agent.
In
November
2017,
we
filed
a
prospectus
supplement
registeringthe
offer
and
sale
of
shares
of
common
stock
of
up
to
an
additional
$75.0
million
under
the
agreement
with
Cantor.
During
the
years
ended
December
31,
2017
and2016,
we
issued
17,722,863
and
3,303,800
shares
of
common
stock,
respectively,
under
this
controlled
equity
offering
sales
agreement
with
Cantor
resulting
in
netproceeds
of
$51.0
million
and
$13.9
million,
respectively,
after
deducting
commission
and
offering
expenses.
At
December
31,
2017,
we
had
$67.6
millionremaining
in
aggregate
gross
offering
price
available
under
the
Cantor
agreement.
From
January
1,
2018
through
February
28,
2018,
we
issued
2,401,847
shares
ofour
common
stock
resulting
in
net
proceeds
of
$6.1
million.
During
the
year
ended
December
31,
2015,
we
issued
8,337,500
shares
of
our
common
stock
in
underwritten
public
offerings
resulting
in
net
proceeds
to
us
of$188.8
million
after
deducting
underwriting
fees
and
offering
expenses.AGGREGATE
CONTRACTUAL
OBLIGATIONS
We
have
entered
into
license
agreements
whereby
we
have
received
licenses
or
options
to
license
technology,
specified
patents
and/or
patent
applications.These
license
and
collaboration
agreements
generally
provide
for
royalty
payments
equal
to
specified
percentages
of
product
sales,
annual
license
maintenancefees,
continuing
patent
prosecution
costs
and
potential
future
milestone
payments
to
third
parties
upon
the
achievement
of
certain
development,
regulatory
and/orcommercial
milestones.
Because
the
achievement
of
these
milestones
had
not
occurred
as
of
December
31,
2017
such
contingencies
have
not
been
recorded
in
ourfinancial
statements.
We
expect
to
incur
approximately
$0.2
million
of
license
and
milestone
payments
in
2018.
The
following
table
summarizes
our
contractual
obligations
(not
including
contingent
royalty
and
milestone
payments
as
described
above)
at
December
31,2017
and
the
effect
such
obligations
and
commercial
commitments
are
expected
to
have
on
our
liquidity
and
cash
flow
in
future
years.
These
obligations,commitments
and
supporting
arrangements
represent
expected
payments
based
on
current
operating
forecasts,
which
are
subject
to
change:84
Total
2018
2019
-
2020
2021
-
2022
Thereafter
(In
thousands)
Contractual
obligations:
Operating
lease
obligations(1)
$11,561
$4,591
$6,970
$—
$—
Other
contractual
obligations(2)(3)
11,330
11,330
—
—
—
Total
contractual
obligations
$22,891
$15,921
$6,970
$—
$—
(1)Such
amounts
primarily
consist
of
payments
for
our
facility
leases
and
do
not
assume
the
exercise
of
renewal
terms
or
early
terminationprovisions.
(2)We
enter
into
agreements
in
the
normal
course
of
business
with
contract
research
organizations
for
clinical
trials,
contract
manufacturingorganizations,
vendors
for
preclinical
research
studies
and
other
services
and
products
for
operating
purposes.
We
have
included
obligationsin
the
table
above
if
the
contracts
are
not
cancelable
at
any
time
by
us,
generally
upon
30
days
prior
written
notice
to
the
vendor. Table
of
ContentsRECENT
ACCOUNTING
PRONOUNCEMENTS
Refer
to
Note
2,
"Summary
of
Significant
Accounting
Policies,"
in
the
accompanying
notes
to
the
financial
statements
for
a
discussion
of
recent
accountingpronouncements.OFF-BALANCE
SHEET
ARRANGEMENTS
None.Item
7A.
QUANTITATIVE
AND
QUALITATIVE
DISCLOSURES
ABOUT
MARKET
RISK
We
own
financial
instruments
that
are
sensitive
to
market
risk
as
part
of
our
investment
portfolio.
Our
investment
portfolio
is
used
to
preserve
our
capital
untilit
is
used
to
fund
operations,
including
our
research
and
development
activities.
None
of
these
market-risk
sensitive
instruments
are
held
for
trading
purposes.
Weinvest
our
cash
primarily
in
money
market
mutual
funds.
These
investments
are
evaluated
quarterly
to
determine
the
fair
value
of
the
portfolio.
From
time
to
time,we
invest
our
excess
cash
balances
in
marketable
securities,
including
municipal
bond
securities,
U.S.
government
agency
securities,
and
high-grade
corporatebonds
that
meet
high
credit
quality
standards,
as
specified
in
our
investment
policy.
Our
investment
policy
seeks
to
manage
these
assets
to
achieve
our
goals
ofpreserving
principal
and
maintaining
adequate
liquidity.
Because
of
the
short-term
nature
of
these
investments,
we
do
not
believe
we
have
material
exposure
due
tomarket
risk.
The
impact
to
our
financial
position
and
results
of
operations
from
changes
in
interest
rates
is
not
material.
We
do
not
utilize
derivative
financial
instruments.
The
carrying
amounts
reflected
in
the
balance
sheet
of
cash
and
cash
equivalents,
accounts
receivables
andaccounts
payable
approximates
fair
value
at
December
31,
2017
due
to
the
short-term
maturities
of
these
instruments.85(3)In
the
event
that
certain
specified
preclinical
and
clinical
development
milestones
related
to
Kolltan's
development
programs
and/or
ourdevelopment
programs
and
certain
commercial
milestones
related
to
Kolltan's
drug
candidates
are
achieved,
we
will
be
required
to
payKolltan's
stockholders
milestone
payments
of
up
to
$172.5
million,
which
milestone
payments
may
be
made,
at
our
sole
election,
in
cash,
inshares
of
our
common
stock
or
a
combination
of
both,
subject
to
NASDAQ
listing
requirements
and
provisions
of
the
merger
agreement.Because
the
timing
and
certainty
of
these
milestones
being
achieved
is
unknown,
these
potential
future
obligations
are
not
included
withinthe
table. Table
of
ContentsItem
8.
FINANCIAL
STATEMENTS
AND
SUPPLEMENTARY
DATA
Report
of
Independent
Registered
Public
Accounting
Firm
To
the
Board
of
Directors
and
Stockholders
of
Celldex
Therapeutics,
Inc.Opinions on the Financial Statements and Internal Control over Financial Reporting
We
have
audited
the
accompanying
consolidated
balance
sheets
of
Celldex
Therapeutics,
Inc.
and
its
subsidiary
as
of
December
31,
2017
and
2016,
and
therelated
consolidated
statements
of
operations
and
comprehensive
loss,
stockholders'
equity,
and
cash
flows
for
each
of
the
three
years
in
the
period
endedDecember
31,
2017,
including
the
related
notes
(collectively
referred
to
as
the
"consolidated
financial
statements").
We
also
have
audited
the
Company's
internalcontrol
over
financial
reporting
as
of
December
31,
2017,
based
on
criteria
established
in
Internal Control—Integrated Framework (2013)
issued
by
the
Committeeof
Sponsoring
Organizations
of
the
Treadway
Commission
(COSO).
In
our
opinion,
the
consolidated
financial
statements
referred
to
above
present
fairly,
in
all
material
respects,
the
financial
position
of
the
Company
as
ofDecember
31,
2017
and
2016
and
the
results
of
their
operations
and
their
cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,
2017
inconformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America.
Also
in
our
opinion,
the
Company
maintained,
in
all
material
respects,effective
internal
control
over
financial
reporting
as
of
December
31,
2017
based
on
criteria
established
in
Internal Control—Integrated Framework (2013)
issuedby
the
COSO.Basis for Opinions
The
Company's
management
is
responsible
for
these
consolidated
financial
statements,
for
maintaining
effective
internal
control
over
financial
reporting,
andfor
its
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
Management's
Annual
Report
on
Internal
Control
over
FinancialReporting
appearing
under
Item
9A.
Our
responsibility
is
to
express
opinions
on
the
Company's
consolidated
financial
statements
and
on
the
Company's
internalcontrol
over
financial
reporting
based
on
our
audits.
We
are
a
public
accounting
firm
registered
with
the
Public
Company
Accounting
Oversight
Board
(UnitedStates)
("PCAOB")
and
are
required
to
be
independent
with
respect
to
the
Company
in
accordance
with
the
U.S.
federal
securities
laws
and
the
applicable
rules
andregulations
of
the
Securities
and
Exchange
Commission
and
the
PCAOB.
We
conducted
our
audits
in
accordance
with
the
standards
of
the
PCAOB.
Those
standards
require
that
we
plan
and
perform
the
audits
to
obtain
reasonableassurance
about
whether
the
consolidated
financial
statements
are
free
of
material
misstatement,
whether
due
to
error
or
fraud,
and
whether
effective
internalcontrol
over
financial
reporting
was
maintained
in
all
material
respects.
Our
audits
of
the
consolidated
financial
statements
included
performing
procedures
to
assess
the
risks
of
material
misstatement
of
the
consolidated
financialstatements,
whether
due
to
error
or
fraud,
and
performing
procedures
that
respond
to
those
risks.
Such
procedures
included
examining,
on
a
test
basis,
evidenceregarding
the
amounts
and
disclosures
in
the
consolidated
financial
statements.
Our
audits
also
included
evaluating
the
accounting
principles
used
and
significantestimates
made
by
management,
as
well
as
evaluating
the
overall
presentation
of
the
consolidated
financial
statements.
Our
audit
of
internal
control
over
financialreporting
included
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
andevaluating
the
design
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audits
also
included
performing
such
other
procedures
as
weconsidered
necessary
in
the
circumstances.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinions.86 Table
of
ContentsDefinition and Limitations of Internal Control over Financial Reporting
A
company's
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
andthe
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
A
company's
internal
control
overfinancial
reporting
includes
those
policies
and
procedures
that
(i)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
thetransactions
and
dispositions
of
the
assets
of
the
company;
(ii)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
offinancial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
receipts
and
expenditures
of
the
company
are
being
made
only
inaccordance
with
authorizations
of
management
and
directors
of
the
company;
and
(iii)
provide
reasonable
assurance
regarding
prevention
or
timely
detection
ofunauthorized
acquisition,
use,
or
disposition
of
the
company's
assets
that
could
have
a
material
effect
on
the
financial
statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
ofeffectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
withthe
policies
or
procedures
may
deteriorate./s/
PricewaterhouseCoopers
LLPBoston,
Massachusetts
March
7,
2018We
have
served
as
the
Company's
auditor
since
2008.87 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
CONSOLIDATED
BALANCE
SHEETS
(In
thousands,
except
share
and
per
share
amounts)
The
accompanying
notes
are
an
integral
part
of
the
financial
statements.88
December
31,
2017
December
31,
2016
ASSETS
Current
Assets:
Cash
and
Cash
Equivalents
$40,288
$42,461
Marketable
Securities
99,139
147,315
Accounts
and
Other
Receivables
1,880
1,784
Prepaid
and
Other
Current
Assets
3,449
4,009
Total
Current
Assets
144,756
195,569
Property
and
Equipment,
Net
10,372
13,192
Intangible
Assets,
Net
67,591
81,487
Other
Assets
1,929
2,134
Goodwill
90,976
90,976
Total
Assets
$315,624
$383,358
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
Current
Liabilities:
Accounts
Payable
$1,715
$1,740
Accrued
Expenses
19,455
28,657
Current
Portion
of
Long-Term
Liabilities
6,566
4,826
Total
Current
Liabilities
27,736
35,223
Other
Long-Term
Liabilities
51,519
82,704
Total
Liabilities
79,255
117,927
Commitments
and
Contingent
Liabilities
(Notes
13
and
15)
Stockholders'
Equity:
Convertible
Preferred
Stock,
$.01
Par
Value;
3,000,000
Shares
Authorized;
NoShares
Issued
and
Outstanding
at
December
31,
2017
and
2016
—
—
Common
Stock,
$.001
Par
Value;
297,000,000
Shares
Authorized;
138,520,404
and120,516,654
Shares
Issued
and
Outstanding
at
December
31,
2017
and
2016,Respectively
139
121
Additional
Paid-In
Capital
1,046,183
982,255
Accumulated
Other
Comprehensive
Income
2,564
2,541
Accumulated
Deficit
(812,517)
(719,486)Total
Stockholders'
Equity
236,369
265,431
Total
Liabilities
and
Stockholders'
Equity
$315,624
$383,358
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
STATEMENTS
OF
OPERATIONS
AND
COMPREHENSIVE
LOSS
(In
thousands,
except
per
share
amounts)
The
accompanying
notes
are
an
integral
part
of
the
financial
statements.89
Consolidated
Year
Ended
December
31,
2017
Consolidated
Year
Ended
December
31,
2016
Year
Ended
December
31,
2015
REVENUES:
Product
Development
and
Licensing
Agreements
$3,153
$2,174
$1,442
Contracts
and
Grants
9,590
4,612
4,038
Total
Revenues
12,743
6,786
5,480
OPERATING
EXPENSES:
Research
and
Development
96,171
102,726
100,171
General
and
Administrative
25,003
35,979
33,837
In-Process
Research
and
Development
Impairment
13,000
—
—
Gain
on
Fair
Value
Remeasurement
of
Contingent
Consideration
(800)
—
—
Amortization
of
Acquired
Intangible
Assets
896
997
1,013
Total
Operating
Expenses
134,270
139,702
135,021
Operating
Loss
(121,527)
(132,916)
(129,541)Investment
and
Other
Income,
Net
4,214
4,386
2,344
Net
Loss
Before
Income
Tax
Benefit
$(117,313)$(128,530)$(127,197)Income
Tax
Benefit
24,282
—
—
Net
Loss
$(93,031)$(128,530)$(127,197)Basic
and
Diluted
Net
Loss
Per
Common
Share
$(0.72)$(1.27)$(1.31)Shares
Used
in
Calculating
Basic
and
Diluted
Net
Loss
per
Share
128,543
101,529
97,051
COMPREHENSIVE
LOSS:
Net
Loss
$(93,031)$(128,530)$(127,197)Other
Comprehensive
Income
(Loss):
Foreign
Currency
Translation
Adjustments
—
—
15
Unrealized
Gain
(Loss)
on
Marketable
Securities
23
234
(298)Comprehensive
Loss
$(93,008)$(128,296)$(127,480) Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.STATEMENTS
OF
STOCKHOLDERS'
EQUITY(In
thousands,
except
share
amounts)The
accompanying
notes
are
an
integral
part
of
the
financial
statements.90
Common
Stock
Shares
Common
Stock
Par
Value
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
Stockholders'
Equity
Consolidated
Balance
atDecember
31,
2014
89,592,779
$90
$672,739
$2,590
$(463,759)$211,660
Shares
Issued
under
Stock
Optionand
Employee
Stock
PurchasePlans
755,316
1
4,310
—
—
4,311
Shares
Issued
in
UnderwrittenOffering
8,337,500
8
188,832
—
—
188,840
Share-Based
Compensation
—
—
12,774
—
—
12,774
Foreign
Currency
TranslationAdjustments
—
—
—
15
—
15
Unrealized
Losses
on
MarketableSecurities
—
—
—
(298)
—
(298)Net
Loss
—
—
—
—
(127,197)
(127,197)Balance
at
December
31,
2015
98,685,595
99
878,655
2,307
(590,956)
290,105
Shares
Issued
under
Stock
Optionand
Employee
Stock
PurchasePlans
158,152
1
534
—
—
535
Shares
Issued
in
Connection
withCantor
Agreement
3,303,800
3
13,943
—
—
13,946
Shares
Issued
in
Connection
with
theKolltan
Acquisition
18,257,996
18
73,379
—
—
73,397
Shares
Issued
in
Connection
withKolltan
Severance
111,111
—
427
—
—
427
Share-Based
Compensation
—
—
15,317
—
—
15,317
Unrealized
Gains
on
MarketableSecurities
—
—
—
234
—
234
Net
Loss
—
—
—
—
(128,530)
(128,530)Consolidated
Balance
atDecember
31,
2016
120,516,654
121
982,255
2,541
(719,486)
265,431
Shares
Issued
under
Stock
Optionand
Employee
Stock
PurchasePlans
173,712
—
265
—
—
265
Shares
Issued
in
Connection
withCantor
Agreement
17,722,863
18
51,007
—
—
51,025
Shares
Issued
in
Connection
withKolltan
Severance
107,175
—
344
—
—
344
Share-Based
Compensation
—
—
12,312
—
—
12,312
Unrealized
Gains
on
MarketableSecurities
—
—
—
23
—
23
Net
Loss
—
—
—
—
(93,031)
(93,031)Consolidated
Balance
atDecember
31,
2017
138,520,404
$139
$1,046,183
$2,564
$(812,517)$236,369
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
STATEMENTS
OF
CASH
FLOWS
(In
thousands)
The
accompanying
notes
are
an
integral
part
of
the
financial
statements.91
Consolidated
Year
Ended
December
31,
2017
Consolidated
Year
Ended
December
31,
2016
Year
Ended
December
31,
2015
Cash
Flows
From
Operating
Activities:
Net
Loss
$(93,031)$(128,530)$(127,197)Adjustments
to
Reconcile
Net
Loss
to
Net
Cash
Used
inOperating
Activities:
Depreciation
and
Amortization
4,414
3,095
2,998
Amortization
of
Intangible
Assets
896
997
1,013
Amortization
and
Premium
of
Marketable
Securities,
Net
(290)
926
350
Loss
on
Sale
or
Disposal
of
Assets
55
81
—
In-Process
Research
and
Development
Impairment
13,000
—
—
Gain
on
Fair
Value
Remeasurement
of
ContingentConsideration
(800)
—
—
Non-Cash
Income
Tax
Benefit
(24,282)
—
—
Stock-Based
Compensation
Expense
12,312
15,317
12,774
Non-Cash
Expense
—
1,638
288
Changes
in
Operating
Assets
and
Liabilities:
Accounts
and
Other
Receivables
(96)
(814)
(543)Prepaid
and
Other
Current
Assets
793
1,320
(653)Other
Assets
205
(89)
6
Accounts
Payable
and
Accrued
Expenses
(8,744)
(4,970)
4,875
Other
Liabilities
(4,363)
(2,007)
7,202
Net
Cash
Used
in
Operating
Activities
(99,931)
(113,036)
(98,887)Cash
Flows
From
Investing
Activities:
Sales
and
Maturities
of
Marketable
Securities
219,236
242,792
161,090
Purchases
of
Marketable
Securities
(170,980)
(173,925)
(206,405)Investment
in
Other
—
(1,801)
—
Cash
Acquired
in
Kolltan
Acquisition,
Net
—
4,592
—
Acquisition
of
Property
and
Equipment
(1,788)
(2,751)
(4,876)Net
Cash
Provided
by
(Used
in)
Investing
Activities
46,468
68,907
(50,191)Cash
Flows
From
Financing
Activities:
Net
Proceeds
from
Stock
Issuances
51,025
13,946
188,840
Proceeds
from
Issuance
of
Stock
from
Employee
Benefit
Plans
265
536
4,311
Net
Cash
Provided
by
Financing
Activities
51,290
14,482
193,151
Effect
of
Exchange
Rate
Changes
on
Cash
and
Cash
Equivalents
—
—
15
Net
(Decrease)
Increase
in
Cash
and
Cash
Equivalents
(2,173)
(29,647)
44,088
Cash
and
Cash
Equivalents
at
Beginning
of
Period
42,461
72,108
28,020
Cash
and
Cash
Equivalents
at
End
of
Period
$40,288
$42,461
$72,108
Non-cash Investing Activities
Accrued
construction
in
progress
$20
$159
$75
Non-cash Supplemental Disclosure
Shares
issued
to
former
Kolltan
executive
for
settlement
ofseverance
$344
$426
$—
Shares
issued
in
connection
with
Kolltan
Acquisition
$—
$73,397
$—
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
NOTES
TO
FINANCIAL
STATEMENTS
(1)
Nature
of
Business
and
Overview
Celldex
Therapeutics,
Inc.
(the
"Company"
or
"Celldex")
is
a
biopharmaceutical
company
focused
on
the
development
and
commercialization
of
severalimmunotherapy
technologies
and
other
cancer-targeting
biologics.
The
Company
currently
has
seven
drug
candidates
in
clinical
development,
includingglembatumumab
vedotin
(also
referred
to
as
CDX-011),
varlilumab
(also
referred
to
as
CDX-1127),
CDX-3379,
CDX-014,
CDX-1140,
CDX-301
and
CDX-1401.
At
December
31,
2017,
the
Company
had
cash,
cash
equivalents
and
marketable
securities
of
$139.4
million.
The
Company
has
had
recurring
losses
andincurred
a
loss
of
$93.0
million
for
the
year
ended
December
31,
2017.
Net
cash
used
in
operations
for
the
year
ended
December
31,
2017
was
$99.9
million.
TheCompany
believes
that
the
cash,
cash
equivalents
and
marketable
securities
at
March
7,
2018
will
be
sufficient
to
meet
estimated
working
capital
requirements
andfund
planned
operations
for
at
least
the
next
twelve
months
from
the
date
of
issuance
of
these
financial
statements.
During
the
next
twelve
months
and
beyond,
the
Company
will
take
further
steps
to
raise
additional
capital
to
meet
its
liquidity
needs.
These
capital
raisingactivities
may
include,
but
may
not
be
limited
to,
one
or
more
of
the
following:
the
licensing
of
drug
candidates
with
existing
or
new
collaborative
partners,possible
business
combinations,
issuance
of
debt,
or
the
issuance
of
common
stock
or
other
securities
via
private
placements
or
public
offerings.
While
theCompany
may
seek
capital
through
a
number
of
means,
there
can
be
no
assurance
that
additional
financing
will
be
available
on
acceptable
terms,
if
at
all,
and
theCompany's
negotiating
position
in
capital-raising
efforts
may
worsen
as
existing
resources
are
used.
There
is
also
no
assurance
that
the
Company
will
be
able
toenter
into
further
collaborative
relationships.
Additional
equity
financings
may
be
dilutive
to
the
Company's
stockholders;
debt
financing,
if
available,
may
involvesignificant
cash
payment
obligations
and
covenants
that
restrict
the
Company's
ability
to
operate
as
a
business;
and
licensing
or
strategic
collaborations
may
resultin
royalties
or
other
terms
which
reduce
the
Company's
economic
potential
from
products
under
development.
The
Company's
ability
to
continue
funding
itsplanned
operations
into
and
beyond
twelve
months
from
the
issuance
date
is
also
dependent
on
the
timing
and
manner
of
payment
of
future
contingent
milestonesfrom
the
Kolltan
acquisition,
in
the
event
that
the
Company
achieves
the
drug
candidate
milestones
related
to
those
payments.
The
Company,
at
its
option,
maydecide
to
pay
those
milestone
payments
in
cash,
shares
of
its
common
stock
or
a
combination
thereof.
If
the
Company
is
unable
to
raise
the
funds
necessary
to
meetits
liquidity
needs,
it
may
have
to
delay
or
discontinue
the
development
of
one
or
more
programs,
discontinue
or
delay
ongoing
or
anticipated
clinical
trials,
licenseout
programs
earlier
than
expected,
raise
funds
at
a
significant
discount
or
on
other
unfavorable
terms,
if
at
all,
or
sell
all
or
a
part
of
the
Company.(2)
Summary
of
Significant
Accounting
PoliciesBasis of Presentation
The
balance
sheets
and
statements
of
operations
and
comprehensive
loss,
stockholders'
equity,
and
cash
flows,
are
consolidated
for
the
years
endedDecember
31,
2017
and
2016.
In
February
2016,
the
Company
formed
a
wholly-owned
subsidiary,
Celldex
Therapeutics
Europe
GmbH,
in
Zug,
Switzerland,which
was
liquidated
in
June
2017.
In
July
2016,
the
Company
formed
a
wholly-owned
subsidiary,
Celldex
Australia
Pty
Ltd,
in
Brisbane,
Australia.
Theseconsolidated
financial
statements
reflect
the
operations
of
the
Company
and
its
wholly-owned
subsidiaries.
All
intercompany
balances
and
transactions
have
beeneliminated
in
consolidation.
The
Company
operates
in
one
segment,
which
is92 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)the
business
of
development,
manufacturing
and
commercialization
of
novel
therapeutics
for
human
health
care.Use of Estimates
The
preparation
of
the
financial
statements
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America
(U.S.
GAAP)
requiresmanagement
to
make
estimates
and
use
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
and
the
disclosure
of
contingent
assets
and
liabilities
atthe
dates
of
the
financial
statements
and
the
reported
amounts
of
revenues
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
thoseestimates.Cash and Cash Equivalents
The
Company
considers
all
highly
liquid
investments
purchased
with
a
maturity
date
of
90
days
or
less
at
the
date
of
purchase
to
be
cash
equivalents.
Cashequivalents
consist
principally
of
money
market
funds
and
debt
securities.Marketable Securities
The
Company
invests
its
excess
cash
balances
in
marketable
securities,
including
municipal
bond
securities,
U.S.
government
agency
securities,
and
highlyrated
corporate
bonds.
The
Company
classifies
all
of
its
marketable
securities
as
current
assets
on
the
balance
sheets
because
they
are
available-for-sale
andavailable
to
fund
current
operations.
Marketable
securities
are
stated
at
fair
value
with
unrealized
gains
and
losses
included
as
a
component
of
accumulated
othercomprehensive
income
(loss),
which
is
a
separate
component
of
stockholders'
equity,
until
such
gains
and
losses
are
realized.
If
a
decline
in
the
fair
value
isconsidered
other-than-temporary,
based
on
available
evidence,
the
unrealized
loss
is
reclassified
from
accumulated
other
comprehensive
income
(loss)
to
thestatements
of
operations.
Realized
gains
and
losses
are
determined
on
the
specific
identification
method
and
are
included
in
investment
and
other
income,
net.Concentration of Credit Risk and of Significant Customers and Suppliers
Financial
instruments
that
potentially
subject
the
Company
to
concentrations
of
credit
risk
primarily
consist
of
cash,
cash
equivalents,
marketable
securitiesand
accounts
receivable.
The
Company
invests
its
cash,
cash
equivalents
and
marketable
securities
in
debt
instruments
and
interest-bearing
accounts
at
majorfinancial
institutions
in
excess
of
insured
limits.
The
Company
mitigates
credit
risk
by
limiting
the
investment
type
and
maturity
to
securities
that
preserve
capital,maintain
liquidity
and
have
a
high
credit
quality.
The
Company
has
not
historically
experienced
credit
losses
from
its
accounts
receivable
and
therefore
has
notestablished
an
allowance
for
doubtful
accounts.
Combined
revenue
from
International
AIDS
Vaccine
Initiative,
Frontier
Biotechnologies,
Inc.
and
BMS
represented
73%
of
total
Company
revenue
for
theyear
ended
December
31,
2017.
Combined
revenue
from
Rockefeller
and
BMS
represented
71%
and
86%
of
total
Company
revenue
for
the
years
endedDecember
31,
2016
and
2015,
respectively.
The
Company
relies
on
contract
manufacturing
organizations
(CMO)
to
manufacture
drug
substance
and
drug
product
for
its
late-stage
clinical
study
ofglembatumumab
vedotin
as
well
as
for
future
commercial
supplies.
The
Company
also
relies
on
CMOs
for
supply
of
raw
materials
as
well
as93 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)filling,
packaging,
storage
and
shipping
of
drug
product.
These
clinical
studies
would
be
adversely
affected
by
a
significant
interruption
in
the
supply
ofglembatumumab
vedotin.
The
Company
also
relies
on
third-party
collaborators
to
develop
companion
diagnostic
tests
for
certain
of
its
drug
candidates,
includingglembatumumab
vedotin.Fair Value Measurements
The
Company
has
certain
assets
and
liabilities
that
are
measured
at
fair
value
in
the
financial
statements.
The
Company
seeks
to
maximize
the
use
ofobservable
inputs
(market
data
obtained
from
sources
independent
from
the
Company)
and
to
minimize
the
use
of
unobservable
inputs
(the
Company's
assumptionsabout
how
market
participants
would
price
assets
and
liabilities)
when
measuring
the
fair
value
of
its
assets
and
liabilities.
These
assets
and
liabilities
are
classifiedinto
one
of
three
levels
of
the
following
fair
value
hierarchy
as
defined
by
U.S.
GAAP:
Level
1:
Observable
inputs
such
as
quoted
prices
in
active
markets
for
identical
assets
or
liabilities.
An
active
market
for
an
asset
or
liability
is
amarket
in
which
transactions
for
the
asset
or
liability
occur
with
sufficient
frequency
and
volume
to
provide
pricing
information
on
an
ongoing
basis.
Level
2:
Observable
inputs
other
than
Level
1
prices,
such
as
quoted
prices
in
active
markets
for
similar
assets
or
liabilities
and
quoted
prices
foridentical
assets
or
liabilities
in
markets
that
are
not
active.
Level
3:
Unobservable
inputs
based
on
the
Company's
assessment
of
the
assumptions
that
market
participants
would
use
in
pricing
the
asset
orliability.Property and Equipment
Property
and
equipment
is
stated
at
cost
and
depreciated
over
the
estimated
useful
lives
of
the
related
assets
using
the
straight-line
method.
Laboratoryequipment
and
office
furniture
and
equipment
are
depreciated
over
five
years,
and
computer
equipment
is
depreciated
over
three
years.
Manufacturing
equipment
isamortized
over
seven
to
ten
years.
Leasehold
improvements
are
amortized
over
the
shorter
of
the
estimated
useful
life
or
the
non-cancelable
term
of
the
relatedlease,
including
any
renewals
that
are
reasonably
assured
of
occurring.
Property
and
equipment
under
construction
is
classified
as
construction
in
progress
and
isdepreciated
or
amortized
only
after
the
asset
is
placed
in
service.
Expenditures
for
maintenance
and
repairs
are
charged
to
expense
whereas
the
costs
of
significantimprovements
which
extend
the
life
of
the
underlying
asset
are
capitalized.
Upon
retirement
or
sale,
the
cost
of
assets
disposed
of
and
the
related
accumulateddepreciation
are
eliminated
and
any
resulting
gain
or
loss
is
reflected
in
the
Company's
statements
of
operations
and
comprehensive
loss.
The
treatment
of
costs
to
construct
property
and
equipment
depends
on
the
nature
of
the
costs
and
the
stage
of
construction.
Costs
incurred
in
the
projectplanning,
design,
construction
and
installation
phases
are
capitalized
as
part
of
the
cost
of
the
asset.
The
Company
stops
capitalizing
these
costs
when
the
asset
issubstantially
complete
and
ready
for
its
intended
use.
For
manufacturing
property
and
equipment,
the
Company
also
capitalizes
the
cost
of
validating
these
assetsfor
the
underlying
manufacturing
process.
The
Company
completes
the
capitalization
of
validation
costs
when
the
asset
is
substantially
complete
and
ready
for
itsintended
use.
Costs
capitalized
include
incremental
labor
and
fringe
benefits,
and
direct
consultancy
services.94 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)Other Assets
Other
assets
include
a
$1.8
million
non-controlling
investment
in
a
privately-held
company
that
is
accounted
for
under
the
cost
method
of
accounting
as
ofDecember
31,
2017
and
2016.
The
Company
periodically
evaluates
the
carrying
value
of
the
investment
if
significant
adverse
events
or
circumstances
indicate
animpairment
in
value.Business Combinations
The
Company
records
the
fair
value
of
the
consideration
transferred
to
acquire
a
business
to
the
tangible
assets
and
identifiable
intangible
assets
acquired
andliabilities
assumed
on
the
basis
of
their
fair
values
at
the
date
of
acquisition.
The
Company
assesses
the
fair
value
of
assets,
including
intangible
assets
such
as
in-process
research
and
development
(IPR&D),
using
a
variety
of
methods
including
present-value
models.
Each
asset
is
measured
at
fair
value
from
the
perspectiveof
a
market
participant.
The
method
used
to
estimate
the
fair
values
of
IPR&D
assets
incorporates
significant
assumptions
regarding
the
estimates
a
marketparticipant
would
make
in
order
to
evaluate
an
asset,
including
a
market
participant's
assumptions
regarding
the
probability
of
completing
IPR&D
projects,
whichwould
require
obtaining
regulatory
approval
for
marketing
of
the
associated
drug
candidate;
a
market
participant's
estimates
regarding
the
timing
of
and
theexpected
costs
to
complete
IPR&D
projects;
a
market
participant's
estimates
of
future
cash
flows
from
potential
product
sales;
and
the
appropriate
discount
rates
fora
market
participant.
Transaction
costs
and
restructuring
costs
associated
with
the
transaction
are
expensed
as
incurred.
The
Company
records
contingent
consideration
resulting
from
a
business
combination
at
its
fair
value
on
the
acquisition
date.
The
Company
determines
thefair
value
of
the
contingent
consideration
based
primarily
on
the
(i)
timing
and
probability
of
success
of
clinical
events
or
regulatory
approvals;
(ii)
timing
andprobability
of
success
of
meeting
clinical
and
commercial
milestones;
and
(iii)
discount
rates.
The
Company's
contingent
consideration
liabilities
arose
inconnection
with
its
acquisition
of
Kolltan.
On
a
quarterly
basis,
the
Company
revalues
these
obligations
and
records
increases
or
decreases
in
their
fair
value
as
anadjustment
to
operating
earnings.
Changes
to
contingent
consideration
obligations
can
result
from
adjustments
to
discount
rates,
accretion
of
the
discount
rates
dueto
the
passage
of
time,
changes
in
the
Company's
estimates
of
the
likelihood
or
timing
of
achieving
development
or
commercial
milestones,
changes
in
theprobability
of
certain
clinical
events
or
changes
in
the
assumed
probability
associated
with
regulatory
approval.
The
assumptions
related
to
determining
the
value
ofcontingent
consideration
include
a
significant
amount
of
judgment,
and
any
changes
in
the
underlying
estimates
could
have
a
material
impact
on
the
amount
ofcontingent
consideration
expense
recorded
in
any
given
period.Intangible Assets
IPR&D
assets
acquired
in
a
business
combination
initially
are
recorded
at
fair
value
and
accounted
for
as
indefinite-lived
intangible
assets.
These
assets
arecapitalized
on
the
Company's
balance
sheets
until
either
the
project
underlying
them
is
completed
or
the
assets
become
impaired.
If
a
project
is
completed,
thecarrying
value
of
the
related
intangible
asset
is
amortized
over
the
remaining
estimated
life
of
the
asset
beginning
in
the
period
in
which
the
project
is
completed.
Ifa
project
becomes
impaired
or
is
abandoned,
the
carrying
value
of
the
related
intangible
asset
is
written
down
to
its
fair
value
and
an
impairment
charge
is
taken
inthe
period
in
which
the
impairment
occurs.95 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)
Each
IPR&D
asset
is
assessed
for
impairment
at
least
annually
or
when
impairment
indicators
are
present.
During
the
year
ended
December
31,
2017,
werecorded
a
partial
impairment
charge
of
$13.0
million
related
to
changes
in
projected
development
and
regulatory
timelines
regarding
the
anti-KIT
program.
Theremaining
IPR&D
assets
were
assessed
for
impairment
during
2017
and
were
determined
not
to
be
impaired.
Intangible
assets
acquired
in
a
business
combination
with
a
finite
life
are
recorded
at
fair
value
and
amortized
over
the
greater
of
economic
consumption
or
ona
straight-line
basis
over
their
estimated
useful
life.Goodwill
The
difference
between
the
purchase
price
and
the
fair
value
of
assets
acquired
and
liabilities
assumed
in
a
business
combination
is
allocated
to
goodwill.Goodwill
is
evaluated
for
impairment
on
an
annual
basis
during
the
third
quarter,
or
earlier
if
impairment
indicators
are
present.
The
Company
has
the
option
toassess
qualitative
factors
to
determine
if
it
is
more
likely
than
not
that
goodwill
might
be
impaired
and
whether
it
is
necessary
to
perform
a
quantitative
single-stepgoodwill
impairment
test
required
under
U.S.
GAAP.
As
part
of
its
annual
impairment
test
of
the
goodwill
asset
as
of
July
1,
2017,
the
Company
bypassed
theoptional
qualitative
assessment
and
performed
a
quantitative
assessment
under
the
single-step
impairment
assessment.
The
Company
concluded
that
goodwill
wasnot
impaired.Impairment of Intangible and Long-Lived Assets
The
Company
evaluates
the
recoverability
of
its
long-lived
assets,
including
property
and
equipment,
and
intangible
assets
when
circumstances
indicate
thatan
event
of
impairment
may
have
occurred.
Determination
of
recoverability
is
based
on
an
estimate
of
undiscounted
future
cash
flows
resulting
from
the
use
of
theasset
and
its
eventual
disposition.
In
the
event
that
such
cash
flows
are
not
expected
to
be
sufficient
to
recover
the
carrying
amount
of
the
assets,
the
assets
arewritten-down
to
their
estimated
fair
values.Revenue Recognition
The
Company
recognizes
revenue
when
all
of
the
following
criteria
are
met:
persuasive
evidence
of
an
arrangement
exists;
delivery
has
occurred
or
serviceshave
been
rendered;
the
seller's
price
to
the
buyer
is
fixed
or
determinable;
and
collectability
is
reasonably
assured.
The
Company
has
entered
into
and
in
the
future
may
enter
into
biopharmaceutical
product
development
agreements
with
collaborative
partners
for
theresearch
and
development
of
therapeutic
drug
candidates.
The
terms
of
the
agreements
may
include
nonrefundable
signing
and
licensing
fees,
funding
for
research,development
and
manufacturing,
milestone
payments
and
royalties
on
any
product
sales
derived
from
collaborations.
These
multiple
element
arrangements
areanalyzed
to
determine
whether
the
deliverables
can
be
separated
or
whether
they
must
be
accounted
for
as
a
single
unit
of
accounting.
In
accounting
for
thesetransactions,
the
Company
allocates
revenue
to
the
various
elements
based
on
their
relative
fair
value.
The
fair
value
of
a
revenue
generating
element
can
be
basedon
current
selling
prices
offered
by
the
Company
or
another
party
for
current
products
or
the96 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)Company's
best
estimate
of
a
selling
price
for
future
products.
Revenue
allocated
to
an
individual
element
is
recognized
when
all
other
revenue
recognition
criteriaare
met
for
that
element.
These
collaborative
and
other
agreements
may
contain
milestone
payments.
Revenues
from
milestones,
if
they
are
considered
substantive,
are
recognized
uponsuccessful
accomplishment
of
the
milestones.
Determining
whether
a
milestone
is
substantive
involves
judgment,
including
an
assessment
of
the
Company'sinvolvement
in
achieving
the
milestone
and
whether
the
amount
of
the
payment
is
commensurate
to
the
Company's
performance.
If
not
considered
substantive,milestones
are
initially
deferred
and
recognized
over
the
period
of
the
remaining
performance
obligation.
Payments
received
to
fund
certain
research
activities
are
recognized
as
revenue
in
the
period
in
which
the
research
activities
are
performed.
Revenue
fromcontracts
and
grants
is
recognized
as
the
services
are
performed
and
recorded
as
effort
is
expended
on
the
contracted
work
and
billed
to
the
government
or
theCompany's
contractual
partner.
Payments
received
in
advance
that
are
related
to
future
performance
are
deferred
and
recognized
as
revenue
when
the
researchprojects
are
performed.
Product
royalty
revenue
consists
of
payments
received
from
licensees
for
a
portion
of
sales
proceeds
from
products
that
utilize
the
Company's
licensedtechnologies
and
is
recognized
when
the
amount
of
and
basis
for
such
royalty
payments
are
reported
to
the
Company
in
accurate
and
appropriate
form
and
inaccordance
with
the
related
license
agreement.Research and Development Expenses
Research
and
development
costs,
including
internal
and
contract
research
costs,
are
expensed
as
incurred.
Research
and
development
expenses
consist
mainlyof
clinical
trial
costs,
manufacturing
of
clinical
material,
toxicology
and
other
preclinical
studies,
personnel
costs,
depreciation,
license
fees
and
funding
of
outsidecontracted
research.
Clinical
trial
expenses
include
expenses
associated
with
clinical
research
organization,
or
CRO,
services.
Contract
manufacturing
expenses
include
expensesassociated
with
contract
manufacturing
organization,
or
CMO,
services.
The
invoicing
from
CROs
and
CMOs
for
services
rendered
can
lag
several
months.
TheCompany
accrues
the
cost
of
services
rendered
in
connection
with
CRO
and
CMO
activities
based
on
our
estimate
of
costs
incurred.
The
Company
maintainsregular
communication
with
our
CROs
and
CMOs
to
assess
the
reasonableness
of
its
estimates.
Differences
between
actual
expenses
and
estimated
expensesrecorded
have
not
been
material
and
are
adjusted
for
in
the
period
in
which
they
become
known.Patent Costs
Patent
costs
are
expensed
as
incurred.
Certain
patent
costs
are
reimbursed
by
the
Company's
product
development
and
licensing
partners.
Any
reimbursedpatent
costs
are
recorded
as
product
development
and
licensing
agreement
revenues
in
the
Company's
financial
statements.Stock-Based Compensation
The
Company
records
stock-based
compensation
expense
for
all
stock-based
awards
made
to
employees
and
directors
based
on
the
estimated
fair
values
of
thestock-based
awards
expected
to
vest
at
the
grant
date
and
is
adjusted,
if
necessary,
to
reflect
actual
forfeitures.
Compensation
expense
for97 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)all
stock-based
awards
to
employees
and
directors
is
recognized
using
the
straight-line
method
over
the
term
of
vesting
or
performance.
The
Company
records
stock-based
compensation
expense
for
stock
options
granted
to
non-employees
based
on
the
fair
value
of
the
stock
options
which
is
re-measured
over
the
graded
vesting
term
resulting
in
periodic
adjustments
to
stock-based
compensation
expense.Foreign Currency Translation
Net
unrealized
gains
and
losses
resulting
from
foreign
currency
translation
are
included
in
accumulated
other
comprehensive
income.
At
December
31,
2017and
2016,
accumulated
other
comprehensive
income
includes
a
net
unrealized
gain
related
to
foreign
currency
translation
of
$2.6
million.Income Taxes
The
Company
uses
the
asset
and
liability
method
to
account
for
income
taxes,
including
the
recognition
of
deferred
tax
assets
and
deferred
tax
liabilities
forthe
anticipated
future
tax
consequences
attributable
to
differences
between
financial
statement
amounts
and
their
respective
tax
basis.
Quarterly,
the
Companyreviews
its
deferred
tax
assets
for
recovery.
A
valuation
allowance
is
established
when
the
Company
believes
that
it
is
more
likely
than
not
that
its
deferred
taxassets
will
not
be
realized.
Changes
in
valuation
allowances
from
period
to
period
are
included
in
the
Company's
tax
provision
in
the
period
of
change.
The
Company
records
uncertain
tax
positions
in
the
financial
statements
only
if
it
is
more
likely
than
not
that
the
uncertain
tax
position
will
be
sustained
uponexamination
by
the
taxing
authorities.
The
Company
records
interest
and
penalties
related
to
uncertain
tax
positions
in
income
tax
expense.Comprehensive Loss
Comprehensive
loss
is
comprised
of
net
loss
and
certain
changes
in
stockholders'
equity
that
are
excluded
from
net
loss.
The
Company
includes
foreigncurrency
translation
adjustments
and
unrealized
gains
and
losses
on
marketable
securities
in
other
comprehensive
loss.
The
statements
of
operations
andcomprehensive
loss
reflect
total
comprehensive
loss
for
the
years
ended
December
31,
2017,
2016
and
2015.Net Loss Per Share
Basic
net
loss
per
common
share
is
based
upon
the
weighted-average
number
of
common
shares
outstanding
during
the
period,
excluding
restricted
stock
thathas
been
issued
but
is
not
yet
vested.
Diluted
net
loss
per
common
share
is
based
upon
the
weighted-average
number
of
common
shares
outstanding
during
theperiod
plus
additional
weighted-average
potentially
dilutive
common
shares
outstanding
during
the
period
when
the
effect
is
dilutive.
The
potentially
dilutivecommon
shares
that98 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)have
not
been
included
in
the
net
loss
per
common
share
calculations
because
the
effect
would
have
been
anti-dilutive
are
as
follows:Newly-Adopted Accounting Pronouncements
On
January
1,
2017,
the
Company
adopted
a
new
accounting
standard
which
involves
several
aspects
of
the
accounting
for
share-based
payment
transactions,including
the
income
tax
consequences,
classification
of
awards
as
either
equity
or
liabilities
and
classification
on
the
statement
of
cash
flows.
The
Companyelected
to
continue
to
estimate
forfeitures
expected
to
occur
to
determine
stock-based
compensation
expense.
Upon
adoption,
the
Company's
gross
deferred
taxassets
and
corresponding
valuation
allowance
each
increased
by
$17.7
million
related
to
tax
deductions
from
the
exercise
of
stock
options
that
previously
wouldhave
been
credited
to
additional
paid-in-capital
when
realized.
On
January
1,
2017,
the
Company
adopted
a
new
accounting
standard
which
simplifies
how
an
entity
tests
goodwill
for
impairment.
A
goodwill
impairment
isnow
calculated
under
a
single-step
quantitative
test
which
compares
a
reporting
unit's
carrying
value
to
its
fair
value.
A
goodwill
impairment
is
the
amount
bywhich
the
carrying
value
of
the
reporting
unit
exceeds
its
fair
value,
not
to
exceed
the
carrying
amount
of
goodwill.
Under
this
standard,
the
Company
continues
tohave
the
option
to
perform
a
qualitative
assessment
to
determine
if
the
single-step
quantitative
test
is
necessary.Recent Accounting Pronouncements
From
time
to
time,
new
accounting
pronouncements
are
issued
by
the
Financial
Accounting
Standards
Board
("FASB")
or
other
standard
setting
bodies
thatare
adopted
by
the
Company
as
of
the
specified
effective
date.
Unless
otherwise
discussed,
the
Company
believes
that
the
impact
of
recently
issued
standards
thatare
not
yet
effective
will
not
have
a
material
impact
on
the
Company's
consolidated
financial
statements
upon
adoption.
In
May
2014,
the
FASB
issued
a
new
accounting
standard
that
updates
guidance
and
disclosure
requirements
for
recognizing
revenue.
The
new
revenuerecognition
standard
provides
a
five-step
model
for
recognizing
revenue
from
contracts
with
customers.
The
core
principle
is
that
a
company
should
recognizerevenue
when
it
transfers
goods
or
services
to
customers
in
an
amount
that
reflects
the
consideration
to
which
the
entity
expects
to
be
entitled
in
exchange
for
thosegoods
and
services.
The
Company
will
adopt
the
new
revenue
standard
as
of
January
1,
2018
using
the
modified
retrospective
application
method.
All
material
open
contracts
asof
December
31,
2017
were
identified
by
the
Company
and
assessed
under
the
updated
revenue
recognition
guidance.
As
of
December
31,
2017,
the
Company
hadfinalized
its
assessment
of
the
impact
of
this
standard
and
expects
to
recognize
an
immaterial
decrease
to
both
accumulated
deficit
and
deferred
revenue
onJanuary
1,
2018.
As
a
result
of
adopting
this
standard,
the
Company
has
implemented
additional
processes
and
controls,
and
plans
to
include
additional
disclosuresin
future
filings
to
comply
with
this
standard.99
Year
Ended
December
31,
2017
2016
2015
Stock
options
10,856,212
10,218,710
8,110,239
Restricted
stock
96,668
50,000
19,500
10,952,880
10,268,710
8,129,739
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
Summary
of
Significant
Accounting
Policies
(Continued)
In
February
2016,
the
FASB
issued
a
new
accounting
standard
which
requires
that
all
lessees
recognize
the
assets
and
liabilities
that
arise
from
leases
on
thebalance
sheet
and
disclose
qualitative
and
quantitative
information
about
its
leasing
arrangements.
The
new
standard
will
be
effective
for
the
Company
onJanuary
1,
2019.
The
Company
is
currently
evaluating
the
potential
impact
that
this
standard
may
have
on
the
Company's
consolidated
financial
statements.
In
August
2016,
the
FASB
issued
updated
guidance
which
clarifies
the
classification
of
certain
cash
receipts
and
payments
in
the
statement
of
cash
flows.
Thisstandard
is
effective
for
the
company
on
January
1,
2018.
The
adoption
of
this
new
guidance
is
not
expected
to
have
a
material
impact
on
the
Company'sconsolidated
financial
statements.(3)
Accumulated
Other
Comprehensive
Income
The
changes
in
accumulated
other
comprehensive
income,
which
is
reported
as
a
component
of
stockholders'
equity,
for
the
year
ended
December
31,
2017are
summarized
below:
No
amounts
were
reclassified
out
of
accumulated
other
comprehensive
income
during
the
years
ended
December
31,
2017,
2016
and
2015.(4)
Fair
Value
Measurements
The
following
tables
set
forth
the
Company's
financial
assets
and
liabilities
subject
to
fair
value
measurements:100
Unrealized
Gain
(Loss)
on
Marketable
Securities
Foreign
Currency
Items
Total
(In
thousands)
Balance
at
December
31,
2016
$(55)$2,596
$2,541
Other
comprehensive
gain
23
—
23
Balance
at
December
31,
2017
$(32)$2,596
$2,564
As
of
December
31,
2017
Level
1
Level
2
Level
3
(In
thousands)
Assets:
Money
market
funds
and
cash
equivalents
$24,061
—
$24,061
—
Marketable
securities
99,139
—
99,139
—
$123,200
—
$123,200
—
Liabilities:
Kolltan
acquisition
contingent
consideration
$43,400
—
—
$43,400
$43,400
—
—
$43,400
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(4)
Fair
Value
Measurements
(Continued)
The
Company's
financial
assets
consist
mainly
of
cash
and
cash
equivalents
and
marketable
securities
and
are
classified
as
Level
2
within
the
valuationhierarchy.
The
Company
values
its
marketable
securities
utilizing
independent
pricing
services
which
normally
derive
security
prices
from
recently
reported
tradesfor
identical
or
similar
securities,
making
adjustments
based
on
significant
observable
transactions.
At
each
balance
sheet
date,
observable
market
inputs
mayinclude
trade
information,
broker
or
dealer
quotes,
bids,
offers
or
a
combination
of
these
data
sources.
The
following
table
reflects
the
activity
for
the
Company's
contingent
consideration
liabilities
measured
at
fair
value
using
Level
3
inputs
for
the
year
endedDecember
31,
2017
(in
thousands):
The
valuation
technique
used
to
measure
fair
value
of
the
Company's
Level
3
liabilities,
which
consist
of
contingent
consideration
related
to
the
acquisition
ofKolltan
in
2016
(Note
17),
was
primarily
an
income
approach.
The
Company
may
be
required
to
pay
future
consideration
of
up
to
$172.5
million
that
is
contingentupon
the
achievement
of
specified
development,
regulatory
approvals
or
sales-based
milestone
events.
The
significant
unobservable
inputs
used
in
the
fair
valuemeasurement
of
the
contingent
consideration
are
estimates,
including
probability
of
success,
discount
rates
and
amount
of
time
until
the
conditions
of
the
milestonepayments
are
met.
During
the
year
ended
December
31,
2017,
the
Company
recorded
a
$0.8
million
gain
on
fair
value
remeasurement
of
contingent
consideration,
primarily
dueto
a
reduction
in
fair
value
attributed
to
the
milestones
related
to
the
Company's
anti-KIT
and
TAM
programs
and
partially
offset
by
losses
related
to
changes
indiscount
rates,
passage
of
time
and
probabilities
affecting
remaining
milestones.
The
Company's
anti-KIT
program
includes
CDX-0158
and
CDX-0159,
a
variant
ofCDX-0158.
CDX-0159
is
being
fully
developed
in-house
with
the
intention
of
replacing
CDX-0158
in
clinical
development.
The
Company
did
not
have
any
transfers
of
assets
or
liabilities
between
the
fair
value
measurement
classifications
during
the
years
ended
December
31,
2017and
2016.101
As
of
December
31,
2016
Level
1
Level
2
Level
3
(In
thousands)
Assets:
Money
market
funds
and
cash
equivalents
$20,445
—
$20,445
—
Marketable
securities
147,315
—
147,315
—
$167,760
—
$167,760
—
Liabilities:
Kolltan
acquisition
contingent
consideration
$44,200
—
—
$44,200
$44,200
—
—
$44,200
Other
Liabilities:
Contingent
Consideration
Balance
at
December
31,
2016
$44,200
Fair
value
adjustments
included
in
operating
expenses
(800)Balance
at
December
31,
2017
$43,400
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(5)
Marketable
Securities
The
following
is
a
summary
of
marketable
securities,
classified
as
available-for-sale:
The
Company
holds
investment
grade
marketable
securities,
and
none
were
considered
to
be
other-than-temporarily
impaired
as
of
December
31,
2017.Marketable
securities
include
$0.3
million
and
$0.6
million
in
accrued
interest
at
December
31,
2017
and
December
31,
2016,
respectively.102
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
(In
thousands)
December
31,
2017
Marketable
securities
U.S.
government
and
municipal
obligations
Maturing
in
one
year
or
less
$26,164
$3
$(9)$26,158
Maturing
after
one
year
through
three
years
—
—
—
—
Total
U.S.
government
and
municipal
obligations
$26,164
$3
$(9)$26,158
Corporate
debt
securities
Maturing
in
one
year
or
less
$73,007
$1
$(27)$72,981
Maturing
after
one
year
through
three
years
—
—
—
—
Total
corporate
debt
securities
$73,007
$1
$(27)$72,981
Total
marketable
securities
$99,171
$4
$(36)$99,139
December
31,
2016
Marketable
securities
U.S.
government
and
municipal
obligations
Maturing
in
one
year
or
less
$52,754
$5
$(12)$52,747
Maturing
after
one
year
through
three
years
296
8
—
304
Total
U.S.
government
and
municipal
obligations
$53,050
$13
$(12)$53,051
Corporate
debt
securities
Maturing
in
one
year
or
less
$94,320
$—
$(56)$94,264
Maturing
after
one
year
through
three
years
—
—
—
—
Total
corporate
debt
securities
$94,320
$—
$(56)$94,264
Total
marketable
securities
$147,370
$13
$(68)$147,315
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(6)
Property
and
Equipment,
Net
Property
and
Equipment,
Net
includes
the
following:
Depreciation
and
amortization
expense
related
to
property
and
equipment
was
$4.4
million,
$3.1
million
and
$3.0
million
for
the
years
ended
December
31,2017,
2016
and
2015,
respectively.(7)
Intangible
Assets
and
GoodwillIntangible Assets, Net
The
table
below
presents
information
for
the
Company's
finite-lived
intangible
assets
that
are
subject
to
amortization
and
indefinite-lived
intangible
assets:
Indefinite-lived
intangible
assets
consist
of
acquired
in-process
research
and
development
("IPR&D")
related
to
the
development
of
glembatumumab
vedotin,CDX-3379,
the
anti-KIT
program
and
the
TAM
program.
As
of
December
31,
2017,
no
IPR&D
asset
had
reached
technological
feasibility
nor
did
any
havealternative
future
uses.
The
Company
performs
an
impairment
test
on
IPR&D
assets
at
least
annually,
or
more
frequently
if
events
or
changes
in
circumstances
indicate
that
IPR&Dassets
may
be
impaired.
During
the
year
ended
December
31,
2017,
the
Company
recorded
a
non-cash
partial
impairment
charge
of
$13.0
million
on
the
anti-KITprogram
IPR&D
assets
acquired
from
Kolltan.
The
Company
determined
that
changes
in
projected
development
and
regulatory
timelines
related
to
the
anti-KITprogram
taken
together
constituted
a
triggering
event
that
required
the
Company
to
evaluate
the
intangible
asset
for103
December
31,
2017
December
31,
2016
(In
thousands)
Laboratory
Equipment
$7,770
$6,771
Manufacturing
Equipment
4,354
4,312
Office
Furniture
and
Equipment
3,764
3,677
Leasehold
Improvements
17,164
17,115
Construction
in
Progress
932
1,283
Total
Property
and
Equipment
33,984
33,158
Less:
Accumulated
Depreciation
and
Amortization
(23,612)
(19,966)Property
and
Equipment,
Net
$10,372
$13,192
December
31,
2017
December
31,
2016
Estimated
Life
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
(In
thousands)
Finite-lived
Intangible
Assets:
License
Rights
16
years
$14,500
$(7,399)$7,101
$14,500
$(6,503)$7,997
Indefinite-lived
Intangible
Assets:
IPR&D
Indefinite
60,490
—
60,490
73,490
—
73,490
Total
Intangible
Assets,
Net
$74,990
$(7,399)$67,591
$87,990
$(6,503)$81,487
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(7)
Intangible
Assets
and
Goodwill
(Continued)impairment.
As
part
of
this
evaluation,
the
present
value
of
probability
adjusted
estimated
net
future
cash
flows
was
used
to
determine
the
fair
value
of
the
programand
compared
to
the
carrying
value
of
the
program.
As
a
result
of
this
impairment
assessment,
the
Company
concluded
that
a
non-cash
partial
impairment
charge
of$13.0
million
on
the
anti-KIT
program
IPR&D
asset
be
recorded
for
the
year
ended
December
31,
2017
for
the
amount
the
fair
value
of
the
anti-KIT
programexceeded
its
carrying
amount.
Due
to
the
nature
of
IPR&D
projects,
the
Company
may
experience
future
delays
or
failures
to
obtain
regulatory
approvals
to
conduct
clinical
trials,
failures
ofsuch
clinical
trials
or
other
failures
to
achieve
a
commercially
viable
product,
and
as
a
result,
may
recognize
further
impairment
losses
in
the
future.
Amortization
expense
for
intangible
assets
was
$0.9
million
for
the
year
ended
December
31,
2017
and
$1.0
million
for
both
the
years
ended
December
31,2016
and
2015.
The
future
amortization
expense
of
intangible
assets
is
estimated
to
be
$0.9
million
for
each
of
the
years
ending
December
31,
2018,
2019,
2020,2021
and
2022.Goodwill
There
have
been
no
changes
to
the
carrying
amount
of
goodwill
during
the
year
ended
December
31,
2017.
The
Company
performs
an
annual
impairment
testof
goodwill
as
of
July
1
each
year.
The
Company
tested
goodwill
for
impairment
as
of
July
1,
2017
and
concluded
that
goodwill
was
not
impaired.(8)
Accrued
Expenses
Accrued
expenses
include
the
following:104
December
31,
2017
December
31,
2016
(In
thousands)
Accrued
Payroll
and
Employee
Benefits
$6,348
$7,132
Accrued
Research
and
Development
Contract
Costs
11,399
17,742
Accrued
Professional
Fees
1,408
1,146
Other
Accrued
Expenses
300
2,637
$19,455
$28,657
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(9)
Other
Long-Term
Liabilities
Other
long-term
liabilities
include
the
following:
In
November
2015,
December
2014,
January
2014
and
January
2013,
the
Company
received
approval
from
the
New
Jersey
Economic
Development
Authorityand
agreed
to
sell
New
Jersey
tax
benefits
of
$9.8
million,
$1.9
million,
$1.1
million
and
$0.8
million
to
an
independent
third
party
for
$9.2
million,
$1.8
million,$1.0
million
and
$0.8
million,
respectively.
Under
the
agreement,
the
Company
must
maintain
a
base
of
operations
in
New
Jersey
for
five
years
or
the
tax
benefitsmust
be
paid
back
on
a
pro-rata
basis
based
on
the
number
of
years
completed.
During
the
years
ended
December
31,
2017,
2016
and
2015,
the
Company
recorded$2.7
million,
$2.8
million
and
$1.0
million
to
other
income
related
to
the
sale
of
these
tax
benefits,
respectively.(10)
Stockholders'
EquityCommon Stock
In
December
2013,
the
Company
filed
an
automatic
shelf
registration
statement
with
the
Securities
and
Exchange
Commission
to
register
for
sale
anycombination
of
the
types
of
securities
described
in
the
shelf
registration
statement.
In
December
2016,
the
Company
filed
a
new
shelf
registration
statement
withthe
Securities
and
Exchange
Commission
to
register
for
sale
any
combination
of
the
types
of
securities
described
in
the
shelf
registration
statement
up
to
amaximum
aggregate
offering
price
of
$250
million.
Such
registration
statement
was
declared
effective
on
February
13,
2017.
In
May
2016,
the
Company
entered
into
an
agreement
with
Cantor
Fitzgerald
&
Co.
("Cantor")
to
allow
the
Company
to
issue
and
sell
shares
of
its
commonstock
having
an
aggregate
offering
price
of
up
to
$60.0
million
from
time
to
time
through
Cantor,
acting
as
agent.
In
November
2017,
the
Company
filed
aprospectus
supplement
registering
the
offer
and
sale
of
shares
of
common
stock
of
up
to
an
additional
$75.0
million
under
the
agreement
with
Cantor.
During
theyears
ended
December
31,
2017
and
2016,
the
Company
issued
17,722,863
and
3,303,800
shares
of
its
common
stock,
respectively,
under
this
controlled
equityoffering
sales
agreement
with
Cantor
resulting
in
net
proceeds
to
the
Company
of
$51.0
million
and
$13.9
million,
respectively,
after
deducting
commission
andoffering
expenses.
At
December
31,
2017,
the
Company
had
$67.6
million
remaining
in
aggregate
gross
offering
price
available
under
the
Cantor
agreement.
FromJanuary
1,
2018
through
February
28,
2018,
the
Company
issued
2,401,847
shares
of
its
common
stock
resulting
in
net
proceeds
to
the
Company
of
$6.1
million.105
December
31,
2017
December
31,
2016
(In
thousands)
Net
Deferred
Tax
Liabilities
Related
to
IPR&D
(Note
14)
$3,772
$28,054
Deferred
Income
From
Sale
of
Tax
Benefits
6,756
9,436
Other
1,344
2,091
Contingent
Milestones
(Note
4)
43,400
44,200
Deferred
Revenue
2,813
3,749
Total
58,085
87,530
Less
Current
Portion
(6,566)
(4,826)Long-Term
Portion
$51,519
$82,704
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(10)
Stockholders'
Equity
(Continued)
During
the
year
ended
December
31,
2015,
the
Company
issued
8,337,500
shares
of
its
common
stock
in
underwritten
public
offerings
resulting
in
netproceeds
to
the
Company
of
$188.8
million
after
deducting
underwriting
fees
and
offering
expenses.Convertible Preferred Stock
At
December
31,
2017,
the
Company
had
authorized
3,000,000
shares
of
preferred
stock
all
of
which
have
been
designated
Class
C
Preferred
Stock
including350,000
shares
which
have
been
designated
Series
C-1
Junior
Participating
Cumulative
Preferred
Stock
(the
"Series
C-1
Preferred
Stock").
No
shares
of
Series
C-1Preferred
Stock
were
outstanding
at
December
31,
2017
or
2016.(11)
Stock-Based
Compensation
The
Company
has
the
following
stock-based
compensation
plans:
the
2004
Employee
Stock
Purchase
Plan
(the
"2004
ESPP
Plan"),
the
2008
Stock
Option
andIncentive
Plan
(the
"2008
Plan")
and
Celldex
Research's
2005
Equity
Incentive
Plan
(the
"Celldex
Research
2005
Plan").
There
are
no
shares
available
for
futuregrant
under
the
Celldex
Research
2005
Plan.Employee Stock Purchase Plan
At
December
31,
2017,
a
total
of
400,000
shares
of
common
stock
are
reserved
for
issuance
under
the
2004
ESPP
Plan.
Under
the
2004
ESPP
Plan,
eachparticipating
employee
may
purchase
shares
of
common
stock
through
payroll
deductions
at
a
purchase
price
equal
to
85%
of
the
lower
of
the
fair
market
value
ofthe
common
stock
at
either
the
beginning
of
the
offering
period
or
the
applicable
exercise
date.
During
the
years
ended
December
31,
2017,
2016
and
2015,
theCompany
issued
80,379,
59,335
and
15,755
shares
under
the
2004
ESPP
Plan,
respectively.
At
December
31,
2017,
197,857
shares
were
available
for
issuanceunder
the
2004
ESPP
Plan.Employee Stock Option and Incentive Plan
The
2008
Plan
permits
the
granting
of
incentive
stock
options
(intended
to
qualify
as
such
under
Section
422A
of
the
Internal
Revenue
Code
of
1986,
asamended),
non-qualified
stock
options,
stock
appreciation
rights,
performance
share
units,
restricted
stock
and
other
awards
of
restricted
stock
in
lieu
of
cashbonuses
to
employees,
consultants
and
non-employee
directors.
At
December
31,
2017,
the
2008
Plan
allowed
for
a
maximum
of
20,000,000
shares
of
common
stock
to
be
issued
for
grants
of
new
awards
until
June
9,
2025and
grants
of
incentive
stock
options
until
April
16,
2025.
The
Company's
board
of
directors
determines
the
term
of
each
option,
option
price,
and
number
of
sharesfor
which
each
option
is
granted
and
the
rate
at
which
each
option
vests.
Options
generally
vest
over
a
period
not
to
exceed
four
years.
The
term
of
each
optioncannot
exceed
ten
years
(five
years
for
options
granted
to
holders
of
more
than
10%
of
the
voting
stock
of
the
Company),
and
the
exercise
price
of
stock
optionscannot
be
less
than
the
fair
market
value
of
the
common
stock
at
the
date
of
grant
(110%
of
fair
market
value
for
incentive
stock
options
granted
to
holders
of
morethan
10%
of
the
voting
stock
of
the
Company).
Vesting
of
all
employee
and
non-employee
director
stock
option
awards
may
accelerate
upon
a
change
in
control
asdefined
in
the
2008
Plan.106 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(11)
Stock-Based
Compensation
(Continued)
A
summary
of
stock
option
activity
for
the
year
ended
December
31,
2017
is
as
follows:
The
total
intrinsic
value
of
stock
options
exercised
during
the
years
ended
December
31,
2017,
2016
and
2015
was
$0.0
million,
$0.1
million
and$14.4
million,
respectively.
The
weighted
average
grant-date
fair
value
of
stock
options
granted
during
the
years
ended
December
31,
2017,
2016
and
2015
was$1.58,
$3.18
and
$15.25,
respectively.
The
total
fair
value
of
stock
options
vested
during
the
years
ended
December
31,
2017,
2016
and
2015
was
$13.4
million,$17.0
million
and
$10.0
million,
respectively.
The
aggregate
intrinsic
value
of
stock
options
outstanding
at
December
31,
2017
was
$1.1
million.
The
aggregate
intrinsic
value
of
stock
options
vested
andexpected
to
vest
at
December
31,
2017
was
$1.1
million.
As
of
December
31,
2017,
total
compensation
cost
related
to
non-vested
employee
and
non-employeedirector
stock
options
not
yet
recognized
was
approximately
$15.0
million,
net
of
estimated
forfeitures,
which
is
expected
to
be
recognized
as
expense
over
aweighted
average
period
of
2.7
years.Restricted Stock
A
summary
of
restricted
stock
activity
under
the
2008
Plan
for
the
year
ended
December
31,
2017
is
as
follows:107
Shares
Weighted
Average
Exercise
Price
Per
Share
Weighted
Average
Remaining
Contractual
Term
(In
Years)
Options
Outstanding
at
December
31,
2016
10,218,710
$11.14
6.5
Granted
2,427,200
$2.37
Exercised
—
$—
Canceled
(1,789,698)$9.76
Options
Outstanding
at
December
31,
2017
10,856,212
$9.40
6.1
Options
Vested
and
Expected
to
Vest
at
December
31,
2017
10,780,023
$9.43
6.1
Options
Exercisable
at
December
31,
2017
6,846,254
$11.18
4.5
Shares
Available
for
Grant
Under
the
2008
Plan
8,324,310
Shares
Weighted
Average
Grant
Date
Fair
Value
(per
share)
Outstanding
and
unvested
at
December
31,
2016
50,000
$4.72
Granted
70,000
$2.32
Vested
(16,665)$4.72
Canceled
(6,667)$4.72
Outstanding
and
unvested
at
December
31,
2017
96,668
$2.98
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(11)
Stock-Based
Compensation
(Continued)Valuation and Expenses Information
Stock-based
compensation
expense
for
the
years
ended
December
31,
2017,
2016
and
2015
was
recorded
as
follows:
The
fair
values
of
employee
and
director
stock
options
granted
during
the
years
ended
December
31,
2017,
2016
and
2015
were
valued
using
the
Black-Scholes
option
pricing
model
with
the
following
assumptions:
The
Company
estimates
expected
term
based
on
historical
exercise
patterns.
The
Company
uses
its
historical
stock
price
volatility
consistent
with
the
expectedterm
of
grant
as
the
basis
for
its
expected
volatility
assumption.
The
risk-free
interest
rate
is
based
upon
the
yield
of
U.S.
Treasury
securities
consistent
with
theexpected
term
of
the
option.
The
dividend
yield
assumption
is
based
on
the
Company's
history
of
zero
dividend
payouts
and
expectation
that
no
dividends
will
bepaid
in
the
foreseeable
future.(12)
RevenueRockefeller University (Rockefeller)
In
2013,
the
Company
entered
into
an
agreement,
as
amended,
with
Rockefeller
pursuant
to
which
the
Company
performs
research
and
development
servicesfor
Rockefeller.
The
Company
bills
Rockefeller
quarterly
for
actual
time
and
direct
costs
incurred
and
records
those
amounts
to
revenue
in
the
quarter
the
servicesare
performed.
The
Company
recorded
$2.2
million,
$2.7
million
and
$3.4
million
in
revenue
related
to
the
Rockefeller
agreement
during
the
years
endedDecember
31,
2017,
2016
and
2015,
respectively.Bristol-Myers Squibb Company (BMS)
In
2014,
the
Company
entered
into
a
clinical
trial
collaboration
with
BMS
to
evaluate
the
safety,
tolerability
and
preliminary
efficacy
of
varlilumab
andOpdivo®,
BMS'
PD-1
immune
checkpoint
inhibitor,
in
a
Phase
1/2
study.
Under
the
terms
of
this
clinical
trial
collaboration,
BMS
made
a
one-time
payment
to
theCompany
of
$5.0
million
and
BMS
and
the
Company
amended
the
terms
of
the
Company's
existing
license
agreement
with
Medarex,
which
was
acquired
by
BMS,related
to
the
Company's
CD27
program
whereby
certain
future
milestone
payments
were
waived
and
future
royalty108
2017
2016
2015
(In
thousands)
Research
and
development
$6,693
$7,821
$6,186
General
and
administrative
5,619
7,496
6,588
Total
stock-based
compensation
expense
$12,312
$15,317
$12,774
2017
2016
2015Expected
stock
price
volatility
75
-
77%
70
-
77%
67
-
69%Expected
option
term
6.0
Years
6.0
Years
6.0
YearsRisk-free
interest
rate
2.0
-
2.3%
1.4
-
2.3%
1.8
-
2.2%Expected
dividend
yield
None
None
None Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(12)
Revenue
(Continued)rates
were
reduced
that
may
have
been
due
from
the
Company
to
Medarex.
In
return,
BMS
was
granted
a
time-limited
right
of
first
negotiation
if
the
Companywishes
to
out-license
varlilumab.
The
companies
also
agreed
to
work
exclusively
with
each
other
to
explore
anti-PD-1
antagonist
antibody
and
anti-CD27
agonistantibody
combination
regimens.
The
clinical
trial
collaboration
provides
that
the
companies
will
share
development
costs
and
that
the
Company
will
be
responsiblefor
conducting
the
ongoing
Phase
1/2
study.
The
Company
has
determined
that
its
performance
obligations
under
the
BMS
agreement,
which
primarily
include
performing
research
and
development,supplying
varlilumab
and
participating
in
the
joint
development
committee,
should
be
accounted
for
as
a
single
unit
of
accounting
and
estimated
that
itsperformance
period
under
the
BMS
agreement
would
be
five
years.
Accordingly,
the
$5.0
million
up-front
payment
was
initially
recorded
as
deferred
revenue
andis
being
recognized
as
revenue
on
a
straight-line
basis
over
the
estimated
five
year
performance
period
using
the
Contingency
Adjusted
Performance
Model("CAPM").
The
BMS
agreement
also
provides
for
BMS
to
reimburse
the
Company
for
50%
of
the
external
costs
incurred
by
the
Company
in
connection
with
theclinical
trial.
These
BMS
payments
are
being
recognized
as
revenue
using
the
CAPM.
The
Company
recorded
$2.8
million,
$2.1
million
and
$1.3
million
inrevenue
related
to
the
BMS
agreement
during
the
years
ended
December
31,
2017,
2016
and
2015,
respectively.International AIDS Vaccine Initiative (IAVI)
In
2017,
the
Company
entered
into
an
agreement
with
IAVI
pursuant
to
which
the
Company
performs
research
and
development
and
manufacturing
servicesfor
IAVI
outlined
under
subsequently
negotiated
task
orders.
Revenue
is
recognized
as
services
are
performed
under
the
negotiated
task
orders.
The
Companyrecorded
$4.9
million
in
revenue
related
to
the
IAVI
agreement
during
the
year
ended
December
31,
2017.Frontier Biotechnologies, Inc. (Frontier)
In
2017,
the
Company
entered
into
an
agreement
with
Frontier
pursuant
to
which
the
Company
performs
research
and
development
and
manufacturingservices
for
Frontier
outlined
under
subsequently
negotiated
task
orders.
Revenue
is
recognized
as
services
are
performed
under
the
negotiated
task
orders.
TheCompany
recorded
$1.7
million
in
revenue
related
to
the
Frontier
agreement
during
the
year
ended
December
31,
2017.(13)
Collaboration
Agreements
The
Company
has
entered
into
license
agreements
whereby
the
Company
has
received
licenses
or
options
to
license
technology,
specified
patents
or
patentapplications.
The
Company's
licensing
and
development
collaboration
agreements
generally
provide
for
royalty
payments
equal
to
specified
percentages
of
productsales,
annual
license
maintenance
fees,
continuing
patent
prosecution
costs
and
potential
future
milestone
payments
to
third
parties
upon
the
achievement
of
certaindevelopmental,
regulatory
and/or
commercial
milestones.
Nonrefundable
license
fee
expense
of
$0.7
million,
$1.6
million
and
$0.9
million
was
recorded
toresearch
and
development
expense
for
the
years
ended
December
31,
2017,
2016
and
2015,
respectively.109 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(13)
Collaboration
Agreements
(Continued)Medarex, Inc. (Medarex), which was acquired by Bristol-Myers Squibb
The
Company
and
Medarex
have
entered
into
an
assignment
and
license
agreement,
as
amended,
that
provides
for
the
assignment
of
certain
patent
and
otherintellectual
property
rights
and
a
license
to
certain
Medarex
technology
related
to
the
Company's
APC
Targeting
Technology™
and
an
anti-mannose
receptorproduct.
Under
the
terms
of
the
agreement,
the
Company
may
be
required
to
pay
royalties
in
the
low-single
digits
on
any
net
product
sale
of
a
licensed
royalty-bearing
product
or
anti-mannose
product
to
Medarex
until
the
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenth
anniversary
of
thefirst
commercial
sale
of
such
licensed
product.
Under
a
license
agreement
with
Medarex,
as
amended,
the
Company
acquired
access
to
the
UltiMab
technology
to
develop
and
commercialize
humanantibodies
to
CD27,
including
varlilumab.
The
Company
may
be
required
to
pay
Medarex
royalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
saleswith
respect
to
the
development
and
commercialization
of
varlilumab
until
the
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenthanniversary
of
the
first
commercial
sale
of
such
licensed
product.Rockefeller University (Rockefeller)
Under
a
license
agreement
with
Rockefeller,
the
Company
acquired
the
exclusive
worldwide
rights
to
human
DEC-205
receptor,
with
the
right
to
sublicensethe
technology.
The
license
grant
is
exclusive
except
that
Rockefeller
may
use
and
permit
other
nonprofit
organizations
to
use
the
human
DEC-205
receptor
patentrights
for
educational
and
research
purposes.
The
Company
may
be
required
to
pay
Rockefeller
milestones
of
up
to
$3.8
million
upon
obtaining
first
approval
forcommercial
sale
in
a
first
indication
of
a
product
targeting
the
licensed
receptor
and
royalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
sales
withrespect
to
development
and
commercialization
of
the
human
DEC-205
receptor.University of Southampton, UK (Southampton)
Under
a
license
agreement
with
Southampton,
the
Company
acquired
the
rights
to
develop
human
antibodies
towards
CD27,
a
potentially
important
target
forimmunotherapy
of
various
cancers.
The
Company
may
be
required
to
pay
Southampton
milestones
of
up
to
approximately
$1.0
million
upon
obtaining
firstapproval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
with
respect
to
development
andcommercialization
of
varlilumab.Amgen Inc. (Amgen)
Under
a
license
agreement
with
Amgen,
the
Company
acquired
the
exclusive
rights
to
CDX-301
and
CD40
ligand,
or
CD40L.
CDX-301
and
CD40L
areimmune
modulating
molecules
that
increase
the
numbers
and
activity
of
immune
cells
that
control
immune
responses.
The
Company
may
be
required
to
payAmgen
milestones
of
up
to
$0.9
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
anynet
product
sales
with
respect
to
development
and
commercialization
of
the
technology
licensed
from
Amgen,
including
CDX-301.110 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(13)
Collaboration
Agreements
(Continued)Seattle Genetics, Inc. (Seattle Genetics)
Under
a
license
agreement
with
Seattle
Genetics,
the
Company
acquired
the
rights
to
proprietary
ADC
technology,
with
the
right
to
sublicense,
for
use
withthe
Company's
proprietary
antibodies
for
the
potential
treatment
of
cancer.
The
Company
may
be
required
to
pay
Seattle
Genetics
milestones
of
up
to
$5.0
millionand
$8.5
million
for
glembatumumab
vedotin
and
CDX-014,
respectively,
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royaltypayments
in
the
mid-single
digits
on
any
net
product
sales
with
respect
to
development
and
commercialization
of
these
drug
candidates.Yale University (Yale)
Under
a
license
agreement
with
Yale,
the
Company
may
be
required
to
make
a
one-time
payment
to
Yale
of
$3.0
million
with
respect
to
each
therapeutic
orprophylactic
RTK
royalty-bearing
product,
including
CDX-3379,
that
achieves
a
specified
commercial
milestone.
In
addition,
the
Company
may
be
required
to
paya
low
single-digit
royalty
on
annual
worldwide
net
sales
of
each
RTK
royalty-bearing
product,
including
CDX-3379.MedImmune, LLC (MedImmune)
Under
an
agreement
with
MedImmune,
the
Company
has
an
exclusive
license,
with
the
right
to
sublicense,
to
specified
patent
rights
and
know-how
that
arecontrolled
by
MedImmune
and
relate
to
the
research,
development,
manufacture
and
commercialization
of
CDX-3379.
The
Company
may
be
required
to
payMedimmune
up
to
$45.0
million
upon
obtaining
specified
regulatory
and
development
milestones
in
the
first
indication
of
CDX-3379.
In
addition,
the
Companymay
be
required
to
pay
MedImmune
one-time
milestone
payments
of
up
to
$125.0
million
if
specified
annual
net
sale
thresholds
are
met
related
to
the
firstindication
of
CDX-3379.
The
Company
may
also
be
required
to
pay
MedImmune
a
tiered
royalty
on
annual
net
sales
of
CDX-3379
at
rates
ranging
from
highsingle-digit
to
low
teens
percentages.
The
Company
may
also
be
required
to
pay
specified
royalties
on
annual
net
sales
of
CDX-3379
at
a
rate
in
the
low
singledigits
to
certain
other
third
parties
from
whom
MedImmune
licensed
certain
intellectual
property.111 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(14)
Income
Taxes
The
components
of
income
tax
benefit
(provision)
are
as
follows:
A
reconciliation
between
the
amount
of
reported
income
tax
and
the
amount
computed
using
the
U.S.
Statutory
rate
is
as
follows:
Deferred
tax
assets
and
liabilities
are
recognized
based
on
temporary
differences
between
the
financial
reporting
and
tax
basis
of
assets
and
liabilities
usingfuture
expected
enacted
rates.
The112
Year
Ended
December
31,
2017
2016
2015
(In
thousands)
Income
Tax
Benefit
(Provision):
Federal
$57,547
$45,518
$46,598
State
(2,479)
7,268
10,642
Foreign
2,448
1,124
—
Income
Tax
Rate
Change
(99,528)
—
—
Expiration
of
Net
Operating
Losses
and
Research
&
Development
Tax
Credits
—
—
(155)
(42,012)
53,910
57,085
Deferred
Tax
Valuation
Allowance
66,294
(53,910)
(57,085)
$24,282
$—
$—
2017
2016
2015
(In
thousands)
Pre-Tax
Loss
$(117,313)$(128,530)$(127,197)Loss
at
Statutory
Rates
(39,887)
(43,700)
(43,247)Difference
in
Foreign
Tax
Rates
326
150
—
Research
and
Development
Credits
(2,847)
(5,203)
(4,935)State
Taxes
(6,283)
(7,268)
(10,642)Income
Tax
Rate
Change
99,528
—
—
Other
(321)
2,111
1,584
Recognition
of
APIC
NOLs
(5,729)
—
—
Impact
of
Pass-through
Entities
(2,775)
—
—
Expiration
of
Net
Operating
Losses
and
Research
&
Development
Tax
Credits
—
—
155
Change
in
Valuation
Allowance
(66,294)
53,910
57,085
Income
Tax
(Benefit)
Provision
$(24,282)$—
$—
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(14)
Income
Taxes
(Continued)principal
components
of
the
deferred
tax
assets
and
liabilities
at
December
31,
2017
and
2016,
respectively,
are
as
follows:
The
Company
has
evaluated
the
positive
and
negative
evidence
bearing
upon
the
realizability
of
its
net
deferred
tax
assets
and
considered
its
history
of
losses,ultimately
concluding
that
it
is
"more
likely
than
not"
that
the
Company
will
not
recognize
the
benefits
of
federal,
state
and
foreign
deferred
tax
assets
and,
as
such,has
maintained
a
full
valuation
allowance
on
its
deferred
tax
assets.
During
year
ended
December
31,
2017,
the
Company's
gross
deferred
tax
assets
and
corresponding
valuation
allowance
each
increased
by
$17.7
million.
Thiswas
a
one-time
increase
due
to
the
adoption
of
a
new
accounting
standard
removing
the
requirement
to
recognize
excess
tax
benefits
from
the
exercise
of
stockoptions
in
additional
paid-in-capital
when
realized.
On
December
22,
2017,
the
Tax
Cuts
and
Jobs
Act
("TCJA")
was
enacted,
leading
to
significant
changes
to
U.S.
tax
law.
Among
other
provisions,
the
TCJAlowered
the
U.S.
federal
corporate
income
tax
rate
from
35%
to
21%,
limited
the
deduction
for
net
operating
losses
to
80%
of
taxable
income
while
providing
thatnet
operating
loss
carryovers
for
years
after
2017
will
not
expire,
imposed
a
mandatory
one-time
transition
tax
on
previously
deferred
foreign
earnings
andeliminated
or
reduced
certain
income
tax
deductions.
Also
on
December
22,
2017,
the
SEC
staff
issued
SAB
118,
allowing
companies
to
record
the
effects
of
theTCJA
on
a
provisional
basis
during
a
measurement
period
not
to
extend
beyond
one
year
of
the
enactment
date.
As
a
result
of
the
TCJA,
the
Company
revalued
its
deferred
tax
liabilities
at
the
new
federal
rate
of
21%,
resulting
in
a
$6.9
million
decrease
and
acorresponding
income
tax
benefit.
The
Company
also
scheduled
out
reversals
of
its
deferred
tax
assets
and
liabilities,
determining
that
their
reversal
would
createfuture
indefinite-lived
net
operating
losses
under
the
TCJA.
As
such,
the
valuation
allowance113
December
31,
2017
December
31,
2016
(In
thousands)
Gross
Deferred
Tax
Assets
Net
Operating
Loss
Carryforwards
$146,228
$174,555
Foreign
Net
Operating
Loss
Carryforwards
3,572
1,124
Tax
Credit
Carryforwards
36,458
32,306
Deferred
Research
and
Development
Expenses
79,272
109,520
Stock-based
Compensation
10,718
12,362
Fixed
Assets
1,305
1,526
Deferred
Revenue
686
1,418
Accrued
Expenses
and
Other
316
894
278,555
333,705
Gross
Deferred
Tax
Liabilities
Other
Acquired
Intangibles
(1,792)
(2,868)IPR&D
Intangibles
(15,992)
(28,054)Total
Deferred
Tax
Assets
and
Liabilities
260,771
302,783
Valuation
Allowance
(264,543)
(330,837)Net
Deferred
Tax
Liability
$(3,772)$(28,054) Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(14)
Income
Taxes
(Continued)was
reduced
relating
to
the
remaining
indefinite-lived
federal
deferred
tax
liabilities
balance,
leading
to
an
additional
income
tax
benefit
of
$12.2
million.
TheCompany's
deferred
tax
asset
balance
was
also
revalued
at
the
new
21%
rate
resulting
in
a
$99.5
million
decrease
in
the
balance
with
a
corresponding
decrease
tothe
valuation
allowance.
Finally,
the
one-time
transition
tax
on
previously
deferred
foreign
earnings
under
the
TCJA
is
not
expected
to
impact
the
Company
due
toa
net
deficit
in
the
Australian
subsidiary.
In
accordance
with
SAB
118,
the
Company
considers
the
aforementioned
adjustments
related
to
the
TCJA
to
be
provisional
amounts
based
on
the
Company'sbest
estimates
at
December
31,
2017.
Updated
guidance,
interpretations
or
assumptions
could
lead
the
Company
to
make
further
adjustments
to
income
tax
benefit(provision)
in
the
future.
The
Company
expects
its
accounting
for
the
tax
effects
of
the
TCJA
to
be
completed
in
2018.
The
net
deferred
tax
liability
of
$3.8
million
and
$28.1
million
at
December
31,
2017
and
2016,
respectively,
relates
to
the
temporary
differences
associatedwith
the
IPR&D
intangible
assets
acquired
in
previous
business
combinations
and
are
not
deductible
for
tax
purposes.
The
Company
recorded
an
income
tax
benefitof
$5.2
million
during
the
year
ended
December
31,
2017
due
to
a
decrease
in
deferred
tax
liabilities
resulting
from
the
partial
impairment
of
the
anti-KIT
program.
As
of
December
31,
2017,
the
Company
had
federal
and
state
net
operating
loss
carryforwards
of
$561.8
million
and
$435.9
million,
respectively,
which
maybe
available
to
offset
certain
future
income
tax
liabilities
and
begin
to
expire
in
2018
and
2028,
respectively.
As
of
December
31,
2017,
the
Company
also
hadfederal
and
state
research
and
development
tax
credit
carryforwards
of
$29.0
million
and
$9.5
million,
respectively,
which
may
be
available
to
offset
future
incometax
liabilities
and
begin
to
expire
in
2018
and
2017,
respectively.
Utilization
of
the
net
operating
loss
carryforwards
and
research
and
credit
carryforwards
may
be
subject
to
a
substantial
annual
limitation
under
Section
382
ofthe
Internal
Revenue
Code
of
1986,
or
Section
382,
due
to
ownership
changes
that
occurred
previously
or
that
could
occur
in
the
future.
These
ownership
changesmay
limit
the
amount
of
carryforwards
that
can
be
utilized
annually
to
offset
future
taxable
income.
In
general,
an
ownership
change,
as
defined
by
Section
382,results
from
transactions
increasing
the
ownership
of
certain
shareholders
or
public
groups
in
the
stock
of
a
corporation
by
more
than
50%
over
a
three-year
period.The
Company
has
estimated
the
amounts
of
net
operating
loss
and
research
and
development
tax
credit
carryforwards
which
will
expire
unutilized
as
a
result
of
itsestimated
annual
limitations
under
Section
382
and
has
excluded
those
amounts
from
the
carryforward
amounts
disclosed
above
and
in
the
deferred
tax
assets
andliabilities
table
included
in
this
footnote.
The
Company
has
concluded
Section
382
studies
through
2015
for
Celldex
generated
NOLs.
The
Company
incurred
a
foreign
pre-tax
loss
of
$8.2
million
and
$3.7
million
during
the
years
ended
December
31,
2017
and
2016,
respectively.
Beginningwith
the
2016
tax
returns,
the
Company
elected
to
classify
the
Australian
entity
as
a
disregarded
entity
for
income
tax
purposes.
The
foreign
pre-tax
losses
havebeen
included
with
the
Federal
net
operating
loss
carryforwards.
As
of
December
31,
2017
and
2016,
the
Company
did
not
have
any
unrecognized
tax
benefits.
Massachusetts,
New
Jersey,
Connecticut
and
Australia
are
the
jurisdictions
in
which
the
Company
primarily
operates
or
has
operated
and
has
income
taxnexus.
The
Company
is
not
currently
under
examination
by
these
or
any
other
jurisdictions
for
any
tax
year.
Generally,
in
U.S.
federal
and
state
taxing
jurisdictions,all
years
which
generated
net
operating
losses
and/or
tax
credit
carryforwards
remain
subject
to
examination
to
the
extent
those
carryforwards
are
utilized
in
asubsequent
period.114 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(15)
Commitments
and
Contingencies
The
Company
has
facility
and
equipment
leases
that
expire
at
various
dates
through
2020.
Certain
of
these
facility
leases
contain
renewal
options,
earlytermination
provisions,
and
provisions
that
escalate
the
base
rent
payments
and
require
the
Company
to
pay
common
area
maintenance
costs
("CAM")
during
thelease
term.
The
following
obligations
for
base
rent
and
CAM
costs
under
facility
and
other
non-cancelable
operating
leases
as
of
December
31,
2017
do
not
includethe
exercise
of
renewal
terms
or
early
termination
provisions
(in
thousands):
The
Company's
total
rent
and
CAM
expense
for
all
facility
leases
was
$4.1
million,
$4.8
million
and
$2.9
million
for
the
years
ended
December
31,
2017,2016
and
2015,
respectively.(16)
Retirement
Savings
Plan
The
Company
maintains
a
401(k)
Plan
which
is
available
to
substantially
all
employees.
Under
the
terms
of
the
401(k)
Plan,
participants
may
elect
tocontribute
up
to
60%
of
their
compensation
or
the
statutory
prescribed
limits.
The
Company
may
make
50%
matching
contributions
on
up
to
4%
of
a
participant'sannual
salary.
Benefit
expense
for
the
401(k)
Plan
was
$0.5
million
for
the
year
ended
December
31,
2017
and
$0.4
million
for
each
of
the
years
endedDecember
31,
2016
and
2015.(17)
Kolltan
Acquisition
On
November
29,
2016,
the
Company
acquired
all
of
the
share
and
debt
interests
of
Kolltan
Pharmaceuticals,
Inc.
("Kolltan"),
a
clinical-stagebiopharmaceutical
company,
in
exchange
for
18,257,996
shares
of
the
Company's
common
stock
plus
contingent
consideration
in
the
form
of
development
andapproval
milestones
up
to
a
maximum
of
$172.5
million.
The
Company
completed
this
acquisition
in
order
to
gain
access
to
Kolltan's
antibody-based
drugdevelopment
programs
targeting
receptor
tyrosine
kinases
(RTKs)
for
the
treatment
of
cancer
and
other
diseases
with
significant
unmet
needs.Purchase Price
The
purchase
price
for
Kolltan
was
calculated
based
on
the
closing
price
of
the
Company's
common
stock
of
$4.02
per
share
on
November
29,
2016.
TheCompany
also
recorded
a
liability
of
$44.2
million
which
represented
the
initial
fair
value
of
the
contingent
consideration.
This
fair
value
measurement
usedsignificant
unobservable
inputs
representing
a
Level
3
measurement
more
fully
described
in
Note
4,
Fair Value Measurements to
these
consolidated
financialstatements.
Subsequent
changes
to
the
fair
value
of
the
contingent
consideration
will
be
recognized
as
adjustments
to
operating
earnings.
The
acquisition
wasaccounted
for
using
the
acquisition
method
of
accounting
which
requires
all
assets
acquired
and
liabilities
assumed
recognized
at
their
acquisition-date
fair
values.1152018
$4,591
2019
4,472
2020
2,498
2021
—
2022
—
Thereafter
—
Total
minimum
lease
payments
$11,561
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(17)
Kolltan
Acquisition
(Continued)
The
total
consideration
transferred
consisted
of
the
following
(in
thousands):Allocations of Assets and Liabilities
The
purchase
price
allocation
was
finalized
in
the
fourth
quarter
of
2017
with
no
adjustments
made
to
the
initial
purchase
price
allocation.
The
following
tablesummarizes
the
fair
values
of
the
assets
acquired
and
liabilities
assumed
as
of
November
29,
2016
(in
thousands):
IPR&D
primarily
represents
the
initial
estimated
fair
value
of
$40.0
million,
$3.5
million
and
$18.0
million
for
the
anti-KIT
program,
CDX-3379
and
TAMprograms,
respectively,
using
probability
adjusted
discounted
cash
flow
analyses.
The
expected
future
net
cash
flows
for
the
anti-KIT
program,
CDX-3379
andTAM
programs
were
based
on
the
expectation
that
a
Biologics
License
Application
("BLA")
would
be
filed
with
the
FDA
no
earlier
than
the
end
of
2023,
2024
and2028,
respectively,
with
an
expected
commercial
launch
as
promptly
as
practicable
after
necessary
regulatory
approvals
are
received.
The
estimated
developmentcosts
included
in
the
expected
future
net
cash
flows
were
approximately
$132
million
combined.
The
deferred
tax
liability,
net
of
$23.4
million
primarily
relates
to
the
temporary
differences
associated
with
the
IPR&D
intangible
assets,
which
are
notdeductible
for
tax
purposes.
The
excess
of
purchase
price
over
the
fair
value
amounts
assigned
to
the
identifiable
assets
acquired
and
liabilities
assumed
represents
the
goodwill
amountresulting
from
the
acquisition.
The
value
of
the
goodwill
can
be
attributable
to
the
synergies
related
to
the
combined
antibody-based
platform
and
a
deferred
taxliability
related
to
acquired
IPR&D
intangible
assets.
None
of
the
goodwill
is
expected
to
be
deductible
for
income
tax
purposes.Acquisition-Related Expenses, Including Severance
The
Company
incurred
$0.7
million
in
acquisition-related
expenses
in
the
consolidated
statements
of
operations
for
the
year
ended
December
31,
2016.
Fromthe
acquisition
date
through
December
31,
2016,
the
consolidated
statements
of
operations
also
include
$2.4
and
$0.7
million
in
Kolltan
related116Fair
value
of
common
stock
issued
for
upfront
payment
$73,397
Fair
value
of
contingent
consideration
44,200
Kolltan
transaction
expenses
paid
in
cash
by
the
Company
3,768
Total
consideration
transferred
$121,365
Cash
and
cash
equivalents
$8,160
Other
current
and
long-term
assets
799
Property
and
equipment,
net
2,072
In-process
research
and
development
(IPR&D)
61,690
Goodwill
82,011
Deferred
tax
liabilities,
net
(23,393)Other
assumed
liabilities
(9,974)Total
$121,365
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(17)
Kolltan
Acquisition
(Continued)severance
expense
within
general
and
administrative
and
research
and
development
expenses,
respectively.Pro Forma Financial Information
The
operating
results
of
Kolltan
and
pro
forma
adjustments
including
severance
expense
and
transaction
expenses
of
$3.1
million
and
$0.7
million,respectively,
have
been
included
in
the
accompanying
consolidated
financial
statements
from
November
29,
2016
to
December
31,
2016.
Kolltan
had
no
revenuesfrom
November
29,
2016
through
December
31,
2016.
The
following
unaudited
pro
forma
financial
summary
is
presented
as
if
the
operations
of
the
Company
andKolltan
were
combined
as
of
January
1,
2015.
The
unaudited
pro
forma
combined
results
are
not
necessarily
indicative
of
the
actual
results
that
would
haveoccurred
had
the
acquisition
been
consummated
at
that
date
or
of
the
future
operations
of
the
combined
entities.(18)
Selected
Quarterly
Financial
Data
(Unaudited)
117
Unaudited
Years
Ended
December
31,
2016
2015
(In
thousands)
Revenue
$6,786
$5,480
Net
loss
$(146,905)$(157,690)Basic
and
diluted
net
loss
per
common
share
$(1.24)$(1.37)2017
Q1
2017
Q2
2017
Q3
2017
Q4
2017
(In
thousands,
except
per
share
amounts)
Total
revenue
$1,534
$3,829
$3,924
$3,456
Net
loss
(34,261)
(28,566)
(26,363)
(3,841)Basic
and
diluted
net
loss
per
common
share
(0.28)
(0.23)
(0.20)
(0.03)2016
Q1
2016
Q2
2016
Q3
2016
Q4
2016
(In
thousands,
except
per
share
amounts)
Total
revenue
$1,303
$1,389
$2,220
$1,874
Net
loss
(34,673)
(31,952)
(29,598)
(32,307)Basic
and
diluted
net
loss
per
common
share
(0.35)
(0.32)
(0.29)
(0.30) Table
of
ContentsItem
9.
CHANGES
IN
AND
DISAGREEMENTS
WITH
ACCOUNTANTS
ON
ACCOUNTING
AND
FINANCIAL
DISCLOSURE
None.Item
9A.
CONTROLS
AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures
As
of
December
31,
2017,
we
evaluated,
with
the
participation
of
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
the
effectiveness
of
our
disclosurecontrols
and
procedures
(as
defined
in
Rules
13a-15(e)
and
15d-15(e)
under
the
Securities
Exchange
Act
of
1934,
as
amended
(the
"Exchange
Act")).
Based
on
thatevaluation,
our
Chief
Executive
Officer
and
Chief
Financial
Officer
concluded
that
our
disclosure
controls
and
procedures
were
effective
at
the
reasonableassurance
level
as
of
December
31,
2017.
Our
disclosure
controls
and
procedures
are
designed
to
provide
reasonable
assurance
that
information
required
to
bedisclosed
in
the
reports
that
we
file
or
submit
under
the
Exchange
Act
is
recorded,
processed,
summarized
and
reported
within
time
periods
specified
by
the
SEC'srules
and
forms,
and
that
such
information
is
accumulated
and
communicated
to
our
management,
including
our
Chief
Executive
Officer
and
Chief
FinancialOfficer,
as
appropriate
to
allow
timely
decisions
regarding
required
disclosure.Management's Annual Report on Internal Control Over Financial Reporting
Our
management
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
our
financial
reporting.
Internal
control
over
financial
reportingis
defined
in
Rules
13a-15(f)
and
15d-15(f)
under
the
Exchange
Act
as
the
process
designed
by,
or
under
the
supervision
of,
our
Chief
Executive
Officer
and
ChiefFinancial
Officer,
and
effected
by
our
board
of
directors,
management
and
other
personnel,
to
provide
reasonable
assurance
regarding
the
reliability
of
our
financialreporting
and
the
preparation
of
our
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles,
and
includes
thosepolicies
and
procedures
that:•pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
transactions
and
dispositions
of
assets;
•provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generallyaccepted
accounting
principles,
and
that
receipts
and
expenditures
are
being
made
only
in
accordance
with
the
authorizations
of
management
anddirectors;
and
•provide
reasonable
assurance
regarding
the
prevention
or
timely
detection
of
unauthorized
acquisition,
use
or
disposition
of
assets
that
could
have
amaterial
effect
on
our
financial
statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Projections
of
any
evaluation
ofeffectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
withthe
policies
or
procedures
may
deteriorate.
Under
the
supervision
and
with
the
participation
of
our
management,
including
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
we
conducted
anevaluation
of
the
effectiveness
of
our
internal
control
over
financial
reporting
based
on
the
framework
provided
in
Internal Control—Integrated Framework (2013)issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission.
Based
on
this
evaluation,
our
management
concluded
that
our
internal
controlover
financial
reporting
was
effective
as
of
December
31,
2017.118 Table
of
Contents
The
effectiveness
of
our
internal
control
over
financial
reporting
as
of
December
31,
2017
has
been
audited
by
PricewaterhouseCoopers
LLP,
an
independentregistered
public
accounting
firm,
as
stated
in
their
report,
which
is
included
herein.Changes in Internal Control Over Financial Reporting
There
were
no
changes
in
our
internal
control
over
financial
reporting
during
the
three
months
ended
December
31,
2017
that
have
materially
affected,
or
arereasonably
likely
to
materially
affect,
our
internal
control
over
financial
reporting.Item
9B.
OTHER
INFORMATION
None.PART
III
Item
10.
DIRECTORS,
EXECUTIVE
OFFICERS
AND
CORPORATE
GOVERNANCE
The
information
required
by
this
Item
10
will
be
included
in
the
definitive
Proxy
Statement
for
our
2018
Annual
Meeting
of
Stockholders,
or
the
2018
ProxyStatement,
under
"Information
Regarding
the
Current
Directors
and
Executive
Officers
of
Celldex
Therapeutic,
Inc.,"
"Section
16(a)
Beneficial
OwnershipReporting
Compliance,"
"Code
of
Business
Conduct
and
Ethics"
and
"The
Board
of
Directors
and
Its
Committees"
and
is
incorporated
herein
by
reference.
If
the2018
Proxy
Statement
is
not
filed
with
the
SEC
within
120
days
after
the
end
of
our
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
anamendment
to
this
Annual
Report
on
Form
10-K.Item
11.
EXECUTIVE
COMPENSATION
The
information
required
by
this
Item
11
will
be
included
in
the
2018
Proxy
Statement
under
"Executive
Compensation,"
and
"Compensation
CommitteeInterlocks
and
Insider
Participation,"
and
is
incorporated
herein
by
reference.
If
the
2018
Proxy
Statement
is
not
filed
with
the
SEC
within
120
days
after
the
end
ofour
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.Item
12.
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
AND
RELATED
STOCKHOLDER
MATTERS
The
information
required
by
this
Item
12
will
be
included
in
the
2018
Proxy
Statement
under
"Security
Ownership
of
Certain
Beneficial
Owners
andManagement"
and
"Equity
Compensation
Plan
Information"
and
is
incorporated
herein
by
reference.
If
the
2018
Proxy
Statement
is
not
filed
with
the
SEC
within120
days
after
the
end
of
our
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.Item
13.
CERTAIN
RELATIONSHIPS
AND
RELATED
TRANSACTIONS,
AND
DIRECTOR
INDEPENDENCE
The
information
required
by
this
Item
13
will
be
included
in
the
2018
Proxy
Statement
under
"Election
of
Directors"
and
"Approval
of
Related
PersonTransactions
and
Transactions
with
Related
Persons"
and
is
incorporated
herein
by
reference.
If
the
2018
Proxy
Statement
is
not
filed
with
the
SEC
within
120
daysafter
the
end
of
our
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.119 Table
of
ContentsItem
14.
PRINCIPAL
ACCOUNTING
FEES
AND
SERVICES
The
information
required
by
this
Item
14
will
be
included
in
the
2018
Proxy
Statement
under
"Independent
Registered
Public
Accounting
Firm"
and
isincorporated
herein
by
reference.
If
the
2018
Proxy
Statement
is
not
filed
with
the
SEC
within
120
days
after
the
end
of
our
most
recent
fiscal
year,
we
will
providesuch
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.120 PART
IV
Item
15.
EXHIBITS,
FINANCIAL
STATEMENT
SCHEDULES
(A)The
following
documents
are
filed
as
part
of
this
Form
10-K:
(1)Financial Statements:
The
Financial
Statements
and
Supplementary
Data
are
included
in
Part
II
Item
8
of
this
report.(2)Financial Statement Schedules:
Schedules
are
omitted
since
the
required
information
is
not
applicable
or
is
not
present
in
amounts
sufficient
to
require
submission
of
the
schedule,
or
becausethe
information
required
is
included
in
the
Financial
Statements
or
Notes
thereto.(3)Exhibits:121
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
2.1
Agreement
and
Plan
of
Merger,
dated
as
of
November
1,
2016,
by
andamong
Kolltan
Pharmaceuticals,
Inc.,
Celldex
Therapeutics,
Inc.,Connemara
Merger
Sub
1
Inc.
and
Connemara
Merger
Sub
2
LLC.
8-K
(000-15006)
2.1
11/1/16
Articles of Incorporation and By-Laws
3.1
Third
Restated
Certificate
of
Incorporation
S-4
(333-59215)
3.1
7/16/98
3.2
Certificate
of
Amendment
of
Third
Restated
Certificate
of
Incorporation
S-4
(333-59215)
3.1
7/16/98
3.3
Second
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
S-4
(333-59215)
3.2
7/16/98
3.4
Third
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
10-Q
(000-15006)
3.1
5/10/02
3.5
Fourth
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
8-K
(000-15006)
3.1
3/11/08
3.6
Fifth
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
8-K
(000-15006)
3.2
3/11/08
3.7
Sixth
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
10-Q
(000-15006)
3.7
11/10/08
3.8
Amended
and
Restated
By-Laws,
dated
April
7,
2014
8-K
(000-15006)
3.1
4/8/14
Instruments Defining the Rights of Security Holders
4.1
Specimen
of
Common
Stock
Certificate
10-Q
(000-15006)
4.1
8/8/17 122
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
4.2
Certificate
of
Designations,
Preferences
and
Rights
of
a
Series
ofPreferred
Stock
classifying
and
designating
the
Series
C-1
JuniorParticipating
Cumulative
Preferred
Stock
8-A
(000-15006)
3.1
11/8/04
Material Contracts—Leases
10.1
Commercial
Lease
Agreement
of
May
1,
1996
between
the
Company
andFourth
Avenue
Ventures
Limited
Partnership
10-Q/A
(000-15006)
10.11
8/23/96
10.2
Extension
of
Lease
Agreement
of
May
1,
1997
between
the
Company
andDIV
Needham
53
LLC
(successor
in
interest
to
Fourth
Avenue
VenturesLimited
Partnership)
dated
as
of
August
23,
2001
10-K
(000-15006)
10.9
3/27/02
10.3
First
Amendment
to
Lease
by
and
between
the
Company
and
DIVNeedham
115
LLC
(successor
in
interest
to
Fourth
Avenue
VenturesLimited
Partnership)
dated
November
29,
2005
10-K
(000-15006)
10.40
3/16/06
10.4
Second
Amendment
to
Lease
by
and
between
the
Company
and
DIVNeedham
115
LLC
dated
as
of
August
1,
2015
10-K/A
(000-15006)
10.4
2/25/16
*10.5
Lease
Agreement,
by
and
between
the
Company
and
the
MassachusettsDevelopment
Finance
Agency,
dated
as
of
December
22,
2003
10-Q
(000-15006)
10.1
4/30/04
10.6
First
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
March
17,
2005
10-K/A
(000-15006)
10.6
12/23/10
10.7
Second
Amendment
to
Lease
by
and
between
the
Company
and
theMassachusetts
Development
Finance
Agency
dated
as
of
November
4,2005
10-K
(000-15006)
10.41
3/16/06
10.8
Third
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
December
20,
2006
10-K/A
(000-15006)
10.7
12/23/10
10.9
Fifth
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
October
3,
2008
10-K/A
(000-15006)
10.8
12/23/10
10.10
Sixth
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
August
20,
2009
10-K/A
(000-15006)
10.9
12/23/10
10.11
Seventh
Amendment
to
Lease
by
and
between
the
Company
and
theMassachusetts
Development
Finance
Agency
dated
as
of
June
22,
2010
10-Q
(000-15006)
10.1
8/5/10
10.12
Eighth
Amendment
to
Lease
by
and
between
the
Company
and
theMassachusetts
Development
Finance
Agency
dated
as
of
November
1,2015
10-K/A
(000-15006)
10.12
2/25/16
123
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
10.13
Lease
Agreement
dated
as
of
May
1,
2013
by
and
between
CrownPerryville,
LLC
and
the
Company.
10-Q
(000-15006)
10.1
5/03/13
10.14
First
Amendment
to
Lease
between
Company
and
Crown
Perryville,
LLCdated
as
of
June
17,
2015
10-Q
(000-15006)
10.2
8/10/15
Material Contracts—License, Collaboration, Supply and Distribution Agreements
*10.15
License
Agreement
dated
as
of
November
1,
2005
by
and
between
TheRockefeller
University
and
the
Company
S-4
(333-148291)
10.2
1/18/08
*10.16
Assignment
and
License
Agreement,
as
amended,
dated
April
6,
2004
byand
among
Medarex,
Inc.,
GenPharm
International,
Inc.
and
the
Company
S-4
(333-148291)
10.4
1/18/08
*10.17
Research
and
Commercialization
Agreement,
as
amended,
dated
as
ofApril
6,
2004
by
and
among
Medarex,
Inc.,
GenPharm
International,
Inc.and
the
Company
S-4
(333-148291)
10.5
1/18/08
*10.18
Exclusive
Patent
and
Know-How
License
Agreement
dated
as
ofNovember
5,
2008
between
the
Company
and
the
University
ofSouthampton
10-K
(000-15006)
10.47
3/2/09
*10.19
License
and
Assignment
Agreement,
between
Amgen
Inc.
and
theCompany
dated
March
16,
2009
10-K/A
(000-15006)
10.1
12/23/10
*10.20
Collaboration
Agreement
dated
June
18,
2004
between
Seattle
Geneticsand
the
Company
10-K
(000-15006)
10.27
3/12/10
*10.21
Second
Restated
Collaboration
Agreement
dated
April
12,
2004
andamended
October
19,
2004
between
Abgenix
Inc.
and
the
Company
10-K
(000-15006)
10.28
3/12/10
10.22
Amgen
Letter
Agreement,
by
and
between
the
Company
and
AmgenFremont,
Inc.
dated
May
2,
2009
10-K
(000-15006)
10.29
3/12/10
*10.23
License
Agreement
between
Medarex
and
Company
dated
September
17,2010
10-Q/A
(000-15006)
10.3
12/23/10
*10.24
License
and
Option
Agreement
by
and
between
MedImmune,
LLC
andthe
Company,
dated
July
24,
2013,
as
amended
by
the
Amendment,
datedOctober
27,
2015
Filed
herewith
*10.25
Third
Amended
and
Restated
License
Agreement
by
and
between
YaleUniversity
and
the
Company,
dated
March
14,
2013,
as
amended
by
theAmendments,
dated
March
21,
2014
and
December
1,
2014
Filed
herewith
Material Contracts—Stock Purchase, Financing and Credit Agreements
10.26
Sales
Agreement,
dated
May
19,
2016,
by
and
between
CelldexTherapeutics,
Inc.
and
Cantor
Fitzgerald
&
Co.
8-K
(000-15006)
1.1
5/19/16 124
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
Material Contracts—Management Contracts and Compensatory Plans
†10.27
2008
Stock
Option
and
Incentive
Plan,
as
amended
and
restated
Filed
herewith
†10.28
2004
Employee
Stock
Purchase
Plan,
as
amended
and
restated
Filed
herewith
†10.29
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Anthony
S.
Marucci
8-K
(000-15006)
10.1
12/29/17
†10.30
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Sam
Martin
8-K
(000-15006)
10.2
12/29/17
†10.31
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Tibor
Keler,
Ph.D.
8-K
(000-15006)
10.3
12/29/17
†10.32
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Ronald
Pepin,
Ph.D.
8-K
(000-15006)
10.4
12/29/17
†10.33
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Sarah
Cavanaugh
8-K
(000-15006)
10.5
12/29/17
†10.34
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Margo
Heath-Chiozzi,
M.D.
8-K
(000-15006)
10.6
12/29/17
†10.35
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Elizabeth
Crowley
8-K
(000-15006)
10.7
12/29/17
†10.36
Amended
and
Restated
Employment
Agreement,
dated
as
of
January
1,2018,
by
and
between
Celldex
Therapeutics,
Inc.
and
Richard
Wright,Ph.D.
8-K
(000-15006)
10.8
12/29/17
†10.37
Form
of
Stock
Option
Agreement
8-K
(000-15006)
10.1
1/25/10
†10.38
Form
of
Restricted
Stock
Award
10-K
(000-15006)
10.42
3/12/10
21.1
Subsidiaries
of
Celldex
Therapeutics,
Inc.
Filed
herewith
23.1
Consent
of
PricewaterhouseCoopers
LLP,
an
Independent
RegisteredPublic
Accounting
Firm
Filed
herewith
31.1
Certification
of
President
and
Chief
Executive
Officer
Filed
herewith
31.2
Certification
of
Senior
Vice
President
and
Chief
Financial
Officer
Filed
herewith
32
Section
1350
Certifications
Furnished
herewith
Item
16.
FORM
10-K
SUMMARY
None.125
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
101
XBRL
Instance
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Schema
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Calculation
Linkbase
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Definition
Linkbase
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Label
Linkbase
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Presentation
Linkbase
Document
Filed
herewith
*Confidential
treatment
has
been
requested
for
certain
provisions
of
this
Exhibit
pursuant
to
Rule
24b-2
promulgated
under
the
SecuritiesExchange
Act
of
1934,
as
amended.
†Indicates
a
management
contract
or
compensation
plan,
contract
or
arrangement. Table
of
ContentsSIGNATURES
Pursuant
to
the
requirements
of
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
the
registrant
has
duly
caused
this
report
to
be
signed
on
its
behalfby
the
undersigned,
thereunto
duly
authorized.
Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
this
report
has
been
signed
by
the
following
persons
on
behalf
of
the
registrant
and
in
thecapacities
and
on
the
dates
indicated.126
CELLDEX
THERAPEUTICS,
INC.
By:
/s/
ANTHONY
S.
MARUCCI
Date
Anthony
S.
MarucciMarch
7,
2018
President and Chief Executive OfficerSignature
Title
Date
/s/
ANTHONY
S.
MARUCCI
Anthony
S.
Marucci
President,
Chief
Executive
Officer,
and
Director
(Principal
Executive
Officer)
March
7,
2018/s/
SAM
MARTIN
Sam
Martin
Senior
Vice
President,
Chief
Financial
Officer
and
Treasurer
(Principal
Financial
and
Accounting
Officer)
March
7,
2018/s/
LARRY
ELLBERGER
Larry
Ellberger
Director,
Chairman
of
the
Board
of
Directors
March
7,
2018/s/
KEITH
L.
BROWNLIE
Keith
L.
Brownlie
Director
March
7,
2018/s/
HERBERT
J.
CONRAD
Herbert
J.
Conrad
Director
March
7,
2018/s/
JAMES
J.
MARINO
James
J.
Marino
Director
March
7,
2018/s/
GERALD
MCMAHON
Gerald
McMahon,
Ph.D.
Director
March
7,
2018/s/
HARRY
H.
PENNER,
JR.
Harry
H.
Penner,
Jr.
Director
March
7,
2018/s/
KAREN
L.
SHOOS
Karen
L.
Shoos
Director
March
7,
2018 Exhibit 10.24
Execution Version
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
LICENSE
AND
OPTION
AGREEMENT
BY
AND
BETWEEN
MEDIMMUNE,
LLC
AND
BULLDOG
PHARMACEUTICALS,
INC.
Table
of
Contents
Page
ARTICLE
1DEFINITIONS1
ARTICLE
2GRANT
OF
RIGHTS18
ARTICLE
3DEVELOPMENT
AND
REGULATORY20
ARTICLE
4COMMERCIALIZATION26
ARTICLE
5OPTION
RIGHTS26
ARTICLE
6PAYMENTS33
ARTICLE
7OWNERSHIP
OF
INTELLECTUAL
PROPERTY
RIGHTS40
ARTICLE
8CONFIDENTIALITY47
ARTICLE
9REPRESENTATIONS
AND
WARRANTIES53
ARTICLE
10INDEMNIFICATION
AND
INSURANCE58
ARTICLE
11TERM
AND
TERMINATION61
ARTICLE
12MISCELLANEOUS66
Exhibits:
Schedules:
i
LICENSE
AND
OPTION
AGREEMENT
This
License
and
Option
Agreement
(this
“
Agreement
”)
is
entered
into
and
made
effective
as
of
the
24th
day
of
July,
2013
(the
“
Effective
Date
”),
byand
between
MedImmune,
LLC,
a
limited
liability
company
organized
and
existing
under
the
laws
of
Delaware,
having
a
principal
office
located
at
OneMedImmune
Way,
Gaithersburg,
MD
20878
(“
MedImmune
”),
and
Bulldog
Pharmaceuticals,
Inc.,
a
company
organized
and
existing
under
the
laws
of
the
BritishVirgin
Islands,
having
a
registered
office
located
at
Midocean
Chambers,
Road
Town,
Tortola,
British
Virgin
Islands
(“
Kolltan
”).
MedImmune
and
Kolltan
areeach
referred
to
herein
by
name
or
as
a
“
Party
”
or,
collectively,
as
“
Parties
.”
RECITALS
WHEREAS,
Kolltan
is
a
wholly-owned
subsidiary
of
Kolltan
Pharmaceuticals,
Inc.;
WHEREAS,
Kolltan
possesses
expertise
in
the
Research,
Development,
Manufacture
and
Commercialization
(each
as
defined
below)
of
pharmaceuticalproducts;
WHEREAS,
MedImmune
controls
certain
intellectual
property
and
regulatory
materials
and
biological
materials
related
to
the
Licensed
Antibody
(asdefined
below);
WHEREAS,
Kolltan
is
interested
in
receiving
certain
licenses
and
other
rights
under
which
it
may
Research,
Develop,
Manufacture
and
Commercializethe
Licensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
and
Follow-On
Products
(each
as
defined
below),
in
each
case
in
the
Field
in
the
Territory
(eachas
defined
below),
and
MedImmune
is
willing
to
grant
Kolltan
such
licenses
and
other
rights
on
the
terms
and
conditions
set
forth
in
this
Agreement;
and
WHEREAS,
the
Parties
desire
to
set
forth
herein
the
terms
and
conditions
of
the
licenses
and
other
rights
to
enable
Kolltan
to
Research,
Develop,Manufacture
and
Commercialize
the
Licensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
and
Follow-On
Products.
NOW,
THEREFORE,
in
consideration
of
the
premises
and
mutual
covenants
herein
contained,
and
for
other
good
and
valuable
consideration,
the
receiptand
sufficiency
of
which
are
hereby
acknowledged,
the
Parties
agree
as
follows:
ARTICLE 1 DEFINITIONS
As
used
in
this
Agreement,
the
following
terms
shall
have
the
meanings
set
forth
in
this
ARTICLE
1:
1.1
“
Accounting
Standards
”
means
generally
accepted
accounting
principles
(GAAP)
as
practiced
in
the
United
States;
provided,
however,
thatfrom
and
after
such
time
(if
any)
as
Kolltan
elects
to
maintain
its
books
in
accordance
with
International
Financial
Reporting
Standards
(“
IFRS
”),
AccountingStandards
shall
mean
IFRS.
1
1.2
“
Affiliate
”
means,
as
to
a
Person,
any
other
Person
that,
directly
or
indirectly
through
one
or
more
intermediaries,
controls,
is
controlled
by
oris
under
common
control
with
said
first
Person,
regardless
of
whether
such
Affiliate
is
an
Affiliate
on
the
Effective
Date
or
becomes
an
Affiliate
after
the
EffectiveDate.
For
purposes
of
this
definition,
a
Person
shall
be
deemed
to
“control”
another
Person
if
it
(a)
owns,
directly
or
indirectly,
beneficially
or
legally,
more
thanfifty
percent
(50%)
of
the
outstanding
voting
securities
or
capital
stock
(or
such
lesser
percentage
which
is
the
maximum
allowed
to
be
owned
by
a
Person
in
aparticular
jurisdiction)
of
such
other
Person,
or
has
other
comparable
ownership
interest
with
respect
to
any
Person
other
than
a
corporation;
or
(b)
has
the
power,whether
pursuant
to
contract,
ownership
of
securities
or
otherwise,
to
direct
the
general
management
and
policies
of
the
Person.
1.3
“
Annual
Net
Sales
”
means,
for
any
Licensed
Product
or
Follow-On
Product,
as
the
case
may
be,
in
any
Calendar
Year,
aggregate
Net
Sales
ofsuch
Licensed
Product
or
Follow-On
Product,
as
applicable,
in
such
Calendar
Year,
but
excluding
any
Net
Sales
of
such
Licensed
Product
or
Follow-On
Product,as
applicable,
in
any
country
if
the
applicable
sale
is
made
after
the
expiration
of
the
Royalty
Term
for
such
Licensed
Product
or
Follow-On
Product,
as
applicable,in
such
country.
1.4
“
Antibody
”
means
any
antibody,
or
any
antigen-binding
fragment
thereof,
with
a
unique
amino
acid
sequence.
Two
antibodies
that
havedifferent
amino
acid
sequences
(even
if
differing
by
only
a
single
amino
acid)
shall
be
deemed
to
be
different
Antibodies.
1.5
“
Applicable
Law
”
or
“
Applicable
Laws
”
means
all
laws,
statutes,
rules,
regulations,
orders,
judgments,
or
ordinances
having
the
effect
of
lawof
any
federal,
national,
multinational,
state,
provincial,
county,
city
or
other
political
subdivision
that
may
be
in
effect
from
time
to
time
and
applicable
to
theactivities
contemplated
by
this
Agreement.
1.6
“
BLA
”
means
a
Biologics
License
Application
and
any
amendments
or
supplements
thereto
filed
with
the
FDA
pursuant
to
21
C.F.R.
Part
601or
any
other
application
that
is
required
for
the
purpose
of
marketing
and
selling
a
biological
product
and
is
filed
with
a
Regulatory
Authority
outside
the
UnitedStates,
including,
with
respect
to
the
EU,
a
Product
License
Application,
Marketing
Authorization
Application
and/or
manufacturing
and
importation
license.
1.7
“
Business
Day
”
means
a
day
on
which
banking
institutions
in
New
York,
NY
are
open
for
business,
excluding
any
Saturday
or
Sunday.
1.8
“
Calendar
Quarter
”
means
a
period
of
three
(3)
consecutive
months
ending
on
the
last
day
of
March,
June,
September,
or
December.
1.9
“
Calendar
Year
”
means
a
period
of
time
commencing
on
January
1
and
ending
on
the
following
December
31.
1.10
“
Clinical
Trial(s)
”
means
individually
and
collectively
a
Phase
1
Clinical
Trial,
a
Phase
1b/2a
Clinical
Trial,
a
Phase
2
Clinical
Trial,
a
Phase
3Clinical
Trial,
a
Phase
4
Study
and
a
Post
Approval
Study.
2
1.11
“
Combination
Product
”
means
a
Licensed
Product
or
Follow-On
Product,
as
the
case
may
be,
that
(a)
includes
the
Licensed
Antibody
or
aFollow-On
Antibody,
as
applicable,
as
an
active
pharmaceutical
ingredient,
together
with
one
or
more
other
active
ingredients,
and
(b)
is
sold
either
as
a
fixed
doseor
with
separate
doses
in
a
single
package.
1.12
“
Commercialization
”
or
“
Commercialize
”
means
any
activities
directed
to
obtaining
pricing
and/or
reimbursement
approvals,
marketing,promoting,
distributing,
importing,
offering
to
sell,
and/or
selling
a
product,
including
post-Regulatory
Approval
promotional
activities
conducted
at
scientificconferences
or
similar
events.
1.13
“
Commercially
Reasonable
Efforts
”
means,
with
respect
to
a
Party,
such
level
of
efforts
required
to
carry
out
an
obligation
in
a
sustainedmanner
consistent
with
the
efforts
normally
used
by
pharmaceutical
or
biopharmaceutical
companies,
as
applicable,
of
comparable
size
and
resources
to
such
Party,for
a
similar
activity
with
respect
to
the
Research,
Development,
Manufacture
or
Commercialization
of
products
that
(a)
are
at
a
similar
stage
in
their
product
life
asthe
relevant
Licensed
Product
or
Follow-On
Product,
as
applicable,
and
(b)
that
have
commercial
and
market
potential
similar
to
the
relevant
Licensed
Product
orFollow-On
Product,
as
applicable,,
taking
into
account
issues
of
intellectual
property
scope,
subject
matter
and
coverage,
safety
and
efficacy,
product
profile,competitiveness
with
respect
to
Third
Party
products
in
the
marketplace,
and
profitability
(including
pricing
and
reimbursement
status
achieved
or
likely
to
beachieved).
1.14
“
Competing
Product
”
means
any
pharmaceutical
product
that
(a)
comprises
or
incorporates
an
Antibody
as
an
active
pharmaceutical
ingredientalone
or
in
combination
with
one
or
more
other
active
agents
and
(b)
operates
by
targeting
HER-3.
1.15
“
Control
,”
“
Controls
,”
“
Controlled
”
or
“
Controlling
”
means,
with
respect
to
any
Know-How,
Patent,
Regulatory
Documentation
or
otherintellectual
property
right,
the
possession
(whether
by
ownership
or
license,
other
than
pursuant
to
this
Agreement)
by
a
Party
of
the
right
to
assign
or
grant
accessto,
or
grant
a
license
or
sublicense
under,
such
Know-How,
Patent,
Regulatory
Documentation
or
other
intellectual
property
right
as
provided
for
herein
withoutviolating
the
terms
of
any
agreement
or
other
arrangement
with
any
Third
Party
existing
at
the
time
such
Party
would
be
required
hereunder
to
make
suchassignment
or
grant
such
access,
license
or
sublicense;
provided,
however,
that
any
Know-How,
Patent,
Regulatory
Documentation
or
other
intellectual
propertyright
that
is
licensed
or
acquired
by
a
Party
from
a
Third
Party
after
the
Effective
Date
(other
than
rights
arising
from
the
In-License
Agreements)
that
wouldotherwise
be
considered
to
be
under
the
Control
of
such
Party
shall
not
be
deemed
to
be
under
the
Control
of
such
Party
if
the
application
of
such
definition
in
thecontext
of
any
licenses
or
sublicenses
granted
to
the
other
Party
under
this
Agreement
would
require
the
granting
Party
to
make
additional
payments
or
royalties
tosuch
Third
Party
in
connection
with
such
license
or
sublicense
grants
pursuant
to
an
arm’s
length
agreement
between
the
granting
Party
and
such
Third
Party,unless
the
other
Party
agrees
to
pay
such
additional
payments
or
royalties
to
the
Third
Party.
1.16
“
Cover
”
or
“
Covered
”
means,
for
any
product,
technology,
process
or
method
and
any
Valid
Claim,
that
the
composition,
manufacture,
use,offer
for
sale,
sale
or
importation
of
such
product
or
the
practice
of
such
technology,
process
or
method
would,
absent
ownership
of
a
3
Patent
that
includes
such
Valid
Claim
or
a
license
or
sublicense
under
such
Valid
Claim,
infringe
such
Valid
Claim
(assuming,
in
the
case
of
a
Valid
Claim
that
hasnot
yet
issued,
that
such
Valid
Claim
had
issued).
A
product,
technology,
process
or
method
shall
be
deemed
Covered
by
a
Patent
if
it
is
Covered
by
at
least
oneValid
Claim
included
in
such
Patent.
1.17
“
Data
Package
Delivery
Date
”
means
the
date
on
which
Kolltan
completes
delivery
to
MedImmune
of
(a)
the
full
data
set
of
clinical
trial
data(including
validated
data
for
primary
and
secondary
endpoints)
in
the
clinical
trial
database
for
a
Phase
1b/2a
Clinical
Trial
of
the
Licensed
Antibody
or
a
LicensedProduct
for
each
of
two
(2)
indications
as
provided
in
Section
5.1.1,
and
(b)
the
clinical
data
and
non-clinical
and/or
Development
data
and
information
required
tobe
delivered
under
Sections
5.1.2
and
5.1.3
together
with
the
full
data
set
described
in
clause
(a)
above.
1.18
“
Develop
”
or
“
Development
”
means
development
activities
relating
to
the
development
of
compounds,
biologics,
or
processes,
andsubmission
of
information
to
a
Regulatory
Authority
for
the
purpose
of
obtaining
Regulatory
Approval
of
a
product.
Development
includes
non-clinical
activities,pharmacology
studies,
toxicology
studies,
manufacturing
process
development
activities,
analytical
method
development
activities,
formulation
developmentactivities,
chemical
analysis,
bioanalytical
analysis,
material
performance
studies
(including
measurements
of
stability,
physical
form,
dissolution,
and
visual
andspectroscopic
analysis),
pharmacokinetic
studies,
clinical
studies,
biomarker
and
companion
diagnostic
discovery
and
development,
regulatory
affairs
activities,and
all
other
activities
relating
to
seeking,
obtaining
or
maintaining
any
Regulatory
Approvals
from
the
FDA
or
any
other
applicable
Regulatory
Authority.
1.19
“
Dollars
”
or
“
$
”
means
the
legal
tender
of
the
United
States.
1.20
“
Dyax
Agreement
”
means
that
certain
Amended
and
Restated
License
Agreement,
dated
July
26,
2012
between
MedImmune
Limited
andDyax
Corp.
1.21
“
EMA
”
means
the
European
Medicines
Agency,
or
any
successor
entity
thereto.
1.22
“
EU
”
means
all
of
the
member
countries
of
the
European
Union
as
of
the
applicable
time
during
the
Term.
For
clarity,
the
member
countries
ofthe
European
Union
as
of
the
Effective
Date
are
Austria,
Belgium,
Bulgaria,
Cyprus,
Czech
Republic,
Denmark,
Estonia,
Finland,
France,
Germany,
Greece,Hungary,
Ireland,
Italy,
Latvia,
Lithuania,
Luxembourg,
Malta,
Netherlands,
Poland,
Portugal,
Romania,
Slovakia,
Slovenia,
Spain,
Sweden,
and
United
Kingdom.
1.23
“
Executive
Officers
”
means
(a)
with
respect
to
Kolltan,
the
Chief
Executive
Officer
of
Kolltan,
and
(b)
with
respect
to
MedImmune,
theExecutive
Vice
President,
Research
and
Development
of
MedImmune.
1.24
“
Existing
IND
”
means
application
number
116023
for
the
treatment
of
advanced
solid
tumors,
filed
with
the
FDA
and
effective
as
ofJanuary
11,
2013.
1.25
“
Existing
Proceeding
”
means
any
post-grant
proceeding
that
is
being
prosecuted
by
MedImmune
or
its
Affiliates
as
of
the
Effective
Date
andthat
relates
to
a
Patent
that
(a)
could
4
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
be
relevant
to
the
exercise
by
Kolltan
of
the
rights,
licenses
and
sublicenses
granted
to
Kolltan
by
MedImmune
under
this
Agreement
(including
the
making,
using,selling,
offering
for
sale
or
import
of
the
Licensed
Antibody
or
any
Licensed
Product,
Follow-On
Antibody
or
Follow-On
Product)
or
(b)
could
otherwise
affect
theResearch,
Development,
Manufacture,
or
Commercialization
of
the
Licensed
Antibody
or
any
Licensed
Product,
Follow-On
Antibody
or
Follow-On
Product.
Forthe
avoidance
of
doubt,
Existing
Proceeding
includes
the
opposition
proceeding
set
forth
in
Exhibit
9.2.6
.
1.26
“
FDA
”
means
the
U.S.
Food
and
Drug
Administration,
or
any
successor
entity
thereto.
1.27
“
FD&C
Act
”
means
the
United
States
Federal
Food,
Drug,
and
Cosmetic
Act,
as
amended.
1.28
“
Field
”
means
any
use
in
humans,
including
diagnosis,
prophylaxis
and
treatment
of
human
disease.
1.29
“
First
Commercial
Sale
”
means,
for
any
Licensed
Product
or
Follow-On
Product,
as
the
case
may
be,
in
any
country,
the
first
sale
or
othertransfer
for
consideration
of
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
in
such
country
by
or
on
behalf
of
Kolltan,
its
Affiliates
or
itsSublicensees
for
use
or
consumption
pursuant
to
a
Regulatory
Approval
(or
as
otherwise
permitted
by
the
applicable
Governmental
Authority)
in
such
country,including
any
sales
or
other
transfers
for
consideration
to
distributors
(subject
to
the
next
sentence),
that
results
in
the
recognition
of
revenue.
Sale
or
other
transferfor
consideration
of
a
Licensed
Product
or
Follow-On
Product,
as
the
case
may
be,
in
a
country
by
Kolltan
to
an
Affiliate
or
Sublicensee
of
Kolltan
shall
notconstitute
a
First
Commercial
Sale
in
such
country
where
such
Affiliate
or
such
Sublicensee
(a)
is
not
the
end
user
of
such
Licensed
Product
or
Follow-On
Product,as
applicable,
and
has
purchased
or
received
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
for
purposes
of
re-selling,
transferring,
distributing
orotherwise
commercially
disposing
of
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
or
(b)
is
solely
acquiring
such
Licensed
Product
or
Follow-OnProduct,
as
applicable,
for
the
purposes
set
forth
in
subsections
(a)-(c)
of
Section
1.98.
In
no
event
shall
any
sales
in
any
country
for
sampling
be
deemed
a
FirstCommercial
Sale
in
such
country.
1.30
“
Follow-On
Antibody
”
means
any
Antibody,
other
than
the
Licensed
Antibody,
that
is
Covered
by
a
claim
of
a
national
stage
application
of
orclaiming
priority
to
Intl.
Appl.
No.
[**].
For
avoidance
of
doubt,
Follow-On
Antibody
includes
any
antibody
or
antigen-binding
fragment
thereof
fused
orconjugated
to
a
molecule,
which
antibody
is
Covered
by
a
claim
of
a
national
stage
application
of
or
claiming
priority
to
Intl.
Appl.
No.
[**].
1.31
“
Follow-On
Product
”
means
any
pharmaceutical
product
(including
all
forms,
presentations,
doses
and
formulations)
that
comprises
orincorporates
any
Follow-On
Antibody
as
an
active
pharmaceutical
ingredient
alone
or
in
combination
with
one
or
more
other
active
agents.
1.32
“
Follow-On
Product
Transaction
”
means
any
sale
by
Kolltan
of,
or
any
grant
of
any
license
or
sublicense
by
Kolltan
under,
Kolltan’s
rights
toCommercialize
any
Follow-On
5
Product;
provided,
however,
that
any
Kolltan
Sale
or
Financing,
or
any
assignment
or
deemed
assignment
of
this
Agreement
by
Kolltan
in
connection
with
aKolltan
Sale
or
Financing,
shall
not
be
deemed
a
Follow-On
Product
Transaction.
1.33
“
Follow-On
Program
”
means
the
Parties’
rights
and
obligations
under
this
Agreement
with
respect
to
Follow-On
Antibodies
and
Follow-OnProducts.
1.34
“
GCP
”
means
the
then-current
standards,
practices
and
procedures
(a)
promulgated
or
endorsed
by
the
FDA
as
set
forth
in
the
guidelinesentitled
“Guidance
for
Industry
E6
Good
Clinical
Practice:
Consolidated
Guidance,”
including
related
regulatory
requirements
imposed
by
the
FDA;
(b)
set
forth
inDirective
2001/20/EC
of
the
European
Parliament
and
of
the
Council
of
4
April
2001
and
Commission
Directive
2005//28/EC
of
8
April
2005;
(c)
set
forth
in
ICHGuideline
for
Good
Clinical
Practice
E6;
(d)
set
forth
in
analogous
Applicable
Laws
of
an
applicable
Regulatory
Authority;
and
(e)
set
forth
in
any
RegulatoryAuthority
documents
or
regulations
that
replace,
amend,
modify,
supplant
or
complement
any
of
the
foregoing.
1.35
“
GLP
”
means
the
then-current
good
laboratory
practice
standards
promulgated
or
endorsed
by
the
FDA
as
defined
in
21
C.F.R.
Part
58,
as
suchregulations
may
be
amended
from
time
to
time,
and
analogous
Applicable
Laws
of
an
applicable
Regulatory
Authority.
1.36
“
GMP
”
means
then-current
standards
for
the
manufacture
of
pharmaceutical
products,
pursuant
to
(a)
the
FD&C
Act
(21
U.S.C.
321
et
seq.);(b)
relevant
United
States
regulations
in
Title
21
of
the
United
States
Code
of
Federal
Regulations
(including
Parts
11,
210,
and
211);
(c)
European
CommunityDirectives
2003/94
and
91/356/EC;
(d)
the
European
Community
Guide
to
Good
Manufacturing
Practice
for
Medicinal
Intermediate
Products;
(e)
ICH
Q7A
GoodManufacturing
Practice
Guidance
for
Active
Pharmaceutical
Ingredients;
(f)
analogous
Applicable
Laws
of
an
applicable
Regulatory
Authority
at
the
time
ofManufacture;
and
(g)
all
additional
Regulatory
Authority
documents
or
regulations
that
replace,
amend,
modify,
supplant
or
complement
any
of
the
foregoing.
1.37
“
Governmental
Authority
”
means
any
United
States
federal,
state
or
local
or
any
non-United
States
government,
or
political
subdivisionthereof,
or
any
multinational
organization
or
authority
or
any
authority,
agency
or
commission
entitled
to
exercise
any
administrative,
executive,
judicial,legislative,
police,
regulatory
or
taxing
authority
or
power,
any
court
or
tribunal
(or
any
department,
bureau
or
division
thereof),
or
any
governmental
arbitrator
orgovernmental
arbitral
body.
1.38
“
HER-3
”
means
the
protein
that
(a)
is
also
known
as
ErbB3
or
EGFR3;
(b)
is
an
alias
of
V-erb-b2
erythroblastic
leukemia
viral
oncogenehomolog
3;
(c)
is
a
member
of
the
ErbB
family
of
receptor
tyrosine
kinases;
and
(d)
has
its
DNA
sequence
located
on
human
chromosome
12q13.
1.39
“
ICH
”
means
the
International
Conference
on
Harmonization
of
Technical
Requirements
for
Registration
of
Pharmaceuticals
for
Human
Use.
6
1.40
“
IND
”
means
an
Investigational
New
Drug
Application
filed
with
FDA
or
a
similar
application
filed
with
an
applicable
Regulatory
Authorityoutside
of
the
United
States
such
as
a
clinical
trial
application
(CTA).
1.41
“
In-License
Agreement
”
means
each
agreement
pursuant
to
which
MedImmune
is
granted
a
license
or
sublicense
under
the
In-Licensed
IP.
Asof
the
Effective
Date,
the
In-License
Agreements
are
the
agreements
set
forth
on
Exhibit
1.41
.
1.42
“
In-Licensed
IP
”
means
the
Patents
and
Know-How
set
forth
on
Exhibit
1.42
.
1.43
“
Insolvency
Event
”
means,
as
to
a
Party,
(a)
the
entry
of
an
order
for
relief
with
respect
to
such
Party
under
the
Bankruptcy
Code
or
any
otherbankruptcy,
insolvency,
reorganization
or
other
similar
act
or
law
of
any
jurisdiction
now
or
hereafter
in
effect;
(b)
the
commencement
of
an
involuntaryproceeding
against
such
Party
under
the
Bankruptcy
Code
or
any
other
bankruptcy,
insolvency,
reorganization
or
other
similar
act
or
law
of
any
jurisdiction
now
orhereafter
in
effect,
if
not
dismissed,
bonded
or
stayed
within
ninety
(90)
days
after
such
commencement;
(c)
the
making
by
such
Party
of
a
general
assignment
forthe
benefit
of
creditors;
or
(d)
the
appointment
of
or
taking
possession
by
a
receiver,
liquidator,
assignee,
custodian,
or
trustee
of
all
or
substantially
all
of
thebusiness
or
property
of
such
Party.
1.44
“
Joint
Information
and
Inventions
”
means
Know-How
that
is
first
made
or
discovered
jointly
by
(a)
one
or
more
employees,
consultants
oragents
of
MedImmune
or
its
Affiliates
and
(b)
one
or
more
employees,
consultants
or
agents
of
Kolltan
or
its
Affiliates,
in
the
course
of
Research,
Development,Manufacture
or
Commercialization
of
the
Licensed
Antibody
and
Licensed
Products.
1.45
“
Joint
IP
”
means
the
Joint
Know-How
and
the
Joint
Patents.
1.46
“
Joint
Know-How
”
means
all
Joint
Information
and
Inventions
except
to
the
extent
disclosed
by
published
Joint
Patents.
1.47
“
Joint
Patents
”
means
Patents
that
Cover
Joint
Information
and
Inventions.
1.48
“
Know-How
”
means
all
tangible
and
intangible
(a)
information,
techniques,
technology,
practices,
trade
secrets,
inventions
(whether
patentableor
not),
methods,
knowledge,
know-how,
strategies,
skill,
experience,
data,
results
(including
pharmacological,
toxicological
and
non-clinical
and
clinical
test
dataand
results,
and
Research
or
Development
data,
reports
and
batch
records),
analytical
and
quality
control
data,
analytical
methods
(including
applicable
referencestandards),
full
batch
documentation
for
all
product
forms,
packaging
records,
release,
stability,
storage
and
shelf-life
data,
Manufacturing
process
information,results
and
descriptions,
and
software
and
algorithms
(but
excluding
any
Regulatory
Documentation)
and
(b)
compositions
of
matter,
cells,
cell
lines,
assays,animal
models
and
physical,
biological
or
chemical
material
(including
reagents
and
antibodies).
1.49
“
Kolltan
Development
Costs
”
means
the
sum
of
(a)
all
Out-of-Pocket
Costs
incurred
by
Kolltan
or
its
Affiliates
under
this
Agreement
as
of
aspecified
time
that
are
specifically
identifiable
to
(i)
the
Research
or
Development
of
the
Licensed
Antibody
or
Licensed
Products
or
(ii)
the
Manufacture
of
theLicensed
Antibody
or
Licensed
Products
in
7
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
support
of
such
Research
or
Development,
including
the
validation,
qualification
and
subsequent
audit
of
Manufacturing
facilities,
and
(b)
an
amount
equal
to
thelesser
of
(x)
the
number
of
Kolltan
employee
hours
attributable
to
Kolltan’s
activities
set
forth
in
the
foregoing
subsections
(i)
and
(ii)
of
clause
(a)
abovemultiplied
by
[**]
Dollars
($[**])
and
(y)
[**]
percent
([**]%)
of
the
amount
described
in
clause
(a)
above.
For
avoidance
of
doubt,
the
Upfront
Fee
shall
not
beincluded
in
the
Kolltan
Development
Costs.
1.50
“
Kolltan
Indemnitees
”
means
Kolltan
and
its
Affiliates
and
Sublicensees
and
the
directors,
officers,
employees
and
consultants
of
Kolltan
andits
Affiliates
and
Sublicenses.
1.51
“
Kolltan
Information
and
Inventions
”
means
Know-How
that
(a)
is
Controlled
by
Kolltan
or
its
Affiliates
during
the
Term
and
(b)
relates
to
theLicensed
Antibody,
any
Licensed
Product,
any
Follow-On
Antibody
or
any
Follow-On
Product,
or
the
Manufacture
of
the
Licensed
Antibody,
any
LicensedProduct,
any
Follow-On
Antibody
or
any
Follow-On
Product;
provided,
however,
that
Kolltan
Information
and
Inventions
excludes
any
Joint
Information
andInventions.
1.52
“
Kolltan
IP
”
means
the
Kolltan
Know-How
and
the
Kolltan
Patents.
1.53
“
Kolltan
Know-How
”
means
all
Kolltan
Information
and
Inventions
except
to
the
extent
disclosed
by
published
Kolltan
Patents.
1.54
“
Kolltan
Patents
”
means
Patents
Controlled
by
Kolltan
or
its
Affiliates
during
the
Term
that
Cover
Kolltan
Information
and
Inventions;provided,
however,
that
Kolltan
Patents
excludes
any
Joint
Patents.
1.55
“
Kolltan
Sale
or
Financing
”
means
(a)
any
transaction
or
series
of
related
transactions
that
results
in
the
sale
or
other
disposition
of
all
orsubstantially
all
of
Kolltan’s
assets;
(b)
any
merger,
consolidation
or
similar
business
combination
involving
Kolltan;
or
(c)
any
issuance,
sale
or
exchange
of
anysecurities
of
Kolltan,
whether
in
a
public
or
private
offering.
1.56
“
Licensed
Antibody
”
means
MedImmune’s
proprietary
Antibody
known
as
MEDI3379
(anti-HER3),
with
respect
to
which
the
Existing
INDhas
been
filed,
and/or
its
parent
Antibody
2C2
(anti-HER3),
or
any
isotype
thereof.
1.57
“
Licensed
Product
”
means
any
pharmaceutical
product
(including
all
forms,
presentations,
doses
and
formulations)
that
comprises
orincorporates
the
Licensed
Antibody
as
an
active
pharmaceutical
ingredient
alone
or
in
combination
with
one
or
more
other
active
agents.
1.58
“
Licensed
Program
”
means
the
Parties’
rights
and
obligations
under
this
Agreement
with
respect
to
the
Licensed
Antibody
and
LicensedProducts.
1.59
“
Lonza
Agreement
”
means
that
certain
Licenses
and
Services
Agreement
made
effective
as
of
January
21,
2005
by
and
between
AstraZenecaAB
and
Lonza
Biologics
PLC,
as
(a)
novated
by
that
certain
Novation
Agreement
effective
January
1,
2007
by
and
among
Lonza
8
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Biologics
PLC,
Lonza
Sales
AG
and
AstraZeneca
AB
and
(b)
amended
by
Amendment
No.
1
made
effective
as
of
March
20,
2009.
1.60
“
Major
Indication
”
means
any
indication
with
a
market
potential
of
at
least
[**]
Dollars
($[**])
in
peak
year
sales
in
the
Territory,
asdetermined
by
Kolltan,
in
consultation
with
MedImmune,
by
reference
to
standard
industry
sources.
1.61
“
Manufacture
”
or
“
Manufacturing
”
means
all
activities
related
to
the
manufacturing
of
a
product
in
all
of
its
forms,
including
test
methoddevelopment,
formulation
development,
process
development,
process
and
product
characterization
(including
upstream
and
downstream
processing),manufacturing
scale-up,
manufacturing
for
use
in
non-clinical
and
clinical
studies,
manufacturing
for
commercial
sale,
packaging,
storage,
qualityassurance/quality
control
development,
quality
control
testing
(including
in-process,
release
and
stability
testing)
and
release
of
product
or
any
component
oringredient
thereof,
and
regulatory
activities
related
to
all
of
the
foregoing.
1.62
“
MedImmune
Additional
Information
and
Inventions
”
means
Know-How
(a)
that
is
Controlled
by
MedImmune
or
its
Affiliates
on
theEffective
Date
or
thereafter
during
the
Term;
(b)
that
relates
to
the
Licensed
Antibody,
any
Licensed
Product,
any
Follow-On
Antibody
or
any
Follow-On
Product;and
(c)
the
practice
of
which
is
reasonably
useful
in
order
to
Research,
Develop
or
Commercialize
the
Licensed
Antibody,
any
Licensed
Product,
any
Follow-OnAntibody
or
any
Follow-On
Product
in
the
Field
in
the
Territory;
provided,
however,
that
MedImmune
Additional
Information
and
Inventions
excludes
anyMedImmune
Information
and
Inventions,
any
MedImmune
Manufacturing
Information
and
Inventions
and
any
Joint
Information
and
Inventions.
1.63
“
MedImmune
Additional
IP
”
means
the
MedImmune
Additional
Know-How
and
the
MedImmune
Additional
Patents.
1.64
“
MedImmune
Additional
Know-How
”
means
all
MedImmune
Additional
Information
and
Inventions
except
to
the
extent
disclosed
bypublished
MedImmune
Additional
Patents.
1.65
“
MedImmune
Additional
Patents
”
means
Patents
Controlled
by
MedImmune
or
its
Affiliates
on
the
Effective
Date
or
thereafter
during
theTerm
that
Cover
MedImmune
Additional
Information
and
Inventions;
provided,
however,
that
MedImmune
Additional
Patents
excludes
any
MedImmune
Patentsand
any
Joint
Patents.
1.66
“
MedImmune
Indemnitees
”
means
MedImmune,
its
Affiliates
and
the
directors,
officers,
employees
and
consultants
of
MedImmune
and
itsAffiliates.
1.67
“
MedImmune
Information
and
Inventions
”
means
Know-How
(a)
that
is
Controlled
by
MedImmune
or
its
Affiliates
on
the
Effective
Date
orthereafter
during
the
Term;
(b)
that
relates
to
the
Licensed
Antibody,
any
Licensed
Product,
any
Follow-On
Antibody
or
any
Follow-On
Product;
and
(c)
thepractice
of
which
is
necessary
to
Research,
Develop
or
Commercialize
the
Licensed
Antibody,
any
Licensed
Product,
any
Follow-On
Antibody
or
any
Follow-OnProduct
in
the
Field
in
the
Territory;
provided,
however,
that
MedImmune
9
Information
and
Inventions
excludes
any
MedImmune
Manufacturing
Information
and
Inventions
and
any
Joint
Information
and
Inventions.
1.68
“
MedImmune
IP
”
means
the
MedImmune
Know-How
and
the
MedImmune
Patents.
1.69
“
MedImmune
Know-How
”
means
all
MedImmune
Information
and
Inventions
except
to
the
extent
disclosed
by
published
MedImmunePatents.
1.70
“
MedImmune
Manufacturing
Information
and
Inventions
”
means
Know-How
(a)
that
is
Controlled
by
MedImmune
or
its
Affiliates
on
theEffective
Date
or
thereafter
during
the
Term
and
(b)
either
(i)
the
practice
of
which
is
necessary
in
order
to
Manufacture
the
Licensed
Antibody,
any
LicensedProduct,
any
Follow-On
Antibody
or
any
Follow-On
Product
in
the
Field
in
the
Territory
or
(ii)
is
expressly
disclosed
in
the
Existing
IND;
provided,
however,
thatMedImmune
Manufacturing
Information
and
Inventions
excludes
any
Joint
Information
and
Inventions.
For
avoidance
of
doubt,
MedImmune
ManufacturingInformation
and
Inventions
shall
not
include
any
Know-How
related
to
MedImmune
proprietary
cell
culture
media
and
nutrient
feeds
used
in
the
Manufacturingprocess.
1.71
“
MedImmune
Manufacturing
Know-How
”
means
all
MedImmune
Manufacturing
Information
and
Inventions
except
to
the
extent
disclosed
bypublished
MedImmune
Manufacturing
Patents.
1.72
“
MedImmune
Manufacturing
Patents
”
means
Patents
Controlled
by
MedImmune
or
its
Affiliates
on
the
Effective
Date
or
thereafter
during
theTerm
that
Cover
MedImmune
Manufacturing
Information
and
Inventions;
provided,
however,
that
MedImmune
Manufacturing
Patents
excludes
any
Joint
Patents;and
provided,
further,
that
any
Patents
that
qualify
as
both
(a)
MedImmune
Manufacturing
Patents
and
(b)
either
MedImmune
Patents
or
MedImmune
AdditionalPatents
shall,
for
purposes
of
ARTICLE
7,
be
treated
as
MedImmune
Patents
or
MedImmune
Additional
Patents,
as
applicable.
1.73
“
MedImmune
Patents
”
means
Patents
Controlled
by
MedImmune
or
its
Affiliates
on
the
Effective
Date
or
thereafter
during
the
Term
thatCover
MedImmune
Information
and
Inventions;
provided,
however,
that
MedImmune
Patents
excludes
any
Joint
Patents.
1.74
“
MRC
Agreement
”
means
that
certain
Agreement,
dated
January
7,
1997,
between
Medical
Research
Council,
Cambridge
AntibodyTechnology
Limited
and
Cambridge
Antibody
Technology
Group
plc,
as
may
be
amended
from
time
to
time.
1.75
“
Net
Sales
”
means,
with
respect
to
Licensed
Products
or
Follow-On
Products,
as
the
case
may
be,
the
gross
amounts
billed
or
invoiced
by
or
onbehalf
of
Kolltan,
its
Affiliates
or
its
Sublicensees
to
Third
Parties
that
are
not
Sublicensees
for
the
sale
or
other
transfer
for
consideration
of
Licensed
Products
orFollow-On
Product,
as
applicable,
less
the
following
deductions,
determined
in
each
case
in
accordance
with
the
Accounting
Standards:
(a)
normal
and
customary
trade,
quantity
or
prompt
settlement
discounts
allowed
and
taken;
10
(b)
refunds,
chargebacks
and
any
other
allowances
given
and
taken
which
effectively
reduce
the
gross
amounts
billed
or
invoiced;
(c)
product
returns,
credits,
allowances
and
bad
debt
write-offs;
(d)
rebates,
reimbursements,
fees,
taxes
or
similar
payments
to
(i)
wholesalers
and
other
distributors,
pharmacies
and
otherretailers,
buying
groups
(including
group
purchasing
organizations),
health
care
insurance
carriers,
pharmacy
benefit
management
companies,
health
maintenanceorganizations,
governmental
entities,
or
other
institutions
or
health
care
organizations
to
the
extent
actually
paid
or
credited;
or
(ii)
patients
and
other
Third
Partiesarising
in
connection
with
any
program
that
provides
low
income,
uninsured
or
other
patients
the
opportunity
to
obtain
discounted
Licensed
Products
or
Follow-OnProduct,
as
applicable;
(e)
discounts
mandated
by,
or
granted
to
meet
the
requirements
of,
Applicable
Law,
including
required
chargebacks
andretroactive
price
reductions;
(f)
transportation,
freight,
postage
charges
and
other
charges
such
as
insurance,
relating
thereto,
in
each
case
included
as
aspecific
line
item
on
a
bill
or
an
invoice
to
such
Third
Parties;
and
(g)
taxes,
excises
or
other
governmental
charges
upon
or
measured
by
the
production,
sale,
transportation,
delivery
or
use
ofgoods,
in
each
case
included
as
a
specific
line
item
on
a
bill
or
an
invoice
to
such
Third
Parties.
Sales
or
other
transfers
for
consideration
of
Licensed
Products
or
Follow-On
Products,
as
the
case
may
be,
(1)
between
Kolltan
and
its
Affiliates
and/or
itsSublicensees
(except
to
the
extent
that
such
Affiliates
or
Sublicensees
are
end
users
of
such
Licensed
Products
or
Follow-On
Products,
as
applicable)
or(2)
provided
to
Third
Parties
without
charge,
in
connection
with
research
and
development,
Clinical
Trials,
compassionate
use,
humanitarian
and
charitabledonations,
or
indigent
programs
or
for
use,
in
reasonable
and
customary
quantities,
as
samples,
shall
in
each
case
((1)
and
(2))
be
excluded
from
the
computation
ofNet
Sales,
and
no
payments
will
be
payable
on
such
sales
or
such
other
transfers
for
consideration.
If
a
Licensed
Product
or
Follow-On
Product
is
sold
or
otherwise
commercially
disposed
of
for
consideration
other
than
cash
or
in
a
transaction
that
is
not
at
arm’slength
between
the
buyer
and
the
seller,
then
the
gross
amount
to
be
included
in
the
calculation
of
Net
Sales
shall
be
the
amount
that
would
have
been
invoiced
hadthe
transaction
been
conducted
at
arm’s
length
and
for
cash.
Such
amount
that
would
have
been
invoiced
shall
be
determined,
wherever
possible,
by
reference
tothe
average
selling
price
of
the
relevant
Licensed
Product
or
Follow-On
Product
in
arm’s
length
transactions
in
the
relevant
country.
Notwithstanding
the
foregoing,
to
the
extent
a
Licensed
Product
or
Follow-On
Product,
as
the
case
may
be,
is
sold
as
a
Combination
Product:
(i)
if,
on
a
country-by-country
basis,
each
of
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
and
the
otheractive
ingredient(s)
in
such
Combination
Product
are
sold
separately
in
a
country,
Net
Sales
with
respect
to
such
11
Combination
Product
in
such
country
for
the
purpose
of
determining
milestones
and
royalties
due
hereunder
shall
be
calculated
by
multiplying
the
actual
Net
Salesof
the
Combination
Product
in
such
country
by
the
fraction
A/(A+B),
where
“A”
is
the
total
weighted
(by
sales
volume)
average
Net
Sales
price
of
such
LicensedProduct
or
Follow-On
Product,
as
applicable,
as
sold
separately
in
such
country
and
“B”
is
the
total
weighted
(by
sales
volume)
average
net
sales
(calculated
in
amanner
analogous
to
the
manner
in
which
Net
Sales
are
calculated
as
set
forth
above)
price
of
such
other
active
ingredient(s)as
sold
separately
in
such
country;
(ii)
if,
on
a
country-by-country
basis,
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
is
sold
separately
in
acountry
but
the
other
active
ingredient(s)
in
such
Combination
Product
are
not
sold
separately
in
such
country,
Net
Sales
with
respect
to
such
Combination
Productin
such
country
for
the
purpose
of
determining
milestones
and
royalties
due
hereunder
shall
be
calculated
by
multiplying
the
actual
Net
Sales
of
the
CombinationProduct
in
such
country
by
the
fraction
A/C,
where
“A”
is
the
total
weighted
(by
sales
volume)
average
Net
Sales
price
of
the
Licensed
Product
or
Follow-OnProduct,
as
applicable,
as
sold
separately
in
such
country
and
“C”
is
the
total
weighted
(by
sales
volume)
average
Net
Sales
price
of
the
Combination
Product
insuch
country;
(iii)
if,
on
a
country-by-country
basis,
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
is
not
sold
separatelyin
a
country,
but
each
of
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
and
the
other
active
ingredient(s)
in
such
Combination
Product
are
soldseparately
in
at
least
one
country,
Net
Sales
with
respect
to
such
Combination
Product
in
such
first
country
for
the
purpose
of
determining
milestones
and
royaltiesdue
hereunder
shall
be
calculated
by
multiplying
the
actual
Net
Sales
of
such
Combination
Product
in
such
first
country
by
the
fraction
D/(D+E),
where
“D”
is
theworldwide
average
Net
Sales
price
of
the
Licensed
Product
or
Follow-On
Product,
as
applicable,
as
sold
separately,
and
“E”
is
the
worldwide
average
net
sales(calculated
in
a
manner
analogous
to
the
manner
in
which
Net
Sales
are
calculated
as
set
forth
above)
price
of
the
other
active
ingredients
included
in
theCombination
Product
as
sold
separately;
and
(iv)
if,
on
a
country-by-country
basis,
none
of
clauses
(i)
through
(iii)
above
is
applicable
with
respect
to
a
country,
NetSales
with
respect
to
such
Combination
Product
in
such
country
for
the
purpose
of
determining
milestones
and
royalties
due
hereunder
shall
be
determined
by
theParties
in
good
faith
based
on
the
fair
market
value
of
the
contribution
of
the
Licensed
Product
or
Follow-On
Product,
as
applicable,
to
the
total
fair
market
value
ofthe
Combination
Product,
using,
to
the
extent
practicable,
the
principles
outlined
in
clauses
(i)
through
(iii)
above.
1.76
“
Out-of-Pocket
Costs
”
means
amounts
actually
paid
by
a
Party
or
its
Affiliates
to
a
Third
Party
that
are
identifiable
to
the
applicable
activitiesunder
this
Agreement,
which
amounts
or
commitments
are
not
cancelable
by
such
Party
without
penalty
or
otherwise
reasonably
capable
of
recovery
from
suchThird
Party.
1.77
“
Patent
”
means
(a)
all
patents
and
patent
applications
in
any
country
or
supranational
jurisdiction,
and
(b)
any
substitutions,
divisionals,continuations,
continuations-in-part,
provisional
applications,
reissues,
renewals,
registrations,
confirmations,
re-examinations,
12
extensions,
supplementary
protection
certificates
and
the
like
of
any
such
patents
or
patent
applications.
1.78
“
Patent
Matter
”
means
any
Dispute
that
relates
to
the
inventorship,
infringement,
enforceability
or
validity
of
any
Patent.
1.79
“
Person
”
means
any
individual,
partnership,
joint
venture,
limited
liability
company,
corporation,
firm,
trust,
association,
unincorporatedorganization,
governmental
authority
or
agency,
or
any
other
entity
not
specifically
listed
herein.
1.80
“
Phase
1
Clinical
Trial
”
means
a
human
clinical
trial
that
is
intended
to
initially
evaluate
the
safety
and/or
pharmacological
effect
of
a
productor
that
would
otherwise
satisfy
the
requirements
of
21
C.F.R.
312.21(a)
or
an
equivalent
clinical
trial
in
a
country
other
than
the
United
States.
1.81
“
Phase
1b/2a
Clinical
Trial
”
means
a
human
clinical
trial
of
a
product
as
a
single
agent
or
in
combination
for
any
indication
that
(a)
is
intendedfor
dose
exploration,
examination
of
pharmacological
or
clinical
activity
(including
dose
response,
dose
escalation,
duration
of
effect
or
kinetic/dynamicrelationship
assessments)
and
preliminary
determination
of
efficacy
and
safety
in
the
target
patient
population,
and
(b)
contains
a
sufficient
number
of
wellcharacterized
and
clinically
uniform
subjects
for
the
applicable
indication
using
a
pre-specified
and
uniform
dose,
or,
if
in
combination,
a
fixed
combinationregimen,
to
assess
the
response
rate
and
safety
of
the
investigational
agent.
As
used
herein,
“response
rate”
in
the
case
of
a
Phase
1b/2a
Clinical
Trial
of
theLicensed
Antibody
or
Licensed
Product
must
be
sufficiently
robust,
and
demonstrate
clinical
benefit
compared
to
standard
of
care
(historical
controls
can
be
used),up
to
a
maximum
obligation
of
40
subjects
in
the
uniform
dose
cohort.
1.82
“
Phase
2
Clinical
Trial
”
means
a
human
clinical
trial
for
which
the
primary
endpoints
include
a
determination
of
dose
ranges
or
an
indication
ofefficacy
of
a
product
in
patients
being
studied
as
described
in
21
C.F.R.
§312.21(b),
or
an
equivalent
clinical
trial
in
a
country
other
than
the
United
States.
1.83
“
Phase
3
Clinical
Trial
”
means
a
human
clinical
trial
that
is
prospectively
designed
to
demonstrate
statistically
whether
a
product
is
safe
andeffective
for
use
in
humans
in
the
indication
being
investigated
in
a
manner
sufficient
to
obtain
Regulatory
Approval
to
market
such
product
in
patients
having
thedisease
or
condition
being
studied
as
described
in
21
C.F.R.
§312.21(c),
or
an
equivalent
clinical
trial
in
a
country
other
than
the
United
States.
1.84
“
Phase
4
Study
”
means
(a)
a
human
clinical
trial
for
a
product
for
an
indication
that
is
required
by
a
Regulatory
Authority
as
a
condition
of
(butis
not
completed
before)
obtaining
the
initial
Regulatory
Approval
for
such
product
for
such
indication
and
(b)
any
trial,
test
or
study
that
is
required
or
requestedby
a
Regulatory
Authority
as
a
condition
of
maintaining
the
initial
Regulatory
Approval
for
a
product
for
an
indication,
excluding
any
Post
Approval
Study.
1.85
“
Post
Approval
Study
”
means
any
human
clinical
study
or
other
test
or
study
with
respect
to
a
product
for
an
indication
that
is
not
required
inorder
to
obtain
or
maintain
Regulatory
Approval
for
such
product
for
such
indication.
For
clarity,
any
human
clinical
study
13
that
is
intended
to
expand
the
product
labeling
for
such
product
shall
be
deemed
not
to
be
a
Post
Approval
Study.
Subject
to
the
foregoing,
Post
Approval
Studymay
include
epidemiological
studies,
modeling
and
pharmacoeconomic
studies,
post-marketing
surveillance
studies,
investigator
or
company
sponsored
or
initiatedstudies
and
health
economics
studies.
1.86
“
Product
Acquisition
Price
”
means
the
greater
of
(a)
the
applicable
Product
FMV
and
(b)
the
Kolltan
Development
Costs
as
of
the
end
of
thecalendar
month
immediately
preceding
the
calendar
month
in
which
the
applicable
payment
is
made
in
accordance
with
this
Agreement.
1.87
“
Product
FMV
”
means
the
fair
market
value
of
the
Product
Rights
based
on
a
calculation
of
risk
adjusted
net
present
value
and,
if
deemednecessary
by
the
Panel,
using
one
or
more
additional
standard
methodologies
generally
accepted
in
the
valuation
industry
(including
review
of
comparableprograms).
1.88
“
Product
Rights
”
means,
as
of
the
applicable
time
under
this
Agreement,
(a)
all
right,
title
and
interest
of
Kolltan
or
its
Affiliates
in
and
to
theLicensed
Antibody
and
any
Licensed
Products,
including
the
rights,
licenses
and
sublicenses
granted
by
MedImmune
hereunder,
(b)
to
the
extent
not
included
inclause
(a)
above,
the
assignments
to
be
made
by
Kolltan
pursuant
to
Section
11.7.2(f),
and
(c)
to
the
extent
not
included
in
clause
(a)
above,
the
licenses
to
begranted
by
Kolltan
pursuant
to
Section
11.7.2(g),
in
each
of
the
foregoing
cases
by
reference
to
then-existing
and
future
plans
for
Development
of
the
LicensedAntibody
and
Licensed
Products
as
reflected
in
any
ongoing
schedule
of
activities
or
otherwise
in
any
Development
plans
to
which
Kolltan
has
committed,including
for
the
specific
indications
included
in
any
completed
or
in-progress
Phase
1b/2a
Clinical
Trials
with
respect
to
the
Licensed
Antibody
and
LicensedProducts,
including
the
estimated
costs
for
Development.
1.89
“
Program
”
means
each
of
the
Follow-On
Program
and
the
Licensed
Program.
1.90
“
Qualified
Bidder
”
means
any
Third
Party
bidder
participating
in
the
auction
conducted
by
Kolltan
pursuant
to
Section
5.4.3(e)(i)
that
isgenerally
regarded
within
the
biopharmaceutical
industry
as
an
entity
that
does
not
(a)
inappropriately
disclose
or
misuse
the
confidential
information
of
itscustomers
and
licensors
or
(b)
infringe
the
patent
rights
or
misappropriate
the
trade
secrets
of
its
customers
and
licensors.
1.91
“
Qualified
Contract
Manufacturer
”
means
any
Third
Party
contract
manufacturer
that
is
generally
regarded
within
the
biopharmaceuticalindustry
as
an
entity
that
does
not
(a)
inappropriately
disclose
or
misuse
the
confidential
information
of
its
customers
and
licensors
or
(b)
infringe
the
patent
rightsor
misappropriate
the
trade
secrets
of
its
customers
and
licensors.
1.92
“
Regulatory
Approval
”
means
all
approvals,
licenses,
registrations
or
authorizations
of
any
applicable
Regulatory
Authority
necessary
for
theCommercialization
(excluding
pricing
and/or
reimbursement
approvals)
of
a
biological
product
for
a
particular
indication
in
a
country.
1.93
“
Regulatory
Authority
”
means
the
FDA
in
the
United
States
or
any
health
authority
in
another
country
that
is
a
counterpart
to
the
FDA
andholds
responsibility
for
14
regulating
development
of
and/or
granting
Regulatory
Approval
for
a
biological
product
in
such
country,
including
the
EMA,
and
any
successor(s)
thereto.
1.94
“
Regulatory
Documentation
”
means
all
INDs
(and/or
clinical
trial
applications),
BLAs
(and/or
marketing
applications),
and
other
regulatoryapplications
submitted
to
any
Regulatory
Authority,
copies
of
Regulatory
Approvals,
regulatory
materials,
drug
dossiers,
master
files
(including
Drug
Master
Files,as
defined
in
21
C.F.R.
§314.420
and
any
non-United
States
equivalents),
and
any
other
reports,
records,
regulatory
correspondence,
meeting
minutes,
telephonelogs,
and
other
materials
relating
to
Regulatory
Approval,
including
any
underlying
safety
and
effectiveness
data
whether
or
not
submitted
to
any
RegulatoryAuthority,
and
any
information
that
relates
to
pharmacology,
toxicology,
chemistry,
manufacturing
and
controls
data,
methods,
processes
and
reports,
executedbatch
records,
safety
and
efficacy,
and
any
safety
database
required
to
be
maintained
for
Regulatory
Authorities,
in
each
case
related
to,
or
required
to
Develop,Manufacture
or
Commercialize,
a
biological
product.
1.95
“
Research
”
means
the
use,
discovery,
identification,
research,
characterization,
modification,
derivatization
and
optimization
of
Antibodies
andother
biological
products.
1.96
“
Research
Program
”
means
each
of
the
internal
MedImmune
Research
programs
listed
on
Exhibit
1.96
.
1.97
“
Royalty
Term
”
means
(a)
with
respect
to
the
relevant
Licensed
Product,
for
any
country,
the
period
(i)
commencing
on
the
First
CommercialSale
of
the
first
Licensed
Product
in
such
country
and
(ii)
expiring
on
the
later
of
(x)
the
tenth
(10th)
anniversary
of
such
First
Commercial
Sale
and
(y)
theexpiration
of
the
last
to
expire
Valid
Claim
of
an
issued
MedImmune
Patent
in
such
country
that
Covers
the
sale
of
the
relevant
Licensed
Product
in
such
country,and
(b)
with
respect
to
the
relevant
Follow-On
Product,
for
any
country,
the
period
(i)
commencing
on
the
First
Commercial
Sale
of
the
first
Follow-On
Product
insuch
country
and
(ii)
expiring
on
the
later
of
(x)
the
tenth
(10th)
anniversary
of
such
First
Commercial
Sale
and
(y)
the
expiration
of
the
last
to
expire
Valid
Claimof
an
issued
MedImmune
Patent
in
such
country
that
Covers
the
sale
of
the
relevant
Follow-On
Product
in
such
country.
1.98
“
Sublicensee
”
means
a
Third
Party
to
whom
Kolltan,
as
permitted
under
this
Agreement,
grants
a
license
or
sublicense,
as
the
case
may
be,under
the
MedImmune
IP,
MedImmune
Additional
IP
or
Joint
IP
to
Research,
Develop,
Manufacture,
Commercialize
or
otherwise
use
the
Licensed
Antibody,
anyLicensed
Product,
any
Follow-On
Antibody
or
any
Follow-On
Product,
or
otherwise
grants
rights
to
distribute,
promote
or
sell
Licensed
Products
or
Follow-OnProducts;
provided,
however,
Sublicensee
does
not
include
any
Third
Party
who
purchases
a
Licensed
Product
or
Follow-On
Product
under
a
limited
license
orsublicense,
as
the
case
may
be,
as
required
to
enable
such
Third
Party
(a)
to
perform
final
packaging
for
such
Licensed
Product
or
Follow-On
Product
for
localdistribution,
(b)
to
conduct
a
confirmatory
Clinical
Trial
of
such
Licensed
Product
or
Follow-On
Product
to
support
a
filing
for
Regulatory
Approval
of
suchLicensed
Product
or
Follow-On
Product
in
such
Third
Party’s
distribution
territory
or
(c)
to
prepare
and
make
a
filing
for
a
Regulatory
Approval
of
such
LicensedProduct
or
Follow-On
Product
in
such
Third
Party’s
distribution
territory.
15
1.99
“
Term
”
means
the
period
commencing
on
the
Effective
Date
and
ending
on
the
expiration
or
earlier
termination
of
this
Agreement.
1.100
“
Territory
”
means
the
entire
world.
1.101
“
Third
Party
”
means
any
Person
other
than
MedImmune
or
Kolltan
that
is
not
an
Affiliate
of
MedImmune
or
of
Kolltan.
1.102
“
United
States
”
or
“
U.S.
”
means
the
United
States
of
America
and
all
of
its
territories
and
possessions.
1.103
“
Unredacted
Provision
”
means
any
provision
of
any
In-License
Agreement
that
was
attached
to
an
email
sent
by
Christian
Dinneen-Long
to
W.Bradford
Middlekauff
on
July
25,
2013
at
4:30pm,
4:31pm,
4:32pm
or
4:33pm
Eastern
Standard
Time,
which
provision
was
included
in
such
attachment
inunredacted
form;
provided,
however,
that
Unredacted
Provisions
excludes
any
provision
that
is
partially
redacted
or
incorporates
any
term
the
definition
of
which
isredacted
or
partially
redacted
(including
by
incorporating
any
other
term
the
definition
of
which
is
redacted
or
partially
redacted).
1.104
“
UT
Agreement
”
means
that
certain
Exclusive
Patent
License
Agreement,
effective
November
1,
2005,
between
the
Board
of
Regents
of
theUniversity
of
Texas
System
on
behalf
of
the
University
of
Texas
Southwestern
Medical
Center
at
Dallas
and
MedImmune,
Inc.,
as
amended
by
Amendment
#1
toExclusive
License
Agreement,
effective
December
13,
2011.
1.105
“
Valid
Claim
”
means
(a)
a
claim
of
an
issued
patent
that
has
not
expired
or
been
abandoned,
or
been
revoked,
held
invalid
or
unenforceable
bya
patent
office,
court
or
other
governmental
agency
of
competent
jurisdiction
in
a
final
and
non-appealable
judgment
(or
judgment
from
which
no
appeal
was
takenwithin
the
allowable
time
period)
or
(b)
a
claim
within
a
patent
application
which
application
has
not
been
pending
for
more
than
five
(5)
years
from
the
date
of
itsfirst
filing
and
which
claim
has
not
been
revoked,
cancelled,
withdrawn,
held
invalid
or
abandoned.
1.106
Additional
Definitions
.
Each
of
the
following
definitions
is
set
forth
in
the
section
of
this
Agreement
indicated
below:
Definition: Section:
Actual
Kolltan
Development
Costs
5.4.4Auction
License
Agreement
5.4.3(e)(ii)Audited
Party
6.9.1Auditing
Party
6.9.1Bankruptcy
Code
2.4Buyout
Amount
5.4.1(b)Clinical
and
Research
Supply
Agreement
3.6.3(a)Co-Development
and
Co-Commercialization
Agreement
5.4.1(c)Co-Development
and
Co-Commercialization
Agreement
Terms
5.4.1(c)
16
Definition: Section:
Commercial
Supply
Agreement
3.6.4(a)Confidential
Information
8.1Court
12.2Disclosing
Party
8.1Dispute
12.1Effective
Date
PreambleElection
Notice
5.4.1Estimated
Kolltan
Development
Costs
5.4.4Exercise
Notice
5.3.1(a)Existing
Confidentiality
Agreement
8.4Expert
5.2.2(a)Final
Kolltan
Development
Costs
5.4.4Follow-On
Product
Transaction
2.5Kolltan
PreambleKolltan
ROFN
Notice
2.5Indemnified
Party
10.3Indemnifying
Party
10.3Indirect
Taxes
6.9.3Information
Delivery
Period
5.2.2(a)Inventory
3.6.1Losses
10.1Materials
3.6.1MedImmune
PreambleMedImmune
ROFN
Notice
2.5Non-Paying
Party
6.9.2Option
Period
5.3.1(a)Option
Termination
Date
3.5.2(a)Panel
5.2.2(a)Party
or
Parties
PreamblePaying
Party
6.9.1Paying
Party
Withholding
Tax
Action
6.9.1Product
Acquisition
Price
Notice
5.2.2(b)Receiving
Party
8.1Resolution
Period
12.1Same
or
Later
Stage
Clinical
Trial
12.4.2(a)(i)Selection
Period
5.2.2(a)Sublicensed
Rights
11.7.6Third
Party
Transaction
5.5Triggering
Sale
12.4.2(a)(i)Trigger
Period
5.2.1(a)Trigger
Notice
5.2.1(a)Upfront
Fee
6.1
17 ARTICLE 2 GRANT OF RIGHTS
2.1
License
Grants
to
Kolltan
.
2.1.1
Licensed
Antibody
and
Licensed
Products
.
Subject
to
the
terms
of
this
Agreement,
MedImmune
hereby
grants
Kolltan
(a)
anexclusive,
royalty-bearing
(to
the
extent
provided
in
Section
6.4),
non-transferable
(except
in
accordance
with
Section
12.4)
license
or
sublicense,
as
applicable,with
the
right
to
sublicense
(subject
to
Sections
2.2
and
5.5),
under
MedImmune’s
and
its
Affiliates’
interests
in
MedImmune
IP,
MedImmune
Additional
IP
andJoint
IP,
to
Research,
Develop,
Manufacture
and
Commercialize
the
Licensed
Antibody
and
Licensed
Products
in
the
Field
in
the
Territory;
and
(b)
an
exclusive,royalty-bearing
(to
the
extent
provided
in
Section
6.4),
non-transferable
(except
in
accordance
with
Section
12.4)
license
or
sublicense,
as
applicable,
with
the
rightto
sublicense
(subject
to
Sections
2.2
and
5.5),
under
MedImmune’s
and
its
Affiliates’
interests
in
MedImmune
Manufacturing
Know-How
and
MedImmuneManufacturing
Patents,
to
Manufacture
the
Licensed
Antibody
and
Licensed
Products
for
use
in
Kolltan’s
Research,
Development
and
Commercialization
activitieshereunder.
2.1.2
Follow-On
Antibodies
and
Follow-On
Products
.
Subject
to
the
terms
of
this
Agreement,
MedImmune
hereby
grants
Kolltan
(a)
anexclusive,
royalty-bearing
(to
the
extent
provided
in
Section
6.4),
non-transferable
(except
in
accordance
with
Section
12.4)
license
or
sublicense,
as
applicable,with
the
right
to
sublicense
(subject
to
Section
2.2),
under
MedImmune’s
and
its
Affiliates’
interests
in
MedImmune
IP,
MedImmune
Additional
IP
and
Joint
IP,
toResearch,
Develop,
Manufacture
and
Commercialize
Follow-On
Antibodies
and
Follow-On
Products
in
the
Field
in
the
Territory;
and
(b)
an
exclusive,
royalty-bearing
(to
the
extent
provided
in
Section
6.4),
non-transferable
(except
in
accordance
with
Section
12.4)
license
or
sublicense,
as
applicable,
with
the
right
tosublicense
(subject
to
Section
2.2),
under
MedImmune’s
and
its
Affiliates’
interests
in
MedImmune
Manufacturing
Know-How
and
MedImmune
ManufacturingPatents,
to
Manufacture
Follow-On
Antibodies
and
Follow-On
Products
for
use
in
Kolltan’s
Research,
Development
and
Commercialization
activities
hereunder.
2.2
Sublicenses
.
Subject
to
Section
5.5
and
in
accordance
with
the
requirements
as
set
forth
on
Exhibit
9.2.9(b)
,
Kolltan
shall
have
the
right
togrant
sublicenses
within
the
scope
of
the
licenses
and
sublicenses
under
Section
2.1
to
its
Affiliates
and
to
Third
Parties;
provided,
however,
that
any
suchsublicense
granted
to
a
Third
Party
shall
be
pursuant
to
a
written
agreement
that
subjects
the
sublicensee
to
all
relevant
restrictions
and
limitations
set
forth
in
thisAgreement,
including
the
confidentiality
provisions
of
ARTICLE
8.
2.3
Rights
Retained
by
MedImmune
.
Any
rights
of
MedImmune
not
expressly
granted
to
Kolltan
pursuant
to
this
Agreement
shall
be
retained
byMedImmune.
Notwithstanding
the
exclusive
licenses
and
sublicenses
granted
to
Kolltan
under
Section
2.1,
but
subject
to
Section
7.9
and
ARTICLE
8,MedImmune
and
its
Affiliates
retain
the
right
(a)
to
practice
under
the
MedImmune
IP,
MedImmune
Additional
IP
and
Joint
IP
solely
(except
as
set
forth
underclause
(b)
below
with
respect
to
Joint
IP)
as
necessary
to
(i)
exercise
their
rights
and
perform
their
obligations
hereunder,
(ii)
complete
any
activities
under
anyResearch
Program
18
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
that
are
ongoing
as
of
the
Effective
Date
and
(iii)
conduct
(or
permit
Third
Parties
to
conduct)
Research,
Development
or
Commercialization
activities
other
thanResearch,
Development
or
Commercialization
of
the
Licensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
or
Follow-On
Products;
and
(b)
to
practiceunder
the
Joint
IP,
MedImmune
Manufacturing
Know-How
and
MedImmune
Manufacturing
Patents
solely
(except
as
set
forth
under
clause
(a)
above
with
respectto
Joint
IP)
as
necessary
to
(i)
exercise
their
rights
and
perform
their
obligations
under
this
Agreement,
the
Clinical
and
Research
Supply
Agreement
(if
any)
andthe
Commercial
Supply
Agreement
(if
any)
and
(ii)
conduct
(or
permit
Third
Parties
to
conduct)
Manufacturing
activities
other
than
Manufacture
of
the
LicensedAntibody,
Licensed
Products,
Follow-On
Antibodies
or
Follow-On
Products.
2.4
Section
365(n)
of
the
Bankruptcy
Code
.
All
rights
and
licenses
granted
under
or
pursuant
to
any
section
of
this
Agreement
are,
and
shall
bedeemed
to
be
for
purposes
of
Section
365(n)
of
the
United
States
Bankruptcy
Code
(Title
11,
U.S.
Code),
as
amended
(the
“
Bankruptcy
Code
”)
or
any
analogousprovision
of
Applicable
Law
outside
the
United
States,
licenses
of
rights
to
“intellectual
property”
as
defined
in
Section
101(35A)
of
the
Bankruptcy
Code
or
anyanalogous
provision
of
Applicable
Law
outside
the
United
States.
Each
Party
shall
retain
and
may
fully
exercise
all
of
its
respective
rights
and
elections
under
theBankruptcy
Code
or
any
analogous
provision
of
Applicable
Law
outside
the
United
States.
In
the
event
of
the
commencement
of
a
bankruptcy
proceeding
by
oragainst
a
Party
under
the
Bankruptcy
Code
or
any
analogous
provision
of
Applicable
Law
outside
the
United
States,
the
other
Party
shall
be
entitled
to
a
completeduplicate
of
(or
complete
access
to,
as
appropriate)
any
intellectual
property
subject
to
any
rights
or
licenses
granted
to
such
other
Party
under
or
pursuant
to
thisAgreement
and
to
all
embodiments
thereof,
which,
if
not
already
in
such
other
Party’s
possession,
shall
be
promptly
delivered
to
(or
otherwise
made
available
to,
asappropriate)
such
other
Party
upon
such
other
Party’s
written
request.
Any
agreements
supplemental
hereto
shall
be
deemed
to
be
“agreements
supplementary
to”this
Agreement
for
purposes
of
Section
365(n)
of
the
Bankruptcy
Code
or
any
analogous
provision
of
Applicable
Law
outside
the
United
States.
2.5
Right
of
First
Negotiation
for
a
Follow-On
Product
Transaction
.
If
Kolltan
desires
to
enter
into
a
Follow-On
Product
Transaction
(as
definedbelow)
with
respect
to
any
Follow-On
Product,
Kolltan
shall
provide
written
notice
thereof
to
MedImmune,
including
a
reasonably
detailed
description
of
suchFollow-On
Product
and
any
completed
or
ongoing
Development
activities
(including
a
summary
of
any
relevant
clinical
and
non-clinical
data)
with
respect
thereto(“
Kolltan
ROFN
Notice
”).
MedImmune
shall
have
the
right,
exercisable
by
written
notice
delivered
to
Kolltan
within
[**]
days
after
delivery
of
the
KolltanROFN
Notice
(the
“
MedImmune
ROFN
Notice
”),
to
trigger
its
right
of
first
negotiation
under
this
Section
2.5
with
respect
to
such
Follow-On
Product.
IfMedImmune
delivers
a
MedImmune
ROFN
Notice
within
such
[**]
day
period,
then
(a)
the
Parties
shall
negotiate
in
good
faith
regarding
a
definitive
agreementfor
a
Follow-On
Product
Transaction
with
respect
to
such
Follow-On
Product
until
such
time
(if
any)
as
MedImmune
shall
discontinue
such
negotiations,
but
in
noevent
for
longer
than
[**]
days
unless
the
Parties
otherwise
mutually
agree.
During
such
period,
Kolltan
shall
not
negotiate
or
enter
into
any
agreement
with
anyThird
Party
for
a
Follow-On
Product
Transaction
with
respect
to
such
Follow-On
Product.
If
MedImmune
does
not
deliver
a
MedImmune
ROFN
Notice
withinsuch
[**]
day
period,
or
if
MedImmune
delivers
a
MedImmune
ROFN
Notice
within
such
[**]
day
period
but
the
Parties
fail
to
enter
into
a
definitive
agreementfor
a
Follow-On
Product
Transaction
with
respect
to
such
Follow-On
19
Product
within
the
applicable
negotiation
period,
then
(subject
to
any
restrictions
set
forth
in
any
provision
of
this
Agreement
other
than
this
Section
2.5)
Kolltanshall
be
free
to
negotiate
and
enter
into
an
agreement
with
any
Third
Party
for
a
Follow-On
Product
Transaction
with
respect
to
such
Follow-On
Product
and(notwithstanding
anything
the
contrary
in
this
Section
2.5)
Kolltan
shall
have
no
further
obligations
and
MedImmune
shall
have
no
further
rights
under
thisSection
2.5
with
respect
to
such
Follow-On
Product.
For
clarity,
subject
to
the
preceding
sentence,
in
no
event
shall
any
Follow-On
Product
Transaction
betweenKolltan
and
a
Third
Party
reduce
or
otherwise
adversely
affect
any
rights
of
MedImmune
or
obligations
of
Kolltan
under
this
Agreement,
including
Kolltan’spayment
obligations
pursuant
to
ARTICLE
6.
ARTICLE 3 DEVELOPMENT AND REGULATORY
3.1
Development
.
Subject
to
the
terms
and
conditions
of
this
Agreement,
as
between
the
Parties,
Kolltan
shall
be
solely
responsible
for
all
costs,activities
and
decision-making
related
to
the
Development
of
the
Licensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
and
Follow-On
Products
in
theField
in
the
Territory.
3.2
Regulatory
.
Subject
to
the
terms
and
conditions
of
this
Agreement,
as
between
the
Parties,
Kolltan
shall
be
solely
responsible
for
allsubmissions
to
and
all
communications
and
interactions
with
Regulatory
Authorities
with
respect
to
the
Licensed
Antibody,
Licensed
Products,
Follow-OnAntibodies
and
Follow-On
Products.
MedImmune
shall
not
make
any
submissions
to
or
otherwise
communicate
or
interact
with
any
Regulatory
Authority
withrespect
to
the
Licensed
Antibody
or
any
Licensed
Product,
Follow-On
Antibody
or
Follow-On
Product
unless
Applicable
Law
requires
such
action,
in
which
caseMedImmune
shall,
unless
prohibited
by
Applicable
Law,
(a)
as
promptly
as
practicable
provide
Kolltan
with
a
draft
of
any
proposed
submission
or
communicationand
(b)
consider
in
good
faith
any
reasonable
comments
provided
in
a
timely
manner
by
Kolltan
with
respect
to
such
proposed
submission
or
communication.
MedImmune
shall
promptly
forward
to
Kolltan
(i)
any
communication
received
by
MedImmune
from
any
Regulatory
Authority
with
respect
to
the
LicensedAntibody,
Licensed
Products,
Follow-On
Antibodies
or
Follow-On
Products
and
(ii)
any
information
received
by
MedImmune
from
any
Third
Party
specificallyrelating
to
the
safety
or
efficacy
of
the
Licensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
or
Follow-On
Products.
3.3
Diligence
.
Kolltan
shall,
at
its
own
expense,
(a)
conduct
(i)
a
Phase
1
Clinical
Trial
of
the
Licensed
Antibody
or
a
Licensed
Product
and
(ii)
aPhase
1b/2a
Clinical
Trial
of
the
Licensed
Antibody
or
a
Licensed
Product
for
at
least
two
indications,
and
(b)
use
Commercially
Reasonable
Efforts
to
completeany
additional
clinical
trials
required
for
Kolltan
to
submit
a
BLA
(or
ex-US
equivalent)
to
a
Regulatory
Authority(ies)
to
obtain
Regulatory
Approval
for
at
leastone
Licensed
Product
in
the
United
States,
France,
Germany,
Italy,
Spain
and
the
United
Kingdom.
Kolltan
shall
use
Commercially
Reasonable
Efforts
withrespect
to
the
Research,
Development,
Manufacture
or
Commercialization
of
any
Follow-On
Antibody
or
Follow-On
Product;
provided,
however,
that
suchCommercially
Reasonable
Efforts
shall
not
operate
to
impair
or
adversely
affect
Kolltan’s
obligation
to
use
Commercially
Reasonable
Efforts
in
the
foregoingsubsection
(b).
20
3.4
Transfer
of
Know-How
and
Regulatory
Documentation
.
3.4.1
Know-How
.
Promptly
after
the
Effective
Date,
MedImmune
shall
(a)
transfer
to
Kolltan
all
MedImmune
Know-How
andMedImmune
Additional
Know-How
described
in
clause
(b)
of
Section
1.48,
including
the
MedImmune
Know-How
and
MedImmune
Additional
Know-Howdescribed
in
Exhibit
3.4.1
,
including
any
data
or
study
reports
generated
since
the
filing
of
the
Existing
IND
(provided,
however,
that
MedImmune
shall
not
haveany
obligation
under
this
Section
3.4.1
to
prepare
or
finalize
any
study
reports),
and
(b)
disclose
to
Kolltan
all
MedImmune
Know-How
and
MedImmuneAdditional
Know-How
other
than
MedImmune
Know-How
and
MedImmune
Additional
Know-How
transferred
pursuant
to
clause
(a)
above.
Such
transfers
anddisclosures
shall
be
made
(x)
in
any
manner
or
form
reasonably
requested
by
Kolltan
(provided,
however,
that
any
data
generated
since
the
filing
of
the
ExistingIND
shall
be
transferred
in
the
form
in
which
such
data
exists
as
of
the
Effective
Date)
and
(y)
at
MedImmune’s
expense.
3.4.2
Research
Programs
.
Without
limiting
Section
3.4.1,
upon
the
completion
or
other
termination
of
any
Research
Program,
MedImmuneshall,
at
its
own
expense,
transfer
and/or
disclose
to
Kolltan
all
Know-How
developed
under
such
Research
Program
that
is
Controlled
by
MedImmune.
Suchtransfers
and
disclosures
shall
be
made
(a)
in
any
manner
or
form
reasonably
requested
by
Kolltan
(provided,
however,
that
any
data
included
in
such
Know-Howshall
be
transferred
in
the
form
in
which
MedImmune
has
collected
or
maintained
such
data
prior
to
such
transfer)
and
(b)
at
MedImmune’s
expense.
3.4.3
Regulatory
Documentation
.
MedImmune
hereby
assigns
to
Kolltan
all
of
MedImmune’s
right,
title
and
interest
in
and
to
anyRegulatory
Documentation
relating
to
the
Licensed
Antibody
or
Licensed
Products
Controlled
by
MedImmune
as
of
the
Effective
Date,
including
the
ExistingIND.
Promptly
after
the
Effective
Date,
MedImmune
shall
(a)
transfer
and/or
disclose
to
Kolltan
all
such
Regulatory
Documentation
and
(b)
provide
Kolltan
withan
executed
copy
of
a
letter
notifying
the
FDA
of
the
assignment
of
the
Existing
IND
to
Kolltan.
MedImmune
shall
submit
such
assignment
letter
to
the
FDA
assoon
as
reasonably
possible
following
the
Effective
Date
and
shall
promptly
notify
Kolltan
of
MedImmune’s
correspondence
with
the
FDA
with
respect
to
suchassignment.
Promptly
(but
in
no
event
more
than
five
(5)
Business
Days)
thereafter,
Kolltan
shall
submit
to
the
FDA
its
acceptance
of
such
transfer
and
provideMedImmune
with
written
notice
of
such
acceptance.
The
transfers
and
disclosures
described
in
clause
(a)
above
shall
be
made
(x)
in
any
manner
or
formreasonably
requested
by
Kolltan
and
(y)
at
MedImmune’s
expense;
provided,
however,
if
at
Kolltan’s
request
any
such
transfer
or
disclosure
is
made
in
any
manneror
form
that
is
not
reasonably
standard
in
the
biopharmaceutical
industry
for
transfers
or
disclosures
of
a
similar
kind,
such
transfer
or
disclosure
shall
be
made
atKolltan’s
expense.
3.5
Cooperation
.
3.5.1
Assistance
.
Without
limiting
any
other
obligations
of
MedImmune
under
this
Agreement,
MedImmune
shall,
at
its
own
expense,
for
aperiod
of
three
(3)
months
following
the
completion
of
the
transfers,
disclosures
and
assignments
described
in
Section
3.4,
use
reasonable
efforts
to
provide
Kolltanwith
information
or
assistance
reasonably
requested
by
Kolltan
in
relation
to
the
Know-How
and
Regulatory
Documentation
transferred,
disclosed
or
assignedpursuant
to
Section
3.4
to
ensure
an
expeditious
transition
of
the
applicable
Research
and
Development
activities.
Such
information
and
assistance
shall
not
exceed(a)
during
the
first
(1st)
such
month,
an
aggregate
of
seventy
(70)
hours,
(b)
during
the
second
(2nd)
such
month,
an
aggregate
of
fifty
(50)
hours,
and
(c)
during
thethird
(3rd)
such
month,
an
aggregate
of
thirty
(30)
hours.
Following
such
three
(3)
month
period,
if
requested
by
Kolltan,
the
Parties
shall
discuss
in
good
faith
thepossibility
of
entering
into
a
consulting
agreement
pursuant
to
which
MedImmune
would
provide
additional
information
and
assistance
to
Kolltan
at
Kolltan’sexpense.
3.5.2
Information
.
(a)
Every
six
(6)
months
or
otherwise
upon
reasonable
request
of
MedImmune
from
time
to
time,
Kolltan
shall
provide
areasonably
detailed
written
update
to
MedImmune
regarding
Kolltan’s
Development
activities
hereunder
with
respect
to
the
Licensed
Antibody
and
LicensedProducts;
provided,
however,
that
(i)
Kolltan
shall
not
be
required
to
provide
more
than
two
(2)
such
written
updates
in
any
Calendar
Year,
and
(ii)
from
and
afterthe
date
on
which
the
provisions
of
Sections
5.3
and
5.4
are
of
no
further
force
or
effect
in
21
accordance
with
Section
5.2.1(b),
or
MedImmune
has
no
further
rights
under
ARTICLE
5
in
accordance
with
Section
5.4.3(b)
(the
“
Option
Termination
Date
”),Kolltan
shall
not
be
required
to
provide
more
than
one
(1)
such
written
update
in
any
Calendar
Year.
(b)
Every
six
(6)
months
or
otherwise
upon
reasonable
request
of
MedImmune
from
time
to
time,
Kolltan
shall
provide
areasonably
detailed
written
update
to
MedImmune
regarding
Kolltan’s
Development
activities
hereunder
with
respect
to
Follow-On
Antibodies
and
Follow-OnProducts;
provided,
however,
that
(i)
Kolltan
shall
not
be
required
to
provide
more
than
two
(2)
such
written
updates
in
any
Calendar
Year,
and
(ii)
for
any
Follow-On
Product,
from
and
after
the
date
on
which
MedImmune
has
no
further
rights
under
Section
2.5
with
respect
to
such
Follow-On
Product,
Kolltan
shall
not
berequired
to
provide
more
than
one
(1)
such
written
update
with
respect
to
such
Follow-On
Product
in
any
Calendar
Year.
3.6
Inventory;
Supply
.
3.6.1
Assignment
of
Inventory
.
MedImmune
hereby
assigns
to
Kolltan
all
of
MedImmune’s
right,
title,
interest
and
risk
of
loss
in
and
to
allquantities
in
the
possession
or
under
the
control
of
MedImmune
as
of
the
Effective
Date
of
the
Licensed
Antibody
and
Licensed
Product
(“
Inventory
”)
and
thematerials
used
in
the
production
of
the
Licensed
Antibody
and
Licensed
Product
(“
Materials
”)
,
which
quantities
of
Inventory
and
Materials
are
(except
in
the
caseof
certain
types
of
Materials)
set
forth
in
Exhibit
3.6.1
.
The
foregoing
sentence
notwithstanding,
MedImmune
may
retain
reference
samples
of
Inventory
andMaterials.
3.6.2
Storage,
Filling
and
Delivery
of
Inventory
.
(a)
MedImmune
shall
store,
formulate,
fill
and
deliver
Inventory
and
Materials
as
described
in
Exhibit
3.6.2(a)
and
shall:
(i)
store
the
Inventory
and
Materials
in
accordance
with
Applicable
Law
and
the
applicable
specifications
set
forth
inExhibit
3.6.2(a)(i)
and
use
at
least
the
same
level
of
care
in
storing
the
Inventory
and
Materials
as
MedImmune
uses
in
storing
its
own
inventory
of
similarproducts,
but
no
less
than
industry
standard
level
of
care;
(ii)
conduct
stability
testing
of
the
Inventory
in
accordance
with
Applicable
Law;
22
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(iii)
upon
the
written
request
of
Kolltan
from
time
to
time,
(x)
fill,
finish
and
prepare
for
shipment,
in
accordance
withApplicable
Law
and
the
specifications
set
forth
in
Exhibit
3.6.2(a)
,
specified
quantities
of
the
Inventory,
(y)
prepare
for
shipment,
in
accordance
with
ApplicableLaw
and
the
specifications
set
forth
in
Exhibit
3.6.2(a)
,
specified
quantities
of
the
Materials,
and
(z)
deliver
such
quantities
of
Inventory
and
Materials
to
Kolltanor
any
Third
Party
designated
by
Kolltan
FCA
MedImmune’s
facility
(Incoterms
2010),
in
each
case
((x),
(y)
and
(z))
in
accordance
with
reasonable
writteninstructions
provided
by
Kolltan,
including
as
to
timing
and
manner
of
delivery;
provided,
however,
that
(1)
with
respect
to
any
quantity
of
Inventory
that
is,
as
ofthe
date
of
Kolltan’s
request,
in
vialed
form,
MedImmune
shall
not
be
required
to
deliver
such
quantity
to
Kolltan
or
its
designee
in
less
than
[**]
months
from
thedate
of
such
request,
and
(2)
with
respect
to
any
quantity
of
Inventory
that
is,
as
of
the
date
of
Kolltan’s
request,
not
in
vialed
form,
MedImmune
shall
not
berequired
to
deliver
such
quantity
to
Kolltan
or
its
designee
in
less
than
[**]
months
from
the
date
of
such
request;
and
(iv)
maintain
appropriate
property
insurance
coverage
for
losses
arising
from
MedImmune’s
failure
to
exercise
due
careover
the
Inventory
and
Materials,
for
as
long
as,
and
to
the
extent
that,
the
Inventory
and
Materials
remain
at
MedImmune’s
facility;
provided,
however,
thatMedImmune’s
obligation
under
this
clause
(iv)
shall
terminate
with
respect
to
any
quantity
of
the
Inventory
or
Materials
upon
delivery
of
such
quantity
to
theshipping
carrier
designated
by
Kolltan
in
accordance
with
clause
(iii)
above.
(b)
MedImmune
shall
notify
Kolltan
promptly
after
(i)
discovering
that
any
quantity
of
Inventory
or
Materials
has
not
beenManufactured,
stored
or
maintained
in
accordance
with
Applicable
Law
or
any
applicable
specifications
or
is
otherwise
not
in
a
condition
reasonably
suitable
foruse
by
Kolltan
in
conducting
its
Research
and
Development
activities
hereunder
or
(ii)
determining
that
it
is
unable,
or
reasonably
expects
to
be
unable,
to
complywith
any
of
its
obligations
under
Section
3.6.2(a).
MedImmune
shall
not
transfer
or
otherwise
dispose
of
any
quantity
of
Licensed
Antibody
or
Licensed
Productfrom
the
Inventory
except
in
accordance
with
Applicable
Law,
MedImmune’s
standard
practices
and
policies
(to
the
extent
previously
disclosed
to
Kolltan)
andKolltan’s
reasonable
written
instructions.
(c)
MedImmune
hereby
represents
and
warrants
that:
(i)
the
Inventory
was
Manufactured
in
accordance
with
Applicable
Law
and
the
applicable
product
specifications
setforth
in
Exhibit
3.6.2(c)(i)
,
which
Exhibit
includes
specifications
for
drug
product
and
unformulated
drug
substance,
as
well
as
the
justification
of
specifications
fordrug
product
(which
in
turn
references
a
Guideline
for
Release
Specifications
for
Monoclonal
Antibodies
(DEV000
GB
0049
ED
002),
a
copy
of
which
wasprovided
to
Kolltan);
(ii)
as
of
the
date
on
which
any
quantity
of
the
Inventory
or
Materials
is
delivered
to
Kolltan
or
its
designee
hereunder,such
quantity
will
have
been
stored
and
maintained
in
accordance
with
Applicable
Law
and
the
applicable
storage
specifications
set
forth
in
Exhibit
3.6.2(a)(i)
;and
(iii)
as
of
the
Effective
Date,
stability
testing
of
the
Inventory
has
been
conducted
in
accordance
with
Applicable
Law;
23
(iv)
as
of
the
date
of
the
last
stability
testing
of
the
Inventory
conducted
prior
to
the
Effective
Date,
the
Inventoryconformed
to
the
applicable
product
specifications
set
forth
in
Exhibit
3.6.2(c)(i)
.
Except
as
expressly
set
forth
in
this
Agreement,
MedImmune
makes
no,
and
hereby
disclaims
all,
other
representations
and
warranties
whatsoever
concerning
theInventory
and
Materials,
including
any
and
all
implied
warranties
of
merchantability,
fitness
for
a
particular
purpose
and
against
infringement.
3.6.3
Clinical
and
Research
Supply
of
Licensed
Antibody
and
Licensed
Products
.
(a)
Within
thirty
(30)
days
after
the
Effective
Date,
the
Parties
shall
commence
good
faith
negotiations
regarding
a
supplyagreement
pursuant
to
which
MedImmune
would
supply
to
Kolltan,
and
Kolltan
would
purchase
from
MedImmune
at
rates
not
materially
different
from
thosecharged
by
Third
Party
contract
manufacturers,
additional
quantities
of
the
Licensed
Antibody
and
Licensed
Products
for
use
by
Kolltan
in
conducting
Researchand
Development
activities
with
respect
to
the
Licensed
Program
and
the
Follow-On
Program,
all
in
accordance
with
the
principles
set
forth
in
Exhibit
3.6.3(a)
(the
“
Clinical
and
Research
Supply
Agreement
”).
(b)
If
(i)
the
Parties
fail
to
enter
into
the
Clinical
and
Research
Supply
Agreement
within
sixty
(60)
days
after
the
commencementof
negotiations
pursuant
to
Section
3.6.3(a)
(or
such
longer
period
as
may
be
agreed
by
the
Parties),
or
(ii)
the
Clinical
and
Research
Supply
Agreement
is
enteredinto
by
the
Parties
but
is
terminated
for
any
reason
other
than
breach
by
Kolltan,
then
upon
Kolltan’s
written
request
and
subject
to
MedImmune’s
good
faithconsent
as
described
below,
MedImmune
shall
(x)
transfer
and/or
disclose
to
Kolltan
or
any
Qualified
Contract
Manufacturer
designated
in
good
faith
by
Kolltansuch
MedImmune
Manufacturing
Know-How
and
(y)
provide
to
Kolltan
or
such
Qualified
Contract
Manufacturer
such
technical
assistance,
in
each
case
((x)
and(y))
as
reasonably
required
for
Kolltan
or
such
Qualified
Contract
Manufacturer
to
Manufacture
the
Licensed
Antibody
and
Licensed
Products
for
use
in
Kolltan’sResearch
and
Development
activities
hereunder.
The
foregoing
sentence
notwithstanding,
except
as
set
forth
in
Section
3.6.5
below,
MedImmune
has
no
obligationto
disclose
to
Kolltan
or
any
Qualified
Contract
Manufacturer
the
MedImmune
Manufacturing
Know
How
related
to
MedImmune
proprietary
cell
culture
mediaand
nutrient
feeds
used
in
the
Manufacturing
process.
Kolltan
acknowledges
and
agrees
that
any
transfer
and/or
disclosure
by
Kolltan
of
any
MedImmuneManufacturing
Know-How
described
in
the
immediately
preceding
sentence
to
a
Third
Party
shall
require
the
prior
written
consent
of
MedImmune;
provided,however,
that
(A)
MedImmune
shall
not
unreasonably
withhold
such
consent
and
(B)
MedImmune’s
determination
as
to
whether
to
provide
such
consent
shall
bemade
in
good
faith.
The
transfers
and
disclosures
described
in
clause
(x)
above
shall
be
made
(1)
in
any
manner
or
form
reasonably
requested
by
Kolltan
and
(2)
atMedImmune’s
expense;
provided,
however,
if
at
Kolltan’s
request
any
such
transfer
or
disclosure
is
made
in
any
manner
or
form
that
is
not
reasonably
standard
inthe
biopharmaceutical
industry
for
transfers
or
disclosures
of
a
similar
kind,
such
transfer
or
disclosure
shall
be
made
at
Kolltan’s
expense.
The
assistancedescribed
in
clause
(y)
above
shall
be
provided
at
MedImmune’s
expense,
provided,
however,
that
the
scope
24
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
of
such
assistance
will
be
limited
to
reasonable
and
customary
assistance
related
to
technology
transfer
under
similar
circumstances
in
the
biologics
industry.
3.6.4
Commercial
Supply
.
After
the
Option
Termination
Date:
(a)
if
requested
by
Kolltan,
the
Parties
shall
undertake
good
faith
negotiations
regarding
a
commercial
supply
agreement
pursuantto
which
MedImmune
would
supply
to
Kolltan,
and
Kolltan
would
purchase
from
MedImmune,
quantities
of
the
Licensed
Antibody
or
Licensed
Product,
in
any
ofits
forms,
for
use
by
Kolltan,
for
commercial
sale
(“
Commercial
Supply
Agreement
”);
and
(b)
if
(i)
for
any
reason
the
Parties
have
not
entered
into
the
Commercial
Supply
Agreement
(including
if
Kolltan
has
notrequested
that
the
Parties
undertake
negotiations
with
respect
to
thereto
pursuant
to
Section
3.6.4(a))
or
(ii)
the
Commercial
Supply
Agreement
is
entered
into
bythe
Parties
but
expires
or
is
terminated
for
any
reason
other
than
breach
by
Kolltan,
without
limitation
of
any
other
rights
that
may
be
available
to
Kolltan,
uponKolltan’s
written
request
and
subject
to
MedImmune’s
good
faith
consent
as
described
below,
MedImmune
shall
(x)
transfer
and/or
disclose
to
Kolltan
or
anyQualified
Contract
Manufacturer
designated
in
good
faith
by
Kolltan
such
MedImmune
Manufacturing
Know-How
and
(y)
provide
to
Kolltan
or
such
QualifiedContract
Manufacturer
such
technical
assistance,
in
each
case
((x)
and
(y))
as
reasonably
required
for
Kolltan
or
such
Qualified
Contract
Manufacturer
toManufacture
the
Licensed
Antibody
and
Licensed
Products
for
use
in
Kolltan’s
Commercialization
activities
hereunder.
The
foregoing
sentence
notwithstanding,except
as
set
forth
in
Section
3.6.5
below,
MedImmune
has
no
obligation
to
disclose
to
Kolltan
or
any
Qualified
Contract
Manufacturer
the
MedImmuneManufacturing
Know
How
related
to
MedImmune
proprietary
cell
culture
media
and
nutrient
feeds
used
in
the
Manufacturing
process.
Kolltan
acknowledges
andagrees
that
any
transfer
and/or
disclosure
by
Kolltan
of
any
MedImmune
Manufacturing
Know-How
described
in
the
immediately
preceding
sentence
to
a
ThirdParty
shall
require
the
prior
written
consent
of
MedImmune;
provided,
however,
that
(A)
MedImmune
shall
not
unreasonably
withhold
such
consent
and(B)
MedImmune’s
determination
as
to
whether
to
provide
such
consent
shall
be
made
in
good
faith.
The
transfers
and
disclosures
described
in
clause
(x)
aboveshall
be
made
(1)
in
any
manner
or
form
reasonably
requested
by
Kolltan
and
(2)
at
MedImmune’s
expense;
provided,
however,
if
at
Kolltan’s
request
any
suchtransfer
or
disclosure
is
made
in
any
manner
or
form
that
is
not
reasonably
standard
in
the
biopharmaceutical
industry
for
transfers
or
disclosures
of
a
similar
kind,such
transfer
or
disclosure
shall
be
made
at
Kolltan’s
expense.
The
assistance
described
in
clause
(y)
above
shall
be
provided
at
MedImmune’s
expense,
provided,however,
that
the
scope
of
such
assistance
will
be
limited
to
reasonable
and
customary
assistance
related
to
technology
transfer
under
similar
circumstances
in
thebiologics
industry.
3.6.5
Supply
of
Media
.
In
each
instance
where
MedImmune
transfers
MedImmune
Manufacturing
Know-How
to
Kolltan
or
a
QualifiedContract
Manufacturer
pursuant
to
this
Section
3.6,
for
a
period
of
[**]
months
after
the
completion
of
such
transfer,
MedImmune
shall
sell
to
Kolltan,
atMedImmune’s
standard
cost,
such
quantities
of
MedImmune’s
proprietary
cell
culture
media
and
nutrient
feeds
used
in
the
Manufacture
of
the
Licensed
Antibodyas
may
be
reasonably
requested
by
Kolltan
in
connection
with
the
Manufacture
by
Kolltan
or
such
Qualified
Contract
Manufacturer
of
the
Licensed
Antibody
or
25
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Licensed
Products.
Kolltan
shall
not
reverse
engineer,
or
have
a
third
party
reverse
engineer,
MedImmune’s
proprietary
cell
culture
media
and
nutrient
feeds.
ARTICLE 4 COMMERCIALIZATION
4.1
In
General
.
Subject
to
the
terms
and
conditions
of
this
Agreement,
as
between
the
Parties,
Kolltan
shall
be
solely
responsible
for
all
costs,activities
and
decision-making
related
to
the
Commercialization
of
Licensed
Products
and
Follow-On
Products
in
the
Field
in
the
Territory.
4.2
Trademarks
.
Kolltan,
its
Affiliates
and
Sublicensees
shall
select
the
trademarks
under
which
to
market
Licensed
Products
and
Follow-OnProducts,
which
trademarks
shall
not
contain
the
word
“MedImmune”
or
be
identical
to
or
likely
to
cause
confusion
with
the
MEDIMMUNE
trademark
or
anytrademark
for
any
pharmaceutical
product
of
MedImmune
or
any
of
its
Affiliates.
4.3
Standards
of
Conduct
.
Kolltan
shall
in
all
respects
comply
with
all
Applicable
Law
and
applicable
guidelines
concerning
the
advertising,
salesand
marketing
of
prescription
drug
products
in
Commercializing
Licensed
Products
and
Follow-On
Products
under
this
Agreement.
ARTICLE 5 OPTION RIGHTS
5.1
Delivery
of
Data
.
5.1.1
Upon
receipt
and
review
by
Kolltan
of
a
validated
data
set
(including
the
full
data
set)
from
the
clinical
trial
database
for
any
Phase1b/2a
Clinical
Trial
of
the
Licensed
Antibody
or
a
Licensed
Product,
which
data
set
comprises
the
clinical
trial
data
for
a
cohort
of
not
less
than
[**]
patients
(or,
ifless,
the
number
of
remaining
enrolled
patients
in
such
Phase
1b/2a
Clinical
Trial),
and
which
data
Kolltan
has
not
previously
delivered
to
MedImmune,
Kolltanshall
promptly
deliver
such
data
to
MedImmune.
5.1.2
Together
with
its
delivery
of
any
data
set
pursuant
to
Section
5.1.1,
Kolltan
shall
(to
the
extent
it
has
not
already
done
so)
deliver
toMedImmune
all
data
in
Kolltan’s
possession
as
of
the
date
of
such
delivery
that
is
contained
in
the
clinical
trial
database
for
any
Phase
1
Clinical
Trial
of
theLicensed
Antibody
or
a
Licensed
Product.
5.1.3
Together
with
its
delivery
of
any
data
set
pursuant
to
Section
5.1.1
and
the
data
pursuant
to
Section
5.1.2,
Kolltan
shall
(to
the
extent
ithas
not
already
done
so)
deliver
to
MedImmune
all
non-clinical
and/or
Development
data
and
information
in
Kolltan’s
possession
as
of
the
date
of
such
deliverythat
(a)
was
generated
by
Kolltan’s
Research,
Development
or
Manufacturing
activities
with
respect
to
the
Licensed
Antibody
or
Licensed
Products
hereunder
and(b)
is
likely
to
be
useful
to
MedImmune’s
determination
to
deliver
a
Trigger
Notice
pursuant
to
Section
5.2.1
or
Exercise
Notice
pursuant
to
Section
5.3.1,including
any
such
pharmacokinetic
data,
pharmacodynamics
data,
biomarker
data
and
genetic
or
epigenetic
characterization
of
patients.
26
5.1.4
After
the
Data
Package
Delivery
Date,
if
Kolltan
comes
into
possession
of
any
data
or
information
that
Kolltan
would
have
beenrequired
to
deliver
to
MedImmune
under
Section
5.1.2
or
5.1.3
if
such
data
or
information
had
been
in
Kolltan’s
possession
as
of
the
Data
Package
Delivery
Date,or
if
MedImmune
reasonably
requests
any
other
information
related
to
the
data
and
information
described
in
Section
5.1.1,
5.1.2
or
5.1.3
or
the
foregoing
clause
ofthis
Section
5.1.4,
Kolltan
shall
promptly
deliver
such
data
or
information
to
MedImmune.
5.2
Trigger
Period;
Determination
of
Product
Acquisition
Price
.
5.2.1
Trigger
Period
.
(a)
From
time
to
time
between
(i)
the
date
on
which
Kolltan
delivers
the
first
data
summary
to
MedImmune
pursuant
toSection
5.1.1
and
(ii)
the
earlier
of
(x)
ten
(10)
Business
Days
after
the
Data
Package
Delivery
Date
and
(y)
December
31,
2017
(the
“
Trigger
Period
”),MedImmune
shall
have
the
right,
exercisable
by
written
notice
to
Kolltan
(a
“
Trigger
Notice
”),
to
trigger
a
determination
of
the
Product
Acquisition
Price
inaccordance
with
Section
5.2.2.
For
clarity,
MedImmune
shall
have
the
right
to
deliver
multiple
Trigger
Notices
during
the
Trigger
Period;
provided,
however,
thatsubject
to
Section
5.3.2,
after
MedImmune
has
delivered
any
Trigger
Notice,
it
shall
not
deliver
a
subsequent
Trigger
Notice
unless
and
until
MedImmune
revokessuch
earlier
Trigger
Notice
in
writing
(provided,
however,
that
MedImmune
shall
not
be
entitled
to
revoke
any
Trigger
Notice
after
the
Parties
have
received
noticeof
the
applicable
Product
FMV
pursuant
to
Section
5.2.2(a))
or
the
Option
Period
with
respect
to
such
earlier
Trigger
Notice
expires
without
MedImmune’s
havingdelivered
an
Exercise
Notice.
(b)
If
(i)
MedImmune
does
not
deliver
a
Trigger
Notice
to
Kolltan
prior
to
the
expiration
of
the
Trigger
Period,
(ii)
as
of
theexpiration
of
the
Trigger
Period,
the
Option
Period
with
respect
to
any
Trigger
Notices
previously
delivered
by
MedImmune
has
expired
without
MedImmune’shaving
delivered
an
Exercise
Notice,
or
(iii)
any
Option
Period
that
has
not
expired
as
of
the
expiration
of
the
Trigger
Period
expires
without
MedImmune’s
havingdelivered
an
Exercise
Notice,
then
the
provisions
of
Sections
5.3
and
5.4
shall
be
of
no
further
force
or
effect.
If
MedImmune
provides
written
notice
to
Kolltanduring
the
Trigger
Period
that
MedImmune
declines
to
deliver
any
further
Trigger
Notices,
then
the
provisions
of
Sections
5.3,
5.4
and
5.5
shall
be
of
no
furtherforce
or
effect.
5.2.2
Determination
of
Product
Acquisition
Price
.
(a)
In
the
event
MedImmune
delivers
a
Trigger
Notice
to
Kolltan
prior
to
the
expiration
of
the
Trigger
Period,
the
Parties
shallobtain
a
determination
of
the
Product
FMV
as
of
the
date
on
which
such
Trigger
Notice
was
delivered,
in
accordance
with
this
Section
5.2.2(a).
Within
eight(8)
Business
Days
after
MedImmune’s
delivery
of
any
Trigger
Notice
(the
“Selection
Period”),
each
Party
shall
select
an
independent
expert
suitably
qualified
todetermine
the
applicable
Product
FMV,
who,
at
a
minimum,
shall
have
expertise
in
the
valuation
of
development-stage
biological
oncology
products
(each,
an“Expert”),
and
the
two
Experts
thereby
selected
shall,
as
promptly
as
practicable,
select
a
third
Expert
(such
three
Experts,
collectively,
the
“Panel”).
As
soon
aspracticable
after
the
selection
of
the
Panel,
the
Parties
shall
meet
with
the
Panel
in
order
to
agree
upon
a
process
for
delivering
to
the
Panel
such
information
in
theParties’
possession
as
the
Panel
may
request
in
connection
with
the
determination
of
the
applicable
Product
FMV,
which
delivery
shall
be
completed
no
later
thanfive
(5)
Business
Days
after
such
initial
meeting
with
the
Panel
(the
“Information
Delivery
Period”).
The
Parties
shall
use
reasonable
efforts
to
cause
the
Panel
todetermine
the
applicable
Product
FMV
and
provide
written
notice
to
the
Parties
thereof
within
seven
(7)
Business
Days
after
expiration
of
the
Information
DeliveryPeriod
(or,
if
the
Panel
is
unable
to
comply
with
such
timing,
as
promptly
thereafter
as
practicable).
The
Panel’s
determination
of
applicable
Product
FMV
shall
bebased
on
the
agreement
of
a
majority
of
the
Panel
members.
Subject
to
Section
5.3.2,
the
determination
of
the
Panel
shall
be
binding
on
the
Parties.
Each
Party
shallbear
its
own
costs
and
expenses
with
respect
to
the
determination
of
the
applicable
Product
FMV.
Subject
to
Section
5.3.2,
the
reasonable
costs
and
expenses
of
thePanel
shall
be
borne
by
MedImmune.
27
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(b)
Within
five
(5)
Business
Days
after
the
Parties
receive
notice
of
the
applicable
Product
FMV
pursuant
to
Section
5.2.2(a),Kolltan
shall
provide
written
notice
to
MedImmune
of
(i)
Kolltan’s
good
faith
estimate
of
the
Kolltan
Development
Costs
as
of
the
end
of
the
calendar
monthimmediately
preceding
the
date
of
the
applicable
Trigger
Notice,
(ii)
Kolltan’s
good
faith
estimate
of
the
Kolltan
Development
Costs
for
the
[**]
month
periodimmediately
following
the
period
covered
by
estimate
described
in
clause
(i)
above,
and
(iii)
the
Product
Acquisition
Price,
on
the
assumption
that
the
KolltanDevelopment
Costs
as
of
the
end
of
the
calendar
month
immediately
preceding
the
calendar
month
in
which
the
applicable
payment
is
made
in
accordance
with
thisAgreement
will
be
equal
to
the
sum
of
the
estimates
described
in
clauses
(i)
and
(ii)
above
(the
“
Product
Acquisition
Price
Notice
”),
and
shall
include
reasonablesupporting
documentation.
5.3
Option
Period;
New
Determination
of
Product
Acquisition
Price
.
5.3.1
Option
Period
.
(a)
If,
within
three
(3)
Business
Days
after
delivery
of
any
Product
Acquisition
Price
Notice,
MedImmune
reasonably
requestsany
additional
supporting
documentation
relating
to
Kolltan’s
estimates
of
the
Kolltan
Development
Costs
included
therein,
Kolltan
shall
provide
such
additionalsupporting
documentation
to
MedImmune
within
five
(5)
Business
Days
after
the
date
of
such
request.
For
a
period
of
five
(5)
Business
Days
after
the
expiration
ofthe
three
(3)
Business
Day
period
described
in
the
preceding
sentence
(or,
if
applicable,
the
date
on
which
Kolltan
satisfies
its
obligation
under
the
precedingsentence
to
provide
additional
supporting
documentation),
(i)
the
Parties
shall
engage
in
informal,
nonbinding
discussions
regarding
their
respective
interests
withrespect
to
their
rights
and
obligations
under
this
Section
5.3
and
Section
5.4
with
respect
to
such
Product
Acquisition
Price
Notice
and
(ii)
within
twelve
(12)Business
Days
after
the
conclusion
of
such
five
(5)
Business
Day
period
(each,
an
“Option
Period”),
MedImmune
shall
have
the
option,
exercisable
by
writtennotice
to
Kolltan
(each,
an
“Exercise
Notice”),
to
trigger
the
rights
and
obligations
of
the
Parties
under
Section
5.4
with
respect
to
such
Product
Acquisition
PriceNotice.
(b)
If
MedImmune
does
not
deliver
an
Exercise
Notice
to
Kolltan
prior
to
the
expiration
of
an
Option
Period,
then
the
Partiesshall
have
no
further
rights
or
obligations
under
Section
5.4
with
respect
to
the
applicable
Product
Acquisition
Price
Notice.
If
MedImmune
provides
written
noticeto
Kolltan
during
an
Option
Period
that
MedImmune
28
declines
to
provide
an
Exercise
Notice
during
such
Option
Period,
then
such
Option
Period
shall
be
deemed
expired
and
the
Parties
shall
have
no
further
rights
orobligations
under
Section
5.4
with
respect
to
the
applicable
Product
Acquisition
Price
Notice.
5.3.2
New
Determination
of
Product
Acquisition
Price
.
Notwithstanding
anything
to
the
contrary
in
Section
5.2,
if
at
any
time
after
thedelivery
by
the
Parties
of
information
to
the
Panel
pursuant
to
Section
5.2.2(a)
and
prior
to
the
expiration
of
the
applicable
Option
Period
or,
if
MedImmunedelivers
an
Exercise
Notice
to
Kolltan
prior
to
the
expiration
of
the
applicable
Option
Period,
during
any
period
for
any
election
or
rejection
by
a
Party
underSection
5.4.1
or
5.4.2,
Kolltan
receives
additional
data
from
(i)
any
Phase
1
Clinical
Trial
of
the
Licensed
Antibody
or
any
Licensed
Product,
(ii)
any
Phase
1b/2aClinical
Trial
of
the
Licensed
Antibody
or
a
Licensed
Product
or
(iii)
any
non-clinical
studies
or
Development
activities
with
respect
to
the
Licensed
Antibody
orLicensed
Products
that
would,
in
the
case
of
any
of
(i),
(ii)
or
(iii),
likely
have
materially
affected
the
determination
of
the
Product
FMV,
(a)
Kolltan
shall
promptlydeliver
such
data
to
MedImmune
(regardless
of
whether
Kolltan
would
otherwise
be
required
to
deliver
such
data
to
MedImmune
pursuant
to
Section
5.1)
and(b)
for
a
period
of
eight
(8)
Business
Days
after
the
date
of
such
delivery,
either
Party
shall
have
the
right,
exercisable
by
written
notice
to
the
other
Party,
to
triggera
new
determination
of
the
Product
Acquisition
Price,
factoring
in
such
new
information.
If
either
Party
exercises
its
right
under
clause
(b)
above,
unless
otherwiseagreed
by
the
Parties,
(w)
ongoing
activities
(if
any)
to
determine
the
Product
Acquisition
Price
shall
terminate,
(x)
the
current
Option
Period
(if
any)
shall
bedeemed
expired
without
MedImmune’s
having
delivered
an
Exercise
Notice,
(y)
the
Parties
shall
have
no
further
rights
or
obligations
under
Section
5.4
withrespect
to
any
Product
Acquisition
Price
Notice
delivered
prior
such
Party’s
exercise
of
its
right
under
clause
(b)
above,
and
(z)
a
new
determination
of
the
ProductFMV
and
the
Product
Acquisition
Price
shall
be
made
in
accordance
with
the
provisions
of
Section
5.2.2
(which
shall
again
trigger
the
applicable
provisions
of
thisSection
5.3
and
Section
5.4);
provided,
however,
that
the
costs
and
expenses
of
the
Panel
for
such
new
determination
shall
be
borne
by
the
Party
that
exercised
itsright
under
clause
(b)
above.
5.4
Kolltan
Election;
MedImmune
Rights
.
5.4.1
Kolltan
Election
.
In
the
event
MedImmune
delivers
an
Exercise
Notice
in
accordance
with
Section
5.3.1(a)
with
respect
to
anyProduct
Acquisition
Price
Notice,
Kolltan
shall
elect,
in
its
sole
discretion,
by
written
notice
to
MedImmune
delivered
within
three
(3)
Business
Days
afterMedImmune’s
delivery
of
such
Exercise
Notice
(the
“
Election
Notice
”),
one
of
the
following:
(a)
to
terminate
this
Agreement
with
respect
to
the
Licensed
Program,
subject
to
MedImmune’s
payment
to
Kolltan
of
an
amountequal
to
the
Product
Acquisition
Price,
in
which
case
the
provisions
of
Section
5.4.3(a)
shall
apply;
(b)
subject
to
MedImmune’s
rights
under
Section
5.4.2(a),
to
terminate
all
further
rights
of
MedImmune
under
this
ARTICLE
5,subject
to
Kolltan’s
payment
to
MedImmune
of
an
amount
equal
to
the
greater
of
(i)
fifty
percent
(50%)
of
the
difference
between
(A)
the
Product
AcquisitionPrice
and
(B)
the
sum
of
(x)
the
Kolltan
Development
Costs
as
of
the
end
of
the
calendar
month
immediately
preceding
the
calendar
month
in
which
29
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
the
applicable
payment
is
made
and
(y)
Eight
Million
Dollars
($8,000,000)
(the
amount
described
in
this
clause
(i),
the
“Co-Agreement
Amount”)
and
(ii)
TwentyMillion
Dollars
($20,000,000)
(the
greater
of
the
amounts
described
in
clauses
(i)
and
(ii),
the
“
Buyout
Amount
”);
or
(c)
subject
to
MedImmune’s
rights
under
Section
5.4.2(b),
to
require
the
Parties
to
enter
into
a
co-development
and
co-commercialization
agreement
(the
“
Co-Development
and
Co-Commercialization
Agreement
”)
in
accordance
with
the
terms
set
forth
on
Exhibit
5.4.1(c)
(the
“Co-Development
and
Co-Commercialization
Agreement
Terms
”).
Together
with
any
Election
Notice,
Kolltan
shall
provide
to
MedImmune
its
then-current
good
faith
estimate,
for
each
potentially
applicable
scenario
described
inSection
5.4.3,
of
the
Kolltan
Development
Costs
as
of
the
end
of
the
calendar
month
immediately
preceding
the
calendar
month
in
which
the
applicable
paymentwill
be
made
by
Kolltan
or
MedImmune
as
well
as
a
good
faith
estimate
of
the
Kolltan
Development
Costs
for
the
[**]
month
period
following
delivery
of
theElection
Notice,
together
with
reasonable
supporting
documentation.
Kolltan
shall
provide
MedImmune
with
monthly
written
updates
to
such
estimates
during
anyperiod
in
which
the
MedImmune
is
exercising
its
rights
under
Section
5.4.2
or
the
Parties
are
negotiating
the
Co-Development
and
Co-CommercializationAgreement
under
Section
5.4.3(c)
or
5.4.3(d).
5.4.2
MedImmune
Rights
.
In
the
event
MedImmune
delivers
an
Exercise
Notice
in
accordance
with
Section
5.3.1(a):
(a)
in
the
event
Kolltan,
pursuant
to
the
Election
Notice,
makes
an
election
under
Section
5.4.1(b),
MedImmune
shall
have
theright,
in
its
sole
discretion,
exercisable
by
written
notice
to
Kolltan
delivered
within
seven
(7)
Business
Days
after
Kolltan
delivers
the
Election
Notice
toMedImmune,
to
reject
Kolltan’s
election,
in
which
case
the
provisions
of
Section
5.4.3(c)
shall
apply;
provided,
however,
that
if
MedImmune
fails
to
deliver
such
arejection
notice
within
such
time
period,
the
provisions
of
Section
5.4.3(b)
shall
apply;
and
(b)
in
the
event
Kolltan,
pursuant
to
the
Election
Notice,
makes
an
election
under
Section
5.4.1(c),
MedImmune
shall
have
theright,
in
its
sole
discretion,
exercisable
by
written
notice
to
Kolltan
delivered
within
three
(3)
Business
Days
after
Kolltan
delivers
the
Election
Notice
toMedImmune,
to
reject
Kolltan’s
election,
in
which
case
Kolltan
shall
elect,
in
its
sole
discretion,
by
written
notice
to
MedImmune
delivered
within
three(3)
Business
Days
after
delivery
of
such
rejection
notice
by
MedImmune,
either
(i)
to
terminate
this
Agreement
with
respect
to
the
Licensed
Program,
subject
toMedImmune’s
payment
to
Kolltan
of
an
amount
equal
to
the
Product
Acquisition
Price,
in
which
case
the
provisions
of
Section
5.4.3(a)
shall
apply,
or
(ii)
toterminate
all
further
options
of
MedImmune
under
this
ARTICLE
5,
subject
to
Kolltan’s
payment
of
the
Buyout
Amount
to
MedImmune,
in
which
case
theprovisions
of
Section
5.4.3(b)
shall
apply;
provided,
however,
that
if
MedImmune
fails
to
deliver
such
a
rejection
notice
within
such
time
period,
the
provisions
ofSection
5.4.3(d)
shall
apply.
30
5.4.3
Effect
of
Elections
and
Rights
.
(a)
In
the
event
Kolltan
(i)
pursuant
to
the
Election
Notice,
makes
an
election
under
Section
5.4.1(a)
or
(ii)
after
receiving
arejection
notice
by
MedImmune
pursuant
to
Section
5.4.2(b),
makes
an
election
under
clause
(i)
of
Section
5.4.2(b),
then
(x)
this
Agreement
shall
terminate
withrespect
to
the
Licensed
Program
thirty
(30)
days
after
such
election
is
made
and
(y)
MedImmune
shall
pay
to
Kolltan
an
amount
equal
to
the
Product
AcquisitionPrice
within
forty-five
(45)
days
after
receipt
of
the
corresponding
invoice
from
Kolltan.
(b)
In
the
event
Kolltan
(i)
pursuant
to
the
Election
Notice,
makes
an
election
under
Section
5.4.1(b)
that
is
not
rejected
byMedImmune
pursuant
to
Section
5.4.2(a)
or
(ii)
after
receiving
a
rejection
notice
pursuant
to
Section
5.4.2(b),
makes
an
election
under
clause
(ii)
ofSection
5.4.2(b),
then
(x)
this
Agreement
shall
remain
in
effect
in
its
entirety,
including
with
respect
to
the
Licensed
Program
(though
MedImmune
shall
have
nofurther
rights
under
this
ARTICLE
5
other
than
as
set
forth
in
this
sentence),
and
(y)
Kolltan
shall
pay
the
Buyout
Amount
to
MedImmune
within
forty-five
(45)days
after
receipt
of
the
corresponding
invoice
from
MedImmune.
(c)
In
the
event
Kolltan,
pursuant
to
the
Election
Notice,
makes
an
election
under
Section
5.4.1(b)
that
is
rejected
by
MedImmunepursuant
to
Section
5.4.2(a),
then
(i)
the
Parties
shall
enter
into
the
Co-Development
and
Co-Commercialization
Agreement
in
accordance
with
the
Co-Development
and
Co-Commercialization
Agreement
Terms,
as
promptly
as
practicable
after
such
election
is
made,
subject
to
Section
5.4.3(e),
and
(ii)
effectiveupon
the
effective
date
of
the
Co-Development
and
Co-Commercialization
Agreement,
this
Agreement
shall
terminate
with
respect
to
the
Licensed
Program
inaccordance
with
Section
11.5.
(d)
In
the
event
Kolltan,
pursuant
to
the
Election
Notice,
makes
an
election
under
Section
5.4.1(c)
that
is
not
rejected
byMedImmune
pursuant
to
Section
5.4.2(b),
then
(i)
the
Parties
shall
enter
into
the
Co-Development
and
Co-Commercialization
Agreement
in
accordance
with
theCo-Development
and
Co-Commercialization
Agreement
Terms,
as
promptly
as
practicable
after
such
election
is
made,
subject
to
Section
5.4.3(e),
and
(ii)
effectiveupon
the
effective
date
of
the
Co-Development
and
Co-Commercialization
Agreement,
this
Agreement
shall
terminate
with
respect
to
the
Licensed
Program
inaccordance
with
Section
11.5.
(e)
Notwithstanding
anything
in
this
Agreement
to
the
contrary,
in
the
event
the
Parties
are
required
to
enter
into
the
Co-Development
and
Co-Commercialization
Agreement
pursuant
to
Section
5.4.3(c)
or
5.4.3(d)
but,
for
any
reason,
fail
to
do
so
within
sixty
(60)
days
after
Kolltan’sdelivery
of
the
applicable
Election
Notice,
unless
the
Parties
otherwise
mutually
agree,
either
Party
may
refer
the
matter
to
the
Executive
Officers
for
attemptedresolution
pursuant
to
the
provisions
of
Section
12.1.
In
the
event
that
the
Executive
Officers
are
not
able
to
resolve
within
the
Resolution
Period
any
issuesreferred
to
them
by
a
Party
pursuant
to
this
Section
5.4.3(e),
then:
(i)
Kolltan
shall
conduct
an
auction,
in
a
manner
reasonably
customary
in
the
industry,
for
the
grant
to
a
Third
Party
ofexclusive
rights
(including
with
respect
to
Kolltan
and
MedImmune)
to
the
Licensed
Program,
including
(x)
license
and
sublicense
grants
as
appropriate
fromKolltan
and
MedImmune
and
(y)
transfer
by
MedImmune
of
MedImmune
Manufacturing
Know-How
to
such
Third
Party
or
its
designee
as
necessary
to
enable
theManufacture
of
the
Licensed
Antibody
and
Licensed
Products,
which
transfer
31
obligation
shall
be
analogous
to
the
transfer
obligations
described
in
Section
3.6.3(b)
and
3.6.4(b);
(ii)
Kolltan
shall
determine
in
good
faith
the
Qualified
Bidder
that
is
the
preferred
bidder
and
Kolltan
shall
negotiate,
ingood
faith
on
behalf
of
the
Parties,
the
terms
of
an
agreement
(the
“
Auction
License
Agreement
”)
with
such
Qualified
Bidder
that,
subject
to
the
other
provisionsof
clauses
(i)
through
(v)
of
this
Section
5.4.3(e),
does
not
treat
either
Kolltan
or
MedImmune
preferentially
vis-à-vis
the
other
(the
“
Auction
License
Agreement”);
provided,
however,
that
Kolltan
shall
(x)
reasonably
consult
with
MedImmune
with
respect
to
such
actions
and
provide
sufficient
opportunity
for
MedImmuneto
review
and
comment
upon
the
material
terms
of
such
Auction
License
Agreement,
and
(y)
reasonably
incorporate
any
reasonable
comments
provided
byMedImmune
with
respect
to
any
provisions
of
the
Auction
License
Agreement
relating
to
the
MedImmune
Manufacturing
Know-How
and
otherwise
consider
ingood
faith
any
reasonable
comments
provided
by
MedImmune
with
respect
to
the
Auction
License
Agreement;
and
provided,
further,
that
the
Auction
LicenseAgreement
shall
provide
that
the
proceeds
of
any
payments
to
be
made
by
such
Third
Party
with
respect
to
the
Licensed
Program
shall
be
split
evenly
between
theParties,
subject
to
the
provisions
of
clause
(iv)
below;
(iii)
upon
the
completion
of
such
negotiations,
Kolltan
and
MedImmune
shall
execute
the
Auction
License
Agreementwith
such
Third
Party;
(iv)
(x)
upon
execution
of
the
Auction
License
Agreement,
each
Party
shall
provide
the
other
Party
with
written
noticeof
the
reasonable
expenses,
including
reasonable
attorneys’
fees,
incurred
by
such
Party
in
connection
with
their
activities
under
clauses
(i)
through
(iii)
above(along
with
reasonable
supporting
documentation
as
requested
by
the
other
Party),
and
Kolltan
or
MedImmune,
as
the
case
may
be,
shall
make
an
appropriatereconciling
payment
to
the
other
so
that,
after
giving
effect
to
such
reconciling
payment,
each
Party
will
have
borne
fifty
percent
(50%)
of
their
collective
expensesdescribed
in
this
clause
(x),
and
(y)
MedImmune’s
share
of
the
proceeds
of
any
payments
to
be
made
by
the
applicable
Third
Party
with
respect
to
the
LicensedProgram
shall
be
paid
to
Kolltan
(whether
directly
from
such
Third
Party
or
from
MedImmune
following
its
receipt
thereof)
until
such
time
as
Kolltan
has
receivedfrom
MedImmune’s
share
of
such
proceeds
the
amount
that
MedImmune
would
have
been
obligated
to
pay
Kolltan
under
the
applicable
scenario
as
an
upfrontpayment
under
the
Co-Development
and
Co-Commercialization
Agreement
(as
set
forth
in
the
“Upfront
payment”
section
of
Exhibit
5.4.1(c)
);
and
(v)
effective
upon
the
effective
date
of
the
Auction
License
Agreement,
this
Agreement
shall
terminate
with
respect
tothe
Licensed
Program
in
accordance
with
Section
11.5.
5.4.4
Determination
of
Kolltan
Development
Costs
.
The
amount
payable
by
Kolltan
or
MedImmune,
as
applicable,
under
Section
5.4.3
orpursuant
to
the
Co-Development
and
Co-Commercialization
Agreement
shall
be
based
on
Kolltan’s
good
faith
estimate,
as
delivered
to
MedImmune
together
withthe
Election
Notice
or
in
the
most
recent
update
described
in
the
last
sentence
of
Section
5.4.1,
of
the
Kolltan
Development
Costs
as
of
the
end
of
the
calendarmonth
immediately
preceding
the
calendar
month
in
which
the
applicable
payment
32
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
would
be
made
under
the
applicable
scenario
(the
“
Estimated
Kolltan
Development
Costs
”);
provided,
however,
that
within
thirty
(30)
days
after
the
applicablepayment
is
made,
Kolltan
shall
provide
written
notice
to
MedImmune
of
its
final
determination
of
the
Kolltan
Development
Costs
as
of
the
end
of
the
calendarmonth
immediately
preceding
the
calendar
month
in
which
such
payment
was
made
(the
“
Final
Kolltan
Development
Costs
”),
together
with
reasonable
supportingdocumentation.
In
the
event
there
was
any
underpayment
or
overpayment
by
the
applicable
Party
based
on
Kolltan’s
final
determination,
an
appropriatereconciling
payment
shall
be
made
within
thirty
(30)
days
after
delivery
of
such
notice.
Kolltan’s
determination
of
the
Final
Kolltan
Development
Costs
shall
besubject
to
MedImmune’s
rights
as
an
Auditing
Party
under
Section
6.10;
provided,
however,
that
(a)
MedImmune’s
right
to
audit
the
Final
Kolltan
DevelopmentCosts
pursuant
to
this
Section
5.4.4
shall
be
independent
of
the
determination
of
whether
MedImmune
has
exercised
its
annual
right
as
an
Auditing
Party
in
anyapplicable
year
pursuant
to
Section
6.10,
(b)
MedImmune
shall
pay
the
full
cost
of
such
audit
unless
(i)
the
applicable
payment
made
by
Kolltan
or
MedImmune
inaccordance
with
Section
5.4.3
was
calculated
on
the
basis
of
the
Kolltan
Development
Costs
and
(ii)
such
audit
shows
that
the
Final
Kolltan
Development
Costsexceeded
[**]
percent
([**]%)
of
the
Kolltan
Development
Costs
as
of
the
end
of
the
calendar
month
immediately
preceding
the
calendar
month
in
which
suchpayment
was
made,
as
determined
by
the
auditors
(the
“
Actual
Kolltan
Development
Costs
”),
in
which
case
Kolltan
shall
pay
the
full
cost
of
such
audit,
and
(c)
if(i)
the
applicable
payment
made
by
Kolltan
or
MedImmune
in
accordance
with
Section
5.4.3
was
calculated
on
the
basis
of
the
Kolltan
Development
Costs
and(ii)
such
audit
shows
that
the
Actual
Kolltan
Development
Costs
exceeded
[**]
percent
([**]%)
of
the
Estimated
Kolltan
Development
Costs,
then
Kolltan
shall
besolely
responsible
for
such
excess
costs;
provided,
however,
that
for
purposes
of
this
clause
(c),
Actual
Kolltan
Development
Costs
excludes
any
KolltanDevelopment
Costs
incurred
in
any
calendar
month
after
the
calendar
month
that
Kolltan
projected
(for
purposes
of
the
Estimated
Kolltan
Development
Costscalculation)
to
be
the
calendar
month
immediately
preceding
the
calendar
month
in
which
the
applicable
payment
would
be
made
under
the
applicable
scenariounder
Section
5.4.3
or
pursuant
to
the
Co-Development
and
Co-Commercialization
Agreement,
to
the
extent
such
payment
was
actually
made
in
a
later
calendarmonth
due
to
(x)
the
actual
time
required
for
the
negotiation
of
the
Co-Development
and
Co-Commercialization
Agreement
or
(y)
any
delay
caused
byMedImmune.
5.5
Restriction
.
Prior
to
and
during
the
Trigger
Period
and
any
Option
Period,
Kolltan
shall
not
initiate
discussions
with
any
Third
Party
regarding,or
consummate,
any
Third
Party
Transaction.
“
Third
Party
Transaction
”
means
any
acquisition
by
a
Third
Party
of,
or
the
grant
of
any
license
or
sublicense
to
aThird
Party
under,
Kolltan’s
rights
to
Research,
Develop,
Manufacture,
or
Commercialize
the
Licensed
Antibody
or
Licensed
Products;
provided,
however,
thatany
transaction
that
does
not
conflict
with
MedImmune’s
rights
under
Section
5.4,
including
any
Kolltan
Sale
or
Financing
or
any
assignment
or
deemedassignment
of
this
Agreement
by
Kolltan
in
connection
with
a
Kolltan
Sale
or
Financing,
shall
not
be
deemed
a
Third
Party
Transaction.
33
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
ARTICLE 6 PAYMENTS
6.1
Upfront
Fee
.
Kolltan
shall
pay
MedImmune
a
non-refundable,
non-creditable
payment
of
Four
Million
Dollars
($4,000,000)
within
forty-five(45)
days
after
the
Effective
Date
(the
“
Upfront
Fee
”).
6.2
Development
Milestones
.
6.2.1
Development
Milestones
.
For
each
milestone
event
set
forth
in
the
following
table,
Kolltan
shall
pay
the
corresponding
non-refundable,
non-creditable
amount
solely
for
the
first
achievement
thereof
(regardless
of
the
number
of
times
such
milestone
event
is
achieved)
by
Kolltan
or
itsAffiliates
or
Sublicensees:
Milestone Event Payment Amount
(a)
[**]
[**](b)
[**]
[**](c)
[**]
[**](d)
[**]
[**](e)
[**]
[**](f)
[**]
[**](g)
[**]
[**](h)
[**]
[**](i)
[**]
[**]
6.2.2
Notification;
Payment
.
Kolltan
shall
notify
MedImmune
in
writing
promptly,
and
in
no
event
beyond
thirty
(30)
days,
after
a
milestoneevent
described
in
Section
6.2.1
has
been
achieved,
and
the
corresponding
milestone
payment
shall
be
due
within
forty-five
(45)
days
after
receipt
of
thecorresponding
invoice
from
MedImmune.
6.2.3
Milestones
for
Non-Major
Indications
.
Notwithstanding
anything
to
the
contrary
herein,
in
the
event
that
Kolltan
achieves
Annual
NetSales
of
at
least
[**]
Dollars
($[**])
for
any
Licensed
Product
for
an
indication
not
considered
to
be
a
Major
Indication,
then
Kolltan
shall
pay
to
MedImmune(a)
the
amount
set
forth
in
Section
6.2.1(b)
(if
such
payment
has
not
already
been
made)
or
6.2.1(e)
(if
the
payment
set
forth
in
Section
6.2.1(b)
has
already
beenmade
but
the
payment
set
forth
in
Section
6.2.1(e)
has
not
already
been
made);
provided,
however,
that
if
the
payments
set
forth
in
Sections
6.2.1(b)
and6.2.1(e)
have
both
already
been
made,
Kolltan
shall
not
be
required
to
make
any
additional
payments
pursuant
to
this
clause
(a);
34
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(b)
if
the
First
Commercial
Sale
of
such
Licensed
Product
for
such
indication
in
the
United
States
has
occurred
as
of
the
achievement
of
such
level
of
Annual
NetSales,
the
amount
set
forth
Section
6.2.1(c)
(if
such
payment
has
not
already
been
made)
or
6.2.1(f)
(if
the
payment
set
forth
in
Section
6.2.1(c)
has
already
beenmade
but
the
payment
set
forth
in
Section
6.2.1(f)
has
not
already
been
made);
provided,
however,
that
if
the
First
Commercial
Sale
of
such
Licensed
Product
forsuch
indication
in
the
United
States
has
not
occurred
as
of
the
achievement
of
such
level
of
Annual
Net
Sales
,
the
applicable
payment
shall
be
made
at
such
time(if
any)
as
such
First
Commercial
Sale
occurs;
and
provided,
further,
that
if
the
payments
set
forth
in
Sections
6.2.1(c)
and
6.2.1(f)
have
both
already
been
made
asof
the
achievement
of
such
level
of
Annual
Net
Sales,
Kolltan
shall
not
be
required
to
make
any
additional
payments
pursuant
to
this
clause
(b);
and
(c)
if
the
FirstCommercial
Sale
of
such
Licensed
Product
for
such
indication
in
the
EU
has
occurred
as
of
the
achievement
of
such
level
of
Annual
Net
Sales,
the
amount
set
forthSection
6.2.1(d)
(if
such
payment
has
not
already
been
made)
or
6.2.1(g)
(if
the
payment
set
forth
in
Section
6.2.1(d)
has
already
been
made
but
the
payment
setforth
in
Section
6.2.1(g)
has
not
already
been
made);
provided,
however,
that
if
the
First
Commercial
Sale
of
such
Licensed
Product
for
such
indication
in
the
EUhas
not
occurred
as
of
the
achievement
of
such
level
of
Annual
Net
Sales,
the
applicable
payment
shall
be
made
at
such
time
(if
any)
as
such
First
Commercial
Saleoccurs;
and
provided,
further,
that
if
the
payments
set
forth
in
Sections
6.2.1(d)
and
6.2.1(g)
have
both
already
been
made
as
of
the
achievement
of
such
level
ofAnnual
Net
Sales,
Kolltan
shall
not
be
required
to
make
any
additional
payments
pursuant
to
this
clause
(c).
6.2.4
Follow-On
Products
.
The
foregoing
provisions
of
this
Section
6.2
(excluding
subsection
(a)
of
Section
6.2.1)
shall
apply,
mutatismutandis,
to
Follow-On
Products;
provided,
however,
that
except
for
the
payments
set
forth
in
subsections
(h)
and
(i)
of
Section
6.2.1,
the
amounts
payable
byKolltan
under
this
Section
6.2
with
respect
to
Follow-On
Products
shall
be
[**]
percent
([**]%)
of
the
corresponding
amounts
payable
by
Kolltan
under
thisSection
6.2
with
respect
to
Licensed
Products.
6.2.5
Clarification
.
For
clarity,
the
maximum
aggregate
amount
payable
by
Kolltan
under
this
Section
6.2
is
(a)
with
respect
to
LicensedProducts,
[**]
Dollars
($[**]),
and
(b)
with
respect
to
Follow-On
Products,
[**]
Dollars
($[**]).
6.3
Sales
Milestones
.
6.3.1
Sales
Milestone
Payments
.
For
each
milestone
event
set
forth
in
the
following
table,
Kolltan
shall
pay
the
corresponding
non-refundable,
non-creditable
amount
solely
for
the
first
achievement
thereof
(regardless
of
the
number
of
times
such
milestone
event
is
achieved):
Milestone Event Payment Amount
(a)
Annual
Net
Sales
of
a
single
Licensed
Product
in
a
single
Calendar
Year
in
excessof
[**]
Dollars
($[**])
[**]
35
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(b)
Annual
Net
Sales
of
a
single
Licensed
Product
in
a
single
Calendar
Year
in
excessof
[**]
Dollars
($[**])
[**]
(c)
Annual
Net
Sales
of
a
single
Licensed
Product
in
a
single
Calendar
Year
in
excessof
[**]
Dollars
($[**])
[**]
6.3.2
Payment
.
Milestone
payments
payable
under
this
Section
6.3
shall
be
paid
by
Kolltan
in
accordance
with
Section
6.6.
6.3.3
Follow-On
Products
.
The
foregoing
provisions
of
this
Section
6.3
shall
apply,
mutatis
mutandis,
to
Follow-On
Products;
provided,however,
that
the
amounts
payable
by
Kolltan
under
this
Section
6.3
with
respect
to
Follow-On
Products
shall
be
[**]
percent
([**]%)
of
the
correspondingamounts
payable
by
Kolltan
under
this
Section
6.3
with
respect
to
Licensed
Products.
6.3.4
Clarification
.
For
clarity,
the
maximum
aggregate
amount
payable
by
Kolltan
under
this
Section
6.3
is
(a)
with
respect
to
LicensedProducts,
[**]
Dollars
($[**]),
and
(b)
with
respect
to
Follow-On
Products,
[**]
Dollars
($[**]).
6.4
Royalties
.
6.4.1
Annual
Net
Sales
.
Subject
to
Sections
6.4.2
and
6.4.3,
for
each
Licensed
Product
in
any
Calendar
Year,
Kolltan
shall
pay
MedImmuneroyalties
on
Annual
Net
Sales
of
such
Licensed
Product
in
such
Calendar
Year
at
the
following
rates:
Annual Net Sales Level Rate
(a)
On
that
portion
of
Annual
Net
Sales
of
such
Licensed
Product
in
such
CalendarYear
that
is
less
than
or
equal
to
[**]
Dollars
($[**])
[**]
Percent
([**]%)
(b)
On
that
portion
of
Annual
Net
Sales
of
such
Licensed
Product
in
such
CalendarYear
that
is
more
than
[**]
Dollars
($[**])
but
less
than
or
equal
to
[**]
($[**])
[**]
Percent
([**]%)
(c)
On
that
portion
of
Annual
Net
Sales
of
such
Licensed
Product
in
such
CalendarYear
that
is
greater
than
[**]
Dollars
($[**])
[**]
Percent
([**]%)
36
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
6.4.2
MRC
Agreement
.
In
addition
to
the
royalties
described
in
Section
6.4.1,
for
each
Licensed
Product,
Kolltan
shall
pay
MedImmune
aroyalty
equal
to
[**]
percent
([**]%)
of
Net
Sales
of
such
Licensed
Product.
Notwithstanding
the
foregoing,
if
for
any
sale
or
other
transfer
for
consideration
ofany
Licensed
Product
by
Kolltan
or
its
applicable
Affiliate
or
Sublicensee,
MedImmune
or
its
applicable
Affiliate
is
not
required
to
pay
royalties
under
the
MRCAgreement,
or
is
required
to
pay
royalties
under
the
MRC
Agreement
at
a
rate
that
is
lower
than
[**]
percent
([**]%)
of
Net
Sales
of
such
Licensed
Product,
thenthe
royalty
payable
by
Kolltan
to
MedImmune
under
this
Section
6.4.2
with
respect
to
such
sale
or
other
transfer
for
consideration
shall
be
accordingly
reduced.
MedImmune
shall
promptly
notify
Kolltan
of
the
occurrence
of
any
event
or
circumstance
that
would
trigger
a
reduced
royalty
payment
obligation
under
theprevious
sentence.
6.4.3
Reductions
.
(a)
Third
Party
Royalty
Reduction
.
If
Kolltan
or
its
Affiliate
or
Sublicensee
decides
in
its
sole
discretion
to
acquire
a
license
orother
rights
from
any
Third
Party
(other
than
under
any
In-Licensed
IP)
under
any
Patents
or
Know-How
controlled
by
such
Third
Party
in
order
to
Research,Develop,
Manufacture,
or
Commercialize
the
Licensed
Antibody
or
Licensed
Products
without
infringing
or
misappropriating
such
Patents
or
Know-How
and,pursuant
to
the
applicable
agreement
with
such
Third
Party,
is
required
to
pay
royalties
based
on
sales
of
a
Licensed
Product
by
Kolltan
or
its
applicable
Affiliate
orSublicensee
in
any
Calendar
Quarter,
then
the
royalties
that,
but
for
this
Section
6.4.3(a)
and
Section
6.4.3(b),
would
be
payable
by
Kolltan
to
MedImmune
withrespect
to
sales
of
such
Licensed
Product
in
such
Calendar
Quarter
shall
be
reduced
by
[**]
percent
([**]%)
of
the
royalties
payable
by
Kolltan
or
its
applicableAffiliate
or
Sublicensee
under
such
Third
Party
agreement
with
respect
to
sales
of
such
Licensed
Product
in
such
Calendar
Quarter;
provided,
however,
that
thisSection
6.4.3(a)
shall
not
operate
to
reduce
(i)
the
royalties
that,
but
for
this
Section
6.4.3(a)
and
Section
6.4.3(b),
would
be
payable
by
Kolltan
to
MedImmune
withrespect
to
sales
of
such
Licensed
Product
in
such
Calendar
Quarter
by
more
than
[**]
percent
([**]%),
or
(ii)
the
royalties
payable
under
Section
6.4.2.
(b)
Know-How
Only
Reduction
.
If,
for
any
portion
of
any
Calendar
Quarter,
any
Licensed
Product
sold
by
Kolltan
or
itsAffiliates
or
Sublicensees
in
any
country
is
not
Covered
by
a
Valid
Claim
of
an
issued
MedImmune
Patent
in
such
country,
then
the
royalties
that,
but
for
thisSection
6.4.3(b)
(but
after
giving
effect
to
Section
6.4.3(a)),
would
be
payable
by
Kolltan
to
MedImmune
with
respect
to
sales
of
such
Licensed
Product
in
suchcountry
in
such
Calendar
Quarter
shall
be
reduced
by
[**]
percent
([**]%);
provided,
however,
that
this
Section
6.4.3(b)
shall
not
operate
to
reduce
the
royaltiespayable
under
Section
6.4.2.
6.4.4
Payments
under
Certain
In-License
Agreements
.
Each
Party
shall
perform
its
obligations
under
Exhibit
6.4.4
.
6.4.5
Effect
of
Expiration
of
Royalty
Term
.
On
a
Licensed
Product
by
Licensed
Product
and
country-by-country
basis,
upon
expiration
ofthe
Royalty
Term
for
a
Licensed
Product
in
a
country,
the
rights,
licenses
and
sublicenses
granted
to
Kolltan
hereunder
with
respect
to
such
Licensed
Product
insuch
country
shall
continue
in
effect
but
become
fully
paid-
37
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
up,
royalty-free,
transferable
(to
the
extent
not
transferable
previously),
perpetual
and
irrevocable.
6.4.6
Follow-On
Products
.
The
foregoing
provisions
of
this
Section
6.4
(including
Exhibit
6.4.4
)
shall
apply,
mutatis
mutandis,
to
Follow-On
Products;
provided,
however,
that
except
with
respect
to
the
royalties
payable
pursuant
to
Section
6.4.2
and
the
payments
described
in
Exhibit
6.4.4
,
theamounts
payable
by
Kolltan
under
this
Section
6.4
with
respect
to
Follow-On
Products
shall
be
[**]
percent
([**]%)
of
the
corresponding
amounts
payable
byKolltan
under
this
Section
6.4
with
respect
to
Licensed
Products.
6.5
Healthcare
Reform
Tax
.
Notwithstanding
anything
herein
to
the
contrary,
for
purposes
of
determining
the
sales
milestones
and
royalties
payableby
Kolltan
under
Sections
6.2.4
and
6.4,
Kolltan
shall
have
the
right
to
offset
from
Net
Sales
of
Licensed
Products
sold
in
the
United
States
that
portion
of
theannual
fee
paid
by
Kolltan
and
its
Affiliates
and
Sublicensees
to
the
United
States
Government
pursuant
to
Section
9008
of
the
Patient
Protection
and
AffordableCare
Act,
Pub.
L.
No.
111-148
(as
may
be
amended)
reasonably
attributable
to
Licensed
Products,
as
determined
in
accordance
with
an
equitable
method
as
agreedin
good
faith
by
the
Parties.
This
Section
6.5
shall
apply,
mutatis
mutandis,
to
Follow-On
Products.
6.6
Reports;
Payments
.
Within
sixty
(60)
days
after
the
end
of
each
Calendar
Quarter
during
which
there
are
Net
Sales
giving
rise
to
a
paymentobligation
under
Section
6.2.4
or
6.4,
Kolltan
shall
submit
to
MedImmune
a
report
identifying
for
each
Licensed
Product,
the
Net
Sales
of
such
Licensed
Productfor
each
country
for
such
Calendar
Quarter,
the
calculation
of
royalties
(including
gross
sales
and
all
deductions
taken
from
gross
sales),
and
the
sales
milestonesand
royalties
payable
to
MedImmune.
Together
with
the
delivery
of
each
such
report,
Kolltan
shall
pay
to
MedImmune
the
sales
milestones
and
royalties
payableby
it
under
Sections
6.2.4
and
6.4.
This
Section
6.6
shall
apply,
mutatis
mutandis,
to
Follow-On
Products.
6.7
Methods
of
Payments
.
All
payments
due
under
this
Agreement
shall
be
paid
in
Dollars
by
wire
transfer
to
a
bank
in
the
United
Statesdesignated
in
writing
by
MedImmune.
For
the
purpose
of
calculating
any
amounts
due
under,
or
otherwise
reimbursable
pursuant
to,
this
Agreement
(including
thecalculation
of
Net
Sales
expressed
in
currencies
other
than
Dollars),
a
Party
shall
convert
any
amount
expressed
in
a
foreign
currency
into
Dollar
equivalents
usingits,
its
Affiliate’s
or
Sublicensee’s
standard
conversion
methodology
consistent
with
the
Accounting
Standards.
6.8
Late
Payments
.
Any
amount
owed
by
a
Party
to
the
other
Party
under
this
Agreement
that
is
not
paid
on
or
before
the
date
such
payment
is
dueas
set
forth
herein
shall
bear
interest
at
a
rate
per
annum
equal
to
the
lower
of
(i)
[**],
or
(ii)
the
highest
rate
permitted
by
Applicable
Law.
6.9
Taxes
.
6.9.1
Withholding
Taxes
.
All
payments
due
and
payable
by
a
Party
(the
“
Paying
Party
”)
under
this
Agreement
will
be
made
without
anydeduction
or
withholding,
unless
such
deduction
or
withholding
tax
is
required
by
Applicable
Law.
If
the
Paying
Party
is
so
required
to
deduct
or
withhold,
thePaying
Party
shall
(a)
promptly
notify
the
other
Party
(the
38
“
Non-Paying
Party
”)
of
such
requirement;
(b)
remit
to
the
relevant
authorities
the
full
amount
required
to
be
deducted
or
withheld
promptly
upon
the
earlier
ofdetermining
that
such
deduction
or
withholding
is
required
or
receiving
notice
that
such
amount
has
been
assessed
against
the
Non-Paying
Party;
and
(c)
promptlyforward
to
the
Non-Paying
Party
an
official
receipt
(or
certified
copy),
or
other
documentation
reasonably
acceptable
to
the
Non-Paying
Party
evidencing
suchpayment
to
such
authorities.
Notwithstanding
the
foregoing,
if
the
Non-Paying
Party
is
entitled
under
any
applicable
tax
treaty
to
a
reduction
of
rate
of,
or
theelimination
of,
or
recovery
of,
the
applicable
deduction
or
withholding
tax,
it
may
deliver
to
the
Paying
Party
or
the
appropriate
governmental
authority
(with
theassistance
of
the
Paying
Party
to
the
extent
that
this
is
reasonably
required)
the
prescribed
forms
necessary
to
reduce
the
deduction
or
applicable
rate
of
withholdingor
to
relieve
the
Paying
Party
of
its
obligation
to
deduct
or
withhold
tax,
and
the
Paying
Party
shall
apply
the
reduced
deduction
or
rate
of
withholding,
or
dispensewith
deduction
or
withholding,
as
the
case
may
be,
provided
that
the
Paying
Party
has
received
evidence
of
the
Non-Paying
Party’s
delivery
of
all
applicable
forms(and,
if
necessary,
its
receipt
of
appropriate
governmental
authorization).
6.9.2
Withholding
Taxes
Resulting
from
Withholding
Tax
Action
.
If
the
Paying
Party
(or
its
Affiliates
or
successors)
is
required
to
make
apayment
to
the
Non-Paying
Party
subject
to
a
deduction
or
withholding
of
tax,
then
if
such
deduction
or
withholding
of
tax
obligation
arises
or
is
increased
solelyas
a
result
of
the
assignment
or
transfer
of
all
or
a
portion
of
this
Agreement
by
the
Paying
Party
(or
its
Affiliates
or
successors)
as
a
result
of
which
payments
ariseor
are
deemed
to
arise
in
a
territory
other
than
in
the
United
States,
or
there
is
a
change
in
the
tax
residency
of
the
Paying
Party
(or
its
Affiliates
or
successors),
orthe
payments
arise
or
are
deemed
to
arise
through
a
branch
of
the
Paying
Party
in
a
territory
other
than
the
United
States
(a
“
Paying
Party
Withholding
Tax
Action”),
then
notwithstanding
any
other
provision
in
this
Agreement,
the
payment
by
the
Paying
Party
(in
respect
of
which
such
deduction
and
withholding
of
tax
isrequired
to
be
made)
shall
be
increased
by
the
amount
necessary
to
ensure
that
the
Non-Paying
Party
receives
an
amount
equal
to
the
same
amount
that
it
wouldhave
received
had
no
Paying
Party
Withholding
Tax
Action
occurred.
6.9.3
Indirect
Taxes
.
All
payments
are
exclusive
of
Indirect
Taxes.
If
any
Indirect
Taxes
are
chargeable
in
respect
of
any
payments,
thePaying
Party
shall
pay
such
Indirect
Taxes
at
the
applicable
rate
in
respect
of
such
payments
following
receipt,
where
applicable,
of
an
Indirect
Taxes
invoice
in
theappropriate
form
issued
by
the
Non-Paying
Party
in
respect
of
those
payments.
The
Parties
shall
issue
invoices
for
all
amounts
payable
under
this
Agreementconsistent
with
Indirect
Tax
requirements
and
irrespective
of
whether
the
sums
may
be
netted
for
settlement
purposes.
If
such
amounts
of
Indirect
Taxes
arerefunded
to
the
Non-Paying
Party
by
the
applicable
tax
authority
or
other
fiscal
authority
subsequent
to
payment,
the
Non-Paying
Party
will
transfer
such
amount
tothe
Paying
Party
within
forty-five
(45)
days
of
receipt.
For
purposes
of
this
section,
“
Indirect
Taxes
”
shall
mean
value
added
taxes,
sales
taxes,
consumption
taxesand
other
similar
taxes.
6.10
Books
and
Records;
Audit
Rights
.
Each
Party
(the
“
Audited
Party
”)
shall
keep
(and,
in
the
case
of
Kolltan,
shall
cause
its
Affiliates
andSublicensees
to
keep)
complete,
true
and
accurate
books
and
records
in
accordance
with
the
Accounting
Standards
in
sufficient
detail
for
the
other
Party
(the
“Auditing
Party
”)
to
determine
the
amount
of
any
payments
due
to
such
Party
under
this
Agreement.
Each
Auditing
Party
shall
have
the
right,
once
annually
at
itsown
expense,
to
39
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
have
an
independent,
certified
public
accounting
firm
of
nationally
recognized
standing,
selected
by
the
Auditing
Party
and
reasonably
acceptable
to
the
AuditedParty,
review
any
such
records
of
the
Audited
Party
in
the
location(s)
where
such
records
are
maintained
by
the
Audited
Party
upon
reasonable
notice
(which
shallbe
no
less
than
thirty
(30)
days’
prior
written
notice)
and
during
regular
business
hours
and
under
obligations
of
confidence,
for
the
sole
purpose
of
verifying
theaccuracy
of
the
amounts
paid
under
this
Agreement
within
a
two
(2)
year
period
preceding
the
date
of
the
request
for
review.
The
Audited
Party
shall
(and,
in
thecase
of
Kolltan
as
the
Audited
Party,
shall
cause
its
Affiliates
and
Sublicensees
to)
make
its
(and
their)
personnel
reasonably
available
to
answer
queries
reasonablyrequired
for
such
report.
The
report
of
such
accounting
firm
shall
be
limited
to
a
certificate
stating
whether
any
report
made
or
invoice
or
payment
submitted
by
theAudited
Party
during
such
period
is
accurate
or
inaccurate
and
the
amounts
of
any
discrepancy.
No
other
information
shall
be
provided
to
the
Auditing
Party.
TheAudited
Party
shall
receive
a
copy
of
each
such
report
concurrently
with
receipt
by
the
Auditing
Party.
Should
such
inspection
lead
to
the
discovery
of
adiscrepancy
to
the
Auditing
Party’s
detriment,
the
Audited
Party
shall
pay
the
amount
of
the
discrepancy
within
thirty
(30)
days
after
its
receipt
from
theaccounting
firm
of
the
certificate
showing
the
amount
of
the
discrepancy.
The
Auditing
Party
shall
pay
the
full
cost
of
the
review
unless
the
underpayment
isgreater
than
[**]
percent
([**]%)
of
the
amount
due
for
the
applicable
period,
in
which
case
the
Audited
Party
shall
pay
the
reasonable
costs
charged
by
suchaccounting
firm
for
such
review.
ARTICLE 7 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS
7.1
Inventorship
.
Inventorship
for
patentable
inventions
made
in
the
course
of
Research,
Development,
Manufacture
or
Commercialization
of
theLicensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
and
Follow-On
Products
shall
be
determined
in
accordance
with
the
patent
laws
of
the
jurisdictionwhere
the
invention
was
made;
provided,
however,
that
the
issue
as
to
whether
any
such
invention
is
jointly
made
by
the
Parties
shall
be
determined
in
accordancewith
the
substantive
Applicable
Laws
of
the
United
States,
irrespective
of
the
country
in
which
such
invention
is
made.
7.2
Ownership
.
Subject
to
the
rights
and
licenses
granted
to
Kolltan
under
this
Agreement,
as
between
the
Parties,
MedImmune
shall
own
the
entireright,
title
and
interest
in
and
to
all
inventions
and
discoveries
(and
Patents
claiming
patentable
inventions
therein)
first
made
or
discovered
solely
by
employees
orconsultants
of
MedImmune
or
its
Affiliates
or
acquired
solely
by
MedImmune
or
its
Affiliates
in
the
course
of
Research,
Development
or
Manufacture
of
theLicensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
and
Follow-On
Products.
Kolltan
shall
own
the
entire
right,
title
and
interest
in
and
to
all
inventionsand
discoveries
(and
Patents
claiming
patentable
inventions
therein)
first
made
or
discovered
solely
by
employees
or
consultants
of
Kolltan
or
its
Affiliates
oracquired
solely
by
Kolltan
or
its
Affiliates
in
the
course
of
Research,
Development,
Manufacture
or
Commercialization
of
the
Licensed
Antibody,
LicensedProducts,
Follow-On
Antibodies
and
Follow-On
Products.
Each
Party
shall
own
an
undivided,
one-half
interest
in
any
Joint
IP
and,
subject
to
the
terms
andconditions
of
this
Agreement,
shall
retain
the
right
to
practice
under
such
interest
without
the
consent
of
or
accounting
to
the
other.
Subject
to
the
terms
of
thisAgreement,
the
rights
of
the
Parties
as
joint
owners
shall
be
determined
in
accordance
with
the
substantive
Applicable
Laws
40
of
the
United
States,
irrespective
of
the
country
in
which
any
invention
or
discovery
is
made
or
discovered.
7.3
Prosecution
and
Maintenance
of
Patents
.
7.3.1
Kolltan
Rights.
(a)
Kolltan
shall
have
(i)
the
sole
right,
at
Kolltan’s
discretion
and
expense,
to
file,
prosecute,
and
maintain
(including
withrespect
to
any
interference,
derivation,
re-issuance,
re-examination,
opposition
or
other
post-grant
proceedings)
any
Kolltan
Patents
throughout
the
world,
and(ii)
the
first
right,
at
Kolltan’s
discretion
(subject
to
the
remainder
of
this
Section
7.3.1),
to
file,
prosecute,
and
maintain
(including
with
respect
to
any
interference,derivation,
re-issuance,
re-examination,
opposition
or
other
post-grant
proceedings)
(x)
any
MedImmune
Patents
throughout
the
world
(subject
to
Section
12.10
ofthe
Dyax
Agreement)
and
(y)
any
Joint
Patents
throughout
the
world.
(b)
Promptly
after
the
Effective
Date,
MedImmune
shall
transfer
or
disclose
to
Kolltan,
in
whatever
manner
or
form
Kolltan
mayreasonably
request,
all
documents,
correspondence
and
other
information
and
materials
Controlled
by
MedImmune
as
of
the
Effective
Date
that
relate
to
theMedImmune
Patents
as
reasonably
necessary
for
Kolltan
to
exercise
its
rights
under
clause
(ii)(x)
of
Section
7.3.1(a).
Such
transfers
and
disclosures
shall
be
made(i)
in
any
manner
or
form
reasonably
requested
by
Kolltan
and
(ii)
at
MedImmune’s
expense;
provided,
however,
if
at
Kolltan’s
request
any
such
transfer
ordisclosure
is
made
in
any
manner
or
form
that
is
not
reasonably
standard
in
the
biopharmaceutical
industry
for
transfers
or
disclosures
of
a
similar
kind,
suchtransfer
or
disclosure
shall
be
made
at
Kolltan’s
expense.
(c)
MedImmune
shall
reimburse
Kolltan
for
the
reasonable
Out-of-Pocket
Costs
of
Kolltan
in
the
filing,
prosecution
andmaintenance
of
any
MedImmune
Patent
or
Joint
Patent;
provided,
however,
that
MedImmune
shall
have
the
right
to
assign
any
such
Patent
in
any
country
(or,
incase
of
a
Joint
Patent,
to
assign
MedImmune’s
interest
in
such
Joint
Patent
in
any
country)
to
Kolltan,
in
which
case
such
Patent
(or
Joint
Patent)
in
such
countryshall
thereafter
be
deemed
a
Kolltan
Patent,
or
(in
the
case
of
a
MedImmune
Patent)
to
cause
the
abandonment
of
any
such
Patent
in
any
country,
at
Kolltan’selection,
and
thereby
to
terminate
MedImmune’s
obligation
to
reimburse
such
costs
incurred
thereafter,
upon
thirty
(30)
days’
written
notice
to
Kolltan.
Kolltanwill
provide
an
invoice
to
MedImmune
for
reimbursement
of
Out-of-Pocket
Costs
within
90
days
of
receiving
an
invoice
from
a
Third
Party
for
such
Out-of-PocketCosts.
(d)
The
Parties
shall
work
together
in
good
faith
to
agree
upon
a
strategy
for
the
prosecution
of
any
MedImmune
Patents
and
JointPatents,
including
the
list
of
countries
in
which
such
Patents
will
be
filed;
provided,
however,
that
(subject
to
Section
7.3.1(e))
Kolltan
shall
have
the
final
right
tomake
such
determinations.
Kolltan
shall
provide
MedImmune
with
a
draft
of
any
prosecution
filing
related
to
any
MedImmune
Patents
or
Joint
Patents
at
leastthirty
(30)
days
in
advance
of
submission
(or,
if
such
timing
is
not
practicable,
as
far
in
advance
of
submission
as
practicable)
and
shall
provide
MedImmune
anopportunity
to
provide
comments
on
and
make
requests
of
Kolltan
concerning
such
filing
and
shall
consider
in
good
faith
any
comments
or
requests
regarding
suchfiling
that
MedImmune
may
timely
provide.
In
41
addition,
Kolltan
shall
provide
to
MedImmune
such
other
information
related
to
prosecution
of
any
MedImmune
Patents
or
Joint
Patents
as
MedImmune
may
fromtime
to
time
reasonably
request
to
allow
MedImmune
to
track
prosecution
and
maintenance
of
such
Patents
and
shall
consider
in
good
faith
any
comments
thatMedImmune
may
provide
with
respect
to
such
matters.
(e)
Kolltan
shall
give
MedImmune
written
notice
reasonably,
but
in
no
event
less
than
thirty
(30)
days,
in
advance
of
any
decisionby
Kolltan
not
to
file
an
application
for
or
to
abandon
the
prosecution
of
or
otherwise
not
maintain
or
extend
any
MedImmune
Patent
or
Joint
Patent
in
anycountry.
Upon
receiving
such
notice,
MedImmune
shall
have
the
right,
at
its
own
cost,
to
file,
prosecute,
maintain
and
extend,
as
the
case
may
be,
suchMedImmune
Patent
or
Joint
Patent,
in
MedImmune’s
name,
in
such
country;
provided,
however,
that
MedImmune
shall
not
exercise
such
right
without
the
priorwritten
consent
of
Kolltan
(which
Kolltan
may
withhold
in
its
sole
discretion)
if
Kolltan’s
decision
not
to
file
an
application
for
or
to
abandon
the
prosecution
of
orotherwise
not
maintain
or
extend
such
MedImmune
Patent
or
Joint
Patent
is
made
for
strategic
business
reasons
(e.g.,
in
countries
with
compulsory
licensingpolicies).
If
MedImmune
exercises
its
rights
under
this
Section
7.3.1(e)
with
respect
to
any
Joint
Patent
in
any
country,
Kolltan
shall
(i)
assign
its
entire
right,
titleand
interest
in
such
Joint
Patent
in
such
country
to
MedImmune,
(ii)
use
reasonable
efforts
to
make
its
authorized
attorneys,
agents
or
representatives
available
toMedImmune
and
to
assist
MedImmune
in
obtaining
and
maintaining
such
patent
protection,
and
(iii)
sign
or
use
reasonable
efforts
to
have
signed
all
legaldocuments
necessary
to
file
and
prosecute
such
Joint
Patent
or
to
obtain
or
maintain
such
Joint
Patent.
7.3.2
MedImmune
Rights
.
(a)
MedImmune
shall
have
(i)
the
sole
right,
at
MedImmune’s
discretion
and
expense,
to
file,
prosecute,
and
maintain
(includingwith
respect
to
any
interference,
derivation,
re-issuance,
re-examination,
opposition
or
other
post-grant
proceedings)
any
MedImmune
Manufacturing
Patentsthroughout
the
world,
and
(ii)
the
first
right,
at
MedImmune’s
discretion
(subject
to
the
remainder
of
this
Section
7.3.2)
and
expense,
to
file,
prosecute,
andmaintain
(including
with
respect
to
any
interference,
derivation,
re-issuance,
re-examination,
opposition
or
other
post-grant
proceedings)
any
MedImmuneAdditional
Patents
throughout
the
world.
(b)
The
Parties
shall
work
together
in
good
faith
to
agree
upon
a
strategy
for
the
prosecution
of
any
MedImmune
AdditionalPatents,
including
the
list
of
countries
in
which
such
MedImmune
Additional
Patents
will
be
filed;
provided,
however,
that
(subject
to
Section
7.3.2(c))MedImmune
shall
have
the
final
right
to
make
such
determinations.
MedImmune
shall
provide
Kolltan
with
a
draft
of
any
prosecution
filing
related
to
anyMedImmune
Additional
Patents
at
least
thirty
(30)
days
in
advance
of
submission
(or,
if
such
timing
is
not
practicable,
as
far
in
advance
of
submission
aspracticable)
and
shall
provide
Kolltan
an
opportunity
to
provide
comments
on
and
make
requests
of
MedImmune
concerning
such
filing
and
shall
consider
in
goodfaith
any
comments
or
requests
regarding
such
filing
that
Kolltan
may
timely
provide.
In
addition,
MedImmune
shall
provide
to
Kolltan
such
other
informationrelated
to
prosecution
of
any
MedImmune
Additional
Patents
as
Kolltan
may
from
time
to
time
reasonably
request
to
allow
Kolltan
to
track
prosecution
andmaintenance
of
such
Patents
and
shall
consider
in
good
faith
any
comments
that
Kolltan
may
provide
with
respect
to
such
matters.
42
(c)
MedImmune
shall
give
Kolltan
written
notice
reasonably,
but
in
no
event
less
than
thirty
(30)
days,
in
advance
of
any
decisionby
MedImmune
not
to
file
an
application
for
or
to
abandon
the
prosecution
of
or
otherwise
not
maintain
or
extend
any
MedImmune
Additional
Patents
in
anycountry.
Upon
receiving
such
notice,
Kolltan
shall
have
the
right,
at
its
own
cost,
to
file,
prosecute,
maintain
and
extend,
as
the
case
may
be,
such
MedImmuneAdditional
Patents,
in
Kolltan’s
name,
in
such
country;
provided,
however,
that
Kolltan
shall
not
exercise
such
right
without
the
prior
written
consent
ofMedImmune
(which
MedImmune
may
withhold
in
its
sole
discretion)
if
MedImmune’s
decision
not
to
file
an
application
for
or
to
abandon
the
prosecution
of
orotherwise
not
maintain
or
extend
such
MedImmune
Additional
Patent
is
made
for
strategic
business
reasons
(e.g.,
in
countries
with
compulsory
licensing
policies).
7.4
Third
Party
Infringement
.
7.4.1
Notice
.
Each
Party
shall
promptly
report
in
writing
to
the
other
Party
any
known
or
suspected
(a)
infringement
of
any
of
theMedImmune
Patents,
MedImmune
Additional
Patents,
Kolltan
Patents
or
Joint
Patents;
(b)
unauthorized
use
or
misappropriation
of
any
of
the
MedImmune
Know-How,
MedImmune
Additional
Know-How,
Kolltan
Know-How
or
Joint
Know-How
of
which
such
Party
becomes
aware;
or
(c)
notification
under
the
BiologicsPrice
Competition
and
Innovation
Act
of
2009,
as
amended,
or
any
similar
law,
from
a
biosimilar
applicant
arising
from
the
filing
of
an
application
for
theRegulatory
Approval
of
a
product
intending
to
show
that
such
product
is
biosimilar
to
any
Licensed
Product
(or,
in
the
case
of
MedImmune
as
the
notifying
Party,any
Follow-On
Product)
that
is
a
reference
product
for
which
a
claim
of
infringement
of
any
of
the
MedImmune
Patents,
MedImmune
Additional
Patents,
KolltanPatents
or
Joint
Patents
by
the
manufacture
or
sale
of
such
product
could
reasonably
be
asserted,
and
shall
provide
the
other
Party
with
all
available
evidenceregarding
such
known
or
suspected
infringement
or
unauthorized
use.
7.4.2
Enforcement
of
Patents
.
(a)
Kolltan
Rights
.
(i)
Kolltan
shall
have
(x)
the
sole
right,
but
not
the
obligation,
to
initiate
a
lawsuit
or
take
other
reasonable
action
toenforce
any
Kolltan
Patents
throughout
the
world
and
(y)
the
first
right,
but
not
the
obligation,
to
initiate
a
lawsuit
or
take
other
reasonable
action
to
enforce(A)
any
MedImmune
Patents
throughout
the
world
and
(B)
any
Joint
Patents
throughout
the
world;
provided,
however,
that
Kolltan
shall
not
initiate
any
suchlawsuit
or
take
such
other
action
with
respect
to
any
matter
described
in
this
clause
(y)
without
first
consulting
with
MedImmune
and
giving
good
faithconsideration
to
any
reasonable
objection
from
MedImmune
regarding
Kolltan’s
proposed
course
of
action.
MedImmune
shall
cooperate
in
the
prosecution
of
anysuit
under
this
Section
7.4.2(a)(i)
as
may
be
reasonably
requested
by
Kolltan
(including
joining
such
suit
as
a
plaintiff
if
Kolltan
is
unable
to
initiate
or
prosecutesuch
action
solely
in
its
own
name);
provided,
however,
that
Kolltan
shall
promptly
reimburse
all
Out-of-Pocket
Costs
(including
reasonable
counsel
fees
andexpenses)
of
MedImmune
in
connection
with
such
cooperation.
In
connection
with
any
such
proceeding,
Kolltan
shall
not
enter
into
any
settlement
admitting
theinvalidity
of,
or
otherwise
impairing
MedImmune’s
rights
in,
any
MedImmune
IP
or
Joint
IP
without
the
prior
written
consent
of
MedImmune.
43
(ii)
Any
recoveries
resulting
from
an
action
brought
by
Kolltan
under
Section
7.4.2(a)(i)
shall
(x)
first
be
applied
toreimburse
each
Party
for
all
Out-of-Pocket
Costs
incurred
by
such
Party
in
connection
with
such
proceeding
(on
a
pro
rata
basis,
based
on
each
Party’s
respectivelitigation
costs,
to
the
extent
the
recovery
was
less
than
all
such
litigation
costs),
and
(y)
second,
as
to
any
remainder
after
such
reimbursements
are
made,
beretained
by
Kolltan;
provided,
however,
that
(A)
to
the
extent
the
award
is
based
on
lost
profits
with
respect
to
a
Licensed
Product
or
Follow-On
Product,MedImmune
shall
receive
an
amount
equal
to
the
royalty
that
would
be
payable,
pursuant
to
Section
6.4,
on
the
imputed
amount
of
Net
Sales
of
such
LicensedProduct
or
Follow-On
Product,
as
applicable,
in
the
country
in
which
such
infringement
occurred
based
on
the
amount
retained
by
Kolltan
under
this
clause
(y),
and(B)
to
the
extent
the
award
reflects
the
amount
of
reasonable
royalty
payments
due
to
Kolltan
with
respect
to
a
Licensed
Product
or
Follow-On
Product
(excluding,for
clarity,
any
award
to
the
extent
described
in
clause
(A)
above),
the
amount
retained
by
Kolltan
under
this
clause
(y)
shall
be
deemed
Net
Sales
hereunder
(andaccordingly
subject
to
any
applicable
royalty
obligation
under
Section
6.4).
(iii)
If
Kolltan
in
good
faith
does
not
intend
to
initiate
a
lawsuit
or
take
other
reasonable
action
with
respect
to
any
matterdescribed
in
clause
(y)
of
Section
7.4.2(a)(i),
then
Kolltan
shall
notify
MedImmune
thereof
(x)
if
there
is
no
time
limit
for
the
filing
of
such
action,
within
sixty
(60)days
following
the
notice
of
alleged
infringement,
or
(y)
if
there
is
a
time
limit
for
the
filing
of
such
action
(including
those
set
forth
in
Applicable
Law),
at
leastfifteen
(15)
days
before
the
time
limit,
and
upon
receipt
of
such
notice
MedImmune
shall
have
the
right,
but
not
the
obligation,
to
initiate
such
lawsuit
or
take
suchother
action,
after
providing
thirty
(30)
days
(or
five
(5)
days
in
the
event
there
is
a
time
limit)
notice
to
Kolltan
and
giving
good
faith
consideration
to
Kolltan’sreason(s)
for
not
initiating
a
lawsuit
or
taking
other
action;
provided,
however,
that
MedImmune
shall
not
initiate
such
a
lawsuit
or
take
such
other
action
withoutthe
prior
written
consent
of
Kolltan
(which
Kolltan
may
withhold
in
its
sole
discretion)
if
Kolltan’s
decision
not
to
exercise
its
first
right
with
respect
thereto
wasmade
for
strategic
business
reasons.
Kolltan
shall
cooperate
in
the
prosecution
of
any
suit
initiated
by
MedImmune
to
the
extent
permitted
by
the
prior
sentence
asmay
be
reasonably
requested
by
MedImmune
(including
joining
such
suit
as
a
plaintiff
if
MedImmune
is
unable
to
initiate
or
prosecute
such
action
solely
in
its
ownname);
provided,
however,
that
MedImmune
shall
promptly
reimburse
all
Out-of-Pocket
Costs
(including
reasonable
counsel
fees
and
expenses)
of
Kolltan
inconnection
with
such
cooperation.
Subject
to
the
proviso
in
the
immediately
preceding
sentence,
any
recoveries
resulting
from
such
an
action
brought
byMedImmune
in
accordance
with
this
Section
7.4.2(a)(iii)shall
be
retained
by
MedImmune.
(b)
MedImmune
Rights
.
(i)
MedImmune
shall
have
(x)
the
sole
right,
but
not
the
obligation,
to
initiate
a
lawsuit
or
take
other
reasonable
actionto
enforce
any
MedImmune
Manufacturing
Patents
throughout
the
world
and
(y)
the
first
right,
but
not
the
obligation,
to
initiate
a
lawsuit
or
take
other
reasonableaction
to
enforce
any
MedImmune
Additional
Patents
throughout
the
world;
provided,
however,
that
MedImmune
shall
not
initiate
any
such
lawsuit
or
take
suchother
action
with
respect
to
any
matter
described
in
this
clause
(y)
without
first
consulting
with
Kolltan
and
giving
good
faith
consideration
to
any
reasonableobjection
from
Kolltan
regarding
MedImmune’s
proposed
course
of
action.
Kolltan
shall
cooperate
in
the
44
prosecution
of
any
suit
under
this
Section
7.4.2(b)(i)
as
may
be
reasonably
requested
by
MedImmune
(including
joining
such
suit
as
a
plaintiff
if
MedImmune
isunable
to
initiate
or
prosecute
such
action
solely
in
its
own
name);
provided,
however,
that
MedImmune
shall
promptly
reimburse
all
Out-of-Pocket
Costs(including
reasonable
counsel
fees
and
expenses)
of
Kolltan
in
connection
with
such
cooperation.
In
connection
with
any
such
proceeding,
MedImmune
shall
notenter
into
any
settlement
admitting
the
invalidity
of,
or
otherwise
impairing
Kolltan’s
rights
in,
any
MedImmune
Additional
IP
without
the
prior
written
consent
ofKolltan.
(ii)
With
respect
to
any
lawsuit
initiated
or
other
action
taken
by
MedImmune
under
clause
(y)
of
Section
7.4.2(b)(i),(w)
MedImmune
shall
keep
Kolltan
reasonably
informed
of
the
status
of
such
lawsuit
or
action;
(x)
without
limiting
clause
(w),
MedImmune
shall
provide
Kolltanwith
copies
of
any
court
filings
or
other
material
documents
or
correspondence
received
from
any
Third
Party
in
connection
with
such
lawsuit
or
action
promptlyafter
such
filings
or
documents
or
correspondence
are
received
by
MedImmune;
(y)
MedImmune
shall
consult
with
Kolltan
with
respect
to
such
lawsuit
or
actionand
consider
any
comments
from
Kolltan
with
respect
to
such
lawsuit
or
action
in
good
faith;
and
(z)
without
limiting
clause
(y),
MedImmune
shall
provide
Kolltanwith
drafts
of
any
court
filings
or
other
material
documents
or
correspondence
to
be
filed
or
delivered
by
MedImmune
prior
to
the
date
of
filing
or
delivery
suchthat
Kolltan
has
a
reasonable
opportunity
to
review
and
provide
comments,
and
to
the
extent
Kolltan
provides
comments
thereon
promptly
and
in
sufficient
time
toallow
MedImmune
to
meet
applicable
filing
requirements,
MedImmune
shall
consider
such
comments
in
good
faith.
(iii)
Any
recoveries
resulting
from
an
action
brought
by
MedImmune
under
Section
7.4.2(b)(i)
shall
(x)
first
be
appliedto
reimburse
each
Party
for
all
Out-of-Pocket
Costs
incurred
by
such
Party
in
connection
with
such
proceeding
(on
a
pro
rata
basis,
based
on
each
Party’s
respectivelitigation
costs,
to
the
extent
the
recovery
was
less
than
all
such
litigation
costs),
and
(y)
second,
as
to
any
remainder
after
such
reimbursements
are
made,
(A)
to
theextent
the
award
is
based
on
lost
profits
with
respect
to
a
Licensed
Product
or
Follow-On
Product,
such
remainder
shall
be
retained
by
Kolltan;
provided,
however,that
if
the
award
is
based
on
lost
profits
with
respect
to
a
Licensed
Product
or
Follow-On
Product,
then
MedImmune
shall
receive
an
amount
equal
to
the
royaltythat
would
be
payable,
pursuant
to
Section
6.4,
on
the
imputed
amount
of
Net
Sales
of
such
Licensed
Product
or
Follow-On
Product,
as
applicable,
in
the
country
inwhich
such
infringement
occurred
based
on
the
amount
retained
by
Kolltan
under
this
clause
(A);
(B)
to
the
extent
the
award
reflects
the
amount
of
reasonableroyalty
payments
due
to
Kolltan
with
respect
to
a
Licensed
Product
or
Follow-On
Product
(excluding,
for
clarity,
any
award
to
the
extent
described
in
clause(A)
above),
such
remainder
shall
be
retained
by
Kolltan;
provided,
however,
that
if
the
award
is
based
on
the
amount
of
reasonable
royalty
payments
due
to
Kolltanwith
respect
to
a
Licensed
Product
or
Follow-On
Product,
as
applicable,
then
the
amount
retained
by
Kolltan
under
this
clause
(B)
shall
be
deemed
Net
Saleshereunder
(and
accordingly
subject
to
any
applicable
royalty
obligation
under
Section
6.4);
and
(C)
to
the
extent
the
award
is
not
described
in
clauses
(A)
or(B)
above,
such
remainder
shall
be
equitably
divided
between
MedImmune
and
Kolltan.
(iv)
If
MedImmune
in
good
faith
does
not
intend
to
initiate
a
lawsuit
or
take
other
reasonable
action
with
respect
to
anymatter
described
in
clause
(y)
of
Section
7.4.2(b)(i),
then
MedImmune
shall
notify
Kolltan
thereof
(x)
if
there
is
no
time
limit
for
the
filing
of
such
action,
withinsixty
(60)
days
following
the
notice
of
alleged
infringement,
or
(y)
if
there
is
a
time
limit
for
the
filing
of
such
action
(including
those
set
forth
in
Applicable
Law),at
least
fifteen
(15)
days
before
the
time
limit,
and
upon
receipt
of
such
notice
Kolltan
shall
have
the
right,
but
not
the
obligation,
to
initiate
such
lawsuit
or
takesuch
other
action,
after
providing
thirty
(30)
days
(or
five
(5)
days
in
the
event
there
is
a
time
limit)
notice
to
MedImmune
and
giving
good
faith
consideration
toMedImmune’s
reason(s)
for
not
initiating
a
lawsuit
or
taking
other
action;
provided,
however,
that
Kolltan
shall
not
initiate
such
a
lawsuit
or
take
such
other
actionwithout
the
prior
written
consent
of
MedImmune
(which
MedImmune
may
withhold
in
its
sole
discretion)
if
MedImmune’s
decision
not
to
exercise
its
first
rightwith
respect
thereto
was
made
for
strategic
business
reasons.
MedImmune
shall
cooperate
in
the
prosecution
of
any
suit
initiated
by
Kolltan
to
the
extent
permittedby
the
prior
sentence
as
may
be
reasonably
requested
by
Kolltan
(including
joining
such
suit
as
a
plaintiff
if
Kolltan
is
unable
to
initiate
or
prosecute
such
actionsolely
in
its
own
name);
provided,
however,
that
Kolltan
shall
promptly
reimburse
all
Out-of-Pocket
Costs
(including
reasonable
counsel
fees
and
expenses)
ofMedImmune
in
connection
with
such
cooperation.
Subject
to
the
proviso
in
the
immediately
preceding
sentence,
any
recoveries
resulting
from
such
an
actionbrought
by
Kolltan
in
accordance
with
this
Section
7.4.2(b)(iv)shall
be
retained
by
Kolltan.
45
7.4.3
Conduct
of
Certain
Actions;
Costs
.
The
Party
initiating
legal
action
shall
have
the
sole
and
exclusive
right
to
select
counsel
for
anysuit
initiated
by
it
pursuant
to
Section
7.4.2
(the
“
Initiating
Party
”).
Unless
otherwise
expressly
provided
herein,
the
Initiating
Party
shall
bear
its
own
Out-of-Pocket
Costs
incurred
in
any
such
legal
action,
including
the
fees
and
expenses
of
the
counsel
selected
by
it.
The
other
Party
shall
have
the
right
to
participate
andbe
represented
in
any
such
legal
action
(in
cases
where
such
other
Party
has
standing)
by
its
own
counsel
at
its
own
expense.
7.5
Patent
Invalidity
Claim
.
Each
Party
shall
promptly
notify
the
other
in
the
event
of
any
legal
action
(excluding
any
actions
covered
bySection
7.3)
by
any
Third
Party
with
respect
to
the
validity
of
a
MedImmune
Patent,
MedImmune
Additional
Patent,
Kolltan
Patent
or
Joint
Patent
of
which
itbecomes
aware.
With
respect
to
any
such
action:
7.5.1
Kolltan
shall
have
(a)
the
sole
right,
but
not
the
obligation,
at
its
expense,
to
defend
against
any
such
action
relating
to
any
KolltanPatents
throughout
the
world,
and
(b)
the
first
right,
but
not
the
obligation,
at
its
expense,
to
defend
against
any
such
action
relating
to
any
MedImmune
Patentsthroughout
the
world
and
any
Joint
Patents
throughout
the
world.
If
Kolltan
does
not
defend
against
any
such
action
described
in
clause
(b)
above,
thenMedImmune
shall
have
the
right,
but
not
the
obligation,
to
defend
such
action
at
MedImmune’s
expense;
provided,
however,
that
MedImmune
shall
not
defendagainst
any
such
action
described
without
the
prior
written
consent
of
Kolltan
(which
Kolltan
may
withhold
in
its
sole
discretion)
if
Kolltan’s
decision
not
toexercise
its
first
right
with
respect
thereto
was
made
for
strategic
business
reasons.
7.5.2
MedImmune
shall
have
(a)
the
sole
right,
but
not
the
obligation,
at
its
expense,
to
defend
against
any
such
action
relating
to
anyMedImmune
Manufacturing
Patents
throughout
the
world
and
(b)
the
first
right,
but
not
the
obligation,
at
its
expense,
to
defend
against
any
such
action
relating
toany
MedImmune
Additional
Patents
throughout
the
world.
If
46
MedImmune
does
not
defend
against
any
such
action
described
in
clause
(b)
above,
then
Kolltan
shall
have
the
right,
but
not
the
obligation,
to
defend
such
action
atKolltan’s
expense;
provided,
however,
that
Kolltan
shall
not
defend
against
any
such
action
described
without
the
prior
written
consent
of
MedImmune(whichMedImmune
may
withhold
in
its
sole
discretion)
if
MedImmune’s
decision
not
to
exercise
its
first
right
with
respect
thereto
was
made
for
strategic
businessreasons.
In
addition,
with
respect
to
any
such
action
described
in
clause(b)
above,
(i)
MedImmune
shall
keep
Kolltan
reasonably
informed
of
the
status
of
suchaction;
(ii)
without
limiting
clause
(i),
MedImmune
shall
provide
Kolltan
with
copies
of
any
court
filings
or
other
material
documents
or
correspondence
receivedfrom
any
Third
Party
in
connection
with
such
action
promptly
after
such
filings
or
documents
or
correspondence
are
received
by
MedImmune;
(iii)
MedImmuneshall
consult
with
Kolltan
with
respect
to
such
action
and
consider
any
comments
from
Kolltan
with
respect
to
such
action
in
good
faith;
and
(iv)
without
limitingclause
(iii),
MedImmune
shall
provide
Kolltan
with
drafts
of
any
court
filings
or
other
material
documents
or
correspondence
to
be
filed
or
delivered
byMedImmune
prior
to
the
date
of
filing
or
delivery
such
that
Kolltan
has
a
reasonable
opportunity
to
review
and
provide
comments,
and
to
the
extent
Kolltanprovides
comments
thereon
promptly
and
in
sufficient
time
to
allow
MedImmune
to
meet
applicable
filing
requirements,
MedImmune
shall
consider
suchcomments
in
good
faith.
7.6
Patent
Term
Extensions
.
The
Parties
shall
cooperate
with
each
other
in
obtaining
patent
term
extensions
or
supplemental
protection
certificatesor
their
equivalents
in
any
country,
where
applicable
to
MedImmune
Patents,
MedImmune
Additional
Patents,
Kolltan
Patents
and
Joint
Patents;
provided,however,
that
(a)
Kolltan
shall
have
the
right
of
final
decision
as
to
whether
to
seek
patent
term
extensions
or
supplemental
protection
certificates
or
theirequivalents
in
any
country
with
respect
to
the
MedImmune
Patents,
Kolltan
Patents
and
Joint
Patents,
and
(b)
MedImmune
shall
have
the
right
of
final
decision
asto
whether
to
seek
patent
term
extensions
or
supplemental
protection
certificates
or
their
equivalents
in
any
country
with
respect
to
the
MedImmune
AdditionalPatents.
7.7
Patent
Marking
.
Kolltan
shall
comply
with
the
patent
marking
statutes
in
each
country
in
which
a
Licensed
Product
or
Follow-On
Product
issold
by
Kolltan,
its
Affiliates
and/or
its
Sublicensees.
7.8
CREATE
Act
.
The
Parties
acknowledge
and
agree
that
this
Agreement
is
a
“joint
research
agreement”
as
defined
in
the
Cooperative
Researchand
Technology
Enhancement
Act
of
2004,
35
U.S.C.
103(c)(2)-(c)(3)
(the
“
CREATE
Act
”).
MedImmune
(a)
without
the
prior
written
consent
of
Kolltan,
shallnot
make
any
election
under
the
CREATE
Act
with
respect
to
the
Licensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
or
Follow-On
Products
and(b)
shall
cooperate
with
Kolltan
with
respect
to
any
actions
taken
by
Kolltan
in
connection
with
any
election
made
by
Kolltan
under
the
CREATE
Act
with
respectto
the
Licensed
Antibody,
Licensed
Products,
Follow-On
Antibodies
or
Follow-On
Products.
7.9
Publications
.
7.9.1
Publication
by
MedImmune
.
Notwithstanding
anything
to
the
contrary
in
this
Agreement,
MedImmune
may
publish,
present
orotherwise
disclose
preclinical
data
relating
to
Licensed
Antibody
or
Licensed
Products,
either
orally
or
in
writing,
in
a
publication,
47
presentation
or
other
disclosure
(a
“
MedImmune
Publication
”),
only
in
accordance
with
the
terms
and
conditions
of
this
Section
7.9.1.
(a)
MedImmune
shall
provide
a
copy
of
any
proposed
MedImmune
Publication
to
Kolltan
at
least
thirty
(30)
days
prior
to
itssubmission
or
other
disclosure,
and
Kolltan
shall
have
thirty
(30)
days
from
receipt
of
such
proposed
MedImmune
Publication
to
provide
comments
and/orproposed
changes
to
MedImmune.
Without
limiting
the
remainder
of
this
Section
7.9.1,
MedImmune
shall
in
good
faith
take
into
account
any
such
commentsand/or
proposed
changes.
(b)
Subject
to
the
last
sentence
of
Section
8.1
and
Section
8.2,
MedImmune
shall
not
include
any
Confidential
Information
ofKolltan
(other
than
preclinical
data
relating
to
Licensed
Antibody
or
Licensed
Products)
in
any
MedImmune
Publication
without
Kolltan’s
prior
written
consent.
(c)
If
Kolltan
reasonably
determines
that
any
MedImmune
Publication
would
entail
the
disclosure
of
any
MedImmune
Know-How
or
Joint
Know-How
upon
which
Kolltan
desires
to
file
a
patent
application,
or
if
MedImmune
has
made
the
decision
not
to
draft
and
file
a
patent
applicationcovering
any
MedImmune
Additional
Know-How
disclosed
in
any
proposed
MedImmune
Publication,
then,
at
Kolltan’s
request,
disclosure
of
the
proposedMedImmune
Publication
shall
be
delayed
for
a
period
not
to
exceed
forty-five
(45)
days
after
the
date
of
proposed
submission
or
disclosure
to
enable
Kolltan
todraft
and
file
a
patent
application
covering
such
MedImmune
Know-How,
Joint
Know-How
or
MedImmune
Additional
Know-How,
as
applicable.
(d)
MedImmune
shall
designate
appropriate
authors
in
accordance
with
generally
recognized
standards
for
academic
publicationson
any
MedImmune
Publication.
7.9.2
Publication
by
Kolltan
.
Notwithstanding
anything
to
the
contrary
in
this
Agreement,
Kolltan
may
publish
information
or
data
relatingto
the
Licensed
Antibody
or
Licensed
Products
in
a
scientific
journal
(a
“
Kolltan
Publication
”),
only
in
accordance
with
the
terms
and
conditions
of
thisSection
7.9.2.
(a)
Prior
to
the
Option
Termination
Date,
(i)
Kolltan
shall
provide
to
MedImmune
a
copy
of
any
proposed
Kolltan
Publication
atleast
thirty
(30)
days
prior
to
submission,
(ii)
MedImmune
shall
have
ten
(10)
days
from
receipt
of
such
proposed
Kolltan
Publication
to
provide
comments
toKolltan,
and
(iii)
without
limiting
the
remainder
of
this
Section
7.9.2,
Kolltan
may,
in
its
sole
discretion,
take
into
account
any
such
comments.
From
and
after
theOption
Termination
Date,
Kolltan
shall
have
no
obligation
to
provide
a
copy
of
any
proposed
Kolltan
Publication
to
MedImmune
prior
to
submission
or
otherdisclosure.
(b)
Subject
to
the
last
sentence
of
Section
8.1
and
Section
8.2,
Kolltan
shall
not
include
any
Confidential
Information
ofMedImmune
in
any
Kolltan
Publication
without
MedImmune’s
prior
written
consent.
(c)
Kolltan
shall
designate
appropriate
authors
in
accordance
with
generally
recognized
standards
for
academic
publications
on any
Kolltan
Publication.
48
7.10
Existing
Proceedings
.
7.10.1
Prosecution
by
MedImmune
.
Until
such
time
as
Kolltan
assumes
control
of
a
particular
Existing
Proceeding
pursuant
toSection
7.10.2,
MedImmune
shall
continue
to
prosecute
such
Existing
Proceeding.
MedImmune
shall
provide
Kolltan
with
a
draft
of
any
filing
or
document
to
besubmitted
related
to
any
such
Existing
Proceeding
at
least
thirty
(30)
days
in
advance
of
submission
(or,
if
such
timing
is
not
practicable,
as
far
in
advance
ofsubmission
as
practicable)
and
shall
provide
Kolltan
an
opportunity
to
provide
comments
on
and
make
requests
of
MedImmune
concerning
such
filing
or
documentand
shall
consider
in
good
faith
any
comments
or
requests
regarding
such
filing
or
document
that
Kolltan
may
timely
provide.
In
addition,
MedImmune
shallprovide
to
Kolltan
such
other
information
related
to
such
Existing
Proceeding
as
Kolltan
may
from
time
to
time
reasonably
request
to
allow
Kolltan
to
track
suchExisting
Proceeding
and
shall
consider
in
good
faith
any
comments
that
Kolltan
may
provide
with
respect
to
such
matters.
MedImmune
shall
also
work
withKolltan
in
good
faith
with
respect
to
the
strategy
for
the
prosecution
of
such
Existing
Proceeding.
7.10.2
Assumption
of
Control
by
Kolltan
.
MedImmune
shall
give
Kolltan
written
notice
reasonably,
but
in
no
event
less
than
thirty
(30)days,
in
advance
of
any
decision
by
MedImmune
not
to
continue
to
prosecute
any
Existing
Proceeding.
Upon
receiving
such
notice,
Kolltan
shall
have
the
right,
atits
own
cost,
to
continue
to
prosecute
such
Existing
Proceeding.
In
addition,
Kolltan
shall
have
the
right,
at
Kolltan’s
discretion
and
at
its
own
cost,
at
any
time
toassume
control
of
any
Existing
Proceeding
by
providing
written
notice
to
MedImmune.
If
Kolltan
exercises
its
rights
under
this
Section
7.10.2,
MedImmune
shalltransfer
or
disclose
to
Kolltan,
in
whatever
manner
or
form
Kolltan
may
reasonably
request,
all
documents,
correspondence
and
other
information
and
materialsControlled
by
MedImmune
(and
not
previously
disclosed
to
Kolltan)
as
reasonably
necessary
for
Kolltan
to
exercise
its
rights
under
this
Section
7.10.2.
Suchtransfers
and
disclosures
shall
be
made
(a)
in
any
manner
or
form
reasonably
requested
by
Kolltan
and
(b)
at
MedImmune’s
expense;
provided,
however,
if
atKolltan’s
request
any
such
transfer
or
disclosure
is
made
in
any
manner
or
form
that
is
not
reasonably
standard
in
the
biopharmaceutical
industry
for
transfers
ordisclosures
of
a
similar
kind,
such
transfer
or
disclosure
shall
be
made
at
Kolltan’s
expense.
In
addition,
MedImmune
shall
(x)
use
reasonable
efforts
to
make
itsauthorized
attorneys,
agents
or
representatives
available
to
Kolltan
and
to
assist
Kolltan
in
transitioning
control
of
such
Existing
Proceeding
to
Kolltan
and
(y)
signor
use
reasonable
efforts
to
have
signed
all
legal
documents
necessary
to
transfer
control
of
such
Existing
Proceeding
to
Kolltan.
7.10.3
Assistance
.
If
Kolltan
assumes
control
of
an
Existing
Proceeding
pursuant
to
Section
7.10.2,
MedImmune
shall
provide
suchcooperation
in
the
prosecution
of
such
proceeding
as
may
be
reasonably
requested
by
Kolltan
(including
permitting
Kolltan
to
continue
such
proceeding
inMedImmune’s
name
if
Kolltan
is
unable
to
prosecute
such
proceeding
solely
in
Kolltan’s
own
name);
provided,
however,
that
Kolltan
shall
promptly
reimburse
allOut-of-Pocket
Costs
(including
reasonable
counsel
fees
and
expenses)
of
MedImmune
in
connection
with
such
cooperation.
49
ARTICLE 8 CONFIDENTIALITY
8.1
Confidentiality;
Exceptions
.
Except
to
the
extent
expressly
authorized
by
this
Agreement
or
otherwise
agreed
in
writing,
the
Parties
agree
thatthe
receiving
Party
(the
“
Receiving
Party
”)
shall
keep
confidential
and
shall
not
publish
or
otherwise
disclose
or
use
for
any
purpose
other
than
as
provided
for
inthis
Agreement
any
Know-How
in
any
form
(whether
written,
oral,
graphic,
photographic,
electronic,
magnetic,
or
otherwise)
that
is
disclosed
to
the
ReceivingParty
by
the
other
Party
(the
“
Disclosing
Party
”)
directly,
or
indirectly
in
the
course
of
the
Receiving
Party’s
performing
its
obligations
or
exercising
its
rightsunder
this
Agreement
(collectively,
“
Confidential
Information
”).
Notwithstanding
anything
to
the
contrary
in
this
Agreement,
(a)
any
Regulatory
Documentationrelating
to
the
Licensed
Antibody
or
Licensed
Products
shall
be
deemed
to
be
the
Confidential
Information
of
Kolltan
(and
not
MedImmune),
(b)
any
MedImmuneKnow-How,
MedImmune
Additional
Know-How
and
Joint
Know-How
shall
be
deemed
to
be
the
Confidential
Information
of
each
Party
and
(c)
subject
toSection
8.3,
the
terms
of
this
Agreement
shall
be
deemed
to
be
the
Confidential
Information
of
each
Party.
Notwithstanding
the
foregoing,
the
restrictions
set
forthin
the
first
sentence
of
this
Section
8.1
shall
not
apply
to
Confidential
Information
of
the
Disclosing
Party
to
the
extent
that
it
can
be
established
by
the
ReceivingParty
that
such
Confidential
Information:
8.1.1
was
in
the
lawful
knowledge
and
possession
of
the
Receiving
Party
prior
to
the
time
it
was
disclosed
to,
or
learned
by,
the
ReceivingParty
pursuant
to
this
Agreement,
or
was
otherwise
developed
independently
by
the
Receiving
Party,
as
evidenced
by
written
records
kept
in
the
ordinary
course
ofbusiness,
or
other
documentary
proof
of
actual
use
by
the
Receiving
Party;
8.1.2
was
generally
available
to
the
public
or
otherwise
part
of
the
public
domain
at
the
time
of
its
disclosure
to
the
Receiving
Party;
8.1.3
became
generally
available
to
the
public
or
otherwise
part
of
the
public
domain
after
its
disclosure
and
other
than
through
any
act
oromission
of
the
Receiving
Party
in
breach
of
this
Agreement;
or
8.1.4
was
disclosed
to
the
Receiving
Party,
other
than
under
an
obligation
of
confidentiality,
by
a
Third
Party
who
had
no
obligation
to
theDisclosing
Party
not
to
disclose
such
information
to
others.
8.2
Authorized
Disclosure
.
Except
as
expressly
provided
otherwise
in
this
Agreement,
a
Receiving
Party
may
use
and
disclose
ConfidentialInformation
of
the
Disclosing
Party
as
follows:
8.2.1
under
appropriate
confidentiality
provisions
similar
to
those
in
this
Agreement,
in
connection
with
the
performance
of
its
obligations
orexercise
of
rights
expressly
granted
or
reserved
under
this
Agreement;
provided,
however,
that
the
Receiving
Party
shall
remain
responsible
for
any
violation
ofsuch
confidentiality
provisions
by
any
Person
receiving
such
Confidential
Information;
50
8.2.2
to
the
extent
such
disclosure
is
reasonably
necessary
in
filing
or
prosecuting
patent
and
copyright
applications,
prosecuting
ordefending
litigation,
complying
with
applicable
governmental
regulations
(including
the
rules
and
regulations
of
any
stock
exchange
or
NASDAQ),
preparing
andsubmitting
filings
to
Regulatory
Authorities
or
as
otherwise
required
by
Applicable
Law;
provided,
however,
that
if
a
Receiving
Party
is
required
by
ApplicableLaw
to
make
any
such
disclosure
of
a
Disclosing
Party’s
Confidential
Information
(other
than
a
disclosure
to
a
Regulatory
Authority
in
a
filing
required
byApplicable
Law)
it
will
give
reasonable
advance
notice
to
the
Disclosing
Party
of
such
disclosure
requirement
and
shall
furnish
only
that
portion
of
the
DisclosingParty’s
Confidential
Information
that
the
Receiving
Party
is
legally
required
to
furnish;
8.2.3
in
communications
with
existing
or
bona
fide
prospective
acquirers,
merger
partners,
lenders,
investors,
licensees,
sublicensees
orcollaborators,
and
consultants
and
advisors
of
the
Receiving
Party
in
connection
with
transactions
or
bona
fide
prospective
transactions
with
any
of
the
foregoing,in
each
case
on
a
need
to
know
basis
and
under
appropriate
confidentiality
provisions
substantially
equivalent
to
those
of
this
Agreement;
provided,
however,
thatthe
Receiving
Party
shall
remain
responsible
for
any
violation
of
such
confidentiality
provisions
by
any
Person
receiving
such
Confidential
Information;
or
8.2.4
to
the
extent
mutually
agreed
to
in
writing
by
the
Parties.
8.3
Press
Release;
Disclosure
of
Agreement
.
8.3.1
On
or
promptly
after
the
Effective
Date,
the
Parties
shall
issue
a
joint
public
announcement
of
the
execution
of
this
Agreement
or
eachParty
shall
issue
a
separate
public
announcement
of
the
execution
of
this
Agreement;
provided,
however,
that
the
content
of
any
such
public
announcement(whether
joint
or
separate)
shall
be
mutually
agreed
by
the
Parties.
Thereafter,
(a)
subject
to
Section
7.9.1,
MedImmune
shall
not
(i)
issue
any
other
press
releaseregarding
this
Agreement
or
the
Parties’
activities
hereunder
without
the
prior
written
consent
of
Kolltan
or
(ii)
make
any
other
disclosures
regarding
thisAgreement
or
the
Parties’
activities
hereunder,
or
any
results
or
data
arising
hereunder,
except
for
any
disclosure
that
is
reasonably
necessary
to
comply
withapplicable
securities
exchange
listing
requirements
or
other
Applicable
Law;
provided,
however,
that
(x)
the
restrictions
set
forth
in
clauses
(i)
and
(ii)
above
shallterminate
at
such
time,
if
any,
as
this
Agreement
terminates
pursuant
to
Section
5.4.3(a);
and
(y)
if
it
is
determined
that
the
Parties
will
enter
into
the
Co-Development
and
Co-Commercialization
Agreement
pursuant
to
Section
5.4.3(c)
or
5.4.3(d),
Kolltan
shall
not
unreasonably
withhold
its
consent
to
any
pressrelease
proposed
to
be
issued
by
MedImmune
with
respect
to
the
Parties’
entering
into
the
Co-Development
and
Co-Commercialization
Agreement;
and
(b)
subjectto
Section
7.9.2,
Kolltan
may,
in
its
sole
discretion,
issue
other
press
releases
regarding
its
Development
and
Commercialization
activities
hereunder
(including
anyresults
or
data
arising
hereunder);
provided,
however,
that
Kolltan
shall
not
issue
any
other
press
releases
regarding
the
terms
of
this
Agreement
or
the
exercise
byeither
Party
of
its
rights
under
ARTICLE
5
without
the
prior
written
consent
of
MedImmune.
8.3.2
Each
Party
shall,
if
practicable,
give
the
other
Party
a
reasonable
opportunity
to
review
those
portions
of
all
filings
with
the
UnitedStates
Securities
and
Exchange
Commission
(or
any
stock
exchange,
including
Nasdaq,
or
any
similar
regulatory
agency
in
any
51
country
other
than
the
United
States)
describing
the
terms
of
this
Agreement
(including
any
filings
of
this
Agreement)
prior
to
submission
of
such
filings,
and
shallgive
due
consideration
to
any
reasonable
comments
by
the
non-filing
Party
relating
to
such
filing,
including
the
provisions
of
this
Agreement
for
which
confidentialtreatment
should
be
sought.
8.4
Existing
Confidentiality
Agreement
.
For
the
avoidance
of
doubt,
any
information
disclosed
by
either
Party
to
the
other
Party
prior
to
theEffective
Date
pursuant
to
the
Mutual
Confidentiality
Agreement,
dated
July
12,
2012,
between
MedImmune
and
Kolltan
(the
“
Existing
ConfidentialityAgreement
”)
shall
be
treated
as
Confidential
Information
of
the
disclosing
Party
for
all
purposes
under
this
Agreement.
8.5
Remedies
.
In
the
event
a
Party
breaches
the
confidentiality
obligations
set
forth
in
this
ARTICLE
8,
the
other
Party
shall
be
entitled
to
seek,
inaddition
to
any
other
right
or
remedy
it
may
have,
at
law
or
in
equity,
a
temporary
injunction,
without
the
posting
of
any
bond
or
other
security,
enjoining
orrestraining
the
breaching
Party
from
any
violation
or
threatened
violation
of
this
ARTICLE
8.
8.6
Return
of
Confidential
Information
.
Upon
the
expiration
or
termination
of
this
Agreement,
the
Receiving
Party
shall
return
to
the
DisclosingParty
all
Confidential
Information
of
the
Disclosing
Party
in
its
possession
(and
all
copies
and
reproductions
thereof).
In
addition,
the
Receiving
Party
shalldestroy:
(a)
any
notes,
reports
or
other
documents
prepared
by
the
Receiving
Party
which
contain
Confidential
Information
of
the
Disclosing
Party;
and
(b)
anyConfidential
Information
of
the
Disclosing
Party
(and
all
copies
and
reproductions
thereof)
which
is
in
electronic
form
or
cannot
otherwise
be
returned
to
theDisclosing
Party.
Alternatively,
upon
written
request
of
the
Disclosing
Party,
upon
such
expiration
or
termination,
the
Receiving
Party
shall
destroy
allConfidential
Information
of
the
Disclosing
Party
in
its
possession
(and
all
copies
and
reproductions
thereof)
and
any
notes,
reports
or
other
documents
prepared
bythe
Receiving
Party
which
contain
Confidential
Information
of
the
Disclosing
Party.
Nothing
in
this
Section
8.6
shall
require
the
alteration,
modification,
deletionor
destruction
of
archival
tapes
or
other
electronic
back-up
media
made
in
the
ordinary
course
of
business;
provided
that
the
Receiving
Party
shall
continue
to
bebound
by
its
obligations
of
confidentiality
and
other
obligations
under
this
ARTICLE
8
with
respect
to
any
Confidential
Information
contained
in
such
archivaltapes
or
other
electronic
back-up
media.
Any
requested
destruction
of
Confidential
Information
shall
be
certified
in
writing
to
the
Disclosing
Party.
Notwithstanding
the
foregoing,
(i)
the
Receiving
Party’s
legal
counsel
may
retain
one
copy
of
the
Disclosing
Party’s
Confidential
Information
solely
for
thepurpose
of
determining
the
Receiving
Party’s
continuing
obligations
under
this
ARTICLE
8
and
(ii)
the
Receiving
Party
may
retain
the
Disclosing
Party’sConfidential
Information
and
its
own
notes,
reports
and
other
documents
to
the
extent
reasonably
required
(x)
to
comply
with
Applicable
Law
and
regulatoryrequirements;
(y)
to
exercise
the
rights
and
licenses
of
the
Receiving
Party
expressly
surviving
expiration
or
termination
of
this
Agreement;
and
(z)
to
perform
theobligations
of
the
Receiving
Party
expressly
surviving
expiration
or
termination
of
this
Agreement.
Notwithstanding
the
return
or
destruction
of
the
DisclosingParty’s
Confidential
Information,
the
Receiving
Party
shall
continue
to
be
bound
by
its
obligations
of
confidentiality
and
other
obligations
under
this
ARTICLE
8.
52
ARTICLE 9 REPRESENTATIONS AND WARRANTIES
9.1
Representations
and
Warranties
of
Both
Parties
.
Each
Party
hereby
represents
and
warrants
to
the
other
Party,
as
of
the
Effective
Date,
that:
9.1.1
Such
Party
is
duly
organized,
validly
existing
and
in
good
standing
under
the
Applicable
Laws
of
the
jurisdiction
of
its
incorporationand
has
full
corporate
power
and
authority
to
enter
into
this
Agreement
and
to
carry
out
the
provisions
hereof.
9.1.2
Such
Party
has
taken
all
necessary
action
on
its
part
to
authorize
the
execution
and
delivery
of
this
Agreement
and
the
performance
ofits
obligations
hereunder.
9.1.3
This
Agreement
has
been
duly
executed
and
delivered
on
behalf
of
such
Party,
and
constitutes
a
legal,
valid,
binding
obligation,enforceable
against
it
in
accordance
with
the
terms
hereof,
subject
to
the
effects
of
bankruptcy,
insolvency
or
other
laws
of
general
application
affecting
theenforcement
of
creditor
rights
and
judicial
principles
affecting
the
availability
of
specific
performance
and
general
principles
of
equity,
whether
enforceability
isconsidered
a
proceeding
at
law
or
equity.
9.1.4
The
execution,
delivery
and
performance
of
this
Agreement
by
such
Party
does
not
conflict
with
any
agreement
or
any
provisionthereof,
or
any
instrument
or
understanding,
oral
or
written,
to
which
such
Party
or
its
Affiliates
is
a
party
or
by
which
such
Party
or
its
Affiliates
is
bound(including,
with
respect
to
MedImmune,
any
In-License
Agreement),
nor
violate
any
Applicable
Law.
9.1.5
No
government
authorization,
consent,
approval,
license,
exemption
of
or
filing
or
registration
with
any
court
or
governmentaldepartment,
commission,
board,
bureau,
agency
or
instrumentality,
domestic
or
foreign,
under
any
Applicable
Law
currently
in
effect,
is
or
will
be
necessary
for,
orin
connection
with,
the
transactions
contemplated
by
this
Agreement,
or
for
the
performance
by
it
of
its
obligations
under
this
Agreement,
except
as
necessary
toconduct
clinical
trials
or
to
seek
or
obtain
Regulatory
Approvals.
9.2
Representations,
Warranties
and
Covenants
of
MedImmune
.
MedImmune
hereby
represents,
warrants
and
covenants
to
Kolltan
that:
9.2.1
MedImmune
is,
as
of
the
Effective
Date,
and
at
all
times
will
be,
(a)
the
sole
and
exclusive
owner
of
all
of
the
MedImmune
IP
andMedImmune
Additional
IP
other
than
the
In-Licensed
IP
and
(b)
the
sole
and
exclusive
licensee
of
the
In-Licensed
IP
other
than
the
In-Licensed
IP
under
the
DyaxAgreement.
MedImmune’s
rights
to
the
MedImmune
IP
and
MedImmune
Additional
IP
are
as
of
the
Effective
Date,
and
at
all
times
will
be,
(x)
free
of
all
liens,mortgages,
encumbrances,
pledges
and
security
interests
of
any
kind
in
favor
of
any
Third
Party
and
(y)
not
subject
to
any
rights
of
or
licenses
to
any
GovernmentalAuthority.
9.2.2
As
of
the
Effective
Date,
MedImmune
has
obtained
from
each
employee
and
agent
of
MedImmune
or
its
Affiliates
who
has
performedactivities
in
connection
with
the
Research,
Development
or
Manufacture
of
the
Licensed
Antibody
or
Licensed
Products
all
right,
53
title
and
interest
in
and
to
any
inventions
and
discoveries
made
or
discovered
by
such
employee
or
agent
in
the
course
of
conducting
such
activities.
9.2.3
The
MedImmune
Patents
existing
as
of
the
Effective
Date
are
listed
on
Exhibit
9.2.3
.
There
are
no
MedImmune
Additional
Patentsexisting
as
of
the
Effective
Date.
As
of
the
Effective
Date,
all
documents
required
to
be
filed
and
all
payments
required
to
be
made
in
order
to
maintain
eachMedImmune
Patent
and
each
MedImmune
Additional
Patent
have
been
filed
or
made,
as
the
case
may
be,
in
a
timely
manner,
and
no
action
has
been
taken
thatwould
constitute
waiver,
abandonment
or
any
similar
relinquishment
of
rights
with
respect
to
any
such
Patent.
9.2.4
As
of
the
Effective
Date,
(a)
MedImmune
has
taken
reasonable
measures
to
maintain
the
confidentiality
of
the
MedImmune
Know-How
and
MedImmune
Additional
Know-How
and
has
disclosed
the
MedImmune
Know-How
and
MedImmune
Additional
Know-How
to
Third
Parties
only
underconfidentiality
obligations
similar
to
those
set
forth
in
ARTICLE
8,
and
(b)
to
the
knowledge
of
MedImmune,
there
is
no
actual
infringement
or
misappropriationor
threatened
infringement
or
misappropriation
of
any
MedImmune
IP,
MedImmune
Additional
IP
or
Regulatory
Documentation
related
to
the
Licensed
Antibodyor
Licensed
Products
by
any
Person.
9.2.5
As
of
the
Effective
Date,
to
the
knowledge
of
MedImmune,
(a)
none
of
the
MedImmune
Patents
or
MedImmune
Additional
Patents
isinvalid
or
unenforceable,
in
whole
or
in
part,
and
(b)
the
conception,
development
and
reduction
to
practice
of
the
MedImmune
IP,
MedImmune
Additional
IP
andRegulatory
Documentation
related
to
the
Licensed
Antibody
or
Licensed
Products
have
not
constituted
or
involved
the
misappropriation
of
trade
secrets
or
otherrights
or
property
of
any
Person.
There
are
not
as
of
the
Effective
Date,
nor
have
there
been
over
the
three
(3)
year
period
immediately
preceding
the
EffectiveDate,
any
actual
(or,
to
MedImmune’s
knowledge,
threatened)
claims,
lawsuits,
arbitrations,
legal
or
administrative
or
regulatory
proceedings,
charges,
complaintsor
investigations
by
any
Government
Authority
(except
in
the
ordinary
administrative
course
of
the
granting
of
patents
or
approvals
and
proceedings
relatingthereto)
or
by
any
Third
Party
relating
to
the
MedImmune
IP,
MedImmune
Additional
IP
or
Regulatory
Documentation
related
to
the
Licensed
Antibody
orLicensed
Products.
9.2.6
As
of
the
Effective
Date,
except
as
listed
in
Exhibit
9.2.6
,
to
the
knowledge
of
MedImmune,
the
exercise
by
Kolltan
of
the
rights,licenses
and
sublicenses
granted
to
Kolltan
by
MedImmune
under
this
Agreement,
including
the
making,
using,
selling,
offering
for
sale
or
import
of
the
LicensedAntibody
or
any
Licensed
Product,
will
not
infringe
any
intellectual
property
rights
of
any
Third
Party.
For
clarity,
a
listing
on
Exhibit
9.2.6
is
not
a
statement
oradmission
regarding
infringement.
9.2.7
As
of
the
Effective
Date,
(a)
each
In-License
Agreement
is
in
effect,
(b)
to
the
knowledge
of
MedImmune,
no
party
to
any
In-LicenseAgreement
is
in
breach
of
any
provisions
thereof
and
(c)
no
event
has
occurred
under
any
In-License
Agreement
that
would
(with
or
without
the
passage
of
time)permit
any
party
thereto
(other
than
MedImmune
or
its
applicable
Affiliate)
to
terminate
such
In-License
Agreement.
54
9.2.8
MedImmune
and
its
Affiliates
shall
(a)
not
commit
any
act
or
permit
the
occurrence
of
any
omission
that
would
constitute
a
breach
ofany
In-License
Agreement
or
result
in
the
termination
thereof
prior
to
the
expiration
thereof
in
accordance
with
the
terms
thereof,
(b)
not
amend,
modify
or
waiveany
rights
under
any
In-License
Agreement
in
such
a
way
as
to
adversely
affect
Kolltan’s
rights
or
obligations
under
this
Agreement,
or
terminate
any
In-LicenseAgreement,
without
Kolltan’s
prior
written
consent,
(c)
promptly
notify
Kolltan
of
any
breach
of
any
In-License
Agreement
by
any
party
thereto,
the
occurrence
ofwhich
gives
rise
to
a
right
of
termination
thereunder
by
any
party
thereto
or
causes
automatic
termination
thereunder,
and
(d)
subject
to
clause
(b)
above,
usecommercially
reasonable
efforts
to
enforce
the
terms
of
each
In-License
Agreement
against
each
other
party
thereto.
9.2.9
This
Agreement
complies
with
any
requirements
or
conditions
set
forth
in
any
In-License
Agreement
with
respect
to
the
grant
of
asublicense
under
MedImmune’s
and
its
Affiliates
rights
under
the
In-Licensed
IP.
Except
as
set
forth
on
Exhibit
9.2.9
,
no
In-License
Agreement
imposes,
directlyor
indirectly,
any
obligation
on
Kolltan
(as
sublicensee
of
MedImmune’s
and
its
Affiliates’
rights
under
the
In-Licensed
IP),
or
any
obligation
on
MedImmune
orits
Affiliates
to
cause
Kolltan
(as
sublicensee
of
MedImmune’s
and
its
Affiliates’
rights
under
the
In-Licensed
IP),
to
take
any
action
or
refrain
from
taking
anyaction.
Except
as
set
forth
on
Exhibit
9.2.9
,
there
are
no
restrictions
on
the
rights
of
Kolltan
as
sublicensee
of
MedImmune’s
and
its
Affiliates’
rights
under
the
In-Licensed
IP
to
use
or
disclose
the
In-Licensed
IP,
including
granting
further
sublicenses
thereunder.
Except
as
set
forth
in
Exhibit
6.4.4,
as
between
MedImmuneand
its
Affiliates
(on
the
one
hand)
and
Kolltan
(on
the
other
hand),
MedImmune
and
its
Affiliates
will
make
all
payments
required
to
be
made
under
each
In-License
Agreement.
9.2.10
The
In-Licensed
IP
under
the
MRC
Agreement
is
not
subject
to
any
Third
Party
Rights
(as
defined
in
the
MRC
Agreement).
9.2.11
MedImmune
or
its
applicable
Affiliate
under
the
Dyax
Agreement
(a)
as
of
the
Effective
Date,
has
the
right
under
its
option
underClause
12
of
the
Dyax
Agreement
to
obtain
a
MedImmune
Product
License
(as
defined
in
the
Dyax
Agreement)
with
respect
to
the
Licensed
Antibody
and
anyLicensed
Product
to
be
Developed
by
Kolltan
for
any
Target
(as
defined
in
the
Dyax
Agreement)
reasonably
contemplated
by
Kolltan’s
Development
activitieshereunder,
(b)
until
such
time
as
MedImmune
or
its
applicable
Affiliate
obtains
a
MedImmune
Product
License
(as
defined
in
the
Dyax
Agreement)
with
respect
tothe
Licensed
Antibody
and
any
Licensed
Product
Developed
or
to
be
Developed
by
Kolltan
for
any
Target
(as
defined
in
the
Dyax
Agreement)
reasonablycontemplated
by
Kolltan’s
Development
activities
hereunder,
shall
maintain
the
right
to
do
so,
and
(c)
upon
Kolltan’s
written
request,
shall
promptly
take
suchactions
as
are
reasonably
necessary
to
obtain
a
MedImmune
Product
License
(as
defined
in
the
Dyax
Agreement)
with
respect
to
the
Licensed
Antibody
or
anyLicensed
Product
Developed
or
to
be
Developed
by
Kolltan
for
any
Target
(as
defined
in
the
Dyax
Agreement)
reasonably
contemplated
by
Kolltan’s
Developmentactivities
hereunder.
9.2.12
Upon
Kolltan’s
written
request,
MedImmune
or
its
applicable
Affiliate
under
the
Lonza
Agreement
shall
promptly
take
such
actions
asare
reasonably
necessary
to
enter
into
a
Product
Schedule
(as
defined
in
the
Lonza
Agreement)
with
respect
to
the
Licensed
Antibody,
any
Licensed
Product,
anyFollow-On
Antibody
or
any
Follow-On
Product,
so
that
the
55
Exploitation
(as
defined
in
the
Lonza
Agreement)
of
the
Licensed
Antibody
or
such
Licensed
Product,
Follow-On
Antibody
or
Follow-On
Product,
as
applicable,
iscovered
by
the
license
grants
set
forth
in
Section
6.1
of
the
Lonza
Agreement.
9.2.13
As
of
the
Effective
Date,
(a)
the
Unredacted
Provisions
constitute
all
provisions
of
the
In-License
Agreements
that
are
relevant
to
therights
and
obligations
of
Kolltan
as
sublicensee
under
the
In-Licensed
IP
and
(b)
nothing
in
any
In-License
Agreement
conflicts
with
the
Unredacted
Provisionsthereof.
9.2.14
Each
Third
Party
that
conducted
activities
under
any
Research
Program
is
subject
to
written
confidentiality
and
non-use
obligationswith
respect
to
any
Know-How
related
to
such
Research
Program
that
are
at
least
as
stringent
as
those
set
forth
in
Sections
8.1
and
8.2,
and
no
such
Third
Party
hasany
rights
in
or
to
the
Licensed
Antibody
or
the
Licensed
Program.
Following
the
Effective
Date,
MedImmune
will
not
cause
or
permit
any
Third
Party
to
conductany
activities
under
any
Research
Program
without
the
prior
written
consent
of
Kolltan.
9.2.15
As
of
the
Effective
Date,
MedImmune
has
not
(a)
employed
or
used
a
contractor
or
consultant
that
has
employed,
any
individual
orentity
debarred
by
the
FDA
(or
subject
to
a
similar
sanction
of
EMA),
or
(b)
employed
any
individual
who
or
entity
that
is
the
subject
of
an
FDA
debarmentinvestigation
or
proceeding
(or
similar
proceeding
of
EMA),
in
the
conduct
of
any
activities
related
to
the
Licensed
Antibody.
9.2.16
As
of
the
Effective
Date,
MedImmune
has
prepared,
filed
and
maintained
all
Regulatory
Documentation
that
(a)
is
relevant
to
theLicensed
Antibody
and
Licensed
Products
and
(b)
Applicable
Law
requires
MedImmune
to
have
prepared,
filed
and
maintained,
in
each
case
in
accordance
withApplicable
Law,
and
all
information
contained
therein
is
true,
complete
and
correct
in
all
material
respects.
9.2.17
As
of
the
Effective
Date,
all
activities
conducted
by
or
on
behalf
of
MedImmune
with
respect
to
the
Licensed
Antibody
or
LicensedProducts
have
been
conducted,
in
all
material
respects,
in
accordance
with
Applicable
Law,
GLP,
GCP
and
GMP,
as
applicable.
9.2.18
Without
limitation
of
Section
9.1.4,
as
of
the
Effective
Date,
MedImmune
has
the
right
to
grant
all
rights,
licenses
and
sublicensesgranted
to
Kolltan
under
this
Agreement
(including
a
sublicense
under
all
of
the
In-Licensed
IP
as
contemplated
by
this
Agreement)
and
has
not
granted
to
anyThird
Party
any
rights,
licenses
or
sublicenses
that
are
inconsistent
with
the
rights,
licenses
and
sublicenses
granted
to
Kolltan
under
this
Agreement.
9.2.19
As
of
the
Effective
Date,
MedImmune
has
disclosed
or
made
available
to
Kolltan
all
material
information,
documents
and
materials
inits
possession
relating
to
the
Licensed
Antibody,
and
all
such
information,
documents
and
materials
are
true,
complete
and
correct
in
all
material
respects.
9.3
Mutual
Covenants
.
Each
Party
hereby
covenants
to
the
other
Party
that:
9.3.1
Such
Party
shall
comply
with
all
Applicable
Law
in
the
performance
of
this
Agreement
and
the
transactions
contemplated
hereby.
56
9.3.2
Such
Party:
(a)
shall
impose
on
each
employee
of
such
Party
or
its
Affiliates
who
performs
activities
in
connection
with
the
Research,Development
or
Manufacture
of
the
Licensed
Antibody
or
Licensed
Products
the
obligation
to
assign
all
right,
title
and
interest
in
and
to
any
inventions
ordiscoveries
made
or
discovered
by
such
employee
in
the
course
of
conducting
such
activities;
(b)
shall
not
(i)
employ
or
use
any
contractor
or
consultant
that
employs
any
individual
or
entity
debarred
by
the
FDA
(or
subjectto
a
similar
sanction
of
EMA);
or
(ii)
employ
any
individual
who
or
entity
that
is
the
subject
of
an
FDA
debarment
investigation
or
proceeding
(or
similarproceeding
of
EMA),
in
each
of
clauses
(i)
and
(ii)
in
the
conduct
of
any
activities
in
connection
with
the
Research,
Development,
or
Manufacture
of
the
LicensedAntibody
or
Licensed
Products.
If,
at
any
time,
(x)
any
individual
or
entity
employed
by
such
Party
or
any
contractor
or
consultant
used
by
such
Party
in
theconduct
of
any
activities
in
connection
with
the
Research,
Development
or
Manufacture
of
the
Licensed
Antibody
or
Licensed
Products
becomes
debarred
by
theFDA
(or
subject
to
a
similar
sanction
of
EMA)
or
(y)
any
individual
or
entity
employed
by
such
Party
in
the
conduct
of
any
activities
in
connection
with
theResearch,
Development
or
Manufacture
of
the
Licensed
Antibody
or
Licensed
Products
becomes
the
subject
of,
or
is
threatened
to
be
made
the
subject
of,
an
FDAdebarment
investigation
or
proceeding
(or
similar
proceeding
of
EMA),
such
Party
shall
immediately
notify
the
other
Party;
and
(c)
shall
perform
all
activities
in
connection
with
the
Research,
Development,
and
Manufacture
of
the
Licensed
Antibody
andLicensed
Products
in
compliance
in
all
material
respects
with
GLP,
GCP
and
GMP
(including
those
specified
by
the
ICH),
in
each
case
as
applicable;
provided,
however,
that
the
covenants
set
forth
in
this
Section
9.3.2
shall
terminate
(1)
upon
the
expiration
of
the
Trigger
Period
(and
any
applicable
OptionPeriod),
if
as
of
such
time
MedImmune
has
not
delivered
an
Exercise
Notice,
and
(2)
upon
Kolltan’s
payment
of
the
Buyout
Amount
to
MedImmune.
9.3.3
Neither
Party
shall
grant
any
right,
license
or
sublicense
to
any
Third
Party
relating
to
any
of
the
intellectual
property
rights
it
owns
orControls
which
would
conflict
with
any
of
the
rights,
licenses
or
sublicenses
granted
or
to
be
granted
to
the
other
Party
hereunder.
9.4
Disclaimer
.
Except
as
otherwise
expressly
set
forth
in
this
Agreement,
NEITHER
PARTY
MAKES
ANY
REPRESENTATION
OREXTENDS
ANY
WARRANTY
OF
ANY
KIND,
EITHER
EXPRESS
OR
IMPLIED,
INCLUDING
ANY
WARRANTY
THAT
ANY
PATENTS
ARE
VALIDOR
ENFORCEABLE,
AND
EXPRESSLY
DISCLAIMS
ALL
IMPLIED
WARRANTIES
OF
MERCHANTABILITY,
FITNESS
FOR
A
PARTICULARPURPOSE
AND
NONINFRINGEMENT.
Without
limiting
the
foregoing,
except
as
otherwise
expressly
set
forth
in
this
Agreement,
each
Party
disclaims
anywarranties
with
regards
to:
(a)
the
success
of
any
study
or
test
commenced
under
this
Agreement;
(b)
the
safety
or
usefulness
for
any
purpose
of
the
technology
ormaterials,
including
any
compounds,
it
provides
or
discovers
under
this
Agreement;
or
(c)
the
validity,
enforceability,
or
non-infringement
of
any
57
intellectual
property
rights
or
technology
it
provides
or
licenses
to
the
other
Party
under
this
Agreement.
ARTICLE 10 INDEMNIFICATION AND INSURANCE
10.1
Indemnification
by
Kolltan
.
Kolltan
shall
defend,
indemnify
and
hold
harmless
the
MedImmune
Indemnitees
from
and
against
any
and
alllosses,
damages,
fees,
expenses,
settlement
amounts
or
costs
(including
reasonable
attorneys’
fees
and
witness
fees)
(“
Losses
”)
relating
to
or
in
connection
with
aThird
Party
claim
arising
out
of
(a)
any
death,
personal
bodily
injury
or
damage
to
real
or
tangible
personal
property
alleged
or
proven
to
result,
directly
orindirectly,
from
the
possession,
use
or
consumption
of,
or
treatment
with,
the
Licensed
Antibody
or
any
Follow-On
Antibody,
Licensed
Product
or
Follow-OnProduct,
in
each
case
by
or
on
behalf
of
Kolltan
or
its
Affiliates
or
Sublicensees,
including
any
product
liability
claims;
(b)
the
Commercialization
by
or
on
behalfof
Kolltan
or
its
Affiliates
or
Sublicensees
of
the
Licensed
Antibody
or
any
Follow-On
Antibody,
Licensed
Product
or
Follow-On
Product;
(c)
any
actual
or
allegedinfringement
or
unauthorized
use
or
misappropriation
of
any
Patent
or
other
intellectual
property
right
of
a
Third
Party
with
respect
to
the
activities
of
Kolltan
or
itsAffiliates
or
Sublicensees
hereunder;
(d)
any
breach
by
Kolltan
of
its
representations,
warranties
or
covenants
made
under
this
Agreement;
or
(e)
any
illegal
ornegligent
act
or
omission
or
willful
misconduct
of
Kolltan
or
its
Affiliates
or
Sublicensees
or
any
of
their
employees,
contractors
or
agents,
in
performing
anyactivities
under
or
in
connection
with
this
Agreement;
provided,
however,
that
the
foregoing
indemnity
shall
not
apply
to
the
extent
that
any
such
Losses
(i)
areattributable
to
an
illegal
act
by
or
the
gross
negligence
or
willful
misconduct
of
any
MedImmune
Indemnitees,
or
(ii)
are
otherwise
subject
to
an
obligation
byMedImmune
to
indemnify
the
Kolltan
Indemnitees
under
Section
10.2,
as
to
which
Losses
the
provisions
of
Section
10.4
shall
apply.
10.2
Indemnification
by
MedImmune
.
MedImmune
shall
defend,
indemnify
and
hold
harmless
the
Kolltan
Indemnitees
from
and
against
any
and
allLosses
relating
to
or
in
connection
with
a
Third
Party
claim
arising
out
of
(a)
any
activities
conducted
by
MedImmune
or
its
Affiliates
with
respect
to
the
LicensedAntibody
or
Licensed
Products
on
or
prior
to
the
Effective
Date;
(b)
any
death,
personal
bodily
injury
or
damage
to
real
or
tangible
personal
property
alleged
orproven
to
result,
directly
or
indirectly,
from
the
possession,
use
or
consumption
of,
or
treatment
with,
any
Licensed
Antibody
or
Licensed
Product
included
in
orproduced
from
the
Inventory,
including
any
product
liability
claims;
(c)
any
actual
or
alleged
infringement
or
unauthorized
use
or
misappropriation
of
any
Patent
orother
intellectual
property
right
of
a
Third
Party
with
respect
to
the
activities
of
MedImmune
or
its
Affiliates
hereunder;
(d)
any
breach
by
MedImmune
of
itsrepresentations,
warranties
or
covenants
made
under
this
Agreement;
or
(e)
any
illegal
or
negligent
act
or
omission
or
willful
misconduct
of
MedImmune
or
itsAffiliates
or
any
of
their
employees,
contractors
or
agents,
in
performing
any
activities
under
or
in
connection
with
this
Agreement
or
the
subject
matter
hereof,whether
before
or
after
the
Effective
Date;
provided,
however,
that
the
foregoing
indemnity
shall
not
apply
to
the
extent
that
any
such
Losses
(i)
are
attributable
toan
illegal
act
by
or
the
gross
negligence
or
willful
misconduct
of
any
Kolltan
Indemnitees,
or
(ii)
are
otherwise
subject
to
an
obligation
by
Kolltan
to
indemnify
theMedImmune
Indemnitees
under
Section
10.1,
as
to
which
Losses
the
provisions
of
Section
10.4
shall
apply.
58
10.3
Procedure
.
In
the
event
of
a
claim
by
a
Third
Party
against
any
Person
entitled
to
indemnification
under
this
Agreement,
the
Party
claimingindemnification
(in
such
capacity,
the
“
Indemnified
Party
”)
shall
promptly
notify
the
other
Party
(in
such
capacity,
the
“
Indemnifying
Party
”)
in
writing
of
theclaim
(it
being
understood
that
the
failure
by
the
Indemnified
Party
to
give
prompt
notice
of
a
Third
Party
claim
as
provided
in
this
Section
10.3
shall
not
relievethe
Indemnifying
Party
of
its
indemnification
obligation
under
this
Agreement
except
and
only
to
the
extent
that
such
Indemnifying
Party
is
actually
prejudiced
as
aresult
of
such
failure
to
give
prompt
notice).
Within
thirty
(30)
days
after
delivery
of
such
notification,
the
Indemnifying
Party
may,
upon
written
notice
thereof
tothe
Indemnified
Party,
undertake
and
solely
manage
and
control,
at
its
sole
expense
and
with
counsel
reasonably
satisfactory
to
the
Indemnified
Party,
the
defenseof
the
claim.
If
the
Indemnifying
Party
does
not
undertake
such
defense
in
accordance
with
the
preceding
sentence,
the
Indemnified
Party
shall
control
suchdefense.
The
Party
not
controlling
such
defense
shall
cooperate
with
the
other
Party
and
may,
at
its
option
and
expense,
participate
in
such
defense
with
counsel
ofits
choice;
provided,
however,
that
if
the
Indemnifying
Party
assumes
control
of
such
defense
as
set
forth
above
and
the
Indemnified
Party
in
good
faith
concludes,based
on
advice
from
counsel,
that
the
Indemnifying
Party
and
the
Indemnified
Party
(or
the
relevant
MedImmune
Indemnitee
or
Kolltan
Indemnitee
seekingindemnification)
have
conflicting
interests
with
respect
to
such
action,
suit,
proceeding
or
claim,
the
Indemnified
Party’s
counsel
may
fully
participate
in
suchdefense
and
the
Indemnifying
Party
shall
be
responsible
for
the
reasonable
fees
and
expenses
of
one
counsel
to
the
indemnified
Persons
solely
in
connectiontherewith.
The
Party
controlling
such
defense
shall
keep
the
other
Party
advised
of
the
status
of
such
action,
suit,
proceeding
or
claim
and
the
defense
thereof,
shallprovide
the
other
Party
copies
of
material
documents
and
filings
related
to
such
action,
suit,
proceeding
or
claim
and
shall
consider
recommendations
made
by
theother
Party
with
respect
thereto.
Except
if
the
Indemnifying
Party
did
not
undertake
defense
of
the
claim
as
set
forth
above,
or
if
the
Indemnifying
Party
and
theIndemnified
Party
(or
the
relevant
MedImmune
Indemnitee
or
Kolltan
Indemnitee
seeking
indemnification)
have
conflicting
interests
with
respect
to
such
action,suit,
proceeding
or
claim
and
the
Indemnified
Party
engages
separate
counsel,
as
provided
above,
the
Indemnifying
Party
shall
not
be
liable
for
any
litigation
costsor
expenses
incurred
by
the
Indemnified
Party
without
the
Indemnifying
Party’s
written
consent.
The
Indemnified
Party
shall
not
settle
any
such
action,
suit,proceeding
or
claim
without
the
prior
written
consent
of
the
Indemnifying
Party,
which
shall
not
be
unreasonably
withheld,
delayed
or
conditioned.
TheIndemnifying
Party
shall
not
settle,
without
the
prior
written
consent
of
the
Indemnified
Party,
any
such
action,
suit,
proceeding
or
claim,
or
consent
to
anyjudgment
in
respect
thereof,
that
does
not
include
a
complete
and
unconditional
release
of
the
Indemnified
Party
from
all
liability
with
respect
thereto,
that
imposesany
liability
or
obligation
on
the
Indemnified
Party
or
that
acknowledges
fault
by
the
Indemnified
Party.
10.4
Allocation
.
In
the
event
a
claim
falls
within
the
scope
of
the
indemnity
given
by
each
Party
in
Section
10.1
or
10.2,
as
the
case
may
be,
anypayments
in
connection
with
such
claim
shall
be
apportioned
between
the
Parties
in
accordance
with
the
degree
of
fault
attributable
to
each
Party.
10.5
EXCLUSION
OF
CONSEQUENTIAL
DAMAGES
.
EXCEPT
WITH
RESPECT
TO
A
BREACH
OF
ARTICLE
8
OR
THIRD
PARTYCLAIMS
THAT
ARE
SUBJECT
TO
INDEMNIFICATION
UNDER
THIS
ARTICLE
10,
NEITHER
MEDIMMUNE
NOR
KOLLTAN,
NOR
ANY
OF
THEIRRESPECTIVE
AFFILIATES,
WILL
BE
LIABLE
FOR
59
ANY
INDIRECT,
INCIDENTAL,
CONSEQUENTIAL,
SPECIAL
OR
PUNITIVE
DAMAGES,
WHETHER
LIABILITY
IS
ASSERTED
IN
CONTRACT,
TORT(INCLUDING
NEGLIGENCE
AND
STRICT
PRODUCT
LIABILITY),
INDEMNITY
OR
CONTRIBUTION,
AND
IRRESPECTIVE
OF
WHETHER
SUCHPARTY
OR
ANY
REPRESENTATIVE
OF
SUCH
PARTY
HAS
BEEN
ADVISED
OF,
OR
OTHERWISE
MIGHT
HAVE
ANTICIPATED
THE
POSSIBILITYOF,
ANY
SUCH
LOSS
OR
DAMAGE.
10.6
Insurance
.
10.6.1
MedImmune
shall,
at
its
own
cost
and
expense,
obtain
and
maintain
in
effect
insurance
at
such
levels
sufficient
to
cover
its
obligationsunder
this
Agreement.
MedImmune
shall
furnish
a
certificate
of
insurance
for
any
of
the
applicable
policies
as
soon
as
practicable
after
the
Effective
Date
andupon
any
renewal
thereof.
10.6.2
Kolltan
shall
at
its
own
cost
and
expense,
obtain
and
maintain
in
effect
the
following
insurance:
(a)
Property
insurance
written
on
an
all-risk
basis
sufficient
to
cover
the
replacement
value
of
the
Inventory;
(b)
Commercial
General
Liability
covering
bodily
injury
and
property
damage
with
minimum
limits
of
$1,000,000
eachoccurrence
and
$2,000,000
general
aggregate,
including
Premises
Liability,
and
Contractual
Liability
coverage
for
Kolltan’s
indemnification
obligations
under
thisAgreement;
(c)
upon
initiation
by
Kolltan
of
any
human
clinical
trial
of
the
Licensed
Antibody,
any
Licensed
Product,
any
Follow-OnAntibody
or
any
Follow-On
Product,
Products/Completed
Operations
Liability
covering
human
clinical
trials
with
minimum
limits
of
$2,000,000
each
occurrenceand
$2,000,000
policy
aggregate;
(d)
Commercial
Automobile
Liability
covering
hired
and
non-owned
vehicles
with
limits
of
at
least
$1,000,000
combined
singlelimit
(bodily
injury
and
property
damage);
(e)
Workers’
Compensation
as
required
by
Applicable
Law
and
Employer’s
Liability
coverage
with
a
limit
of
not
less
than$1,000,000;
and
(f)
Umbrella
Liability
coverage
with
minimum
limits
of
at
least
$3,000,000
each
occurrence
and
$3,000,000
general
aggregate,sitting
excess
of
the
general
liability,
commercial
auto
liability
and
employer’s
liability
programs.
Each
of
the
policies
in
clauses
(b),
(c),
(d)
and
(f)
above
shall
name
MedImmune
as
an
Additional
Insured,
and
all
of
the
above
policies
shall
be
primary
to
anyliability
insurance
carried
by
MedImmune,
which
insurance(s)
shall
be
excess
and
non-contributory
for
claims
and
losses
arising
out
of
the
performance
of
thisAgreement.
Kolltan
shall
furnish
a
certificate
of
insurance
for
any
of
the
required
policies
as
soon
as
practicable
after
the
Effective
Date
(or
such
later
time
asKolltan
obtains
the
applicable
policy)
and
upon
any
renewal
thereof.
All
such
insurances
as
required
under
this
Section
10.6.2
shall
be
written
with
a
company
orcompanies
60
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
having
a
financial
rating
of
not
less
than
A-
in
the
most
current
edition
of
Bests
Key
Rating
Guide.
In
the
event
that
any
of
the
required
policies
of
insurance
are
written
on
a
claims
made
basis,
then
such
policies
shall
be
maintained
for
a
period
of
not
less
thanthree
(3)
years
following
the
termination
or
expiration
of
this
Agreement.
MedImmune
shall
promptly
provide
to
Kolltan
such
information
as
Kolltan
reasonably
requests
to
enable
Kolltan
to
comply
with
its
obligations
under
thisSection
10.6.2.
ARTICLE 11 TERM AND TERMINATION
11.1
Term;
Expiration
.
This
Agreement
shall
become
effective
as
of
the
Effective
Date
and,
unless
earlier
terminated
in
accordance
herewith,
shallremain
in
effect
until
the
expiration
of
the
last
to
expire
Royalty
Term
for
any
Licensed
Product
or
Follow-On
Product
in
any
country.
11.2
Termination
for
Cause
.
11.2.1
By
Kolltan
.
Kolltan
may,
without
prejudice
to
any
other
remedies
available
to
it
under
Applicable
Law
or
in
equity,
terminate
thisAgreement
(a)
in
its
entirety,
if
MedImmune
has
materially
breached
or
defaulted
in
the
performance
of
its
obligations
hereunder
or
(b)
with
respect
to
a
Program,if
MedImmune
has
materially
breached
or
defaulted
in
the
performance
of
its
obligations
hereunder
with
respect
to
such
Program,
in
either
case
((a)
or
(b))
if
suchbreach
or
default
has
continued
for
[**]
days
after
written
notice
thereof
describing
such
breach
or
default
was
provided
to
MedImmune
by
Kolltan.
Any
suchtermination
shall
become
effective
at
the
end
of
such
[**]
day
cure
period,
unless
MedImmune
has
cured
such
breach
or
default
prior
to
the
expiration
of
such
cureperiod.
11.2.2
By
MedImmune
.
MedImmune
may,
without
prejudice
to
any
other
remedies
available
to
it
under
Applicable
Law
or
in
equity,terminate
this
Agreement
with
respect
to
a
Program
if
Kolltan
has
materially
breached
or
defaulted
in
the
performance
of
its
obligations
hereunder
with
respect
tosuch
Program
and
such
breach
or
default
has
continued
for
[**]
days
after
written
notice
thereof
describing
such
breach
or
default
was
provided
to
Kolltan
byMedImmune.
Any
such
termination
shall
become
effective
at
the
end
of
such
[**]
day
cure
period,
unless
Kolltan
has
cured
such
breach
or
default
prior
to
theexpiration
of
such
cure
period.
11.3
Termination
for
Insolvency
Event
.
Either
Party
may
terminate
this
Agreement
in
its
entirety
or
with
respect
to
a
Program
effective
upon
writtennotice
to
the
other
Party
if
the
other
Party
suffers
an
Insolvency
Event.
11.4
Termination
for
Regulatory
Reasons
.
If
Kolltan
reasonably
determines
that
it
is
not
feasible
for
Kolltan
to
pursue
the
Development
orCommercialization
of
Licensed
Products
for
reasons
of
safety
or
lack
of
efficacy,
then
Kolltan
may
terminate
this
Agreement
with
respect
to
the
Licensed
Programupon
thirty
(30)
days’
written
notice
to
MedImmune.
If
Kolltan
reasonably
determines
that
it
is
not
feasible
for
Kolltan
to
pursue
the
Development
or
61
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Commercialization
of
Follow-On
Products
for
reasons
of
safety
or
lack
of
efficacy,
then
Kolltan
may
terminate
this
Agreement
with
respect
to
the
Follow-OnProgram
upon
thirty
(30)
days’
written
notice
to
MedImmune.
11.5
Termination
upon
Effective
Date
of
Co-Development
and
Co-Commercialization
Agreement
or
Auction
License
Agreement
.
In
the
event
theParties
enter
into
the
Co-Development
and
Co-Commercialization
Agreement
pursuant
to
Section
5.4.3(c)
or
5.4.3(d),
this
Agreement
shall
terminate
with
respectto
the
Licensed
Program
upon
the
effective
date
thereof.
In
the
event
the
Parties
enter
into
the
Auction
License
Agreement
pursuant
to
Section
5.4.3(e),
thisAgreement
shall
terminate
with
respect
to
the
Licensed
Program
upon
the
effective
date
thereof.
11.6
Other
Termination
.
For
clarity,
this
Agreement
may
be
terminated
with
respect
to
the
Licensed
Program
pursuant
to
Section
5.4.3(a)
inaccordance
with
the
terms
thereof.
11.7
Effect
of
Termination
or
Expiration
.
11.7.1
Termination
by
Kolltan
for
Cause
or
Insolvency
.
Subject
to
Section
11.8,
upon
termination
of
this
Agreement
in
its
entirety
or
withrespect
to
a
Program
by
Kolltan
pursuant
to
Section
11.2.1
or
11.3:
(a)
the
rights
of
Kolltan
under
ARTICLE
2
(including
Section
2.1),
ARTICLE
3,
ARTICLE
4
and
ARTICLE
7
(with
respect
tothe
terminated
Program,
if
applicable)
shall
remain
in
effect;
(b)
subject
to
clause
(e)
below,
the
rights
of
MedImmune
under
ARTICLE
7
(with
respect
to
the
terminated
Program,
ifapplicable)
shall
remain
in
effect
solely
to
the
extent
related
to
Joint
IP;
(c)
the
obligations
and
covenants
of
MedImmune
under
ARTICLE
3,
ARTICLE
7
and
ARTICLE
9
(with
respect
to
theterminated
Program,
if
applicable)
shall
remain
in
effect;
(d)
the
provisions
of
ARTICLE
6
(with
respect
to
the
terminated
Program,
if
applicable)
shall
remain
in
effect;
(e)
the
provisions
of
Sections
2.4,
7.1
and
7.2
and
ARTICLE
10
(with
respect
to
the
terminated
Program,
if
applicable)
shallremain
in
effect
indefinitely,
and
the
provisions
of
ARTICLE
8
(with
respect
to
the
terminated
Program,
if
applicable)
shall
remain
in
effect
for
a
period
of
[**]years
after
such
termination;
and
(f)
in
the
case
of
any
termination
with
respect
to
a
Program,
all
rights
and
obligations
of
the
Parties
with
respect
to
the
otherProgram
shall,
to
the
extent
in
effect
immediately
prior
to
such
termination,
remain
in
effect.
11.7.2
Termination
Involving
MedImmune’s
Payment
of
the
Product
Acquisition
Price
.
Subject
to
Section
11.8,
upon
termination
of
thisAgreement
with
respect
to
the
Licensed
Program
by
Kolltan
pursuant
to
Section
5.4.3(a):
62
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(a)
subject
to
clause
(c)
below,
the
rights
and
obligations
of
Kolltan
under
ARTICLE
7
with
respect
to
the
Licensed
Programshall
remain
in
effect
solely
to
the
extent
related
to
any
Joint
IP
other
than
Joint
IP
described
in
clauses
(f)
and
(g)
below;
(b)
MedImmune’s
payment
obligation
under
clause
(y)
of
Section
5.4.3(a)
shall
remain
in
effect;
(c)
the
rights
of
MedImmune
under
ARTICLE
7
with
respect
to
the
Licensed
Program
shall
remain
in
effect,
and
subject
toclause
(d)
below,
the
obligations
of
MedImmune
under
ARTICLE
7
with
respect
to
the
Licensed
Program
shall
remain
in
effect
solely
to
the
extent
related
to
anyJoint
IP
other
than
Joint
IP
described
in
clauses
(f)
and
(g)
below;
(d)
the
provisions
of
Sections
2.4,
7.1
and
7.2
with
respect
to
the
Licensed
Program
shall
remain
in
effect
indefinitely,
and
theprovisions
of
ARTICLE
8
with
respect
to
the
Licensed
Program
shall
remain
in
effect
for
a
period
of
[**]
years
after
such
termination;
provided,
however,
thatfrom
and
after
such
termination,
(i)
any
MedImmune
Know-How,
MedImmune
Additional
Know-How
and
Regulatory
Documentation,
in
each
case
related
to
theLicensed
Program
(but
excluding
any
MedImmune
Know-How,
MedImmune
Additional
Know-How
and
Regulatory
Documentation
related
to
the
Follow-OnProgram),
and
any
Regulatory
Documentation
and
Know-How
assigned
to
MedImmune
pursuant
to
clause
(f)
below,
shall
be
deemed
to
be
the
ConfidentialInformation
of
MedImmune
(and
not
Kolltan)
and
(ii)
any
Know-How
exclusively
licensed
to
MedImmune
pursuant
to
clause
(g)
below
and
any
Joint
Know-Howwith
respect
to
the
Licensed
Program
shall
be
deemed
to
be
Confidential
Information
of
each
Party;
(e)
the
provisions
of
ARTICLE
10
with
respect
to
the
Licensed
Program
shall
remain
in
effect;
provided,
however,
that
from
andafter
such
termination,
in
addition
to
the
other
grounds
for
indemnification
set
forth
in
Section
10.2,
MedImmune
shall
defend,
indemnify
and
hold
harmless
theKolltan
Indemnitees
from
and
against
any
and
all
Losses
relating
to
or
in
connection
with
a
Third
Party
claim
arising
out
of
(i)
any
death,
personal
bodily
injury
ordamage
to
real
or
tangible
personal
property
alleged
or
proven
to
result,
directly
or
indirectly,
from
the
possession,
use
or
consumption
of,
or
treatment
with,
theLicensed
Antibody
or
any
Licensed
Product,
in
each
case
by
or
on
behalf
of
MedImmune
or
its
Affiliates
or
sublicensees,
including
any
product
liability
claims,and
(ii)
the
Commercialization
by
or
on
behalf
of
MedImmune
or
its
Affiliates
or
sublicensees
of
the
Licensed
Antibody
or
any
Licensed
Product;
(f)
Kolltan
shall
assign
to
MedImmune
all
of
Kolltan’s
right,
title
and
interest
in
and
to
(i)
any
Regulatory
DocumentationControlled
by
Kolltan
or
its
Affiliates
as
of
the
effective
date
of
such
termination
that
is
related
to
the
Licensed
Antibody
or
Licensed
Products
(but
excluding
anysuch
Regulatory
Documentation
that
is
related
to
Follow-On
Antibodies
or
Follow-On
Products)
and
(ii)
any
Know-How
or
Patents
that
(x)
are
Controlled
byKolltan
or
its
Affiliates
as
of
the
date
of
such
termination
and
(y)
solely
relate
to
the
Licensed
Antibody
or
any
Licensed
Product
or
the
Manufacture
of
theLicensed
Antibody
or
any
Licensed
Product;
63
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(g)
Kolltan
hereby
grants
to
MedImmune,
effective
as
of
the
date
of
such
termination,
an
exclusive,
royalty-free
license,
with
theright
to
grant
sublicenses,
under
any
Know-How
or
Patents
(other
than
those
included
in
clause
(f)
above)
that
(x)
are
Controlled
by
Kolltan
or
its
Affiliates
as
ofthe
date
of
such
termination
or
within
three
(3)
months
thereafter
and
(y)
are
necessary
to
Research,
Develop,
Manufacture
or
Commercialize
the
LicensedAntibody
or
any
Licensed
Product
in
the
Field
in
the
Territory,
solely
for
the
purpose
of
Researching,
Developing,
Manufacturing
and
Commercializing
theLicensed
Antibody
and
Licensed
Products
in
the
Field
in
the
Territory;
(h)
Kolltan
shall
reasonably
cooperate
with
MedImmune
to
effect
an
orderly
transfer
or
disclosure,
as
applicable,
to
MedImmuneof
the
Know-How
and
Regulatory
Documentation
described
in
clauses
(f)
and
(g)
above;
and
(i)
all
rights
and
obligations
of
the
Parties
with
respect
to
the
Follow-On
Program
shall,
to
the
extent
in
effect
immediately
priorto
such
termination,
remain
in
effect.
11.7.3
Termination
by
MedImmune
for
Cause
or
Insolvency
or
by
Kolltan
for
Regulatory
Reasons
.
Subject
to
Section
11.8,
upontermination
of
this
Agreement
in
its
entirety
or
with
respect
to
a
Program
by
MedImmune
pursuant
to
Section
11.2.2
or
11.3
or
by
Kolltan
pursuant
to
Section
11.4:
(a)
subject
to
clause
(c)
below,
the
rights
and
obligations
of
Kolltan
under
ARTICLE
7
(with
respect
to
the
terminated
Program,if
applicable)
shall
remain
in
effect
solely
to
the
extent
related
to
Joint
IP;
(b)
the
rights
of
MedImmune
under
ARTICLE
7
(with
respect
to
the
terminated
Program,
if
applicable)
shall
remain
in
effect,and
subject
to
clause
(c)
below,
the
obligations
of
MedImmune
under
ARTICLE
7
(with
respect
to
the
terminated
Program,
if
applicable)
shall
remain
in
effectsolely
to
the
extent
related
to
Joint
IP;
(c)
the
provisions
of
Sections
2.4,
2.5,
4.3
(with
respect
to
the
non-terminated
Program,
if
applicable),
7.1
and
7.2
andARTICLE
10
(with
respect
to
the
terminated
Program,
if
applicable)
shall
remain
in
effect
indefinitely,
and
the
provisions
of
ARTICLE
8
(with
respect
to
theterminated
Program,
if
applicable)
shall
remain
in
effect
for
a
period
of
[**]
years
after
such
termination;
provided,
however,
that
from
and
after
such
termination,(i)
any
MedImmune
Know-How,
MedImmune
Additional
Know-How
and
Regulatory
Documentation
(if
applicable,
in
each
case
related
to
the
terminated
Programbut
excluding
any
MedImmune
Know-How,
MedImmune
Additional
Know-How
and
Regulatory
Documentation
related
to
the
other
Program)
shall
be
deemed
tobe
the
Confidential
Information
of
MedImmune
(and
not
Kolltan)
and
(ii)
any
Joint
Know-How
(if
applicable,
related
to
the
terminated
Program)
shall
be
deemedto
be
the
Confidential
Information
of
each
Party;
(d)
solely
in
the
case
of
termination
with
respect
to
the
Licensed
Program,
in
the
event
that
MedImmune,
in
its
sole
discretion,requests
in
writing,
Kolltan
shall
assign
to
MedImmune
all
of
Kolltan’s
right,
title
and
interest
in
and
to
(i)
any
Regulatory
Documentation
Controlled
by
Kolltan
asof
the
effective
date
of
such
termination
that
is
related
to
the
Licensed
Antibody
or
Licensed
Products
(but
excluding
any
such
Regulatory
64
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Documentation
that
is
related
to
Follow-On
Antibodies
or
Follow-On
Products),
(ii)
all
data
and
information
to
be
provided
to
MedImmune
under
Section
5.1
ofthis
Agreement,
to
the
extent
then
available
and
not
previously
provided
to
MedImmune,
and
(iii)
any
Know-How
or
Patents
that
(x)
were
licensed
or
assigned
byMedImmune
or
its
Affiliates
to
Kolltan
pursuant
to
this
Agreement
and
(y)
solely
relate
to
the
Licensed
Antibody
or
any
Licensed
Product
or
the
Manufacture
ofthe
Licensed
Antibody
or
any
Licensed
Product,
and
Kolltan
shall
reasonably
cooperate
with
MedImmune
to
effect
an
orderly
transfer
of
such
RegulatoryDocumentation
and
information
to
MedImmune;
(e)
solely
in
the
case
of
termination
with
respect
to
the
Licensed
Program,
in
the
event
that
MedImmune,
in
its
sole
discretion,requests
in
writing,
the
Parties
shall
enter
into
good
faith
negotiations
with
respect
to
an
agreement
pursuant
to
which
Kolltan
would
grant
to
MedImmune
a
licenseunder
the
Kolltan
IP
to
Research,
Develop,
Manufacture
and
Commercialize
the
Licensed
Antibody
and
Licensed
Products,
with
terms
regarding
degree
ofexclusivity,
royalty
or
other
payments,
access
to
or
assignment
of
technical
and
other
information
or
materials
owned
or
controlled
by
Kolltan
or
its
Affiliates,transfer
or
amendment
of
applicable
agreements
or
arrangements
with
Third
Parties
and
other
appropriate
transition
matters
to
be
negotiated
in
good
faith;
(f)
Kolltan
shall
continue
to
communicate
with
Regulatory
Authorities
and
complete
any
activities
as
required
by
ApplicableLaw
with
respect
to
its
Development
and
Commercialization
activities
with
respect
to
such
Program
hereunder;
and
(g)
in
the
case
of
any
termination
with
respect
to
a
Program,
all
rights
and
obligations
of
the
Parties
with
respect
to
the
otherProgram
shall,
to
the
extent
in
effect
immediately
prior
to
such
termination,
remain
in
effect.
11.7.4
Termination
with
respect
to
the
Licensed
Program
upon
Effective
Date
of
Co-Development
and
Co-Commercialization
Agreement
orAuction
License
Agreement
.
Subject
to
Section
11.8,
upon
termination
of
this
Agreement
with
respect
to
the
Licensed
Program
pursuant
to
Section
11.5:
(a)
except
as
otherwise
expressly
set
forth
in
the
Co-Development
and
Co-Commercialization
Agreement
or
Auction
LicenseAgreement,
the
provisions
of
Sections
2.4,
7.1
and
7.2
and
ARTICLE
10
with
respect
to
the
Licensed
Program
shall
remain
in
effect
indefinitely,
and
theprovisions
of
ARTICLE
8
with
respect
to
the
Licensed
Program
shall
remain
in
effect
for
a
period
of
[**]
years
after
such
termination;
(b)
solely
in
the
case
of
termination
pursuant
to
the
second
sentence
of
Section
11.5,
the
Parties’
obligations
underSection
5.4.3(e)(iv)
shall
remain
in
effect;
and
(c)
all
rights
and
obligations
of
the
Parties
with
respect
to
the
Follow-On
Program
shall,
to
the
extent
in
effect
immediately
priorto
such
termination,
remain
in
effect.
11.7.5
Expiration
.
Subject
to
Section
11.8,
upon
expiration
of
this
Agreement
in
accordance
with
Section
11.1:
65
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(a)
the
rights,
licenses
and
sublicenses
granted
to
Kolltan
hereunder
with
respect
to
the
Licensed
Antibody,
Licensed
Products,Follow-On
Antibodies
and
Follow-On
Products
shall,
to
the
extent
in
effect
immediately
prior
to
such
expiration,
remain
in
effect
but
(to
the
extent
they
have
notalready
done
so)
become
fully
paid-up,
royalty-free,
transferable
(to
the
extent
not
transferable
previously),
perpetual
and
irrevocable;
and
(b)
the
provisions
of
Section
2.4,
ARTICLE
7
(solely
with
respect
to
the
MedImmune
Additional
Patents
and
the
Joint
IP)
andARTICLE
10
shall,
to
the
extent
in
effect
immediately
prior
to
such
expiration,
remain
in
effect
indefinitely,
and
the
provisions
of
ARTICLE
8
shall,
to
the
extentin
effect
immediately
prior
to
such
expiration,
remain
in
effect
for
a
period
of
[**]
years
after
such
termination.
11.7.6
Effect
of
Termination
on
Sublicenses
Granted
by
Kolltan
.
In
the
event
that
Kolltan
grants
to
any
Third
Party
any
sublicense
under
anylicense
or
sublicense
granted
to
Kolltan
under
Section
2.1
(the
“
Sublicensed
Rights
”),
upon
any
termination
of
this
Agreement
in
its
entirety
or
with
respect
to
theapplicable
Program
that
results
in
the
termination
of
Kolltan’s
rights
to
the
Sublicensed
Rights,
if
as
of
such
termination
the
applicable
sublicensee
is
not
in
breachof
its
obligations
under
the
applicable
sublicense
agreement
with
Kolltan,
then
MedImmune
shall,
upon
the
reasonable
request
of
such
sublicensee,
grant
suchsublicensee
a
license
or
sublicense,
as
applicable,
under
the
Sublicensed
Rights
on
substantially
the
same
terms
as
Kolltan
had
previously
granted
such
sublicenseea
sublicense
under
the
Sublicensed
Rights.
11.8
Accrued
Rights;
Surviving
Provisions
.
11.8.1
Accrued
Rights
.
Termination
or
expiration
of
this
Agreement
in
its
entirety
or
with
respect
to
a
Program
for
any
reason
shall
bewithout
prejudice
to
any
rights
that
shall
have
accrued
to
the
benefit
of
any
Party
prior
to
such
termination
or
expiration,
including
any
rights
of
Kolltan
underSection
6.4.5
and
any
rights
of
MedImmune
under
Section
3.5.2
or
Sections
6.6
through
6.10,
and
any
and
all
damages
or
remedies
arising
from
any
breachhereunder.
Such
termination
or
expiration
shall
not
relieve
any
Party
from
obligations
which
are
expressly
indicated
to
survive
termination
of
this
Agreement.
11.8.2
Surviving
Provisions
.
The
provisions
of
Sections
5.4.4,
6.6
through
6.9
(solely
with
respect
to
amounts
accrued
but
unpaid
asexpiration
or
termination),
6.10,
9.4,
11.7
and
this
Section
11.8
and
ARTICLE
12,
and
any
applicable
definitions
in
ARTICLE
1,
shall
survive
any
expiration
ortermination
of
this
Agreement
in
its
entirety
or
with
respect
to
a
Program
for
any
reason,
in
accordance
with
their
respective
terms
and
conditions,
and
for
theduration
stated
or,
if
no
duration
is
stated,
indefinitely.
ARTICLE 12 MISCELLANEOUS
12.1
Dispute
Resolution
by
Executive
Officers
.
In
the
event
of
any
dispute
between
the
Parties
arising
out
of
or
in
connection
with
this
Agreement,including
any
dispute
regarding
the
interpretation,
effect,
termination,
validity,
performance
and/or
breach
of
this
Agreement
or
any
amendments
hereto
(each,
a
“Dispute
”),
either
Party
may,
by
written
notice
to
the
other
Party,
refer
the
Dispute
to
the
Executive
Officers
for
attempted
resolution
by
good
faith
66
negotiations
for
a
period
of
thirty
(30)
days
after
such
notice
is
received
(or
such
longer
time
as
may
be
agreed
by
the
Executive
Officers)
(the
“
Resolution
Period”).
In
the
event
a
Dispute
is
referred
to
the
Executive
Officers
in
accordance
with
the
preceding
sentence,
(a)
the
Parties
shall
cause
their
respective
ExecutiveOfficers
to
meet
with
each
other
and
attempt
to
resolve
such
Dispute
through
good
faith
negotiations
for
the
duration
of
the
Resolution
Period
and
(b)
if
the
Partiesare
able
to
resolve
such
Dispute
during
the
Resolution
Period,
upon
the
request
of
either
Party,
a
memorandum
setting
forth
the
resolution
shall
be
prepared
andsigned
by
the
Parties.
Notwithstanding
anything
to
the
contrary
in
this
Agreement,
neither
Party
shall
initiate
any
action,
suit
or
proceeding
under
Section
12.2(other
than
any
action
for
a
temporary
restraining
order,
preliminary
injunction
or
other
similar
interim
or
conservatory
relief)
unless
the
applicable
Dispute
hasbeen
referred
to
the
Executive
Officers
under
this
Section
12.1
and
the
Resolution
Period
with
respect
to
such
Dispute
has
expired.
12.2
Jurisdiction
and
Venue
.
12.2.1
Subject
to
Section
12.2.2,
each
Party
(a)
irrevocably
submits
to
the
exclusive
jurisdiction
of
the
federal
and
state
courts
located
in
theCity
of
New
York,
State
of
New
York
(the
“
Court
”)
with
respect
to
any
Dispute,
and
(b)
agrees
not
to
raise
any
objection
at
any
time
to
the
laying
or
maintainingof
the
venue
of
any
action,
suit
or
proceeding
for
such
purpose
in
any
such
Court,
irrevocably
waives
any
claim
that
such
action,
suit
or
other
proceeding
has
beenbrought
in
an
inconvenient
forum
and
further
irrevocably
waives
the
right
to
object,
with
respect
to
such
action,
suit
or
other
proceeding,
that
such
Court
does
nothave
any
jurisdiction
over
such
Party,
and
(c)
agrees
not
to
commence
any
action,
suit
or
proceeding
with
respect
to
any
Dispute
except
in
such
Court.
Each
Partyfurther
agrees
that
service
of
any
process,
summons,
notice
or
document
by
U.S.
registered
mail
to
such
Party’s
notice
address
provided
for
in
this
Agreement
shallbe
effective
service
of
process
for
any
action,
suit
or
proceeding
in
the
Court
with
respect
to
any
matters
to
which
it
has
submitted
to
jurisdiction
in
thisSection
12.2.1.
12.2.2
Notwithstanding
anything
in
this
Agreement
to
the
contrary,
any
Patent
Matter
shall
be
subject
to
adjudication
in
accordance
with
thelaws
of
the
country
in
which
the
applicable
Patent
is
pending
or
has
been
issued.
The
Parties
agree
that
the
venue
of
any
such
adjudication
shall
be
(a)
if
theapplicable
Patent
is
pending
in
or
has
been
issued
by
the
United
States,
a
U.S.
federal
district
court
sitting
in
the
City
of
New
York,
State
of
New
York,
and
(b)
ifthe
applicable
Patent
is
pending
in
or
has
been
issued
by
any
other
country,
any
competent
court
having
jurisdiction
over
the
subject
of
the
Patent
Matter
sitting
inthe
capital
of
such
country
(or
if
there
is
not
any
such
competent
court
in
the
capital,
a
location
reasonably
proximate
to
the
capital).
For
any
Patent
Matter
and
anyapplicable
court
as
described
in
the
previous
sentence,
each
Party
(w)
irrevocably
submits
to
the
jurisdiction
of
such
court,
(x)
agrees
not
to
raise
any
objection
atany
time
to
the
laying
or
maintaining
of
the
venue
of
any
action,
suit
or
proceeding
relating
to
such
Patent
Matter
in
such
court,
(y)
irrevocably
waives
any
claimthat
any
action,
suit
or
proceeding
relating
to
such
Patent
Matter
in
such
court
has
been
brought
in
an
inconvenient
forum,
including
any
forum
non
conveniensargument,
and
(z)
irrevocably
waives
the
right
to
object,
with
respect
to
any
action,
suit
or
proceeding
relating
to
such
Patent
Matter,
that
such
court
does
not
haveany
jurisdiction
over
such
Party.
67
12.3
Governing
Law
.
This
Agreement
and
any
dispute
arising
from
the
performance
or
breach
hereof
shall
be
governed
by
and
construed
andenforced
in
accordance
with
the
laws
of
New
York
without
reference
to
conflicts
of
laws
principles.
12.4
Assignment
.
12.4.1
By
MedImmune
.
MedImmune
may
not
assign
this
Agreement
or
any
of
its
rights
or
obligations
hereunder
without
the
prior
writtenconsent
of
Kolltan,
which
consent
shall
not
be
unreasonably
withheld
or
delayed.
Notwithstanding
the
foregoing,
MedImmune
may
assign
its
rights
or
obligationshereunder
without
the
prior
written
consent
of
Kolltan
(but
shall
notify
Kolltan
in
writing
promptly
after
any
such
assignment)
(a)
subject
to
the
next
sentence,
byway
of
sale
of
itself
or
the
sale
of
the
portion
of
its
business
to
which
this
Agreement
relates,
through
merger,
sale
of
assets
or
sale
of
stock
or
ownership
interest,provided
that
the
assignee
shall
expressly
agree
to
be
bound
by
MedImmune’s
obligations
hereunder
and
that
such
sale
is
not
primarily
for
the
benefit
ofMedImmune’s
creditors,
and
(b)
to
any
of
its
Affiliates,
provided
that
the
assignee
shall
expressly
agree
to
be
bound
by
MedImmune’s
obligations
hereunder
andthat
MedImmune
shall
remain
responsible
for
its
applicable
Affiliate’s
performance
hereunder.
In
the
event
of
an
acquisition
of
MedImmune
or
its
assets
or
equityby
a
Third
Party,
such
acquisition
shall
not
provide
Kolltan
with
rights
or
access
to
(x)
any
Patents
or
Know-How
of
such
Third
Party,
or
any
Affiliate
of
suchThird
Party
that
becomes
an
Affiliate
of
MedImmune
as
a
result
of
such
acquisition,
that
exists
prior
to
such
acquisition,
or
(y)
any
Patents
or
Know-How
of
suchThird
Party,
or
any
Affiliate
of
such
Third
Party
that
becomes
an
Affiliate
of
MedImmune
as
a
result
of
such
acquisition,
that
are
filed
or
developed,
as
the
casemay
be,
after
the
date
of
such
acquisition,
in
the
case
of
(y)
for
so
long
as
MedImmune
(or,
in
the
case
of
an
acquisition
of
MedImmune’s
assets
by
such
ThirdParty,
the
applicable
program
of
such
Third
Party)
continues
to
conduct
any
activities
related
to
this
Agreement
independently
of
such
Third
Party
(or,
in
the
caseof
an
acquisition
of
MedImmune’s
assets
by
such
Third
Party,
any
other
programs
of
such
Third
Party),
or
such
Affiliate
of
such
Third
Party,
and
without
anysharing
or
transfer
of
relevant
Know-How.
12.4.2
By
Kolltan
.
(a)
Kolltan
may
not
assign
this
Agreement
or
any
of
its
rights
or
obligations
hereunder
without
the
prior
written
consent
ofMedImmune,
which
consent
shall
not
be
unreasonably
withheld
or
delayed.
Notwithstanding
the
foregoing,
Kolltan
may
assign
its
rights
or
obligations
hereunderwithout
the
prior
written
consent
of
MedImmune
(but
shall
notify
MedImmune
in
writing
promptly
after
any
such
assignment):
(i)
prior
to
the
Option
Termination
Date
and
subject
to
Section
12.4.2(b),
by
way
of
sale
of
itself
or
the
sale
of
theportion
of
its
business
to
which
this
Agreement
relates
(the
“
Triggering Sale ”),
through
merger,
sale
of
assets
or
sale
of
stock
or
ownership
interest,
to
any
ThirdParty
that
as
of
the
time
of
such
Triggering
Sale
(x)
is
not
Commercializing
a
Competing
Product
or
(y)
has
not
enrolled
the
first
patient
in
a
Clinical
Trial
of
aCompeting
Product,
which
Clinical
Trial
for
such
Competing
Product
is:
(1)
a
Phase
3
Clinical
Trial,
if,
as
of
the
time
of
such
Triggering
Sale,
Kolltan
has
enrolledthe
first
patient
in
a
Phase
3
Clinical
Trial
of
a
Licensed
Product;
(2)
a
Phase
2
Clinical
Trial
or
Phase
3
Clinical
Trial,
if,
as
of
the
time
of
such
Triggering
Sale,Kolltan
has
enrolled
the
first
patient
in
a
Phase
2
68
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Clinical
Trial
of
the
Licensed
Product
but
has
not
enrolled
the
first
patient
in
a
Phase
3
Clinical
Trial
of
the
Licensed
Product;
or
(3)
a
Phase
1
Clinical
Trial,
Phase2
Clinical
Trial
or
Phase
3
Clinical
Trial,
if
as
of
the
time
of
such
Triggering
Sale,
Kolltan
either
(A)
has
not
enrolled
the
first
patient
in
any
Clinical
Trial
of
theLicensed
Product
or
(B)
has
enrolled
the
first
patient
in
a
Phase
1
Clinical
Trial
of
the
Licensed
Product
but
has
not
enrolled
the
first
patient
in
a
Phase
2
ClinicalTrial
of
the
License
Product
or
a
Phase
3
Clinical
Trial
of
the
Licensed
Product
(a
“
Same or Later Stage Clinical Trial ”),
provided
that
the
assignee
shallexpressly
agree
to
be
bound
by
Kolltan’s
obligations
hereunder
and
that
such
Triggering
Sale
is
not
primarily
for
the
benefit
of
Kolltan’s
creditors;
(ii)
on
or
after
the
Option
Termination
Date
and
subject
to
Section
12.4.2(b),
by
way
of
a
Triggering
Sale
to
any
ThirdParty,
provided
that
the
assignee
shall
expressly
agree
to
be
bound
by
Kolltan’s
obligations
hereunder
and
that
such
Triggering
Sale
is
not
primarily
for
the
benefitof
Kolltan’s
creditors;
provided,
however,
that
if,
as
of
the
time
of
such
Triggering
Sale,
such
Third
Party
(x)
is
Commercializing
a
Competing
Product
or
(y)
hasenrolled
the
first
patient
in
a
Same
or
Later
Stage
Clinical
Trial
of
a
Competing
Product,
then,
at
such
Third
Party’s
election,
which
shall
be
delivered
by
writtennotice
to
MedImmune
within
[**]
days
after
the
date
of
such
Triggering
Sale,
such
Third
Party
shall,
as
promptly
as
practicable
but
in
no
event
more
than
one
yearfollowing
the
date
of
such
Triggering
Sale,
either:
(x)
divest
all
of
its
right,
title
and
interest
in
and
to
any
Competing
Product
that,
as
of
the
time
of
suchTriggering
Sale,
such
Third
Party
is
Commercializing
or
with
respect
to
which
such
Third
Party
has
enrolled
the
first
patient
in
a
Same
or
Later
Stage
Clinical
Trial(and
any
failure
by
such
Third
Party
to
consummate
such
divestment
within
such
time
period
shall
be
deemed
a
material
breach
of
Kolltan’s
obligationshereunder);
or
(y)
assign
all
of
its
rights
and
obligations
under
this
Agreement
with
respect
to
the
Licensed
Program
to
aThird
Party
that
as
of
the
time
of
such
assignment
(1)
is
not
Commercializing
a
Competing
Product
or
(2)
has
not
enrolled
the
first
patient
in
a
Same
or
Later
StageClinical
Trial
of
a
Competing
Product;
and
(iii)
to
any
of
its
Affiliates,
provided
that
the
assignee
shall
expressly
agree
to
be
bound
by
Kolltan’s
obligationshereunder
and
that
Kolltan
shall
remain
responsible
for
its
applicable
Affiliate’s
performance
hereunder.
(b)
Limitations
on
Reach-Through
.
In
the
event
of
any
acquisition
of
Kolltan
or
its
assets
or
equity
by
a
Third
Party
underSection
12.4.2(a)(i)
or
12.4.2(a)(ii),
such
acquisition
shall
not
provide
MedImmune
with
rights
or
access
to
(i)
any
Patents
or
Know-How
of
such
Third
Party,
orany
Affiliate
of
such
Third
Party
that
becomes
an
Affiliate
of
Kolltan
as
a
result
of
such
acquisition,
that
exists
prior
to
such
acquisition,
or
(ii)
any
Patents
orKnow-How
of
such
Third
Party,
or
any
Affiliate
of
such
Third
Party
that
becomes
an
Affiliate
of
Kolltan
as
a
result
of
such
acquisition,
that
are
filed
or
developed,as
the
case
may
be,
after
the
date
of
such
acquisition,
in
the
case
of
(ii)
for
so
long
as
Kolltan
(or,
in
the
case
of
an
acquisition
of
Kolltan’s
assets
by
such
ThirdParty,
the
applicable
program
of
such
Third
Party)
continues
to
conduct
any
activities
related
to
this
Agreement
independently
of
such
Third
Party
(or,
in
the
caseof
an
69
acquisition
of
Kolltan’s
assets
by
such
Third
Party,
any
other
programs
of
such
Third
Party),
or
such
Affiliate
of
such
Third
Party,
and
without
any
sharing
ortransfer
of
relevant
Know-How.
12.4.3
By
Either
Party
.
Subject
to
the
foregoing
provisions
of
this
Section
12.4,
this
Agreement
shall
be
binding
upon
the
successors
andpermitted
assigns
of
the
Parties
and
the
name
of
a
Party
appearing
herein
shall
be
deemed
to
include
the
names
of
such
Party’s
successors
and
permitted
assigns
tothe
extent
necessary
to
carry
out
the
intent
of
this
Agreement.
Any
assignment
not
in
accordance
with
this
Section
12.4
shall
be
void.
12.5
Force
Majeure
.
Each
Party
shall
be
excused
from
the
performance
of
its
obligations
under
this
Agreement
to
the
extent
that
such
performanceis
prevented
by
force
majeure
(defined
below)
and
the
nonperforming
Party
promptly
provides
notice
of
the
prevention
to
the
other
Party.
Such
excuse
shall
becontinued
so
long
as
the
condition
constituting
force
majeure
continues
and
the
nonperforming
Party
uses
commercially
reasonable
efforts
to
remove
the
condition.
For
purposes
of
this
Agreement,
“force
majeure”
shall
include
conditions
beyond
the
control
of
the
Parties,
including
an
act
of
God,
voluntary
or
involuntarycompliance
with
any
regulation,
law
or
order
of
any
government,
war,
act
of
terror,
civil
commotion,
labor
strike
or
lock-out,
epidemic,
failure
or
default
of
publicutilities
or
common
carriers,
destruction
of
production
facilities
or
materials
by
fire,
earthquake,
storm
or
like
catastrophe.
12.6
Notices
.
Any
notice
or
request
required
or
permitted
to
be
given
under
or
in
connection
with
this
Agreement
shall
be
deemed
to
have
beensufficiently
given
if
in
writing
and
personally
delivered
or
sent
by
facsimile
transmission
(receipt
verified)
or
reputable
international
business
courier
(signaturerequired),
prepaid,
to
the
Party
for
which
such
notice
is
intended,
at
the
address
set
forth
for
such
Party
below:
If
to
MedImmune,
addressed
to:
MedImmune,
LLC
One
MedImmune
Way
Gaithersburg,
MD
20878
Attention:
EVP,
Research
Facsimile:
(301)
398-8268
with
a
copy
to:
MedImmune,
LLC
One
MedImmune
Way
Gaithersburg,
MD
20878
Attention:
Legal
Department
Facsimile:
(301)
398-9263
70
If
to
Kolltan,
addressed
to:
Bulldog
Pharmaceuticals,
Inc.
Midocean
Chambers,
Road
Town,
Tortola
British
Virgin
Islands
Attention:
Chief
Executive
Officer
Facsimile:
+1
(284)
494-4568
with
a
copy
to:
Kolltan
Pharmaceuticals,
Inc.
300
George
St.,
Suite
530
New
Haven,
CT
06511
Attention:
General
Counsel
Facsimile:
(203)
773-1300
with
a
copy
(which
shall
not
constitute
notice)
to:
Covington
&
Burling
LLP
One
Front
Street
San
Francisco,
CA
94111
Attention:
Jim
Snipes
Facsimile:
415-955-6571
or
to
such
other
address
for
such
Party
as
it
shall
have
specified
by
like
notice
to
the
other
Parties,
provided
that
notices
of
a
change
of
address
shall
be
effectiveonly
upon
receipt
thereof.
The
effective
date
of
any
notice
shall
be
(a)
the
date
of
delivery,
if
personally
delivered
during
the
recipient’s
normal
business
hours(and
otherwise
the
first
(1st)
Business
Day
after
the
date
of
delivery),
(b)
the
Business
Day
following
verification
of
receipt,
if
sent
by
facsimile,
and
(c)
theBusiness
Day
after
dispatch,
if
sent
by
courier
service.
12.7
Export
Clause
.
Each
Party
agrees
that,
as
of
the
Effective
Date,
it
will
not
export
or
re-export
restricted
commodities
or
the
technical
data
ofthe
other
Party
in
any
form
except
in
compliance
with
Applicable
Law
(including
obtaining
any
required
United
States
and
non-United
States
government
licenses).
12.8
Waiver
.
Neither
Party
may
waive
or
release
any
of
its
rights
or
interests
in
this
Agreement
except
in
writing.
The
failure
of
either
Party
toassert
a
right
hereunder
or
to
insist
upon
compliance
with
any
term
of
this
Agreement
shall
not
constitute
a
waiver
of
that
right
or
excuse
a
similar
subsequentfailure
to
perform
any
such
term
or
condition.
No
waiver
by
either
Party
of
any
condition
or
term
in
any
one
or
more
instances
shall
be
construed
as
a
continuingwaiver
of
such
condition
or
term
or
of
another
condition
or
term.
12.9
Severability
.
If
any
provision
hereof
should
be
held
invalid,
illegal
or
unenforceable
in
any
jurisdiction,
the
Parties
shall
negotiate
in
good
faitha
valid,
legal
and
enforceable
substitute
provision
that
most
nearly
reflects
the
original
intent
of
the
Parties
and
all
other
provisions
hereof
shall
remain
in
effect
insuch
jurisdiction
and
shall
be
liberally
construed
in
order
to
carry
out
the
intentions
of
the
Parties
hereto
as
nearly
as
may
be
possible.
Such
71
invalidity,
illegality
or
unenforceability
shall
not
affect
the
validity,
legality
or
enforceability
of
such
provision
in
any
other
jurisdiction.
12.10
Entire
Agreement
.
This
Agreement,
together
with
the
Schedules
and
Exhibits
hereto,
set
forth
all
the
covenants,
promises,
agreements,warranties,
representations,
conditions
and
understandings
between
the
Parties
as
to
the
subject
matter
of
this
Agreement
and
supersedes
and
terminates
all
prioragreements
and
understanding
between
the
Parties
with
respect
to
the
subject
matter
hereof.
In
particular,
and
without
limitation,
this
Agreement
supersedes
andreplaces
the
Existing
Confidentiality
Agreement
and
any
and
all
term
sheets
relating
to
the
transactions
contemplated
by
this
Agreement
and
exchanged
betweenthe
Parties
prior
to
the
Effective
Date.
There
are
no
covenants,
promises,
agreements,
warranties,
representations,
conditions
or
understandings,
either
oral
orwritten,
between
the
Parties
as
to
the
subject
matter
of
this
Agreement
other
than
as
set
forth
herein
and
therein.
No
subsequent
alteration,
amendment,
change
oraddition
to
this
Agreement
shall
be
binding
upon
the
Parties
hereto
unless
reduced
to
writing
and
signed
by
the
respective
authorized
officers
of
the
Parties.
12.11
Independent
Contractors
.
Nothing
herein
shall
be
construed
to
create
any
relationship
of
employer
and
employee,
agent
and
principal,partnership
or
joint
venture
between
the
Parties.
Each
Party
is
an
independent
contractor.
Neither
Party
shall
assume,
either
directly
or
indirectly,
any
liability
ofor
for
the
other
Party.
Neither
Party
shall
have
the
authority
to
bind
or
obligate
the
other
Party
and
neither
Party
shall
represent
that
it
has
such
authority.
12.12
Headings;
Construction;
Interpretation
.
Headings
used
herein
are
for
convenience
only
and
shall
not
in
any
way
affect
the
construction
of
or
betaken
into
consideration
in
interpreting
this
Agreement.
The
terms
of
this
Agreement
represent
the
results
of
negotiations
between
the
Parties
and
theirrepresentatives,
each
of
which
has
been
represented
by
counsel
of
its
own
choosing,
and
neither
of
which
has
acted
under
duress
or
compulsion,
whether
legal,economic
or
otherwise.
Accordingly,
the
terms
of
this
Agreement
shall
be
interpreted
and
construed
in
accordance
with
their
usual
and
customary
meanings,
andeach
of
the
Parties
hereto
hereby
waives
the
application
in
connection
with
the
interpretation
and
construction
of
this
Agreement
of
any
rule
of
Applicable
Law
tothe
effect
that
ambiguous
or
conflicting
terms
or
provisions
contained
in
this
Agreement
shall
be
interpreted
or
construed
against
the
Party
whose
attorney
preparedthe
executed
draft
or
any
earlier
draft
of
this
Agreement.
Any
reference
in
this
Agreement
to
an
Article,
Section,
subsection,
paragraph,
clause,
Schedule
orExhibit
shall
be
deemed
to
be
a
reference
to
any
Article,
Section,
subsection,
paragraph,
clause,
Schedule
or
Exhibit,
of
or
to,
as
the
case
may
be,
this
Agreement.
Except
where
the
context
otherwise
requires,
(a)
any
definition
of
or
reference
to
any
agreement,
instrument
or
other
document
refers
to
such
agreement,
instrumentother
document
as
from
time
to
time
amended,
supplemented
or
otherwise
modified
(subject
to
any
restrictions
on
such
amendments,
supplements
or
modificationsset
forth
herein
or
therein);
(b)
any
reference
to
any
Applicable
Law
refers
to
such
Applicable
Law
as
from
time
to
time
enacted,
repealed
or
amended;
(c)
thewords
“herein,”
“hereof”
and
“hereunder,”
and
words
of
similar
import,
refer
to
this
Agreement
in
its
entirety
and
not
to
any
particular
provision
hereof;
and
(d)
thewords
“include,”
“includes,”
“including,”
“exclude,”
“excludes,”
and
“excluding,”
shall
be
deemed
to
be
followed
by
the
phrase
“but
not
limited
to,”
“withoutlimitation”
or
words
of
similar
import.
72
12.13
Further
Actions
.
Each
Party
shall
execute,
acknowledge
and
deliver
such
further
instruments,
and
do
all
such
other
acts,
as
may
be
necessary
orappropriate
in
order
to
carry
out
the
expressly
stated
purposes
and
the
clear
intent
of
this
Agreement.
12.14
Parties
in
Interest
.
All
of
the
terms
and
provisions
of
this
Agreement
shall
be
binding
upon,
and
shall
inure
to
the
benefit
of
and
be
enforceableby
the
Parties
hereto
and
their
respective
successors,
heirs,
administrators
and
permitted
assigns.
12.15
Performance
by
Affiliates
.
To
the
extent
that
this
Agreement
imposes
obligations
on
Affiliates
of
a
Party,
such
Party
agrees
to
cause
itsAffiliates
to
perform
such
obligations.
12.16
Counterparts
.
This
Agreement
may
be
signed
in
counterparts,
each
and
every
one
of
which
shall
be
deemed
an
original,
notwithstandingvariations
in
format
or
file
designation
which
may
result
from
the
electronic
transmission,
storage
and
printing
of
copies
from
separate
computers
or
printers.
Facsimile
signatures
and
signatures
transmitted
via
portable
document
format
(PDF)
shall
be
treated
as
original
signatures.
[Signature
page
to
follow]
73
IN
WITNESS
WHEREOF,
and
intending
to
be
legally
bound
hereby,
the
Parties
have
caused
this
Agreement
to
be
executed
by
their
duly
authorizedrepresentatives
as
of
the
Effective
Date.
MEDIMMUNE,
LLC
By:/s/
Bahija
Jallal
Name:
Bahija
Jallal
Title:
EVP
BULLDOG
PHARMACEUTICALS,
INC.
By:/s/
Gerald
McMahon
Name:
Gerald
McMahon
Title:
Director
[Signature
Page]
Exhibit
1.41
In-License
Agreements
1.
MRC
Agreement
2.
Dyax
Agreement
3.
UT
Agreement
4.
Lonza
Agreement
Exhibit
1.41
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
1.42
In-Licensed
IP
1.
CAT/MRC Patent Rights
Country ApplicationStatus AppNumber FilDate PatNumber[**]
[**]
[**]
[**]
[**]
Confidential
Materials
omitted
and
filed
separately
with
the
Securities
and
Exchange
Commission.
A
total
of
5
pages
were
omitted.
[**]
2.
Dyax Patent Rights
[**]
3.
UTSW Patent Rights
Ctry Status Application Number Filing Date Patent Number Issue Date[**]
[**]
[**]
[**]
[**]
[**]
Confidential
Materials
omitted
and
filed
separately
with
the
Securities
and
Exchange
Commission.
A
total
of
1
page
was
omitted.
[**]
4.
Lonza Patent Rights
[**]
Territory Appl. No. Patent No.[**]
[**]
[**][**]
[**]
[**][**]
[**]
[**][**]
[**]
[**][**]
[**]
[**][**]
[**]
[**][**]
[**]
[**]
[**]
[**]
Territory Patent or Patent Appl. No.[**]
[**][**]
[**][**]
[**][**]
[**]
[**]
Exhibit
1.422
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Territory Patent or Patent Appl. No.[**]
[**][**]
[**][**]
[**][**]
[**]
[**]
a.
and
(a)
all
patents
and
patent
applications
in
any
country
or
supranational
jurisdiction
corresponding
to
national
stage
counterparts
to
these
patentsand
patent
applications,
and
(b)
any
substitutions,
divisionals,
continuations,
continuations-in-part,
provisional
applications,
reissues,
renewals,registrations,
confirmations,
re-examinations,
extensions,
supplementary
protection
certificates
and
the
like
of
any
such
patents
or
patent
applications,and
(c)
any
other
Patents
licensed
to
MedImmune
under
the
Lonza
Agreement.
5.
Unpatented and technical Know-How related to subject matter disclosed in applications listed above.
Exhibit
1.422
-
2
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
1.96
Research
Programs
Research
study
with
external
CRO,
[**],
titled:
In
Vivo
Evaluation
of
MEDI3379
and
[**]
Alone
in
[**]
Models
of
[**]
in
[**]
Mice
Exhibit
1.96
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
3.4.1
Certain
Know-How
to
be
Transferred
Confidential
Materials
omitted
and
filed
separately
with
the
Securities
and
Exchange
Commission.
A
total
of
2
pages
were
omitted.
[**]
Exhibit
3.4.1
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
3.6.1
Inventory
and
Materials
Inventory (Unformulated Drug Substance and Drug Product)
[**]
Materials
[**]
Exhibit
3.6.1
-
1
Exhibit
3.6.2(a)
Inventory
Storage,
Formulation,
Filling
and
Delivery
1.
Form of Licensed Antibody in the Inventory.
Without
limiting
Section
3.6.1
or
Exhibit
3.6.1
,
the
Licensed
Antibody
in
the
Inventory
includesunformulated
drug
substance
(“
UDS ”)
and
drug
product
in
non-labeled
vials
(“
DP ”).
2.
Testing as of Effective Date .
Without
limiting
Section
3.6.2(c),
MedImmune
will
communicate
to
Kolltan
the
results,
as
of
the
Effective
Date,
of
anyanalytical
testing
and
stability
testing
of
the
Inventory
and
will
indicate
whether
(a)
as
of
the
Effective
Date,
the
Inventory
and
Materials
have
been
storedand
maintained
in
accordance
with
the
applicable
storage
specifications
set
forth
in
Exhibit
3.6.2(a)(i)
,
(b)
as
of
the
Effective
Date,
stability
testing
of
theInventory
has
been
conducted,
and
(c)
as
of
the
date
of
the
last
stability
testing
of
the
Inventory
conducted
prior
to
the
Effective
Date,
the
Inventoryconformed
to
the
applicable
product
specifications
set
forth
in
Exhibit
3.6.2(c)(i)
.
3.
Storage.
MedImmune
will
store
the
Inventory
and
Materials
at
MedImmune
or
MedImmune’s
Third
Party
warehouse(s)
(collectively,
the
“Warehouses ”)
for
up
to
90
days
after
the
Effective
Date
without
charge.
Kolltan
will
notify
MedImmune
within
60
days
after
the
Effective
Date
ofKolltan’s
decision
to
(a)
continue
storage
of
any
or
all
quantities
of
the
Inventory
and
the
Materials
at
the
Warehouses
for
a
fee
payable
to
MedImmune
(“Storage Fee ”)
and/or
(b)
transfer
any
or
all
quantities
of
the
the
Inventory
and
Materials
to
a
warehouse
designated
by
Kolltan
with
transfer
fees
andstorage
fees
for
that
warehouse
paid
directly
by
Kolltan.
If
Kolltan
elects
continued
storage
of
any
quantites
of
the
Inventory
and
Materials
byMedImmune,
the
Parties
shall,
if
applicable,
mutally
agree
on
the
storage
terms
for
the
Materials
(to
the
extent
they
have
not
done
so
already)
andMedImmune
will
store
such
quantities
at
the
Warehouses
until
(x)
in
the
case
of
Inventory,
the
applicable
quantity
has
expired
as
determined
by
thestability
study
for
the
Inventory
(“
Expiration Date ”)
or
(y)
in
the
case
of
Inventory
and
Materials,
until
directed
by
Kolltan
to
transfer
the
applicablequantity
to
a
warehouse
designated
by
Kolltan.
Any
Inventory
remaining
in
storage
at
the
Warehouses
after
the
Expiration
Date
will
be
destroyed
ortransferred
to
a
warehouse
designated
by
Kolltan,
all
according
to
Kolltan’s
reasonable
written
instructions.
The
Storage
Fee
will
be
a
pass-through,without
mark-up,
of
the
storage
fee
paid
by
MedImmune
for
Kolltan’s
Inventory
and
Materials
at
the
Warehouses.
For
so
long
as
any
part
of
theInventory
or
Materials
are
stored
at
any
Warehouse,
Kolltan
shall
have
the
right,
at
reasonable
times
and
upon
reasonable
advance
notice,
to
reasonablyinspect
such
Warehouse
to
confirm
MedImmune’s
compliance
with
its
obligations
under
Section
3.6.2.
Exhibit
3.6.2(a)
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
4.
Stability Studies.
MedImmune
will
continue
to
provide
updates
on
the
stability
studies
within
[**]
days
after
results
become
available
under
thestability
study
protocols,
which
will
be
provided
to
Kolltan.
MedImmune
will
charge
a
fee
of
$[**]
for
completion
of
the
currently
underway
stabilitystudies
for
Inventory.
To
the
extent
that
new
stability
studies
for
Inventory
are
required
due
to
unforeseen
circumstances,
the
Parties
will
discuss
andagree
on
a
reasonable
fee.
5.
Delivery.
Kolltan
will
provide
written
instructions
as
to
the
timing
and
manner
of
delivery
of
Inventory
and
Materials
out
of
storage.
MedImmune
willdeliver
all
Licensed
Antibody
in
the
Inventory
as
DP,
i.e.,
drug
product
in
non-labeled
vialed
form,
unless
otherwise
requested
by
Kolltan.
MedImmunewill
not,
and
will
have
no
obligation
to,
label
or
(subject
to
Section
6
below)
package
the
Inventory.
MedImmune
will
prepare
Inventory
and
Materials
forshipment
to
Kolltan
or
to
Kolltan’s
designated
Third
Party.
At
Kolltan’s
request,
MedImmune
may
recommend
a
contract
manufacturer
for
labeling.
Kolltan
will
pay
transfer
costs
to
the
contract
manufacturer.
6.
Formulation and Filling.
When
requested
by
Kolltan
with
no
less
than
[**]
months’
notice,
MedImmune
will
fill
DS
into
unlabeled
vials
and
packagethem
for
shipment
for
a
fee
of
$[**]
per
batch.
MedImmune
will
formulate
UDS
into
DS
for
a
fee
of
$[**]
per
batch.
At
Kolltan’s
request,
MedImmunemay
recommend
a
contract
manufacturer
for
filling,
labeling
and/or
formulation
and
establish
a
plan
for
the
transfer
of
the
UDS
and
DS
and
theinformation
necessary
and
customary
in
the
industry
to
enable
a
Third
Party
to
formulate
UDS
and
fill
DS
for
Kolltan.
Kolltan
will
pay
for
the
cost
oftransfer
to
the
contract
manufacturer.
Exhibit
3.6.2(a)
-
2
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
3.6.2(a)(i)
Inventory
and
Materials
Storage
Specifications
Drug
Product
:Storage
temperatures
between
[**]Shipment
temperatures
between
[**]
Unformulated
Drug
Substance
:Storage
temperature
at
[**]
Master
Cell
Bank
:Stored
in
the
[**].
Reference
StandardStorage
temperature
at
less
than
[**]
Exhibit
3.6.2(a)(i)
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
3.6.2(c)(i)
Inventory
Product
Specifications
In-process Targets for Process Intermediates
Product Name: MEDI3379
Unformulated
Drug
Substance
(Process
1)Material Number: [**]Formulation: [**]
Storage Temperature: [**]Storage Container: 16
L
Celsius
BagMaximum Dose: [**]Body Mass: 40
–
150
kgVersion: 1.0
Test Method Number Target ExpectationsAppearance
[**]
[**]Total
protein
[**]
[**]pH
[**]
[**]Reducing
gel
electrophoresis
[**]
[**]Non-reducing
gel
electrophoresis
[**]
[**]High
performance
size
exclusion
chromatography(HPSEC)
[**]
[**]Capillary
isoelectric
focusing
(cIEF)
[**]
[**]MEDI3379
bioassay
[**]
[**]Bioburden
[**]
[**]
Exhibit
3.6.2(c)(i)
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
In-process Targets for Process Intermediates
Product Name: MEDI3379
Unformulated
Drug
Substance
(Process
1)Material Number: [**]Formulation: [**]
Storage Temperature: [**]Storage Container: 16
L
Celsius
BagMaximum Dose: [**]Body Mass: 40
–
150
kgVersion: 1.0
Endotoxin
(LAL)QC-9744[**]
COMMENTS:
[**].
Revision
History
Version Reason[**]
[**]
APPROVALS
Role Printed Name SignatureLot
Release
[**]
[**]
02
May
12Analytical
Biochemistry
[**]
[**]
3
May
12Quality
Assurance
[**]
[**]
04
May
12
Exhibit
3.6.2(c)(i)
-
2
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Master Specification for Clinical Trial Material
Product Information
Product Name: MEDI3379
Drug
Product
(Process
1)
Formulation: [**]
Storage Condition: [**]
Material Number: [**]
Maximum Dose: [**]
Body Weight Range: 40
–
150
kg
Nominal Fill Volume: 1.0
mL
Fill Volume: 1.3
mL
Comments: Not
applicable
Alternate Storage Conditions
Storage Condition: Not
applicable
Material Number: Not
applicable
Storage Condition: Not
applicable
Material Number: Not
applicable
Test, Method, and Acceptance Criteria
Test Method Acceptance CriteriaAppearance
[**]
[**]pH
[**]
[**]Total
protein
[**]
[**]Capillary
isoelectric
focusing
[**]
[**]MEDI3379
bioassay
[**]
[**]Reducing
gel
electrophoresis
[**]
[**]Non-reducing
gel
electrophoresis
[**]
[**]High
performance
size
exclusion
chromatography
[**]
[**]
Exhibit
3.6.2(c)(i)
-
3
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Test Method Acceptance CriteriaEndotoxin
(LAL)
[**]
[**]Sub-visible
particles
[**]
[**]Extractable
volume
[**]
[**]Osmolality
[**]
[**]Sterility
[**]
[**]
Comments
[**]
Version History
Version Reason[**]
[**]
Exhibit
3.6.2(c)(i)
-
4
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Justification of Specification Worksheet (New Specifications Only)
Section 1: Material Type Abbreviations
BIVBP
= Bulk IV Bag ProtectantVIVBP
= Vialed IV Bag ProtectantBD
= Bulk DiluentVD
= Vialed DiluentBP
= Bulk PlaceboVP
= Vialed PlaceboDS
= Drug SubstanceDP
= Drug Product
Section 2: Material Types
Material Type#1
Product Name: MEDI3379 Drug Product (Process 1)Master Specification #: [**]Abbreviation:DPFormulation: [**]
Storage Condition: [**]
MaterialNumber: [**]Nominal Fill Volume: 1.0mLTarget Fill Volume: 1.3 mL
Section 3: Maximum Dosage
Maximum Dose Applies to: Reference Justification[**]
[**]
[**]
[**]
Exhibit
3.6.2(c)(i)
-
5
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Section 4: Test, Acceptance Criteria and Justification
Text Applies to: Method Number Acceptance Criteria JustificationAppearance
DP
[**]
[**]
[**]pH
DP
[**]
[**]
[**]Total
protein
DP
[**]
[**]
[**]Capillary
isoelectric
focusing
DP
[**]
[**]
[**]MEDI3379
bioassay
DP
[**]
[**]
[**]Reducing
gel
electrophoresis
DP
[**]
[**]
[**]Non-reducing
gel
electrophoresis
DP
[**]
[**]
[**]High
performance
size
exclusion
chromatography
DP
[**]
[**]
[**]Endotoxin
(LAL)
DP
[**]
[**]
[**]Sub-visible
particles
DP
[**]
[**]
[**]Extractable
volume
DP
[**]
[**]
[**]Osmolality
DP
[**]
[**]
[**]Sterility
DP
Contract
lab
[**]
[**]
Section 5: Comments
[**]
Section 6: Approvals
Role Name Signature DateCMC
Analytical
Representative
[**]
[**]
13
June
12
Exhibit
3.6.2(c)(i)
-
6
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions. Justification of Specification Worksheet (New Specifications Only)
CMC
Team
Leader
[**]
[**]
14
June
12MSWC
Coordinator
[**]
[**]
15
June
12ABC
Senior
Management
[**]
[**]
18
June
12
Exhibit
3.6.2(c)(i)
-
7
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Confidential
Materials
omitted
and
filed
separately
with
the
Securities
and
Exchange
Commission.
A
total
of
one
page
was
omitted.
[**]
Exhibit
3.6.2(c)(i)
-
8
Exhibit
3.6.3(a)
Clinical
and
Research
Supply
Agreement
Principles
1.
Supply Agreement - Overview
The
Clinical
and
Research
Supply
Agreement
(for
purposes
of
this
Exhibit,
the
“
Supply Agreement ”)
will
consist
of
general
principles
set
forth
in
a
mainagreement
and
project
addenda
that
will
be
entered
into
for
specific
manufacturing
projects
or
for
particular
services
(“
Project Addenda ”).
At
this
time
theParties
anticipate
separate
Project
Addenda
for
(1)
research
supply
and
Phase
1
&
Phase
2
clinical
supply,
(2)
Phase
3
clinical
supply,
and
(3)
special
services
notcovered
by
the
supply
Project
Addenda
such
as
technology
transfer
(except
for
technology
transfer
by
MedImmune
upon
termination
as
described
below),
processdevelopment,
formulation
development
and
the
like.
Drug
substance
and
drug
product
containing
Licensed
Antibody
and
Licensed
Product
are
referred
to
in
thisExhibit
as
“
Product .”
1.1
Manufacture.
MedImmune
will
manufacture
for
Kolltan
those
quantities
of
Product
required
by
a
Project
Addendum.
Product
will
be
manufactured
and
delivered
in
accordancewith
the
Project
Addendum
and
the
Quality
Agreement.
The
Parties
will
agree
on
a
forecasting
procedure
which
may
include
a
long
term
forecast
and
a
bindingforecast.
1.2
Data
Transfer.
MedImmune
will
provide
to
Kolltan
a
mutually
agreed
data
set
for
each
lot
of
Product
to
enable
Kolltan
to
prepare
documents
required
for
Kolltan’s
regulatoryagency
filings.
The
foregoing
sentence
notwithstanding,
MedImmune
has
no
obligation
under
the
Supply
Agreement
to
disclose
to
Kolltan
any
MedImmuneManufacturing
Know
How
related
to
MedImmune
proprietary
cell
culture
media
and
nutrient
feeds
used
in
the
manufacturing
process.
1.3
Delivery
Terms;
Title
and
Risk
of
Loss.
Delivery
terms
will
be
FCA
(Incoterms
2010)
MedImmune’s
facility.
Title
and
risk
of
loss
or
damage
will
pass
to
Kolltan
upon
delivery
of
Product
to
thedesignated
carrier
at
MedImmune’s
facility.
Kolltan
will
be
responsible
for
obtaining
governmental
permits,
consents
and
approvals
required
for
export
out
ofcountry
of
origin
and
for
import
into
the
destination
country.
1.4
Final
Release
of
Product.
MedImmune
will
perform
a
manufacturer’s
release
of
Product
and
will
provide
Kolltan
with
a
certificate
of
analysis.
Kolltan
will
perform
the
final
release
ofProduct.
1.5
Regulatory
Matters.
When
requested
by
Kolltan,
MedImmune
will
provide
to
Kolltan
documentation
in
support
of
GMP
Manufacture
of
Product
for
filing
by
Kolltan
with
regulatoryauthorities
in
the
U.S.,
any
of
the
member
states
of
the
European
Union,
or
other
jurisdictions
mutually
agreed
in
writing.
If
supporting
such
approval
wouldrequire
material
changes
or
significant
resources,
then
the
Parties
will
first
prepare
a
written
action
plan,
which
includes
responsibilities
and
costs.
Exhibit
3.6.3(a)
-
1
1.6
Assistance
to
Kolltan.
MedImmune
will
provide
reasonable
assistance
to
Kolltan
with
respect
to
any
filings
related
to
the
Product
that
Kolltan
may
wish
to
make
to
a
regulatory
authority;such
assistance
may
include
providing
to
Kolltan
requested
documentation
with
respect
to
the
services
performed
under
the
Supply
Agreement.
MedImmunefurther
will
provide
reasonable
assistance
to
Kolltan
with
respect
to
Kolltan
responding
to
regulatory
authorities.
Any
additional
assistance
will
be
subject
to
aseparate
Project
Addendum
with
a
separate
fee.
1.7
Product
Warranties;
Acceptance
and
Rejection;
Failure
to
Supply.
MedImmune
will
make
customary
warranties
regarding
any
Product
delivered
to
Kolltan
under
the
Supply
Agreement.
The
Supply
Agreement
will
containprocedures
for
acceptance
and
rejection
of
Product
and
procedures
for
dispute
resolution
related
to
rejection
of
Product.
The
Supply
Agreement
will
specifyappropriate
remedies
for
Kolltan
if
MedImmune
fails
to
supply
Product
in
a
timely
manner
in
accordance
with
the
applicable
warranties.
1.8
Subcontractors
MedImmune
may
engage
subcontractors
identified
on
a
list
agreed
by
the
Parties
and
attached
as
an
exhibit
to
the
Supply
Agreement,
to
carry
out
MedImmune’sresponsibilities
under
the
Supply
Agreement,
provided
that
such
subcontractors
are
subject
to
the
applicable
terms
of
the
Supply
Agreement
and
QualityAgreement.
The
list
of
approved
subcontractors
may
be
updated
from
time
to
time
by
MedImmune
with
Kolltan’s
prior
written
consent,
which
consent
will
not
beunreasonably
withheld.
MedImmune
will
remain
responsible
for
the
peformance
by
its
subcontractors
of
its
obligations
under
the
Supply
Agreement.
2.
Quality; Audit
A
quality
agreement
will
be
executed
at
the
same
time
as,
or
prior
to,
the
execution
of
a
Project
Addendum
for
GMP
manufacture
(the
“
Quality Agreement ”).
The
Supply
Agreement
will
include
rights
for
Kolltan
to
audit
and
inspect
MedImmune’s
books,
records
and
facilities
as
reasonably
required
to
comply
withregulatory
requirements
or
confirm
MedImmune’s
compliance
with
its
obligations
under
the
Supply
Agreement.
3.
Pricing
3.1.
MedImmune
will
supply
Product
to
Kolltan
at
rates
not
materially
different
from
those
charged
by
third
party
contract
manufacturers.
3.2.
Kolltan
will
pay
invoices
within
30
days
after
receipt.
4.
Compliance with Legal and Regulatory Requirements
4.1.
Appropriate
provisions
will
be
included
in
the
Supply
Agreement
to
ensure
that
each
Party
complies
with
all
relevant
local,
national
and
internationallegal
or
regulatory
requirements
and
other
relevant
requirements
applicable
to
the
manufacture,
handing,
transport
and
storage
of
Product.
5.
Document Retention
5.1.
Appropriate
provisions
will
be
included
in
the
Supply
Agreement
with
regard
to
maintaining
appropriate
documentation
for
patent
and
regulatorypurposes
and
in
full
compliance
with
all
applicable
laws.
Exhibit
3.6.3(a)
-
2
6.
Product Security and Waste Disposal
6.1.
Appropriate
provisions
will
be
included
in
the
Supply
Agreement
with
regard
to
product
security
and
waste
handling.
7.
Ownership of Results and Background IPR
7.1.
The
applicable
intellectual
property
provisions
of
the
Agreement
will
be
reflected
as
appropriate
in
the
Supply
Agreement.
8.
General Provisions
8.1.
Each
Party
agrees
and
acknowledges
that
the
Supply
Agreement
will
contain
a
number
of
other
provisions
that
are
standard
in
the
biopharmaceuticalmanufacture
industry,
including
with
respect
to
insurance,
indemnification,
confidentiality,
assignment,
governing
law
and
jurisdiction,
which
will
not
conflict
orbe
inconsistent
with
the
provisions
of
the
Agreement.
9.
Termination
9.1.
Either
Party
shall
have
the
right
to
terminate
the
Supply
Agreement
for
convenience
on
appropriate
notice
(which
in
the
case
of
MedImmune
shall
be
ontwelve
(12)
months’
notice
not
to
be
delivered
prior
to
December
31,
2016);
or
for
material
breach
of
the
Supply
Agreement
by
the
other
Party
or
insolvency.
9.2.
The
Supply
Agreement
shall
automatically
terminate:
9.2.1.
upon
termination
of
the
Agreement
in
its
entirety
by
MedImmune
due
to
Kolltan’s
material
breach
of
the
Agreement
or
insolvency;
and
9.2.2.
upon
termination
of
the
Agreement
by
Kolltan
with
respect
to
each
of
the
Licensed
Program
and
the
Follow-On
Program
under
Section
11.4
ofthe
Agreement.
9.3.
Without
limiting
Section
3.6.3(b)
of
the
Agreement
(to
the
extent
it
survives
termination
of
the
Agreement,
if
applicable),
in
the
event
that
the
SupplyAgreement
is
terminated
other
than
(a)
by
MedImmune
for
Kolltan’s
material
breach
of
the
Supply
Agreement
or
insolvency
or
(b)
as
described
in
Section
9.2
ofthis
Exhibit,
MedImmune
will
perform
such
technology
and
knowledge
transfer
required
to
ensure
continuity
of
supply
for
Kolltan.
Exhibit
3.6.3(a)
-
3
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
5.4.1(c)
Co-Development
and
Co-Commercialization
Agreement
Terms
Capitalized
terms
used
but
not
defined
in
this
Exhibit
shall
have
the
meanings
given
to
them
in
the
Agreement.
Scope
The
Co-Development
and
Co-Commercialization
Agreement
shall
set
forth
the
rights
and
obligations
of
the
Parties
with
respect
tothe
Development
and
Commercialization
of
the
Licensed
Antibody
and
Licensed
Products
in
the
Field
in
the
Territory.
Upfront
payment
Within
forty-five
(45)
days
after
execution
of
the
Co-Development
and
Co-Commercialization
Agreement,
MedImmune
shall
payto
Kolltan
(a)
if
the
Co-Development
and
Co-Commercialization
Agreement
is
entered
pursuant
to
Section
5.4.3(c)
of
theAgreement,
an
amount
equal
to
[**]
percent
([**]%)
of
the
Product
Acquisition
Price,
or
(b)
if
the
Co-Development
and
Co-Commercialization
Agreement
is
entered
pursuant
to
Section
5.4.3(d)
of
the
Agreement,
an
amount
equal
to
the
Co-AgreementAmount
(provided,
however,
that
if
the
Co-Agreement
Amount
is
less
than
or
equal
to
zero,
MedImmune
shall
not
be
required
topay
Kolltan
an
upfront
payment
under
this
clause
(b)).
License
grants
Each
Party
shall
grant
the
other
Party
a
sole,
royalty-free
license
(which
license
shall
be
exclusive
as
to
Third
Parties
but
not
as
tothe
licensor
and
its
Affiliates),
with
the
right
to
grant
sublicenses
(subject
to
restrictions
to
be
set
forth
in
the
Co-Development
andCo-Commercialization
Agreement)
under
any
Patents
or
Know-How
owned
or
controlled
by
such
Party
that
are
necessary
orreasonably
useful
for
the
Development
or
Commercialization
of
the
Licensed
Antibody
or
Licensed
Products,
to
Develop
andCommercialize
the
Licensed
Antibody
and
Licensed
Products
in
the
Field
in
the
Territory
in
accordance
with
the
terms
of
the
Co-Development
and
Co-Commercialization
Agreement.
Governance
The
Parties’
activities
under
the
Co-Development
and
Co-Commercialization
Agreement
shall
be
generally
overseen
by
a
steeringcommittee,
which
shall
consist
of
an
equal
number
of
representatives
of
each
Party
(the
“
Steering
Committee
”).
The
SteeringCommittee
shall
act
by
consensus;
provided,
however,
that
if
the
Steering
Committee
is
unable
to
reach
consensus
on
a
matterwithin
the
scope
of
its
responsibility,
the
matter
shall
be
escalated
to
the
Executive
Officers
for
attempted
resolution
in
accordancewith
procedures
set
forth
in
the
Co-Development
and
Co-Commercialization
Agreement.
The
Parties’
Development
activities
under
the
Co-Development
and
Co-Commercialization
Agreement
shall
be
specificallyoverseen
by
a
development
committee,
which
shall
consist
of
an
equal
number
of
representatives
of
each
Party
(the
“
JDC
”),
andthe
Parties’
Commercialization
activities
under
the
Co-Development
and
Co-Commercialization
Agreement
shall
be
specifically
Exhibit
5.4.1(c)
-
1
overseen
by
a
commercialization
committee,
which
shall
consist
of
an
equal
number
of
representatives
of
each
Party
(the
“
JCC
”).Each
of
the
JDC
and
the
JCC
shall
act
by
consensus;
provided,
however,
that
if
either
the
JDC
or
the
JCC
is
unable
to
reachconsensus
on
a
matter
within
the
scope
of
its
responsibility,
the
matter
shall
be
escalated
to
the
Steering
Committee.
Development
activities
The
Steering
Committee
shall
determine
which
Party
shall
have
primary
operational
responsibility
for
conducting
Developmentactivities
with
respect
to
the
Licensed
Antibody
and
Licensed
Products
in
accordance
with
a
Development
plan
and
budgetapproved
(and,
as
applicable,
amended)
by
the
JDC
and
thereafter
approved
by
the
Steering
Committee
(the
“
Development
Plan”).
To
the
extent
feasible
and
based
on
then-existing
circumstances,
the
Steering
Committee
shall
use
reasonable
efforts
to
ensurethat
Kolltan
shall
assume
primary
operational
responsibility
whenever
possible.
Development
diligence
Each
Party
shall
use
Commercially
Reasonable
Efforts
to
carry
out
the
activities
assigned
to
it
under
the
Development
Plan.
Development
costs
Each
Party
shall
bear
50%
of
the
Development
Costs.
“
Development
Costs
”
will
be
defined
more
specifically
in
the
Co-Development
and
Co-Commercialization
Agreement
butgenerally
will
mean
the
sum
of
all
out-of-pocket
costs
incurred
by
a
Party
or
its
Affiliates
after
the
effective
date
of
the
Co-Development
and
Co-Commercialization
Agreement
that
are
specifically
identifiable
to
(i)
the
Development
of
the
LicensedAntibody
or
Licensed
Products
or
(ii)
the
Manufacture
of
the
Licensed
Antibody
or
Licensed
Products
in
support
of
suchDevelopment,
in
each
case
((i)
and
(ii))
in
accordance
with
the
Development
Plan
(subject
to
any
cost
overruns
that
may
bepermitted
under
the
Co-Development
and
Co-Commercialization
Agreement).
Commercialization
activities
The
Parties
shall
conduct
Commercialization
activities
with
respect
to
Licensed
Products
in
accordance
with
a
Commercializationplan
approved
(and,
as
applicable,
amended)
by
the
JCC
and
thereafter
approved
by
the
Steering
Committee
(the
“Commercialization
Plan
”).
Commercialization
diligence
Each
Party
shall
use
Commercially
Reasonable
Efforts
to
carry
out
the
activities
assigned
to
it
under
the
Commercialization
Plan.
Exhibit
5.4.1(c)
-
2
Net
Profits/Losses
Each
Party
shall
be
receive
or
bear,
as
applicable,
fifty
percent
(50%)
of
the
Net
Profits/Losses.
“
Net
Profits/Losses
”
will
be
defined
more
specifically
in
the
Co-Development
and
Co-Commercialization
Agreement
butgenerally
will
mean
Net
Sales
(as
defined
below)
less
Commercialization
Costs.
“
Net
Sales
”
will
be
defined
more
specifically
in
the
Co-Development
and
Co-Commercialization
Agreement
but
generally
will
bedefined
in
a
manner
analogous
to
the
manner
in
which
Net
Sales
are
defined
in
the
Agreement.
“
Commercialization
Costs
”
will
be
defined
more
specifically
in
the
Co-Development
and
Co-Commercialization
Agreement
butgenerally
will
mean
the
sum
of
all
out-of-pocket
costs
incurred
by
a
Party
or
its
Affiliates
after
the
effective
date
of
the
Co-Development
and
Co-Commercialization
Agreement
that
are
specifically
identifiable
to
(i)(x)
the
Commercialization
of
LicensedProducts
or
(y)
the
Manufacture
of
Licensed
Products
in
support
of
such
Commercialization,
in
each
case
((x)
and
(y))
inaccordance
with
the
Commercialization
Plan
(subject
to
any
cost
overruns
that
may
be
permitted
under
the
Co-Development
andCo-Commercialization
Agreement),
(ii)
prosecution,
maintenance,
enforcement
or
defense
of
Patents,
(iii)
indemnification
claimsor
other
liabilities
to
Third
Parties
not
attributable
to
a
Party’s
breach,
negligence
or
willful
misconduct
or
(iv)
obligations
to
ThirdParties
under
license
or
other
agreements
relating
to
relevant
Patents
or
Know-How,
to
the
extent
agreed
by
the
Parties,
in
eachcase
excluding
any
costs
to
the
extent
deducted
under
the
definition
of
Net
Sales.
Supply
If
MedImmune
is
interested
in
supplying
the
Parties’
requirements
of
the
Licensed
Antibody
and
Licensed
Products
for
theirDevelopment
and
Commercialization
activities
under
the
Co-Development
and
Co-Commercialization
Agreement,
then
the
Partiesshall
negotiate
in
good
faith
regarding
a
mutually
acceptable
supply
agreement;
provided,
however,
that
if
the
Parties
in
good
faithare
unable
to
agree
on
the
terms
of
such
a
supply
agreement
within
a
reasonable
period
of
time,
then
the
Parties
shall
negotiate
ingood
faith
with
one
or
more
Third
Parties
regarding
a
supply
agreement
pursuant
to
which
the
applicable
Third
Party
would
supplythe
Parties’
requirements
of
the
Licensed
Antibody
and
Licensed
Products
for
their
Development
and
Commercialization
activitiesunder
the
Co-Development
and
Co-Commercialization
Agreement.
If
MedImmune
is
not
interested
in
supplying
the
Parties’
requirements
of
the
Licensed
Antibody
and
Licensed
Products
for
theirDevelopment
and
Commercialization
activities
under
the
Co-Development
and
Co-Commercialization
Agreement,
then
the
Partiesshall
mutually
agree
upon
a
Third
Party
to
supply
such
requirements.
Exhibit
5.4.1(c)
-
3
Confidentiality
The
Co-Development
and
Co-Commercialization
Agreement
shall
include
provisions
regarding
protection
of
confidentialinformation,
including
confidential
information
disclosed
under
or
in
connection
with
the
Agreement,
that
are
customary
forsimilar
transactions
and,
to
the
extent
applicable,
consistent
with
the
corresponding
provisions
of
the
Agreement.
Other
provisions
The
Co-Development
and
Co-Commercialization
Agreement
shall
include
provisions
regarding
(a)
termination,
(b)
ownership,prosecution,
maintenance,
enforcement
and
defense
of
relevant
Patents,
(c)
representations
and
warranties,
(d)
indemnification,(e)
assignment
and
change
of
control
and
(f)
governing
law
and
resolution
of
legal
disputes,
in
each
case
that
are
customary
forsimilar
transactions
and,
to
the
extent
applicable,
consistent
with
the
corresponding
provisions
of
the
Agreement,
and
such
otherprovisions
as
may
be
agreed
by
the
Parties.
Exhibit
5.4.1(c)
-
4
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
6.4.4
Payments
under
Certain
In-License
Agreements
1.
UT Agreement .
1.1
Capitalized
terms
used
in
this
Section
1
but
not
defined
in
the
Agreement
shall
have
the
meanings
given
to
them
in
the
UT
Agreement.
1.2
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
5.1b
of
the
UT
Agreement,
Kolltan
shall
pay
Board
thefollowing
milestone
fees
within
30
days
of
the
applicable
milestone
event
for
each
Licensed
Product
(as
defined
in
the
UT
Agreement)
that
is
aLicensed
Product
(as
defined
in
this
Agreement);
provided,
however
that
Kolltan
shall
not
be
required
to
make
any
such
payment
more
than
oncefor
any
Licensed
Product
(as
defined
in
the
UT
Agreement):
Milestone Event Amount[**]
[**][**]
[**][**]
[**][**]
[**]
1.3
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
5.1c
of
the
UT
Agreement,
Kolltan
shall
pay
Board
thefollowing
commercial
success
milestone
fees
on
or
before
March
1
of
each
year
during
the
Term
(as
defined
in
the
UT
Agreement)
based
on
thetotal
worldwide
Net
Sales
(as
defined
in
the
UT
Agreement)
of
Licensed
Products
(as
defined
in
this
Agreement)
in
the
previous
Calendar
Year:
Total Worldwide Net Sales (as defined in the UT Agreement) of Licensed Products (as defined in this Agreement) in the Previous Calendar Year AmountGreater
than
$[**]
but
less
than
or
equal
to
$[**]
[**]Greater
than
$[**]
but
less
than
or
equal
to
$[**]
[**]Greater
than
$[**]
but
less
than
or
equal
to
$[**]
[**]Greater
than
$[**]
but
less
than
or
equal
to
$[**]
[**]Greater
than
$[**]
[**]
Exhibit
6.4.4
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Notwithstanding
the
foregoing,
if
for
any
Calendar
Year
there
are
Net
Sales
(as
defined
in
the
UT
Agreement)
of
any
product
other
than
LicensedProducts
(as
defined
in
this
Agreement),
then
promptly
after
the
end
of
such
Calendar
Year,
MedImmune
shall
notify
Kolltan
of
the
total
amountof
Net
Sales
(as
defined
in
the
UT
Agreement)
of
such
products
for
such
Calendar
Year,
and
the
amount
payable
by
Kolltan
under
thisSection
1.3
for
such
Calendar
Year
shall
be
the
product
of
(a)
the
total
amount
owed
by
MedImmune
or
its
applicable
Affiliate
to
Board
underSection
5.1c
of
the
UT
Agreement
for
such
Calendar
Year
and
(b)
a
fraction,
the
numerator
of
which
is
the
amount
of
Net
Sales
(as
defined
in
theUT
Agreement)
of
Licensed
Products
(as
defined
in
this
Agreement)
for
such
Calendar
Year
and
the
denominator
of
which
is
the
total
amount
ofNet
Sales
(as
defined
in
the
UT
Agreement)
for
such
Calendar
Year.
2.
Dyax Agreement .
2.1
Capitalized
terms
used
in
this
Section
2
but
not
defined
in
the
Agreement
shall
have
the
meanings
given
to
them
in
the
Unredacted
Provisions
ofthe
Dyax
Agreement.
2.2
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
13.3
of
the
Dyax
Agreement,
for
any
Licensed
Product,Kolltan
shall
pay
Dyax
a
royalty
of
[**]
percent
([**]%)
of
Net
Sales
(as
defined
in
the
Dyax
Agreement
after
substituting,
for
each
reference
insuch
definition
to
MedImmune
Products,
a
reference
to
Licensed
Products)
of
such
Licensed
Product;
provided,
however,
that
Kolltan
shall
notbe
required
to
pay
such
royalty
with
respect
to
sales
of
any
Licensed
Product
in
any
country
after
the
tenth
(10th)
anniversary
of
the
firstcommercial
sale
of
such
Licensed
Product
in
such
country
pursuant
to
a
Regulatory
Approval
in
such
country.
3.
Lonza Agreement .
3.1
Capitalized
terms
used
in
this
Section
3
but
not
defined
in
the
Agreement
(or
in
any
provision
of
this
Section
3)
shall
have
the
meanings
givento
them
in
the
Unredacted
Provisions
of
the
Lonza
Agreement.
3.2
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
6.3
of
the
Lonza
Agreement,
for
any
Calendar
Year,
if
anyProduct
or
End
Product
that
is
a
Licensed
Product
with
respect
to
which
Commencement
of
Phase
2
Clinical
Study
has
occurred,
is
manufacturedfor
Kolltan
by
MedImmune
using
the
LB
System
Technology,
then
Kolltan
shall
pay
to
Lonza
Sales
a
license
fee
for
such
Calendar
Year
in
theamount
of
the
Applicable
Amount;
provided,
however,
that
Kolltan
shall
not
be
required
to
make
such
payment
for
any
Calendar
Year
(a)
inwhich
Lonza
Sales
or
any
of
its
Affiliates
manufactures
for
Kolltan
any
Product
or
End
Product
that
is
a
Licensed
Product
or
(b)
after
the
Exhibit
6.4.4
-
2
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Calendar
Year
in
which
the
last-to-expire
relevant
patent
(depending
on
which
cell
line
is
used
for
such
Product
or
End
Product)
under
the
LBSystem
Technology
in
Exhibit
2
to
the
Lonza
Agreement
in
the
country
of
manufacture
expires.
For
purposes
of
this
Section
3.2,
the“Applicable
Amount”
means
(x)
if
the
relevant
Licensed
Product
is
the
first
Product
or
End
Product
manufactured
by
MedImmune
(or
itsAffiliates),
regardless
of
whether
any
given
Product
or
End
Product
is
manufactured
for
MedImmune
(or
its
Affiliates),
Kolltan
(or
its
Affiliates)or
any
Third
Party,
using
the
LB
System
Technology
with
respect
to
which
Commencement
of
Phase
2
Clinical
Study
occurred,
GBP
[**]
(£[**]),
(y)
if
the
relevant
Licensed
Product
is
the
second,
third
or
fourth
Product
or
End
Product
manufactured
by
MedImmune
(or
its
Affiliates),regardless
of
whether
any
given
Product
or
End
Product
is
manufactured
for
MedImmune
(or
its
Affiliates),
Kolltan
(or
its
Affiliates)
or
anyThird
Party,
using
the
LB
System
Technology
with
respect
to
which
Commencement
of
Phase
2
Clinical
Study
has
occurred,
GBP
[**]
(£[**]),and
(z)
if
the
relevant
Licensed
Product
is
the
[**]
or
later
Product
or
End
Product
manufactured
by
MedImmune
(or
its
Affiliates),
regardless
ofwhether
any
given
Product
or
End
Product
is
manufactured
for
MedImmune
(or
its
Affiliates),
Kolltan
(or
its
Affiliates)
or
any
Third
Party,
usingthe
LB
System
Technology
with
respect
to
which
Commencement
of
Phase
2
Clinical
Study
has
occurred,
[**]
(£[**]).
3.3
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
6.5
of
the
Lonza
Agreement,
for
any
Product
or
End
Productthat
is
a
Licensed
Product
and
manufactured
in
any
country
for
Kolltan
by
MedImmune
using
the
LB
System
Technology,
Kolltan
shall
pay
toLonza
Sales
a
royalty
of
(a)
if
such
Product
or
End
Product
was
manufactured
during
the
Royalty
Patent
Term
of
such
Product
or
End
Product
insuch
country,
[**]%
of
Net
Sales
(as
defined
in
the
Lonza
Agreement)
of
such
Product
or
End
Product,
and
(b)
if
such
Product
or
End
Productwas
manufactured
during
the
Royalty
Know-How
Term
of
such
Product
or
End
Product
in
such
country,
[**]%
of
Net
Sales
(as
defined
in
theLonza
Agreement)
of
such
Product
or
End
Product.
3.4
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
6.7
of
the
Lonza
Agreement,
for
any
Calendar
Year,
if
anyProduct
or
End
Product
that
is
(a)
a
Licensed
Product
and
(b)
manufactured
(i)
by
Kolltan
on
its
own
behalf
or
(ii)
by
any
Third
Party
other
thanLonza
Sales
or
any
of
its
Affiliates
on
behalf
of
Kolltan,
in
either
case
((i)
or
(ii))
in
accordance
with
GMP
(as
defined
in
the
Lonza
Agreement)requirements
and
using
the
LB
System
Technology,
then
Kolltan
shall
pay
to
Lonza
Sales
a
sublicense
fee
for
such
Calendar
Year
in
the
amountof
the
product
of
(x)
GBP
[**]
(£[**]),
and
(y)
the
number
of
different
Products
and
End
Products
described
in
clauses
(a)
and
(b)
above
for
suchCalendar
Year;
provided,
however,
that
Kolltan
shall
not
be
required
to
make
such
payment
for
any
Calendar
Year
(A)
in
which
Lonza
Sales
orany
of
its
Affiliates
manufactures
for
Kolltan
any
Product
or
End
Product
that
is
a
Licensed
Product
or
(B)
with
respect
to
any
Product
or
EndProduct,
after
the
Calendar
Year
in
which
the
last-to-expire
relevant
patent
(depending
on
which
cell
line
is
used
for
such
Product
or
EndProduct)
under
the
LB
System
Exhibit
6.4.4
-
3
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Technology
in
Exhibit
2
to
the
Lonza
Agreement
in
the
country
of
manufacture
expires.
Any
Product
and
any
End
Product
that
have
the
sameactive
ingredient
shall
be
counted
as
one
for
purposes
of
calculating
the
fraction
described
in
clause
(y)
above.
3.5
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
6.8
of
the
Lonza
Agreement,
for
any
Product
or
End
Productthat
is
a
Licensed
Product
and
manufactured
in
any
country
(a)
by
Kolltan
on
its
own
behalf
or
(b)
by
any
Third
Party
other
than
Lonza
Sales
(asdefined
in
the
Lonza
Agreement)
or
any
of
its
Affiliates
on
behalf
of
Kolltan,
in
either
case
((a)
or
(b))
using
the
LB
System
Technology,
in
lieuof
the
royalty
described
in
Section
3.3
of
this
Exhibit,
if
such
Product
or
End
Product
was
manufactured
during
the
Royalty
Patent
Term
of
suchProduct
or
End
Product
in
such
country,
then
Kolltan
shall
pay
to
Lonza
Sales
a
royalty
of
[**]%
of
Net
Sales
(as
defined
in
the
LonzaAgreement)
of
such
Product
or
End
Product.
3.6
In
respect
of
MedImmune’s
(or
its
applicable
Affiliate’s)
obligations
under
Section
6.9
of
the
Lonza
Agreement,
for
any
Product
or
End
Productthat
is
a
Licensed
Product
and
manufactured
in
any
country
for
Kolltan
by
Lonza
Sales
or
any
of
its
Affiliates,
Kolltan
shall
pay
to
Lonza
Sales
aroyalty
of
(a)
during
the
Royalty
Patent
Term
of
such
Product
or
End
Product
in
such
country,
[**]%
of
Net
Sales
(as
defined
in
the
LonzaAgreement)
of
such
Product
or
End
Product,
and
(b)
during
the
Royalty
Know-How
Term
of
such
Product
or
End
Product
in
such
country,[**]%
of
Net
Sales
(as
defined
in
the
Lonza
Agreement)
of
such
Product
or
End
Product.
4.
Limitations; Cooperation .
4.1
Notwithstanding
the
foregoing
provisions
of
this
Exhibit,
if
for
any
reason
MedImmune
or
its
applicable
Affiliate
is
not
required
under
theapplicable
provision
of
the
applicable
In-License
Agreement
to
make
any
payment
to
the
applicable
licensor
as
a
result
of
Kolltan’s
activitiesunder
this
Agreement
with
respect
to
the
Licensed
Program,
or
is
required
under
the
applicable
provision
of
the
applicable
In-License
Agreementto
pay
an
amount
to
the
applicable
licensor
as
a
result
of
Kolltan’s
activities
under
this
Agreement
with
respect
to
the
Licensed
Program
that
isless
than
the
amount
described
in
the
corresponding
provision
of
this
Exhibit,
then
Kolltan
shall
not
be
required
to
make
any
payment,
or
shall
berequired
to
pay
only
such
lesser
amount,
as
the
case
may
be,
to
the
applicable
licensor
in
respect
of
such
provision
of
such
In-LicenseAgreement.
MedImmune
shall
promptly
notify
Kolltan
of
the
existence
of,
and
shall
promptly
respond
to
any
inquiry
made
by
Kolltanregarding,
any
event
or
circumstance
that
would
trigger
a
reduced
payment
obligation
under
this
Section
4.1.
Without
limiting
the
foregoing,reasonably
prior
to
the
First
Commercial
Sale
of
the
initial
Licensed
Product,
MedImmune
and
Kolltan
shall
consult
as
to
whether
any
reductionsto
the
payment
obligations
described
in
this
Exhibit
apply.
Exhibit
6.4.4
-
4
4.2
In
no
event
shall
Kolltan
be
required
to
make
any
payment
to
any
licensor
in
respect
of
any
provision
of
any
In-License
Agreement
in
an
amountthat
is
greater
than
the
amount
described
in
the
corresponding
provision
of
this
Exhibit.
4.3
As
requested
by
Kolltan,
MedImmune
shall
cooperate
with
Kolltan
to
determine
the
appropriate
amount,
manner
and
timing
of
any
paymentdescribed
in
this
Exhibit.
Exhibit
6.4.4
-
5
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
9.2.3
MedImmune
Patents
MedImmune
Patents
[**]
The
Patents
listed
in
Exhibit
1.42
(excluding
any
MedImmune
Manufacturing
Patents)
are
incorporated
into
this
Exhibit
by
reference.
Exhibit
9.2.3
-
1
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Exhibit
9.2.6
Third
Party
Intellectual
Property
[**]
Exhibit
9.2.6
-
1
Exhibit
9.2.9
Obligations
and
Restrictions
under
In-License
Agreements
1.
UT
Agreement
.
1.1
Capitalized
terms
used
in
this
Section
1
but
not
defined
in
the
Agreement
shall
have
the
meanings
given
to
them
in
the
UT
Agreement.
1.2
The
rights
granted
by
MedImmune
to
Kolltan
as
sublicensee
under
the
UT
Agreement
are
subject
to
the
rights,
conditions
and
limitationsimposed
by
United
States
law
on
inventions
and
discoveries
conceived
or
first
actually
reduced
to
practice
during
the
course
of
research
fundedby
a
United
States
federal
agency,
as
described
in
the
first
Section
3.2
of
the
UT
Agreement.
1.3
MedImmune
is
indirectly
obligated
to
require
Kolltan
to
take
steps
as
necessary
and
solely
as
they
relate
to
Kolltan’s
activities
under
theAgreement
to
enable
MedImmune
to
perform
its
obligations
under
the
following
provisions
of
the
UT
Agreement:
1.3.1
first
two
sentences
of
Section
5.3;
1.3.2
the
reporting
obligations
described
in
Section
5.4;
1.3.3
the
second,
third
and
fourth
sentences
of
Section
5.5;
1.3.4
Section
5.7;
and
1.3.5
the
first
and
third
sentences
of
Section
7.1.
The
Parties
acknowledge
and
agree
that
(a)
the
Agreement
includes
provisions
whereby
Kolltan
is
bound
to
take
such
steps,
and
(b)
the
foregoingprovisions
of
the
UT
Agreement
include
all
the
terms
and
conditions
of
the
UT
Agreement
that
are
applicable
to
Kolltan
as
sublicensee
under
theUT
Agreement.
2.
MRC
Agreement
2.1
Any
capitalized
term
used
in
this
Section
2
but
not
defined
in
the
Agreement,
or
used
in
any
provision
of
the
MRC
Agreement
referenced
in
thisSection
2
,
(a)
if
such
capitalized
term
is
defined
in
the
Unredacted
Provisions
of
the
MRC
Agreement,
shall
have
the
meaning
given
to
suchcapitalized
term
in
such
Unredacted
Provisions,
or
(b)
if
such
capitalized
term
is
defined
in
the
MRC
Agreement
other
than
in
the
UnredactedProvisions,
shall
be
construed
on
the
basis
of
the
plain
English
meaning
of
the
words
in
the
capitalized
term
itself
and
the
portion,
if
any,
of
thedefinition
of
such
capitalized
term
(including
any
definition
(or
portion
thereof)
of
any
other
capitalized
term
used
directly
or
indirectly
in
thedefinition
of
such
capitalized
term)
that
is
not
redacted.
Exhibit
9.2.9
-
1
2.2
The
rights
granted
by
MedImmune
to
Kolltan
as
sublicensee
under
the
MRC
Agreement
do
not
include
the
right
to
exercise
or
use
theTechnology
or
Patent
Rights
in
the
commercial
sale
of
single
variable
domains
(heavy
or
light)
of
antibodies.
2.3
MedImmune
is
indirectly
obligated
to
require
Kolltan
to
take
steps
as
necessary
to
enable
MedImmune
to
perform
its
obligations
under
Clause21
of
the
MRC
Agreement
as
they
apply
to
Kolltan’s
activities
under
the
Agreement.
3.
Dyax
Agreement
.
3.1
Any
capitalized
term
used
in
this
Section
3
but
not
defined
in
the
Agreement,
or
used
in
any
provision
of
the
Dyax
Agreement
referenced
in
thisSection
3
,
(a)
if
such
capitalized
term
is
defined
in
the
Unredacted
Provisions
of
the
Dyax
Agreement,
shall
have
the
meaning
given
to
suchcapitalized
term
in
such
Unredacted
Provisions,
or
(b)
if
such
capitalized
term
is
defined
in
the
Dyax
Agreement
other
than
in
the
UnredactedProvisions,
shall
be
construed
on
the
basis
of
the
plain
English
meaning
of
the
words
in
the
capitalized
term
itself
and
the
portion,
if
any,
of
thedefinition
of
such
capitalized
term
(including
any
definition
(or
portion
thereof)
of
any
other
capitalized
term
used
directly
or
indirectly
in
thedefinition
of
such
capitalized
term)
that
is
not
redacted.
3.2
Any
sub-sublicenses
granted
by
Kolltan
under
its
sublicense
from
MedImmune
under
the
Dyax
Agreement
must
be
granted
pursuant
to
a
writtenagreement
that
(a)
requires
the
sub-sublicensee
to
abide
by
the
terms
of
the
applicable
MedImmune
Product
License,
consistent
with
the
terms
ofthe
Agreement
and
this
Exhibit
9.2.9
,
and
(b)
is
consistent
with
the
Unredacted
Provisions
of
Clauses
11,
12
and
13
of
the
Dyax
Agreement.
3.3
MedImmune
is
indirectly
obligated
to
require
Kolltan
to
take
steps
as
necessary
and
solely
as
they
relate
to
Kolltan’s
activities
under
theAgreement
to
enable
MedImmune
to
perform
its
obligations
under
the
following
provisions
of
the
Dyax
Agreement:
3.3.1
Clause
12.4;
3.3.2
the
first
sentence
of
Clause
12.9;
3.3.3
the
last
sentence
of
Clause
13.4;
and
3.3.4
Clause
13.6
(excluding
Clause
13.6.5).
3.4
As
set
forth
in
Clause
12.6
of
the
Dyax
Agreement,
Kolltan
shall
indemnify
the
Dyax
Indemnitees
against
any
liability,
damage,
loss
or
expense(including
attorney’s
fees
and
expenses
of
litigation)
incurred
by
or
imposed
upon
the
Dyax
Indemnitees
or
any
one
of
them
in
connection
withany
claims,
suits,
actions,
demands
or
judgments
by
or
in
favor
of
any
Third
Party
(as
defined
in
the
Dyax
Exhibit
9.2.9
-
2
Agreement)
concerning
any
manufacture,
use
or
sale
of
any
MedImmune
Product
by
Kolltan
or
its
sublicensee.
3.5
As
set
forth
in
Clause
12.11
of
the
Dyax
Agreement,
Kolltan
may
assign
the
benefit
and/or
burden
of
its
rights
under
any
MedImmune
ProductLicense
to
any
Affiliate
(as
defined
in
the
Dyax
Agreement)
or
Third
Party
(as
defined
in
the
Dyax
Agreement),
provided
that
such
Affiliate
(asdefined
in
the
Dyax
Agreement)
or
Third
Party
(as
defined
in
the
Dyax
Agreement)
undertakes
to
Dyax
to
be
bound
by
the
terms
of
theMedImmune
Product
License.
3.6
As
set
forth
in
Clause
12.12
of
the
Dyax
Agreement,
Dyax
has
the
right
to
terminate
any
MedImmune
Product
License
under
which
Kolltanreceives
a
sublicense
in
the
event
that
Kolltan
(or
its
sublicensee)
directly
or
indirectly
opposes
or
assists
any
Third
Party
(as
defined
in
the
DyaxAgreement)
to
oppose
the
grant
of
letters
patent
or
any
patent
application
within
the
Dyax
Patent
Rights,
or
disputes
or
directly
or
indirectlyassists
any
Third
Party
(as
defined
in
the
Dyax
Agreement)
to
dispute
the
validity
of
any
patent
within
the
Dyax
Patent
Rights
or
any
of
theclaims
thereof.
4.
Lonza
Agreement
.
4.1
MedImmune
is
indirectly
obligated
to
require
Kolltan
to
take
steps
as
necessary
and
solely
as
they
relate
to
Kolltan’s
activities
under
theAgreement
to
enable
MedImmune
to
perform
its
obligations
under
the
following
provisions
of
the
Lonza
Agreement:
4.1.1
the
reporting
obligations
described
in
Section
6.11;
and
4.1.2
Section
6.13.1.
Exhibit
9.2.9
-
3
AMENDMENTToLICENSE AND OPTION AGREEMENT
This
Amendment
(the
“Amendment”)
to
the
License
and
Option
Agreement
dated
July
24,
2013
(“Agreement”)
by
and
between
MedImmune,
LLC,
a
Delawarelimited
liability
company,
with
its
principal
executive
offices
located
at
One
MedImmune
Way,
Gaithersburg,
MD
20878
(“MedImmune”),
and
BulldogPharmaceuticals,
Inc.,
a
company
organized
and
existing
under
the
laws
of
the
British
Virgin
Islands,
having
a
registered
office
located
at
Midocean
Chambers,Road
Town,
Tortola,
British
Virgin
Islands
(“Kolltan”),
as
previously
amended
on
February
10,
2014,
June
25,
2014
and
June
30,
2014,
is
entered
into
effective
asof
October
27,
2015
(the
“Amendment
Effective
Date”).
MedImmune
and
Kolltan
are
each
referred
to
herein
by
name
or
as
a
“Party”
or,
collectively,
as
“Parties.”
RECITALS
WHEREAS ,
MedImmune
and
Kolltan
desire
to
eliminate
from
the
Agreement
certain
Option
Rights
regarding
the
Licensed
Antibody
and
the
LicensedProducts;
WHEREAS ,
Kolltan
desires
to
purchase
from
MedImmune
certain
additional
quantities
of
Licensed
Antibody
and
Licensed
Products
for
non-commercial
clinical
research
purposes;
and
WHEREAS ,
MedImmune
is
willing
to
supply
such
additional
quantities
of
Licensed
Antibody
and
Licensed
Product
to
Kolltan,
NOW, THEREFORE ,
in
consideration
of
the
mutual
promises
and
covenants
hereinafter
set
forth,
the
Parties
hereto
agree
as
follows:
1.
Definitions .
1.1
Capitalized
terms
used
in
this
Amendment
and
not
otherwise
defined
herein
shall
have
the
meanings
ascribed
to
such
terms
in
the
Agreement.
1.2
The
definition
of
Inventory
set
forth
in
Section
3.6.1
of
the
Agreement
is
hereby
amended
to
mean
any
and
all
Drug
Substance
and
Drug
Product(each
as
defined
below)
delivered
or
to
be
delivered
to
Kolltan
by
MedImmune,
regardless
of
whether
such
Drug
Substance
or
Drug
Product
wasexisting
as
of
the
Effective
Date
of
the
Agreement.
1.3
The
definition
of
“MedImmune
Manufacturing
Information
and
Inventions”
set
forth
in
Section
1.70
of
the
Agreement
is
hereby
amended
asfollows:
Know-How
(a)
that
is
Controlled
by
MedImmune
or
its
Affiliates
on
the
Effective
Date
or
thereafter
during
the
Term
and
(b)
either(i)
the
practice
of
which
is
necessary
in
order
to
Manufacture
the
Licensed
Antibody,
any
Licensed
Product,
any
Follow-On
Antibody
or
anyFollow-On
Product
in
the
Field
in
the
Territory
or
(ii)
relates
to
the
Manufacture
of
the
Licensed
Antibody,
any
Licensed
Product,
and
Follow-On
Antibody
or
any
Follow-On
Product
in
the
Field
in
the
Territory
and
is
expressly
disclosed
in
the
Existing
IND;
provided,
however,
thatMedImmune
Manufacturing
Information
and
Inventions
excludes
any
Joint
Information
and
Inventions.
For
avoidance
of
doubt,
MedImmuneManufacturing
Information
and
Inventions
shall
not
include
any
Know-How
related
to
MedImmune
proprietary
cell
culture
media
and
nutrientfeeds
used
in
the
Manufacturing
process.
2.
Deletion of Option Rights Provisions .
Article
5
(Option
Rights)
is
hereby
deleted
in
its
entirety.
The
Parties
agree
that
all
obligations
with
respect
toArticle
5,
as
of
the
Amendment
Effective
Date,
have
been
met,
subject
to
the
Representations
and
Warranties
made
in
Section
11
of
this
Amendment,
andneither
Party
shall
have
any
further
rights
or
obligations
pursuant
thereto.
Without
limitation
of
the
foregoing,
MedImmune
shall
retain
no
Option
Rightsunder
the
Agreement.
The
Amendment
Effective
Date
will
be
the
Option
Termination
Date
for
the
purposes
of
the
Agreement.
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
3.
Inventory Supply .
(a)
MedImmune
will
deliver
to
Kolltan:
i.
existing
Inventory
of
[**]
lots
of
Licensed
Antiobody
in
formulated
bulk
drug
substance
form
(“
Drug Substance ”)
filledinto
the
current
vial
configuration
and
fill
volume
(“
Drug Product ”);
and
ii.
additional
Inventory
of
[**]
lots
of
Drug
Substance,
delivered
as
Drug
Product,
each
manufactured
at
the
[**]
bioreactorscale,
for
delivery
on
or
before
July
31,
2017.
The
pricing
and
payment
terms
for
Drug
Substance
and
Drug
Product
are
setforth
in
Appendix
A
to
this
Amendment.
(b)
MedImmune
may,
in
its
sole
discretion,
(1)
produce
Drug
Substance
at
either
the
Gaithersburg
Pilot
Facility
located
at
OneMedImmune
Way,
Gaithersburg,
MD
(“GPF”)
or
the
Gaithersburg
Pilot
Facility—North
located
at
45
West
Watkins
Mill
Rd,Gaithersburg,
MD
(“GPF-North”),
(2)
pool
two
200L
cell
culture
lots
into
one
purification
(Drug
Substance)
lot,
and
(3)
pool
more
thanone
Drug
Substance
lot
into
one
Drug
Product
lot.
(c)
In
the
event
that
Drug
Substance
manufacturing
is
performed
at
GPF-North
and
requires
analytical
comparability
and
stability
testingactivities,
MedImmune
and
Kolltan
will
discuss
the
specific
activities
and
associated
pricing.
Such
activities
and
costs
shall
correspondto
standard
comparability
and
stability
testing
activities.
(d)
Kolltan
shall
bear
the
responsibility
for
conducting
any
compatibility
assessment
between
Drug
Substance
and
Drug
Product
providedby
MedImmune
and
any
other
Drug
Substance
or
Drug
Product.
MedImmune
shall
have
no
additional
supply
obligations
under
theAgreement
beyond
those
set
forth
above.
For
the
avoidance
of
doubt,
MedImmune
will
have
no
obligation
to
supply
Drug
Substance
orDrug
Product
for
commercial
use
to
Kolltan.
(e)
MedImmune
will
make
Drug
Substance
and
Drug
Product
available
to
Kolltan
under
the
terms
and
conditions
set
forth
in
Section
3.6.1and
3.6.2
of
the
Agreement
with
respect
to
the
Inventory,
except
as
expressly
set
forth
in
this
Section
3,
and
such
Drug
Substance
andDrug
Product
shall
be
treated
as
Inventory
for
all
other
purposes
under
the
Agreement.
MedImmune
warrants
that
all
Drug
Substanceand
Drug
Product
will,
as
of
the
date
of
delivery
to
Kolltan,
conform
to
the
applicable
product
specifications.
(f)
With
respect
to
Drug
Substance
and
Drug
Product
supplied
under
this
Amendment
(excluding
Inventory
existing
as
of
the
EffectiveDate
of
the
Agreement),
the
indemnification
provided
in
Section
10.2(b)
by
MedImmune
will
be
modified
by
insertion
of
the
underlinedlanguage
below:
“MedImmune
shall
defend,
indemnify
and
hold
harmless
the
Kolltan
Indemnitees
from
and
against
any
and
all
Losses
relatingto
or
in
connection
with
a
Third
Party
claim
arising
out
of
**
*
(b)
any
death,
personal
bodily
injury
or
damage
to
real
ortangible
personal
property
alleged
or
proven
to
result,
directly
or
indirectly,
from
the
gross
negligence
or
willful
misconduct
ofMedImmune
and
the
possession,
use
or
consumption
of,
or
treatment
with,
any
Licensed
Antibody
or
Licensed
Productincluded
in
or
produced
from
the
Inventory,
including
any
product
liability
claims;
***”
4.
Deletion of Clinical and Research Supply Provision .
Section
3.6.3.
(Clinical
and
Research
Supply
of
Licensed
Antibody
and
Licensed
Products)
ishereby
deleted
in
its
entirety.
The
Parties
agree
that
all
obligations
with
respect
to
Section
3.6.3,
as
of
the
Amendment
Effective
Date,
have
been
met
with
no
further
rights
and
obligations
outstanding.
5.
Deletion of Commercial Supply Provision .
Section
3.6.4
(Commercial
Supply)
is
hereby
deleted
in
its
entirety.
The
Parties
agree
that
all
obligationswith
respect
to
Section
3.6.4,
as
of
the
Amendment
Effective
Date,
have
been
met
with
no
further
rights
and
obligations
outstanding.
6.
Deletion of Supply of Media Provisions .
Section
3.6.5
(Supply
of
Media)
is
hereby
deleted
in
its
entirety.
The
Parties
agree
that
all
obligations
withrespect
to
Section
3.6.5,
as
of
the
Amendment
Effective
Date,
have
been
met
with
no
further
rights
and
obligations
outstanding.
7.
Amendment of Prosecution and Maintenance of Patents Provision .
Section
7.3.1(c)
is
amended
and
restated
in
its
entirety
to
read
as
follows:
Kolltan
shall
bear
responsibility
for
all
costs
associated
with
the
filing,
prosecution
and
maintenance
of
any
MedImmune
Patent
or
Joint
Patent.
MedImmune
shall
have
the
right
to
assign
any
such
Patent
in
any
country
(or,
in
case
of
a
Joint
Patent,
to
assign
MedImmune’s
interest
in
suchJoint
Patent
in
any
country)
to
Kolltan,
in
which
case
at
Kolltan’s
election,
such
Patent
(or
Joint
Patent)
in
such
country
shall
thereafter
bedeemed
a
Kolltan
Patent,
or
(in
the
case
of
a
MedImmune
Patent)
may
be
abandoned.
In
addition,
within
ninety
(90)
days
of
the
Amendment
Effective
Date,
Kolltan
will
provide
an
invoice
to
MedImmune
for
any
Out-of-Pocket
Costsincurred
prior
to
the
Amendment
Effective
Date,
for
which
MedImmune
shall
promptly
reimburse
Kolltan.
8.
Survival .
If
Kolltan
terminates
the
Agreement
pursuant
to
Section
11.2.1
of
the
Agreement,
this
Amendment,
and
the
rights
and
obligations
of
theParties
hereunder,
shall
survive
such
termination.
9.
Reference to Aareement .
Upon
and
after
the
Amendment
Effective
Date,
each
reference
in
the
Agreement
to
“this
Agreement”,
“hereunder”,
“hereof’or
words
of
like
import
referring
to
the
Agreement
shall
mean
and
be
a
reference
to
the
Agreement
as
modified
and
amended
hereby.
10.
Effectiveness of Amendment .
Upon
execution
and
delivery
of
this
Amendment
by
both
Parties,
the
amendments
set
forth
above
shall
be
effective
as
ofthe
Amendment
Effective
Date.
This
Amendment
supersedes
all
previous
amendments
and
addenda
to
the
Agreement,
except
as
otherwise
provided.
Drug
Substance
and
Drug
Product
delivered
pursuant
to
the
Addendum
dated
June
25,
2014,
will
be
subject
to
the
terms
and
conditions
of
the
Agreementas
amended
by
this
Amendment.
Except
as
specifically
amended
above,
the
Agreement
is
and
shall
continue
to
be
in
full
force
and
effect
and
is
hereby
inall
respects
ratified
and
confirmed
and
shall
constitute
the
legal,
valid,
binding
and
enforceable
obligations
of
the
Parties.
11.
Representations and Warranties .
A
new
Section
9.5
is
added
to
read
as
follows:
9.5
Kolltan
hereby
represents
to
MedImmune,
as
of
the
Amendment
Effective
Date,
that
it
has
disclosed
to
MedImmune
all
material
clinical
dataunder
the
Control
of
Kolltan
with
respect
to
the
Licensed
Antibody
or
a
Licensed
Product.
12.
No Waiver .
The
execution,
delivery
and
effectiveness
of
this
Amendment
shall
not
operate
as
a
waiver
of
any
right,
power
or
remedy
of
either
Partyunder
the
Agreement,
nor
constitute
a
waiver
of
any
provision
of
the
Agreement.
13.
Counterparts .
This
Amendment
may
be
executed
in
counterparts,
each
of
which
is
an
original,
but
all
of
which
together
constitute
one
and
the
sameinstrument.
The
Parties
have
executed
this
Amendment
to
be
effective
as
of
the
Amendment
Effective
Date.
BULLDOG PHARMACEUITCALS, INC. MEDIMMUNE, LLCBy:/s/
Gerald
McMahon
By:/s/
Kripa
RamName:Gerald
McMahon
Name:Kripa
RamTitle:Director
Title:Vice
PresidentDate:October
27,
2015
Date:October
29,
2015
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
APPENDIX A
Pricing
A. Prices for the Services
The
following
services
will
be
provided
by
MedImmune
at
the
prices
set
forth
below
for
[**]
lots
of
Drug
Substance
and
thus,
the
total
costs
for
this
work
will
becalculated
based
on
the
relative
number
of
lots
of
Drug
Substance
produced.
Activities and Services Price (in $)Activity
1:
Pre-production
activities
and
on-going
project
management·
Ongoing
project
management·
Periodic
meetings
Estimate
[**]
Activity
#2:
Resins,
raw
materials
and
consumables
for
two
runs:·
Purchase
of
resins,
raw
materials
and
consumables
Note:
Estimated
costs.
Actual
raw
material
costs
will
be
billed
to
Kolltan
Estimate
[**]
Activity
#3:
Clinical
GMP
Drug
Substance
Production·
Manufacture
according
to
cGMP
standards·
Perform
release
testing
as
described
in
IND
116023
and
preparation
of
Certificate
of
Analysis·
Includes
additional
in-process
testing
of
intermediates·
Includes
preparation
of
a
campaign
summary
report
Note:
No
stability
testing
necessary
if
Manufacture
using
same
scale
and
equipment
as
in
IND
116023
Estimate
[**]
Activity
#4:
Drug
Product
Manufacturing·
Ship
material
to
fill
finish
site·
Perform
Drug
Product
fills
into
unlabeled
vials
using
the
fill-finish
Manufacturing
process
described
in
IND
116023·
Production
batch
records
prepared
by
MedImmune
and
approved
by
Kolltan·
Perform
release
testing
as
described
in
the
current
IND
and
preparation
of
Certificate
of
Analysis·
Includes
all
Raw
Materials
and
consumable
needed
for
Manufacturing·
Ship
material
to
Kolltan-defined
site
Estimate
[**]
TOTAL
[**]
Exhibit 10.25
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
THIRD AMENDED AND RESTATED LICENSE AGREEMENT
THIS
THIRD
AMENDED
AND
RESTATED
LICENSE
AGREEMENT
(this
“AGREEMENT”),
dated
as
of
March
14,
2013
(the
“THIRDAMENDMENT
EFFECTIVE
DATE”),
by
and
between
YALE
UNIVERSITY,
a
corporation
organized
and
existing
under
and
by
virtue
of
a
charter
granted
by
thegeneral
assembly
of
the
Colony
and
State
of
Connecticut
and
located
in
New
Haven,
Connecticut
(“YALE”),
and
KOLLTAN
PHARMACEUTICALS,
INC.,
acorporation
organized
and
existing
under
the
laws
of
the
State
of
Delaware,
and
with
principal
offices
located
at
300
George
Street,
New
Haven,
CT
06511(“LICENSEE”)
is
effective
as
of
the
THIRD
AMENDMENT
EFFECTIVE
DATE.
R
E
C
I
T
A
L
S
:
WHEREAS,
in
the
course
of
research
conducted
under
YALE
auspices,
Dr.
Joseph
Schlessinger,
an
employee
of
YALE
(“SCHLESSINGER”),
and
theother
inventors
performing
research
under
SCHLESSINGER’s
immediate
supervision
(together
with
any
and
all
people
from
time
to
time
performing
researchunder
SCHLESSINGER’s
immediate
supervision
at
YALE,
the
“SCHLESSINGER
LAB”)
and
Dr.
Irit
Lax,
an
employee
of
YALE
(“LAX”),
and
the
otherinventors
performing
research
under
LAX’s
immediate
supervision,
in
the
course
of
studying
RTK
biology,
have
produced
and
may
continue
to
producecompositions
of
matter,
know-how,
methods,
data
and
intellectual
property
that
have
and
may
continue
to
lead
to
the
discovery
and
development
of
activesubstances
that
may
induce,
prevent,
modify
or
otherwise
modulate
the
activation
of
an
RTK
for
the
purpose
of
diagnosing,
preventing
or
treating
a
disease
orcondition
(the
“INVENTIONS”);
WHEREAS,
as
of
the
THIRD
AMENDMENT
EFFECTIVE
DATE,
SCHLESSINGER
serves
on
the
LICENSEE
Board
of
Directors
and
the
LICENSEEScientific
Advisory
Board,
and
as
a
paid
consultant
to
LICENSEE;
WHEREAS,
YALE
permits
its
faculty
such
as
SCHLESSINGER
to
engage
in
consulting
consistent
with
YALE
policies
such
as
the
Yale
UniversityPatent
Policy,
and
LICENSEE
acknowledges
that
SCHLESSINGER’s
involvement
with
LICENSEE
is
subject
to
the
Yale
University
Patent
Policy;
WHEREAS,
YALE
wishes
to
have
the
INVENTIONS
and
any
resulting
patents
commercialized
to
benefit
the
public
good;
WHEREAS,
to
induce
YALE
to
enter
into
this
AGREEMENT,
LICENSEE
has
represented
that
it
has
been
formed
for
the
purpose
of
developing
andcommercializing
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
and
that
it
intends
to
develop
the
skill
and
expertise
to
seek
to
develop
and
commercializethe
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
for
public
use
in
the
LICENSED
TERRITORY;
WHEREAS,
YALE
is
willing
to
grant
a
license
to
LICENSEE,
subject
to
the
terms
and
conditions
of
this
AGREEMENT;
WHEREAS,
YALE
and
LICENSEE
have
previously
entered
into
an
Exclusive
License
Agreement
(the
“ORIGINAL
LICENSE
AGREEMENT”),
datedMay
30,
2008
(the
“ORIGINAL
LICENSE
AGREEMENT
EFFECTIVE
DATE”);
WHEREAS,
YALE
and
LICENSEE
have
previously
entered
into
an
Amended
and
Restated
Exclusive
License
Agreement
(the
“AMENDED
ANDRESTATED
LICENSE
AGREEMENT”),
dated
November
23,
2010;
WHEREAS,
YALE
and
LICENSEE
have
previously
entered
into
a
Second
Amended
and
Restated
Exclusive
License
Agreement
(the
“SECONDAMENDED
AND
RESTATED
LICENSE
AGREEMENT”),
dated
December
23,
2011(the
“EFFECTIVE
DATE”)
and
they
now
wish
to
amend
and
restate
theSECOND
AMENDED
AND
RESTATED
LICENSE
AGREEMENT
in
its
entirety;
and
WHEREAS,
in
order
to
minimize
potential
disagreements
between
the
parties
as
to
the
genesis
of
unpatented
know-how,
materials
and
methodsincorporated
by
LICENSEE
into
its
RTK
PRODUCTS
during
periods
when
SCHLESSINGER
is
MEANINGFULLY
INVOLVED
AT
KOLLTAN
andMEANINGFULLY
INVOLVED
AT
YALE,
the
parties
have
agreed
that
certain
RTK
PRODUCTS
developed
by
Kolltan
during
such
period
shall
be
deemedPRODUCTS
IN
CLASS
under
this
AGREEMENT;
NOW
THEREFORE,
in
consideration
of
these
statements
and
mutual
promises
contained
herein
and
other
good
and
valuable
consideration,
the
receiptand
sufficiency
of
which
the
parties
hereby
acknowledge,
YALE
and
LICENSEE
agree
to
the
terms
of
this
AGREEMENT.
ARTICLE
1
REPRESENTATIONS
AND
WARRANTIES
1.1.
LICENSEE
represents
and
warrants
to
YALE
as
follows:
(a)
LICENSEE
is
a
corporation
duly
organized,
validly
existing
and
in
good
standing
under
the
laws
of
the
State
of
Delaware;
has
allcorporate
power
to
carry
on
its
business
as
presently
conducted
and
to
own
and
operate
its
properties
and
assets;
(b)
The
execution,
delivery
and
performance
by
LICENSEE
of
this
AGREEMENT
have
been
duly
authorized
by
all
necessary
corporateaction
by
LICENSEE;
(c)
There
is
no
pending
or,
to
LICENSEE’s
knowledge,
threatened
litigation
involving
LICENSEE
which
would
have
any
materialadverse
effect
on
this
AGREEMENT
or
on
LICENSEE’s
ability
to
perform
its
obligations
hereunder;
and
(d)
There
is
no
indenture,
contract
or
other
agreement
to
which
LICENSEE
is
a
party
or
by
which
LICENSEE
is
bound
which
prohibits
orwould
prohibit
the
execution
and
delivery
by
LICENSEE
of
this
AGREEMENT
or
the
performance
or
observance
by
LICENSEE
of
any
material
term
of
provisionof
this
AGREEMENT.
2
1.2.
YALE
represents
and
warrants
to
LICENSEE
as
follows:
(a)
The
execution,
delivery
and
performance
by
YALE
of
this
AGREEMENT
have
been
duly
authorized
by
all
necessary
requisite
actionon
the
part
of
YALE
and
YALE
has
all
right,
power
and
authority
necessary
to
grant
the
LICENSE
and
to
perform
its
obligations
hereunder;
(b)
There
is
no
pending
or,
to
YALE’s
knowledge,
threatened
patent
or
contract
litigation
involving
YALE
which
would
have
anymaterial
adverse
effect
on
this
AGREEMENT
or
on
YALE’s
ability
to
perform
its
obligations
hereunder;
(c)
There
is
no
indenture,
contract
or
other
agreement
to
which
YALE
is
a
party
or
by
which
YALE
is
bound
which
prohibits
or
wouldprohibit
the
execution
and
delivery
by
YALE
of
this
AGREEMENT
or
the
performance
or
observance
by
YALE
of
any
material
term
or
provision
of
thisAGREEMENT;
(d)
(i)
YALE
holds
all
right,
title
and
interest
in
and
to
the
LICENSED
PATENTS
existing
as
of
the
EFFECTIVE
DATE
and
is
thesole
and
exclusive
owner
thereof,
subject
only
to
the
rights,
if
any,
of
the
United
States
government
and
its
agencies,
as
specified
in
Section
3.5;
and
(ii)
Except
as
set
forth
on
Appendix
D,
YALE
has
adequate
right,
title
and
interest
in
and
to
the
LICENSED
KNOW-HOW,LICENSED
MATERIALS
and
LICENSED
METHODS
existing
as
of
the
EFFECTIVE
DATE
sufficient
to
grant
the
LICENSE
thereof
to
LICENSEE
under
thisAGREEMENT
and
LICENSEE
does
not
have
and
will
not
have
any
present
or
future
obligations
to
any
third
party
arising
out
of
such
grant;
and
(iii)
Except
as
set
forth
on
Appendix
D,
as
of
the
EFFECTIVE
DATE,
neither
YALE’s
Office
of
Cooperative
Research,SCHLESSINGER
nor
LAX
has
received
written
notice
of,
and
has
no
reasonable
knowledge
of
any
basis
for,
any
claim
that
the
use
by
LICENSEE
ofTECHNOLOGY,
if
and
to
the
extent
such
use
is
known
to
YALE’s
Office
of
Cooperative
Research,
SCHLESSINGER
or
LAX,
infringes
on
any
patent
ormisappropriates
any
other
intellectual
property
or
ownership
right
of
any
third
party;
and
(e)
(i)
Except
to
the
extent
such
LICENSED
PATENTS
have
been
invented
or
co-invented
by
an
individual
who
is
notSCHLESSINGER,
LAX,
or
an
employee
in
the
SCHLESSINGER
LAB
or
the
LAX
LAB,
YALE
will
hold
all
right,
title
and
interest
in
and
to
the
LICENSEDPATENTS
that
arise
after
the
EFFECTIVE
DATE
and
YALE
will
be
the
sole
and
exclusive
owner
thereof,
subject
only
to
the
rights,
if
any,
of
the
United
Statesgovernment
and
its
agencies,
as
specified
in
Section
3.5;
and
(ii)
YALE
will
have
adequate
right,
title
and
interest
in
and
to
the
LICENSED
PATENTS
(to
the
extent
such
LICENSEDPATENTS
have
been
invented
or
co-invented
by
an
individual
who
is
not
SCHLESSINGER,
LAX,
or
an
employee
in
the
SCHLESSINGER
LAB
or
the
LAXLAB)
and
LICENSED
MATERIALS
that
arise
after
the
EFFECTIVE
DATE,
in
each
case
sufficient
to
grant
the
LICENSE
thereof
to
LICENSEE
under
thisAGREEMENT
and,
except
as
YALE
may
inform
LICENSEE
in
writing
upon
the
provision
of
any
such
LICENSED
MATERIALS
to
LICENSEE,
LICENSEE
willnot
have
any
present
or
future
obligations
to
any
third
party
arising
out
of
such
grant
with
respect
to
such
LICENSED
PATENTS
or
LICENSED
MATERIALS;and
3
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(f)
YALE
will
promptly
notify
LICENSEE
in
writing
if,
after
the
EFFECTIVE
DATE,
YALE’s
Office
of
Cooperative
Research,SCHLESSINGER
or
LAX
receives
written
notice
of,
or
has
reasonable
knowledge
of
any
basis
for,
any
claim
that
the
use
by
LICENSEE
of
TECHNOLOGY,
ifand
to
the
extent
such
use
is
known
to
YALE’s
Office
of
Cooperative
Research,
SCHLESSINGER
or
LAX,
infringes
on
any
patent
or
misappropriates
any
otherintellectual
property
or
ownership
right
of
any
third
party
relating
to
RTK
TECHNOLOGY;
and
(g)
So
as
to
minimize
the
chances
of
any
future
disputes,
YALE
will
use
good
faith
reasonable
efforts
to
segregate
any
workSCHLESSINGER
or
LAX
may
undertake
with
respect
to
[**]-FUNDED
PATENTS,
and
intellectual
property
related
thereto,
from
any
other
workSCHLESSINGER
or
LAX
may
undertake
with
respect
to
RTK
TECHNOLOGY
and
RTK
PRODUCTS;
and
(h)
Each
YALE
employee
who
is
an
inventor
of
potentially
patentable
intellectual
property
licensed
pursuant
to
this
AGREEMENT
hasagreed
to
assign
to
YALE
(and,
in
the
case
of
such
potentially
patentable
intellectual
property
existing
as
of
the
EFFECTIVE
DATE,
has
assigned
to
YALE),
bywritten
instrument
sufficient
in
form,
scope
and
substance
for
such
purpose,
all
of
such
inventor’s
right,
title
and
interest
in
and
to
such
potentially
patentableintellectual
property
and
any
resulting
patents.
ARTICLE
2
DEFINITIONS
The
following
terms
used
in
this
AGREEMENT
shall
be
defined
as
set
forth
below:
2.1.
“AFFILIATE”
shall
mean
any
entity
or
person
that
directly
or
indirectly
controls,
is
controlled
by
or
is
under
common
control
with
LICENSEE.
For
purposes
of
this
definition,
“control”
means
possession
of
the
power
to
direct
the
management
of
such
entity
or
person,
whether
through
ownership
of
morethan
fifty
percent
(50%)
of
voting
securities,
by
contract
or
otherwise.
2.2.
“APPROVED
PRODUCT”
shall
mean
a
PRODUCT,
the
sale,
marketing,
and
use
of
which
in
humans
(or
other
animals)
has
been
approved
bythe
FDA,
or,
as
to
a
PRODUCT
sold,
marketed,
or
used
in
a
country
other
than
the
United
States,
that
has
been
approved
to
the
extent
necessary
by
the
comparablerequired
government
authority
in
such
country.
2.3.
“CHANGE
OF
CONTROL”
shall
mean:
(a)
any
consolidation,
merger,
combination,
reorganization
or
other
business
combination
transaction
to
which
LICENSEE
is
a
party
andin
which
LICENSEE
is
not
the
surviving
entity;
or
(b)
(i)
all
of
the
outstanding
shares
of
voting
stock
of
LICENSEE
are
exchanged
for
or
changed
into
other
stock
or
securities,
cash,financial
vehicle
and/or
any
other
property
and
(ii)
persons
who
were
stockholders
of
LICENSEE
immediately
prior
to
such
exchange
or
change
do
nothold
securities
entitled
to
at
least
50%
of
the
voting
power
of
the
entity
surviving
such
exchange
or
change
or
the
entity
into
whose
securities
for
or
intowhich
the
voting
stock
of
LICENSEE
is
exchanged
or
changed;
or
4
(c)
a
sale
or
other
disposition
(other
than
by
license
and/or
sublicense)
of
all
or
substantially
all
of
the
assets
of
LICENSEE
for
cash,securities
or
other
property;
and
in
any
such
case
in
the
preceding
clause
(a),
(b)
or
(c)
the
surviving
entity
in
such
transaction
(if
LICENSEE
is
not
the
surviving
entity)
or
LICENSEE
and
theentity
of
which
LICENSEE
shall
have
become
an
AFFILIATE
in
such
transaction
or
the
person
who
shall
have
purchased
or
otherwise
acquired
all
or
substantiallyall
of
LICENSEE’s
assets,
as
the
case
may
be,
shall
meet
all
of
the
following:
1.
immediately
after
such
transaction,
shall
have
cash
and
cash
equivalent
assets
at
least
equal
to
$200
million,
determined
on
a
proforma
consolidated
basis;
and
2.
during
the
two
fiscal
years
immediately
preceding
such
transaction,
shall
have
had
positive
cash
flow,
determined
on
a
pro
formaconsolidated
basis;
and
3.
immediately
after
such
transaction,
the
amount
of
its
cash
and
cash
equivalent
assets
shall
equal
at
least
twice
its
cash
requirements
forthe
12
consecutive
full
calendar
months
immediately
following
such
transaction,
determined
on
a
pro
forma
consolidated
basis.
2.4.
“CLAIMS”
is
defined
in
Section
14.1.
2.5.
“CONFIDENTIAL
INFORMATION”
shall
mean
all
information
disclosed
by
one
party
to
the
other
during
the
negotiation
of
or
under
thisAGREEMENT,
the
SECOND
AMENDED
AND
RESTATED
LICENSE
AGREEMENT,
the
AMENDED
AND
RESTATED
LICENSE
AGREEMENT
or
theORIGINAL
LICENSE
AGREEMENT
in
any
manner,
whether
in
writing
or
orally,
visually
or
in
tangible
form,
that
relates
to
the
TECHNOLOGY
or
thisAGREEMENT
or
the
SECOND
AMENDED
AND
RESTATED
LICENSE
AGREEMENT
or
the
AMENDED
AND
RESTATED
LICENSE
AGREEMENT
or
theORIGINAL
LICENSE
AGREEMENT,
unless
such
information
is
subject
to
an
exception
described
in
Section
8.2
and
shall
include
the
terms
of
any
sublicense
orproposed
sublicense
and
any
information
or
reports
of
or
about
any
SUBLICENSEE
that
LICENSEE
may
from
time
to
time
provide
to
YALE
pursuant
to
thisAGREEMENT;
provided
,
however
,
that
CONFIDENTIAL
INFORMATION
that
is
disclosed
in
tangible
form
shall
be
marked
“Confidential”
at
the
time
ofdisclosure
and
CONFIDENTIAL
INFORMATION
that
is
disclosed
orally
or
visually
shall
be
identified
as
confidential
within
thirty
(30)
days
after
the
time
ofdisclosure
and
subsequently
reduced
to
writing,
marked
confidential
and
delivered
to
the
other
party
within
thirty
(30)
days
of
such
disclosure.
CONFIDENTIALINFORMATION
shall
include,
without
limitation,
materials,
know-how
and
data,
technical
or
non-technical,
inventions,
methods
and
processes,
whether
or
notpatentable
and
all
information
provided
by
LICENSEE
to
YALE
pursuant
to
Sections
7.3
and
9.3.
Notwithstanding
anything
in
this
Section,
CONFIDENTIALINFORMATION
shall
be
deemed
to
include
any
scientific
data,
information
or
know-how
that
a
reasonable
scientist
would
believe
is
confidential,
whether
inwritten,
oral,
visual
or
tangible
form,
disclosed
by
LICENSEE
to
SCHLESSINGER
or
LAX,
unless
such
information
is
subject
to
an
exception
described
inSection
8.2.
5
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
2.6.
“DESIGNATED
THIRD
PARTY
RTK
PRODUCT”
shall
mean
an
RTK
PRODUCT
where
LICENSEE
acquired
or
in-licensed
from
a
thirdparty
(i.e.,
a
party
other
than
YALE)
intellectual
property
claiming
such
RTK
PRODUCT
and
either:
(a)
Such
RTK
PRODUCT
is
(or
another
RTK
PRODUCT
against
the
same
RTK
and
acquired
or
in-licensed
from
the
same
source
is)
thesubject
of
an
IND,
or
similar
filing
outside
the
United
States,
either
at
the
time
of
such
acquisition
or
in-license
or
within
six
(6)
months
thereafter
(an
“INDPRODUCT”);
or
(b)
Such
RTK
PRODUCT
is
not
an
IND
PRODUCT,
and,
subsequent
to
such
acquisition
or
in-licensing,
LICENSEE
does
not
file
apatent
application
listing
one
or
more
LICENSEE
employees
as
inventors
where
such
patent
application
claims
the
composition
of
matter
or
method
of
use
of
suchRTK
PRODUCT;
provided,
however
,
if,
in
the
case
of
(a)
or
(b)
above,
(x)
prior
to
such
acquisition
or
in-licensing,
LICENSEE
has
filed
a
patent
application
listing
one
or
moreLICENSEE
employees
as
inventors
where
such
patent
application
claims
the
composition
of
matter
of
such
RTK
PRODUCT
or
(y)
after
such
acquisition
or
in-licensing,
LICENSEE
conducts
(or
contracts
with
a
third
party
to
conduct
on
behalf
of
LICENSEE)
pre-clinical
or
clinical
development
on
such
RTK
PRODUCT,then
(in
the
case
of
(x)
or
(y)),
such
RTK
PRODUCT
shall
not
be
a
DESIGNATED
THIRD
PARTY
RTK
PRODUCT.
2.7.
“EARNED
ROYALTY”
is
defined
in
Section
6.1.
2.8.
“EFFECTIVE
DATE”
shall
mean
have
the
meaning
set
forth
in
the
recitals
of
this
AGREEMENT.
2.9.
“FDA”
shall
mean
the
United
States
Food
and
Drug
Administration
or
any
comparable
governmental
agency
in
any
territory
with
regulatoryauthority
in
or
for
a
country
or
group
of
countries
other
than
the
United
States.
2.10.
“FEDERAL
PATENT
POLICY”
is
defined
in
Section
3.5.
2.11.
“FIRST
SALE”
shall
mean
the
first
sale
to
a
third
party
of
any
PRODUCT
IN
CLASS
in
any
country
in
which
such
product
is
an
APPROVEDPRODUCT,
or
the
first
sale
to
a
third
party
of
a
service
using
a
LICENSED
METHOD.
For
the
avoidance
of
doubt,
if
LICENSEE
is
providing
services
to
a
thirdparty
in
the
context
of
a
sublicense
of
the
TECHNOLOGY
or
a
drug
development
collaboration
with
such
third
party,
the
provision
of
such
services
shall
notqualify
as
a
FIRST
SALE.
2.12.
“GAAP”
is
defined
in
Section
9.3
2.13.
“[**]-FUNDED
PATENTS”
shall
mean
any
United
States
or
foreign
patent
application(s)
and
patents(s)
filed
by
or
on
behalf
of
YALE
duringthe
TERM
that
claim
RTK
TECHNOLOGY,
where
such
RTK
TECHNOLOGY
is
made,
created,
developed,
discovered,
conceived
or
first
reduced
to
practice
byor
on
behalf
of
SCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB
and
such
activities
(i.e.,
the
making,
creation,
development,
discovery,conception
or
first
reduction
to
practice
of
such
RTK
TECHNOLOGY)
6
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
are
funded
in
whole
or
in
part
by
[**]
pursuant
to
an
agreement
between
[**]
and
YALE
in
effect
as
of
the
EFFECTIVE
DATE.
To
the
extent
that
YALE
has
theright
with
respect
to
such
patent
applications
or
patents
to
grant
rights
to
parties
other
than
[**],
such
rights
held
by
YALE
shall
not
be
deemed
to
be
[**]-FUNDED
PATENTS
and
shall
thus
be
included
in
the
definition
of
LICENSED
PATENTS
(to
the
extent
such
rights
would
otherwise
fall
within
the
definition
ofLICENSED
PATENTS).
In
order
to
establish
clarity,
when
any
patent
application
that
is
a
[**]-FUNDED
PATENT
publishes,
YALE
shall
notify
LICENSEEwithin
thirty
(30)
days
of
the
date
of
such
publication.
2.14.
“IND”
shall
mean
an
Investigational
New
Drug
and/or
Diagnostic
application
filed
with
the
FDA
prior
to
beginning
clinical
trials
in
humans
(orother
animals)
in
the
United
States
or
in
or
for
any
country
or
group
of
countries
outside
the
United
States.
2.15.
“IND
APPROVAL”
shall
mean
approval
of
an
IND
filed
with
the
FDA.
2.16.
“INDEMNIFIED
PERSONS”
is
defined
in
Section
14.1.
2.17.
“INVENTIONS”
is
defined
in
the
recitals
to
this
AGREEMENT.
2.18.
“INSOLVENT”
shall
mean
that
that
LICENSEE
(i)
has
admitted
in
writing
its
inability
to
pay
its
debts
generally
when
due
or
(ii)
hascommenced
bankruptcy,
reorganization,
receivership
or
insolvency
proceedings,
or
any
other
proceeding
under
any
Federal,
state
or
other
law
for
the
relief
ofdebtors.
2.19.
“KOLLTAN
PATENTS”
shall
mean:
(a)
the
United
States
or
foreign
patent
application(s)
and
patents(s)
listed
in
Appendix
F;
(b)
any
United
States
or
foreign
patent
application(s)
and
patents(s)
filed
by
or
on
behalf
of
LICENSEE
after
the
EFFECTIVE
DATE
thatclaim
RTK
TECHNOLOGY,
where
the
RTK
TECHNOLOGY
claimed
in
such
patent
application(s)
or
patents(s)
was
made,
created,
developed,
discovered,conceived
or
first
reduced
to
practice
by
a
LICENSEE
employee
while
SCHLESSINGER
is
or
was
MEANINGFULLY
INVOLVED
AT
YALE
andMEANINGFULLY
INVOLVED
AT
KOLLTAN;
(c)
any
continuations,
divisionals,
and
continuations-in-part,
and
continued
prosecution
application(s),
to
the
extent
the
claims
of
any
suchpatent
or
patent
application
are
directed
to
subject
matter
specifically
described
in
the
patent
applications
described
in
clause
(a)
or
(b);
(d)
any
reissues,
re-examinations,
renewals,
or
extensions
of
patent
applications
or
patents
described
in
clause
(a),
(b)
or
(c),
or
substitutestherefor;
and
(e)
the
relevant
international
equivalents
of
any
of
the
patents
or
patent
applications
described
in
clause
(a),
(b),
(c)
or
(d).
Appendix
F
is
incorporated
into
this
AGREEMENT.
7
2.20.
“LAX”
is
defined
in
the
recitals
to
this
AGREEMENT.
2.21.
“LAX
LAB”
shall
mean
LAX,
and
any
other
individuals
performing
research
from
time
to
time
under
LAX’s
immediate
supervision
at
YALE,for
so
long
as
LICENSEE
provides
the
RESEARCH
SUPPORT
described
in
Section
3.4(b).
.
2.22.
“LICENSE”
is
defined
in
Section
3.4.
2.23.
“LICENSED
KNOW-HOW”
shall
mean
(i)
except
as
set
forth
on
Appendix
D,
any
inventions
(other
than
LICENSED
PATENTS)
and
anyinformation,
know-how,
technical
and
non-technical
data,
processes
and
any
drawings,
plans,
diagrams,
specifications,
and/or
other
documents
or
data
formscontaining
such
information
(collectively,
the
“KNOW-HOW”),
discovered,
developed
or
acquired
by
or
on
behalf
of
SCHLESSINGER,
LAX,
theSCHLESSINGER
LAB
or
the
LAX
LAB
(including,
for
the
avoidance
of
doubt,
under
the
RESEARCH
AGREEMENT),
in
each
case
prior
to
or
after
theORIGINAL
LICENSE
AGREEMENT
EFFECTIVE
DATE,
that
may
be
used
for
the
discovery,
development,
selection,
improvement
of,
or
use
as,
an
RTKPRODUCT
or
LICENSED
METHOD;
and
(ii)
the
VISITING
SCIENTIST
IP,
that:
(x)
in
the
case
of
both
(i)
and
(ii),
is
not
claimed
in
a
LICENSED
PATENT
and(y)
in
the
case
of
(i)
only,
is
disclosed
to
LICENSEE
by
SCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB
and
that,
with
respect
to
suchKNOW-HOW
that
is
discovered,
developed
or
acquired
after
the
EFFECTIVE
DATE,
is
discovered,
developed
or
acquired
while
SCHLESSINGER
is
or
wasMEANINGFULLY
INVOLVED
AT
YALE
and
MEANINGFULLY
INVOLVED
AT
KOLLTAN.
2.24.
“LICENSED
MATERIALS”
shall
mean,
except
as
set
forth
on
Appendix
D,
tangible
materials
(including,
but
not
limited
to,
pharmaceutical,chemical
and
biochemical
products)
(collectively,
the
“MATERIALS”)
discovered,
developed
or
acquired
by
or
on
behalf
of
SCHLESSINGER,
LAX,
theSCHLESSINGER
LAB
or
the
LAX
LAB
(including,
for
the
avoidance
of
doubt,
under
the
RESEARCH
AGREEMENT)
prior
to
or
after
the
ORIGINALLICENSE
AGREEMENT
EFFECTIVE
DATE
that
may
be
used
for
the
discovery,
development,
selection,
improvement
of
or
use
as
an
RTK
PRODUCT
orLICENSED
METHOD,
that
is
provided
to
LICENSEE
by
SCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB
and
that,
with
respect
to
suchmaterials
that
are
discovered,
developed
or
acquired
after
the
EFFECTIVE
DATE,
are
discovered,
developed
or
acquired
while
SCHLESSINGER
is
or
wasMEANINGFULLY
INVOLVED
AT
YALE
and
MEANINGFULLY
INVOLVED
AT
KOLLTAN.
To
the
extent
that
any
materials
provided
bySCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB
to
LICENSEE
after
the
EFFECTIVE
DATE
are
not
owned
100%
by
YALE,
YALE
shall,
atthe
time
such
materials
are
provided
to
LICENSEE,
notify
LICENSEE
of
such
fact
in
writing
(with
such
notice
identifying
the
source
of
such
materials
and
whichother
party(ies)
might
have
an
ownership
interest
in
such
materials)
and
this
definition
shall
only
apply
to
the
extent
of
YALE’s
ownership
interest
in
suchmaterials.
It
is
the
parties’
intention,
promptly
following
the
EFFECTIVE
DATE,
to
enter
into
a
material
transfer
agreement
to
establish
other
terms
and
conditionswith
respect
to
tangible
materials
transferred
between
the
parties.
2.25.
“LICENSED
METHODS”
shall
mean
any
method,
procedure,
service
or
process
(collectively,
the
“METHODS”),
discovered,
developed
oracquired
by
or
on
behalf
of
8
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
SCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB,
whether
existing
on
or
after
the
ORIGINAL
LICENSE
AGREEMENT
EFFECTIVEDATE,
the
practice
of
which,
in
the
absence
of
a
license
from
YALE,
would
infringe
a
VALID
CLAIM
of
a
LICENSED
PATENT
or
which
uses
or
is
derived
fromLICENSED
KNOW-HOW,
LICENSED
MATERIALS,
and/or
the
LICENSED
PATENTS,
in
each
case
that
is
disclosed
to
LICENSEE
by
SCHLESSINGER,LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB
and,
that,
with
respect
to
such
methods
that
are
discovered,
developed
or
acquired
after
the
EFFECTIVEDATE,
are
discovered,
developed
or
acquired
while
SCHLESSINGER
is
or
was
MEANINGFULLY
INVOLVED
AT
YALE
and
MEANINGFULLY
INVOLVEDAT
KOLLTAN.
To
the
extent
that
any
METHODS
provided
by
SCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB
to
LICENSEE
after
theEFFECTIVE
DATE
are
not
owned
100%
by
YALE,
YALE
shall,
at
the
time
such
METHODS
are
provided
to
LICENSEE,
notify
LICENSEE
of
such
fact
inwriting
(with
such
notice
identifying
the
source
of
such
METHODS
and
which
other
party(ies)
might
have
an
ownership
interest
in
such
METHODS)
and
thisdefinition
shall
only
apply
to
the
extent
of
YALE’s
ownership
interest
in
such
METHODS.
2.26.
“LICENSED
PATENTS”
shall
mean:
(a)
the
United
States
or
foreign
patent
application(s)
and
patents(s)
listed
in
Appendix
A
and
owned
by
YALE
during
the
TERM;
(b)
to
the
full
extent
owned
or
controlled
(with
the
ability
to
grant
licenses
or
sublicenses)
by
YALE,
any
United
States
or
foreign
patentapplication(s)
and
patents(s)
filed
by
or
on
behalf
of
YALE
after
the
EFFECTIVE
DATE
that
claim
RTK
TECHNOLOGY,
(i)
where
such
RTK
TECHNOLOGYis
made,
created,
developed,
discovered,
conceived
or
first
reduced
to
practice
by
or
on
behalf
of
SCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAXLAB
(including,
for
the
avoidance
of
doubt,
under
the
RESEARCH
AGREEMENT)
and,
(ii)
solely
with
respect
to
United
States
or
foreign
patentapplication(s)
and
patents(s)
filed
after
the
EFFECTIVE
DATE
and
not
arising
under
the
RESEARCH
AGREEMENT,
where
the
RTK
TECHNOLOGY
claimed
insuch
patent
application(s)
or
patents(s)
was
made,
created,
developed,
discovered,
conceived
or
first
reduced
to
practice
while
SCHLESSINGER
is
or
wasMEANINGFULLY
INVOLVED
AT
YALE
and
MEANINGFULLY
INVOLVED
AT
KOLLTAN;
but
in
all
cases
excluding
the
[**]-FUNDED
PATENTS;
(c)
any
continuations,
divisionals,
and
continuations-in-part,
and
continued
prosecution
application(s),
to
the
extent
the
claims
of
any
suchpatent
or
patent
application
are
directed
to
subject
matter
specifically
described
in
the
patent
applications
described
in
clause
(a)
or
(b);
(d)
any
reissues,
re-examinations,
renewals,
or
extensions
of
patent
applications
or
patents
described
in
clause
(a),
(b)
or
(c),
or
substitutestherefor;
and
(e)
the
relevant
international
equivalents
of
any
of
the
patents
or
patent
applications
described
in
clause
(a),
(b),
(c)
or
(d).
Appendix
A
is
incorporated
into
this
AGREEMENT.
2.27.
“LICENSED
TERRITORY”
shall
mean
Worldwide.
2.28.
“LMR”
is
defined
in
Section
5.2.
2.29.
“MEANINGFULLY
INVOLVED
AT
KOLLTAN”
shall
mean
a
situation
whereby
SCHLESSINGER
has
an
active
consulting
agreement
withLICENSEE,
or
is
a
member
of
the
Scientific
Advisory
Board
of
LICENSEE,
or
has
a
similar
arrangement
whereby
9
SCHLESSINGER
provides
advice
on
a
regular
basis
to
LICENSEE.
For
the
avoidance
of
doubt,
and
without
limiting
the
foregoing,
the
parties
agree
thatSCHLESSINGER
has
been
MEANINGFULLY
INVOLVED
AT
KOLLTAN
from
the
date
LICENSEE
was
incorporated
(i.e.,
November,
2007)
through
theEFFECTIVE
DATE.
2.30.
“MEANINGFULLY
INVOLVED
AT
YALE”
shall
mean
a
situation
whereby
SCHLESSINGER
is
serving
as
an
employee
or
faculty
member(including
an
emeritus
faculty
member)
at
YALE.
2.31.
“MINIMUM
DIRECT
COSTS”
is
defined
in
Section
7.5.
2.32.
“MRP”
is
defined
in
Section
6.3.
2.33.
“NDA”
shall
mean
(i)
a
New
Drug
Application
or
Biologic
License
Application
filed
with
the
FDA
to
obtain
marketing
approval
for
aPRODUCT
IN
CLASS
in
the
United
States;
or
(ii)
a
foreign
equivalent
of
(i).
2.34.
“NET
SALES”
shall
mean:
(a)
gross
invoice
price
from
the
sale,
lease
or
other
transfer
or
disposition,
other
than
by
sublicense,
of
a
PRODUCT
IN
CLASS
orLICENSED
METHOD,
or
from
services
performed
using
a
PRODUCT
IN
CLASS
or
LICENSED
METHOD,
by
LICENSEE
or
any
SUBLICENSEE
orAFFILIATE
to
third
parties,
except
as
set
forth
in
Section
2.34(b),
in
each
case
from
and
after
the
FIRST
SALE
of
such
PRODUCT
IN
CLASS
or
LICENSEDMETHOD,
less
the
following
deductions,
provided
they
actually
pertain
to
the
disposition
of
the
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
and,
in
thecase
of
the
items
specified
in
the
immediately
succeeding
clauses
(i)
and
(ii),
are
separately
stated
on
the
applicable
invoice:
(i)
all
discounts,
credits
and
allowances
on
account
of
returns;
(ii)
transportation
and
insurance;
and
(iii)
duties,
taxes
and
other
governmental
charges
levied
on
the
sale,
transportation
or
delivery
of
PRODUCTS
IN
CLASS
orpractice
of
the
LICENSED
METHODS,
but
not
including
income
taxes.
No
deductions
shall
be
made
for
any
other
costs
or
expenses,
including,
but
not
limited
to,
commissions
to
independent
sales
agents
or
those
on
LICENSEE’s
or
aSUBLICENSEE’s
or
AFFILIATE’s
payroll
or
for
the
cost
of
collection.
(b)
“NET
SALES”
shall
not
include
the
gross
invoice
price
for
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
sold
to,
or
servicesperformed
using
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
for,
any
AFFILIATE
unless
such
AFFILIATE
is
an
end-user
of
any
PRODUCT
INCLASS
or
LICENSED
METHOD,
in
which
case
such
consideration
shall
be
included
in
NET
SALES
at
the
average
selling
price
charged
to
a
third
party
duringthe
same
quarter.
10
2.35.
“ORIGINAL
LICENSE
AGREEMENT”
is
defined
in
the
recitals
to
this
AGREEMENT.
2.36.
“ORIGINAL
LICENSE
AGREEMENT
EFFECTIVE
DATE”
is
defined
in
the
recitals
to
this
AGREEMENT.
2.37.
“PHASE
1
STUDY”
shall
mean
a
human
clinical
trial
in
any
country
that
is
intended
to
initially
evaluate
the
safety
of
an
investigationalPRODUCT
IN
CLASS
in
volunteer
subjects
or
patients
that
would
satisfy
the
requirements
of
21
CFR
312.21(a),
or
other
comparable
regulation
imposed
by
theFDA
or
its
foreign
counterpart.
2.38.
“PHASE
2
STUDY”
shall
mean
a
human
clinical
trial
in
any
country
that
is
conducted
to
evaluate
the
effectiveness
of
the
PRODUCT
INCLASS
for
a
particular
indication
or
indications
in
patients
with
the
disease
or
condition
under
study
and
to
determine
the
common
short-term
side
effects
and
risksassociated
with
the
drug
that
would
satisfy
the
requirements
of
21
CFR
312.21(b),
or
other
comparable
regulation
imposed
by
the
FDA
or
its
foreign
counterpart.
2.39.
“PHASE
3
STUDY”
shall
mean
a
pivotal
human
clinical
trial
in
any
country
the
results
of
which
could
be
used
to
establish
safety
and
efficacyof
a
PRODUCT
IN
CLASS
as
a
basis
for
a
marketing
application
that
would
satisfy
the
requirements
of
21
CFR
312.21(c)
or
other
comparable
regulation
imposedby
the
FDA
or
its
foreign
counterpart.
2.40.
“PIVOTAL
TRIAL”
shall
mean
a
controlled
clinical
trial
to
evaluate
the
safety
and/or
efficacy
of
a
given
PRODUCT
IN
CLASS
and/or
a
givenLICENSED
METHOD
in
humans.
Each
such
clinical
trial
should
show
safety
and
efficacy
to
a
statistical
significance
and
suffice
as
demonstration
of
suchPRODUCT
IN
CLASS’s
or
such
LICENSED
METHOD’s
safety
and
efficacy
such
that
the
results
of
said
trial
are
the
basis
for
the
filing
of
an
NDA
for
such
aPRODUCT
IN
CLASS
and/or
such
a
LICENSED
METHOD.
2.41.
“PLAN”
is
defined
in
Section
7.1.
2.42.
“PRODUCT”
shall
mean
any
form
of
product,
including
but
not
limited
to,
a
service,
a
method,
a
diagnostic
(or
the
like),
a
drug
and
other
typeof
therapeutic
for
human
(or
other)
disease
or
condition,
including,
without
limitation,
gene
therapy
constructs,
small
molecules,
proteins,
peptides,peptidomimetics,
antisense
constructs,
antibody-drug
conjugates
or
any
other
natural
or
synthetic
molecule,
and
assays
run
in
reference
labs
for
fee-for-servicediagnostic
tests.
2.43.
“PRODUCT
IN
CLASS”
shall
mean
any
RTK
PRODUCT
(i)
as
to
which
LICENSEE
commenced
work
on,
or
acquired
or
in-licensed
suchproduct
(or
intellectual
property
claiming
the
composition
or
method
of
use
of
such
product)
while
SCHLESSINGER
was
MEANINGFULLY
INVOLVED
ATYALE
and
MEANINGFULLY
INVOLVED
AT
KOLLTAN;
or
(ii)
that
is
claimed
by
a
VALID
CLAIM
in
a
LICENSED
PATENT.
Notwithstanding
theforegoing,
for
purposes
of
this
AGREEMENT,
PRODUCT
IN
CLASS
shall
not
include
(x)
an
RTK
PRODUCT
that
is
owned,
in-licensed
(unless
in-licensed(directly
or
indirectly)
from
LICENSEE)
or
otherwise
controlled
by
a
third
party
that
acquires
control
of
LICENSEE
through
a
CHANGE
OF
CONTROL,
wheresuch
third
party
owned,
in-licensed
11
(unless
in-licensed
(directly
or
indirectly)
from
LICENSEE)
or
otherwise
controlled
such
RTK
PRODUCT
prior
to
such
CHANGE
OF
CONTROL;
(y)
an
RTKPRODUCT
that
is
owned,
in-licensed
or
otherwise
controlled
by
a
third
party
that
acquires
control
of
LICENSEE
through
a
CHANGE
OF
CONTROL,
where
suchthird
party
first
owned,
in-licensed
or
otherwise
controlled
such
RTK
PRODUCT
following
such
CHANGE
OF
CONTROL;
or
(z)
a
DESIGNATED
THIRDPARTY
RTK
PRODUCT,
unless
in
either
(x),
(y)
or
(z)
such
RTK
PRODUCT
is
claimed
by
a
VALID
CLAIM
in
a
LICENSED
PATENT.
2.44.
“REASONABLE
COMMERCIAL
EFFORTS”
shall
mean
documented
efforts:
(a)
that
are
consistent
with
those
utilized
by
companies
of
similar
size
and
type
and
at
a
similar
stage
of
corporate
development
toLICENSEE,
which
companies
have
successfully
developed
therapeutic
or
prophylactic
products
similar
to
the
proposed
PRODUCTS
IN
CLASS
described
in
thePLAN
and/or
services
of
a
type
similar
to
LICENSED
METHODS
described
in
the
PLAN;
and
(b)
that
are
consistent
with
the
interests
of
LICENSEE’s
stockholders
and
the
development
of
a
PRODUCT
IN
CLASS
and/or
commercialapplication
of
LICENSED
METHODS
and
that
constitute
a
prudent
and
commercially
reasonable
use
of
LICENSEE’s
capital
resources;
and
(c)
that
are
evidenced
by
a
record
of
incurring
MINIMUM
DIRECT
COSTS,
which
shall
include
the
RESEARCH
SUPPORT,
andadditional
documented
expenditures
appropriate
to
the
stage
of
development
of
one
or
more
PRODUCTS
IN
CLASS
and/or
commercial
application
of
LICENSEDMETHODS.
2.45.
“REDUCED
EARNED
ROYALTY”
is
defined
in
Section
6.1.
2.46.
“RESEARCH
AGREEMENT”
shall
mean
(i)
the
Amended
and
Restated
Research
Agreement,
dated
as
of
the
EFFECTIVE
DATE,
by
andbetween
YALE
and
LICENSEE,
as
the
same
may
be
amended,
extended,
renewed
or
replaced
from
time
to
time
and
(ii)
the
Research
Agreement
between
YALEand
LICENSEE
dated
as
of
June
4,
2008.
2.47.
“RESEARCH
PROGRAM”
shall
mean
the
research
program
that
has
been
and
will
continue
to
be
conducted
under
the
RESEARCHAGREEMENT.
2.48.
“RESEARCH
SUPPORT”
shall
mean
amounts
payable
by
LICENSEE
to
YALE
under
the
RESEARCH
AGREEMENT.
2.49.
“RTK”
shall
mean
a
tyrosine
kinase
receptor.
2.50.
“RTK
PRODUCT”
shall
mean
any
PRODUCT
that
may
induce,
prevent,
modify
or
otherwise
modulate
the
activation
of
one
or
more
RTKs
forthe
purpose
of
diagnosing,
preventing
or
treating
a
disease
or
condition
in
humans
or
non-human
animals.
2.51.
“RTK
TECHNOLOGY”
shall
mean
all
inventions
and
any
information,
know-how,
technical
and
non-technical
data,
methods
and
processesand
any
drawings,
plans,
diagrams,
specifications,
and/or
other
documents
or
data
form
containing
such
information
that
12
directly
relates
to
(i)
one
or
more
RTKs
and
the
activity,
modification
and/or
modulation
thereof
or
(ii)
RTK
PRODUCTS
(including,
but
not
limited
to,
thecomposition,
method
of
use
or
method
of
manufacture
of
RTK
PRODUCTS).
2.52.
“SCHLESSINGER”
is
defined
in
the
recitals
to
this
AGREEMENT.
2.53.
“SCHLESSINGER
LAB”
is
defined
in
the
recitals
to
this
AGREEMENT.
2.54.
“SUBLICENSEE”
shall
mean
any
third
party
sublicensed
by
LICENSEE
to
make,
have
made,
use,
sell,
offer
for
sale,
have
sold,
import
orexport
any
PRODUCT
IN
CLASS
or
to
practice
any
LICENSED
METHOD.
2.55.
“SUBLICENSE
INCOME”
shall
mean
consideration
in
any
form
actually
received
by
LICENSEE
or
an
AFFILIATE
in
connection
with
a
grantto
any
third
party
or
parties
of
a
sublicense
or
other
right,
license,
privilege
or
immunity
to
make,
have
made,
use,
sell,
have
sold,
distribute,
import
or
exportPRODUCTS
IN
CLASS
or
to
practice
the
TECHNOLOGY,
but
excluding
consideration
that
may
be
received
by
LICENSEE
or
an
AFFILIATE
as
a
royalty
(orsimilar
consideration)
on
sales
of
such
PRODUCTS
IN
CLASS.
SUBLICENSE
INCOME
shall
include,
without
limitation,
but
subject
to
the
following
sentence,any
license
signing
fee,
license
maintenance
fee,
unearned
portion
of
any
minimum
royalty
payment
received
by
LICENSEE,
equity
interest
in
a
person
and/orentity
other
than
LICENSEE
or
an
AFFILIATE
and
any
distribution
or
joint
marketing
fee.
SUBLICENSE
INCOME
shall
not
include:
(a)
any
payments
or
reimbursements
for
past,
present
or
future
research,
development,
manufacturing
or
commercial
launch
activity,including,
without
limitation,
laboratory
research,
clinical
research
and
development,
process
development,
regulatory
approvals
or
certifications,
reimbursementfor
payments
due
to
YALE
pursuant
to
Section
5.5
or
Section
5.8,
and
commercial
launch
expenses,
except
where,
and
to
the
extent
that,
such
payments
orreimbursements
are
in
excess
of
LICENSEE’s
external
costs
and
reasonably
attributable
internal
costs
incurred
in
undertaking
such
activities;
(b)
any
consideration
received
for
an
equity
interest
in,
extension
of
credit
to,
or
other
investment
in,
LICENSEE
or
an
AFFILIATE;
or
(c)
any
reimbursement
for
patent
expenses
or
other
costs
or
expenses
of
LICENSEE
or
an
AFFILIATE
associated
with
creating
ormaintaining
intellectual
property
protection.
In
case
an
extension
of
credit
to
LICENSEE
by
a
SUBLICENSEE,
as
described
in
clause
(b)
above,
is
forgiven
in
whole
or
in
part
by
the
SUBLICENSEE,
withinthirty
(30)
days
thereafter
LICENSEE
shall
by
notice
to
YALE
provide
information
in
reasonable
detail
showing
the
categories
and
uses
of
such
funds
for
purposesof
determining
the
amount
thereof,
if
any,
that
constitutes
SUBLICENSE
INCOME.
YALE
may
request
in
writing
and
LICENSEE
shall
not
unreasonably
refuse
toprovide
in
writing
additional
information
about
the
categories
and
uses
of
such
forgiven
extension
of
credit.
13
2.56.
“TECHNOLOGY”
shall
mean
LICENSED
KNOW-HOW,
LICENSED
MATERIALS,
LICENSED
METHODS,
and/or
LICENSEDPATENTS.
2.57.
“TERM”
is
defined
in
Section
3.7.
2.58.
“TERMINATION
EVENT”
shall
mean:
(a)
LICENSEE
fails
to
make
any
payment
whatsoever
due
and
payable
pursuant
to
this
AGREEMENT
and
LICENSEE
shall
fail
to
makeall
such
payments
(and
to
pay
all
interest
due
on
such
payments
under
Section
6.4)
for
thirty
(30)
days
after
receipt
of
written
notice
of
such
failure
from
YALE;
or
(b)
LICENSEE
commits
a
material
breach
of
any
provision
of
this
AGREEMENT
(other
than
as
provided
in
the
immediately
precedingclause
(a))
which
breach
(1)
if
capable
of
being
cured,
shall
continue
uncured
for
sixty
(60)
days
after
LICENSEE
receives
written
notice
thereof
from
YALE,which
notice
shall
identify
such
breach
in
reasonable
detail,
or
(2)
is
not
capable
of
being
cured;
or
(c)
LICENSEE
fails
to
obtain
or
maintain
insurance
as
described
in
Article
14;
or
(d)
LICENSEE
gives
notice
to
YALE
pursuant
to
Section
7.4(a)
or
(b);
or
(e)
the
occurrence
of
any
of
the
events
set
forth
in
Section
7.4(a)
or
(b).
2.59.
“TERMINATION
EVENT
INFORMATION
NOTICE”
is
defined
in
Section
13.4(a).
2.60.
“TERMINATION
EVENT
NOTICE”
is
defined
in
Section
13.4(b).
2.61.
“VALID
CLAIM”
shall
mean,
as
the
context
requires,
(i)
an
issued
and
unexpired
claim
of
a
LICENSED
PATENT
so
long
as
such
claim
shallnot
have
been
irrevocably
abandoned
or
declared
to
be
invalid
in
an
unappealable
decision
of
a
court
or
other
authority
of
competent
jurisdiction
through
no
fault
orcause
of
LICENSEE
or
(ii)
an
issued
and
unexpired
claim
of
a
KOLLTAN
PATENT
so
long
as
such
claim
shall
not
have
been
irrevocably
abandoned
or
declaredto
be
invalid
in
an
unappealable
decision
of
a
court
or
other
authority
of
competent
jurisdiction.
2.62.
“VISITING
SCIENTIST
IP”
shall
mean
any
intellectual
property
resulting
from
work
done
by
LICENSEE
employees
in
laboratory
space
in
theDepartment
of
Pharmacology
at
the
Yale
School
of
Medicine
during
the
period
from
November
17,
2008
through
June
22,
2009
where
such
intellectual
propertywas
created
by
such
LICENSEE
employees.
Such
VISITING
SCIENTIST
IP
may
include
inventions,
discoveries,
developments,
technical
information,
tradesecrets,
know-how,
methods,
techniques,
formulae,
data,
information,
processes,
intellectual
property
and
other
proprietary
ideas,
whether
patentable
or
patented
ornot
patentable
or
not
yet
patented.
Some
VISITING
SCIENTIST
IP
is
described
in
more
detail
in
Appendix
C,
which
is
hereby
incorporated
into
thisAGREEMENT.
YALE
and
LICENSEE
have
previously
entered
into
(1)
a
Visiting
Scientist
Agreement,
effective
November
14,
2008,
as
amended
by
14
Amendment
One
to
Visiting
Scientist
Agreement,
effective
January
5,
2009
and
(2)
a
separate
Visiting
Scientist
Agreement,
effective
January
5,
2009
(collectively,the
“Two
Visiting
Scientist
Agreements”).
It
is
understood
and
agreed
that
any
VISITING
SCIENTIST
IP
shall
be
governed
by
the
terms
of
this
AGREEMENT,in
addition
to
the
Two
Visiting
Scientist
Agreements,
however,
in
the
case
of
any
inconsistencies
between
this
AGREEMENT
and
one
or
both
of
the
Two
VisitingScientist
Agreements,
the
provisions
of
this
AGREEMENT
shall
prevail.
LICENSEE
hereby
acknowledges
that,
during
the
term
of
each
of
the
Two
VisitingScientist
Agreements,
LICENSED
KNOW-HOW
was
provided
to
LICENSEE
pursuant
to
the
terms
of
the
ORIGINAL
LICENSE
AGREEMENT,
and
LICENSEEhereby
acknowledges
having
received
and
made
use
of
such
LICENSED
KNOW-HOW
from
YALE.
ARTICLE
3
LICENSE
GRANT
AND
TERM
3.1.
Subject
to
all
the
terms
and
conditions
of
this
AGREEMENT,
YALE
hereby
grants
to
LICENSEE
an
exclusive
license
under
all
of
YALE’sinterest
in
the
LICENSED
PATENTS,
LICENSED
MATERIALS
and
LICENSED
METHODS
to
make,
have
made,
use,
sell,
offer
for
sale,
have
sold,
import
orexport
therapeutic
and
prophylactic
RTK
PRODUCTS
in
the
LICENSED
TERRITORY,
with
the
right
to
sublicense
as
provided
in
this
AGREEMENT.
3.2.
Subject
to
all
the
terms
and
conditions
of
this
AGREEMENT,
YALE
hereby
grants
to
LICENSEE
a
non-exclusive
license
under
all
of
YALE’sinterest
in
the
LICENSED
PATENTS
and
LICENSED
METHODS
and
LICENSED
MATERIALS
to
make,
have
made,
use,
sell,
offer
for
sale,
have
sold,
importor
export
diagnostic
RTK
PRODUCTS
within
the
LICENSED
TERRITORY,
with
the
right
to
sublicense
as
provided
in
this
AGREEMENT.
3.3.
Subject
to
all
the
terms
and
conditions
of
this
AGREEMENT,
YALE
hereby
grants
to
LICENSEE
a
non-exclusive
license
under
all
of
YALE’sinterest
in
the
LICENSED
KNOW-HOW
to
make,
have
made,
use,
sell,
offer
for
sale,
have
sold,
import
or
export
any
RTK
PRODUCT,
method,
procedure,service
or
process
in
the
LICENSED
TERRITORY,
with
the
right
to
sublicense
as
provided
in
this
AGREEMENT.
3.4.
(a)
Collectively,
the
rights
granted
to
LICENSEE
under
Section
3.1,
Section
3.2
and
Section
3.3
shall
be
the
“LICENSE”.
The
LICENSEis
further
subject
to
all
the
terms
and
conditions
of
this
AGREEMENT,
including,
without
limitation,
YALE’s
right
to
terminate
the
LICENSE
if
aTERMINATION
EVENT
has
occurred
and
is
continuing
by
reason
of,
among
other
things,
LICENSEE’s
failure
to
pay
all
amounts
due
to
YALE
pursuant
toArticles
5,
6,
and
10
and
LICENSEE’s
failure
to
comply
with
Section
7.5.
(b)
Part
of
the
consideration
received
by
YALE
for
the
grant
of
the
LICENSE
is
LICENSEE’s
obligation
under
the
RESEARCHAGREEMENT
to
provide
RESEARCH
SUPPORT
in
the
aggregate
amount
of
Nine
Million
Dollars
($9,000,000),
consisting
of
One
Million
Five
HundredThousand
Dollars
per
year
over
the
six-year
period
provided
in
the
RESEARCH
AGREEMENT.
Notwithstanding
that
such
obligation
of
LICENSEE
under
theRESEARCH
AGREEMENT
forms
part
of
the
consideration
for
this
AGREEMENT,
a
failure
by
LICENSEE
to
pay
all
or
any
portion
of
the
RESEARCHSUPPORT
shall
not
constitute
a
failure
of
consideration
for
this
AGREEMENT
or
give
rise
to
a
right
of
YALE
to
terminate
this
AGREEMENT;
provided,however,
that
in
case
of
termination
of
the
RESEARCH
AGREEMENT,
LICENSEE
shall
have
paid
all
costs
for
which
LICENSEE
is
responsible
under
theRESEARCH
AGREEMENT
and
which
costs
were
incurred
by
YALE
and
unpaid
by
the
LICENSEE
through
the
date
of
termination,
including,
without
limitation,all
non-reimbursed
costs
and
non-cancelable
commitments
of
YALE
relating
to
the
RESEARCH
AGREEMENT,
that
are
incurred
prior
to
the
date
of
terminationof
the
RESEARCH
AGREEMENT,
but
in
the
case
of
personnel
costs,
no
more
than
salary
and
benefits
of
such
personnel
provided
for
under
the
RESEARCHAGREEMENT
for
up
to
one
year
from
date
of
notice
of
termination
of
the
RESEARCH
AGREEMENT.
YALE
shall
use
reasonable
best
efforts
to
mitigate
suchcosts
and
commitments,
consistent
with
YALE’s
normal
policies
and
practices
with
regard
to
termination
or
transfer
of,
or
assistance
in
seeking
other
employmentfor,
such
personnel.
Expiration
or
termination
of
the
RESEARCH
AGREEMENT
in
accordance
with
its
terms
shall
not
be
deemed
a
termination
of
thisAGREEMENT.
3.5.
To
the
extent
that
any
invention
included
within
the
LICENSED
PATENTS
has
been
funded
in
whole
or
in
part
by
the
United
Statesgovernment,
the
United
States
government
retains
certain
rights
in
such
invention
as
set
forth
in
35
U.S.C.
§200-212
and
all
regulations
15
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
promulgated
thereunder,
as
amended,
and
any
successor
statutes
and
regulations
(the
“FEDERAL
PATENT
POLICY”).
As
a
condition
of
the
grant
of
theLICENSE,
LICENSEE
acknowledges
and
shall
comply
with
all
aspects
of
the
FEDERAL
PATENT
POLICY
applicable
to
the
LICENSED
PATENTS,
includingthe
obligation
that
PRODUCTS
IN
CLASS
used
or
sold
in
the
United
States
be
manufactured
substantially
in
the
United
States.
Nothing
contained
in
thisAGREEMENT
obligates
or
shall
obligate
YALE
to
take
any
action
that
would
conflict
in
any
respect
with
its
past,
current
or
future
obligations
to
the
United
StatesGovernment
under
the
FEDERAL
PATENT
POLICY
with
respect
to
the
LICENSED
PATENTS.
3.6.
The
LICENSE
is
expressly
made
subject
to
YALE’s
reservation
of
the
right,
on
behalf
of
itself
and
all
other
non-profit
academic
researchinstitutions,
to
make,
use
and
practice
the
TECHNOLOGY
for
academic
research,
clinical,
teaching
or
other
non-commercial
purposes,
and
not
for
purposes
ofcommercial
development,
use,
manufacture,
sale
or
distribution.
Nothing
in
this
AGREEMENT
shall
be
construed
to
grant
by
implication,
estoppel
or
otherwiseany
licenses
under
patents
of
YALE
other
than
the
LICENSED
KNOW-HOW,
LICENSED
MATERIALS,
LICENSED
METHODS,
and
LICENSED
PATENTS.
3.7.
The
term
of
the
LICENSE
(the
“TERM”)
shall
commence
on
the
ORIGINAL
LICENSE
AGREEMENT
EFFECTIVE
DATE
and,
unlessterminated
earlier
as
provided
in
Article
13,
shall
automatically
expire,
on
a
country-by-country
basis,
on
the
date
that
is
the
latest
of
whichever
of
the
following
isapplicable:
(a)
the
date
on
which
the
last
of
the
VALID
CLAIMS
of
the
patents
included
in
the
LICENSED
PATENTS
in
such
country
expires,
lapsesor
is
declared
to
be
invalid
by
a
final
decision
of
a
court
or
other
authority
of
competent
jurisdiction,
not
subject
to
further
appeal,
through
no
fault
or
cause
ofLICENSEE;
and
(b)
the
date
that
is
fifteen
(15)
years
after
the
last
LICENSED
KNOW-HOW,
LICENSED
MATERIALS,
or
LICENSED
METHODShave
been
provided
to
LICENSEE
by
YALE
under
this
AGREEMENT;
and
(c)
the
date
that
is
fifteen
(15)
years
from
the
date
of
FIRST
SALE
of
a
PRODUCT
IN
CLASS;
but
in
no
event
shall
the
TERM
end
later
than
the
date
that
is
thirty
(30)
years
after
the
ORIGINAL
LICENSE
AGREEMENT
EFFECTIVE
DATE.
3.8.
YALE
hereby
agrees
that,
after
the
EFFECTIVE
DATE
and
for
so
long
as
SCHLESSINGER
is
MEANINGFULLY
INVOLVED
AT
YALEand
MEANINGFULLY
INVOLVED
AT
KOLLTAN,
except
for
[**]-FUNDED
PATENTS,
YALE
will
not
grant
any
third
party
(including
[**])
any
rights,
forany
therapeutic
or
prophylactic
uses,
in
any
patent
application
or
patents
(or,
for
the
avoidance
of
doubt,
related
filings
described
in
clause
(c),
(d)
or
(e)
of
thedefinition
of
LICENSED
PATENTS)
filed
by
or
on
behalf
of
YALE
that
claim
RTK
TECHNOLOGY
made,
created,
developed,
discovered,
conceived
or
firstreduced
to
practice
by
or
on
behalf
of
SCHLESSINGER,
LAX,
the
SCHLESSINGER
LAB
or
the
LAX
LAB
(including,
for
the
avoidance
of
doubt,
under
theRESEARCH
AGREEMENT).
16
3.9.
In
the
event
that
YALE
materially
breaches
a
representation
or
warranty
contained
in
Section
1.2
with
respect
to
the
TECHNOLOGY
(a“Section
1.2
Breach”),
which
in
turn
creates
potential
liability
for
LICENSEE
(including,
potentially,
for
its
AFFILIATES
or
SUBLICENSEES)
to
YALE
or
athird
party
(“Section
1.2
Liability”),
YALE
hereby
agrees
it
will
never
institute
any
action
or
suit
at
law
or
in
equity
against
LICENSEE
or
its
AFFILIATES
or
itsSUBLICENSEES
alleging
Section
1.2
Liability
with
respect
to
the
use
by
LICENSEE
or
its
AFFILIATES
or
SUBLICENSEES
of
the
component(s)
of
theTECHNOLOGY
that
was(were)
the
subject
of
the
Section
1.2
Breach,
nor
institute,
prosecute
or
in
any
way
aid
in
the
institution
or
prosecution
of
any
claim,demand,
suit,
action,
or
cause
of
action
for
damages,
costs,
other
compensation
or
injunctive
relief
for
or
on
account
of
any
Section
1.2
Liability,
whetherdeveloped
or
undeveloped,
resulting
or
to
result,
known
or
unknown,
past,
present
or
future,
arising
out
of
the
use
by
LICENSEE
or
its
AFFILIATES
or
itsSUBLICENSEES
of
the
component(s)
of
the
TECHNOLOGY
that
was(were)
the
subject
of
the
Section
1.2
Breach.
For
the
avoidance
of
doubt,
the
precedingsentence
shall
in
no
way
limit
LICENSEE’s
ability
to
seek
other
remedies
with
respect
to
YALE,
nor
shall
it
in
any
way
limit
LICENSEE’s
obligations
to
complyin
good
faith
with
all
provisions
of
this
AGREEMENT
with
which
it
is
able
to
comply
notwithstanding
the
Section
1.2
Breach.
3.10.
No
earlier
than
twenty-seven
(27)
months
after
the
EFFECTIVE
DATE
and
no
later
than
thirty
(30)
months
after
the
EFFECTIVE
DATE,YALE
may,
by
written
notice
to
LICENSEE,
elect
to
deem
SCHLESSINGER
to
no
longer
be
MEANINGFULLY
INVOLVED
AT
KOLLTAN
andMEANINGFULLY
INVOLVED
AT
YALE
as
of
the
third
anniversary
of
the
EFFECTIVE
DATE.
Following
delivery
of
such
notice,
for
purposes
of
thisAGREEMENT,
SCHLESSINGER
shall
be
deemed
to
be
no
longer
MEANINGFULLY
INVOLVED
AT
KOLLTAN
and
MEANINGFULLY
INVOLVED
ATYALE
as
of
the
third
anniversary
of
the
EFFECTIVE
DATE.
3.11.
In
the
event
of
a
CHANGE
OF
CONTROL,
upon
the
occurrence
of
such
CHANGE
OF
CONTROL,
for
purposes
of
this
AGREEMENT,SCHLESSINGER
shall
be
deemed
to
be
no
longer
MEANINGFULLY
INVOLVED
AT
KOLLTAN
and
MEANINGFULLY
INVOLVED
AT
YALE
as
of
thedate
of
such
occurence.
ARTICLE
4
SUBLICENSES
4.1.
Any
sublicense
by
LICENSEE
of
the
rights
granted
to
it
under
this
AGREEMENT
shall
comply
with
the
provisions
of
Sections
4.2,
4.3
and
4.4.
4.2.
Subject
to
Section
4.5,
any
sublicense
granted
by
LICENSEE
shall
include
terms
under
which
the
SUBLICENSEE
agrees
with
the
LICENSEE,and
shall
include
provisions
in
favor
of
LICENSEE,
as
sublicensor
thereunder,
substantially
the
same
as
are
provided
in
Section
7.1,
Section
7.2,
Section
7.3,Section
7.4,
Article
8,
Section
9.1,
Section
9.2,
Section
10.6,
Article
12
and
Article
14
of
this
AGREEMENT
with
respect
to
the
subject
matter
of
such
sublicenseand
the
related
definitions
in
this
AGREEMENT.
LICENSEE
will
provide
YALE
with
a
copy
of
each
sublicense
agreement
(and
all
amendments
thereof)
withinthirty
(30)
days
of
execution
of
such
agreement
or
amendment.
LICENSEE
shall
not
be
responsible
for
the
performance
of
any
SUBLICENSEE
under
any
suchsublicense
and
shall
be
obligated
to
pay
17
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
royalties
and
other
amounts
that
arise
from
such
sublicense
and
are
due
to
YALE
only
as
and
to
the
extent
such
SUBLICENSEE
pays
the
same
to
LICENSEE.
4.3.
LICENSEE
shall
pay
royalties
to
YALE
on
NET
SALES
of
SUBLICENSEES
based
on
the
same
royalty
rate
as
apply
to
NET
SALES
byLICENSEE
and
its
AFFILIATES
under
Article
6,
regardless
of
the
royalty
rates
payable
by
SUBLICENSEES
to
LICENSEE
under
a
sublicense
agreement.
Inaddition,
LICENSEE
shall
pay
to
YALE
[**]
Percent
([**]%)
of
any
SUBLICENSE
INCOME.
4.4.
LICENSEE
agrees
that
it
shall:
(a)
within
thirty
(30)
days
of
execution
by
the
parties,
provide
YALE
with
a
copy
of
any
amendments
to
sublicenses
granted
byLICENSEE
under
this
AGREEMENT,
and
within
thirty
(30)
days
after
termination
of
any
sublicense,
notify
YALE
of
such
termination;
and
(b)
within
thirty
(30)
days
of
receipt,
provide
complete
copies
of
all
reports
provided
to
LICENSEE
by
SUBLICENSEES
pursuant
to
anysublicense;
provided,
howeve
r,
that
LICENSEE
may
omit
or
redact
from
the
copies
so
provided
to
YALE
any
portion
of
the
reports
of
a
SUBLICENSEE
whichportion
contains
information
that
LICENSEE
would
not
have
otherwise
been
required
to
report
to
YALE
under
Section
7.3
if
such
report
were
provided
byLICENSEE
directly;
and
(c)
use
commercially
reasonable
efforts
to
seek
compliance
in
all
material
respects
by
each
SUBLICENSEE
with
the
terms
of
thesublicense
to
which
such
SUBLICENSEE
is
a
party.
4.5.
If
LICENSEE
proposes
to
enter
into
a
sublicense
that
does
not
include
terms
that
require
SUBLICENSEE
thereunder
to
agree
substantially
asprovided
in
Sections
7.1
and
7.2
of
this
AGREEMENT
(and
the
related
definitions)
with
respect
to
the
subject
matter
of
such
sublicense,
then
LICENSEE
shallsubmit
the
proposed
form
of
such
sublicense
to
YALE
for
review
and
approval
prior
to
entering
into
such
sublicense.
YALE’s
review
and
approval
of
any
suchsublicense
shall
be
limited
to
the
terms
of
the
due
diligence
obligations
of
SUBLICENSEE
thereunder,
provided
that
such
sublicense
otherwise
complies
with
therequirements
of
Sections
4.2
and
4.3
of
this
AGREEMENT.
YALE
shall
notify
LICENSEE
of
any
objections
it
may
have
to
the
due
diligence
terms
of
a
proposedsublicense
within
fifteen
(15)
days
after
LICENSEE
submits
such
sublicense
to
YALE
for
its
review
and
approval,
and
LICENSEE
shall
notify
YALE
ofLICENSEE’s
response
to
said
objections
within
fifteen
(15)
days
after
receipt
of
YALE’s
objections.
YALE
shall
not
unreasonably
withhold
its
consent
to
anysuch
sublicense
provided
that
LICENSEE
substantively
responds
to
YALE’s
objections.
ARTICLE
5
LICENSE
ISSUE
ROYALTY;
LICENSE
MAINTENANCE
ROYALTY;
MILESTONE
ROYALTIES
5.1.
The
parties
acknowledge
that
LICENSEE
paid
to
YALE,
within
ninety
(90)
days
after
the
ORIGINAL
LICENSE
AGREEMENT
EFFECTIVEDATE,
a
non-refundable
license
issue
royalty
of
Fifty
Thousand
Dollars
($50,000.00).
18
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
5.2.
During
the
TERM,
LICENSEE
agrees
to
pay
to
YALE
an
annual
license
maintenance
royalty
(“LMR”)
commencing
with
the
first
anniversaryof
the
ORIGINAL
LICENSE
AGREEMENT
EFFECTIVE
DATE
according
to
the
following
schedule:
Anniversary of the ORIGINAL LICENSE AGREEMENT EFFECTIVE DATE LMR[**]
[**][**]
[**]
until
LICENSEE
starts
to
pay
MRP
under
Section
6.3.
The
parties
acknowledge
that,
as
of
the
EFFECTIVE
DATE,
LICENSEE
has
paid
YALE
the
first
three(3)
LMR
payments.
5.3.
LICENSEE
shall
pay
YALE,
for
each
therapeutic
or
prophylactic
PRODUCT
IN
CLASS
that
is
developed
by
LICENSEE
or
an
AFFILIATE,
anon-refundable
milestone
royalty
of
Three
Million
Dollars
($3,000,000.00)
when
LICENSEE
has
collected
at
least
[**]
Dollars
($[**])
in
NET
SALES
of
suchPRODUCT
IN
CLASS,
determined
on
an
accrual
basis
consistent
with
the
GAAP
used
in
the
preparation
of
the
financial
statements
furnished
by
LICENSEE
toYALE
pursuant
to
Section
9.3,
subject
to
Section
5.11.
5.4.
Notwithstanding
Section
5.3,
in
case
a
CHANGE
OF
CONTROL
shall
occur,
then
for
each
therapeutic
or
prophylactic
PRODUCT
INCLASS
for
which
IND
APPROVAL
for
a
PHASE
1
STUDY
occurs
after
such
CHANGE
OF
CONTROL,
in
lieu
of
making
payment
in
respect
of
such
therapeuticor
prophylactic
PRODUCT
IN
CLASS
of
the
milestone
royalty
provided
in
Section
5.3,
and
subject
to
Section
5.11,
LICENSEE
shall
pay
the
following
milestoneroyalties:
(a)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
upon
[**];
and
(b)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
upon
the
[**];
and
(c)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
upon
the
[**];
and
(d)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
upon
the
[**];
and
(e)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
upon
the
[**].
For
the
avoidance
of
doubt,
each
of
the
foregoing
milestone
royalties
shall
be
payable
only
once
for
each
therapeutic
or
prophylactic
PRODUCT
IN
CLASS,
evenif
such
PRODUCT
IN
CLASS
achieves
a
given
milestone
more
than
once.
5.5.
In
case
of
a
sublicense
by
LICENSEE
with
respect
to
a
proposed
or
actual
therapeutic
or
prophylactic
PRODUCT
IN
CLASS
for
which,
on
theeffective
date
of
such
sublicense,
a
milestone
royalty
under
Section
5.3
shall
not
yet
have
become
due
and
payable
by
LICENSEE,
then
from
and
after
the
date
ofsuch
sublicense,
LICENSEE
shall
pay
milestone
19
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
royalties
for
such
therapeutic
or
prophylactic
PRODUCT
IN
CLASS
in
accordance
with
Section
5.4
and
Section
5.3
shall
be
inapplicable
to
such
PRODUCT
INCLASS.
In
case
of
any
such
sublicense,
if
on
the
effective
date
of
such
sublicense,
one
or
more
of
the
milestones
specified
in
Section
5.4
shall
have
been
met,
then,within
thirty
(30)
days
after
the
effective
date
of
the
sublicense
for
each
such
therapeutic
or
prophylactic
PRODUCT
IN
CLASS,
LICENSEE
shall
pay
YALE
themilestone
royalties
for
all
milestones
specified
in
Section
5.4
which
shall
have
been
achieved
for
such
PRODUCT
IN
CLASS
prior
to
the
effective
date
of
suchsublicense.
5.6.
LICENSEE
shall
pay
YALE,
for
each
diagnostic
PRODUCT
IN
CLASS
that
is
developed
by
LICENSEE,
a
non-refundable
milestone
royalty
ofThree
Hundred
Thousand
Dollars
($300,000.00)
when
LICENSEE
and/or
an
AFFILIATE
has
received
at
least
[**]
Dollars
($[**])
in
NET
SALES
of
suchPRODUCT
IN
CLASS,
determined
on
an
accrual
basis
consistent
with
the
GAAP
used
in
the
preparation
of
the
financial
statement,
furnished
by
LICENSEE
toYALE
pursuant
to
Section
9.3,
subject
to
Section
5.11.
5.7.
Notwithstanding
Section
5.6,
in
case
a
CHANGE
OF
CONTROL
shall
occur,
then
for
each
diagnostic
PRODUCT
IN
CLASS
for
which,
aftersuch
CHANGE
OF
CONTROL,
LICENSEE
receives
IND
APPROVAL
for
the
first
clinical
trial
of
such
PRODUCT
IN
CLASS,
then
in
lieu
of
making
payment
inrespect
of
such
PRODUCT
IN
CLASS
of
the
milestone
royalty
provided
in
Section
5.6,
and
subject
to
Section
5.11,
LICENSEE
shall
pay
the
following
milestoneroyalties:
(a)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
when
[**];
and
(b)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
when
[**];
and
(c)
a
non-refundable
milestone
royalty
of
[**]
Dollars
($[**])
when
[**].
For
the
avoidance
of
doubt,
each
of
the
foregoing
milestone
royalties
shall
be
payable
only
once
for
each
diagnostic
PRODUCT
IN
CLASS,
even
if
suchPRODUCT
IN
CLASS
achieves
a
given
milestone
more
than
once.
5.8.
In
case
of
a
sublicense
by
LICENSEE
with
respect
to
a
proposed
or
actual
diagnostic
PRODUCT
IN
CLASS
for
which,
on
the
effective
date
ofsuch
sublicense,
a
milestone
royalty
under
Section
5.6
shall
not
yet
have
become
due
and
payable
by
LICENSEE,
then
from
and
after
the
date
of
such
sublicense,LICENSEE
shall
pay
milestone
royalties
for
each
such
diagnostic
PRODUCT
IN
CLASS
in
accordance
with
Section
5.7
and
Section
5.6
shall
be
inapplicable
tosuch
PRODUCT
IN
CLASS.
In
case
of
any
such
sublicense,
if
on
the
effective
date
of
such
sublicense,
one
or
more
of
the
milestones
specified
in
Section
5.7
shallhave
been
met,
then,
within
thirty
(30)
days
after
the
effective
date
of
the
sublicense
for
such
diagnostic
PRODUCT
IN
CLASS,
LICENSEE
shall
pay
YALE
themilestone
royalties
for
all
milestones
specified
in
Section
5.7
which
shall
have
been
achieved
for
such
PRODUCT
IN
CLASS
prior
to
the
effective
date
of
suchsublicense.
5.9.
In
case
a
particular
PRODUCT
IN
CLASS
is
both
a
therapeutic
or
prophylactic
and
a
diagnostic
and
such
therapeutic
or
prophylacticPRODUCT
IN
CLASS
is
or
is
intended
to
be
marketed
and
sold
separate
from
diagnostic
PRODUCT
IN
CLASS
and
such
diagnostic
20
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
PRODUCT
IN
CLASS
is
or
is
intended
to
be
marketed
and
sold
for
a
use
other
than
determining
the
suitability
of
the
use
of
such
therapeutic
or
prophylacticPRODUCT
IN
CLASS
in
particular
patients,
then
milestone
royalties
for
both
the
therapeutic
or
prophylactic
and
the
diagnostic
PRODUCT
IN
CLASS
underSections
5.3,
5.4,
5.6
or
5.7
shall
be
due
to
YALE
under
this
AGREEMENT.
5.10.
None
of
the
license
issue
royalty
set
forth
in
Section
5.1,
the
LMR
set
forth
in
Section
5.2
or
the
milestone
royalties
set
forth
in
Sections
5.3,
5.4,5.6
or
5.7
shall
be
credited
against
EARNED
ROYALTIES
payable
under
Article
6.
LICENSEE
shall
pay
the
amounts
payable
to
YALE
under
Sections
5.3
and5.6
within
ninety
(90)
days
after
the
end
of
LICENSEE’s
fiscal
year
in
which
the
applicable
NET
SALES
threshold
is
met.
5.11.
Notwithstanding
any
other
provision
of
this
AGREEMENT,
for
purposes
of
determining
what
constitutes
a
single
or
separate
therapeutic
orprophylactic
and/or
diagnostic
PRODUCTS
IN
CLASS
or
a
single
or
separate
services
using
LICENSED
METHODS:
(a)
any
two
or
more
therapeutic
or
prophylactic
PRODUCTS
IN
CLASS
or
therapeutic
or
prophylactic
LICENSED
METHOD
which
haveas
an
active
ingredient
the
same
molecule,
chemical
entity
or
compound
as
one
another
shall
be
deemed
a
single
therapeutic
PRODUCT
IN
CLASS
or
singletherapeutic
LICENSED
METHOD,
as
the
case
may
be,
even
if
researched,
developed,
marketed,
delivered
or
sold
for
different
indications
or
with
differentformulations
or
under
different
regulatory
approvals.
(b)
any
two
or
more
diagnostic
PRODUCTS
IN
CLASS
or
two
or
more
diagnostic
LICENSED
METHODS
which
have
as
an
activeingredient
the
same
molecule,
chemical
entity
or
compound
as
one
another
shall
be
deemed
a
single
diagnostic
PRODUCT
IN
CLASS
or
single
service
using
aLICENSED
METHOD,
as
the
case
may
be,
even
if
researched,
developed,
marketed,
delivered,
or
sold
for
different
indications
or
with
different
formulations
orunder
different
regulatory
approvals.
ARTICLE
6
EARNED
ROYALTIES;
MINIMUM
ROYALTY
PAYMENTS
6.1.
During
the
TERM,
and
subject
to
the
following
sentence,
as
partial
consideration
for
the
LICENSE,
LICENSEE
shall
pay
to
YALE
an
earnedroyalty
on
worldwide
cumulative
NET
SALES
of
each
PRODUCT
IN
CLASS
or
LICENSED
METHOD
developed
by
LICENSEE
or
its
SUBLICENSEES
orAFFILIATES
equal
to
[**]
percent
([**]%)
of
such
NET
SALES
(the
“EARNED
ROYALTY”).
If
for
such
a
PRODUCT
IN
CLASS
or
LICENSED
METHODthere
is
not
a
VALID
CLAIM
in
either
a
LICENSED
PATENT
or
a
KOLLTAN
PATENT,
in
each
case
claiming
such
PRODUCT
IN
CLASS
or
LICENSEDMETHOD,
then
the
EARNED
ROYALTY
on
such
a
PRODUCT
IN
CLASS
or
LICENSED
METHOD
shall
be
reduced
(a
“REDUCED
EARNED
ROYALTY”).
The
REDUCED
EARNED
ROYALTY
on
worldwide
cumulative
NET
SALES
of
each
PRODUCT
IN
CLASS
or
LICENSED
METHOD
developed
byLICENSEE
or
its
SUBLICENSEES
or
AFFILIATES
shall
be
equal
to
[**]
percent
([**]%)
of
such
NET
SALES
from
and
after
the
date
there
is
no
such
VALIDCLAIM.
Unless
otherwise
stated
in
this
AGREEMENT,
any
reference
to
“EARNED
ROYALTIES”
shall
refer
to
either
or
both
EARNED
ROYALTIES
andREDUCED
EARNED
ROYALTIES,
as
the
case
may
be.
21
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
6.2.
LICENSEE
shall
pay
all
EARNED
ROYALTIES
accruing
to
YALE
within
thirty
(30)
days
from
the
end
of
each
calendar
quarter
(March
31,June
30,
September
30
and
December
31),
beginning
in
the
first
calendar
quarter
in
which
NET
SALES
occur.
6.3.
During
the
TERM,
LICENSEE
agrees
to
pay
YALE
annual
Minimum
Royalty
Payments
(“MRP”),
commencing
on
the
first
anniversary
of
theORIGINAL
LICENSE
AGREEMENT
EFFECTIVE
DATE
to
occur
at
least
six
(6)
months
after
the
date
of
the
FIRST
SALE
of
the
first
PRODUCT
IN
CLASS
orfirst
service
using
a
LICENSED
METHOD
that
results
in
NET
SALES
for
such
a
first
PRODUCT
IN
CLASS
or
LICENSED
METHOD.
(a)
If
the
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD
the
FIRST
SALE
of
which
gives
rise
to
LICENSEE’sobligation
to
pay
an
MRP
is
a
therapeutic
or
prophylactic
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD,
then
the
MRP
shall
be
made
accordingto
the
following
schedule:
Years after FIRST SALE MRPYear
1
[**]Year
2
[**]Years
3-5
[**]Year
6
and
every
year
thereafter
[**]
(b)
If
the
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD
the
FIRST
SALE
of
which
gives
rise
to
LICENSEE’sobligation
to
pay
an
MRP
is
a
diagnostic
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD,
then
the
MRP
shall
be
made
according
to
the
followingschedule:
Years after FIRST SALE MRPYear
1
[**]Year
2
[**]Years
3-5
[**]Year
6
and
every
year
thereafter
[**]
(c)
Once
the
LICENSEE
has
made
a
FIRST
SALE
of
both
a
therapeutic
or
prophylactic
PRODUCT
IN
CLASS
or
a
service
using
aLICENSED
METHOD
and
a
diagnostic
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD,
then
thereafter
MRP
shall
be
the
sum
of
the
amountsindicated
in
Sections
6.3(a)
and
6.3(b).
If
the
FIRST
SALE
of
a
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD
is
both
a
therapeutic
orprophylactic
and
a
diagnostic
and
such
therapeutic
or
prophylactic
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD
is,
or
is
intended
to
be,marketed
and
sold
separate
from
such
diagnostic
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD,
as
the
case
may
be,
and
such
diagnosticPRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD
is,
or
is
intended
to
be,
marketed
and
sold
for
a
use
other
than
determining
the
suitability
of
theuse
of
such
therapeutic
or
prophylactic
PRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD
in
particular
patients,
then
thereafter
MRP
shall
be
thesum
of
the
amounts
indicated
in
Sections
6.3(a)
and
6.3(b).
22
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
(d)
Once
the
MRP
commences,
LICENSEE
shall
continue
to
pay
the
MRP
for
PRODUCTS
IN
CLASS
or
services
using
LICENSEDMETHODS
until
the
end
of
the
TERM,
subject
to
Section
6.3(e).
YALE
shall
fully
credit
MRP
paid
against
any
EARNED
ROYALTIES
payable
by
LICENSEEin
the
same
year.
(e)
If
at
any
time
after
the
MRP
commences
all
PRODUCTS
IN
CLASS
and
services
using
a
LICENSED
METHOD
for
which
a
FIRSTSALE
has
occurred
are
temporarily
or
permanently
removed
from
the
market
and
there
is
no
longer
any
PRODUCT
IN
CLASS
or
service
using
a
LICENSEDMETHOD
subject
to
EARNED
ROYALTY
under
the
terms
of
this
AGREEMENT,
then
the
MRP
due
under
Section
6.3
shall
be
suspended
and
LICENSEE
shallresume
payment
of
the
applicable
LMR
under
Section
5.2.
The
payment
of
LMR
as
so
resumed
shall
continue
until
such
time
as
marketing
of
any
removedPRODUCT
IN
CLASS
or
service
using
a
LICENSED
METHOD
has
resumed
or
LICENSEE
shall
have
made
a
FIRST
SALE
of
another
PRODUCT
IN
CLASS
orservice
using
a
LICENSED
METHOD,
subject
to
suspension
of
the
MRP
through
subsequent
operation
of
this
Section
6.3(e).
MRP
that
is
suspended
or
resumedand
LMR
that
arises
by
reason
of
this
Section
6.3(e),
in
any
such
case
for
a
period
of
less
than
12
months,
shall
be
prorated.
(f)
If
at
any
time
the
applicable
rate
of
EARNED
ROYALTIES
for
all
PRODUCTS
IN
CLASS
and
services
using
any
LICENSEDMETHOD
shall
become
the
REDUCED
EARNED
ROYALTY,
then
the
applicable
MRP
shall
thereafter
be
[**]
percent
([**]%)
of
the
applicable
amount
fromthe
above
schedules,
prorated
for
any
period
of
less
than
12
months.
6.4.
All
EARNED
ROYALTIES
and
other
payments
due
under
this
AGREEMENT
shall
be
paid
to
YALE
in
United
States
Dollars.
In
the
event
thatconversion
from
foreign
currency
is
required
in
calculating
a
payment
under
this
AGREEMENT,
the
exchange
rate
used
shall
be
the
Interbank
rate
quoted
byCitibank,
N.A.
at
the
end
of
the
last
business
day
of
the
quarter
in
which
the
royalty
was
earned.
If
overdue,
the
EARNED
ROYALTIES
and
any
other
paymentsdue
under
this
AGREEMENT
shall
bear
interest
until
payment
at
a
per
annum
rate
equal
to
[**],
and
YALE
shall
be
entitled
to
recover
reasonable
attorneys’
feesand
costs
related
to
the
collection
of
overdue
EARNED
ROYALTIES
or
other
overdue
amounts
payable
by
LICENSEE
under
this
AGREEMENT,
following
suchfailure
to
pay.
The
payment
of
such
interest
shall
not
foreclose
YALE
from
exercising
any
other
right
it
may
have
as
a
consequence
of
the
failure
of
LICENSEE
tomake
any
payment
when
due.
ARTICLE
7
DUE
DILIGENCE
7.1.
LICENSEE
has
designed
a
plan
for
pre-clinical
and
clinical
development
of
one
or
more
PRODUCTS
IN
CLASS
by
use
of
theTECHNOLOGY,
which
plan
(i)
includes
a
description
of
research
and
development,
testing,
government
approval
and
manufacturing
of
PRODUCTS
INCLASS
and/or
LICENSED
METHODS
and
(ii)
after
completion
of
a
PIVOTAL
TRIAL
for
a
PRODUCTS
IN
CLASS
and/or
LICENSED
METHODS,
willadditionally
include
a
description
of
the
plan
for
the
marketing
and
sale
or
lease
of
such
PRODUCTS
IN
CLASS
and/or
LICENSED
METHODS
(as
such
plan
maybe
supplemented
or
modified
from
time
to
time
pursuant
to
Section
7.3,
the
“PLAN”).
A
copy
of
the
PLAN
as
of
the
23
EFFECTIVE
DATE
is
attached
to
this
AGREEMENT
as
Appendix
B
and
incorporated
herein
by
reference.
7.2.
LICENSEE
shall
use
REASONABLE
COMMERCIAL
EFFORTS
to
pursue
development
and
commercialization
of
PRODUCTS
INCLASS
and
LICENSED
METHODS.
The
efforts
of
AFFILIATES
and
SUBLICENSEES
shall
be
considered
LICENSEE
efforts
for
purposes
of
determiningwhether
LICENSEE
is
using
REASONABLE
COMMERCIAL
EFFORTS
as
required
by
this
Section
7.2.
LICENSEE
shall
not
pursue
development
andcommercialization
of
an
RTK
PRODUCT
that
is
not
a
PRODUCT
IN
CLASS
for
the
sole
purpose
of
avoiding
the
payment
of
a
royalty
to
YALE
pursuant
toSection
6.1.
7.3.
No
later
than
one
hundred
twenty
(120)
days
after
the
end
of
each
calendar
year
during
the
TERM,
LICENSEE
shall
provide
to
YALE
a
writtenreport
describing
LICENSEE’s,
SUBLICENSEE’s,
and/or
AFFILIATE’s
activities
and
progress
on
research
and
development,
regulatory
approvals,manufacturing,
sublicensing,
marketing
and
sales,
as
applicable,
of
one
or
more
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
during
such
year
andindicating
LICENSEE’s
progress
and
problems
to
date
in
implementing
the
PLAN
during
such
year.
If
during
the
course
of
the
year
covered
by
such
reportLICENSEE,
SUBLICENSEE
or
AFFILIATE
shall
have
been
involved
in
REASONABLE
COMMERCIAL
EFFORTS
for
more
than
one
actual
or
proposedPRODUCT
IN
CLASS
or
LICENSED
METHOD,
such
report
for
such
year
shall
provide
the
information
set
forth
above
for
each
such
actual
or
proposedPRODUCT
IN
CLASS
or
LICENSED
METHOD.
If
progress
or
developments
differ
from
those
anticipated
in
the
PLAN,
as
supplemented
by
prior
reportsLICENSEE
has
provided
pursuant
to
this
Section
7.3,
then
in
such
report
LICENSEE
shall
identify
in
reasonable
detail
the
principal
differences,
state
the
reasonsfor
the
differences
and
set
forth
a
modified
research,
development,
regulatory
approval,
manufacturing,
sublicensing,
marketing
and
sales
plan.
Such
report
shallalso
include
a
forecast
and
schedule
of
major
events
required
to
market
the
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
under
development
during
suchyear.
Such
report
shall
also
include
the
aggregate
MINIMUM
DIRECT
COSTS
actually
incurred
to
the
end
of
the
most
recent
calendar
year
preceding
suchreport.
LICENSEE
shall
also
promptly
provide
any
reasonable
additional
data
that
YALE
by
written
notice
to
LICENSEE
requests
in
order
to
evaluateLICENSEE’s
exercise
of
REASONABLE
COMMERCIAL
EFFORTS
during
such
year.
Within
thirty
(30)
days
following
any
assignment
by
LICENSEEpursuant
to
Section
17.6,
the
assignee
shall
provide
YALE
with
an
updated
and
revised
copy
of
the
PLAN.
7.4.
LICENSEE
shall
immediately
notify
YALE
if
at
any
time
LICENSEE
(a)
abandons
or
suspends,
or
determines
to
abandon
or
suspend,
itsresearch,
development
and
marketing
of
the
PRODUCTS
IN
CLASS
and
LICENSED
METHODS,
(b)
fails
to
comply
with
its
due
diligence
obligations
under
thisArticle
for
a
period
exceeding
ninety
(90)
days,
or
(c)
abandons
or
suspends,
or
determines
to
abandon
or
suspend,
its
clinical
research,
development
or
marketingof
a
particular
PRODUCT
IN
CLASS
or
a
particular
LICENSED
METHOD.
7.5.
LICENSEE
shall
during
the
TERM
incur
costs
(including
external
costs
and
reasonably
attributable
internal
costs)
towards
research,
clinicaldevelopment,
regulatory
approvals,
manufacturing,
intellectual
property
filings
or
maintenance
fees,
or
marketing
of
one
or
more
PRODUCT
IN
CLASS
and/orLICENSED
METHODS
(“MINIMUM
DIRECT
COSTS”)
according
to
the
following
schedule:
24
Period from ORIGINAL LICENSE AGREEMENT EFFECTIVE DATE to end of Cumulative MINIMUM DIRECT COSTS Year
5
$15,000,000
Year
8
$25,000,000
In
determining
the
amount
of
such
costs
that
LICENSEE
has
incurred,
costs
of
LICENSEE
shall
be
calculated
on
an
accrual
basis,
consistent
with
the
GAAP
usedin
the
preparation
of
LICENSEE’s
financial
statements
furnished
to
YALE
pursuant
to
Section
9.3,
and
amounts
paid
by
LICENSEE
as
RESEARCH
SUPPORT
ofthe
RESEARCH
PROGRAM
and
such
documented
costs
incurred
by
SUBLICENSEES
and/or
AFFILIATES
towards
a
PRODUCT
IN
CLASS
or
a
LICENSEDMETHOD
shall
all
be
considered
costs
incurred
by
LICENSEE.
ARTICLE
8
CONFIDENTIALITY
AND
PUBLICITY
8.1.
Subject
to
the
parties’
rights
and
obligations
pursuant
to
this
AGREEMENT,
YALE
and
LICENSEE
agree
that
during
the
TERM
and
for
five(5)
years
thereafter,
each
of
them:
(a)
will
keep
confidential
and
will
cause
their
AFFILIATES
and,
in
the
case
of
LICENSEE,
require
its
SUBLICENSEES
to
agree
inwriting
with
LICENSEE,
to
keep
confidential,
CONFIDENTIAL
INFORMATION
disclosed
to
it
by
the
other
party,
by
taking
whatever
action
the
party
receivingthe
CONFIDENTIAL
INFORMATION
would
take
to
preserve
the
confidentiality
of
its
own
CONFIDENTIAL
INFORMATION,
which
in
no
event
shall
be
lessthan
reasonable
care;
and
(b)
will
only
disclose
that
part
of
the
other’s
CONFIDENTIAL
INFORMATION
to
its
officers,
employees
or
agents
that
is
necessary
forthose
officers,
employees
or
agents
who
need
to
know
to
carry
out
its
responsibilities
under
this
AGREEMENT;
and
(c)
will
not
use
the
other
party’s
CONFIDENTIAL
INFORMATION
other
than
as
expressly
set
forth
in
this
AGREEMENT
or
disclosethe
other’s
CONFIDENTIAL
INFORMATION
to
any
third
parties
under
any
circumstance
without
advance
written
permission
from
the
other
party;
and
(d)
will,
within
sixty
(60)
days
of
termination
of
this
AGREEMENT,
return
all
the
CONFIDENTIAL
INFORMATION
disclosed
to
it
bythe
other
party
pursuant
to
this
AGREEMENT
except
for
one
copy
which
may
be
retained
by
the
recipient
for
monitoring
compliance
with
this
Article
8.
8.2.
The
obligations
of
confidentiality
described
above
shall
not
pertain
to
that
part
of
the
CONFIDENTIAL
INFORMATION
that:
25
(a)
was
known
to
the
recipient
prior
to
the
disclosure
by
the
disclosing
party;
or
(b)
is
at
the
time
of
disclosure
or
has
become
thereafter
publicly
known
through
no
fault
or
omission
attributable
to
the
recipient;
or
(c)
is
rightfully
given
to
the
recipient
from
sources
independent
of
the
disclosing
party;
or
(d)
is
independently
developed
by
the
receiving
party
without
use
of
or
reference
to
the
CONFIDENTIAL
INFORMATION
of
the
otherparty;
or
(e)
is
required
to
be
disclosed
by
law
in
the
opinion
of
recipient’s
attorney,
but
only
after
the
disclosing
party
is
given
prompt
writtennotice
and
an
opportunity
to
seek
a
protective
order;
or
(f)
is
provided
under
the
RESEARCH
AGREEMENT
(which
CONFIDENTIAL
INFORMATION
shall
be
governed
by
the
provisions
ofthe
RESEARCH
AGREEMENT
governing
confidential
information).
8.3.
Except
as
required
by
law,
neither
party
may
disclose
the
financial
terms
of
this
AGREEMENT
without
the
prior
written
consent
of
the
otherparty,
except
that
LICENSEE
may
disclose
such
terms
to
persons
who
agree
in
writing
with
LICENSEE
to
keep
such
information
confidential.
ARTICLE
9
REPORTS,
RECORDS
AND
INSPECTIONS
9.1.
LICENSEE
shall,
within
thirty
(30)
days
after
the
calendar
year
in
which
NET
SALES
first
occur,
and
within
thirty
(30)
days
after
each
calendarquarter
(March
31,
June
30,
September
30
and
December
31)
thereafter,
provide
YALE
with
a
written
report
detailing
the
NET
SALES
and
uses,
if
any,
made
byLICENSEE,
its
SUBLICENSEES
and
AFFILIATES
of
LICENSED
PRODUCTS
and
LICENSED
METHODS
during
the
preceding
calendar
quarter
andcalculating
the
payments
due
pursuant
to
Article
6.
NET
SALES
of
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
shall
be
deemed
to
have
occurred
asdetermined
in
accordance
with
the
GAAP
used
in
the
preparation
of
the
financial
statement
furnished
by
LICENSEE
to
YALE
pursuant
to
Section
9.3.
Each
suchreport
shall
be
signed
by
an
officer
of
LICENSEE
(or
the
officer’s
designee),
and
must
include:
(a)
the
number
of
PRODUCTS
IN
CLASS
manufactured,
sold,
leased
or
otherwise
transferred
or
disposed
of,
and
the
amount
ofLICENSED
METHODS
sold,
by
LICENSEE,
SUBLICENSEES
and
AFFILIATES;
(b)
a
calculation
of
NET
SALES
for
the
applicable
reporting
period
in
each
country,
including
the
gross
invoice
prices
charged
for
thePRODUCTS
IN
CLASS
and
LICENSED
METHODS
and
any
permitted
deductions
made
pursuant
to
Section
2.34;
26
(c)
a
calculation
of
total
royalties
or
other
payment
due,
including
any
exchange
rates
used
for
conversion;
and
(d)
names
and
addresses
of
all
SUBLICENSEES
and
the
type
and
amount
of
any
SUBLICENSE
INCOME
received
from
eachSUBLICENSEE.
9.2.
LICENSEE
and
its
SUBLICENSEES
shall
keep
and
maintain
complete
and
accurate
records
and
books
containing
an
accurate
accounting
of
alldata
in
sufficient
detail
to
enable
verification
of
EARNED
ROYALTIES
and
other
payments
under
this
AGREEMENT.
LICENSEE
shall
preserve
such
books
andrecords
for
three
(3)
years
after
the
calendar
year
to
which
they
pertain.
Such
books
and
records
shall
be
open
to
inspection
by
YALE
or
an
independent
certifiedpublic
accountant
selected
by
YALE,
at
YALE’s
expense,
during
normal
business
hours
upon
ten
(10)
days’
prior
written
notice,
for
the
purpose
of
verifying
theaccuracy
of
the
reports
and
computations
rendered
by
LICENSEE.
In
the
event
LICENSEE
underpaid
the
amounts
due
to
YALE
with
respect
to
the
audited
periodby
more
than
five
percent
(5%),
LICENSEE
shall
pay
the
reasonable
cost
of
such
examination,
together
with
the
deficiency
not
previously
paid,
within
thirty
(30)days
of
receiving
notice
thereof
from
YALE.
9.3.
LICENSEE
shall
deliver
to
YALE
within
one
hundred
fifty
(150)
days
after
the
end
of
each
fiscal
year
of
LICENSEE
during
the
TERM,
anincome
statement
for
such
fiscal
year,
a
balance
sheet
of
LICENSEE
and
statement
of
stockholders’
equity
as
of
the
end
of
such
fiscal
year,
and
a
statement
of
cashflows
for
such
fiscal
year,
such
financial
statements
to
be
prepared
in
accordance
with
generally
accepted
accounting
principles
(“GAAP”),
and
accompanied
by
anaudit
report
of
independent
public
accountants
of
nationally
recognized
standing
selected
by
LICENSEE.
ARTICLE
10
PATENT
PROTECTION
10.1.
LICENSEE
shall
be
responsible
for
all
past,
present
and
future
costs
of
filing,
prosecution
and
maintenance
of
all
United
States
patentapplications
contained
in
the
LICENSED
PATENTS.
Any
and
all
such
United
States
patent
applications,
and
resulting
issued
patents,
shall
remain
the
property
ofYALE.
10.2.
LICENSEE
shall
be
responsible
for
all
past,
present
and
future
costs
of
filing,
prosecution
and
maintenance
of
all
foreign
patent
applications,and
patents
contained
in
the
LICENSED
PATENTS
in
the
countries
outside
the
United
States
in
the
LICENSED
TERRITORY
selected
by
YALE
and
agreed
to
byLICENSEE.
All
such
applications
or
patents
shall
remain
the
property
of
YALE.
10.3.
If
LICENSEE
does
not
agree
to
pay
the
expenses
of
filing,
prosecuting
or
maintaining
a
patent
application
or
patent
in
any
country
outside
theUnited
States,
or
fails
to
pay
the
expenses
of
filing,
prosecuting
or
maintaining
a
patent
application
or
patent
in
the
United
States,
then
the
LICENSE
with
respect
tosuch
patent
application
or
patent
shall
terminate
automatically
with
respect
to
that
country.
10.4.
The
costs
mentioned
in
Sections
10.2
and
10.3
shall
include,
but
are
not
limited
to,
any
past,
present
and
future
taxes,
annuities,
working
fees,maintenance
fees,
renewal
and
extension
charges.
Payment
of
such
costs
shall
be
made,
at
YALE’s
option,
either
directly
to
27
patent
counsel
or
by
reimbursement
to
YALE.
In
either
case,
LICENSEE
shall
make
payment
directly
to
the
appropriate
party
within
thirty
(30)
days
of
receivingits
invoice.
If
LICENSEE
fails
to
make
payment
to
YALE
or
patent
counsel,
as
appropriate,
within
the
thirty
(30)
day
period,
LICENSEE
shall
be
charged
a
fivepercent
(5%)
surcharge
on
the
invoiced
amount
per
month
or
fraction
thereof
or
such
other
amount
(higher
or
lower)
as
may
be
charged
by
patent
counsel.
Failureof
LICENSEE
to
pay
the
surcharge
shall
be
grounds
for
termination
by
YALE
under
Section
13.1
as
and
to
the
extent
the
same
constitutes
a
TERMINATIONEVENT.
10.5.
All
patent
applications
under
the
LICENSED
PATENTS
shall
be
prepared,
prosecuted,
filed
and
maintained
by
independent
patent
counselchosen
by
YALE
and
reasonably
acceptable
to
LICENSEE.
Said
independent
patent
counsel
shall
be
ultimately
responsible
to
YALE.
LICENSEE
shall
have
theright
to
retain,
at
its
own
expense,
separate
patent
counsel
to
advise
LICENSEE
regarding
such
patent
matters.
YALE
shall
instruct
its
patent
counsel
to
keepYALE,
LICENSEE
and
LICENSEE’s
patent
counsel,
if
any,
fully
informed
of
the
progress
of
all
patent
applications
and
patents,
and
to
give
both
YALE
andLICENSEE
reasonable
opportunity
to
comment
on
the
type
and
scope
of
useful
claims
and
the
nature
of
supporting
disclosures
and
other
matters
in
the
course
ofpatent
prosecution
and
maintenance.
YALE
will
not
finally
abandon
any
patent
application
for
which
LICENSEE
is
bearing
expenses
without
LICENSEE’sconsent.
In
making
its
decisions
regarding
patent
matters
YALE
shall
(1)
give
due
regard
to
the
advice
of
its
patent
counsel,
(2)
instruct
its
patent
counsel
toconsider
any
advice
offered
by
LICENSEE’s
patent
counsel,
if
any,
and
(3)
conduct
such
preparation,
prosecution
and
maintenance
of
patent
applications
andpatents
in
a
manner
that
is
commercially
reasonable
and
with
a
view
to
assisting
LICENSEE
in
complying
with
its
obligations
under
this
AGREEMENT
and
tofacilitate
LICENSEE’s
ability
to
commercialize
PRODUCTS
IN
CLASS
and/or
LICENSED
METHODS
for
which
royalties
will
be
payable
by
LICENSEE
underSection
6.1.
YALE
shall
have
no
liability
to
LICENSEE
for
damages,
whether
direct,
indirect
or
incidental,
consequential
or
otherwise,
allegedly
arising
from
itsgood
faith
decisions,
actions
and
omissions
taken
in
compliance
with
this
AGREEMENT
in
connection
with
such
patent
prosecution.
10.6.
LICENSEE
shall
mark,
and
shall
require
SUBLICENSEES
to
mark,
all
LICENSED
PRODUCTS
with
the
numbers
of
all
patents
included
inLICENSED
PATENTS
that
cover
the
PRODUCTS
IN
CLASS.
Without
limiting
the
foregoing,
all
PRODUCTS
IN
CLASS
shall
be
marked
in
such
a
manner
as
toconform
with
the
patent
marking
notices
required
by
the
law
of
any
country
where
such
PRODUCTS
IN
CLASS
are
made,
sold,
used
or
shipped,
including,
but
notlimited
to,
the
applicable
patent
laws
of
that
country.
ARTICLE
11
INFRINGEMENT
AND
LITIGATION
11.1.
Each
party
shall
promptly
notify
the
other
in
writing
in
the
event
that
it
obtains
knowledge
of
infringing
activity
by
third
parties,
or
is
sued
orthreatened
with
an
infringement
suit,
in
any
country
in
the
LICENSED
TERRITORY
as
a
result
of
activities
that
concern
the
TECHNOLOGY
and
shall
supply
theother
party
with
documentation
of
the
infringing
activities
that
it
possesses.
28
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
11.2.
During
the
TERM:
(a)
LICENSEE
shall
have
the
first
right
and
obligation
to
(i)
defend
its
or
its
SUBLICENSEE’s
use
of
the
TECHNOLOGY
againstinfringement
or
interference
claims
in
the
LICENSED
TERRITORY
by
third
parties
and
(ii)
take
action
(including
legal
action)
against
third
parties
who
mayinfringe
the
LICENSED
PATENTS
or
otherwise
misappropriate
the
LICENSED
KNOW-HOW,
LICENSED
METHODS
or
LICENSED
MATERIALS.
This
rightand
obligation
includes
bringing
any
legal
action
for
infringement
and
defending
any
counter
claim
of
invalidity
or
action
of
a
third
party
for
declaratory
judgmentfor
non-infringement
or
non-interference.
If,
in
the
reasonable
opinion
of
both
LICENSEE’s
and
YALE’s
respective
counsel,
YALE
is
required
to
be
a
namedparty
to
any
such
suit
for
standing
purposes,
LICENSEE
may
join
YALE
as
a
party;
provided
,
however
,
that
(i)
YALE
shall
not
be
the
first
named
party
in
anysuch
action,
(ii)
the
pleadings
and
any
public
statements
about
the
action
shall
state
that
the
action
is
being
pursued
by
LICENSEE
and
that
LICENSEE
has
joinedYALE
as
a
party;
and
(iii)
LICENSEE
shall
keep
YALE
reasonably
apprised
of
all
developments
in
any
such
action.
LICENSEE
may
settle
such
suits
solely
in
itsown
name
and
solely
at
its
own
expense
and
through
counsel
of
its
own
selection;
provided
,
however
,
that
no
settlement
shall
be
entered
without
YALE’s
priorwritten
consent.
LICENSEE
shall
bear
the
expense
of
such
legal
actions.
Except
for
providing
reasonable
assistance,
at
the
request
and
expense
of
LICENSEE,YALE
shall
have
no
obligation
regarding
the
legal
actions
described
in
this
Section
unless
required
to
participate
by
law.
However,
YALE
shall
have
the
right
toparticipate
in
any
such
action
through
its
own
counsel
and
at
its
own
expense.
Any
recovery
shall
first
be
applied
to
LICENSEE’s
out-of-pocket
expenses
andsecond
shall
be
applied
to
YALE’s
out-of-pocket
expenses,
including
legal
fees.
Thereafter,
any
remaining
amount
of
such
recovery
by
LICENSEE
up
to
theamount
of
compensatory
damages
recovered
by
LICENSEE
shall
be
retained
by
LICENSEE,
but
if
related
to
a
PRODUCT
IN
CLASS
or
LICENSED
METHODshall
be
deemed,
to
the
extent
so
related,
NET
SALES
of
a
PRODUCT
IN
CLASS
or
LICENSED
METHOD,
as
the
case
may
be,
during
the
calendar
quarter
inwhich
such
recovery
is
actually
paid
to
LICENSEE,
and
shall
be
subject
to
payment
by
LICENSEE
of
an
EARNED
ROYALTY
thereon
pursuant
to
Section
6.1.
LICENSEE
shall
pay
YALE
[**]
percent
([**]%)
of
the
amount,
if
any,
of
any
such
recovery
by
LICENSEE
related
to
a
PRODUCT
IN
CLASS
or
LICENSEDMETHOD
which
amount
is
in
excess
of
(i)
LICENSEE’s
and
YALE’s
out-of-pocket
expenses
as
aforesaid
and
(ii)
the
amount
of
such
compensatory
damages
asaforesaid.
LICENSEE
shall
make
such
payment
to
YALE
within
thirty
(30)
days
after
the
end
of
the
calendar
quarter
in
which
LICENSEE
actually
receives
theamount
giving
rise
to
such
payment
to
YALE.
(b)
Promptly
after
LICENSEE
(a)
receives
notification
from
YALE
of
infringement
by
a
third
party
or
(b)
otherwise
first
becomes
awareof
an
infringement
by
a
third
party,
whichever
is
earlier,
LICENSEE
shall
investigate
such
infringement
and
take
other
steps,
including,
without
limitation,contacting
the
person
believed
to
be
infringing,
to
determine
the
nature
and
extent
of
any
such
infringement
and,
if
LICENSEE
determines
that
such
infringement
isoccurring,
notify
such
infringing
person
to
cease.
If
such
infringement
shall
nonetheless
continue,
then
LICENSEE
shall
proceed
in
a
timely
manner
in
accordancewith
Section
11.2(a).
If
LICENSEE
fails
to
initiate
such
actions
to
investigate
and
determine
the
nature
and
extent
of
such
infringement
within
sixty
(60)
days
afterthe
earlier
of
such
notice
from
YALE
or
the
date
LICENSEE
first
becomes
aware
of
such
infringement
or
if
LICENSEE
fails
to
commence
a
legal
action
underSection
11.2(a)
in
a
timely
manner,
as
the
case
may
be,
then
YALE
may
by
notice
to
LICENSEE
demand
that
LICENSEE
take
such
actions
or
commence
suchlegal
action.
If
29
LICENSEE
shall
fail
to
take
such
action
or
commence
such
legal
action,
as
the
case
may
be,
within
sixty
(60)
days
after
such
demand
by
YALE,
then
YALE
shallhave
the
right
to
take
such
action
or
to
initiate
such
legal
action,
as
the
case
may
be,
at
its
own
expense.
If
YALE
initiates
such
legal
action
YALE
may
use
thename
of
LICENSEE
as
party
plaintiff
to
uphold
the
LICENSED
PATENTS.
In
such
case,
LICENSEE
shall
provide
reasonable
assistance
to
YALE
if
requested
todo
so.
YALE
may
settle
such
actions
solely
through
its
own
counsel.
Any
recovery
shall
be
retained
by
YALE.
In
case
YALE
initiates
such
legal
action
inaccordance
with
this
Section
11.2(b),
then
YALE
may
terminate
the
LICENSE
in
the
country
where
such
legal
action
is
taken.
11.3.
In
the
event
LICENSEE
is
permanently
enjoined
from
exercising
its
LICENSE
under
this
AGREEMENT
pursuant
to
an
infringement
actionbrought
by
a
third
party,
or
if
both
LICENSEE
and
YALE
elect
not
to
undertake
the
defense
or
settlement
of
a
suit
alleging
infringement
for
a
period
of
six(6)
months
from
notice
of
such
suit,
then
either
party
shall
have
the
right
to
terminate
the
LICENSE
in
the
country
where
the
suit
was
filed
with
respect
to
theallegedly
infringing
LICENSED
PATENT
following
thirty
(30)
days’
written
notice
to
the
other
party
in
accordance
with
the
terms
of
Article
15.
11.4.
If
LICENSEE,
AFFILIATE,
and/or
SUBLICENSEE
challenge
a
VALID
CLAIM
of
a
LICENSED
PATENT
or
challenge
a
claim
by
YALE
thata
product
is
a
PRODUCT
IN
CLASS
(each
a
“CHALLENGE”),
then
LICENSEE,
AFFILIATE,
and/or
SUBLICENSEE
shall
pay
or
continue
to
pay
all
amountsdue
under
this
AGREEMENT
during
the
pendency
of
such
CHALLENGE,
whether
or
not
any
of
such
amounts
is
in
dispute
in
such
CHALLENGE.
ARTICLE
12
USE
OF
YALE’S
NAME
LICENSEE
shall
not
use
the
name
“Yale”
or
“Yale
University,”
nor
any
variation
or
adaptation
thereof,
nor
any
trademark,
trade
name
or
otherdesignation
owned
by
YALE,
nor
the
names
of
any
of
its
trustees,
officers,
faculty,
students,
employees
or
agents,
for
any
purpose
without
the
prior
written
consentof
YALE
in
each
instance,
except
(a)
that
LICENSEE
may
disclose
the
terms
of
this
AGREEMENT,
the
activities
of
the
parties
hereunder,
and
theTECHNOLOGY
to
its
stockholders,
potential
investors
and
consultants
who
are
subject
to
obligations
to
LICENSEE
to
keep
such
information
confidential,
wheresuch
confidentiality
obligations
are
substantially
similar
to
the
obligations
of
LICENSEE
to
YALE
hereunder
and
(b)
as
required
by
applicable
law.
ARTICLE
13
TERMINATION
13.1.
YALE
shall
have
the
right
to
terminate
the
LICENSE
upon
written
notice
to
LICENSEE
in
the
event
a
TERMINATION
EVENT
shall
haveoccurred
and
be
continuing;
provided,
however,
that
any
termination
by
reason
of
a
TERMINATION
EVENT
(other
than
a
TERMINATION
EVENT
described
inSection
2.58(a))
shall
be
made
in
accordance
with
Section
13.4.
13.2.
The
LICENSE
shall
terminate
automatically
without
any
notice
to
LICENSEE
in
the
event
LICENSEE
shall
cease
to
carry
on
its
business
for
aperiod
of
thirty
(30)
consecutive
days
or
becomes
INSOLVENT,
or
a
petition
in
bankruptcy
is
filed
against
LICENSEE
and
is
30
consented
to,
acquiesced
in
or
remains
undismissed
for
one
hundred
twenty
(120)
days,
or
LICENSEE
makes
a
general
assignment
for
the
benefit
of
creditors,
or
areceiver
is
appointed
for
LICENSEE.
13.3.
LICENSEE
shall
have
the
right
to
terminate
the
LICENSE
upon
written
notice
to
YALE:
(a)
at
any
time
on
six
(6)
months’
notice
to
YALE,
provided
LICENSEE
is
not
in
breach
of
the
AGREEMENT
in
any
material
respect
andupon
payment
of
all
amounts
due
YALE
through
the
effective
date
of
termination;
or
(b)
in
the
event
YALE
commits
a
material
breach
of
any
of
the
provisions
of
this
AGREEMENT
and
such
breach
is
not
cured
(if
capableof
being
cured)
within
the
sixty
(60)
day
period
after
receipt
of
written
notice
thereof
from
LICENSEE
which
notice
shall
identify
such
breach
in
reasonable
detail,or
upon
receipt
of
such
notice
if
such
breach
is
not
capable
of
being
cured.
13.4.
Subject
to
Section
13.1,
if
YALE
believes
that
a
TERMINATION
EVENT
(other
than
a
TERMINATION
EVENT
described
in
Section
2.58(a))shall
have
occurred
and
be
continuing,
then
such
matter
shall
be
resolved
in
accordance
with
this
Section
13.4.
(a)
If
YALE
believes
such
a
TERMINATION
EVENT
shall
have
occurred
and
be
continuing
and
wishes
to
obtain
additional
informationfrom
LICENSEE
to
assess
whether
such
a
TERMINATION
EVENT
shall
have
occurred
and
be
continuing,
then
YALE
may
so
notify
LICENSEE
and
requestsuch
information
as
YALE
may
specify
in
such
notice
to
assist
YALE
in
determining
whether
such
a
TERMINATION
EVENT
shall
have
occurred
and
becontinuing
(each
a
“TERMINATION
EVENT
INFORMATION
NOTICE”).
LICENSEE
shall
respond
to
such
TERMINATION
EVENT
INFORMATIONNOTICE
within
thirty
(30)
days
and
in
such
response
shall
provide
such
information
as
YALE
shall
have
requested
and
which
LICENSEE
has
in
its
possession
ormay
obtain
without
unreasonable
effort
or
expense.
(b)
If
either
(1)
notwithstanding
LICENSEE
having
provided
such
additional
information,
YALE
continues
to
believe
such
aTERMINATION
EVENT
shall
have
occurred
and
be
continuing
or
(2)
YALE
believes
such
a
TERMINATION
EVENT
shall
have
occurred
and
be
continuing
anddoes
not
wish
to
obtain
additional
information
from
LICENSEE
under
Section
13.4(a),
then
in
either
such
case
in
the
preceding
clause
(1)
or
(2)
YALE
may
givenotice
to
LICENSEE
stating
that
YALE
believes
that
such
a
TERMINATION
EVENT
shall
have
occurred
and
be
continuing
and
setting
forth
in
reasonable
detailthe
basis
for
YALE’s
belief
that
such
a
TERMINATION
EVENT
shall
have
occurred
and
be
continuing
(each
a
“TERMINATION
EVENT
NOTICE”).
Withinthirty
(30)
days
after
LICENSEE
receives
a
TERMINATION
EVENT
NOTICE,
LICENSEE
shall
provide
YALE
such
information
as
LICENSEE
believesestablishes
the
absence
of
such
a
TERMINATION
EVENT
having
occurred
and
be
continuing.
(c)
YALE
shall
give
a
TERMINATION
EVENT
INFORMATION
NOTICE
(or
if
YALE
determines
not
to
give
a
TERMINATIONEVENT
INFORMATION
NOTICE,
then
a
TERMINATION
EVENT
NOTICE)
within
ninety
(90)
days
after
(1)
the
cure
period,
in
the
31
case
of
such
a
notice
relating
to
Section
2.58(b),
(2)
YALE
first
learns
of
the
event,
in
the
case
of
such
a
notice
relating
to
Section
2.58(c)
or
2.58(e),(3)
LICENSEE’s
notice
to
YALE,
in
the
case
of
such
a
notice
relating
to
Section
2.58(d),
or
(4)
it
receives
LICENSEE’s
annual
progress
report,
in
the
case
of
sucha
notice
relating
to
Section
7.2
or
7.5,
or
the
due
date
for
LICENSEE’s
annual
progress
report,
in
case
LICENSEE
fails
to
provide
any
such
report
when
due.
IfYALE
gives
a
TERMINATION
EVENT
INFORMATION
NOTICE,
then
it
shall
give
any
TERMINATION
EVENT
NOTICE
relating
thereto
within
60
days
aftergiving
such
TERMINATION
EVENT
INFORMATION
NOTICE.
(d)
Within
sixty
(60)
days
after
LICENSEE
receives
a
TERMINATION
EVENT
NOTICE,
YALE
and
LICENSEE
shall
meet
at
YALE’scampus
in
New
Haven,
Connecticut
to
discuss
and
seek
to
resolve
the
matter.
If,
after
such
meeting
the
parties
are
unable
to
resolve
such
matter,
then
theManaging
Director
of
YALE’s
Office
of
Cooperative
Research,
or
the
Managing
Director’s
designee,
and
the
Chairman
of
the
Board,
the
Chief
Executive
Officeror
the
President
or
another
designee
of
LICENSEE
shall
meet
at
YALE’s
campus
in
New
Haven,
Connecticut
and
seek
to
resolve
such
matter.
(e)
If,
after
following
the
procedures
specified
in
this
Section
13.4
with
respect
to
an
alleged
TERMINATION
EVENT
of
the
type
coveredby
this
Section
13.4,
the
parties
are
unable
to
resolve
the
matter
and
YALE
continues
to
believe
that
such
a
TERMINATION
EVENT
has
occurred
and
iscontinuing,
then
YALE
shall
so
notify
LICENSEE
within
thirty
(30)
days
after
conclusion
of
the
meetings
provided
for
in
Section
13.4(d).
Such
notice
shallspecify
in
reasonable
detail
the
TERMINATION
EVENT(S)
alleged
to
have
occurred
and
be
continuing.
After
YALE
gives
such
notice,
the
parties
shall
submitthe
dispute
to
JAMS
or
another
such
mutually
agreed
upon
alternative
dispute
resolution
provider
experienced
in
business
dispute
mediation
(an
“ADR”)
for
non-binding
mediation.
The
parties
will
cooperate
with
ADR
and
with
one
another
in
selecting
a
mediator
from
ADR’s
panel
of
neutrals,
and
in
promptly
schedulingthe
mediation
proceedings.
The
parties
covenant
that
they
will
participate
in
the
mediation
in
good
faith,
and
that
they
will
share
ADR
costs
equally.
All
offers,promises,
conduct
and
statements,
whether
oral
or
written,
made
in
the
course
of
the
mediation
by
any
of
the
parties,
their
agents,
employees,
experts
and
attorneys,and
by
the
mediator
or
any
ADR
employees,
are
confidential,
privileged
and
inadmissible
for
any
purpose,
including
impeachment,
in
any
arbitration
or
otherproceeding
involving
the
parties,
provided
that
evidence
that
is
otherwise
admissible
or
discoverable
shall
not
be
rendered
inadmissible
or
non-discoverable
as
aresult
of
its
use
in
the
mediation.
If
the
dispute
is
not
resolved
within
ninety
(90)
days
from
the
date
of
the
submission
of
the
dispute
to
mediation
(or
such
later
dateas
the
parties
may
mutually
agree
in
writing),
then
if
such
TERMINATION
EVENT
shall
be
continuing
YALE
shall
have
the
right
to
terminate
the
LICENSE
bygiving
fifteen
(15)
days
notice
to
LICENSEE,
which
notice
shall
specify
in
reasonable
detail
the
particular
TERMINATION
EVENT(S)
(the
“TERMINATIONNOTICE”).
The
mediation
may
continue,
if
the
parties
so
agree,
after
YALE
gives
the
TERMINATION
NOTICE.
The
pendency
of
a
mediation
shall
not
precludea
party
from
seeking
provisional
remedies
in
connection
with
this
AGREEMENT
or
such
dispute
from
a
court
of
competent
jurisdiction,
and
the
parties
agree
notto
defend
against
any
application
for
provisional
relief
on
the
ground
that
a
mediation
is
pending.
(f)
Either
party
shall
have
the
right
to
seek
declaratory
relief
relating
to
this
AGREEMENT
in
a
court
of
competent
jurisdiction.
32
13.5.
Upon
termination
of
the
LICENSE,
for
any
reason,
all
rights
and
licenses
granted
to
LICENSEE
under
the
terms
of
this
AGREEMENT
shallterminate.
In
case
of
any
termination
of
the
LICENSE,
each
sublicense
that
LICENSEE
shall
have
entered
into
in
compliance
with
this
AGREEMENT
shallbecome
a
direct
license
by
YALE
to
the
applicable
SUBLICENSEE,
so
long
as
at
the
time
of
such
termination
of
the
LICENSE
such
SUBLICENSEE
shall
be
incompliance
in
all
material
respects
with
the
terms
of
its
sublicense;
provided,
however
that
(1)
YALE
shall
not
be
liable
for
any
breach
or
default
under
suchsublicense
by
LICENSEE
and
(2)
in
no
event
shall
YALE
have
any
obligation
or
liability
under
such
sublicense
that
it
did
not
have
to
LICENSEE
under
thisAGREEMENT
prior
to
termination
of
the
LICENSE.
Upon
such
termination,
LICENSEE
shall
cease
to
manufacture
or
sell
PRODUCTS
IN
CLASS
and
cease
topractice
LICENSED
METHODS,
except
that
(1)
LICENSEE
may
complete
the
manufacture
of
quantities
of
PRODUCTS
IN
CLASS
which
were
work-in-processon
the
date
of
such
termination
and
(2)
LICENSEE
may,
for
up
to
one
hundred
eighty
(180)
days
after
the
date
of
such
termination,
sell
any
inventory
ofPRODUCTS
IN
CLASS
that
existed
on
the
date
of
such
termination
or
which
were
completed
as
permitted
by
the
immediately
preceding
clause
(1).
Within
sixty(60)
days
of
the
effective
date
of
termination
LICENSEE
shall:
(a)
Return
to
YALE
all
materials
relating
to
or
containing
the
LICENSED
PATENTS,
LICENSED
METHODS
or
CONFIDENTIALINFORMATION
disclosed
by
YALE;
provided,
however,
that
LICENSEE
may
retain
a
single
file
copy
thereof
in
its
records;
(b)
Provide
to
YALE
the
last
report
required
under
Section
9.1;
and
(c)
Make
all
payments
arising
under
this
AGREEMENT
up
to
the
effective
date
of
termination.
13.6.
Termination
of
the
LICENSE
shall
not
affect
any
rights
or
obligations
accrued
prior
to
the
effective
date
of
such
termination
and
specificallyLICENSEE’s
obligation
to
pay
all
royalties
and
other
payments
specified
by
Article
5
and
6
for
NET
SALES
to
the
date
of
termination.
The
parties
agree
thatclaims
giving
rise
to
indemnification
may
arise
after
the
TERM
or
termination
of
the
LICENSE
granted
herein.
13.7.
The
rights
provided
in
this
Article
13
shall
be
in
addition
and
without
prejudice
to
any
other
rights
which
the
parties
may
have
with
respect
toany
default
or
breach
of
the
provisions
of
this
AGREEMENT.
13.8.
Waiver
by
either
party
of
one
or
more
defaults
or
breaches
shall
not
deprive
such
party
of
the
right
to
terminate
because
of
any
subsequentdefault
or
breach.
13.9.
Upon
termination
of
the
LICENSE
for
any
reason
other
than
breach
by
YALE,
the
TECHNOLOGY
that
may
no
longer
be
practiced
upontermination
of
the
LICENSE
or
termination
of
the
LICENSE
with
respect
to
a
particular
PRODUCT
IN
CLASS
or
LICENSED
METHOD
that
LICENSEE
haschosen
to
abandon,
as
the
case
may
be,
shall
be
a
“RETURNED
TECHNOLOGY”.
LICENSEE
shall
permit
YALE
and
its
future
licensees
of
the
RETURNEDTECHNOLOGY
to
utilize,
reference
and
otherwise
have
the
benefit
of
all
regulatory
approvals
of,
or
clinical
trials
or
other
studies
conducted
by
or
on
behalf
ofLICENSEE
on,
and
all
filings
made
by
or
on
behalf
of
LICENSEE
with
regulatory
agencies
with
respect
to,
RETURNED
33
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
TECHNOLOGY.
In
addition,
at
YALE’s
request
and
subject
to
Section
13.5,
LICENSEE
shall,
at
YALE’s
sole
cost
and
expense,
deliver
to
YALE
copies
ofrecords
held
by
or
on
behalf
of
LICENSEE
that
are
required
by
regulatory
authorities
to
be
maintained
with
respect
to
the
sale,
storage,
handling,
shipping
and
useof
the
RETURNED
TECHNOLOGY,
copies
of
all
reimbursement
approval
files
held
by
LICENSEE,
and
copies
of
all
documents,
data
and
information
held
by
oron
behalf
of
LICENSEE
that
are
related
to
clinical
trials
and
other
studies
by
or
on
behalf
of
LICENSEE
of
RETURNED
TECHNOLOGIES,
all
of
which
arecollectively
the
“RETURNED
MATERIALS”.
YALE
agrees
that,
subject
to
the
provisions
of
Article
8,
LICENSEE
may
retain
one
copy
thereof
to
the
extentLICENSEE
is
required
by
law
to
maintain
such
copy.
If
LICENSEE
so
returns
the
RETURNED
TECHNOLOGY
and
the
RETURNED
MATERIALS
within
six(6)
months
after
YALE’s
request,
then
in
total
consideration
for
the
provision
of
the
RETURNED
TECHNOLOGY
and
the
RETURNED
MATERIALS,
YALEshall
from
time
to
time
pay
to
LICENSEE
[**]
percent
([**]%)
of
all
revenue
or
other
financial
consideration
YALE
receives
from
any
new
license
of
theRETURNED
TECHNOLOGY
and
the
RETURNED
MATERIALS,
other
than
revenue
or
other
consideration
that
is
research
support.
YALE
shall
pay
suchamounts
to
LICENSEE
within
ninety
(90)
days
after
YALE
receives
such
revenue.
13.10.
Upon
expiration
of
the
TERM
or
upon
termination
of
the
LICENSE,
LICENSEE
shall
have
a
non-exclusive,
fully
paid-up,
perpetual
license
toLICENSED
KNOW-HOW
to
make,
have
made,
use,
sell,
have
sold,
import
or
export
any
PRODUCT,
method,
procedure,
service
or
process
in
the
LICENSEDTERRITORY.
ARTICLE
14
INDEMNIFICATION;
INSURANCE;
NO
WARRANTIES
14.1.
LICENSEE
shall
defend,
indemnify
and
hold
harmless
YALE,
its
trustees,
directors,
officers,
employees,
and
agents
and
their
respectivesuccessors,
heirs
and
permitted
assigns
(the
“INDEMNIFIED
PERSONS”)
against
any
and
all
liabilities,
claims,
demands,
damages,
judgments,
losses
andexpenses
of
any
nature,
including,
without
limitation,
reasonable
legal
expenses
and
attorneys’
fees
(collectively
“CLAIMS”),
(1)
arising
out
of
any
theory
ofliability
(including,
without
limitation,
tort,
warranty,
or
strict
liability)
or
the
death,
personal
injury,
or
illness
of
any
person
or
out
of
damage
to
any
propertyrelated
in
any
way
to
the
rights
granted
under
this
AGREEMENT;
or
(2)
resulting
from
the
production,
manufacture,
sale,
use,
lease,
or
other
disposition
orconsumption
or
advertisement
of
the
PRODUCTS
IN
CLASS
or
LICENSED
METHODS
by
LICENSEE,
its
AFFILIATES,
SUBLICENSEES
or
any
othertransferees;
or
(3)
in
connection
with
any
statement,
representation
or
warranty
of
LICENSEE,
its
AFFILIATES,
SUBLICENSEES
or
any
other
transferees
withrespect
to
the
LICENSED
PRODUCTS
or
LICENSED
METHODS.
Each
INDEMNIFIED
PERSON
shall
notify
LICENSEE
promptly
after
such
INDEMNIFIEDPERSON
learns
of
a
CLAIM
or
threatened
CLAIM
for
which
indemnity
may
be
sought
under
this
Section
14.1.
The
LICENSEE
shall
have
the
right
to
assume
thedefense
of
any
legal
action
for
which
indemnity
may
be
sought
under
this
Section
14.1.
LICENSEE
shall
not
be
responsible
for
indemnity
with
regard
to
anyCLAIM
that
is
settled
without
LICENSEE’s
prior
written
consent.
Notwithstanding
any
provision
of
this
AGREEMENT
to
the
contrary,
no
INDEMNIFIEDPERSON
shall
be
entitled
to
indemnity
hereunder
for
any
CLAIM
arising
out
of
or
relating
to
such
INDEMNIFIED
PERSON’s
participation
in
any
clinical
trialinvolving
any
PRODUCT
IN
CLASS
or
such
INDEMNIFIED
PERSON’s
use
of
a
PRODUCT
IN
CLASS
as
a
patient.
34
14.2.
LICENSEE
shall
purchase
and
maintain
in
effect
and
shall
require
its
SUBLICENSEES
to
purchase
and
maintain
in
effect
a
policy
ofcommercial,
general
liability
insurance
to
protect
YALE
with
respect
to
events
described
in
Section
14.1.
Such
insurance
shall:
(a)
list
“YALE,
its
trustees,
directors,
officers,
employees
and
agents”
as
additional
insureds
under
the
policy;
(b)
provide
that
such
policy
is
primary
and
not
excess
or
contributory
with
regard
to
other
insurance
YALE
may
have;
(c)
be
endorsed
to
include
product
liability
coverage
in
amounts
no
less
than
Five
Million
Dollars
($5,000,000.00)
per
incident
and
FiveMillion
Dollars
($5,000,000.00)
annual
aggregate;
and
(d)
be
endorsed
to
include
contractual
liability
coverage
for
LICENSEE’s
indemnification
under
Section
14.1;
and
(e)
by
virtue
of
the
minimum
amount
of
insurance
coverage
required
under
Section
14.2(c),
not
be
construed
to
create
a
limit
ofLICENSEE’s
liability
with
respect
to
its
indemnification
under
Section
14.1.
14.3.
By
signing
this
AGREEMENT,
LICENSEE
certifies
that
the
requirements
of
Section
14.2
will
be
met
on
or
before
the
earlier
of
(a)
the
date
ofFIRST
SALE
of
any
PRODUCT
IN
CLASS
or
LICENSED
METHOD
or
(b)
the
date
any
PRODUCT
IN
CLASS,
or
LICENSED
METHOD
is
tested
or
used
onhumans,
and
will
continue
to
be
met
thereafter.
Upon
YALE’s
request,
LICENSEE
shall
furnish
a
Certificate
of
Insurance
and
a
copy
of
the
current
InsurancePolicy
to
YALE.
LICENSEE
shall
give
thirty
(30)
days’
written
notice
to
YALE
prior
to
any
cancellation
of
or
material
change
to
the
policy.
14.4.
(a)
YALE
MAKES
NO,
AND
EXPRESSLY
DISCLAIMS
ALL,
REPRESENTATIONS
OR
WARRANTIES
THAT
ANY
CLAIMS
OFTHE
LICENSED
PATENTS,
ISSUED
OR
PENDING,
ARE
VALID,
OR
THAT
THE
MANUFACTURE,
USE,
SALE
OR
OTHER
DISPOSAL
OF
THEPRODUCTS
IN
CLASS,
OR
PRACTICE
OF
THE
LICENSED
METHODS,
DOES
NOT
OR
WILL
NOT
INFRINGE
UPON
ANY
PATENT
OR
OTHERRIGHTS
NOT
VESTED
IN
YALE.
(b)
EXCEPT
AS
OTHERWISE
SPECIFICALLY
PROVIDED
IN
THIS
AGREEMENT,
YALE
MAKES
NO,
AND
EXPRESSLYDISCLAIMS
ALL,
REPRESENTATIONS
AND
WARRANTIES
WHATSOEVER
WITH
RESPECT
TO
THE
LICENSED
PATENTS,
PRODUCTS
INCLASS
AND
LICENSED
METHODS,
EITHER
EXPRESS
OR
IMPLIED,
INCLUDING,
BUT
NOT
LIMITED
TO,
WARRANTIES
OF
MERCHANTABILITYOR
FITNESS
FOR
A
PARTICULAR
PURPOSE.
LICENSEE
SHALL
MAKE
NO
STATEMENTS,
REPRESENTATION
OR
WARRANTIES
WHATSOEVERTO
ANY
THIRD
PARTIES
WHICH
ARE
INCONSISTENT
WITH
SUCH
DISCLAIMER
BY
YALE.
IN
NO
EVENT
SHALL
YALE,
OR
ITS
TRUSTEES,DIRECTORS,
OFFICERS,
EMPLOYEES
AND
AFFILIATES,
BE
LIABLE
FOR
SPECIAL,
INCIDENTAL,
CONSEQUENTIAL
OR
INDIRECT
DAMAGESOF
ANY
KIND,
INCLUDING
ECONOMIC
35
DAMAGE
OR
INJURY
TO
PROPERTY
AND
LOST
PROFITS,
REGARDLESS
OF
WHETHER
YALE
SHALL
BE
ADVISED,
SHALL
HAVE
OTHERREASON
TO
KNOW,
OR
IN
FACT
SHALL
KNOW
OF
THE
POSSIBILITY
OF
THE
FOREGOING.
IN
NO
EVENT
SHALL
YALE,
OR
ITS
TRUSTEES,DIRECTORS,
OFFICERS,
EMPLOYEES
AND
AFFILIATES,
BE
LIABLE
FOR
DAMAGES
IN
EXCESS
OF
AMOUNTS
YALE
HAS
RECEIVED
FROMLICENSEE
UNDER
THIS
LICENSE.
ARTICLE
15
NOTICES,
PAYMENTS
15.1.
Any
payment,
notice
or
other
communication
required
by
this
AGREEMENT
(a)
shall
be
in
writing,
(b)
may
be
delivered
personally
or
sent
byreputable
overnight
courier
with
written
verification
of
receipt
or
by
registered
or
certified
first
class
United
States
Mail,
postage
prepaid,
return
receipt
requested,(c)
shall
be
sent
to
the
following
addresses
or
to
such
other
address
as
such
party
shall
designate
by
written
notice
to
the
other
party,
and
(d)
shall
be
effective
uponreceipt:
FOR
YALE:
FOR
LICENSEE:
Managing
Director
Chief
Executive
Officer
YALE
UNIVERSITY
Kolltan
Pharmaceuticals,
Inc.
Office
of
Cooperative
Research
300
George
Street
433
Temple
Street
New
Haven,
Connecticut,
06511
New
Haven,
Connecticut
06511
With
a
copy
to:
General
Counsel
Kolltan
Pharmaceuticals,
Inc.
300
George
Street
New
Haven,
Connecticut,
06511
ARTICLE
16
LAWS,
FORUM
AND
REGULATIONS
16.1.
Any
matter
arising
out
of
or
related
to
this
AGREEMENT
shall
be
governed
by
and
in
accordance
with
the
substantive
laws
of
the
State
ofConnecticut,
without
regard
to
its
conflicts
of
law
principles,
except
where
the
federal
laws
of
the
United
States
are
applicable
and
have
precedence.
Any
disputearising
out
of
or
related
to
this
AGREEMENT
shall
be
brought
in
a
court
of
competent
jurisdiction
in
the
State
of
Connecticut.
16.2.
LICENSEE
shall
comply,
and
shall
cause
its
AFFILIATES
to
comply
and
require
its
SUBLICENSEES
to
comply,
with
all
foreign
and
UnitedStates
federal,
state,
and
local
laws,
regulations,
rules
and
orders
applicable
to
the
testing,
production,
transportation,
packaging,
labeling,
export,
sale
and
use
ofthe
PRODUCTS
IN
CLASS
and
practice
of
the
LICENSED
METHODS.
In
particular,
LICENSEE
shall
be
responsible
for
assuring
compliance
with
all
UnitedStates
export
laws
and
regulations
applicable
to
this
LICENSE
and
LICENSEE’s
activities
under
this
AGREEMENT.
36
ARTICLE
17
MISCELLANEOUS
17.1.
This
AGREEMENT
shall
be
binding
upon
and
inure
to
the
benefit
of
the
parties
and
their
respective
legal
representatives,
successors
andpermitted
assigns.
17.2.
This
AGREEMENT
constitutes
the
entire
agreement
of
the
parties
relating
to
the
LICENSED
PATENTS,
PRODUCTS
IN
CLASS
andLICENSED
METHODS,
and
all
prior
representations,
agreements
and
understandings,
written
or
oral,
are
merged
into
it
and
are
superseded
by
thisAGREEMENT.
This
AGREEMENT
supersedes
the
SECOND
AMENDED
AND
RESTATED
LICENSE
AGREEMENT
in
its
entirety
and,
as
of
the
THIRDAMENDMENT
EFFECTIVE
DATE,
the
SECOND
AMENDED
AND
RESTATED
LICENSE
AGREEMENT
shall
be
of
no
further
force
and
effect;
provided,however,
that
any
obligations
to
either
party
accrued
by
the
other
party
prior
to
the
THIRD
AMENDMENT
EFFECTIVE
DATE
under
the
SECOND
AMENDEDAND
RESTATED
LICENSE
AGREEMENT
shall
remain
as
such.
17.3.
The
provisions
of
this
AGREEMENT
shall
be
deemed
separable.
If
any
part
of
this
AGREEMENT
is
rendered
void,
invalid,
or
unenforceable,such
determination
shall
not
affect
the
validity
or
enforceability
of
the
remainder
of
this
AGREEMENT
unless
the
part
or
parts
which
are
void,
invalid
orunenforceable
shall
substantially
impair
the
value
of
the
entire
AGREEMENT
as
to
either
party.
17.4.
Articles,
paragraph
and
section
headings
are
inserted
for
convenience
of
reference
only
and
do
not
form
a
part
of
this
AGREEMENT.
17.5.
No
person
not
a
party
to
this
AGREEMENT,
including
any
employee
of
any
party
to
this
AGREEMENT,
shall
have
or
acquire
any
rights
byreason
of
this
AGREEMENT.
Nothing
contained
in
this
AGREEMENT
shall
be
deemed
to
constitute
the
parties
partners
with
each
other
or
any
third
party.
17.6.
This
AGREEMENT
may
not
be
amended
or
modified
except
by
written
agreement
executed
by
each
of
the
parties.
This
AGREEMENT
ispersonal
to
LICENSEE
and
shall
not
be
assigned
by
LICENSEE
without
the
prior
written
consent
of
YALE;
provided,
however,
that
no
such
consent
of
YALEshall
be
required
in
case
of
any
assignment
of
this
AGREEMENT
by
LICENSEE
in
connection
with
a
merger,
consolidation,
sale
or
other
transfer
of
all
orsubstantially
all
of
LICENSEE’s
assets
or
any
similar
business
combination
or
reorganization
so
long
as
the
assignee
shall
expressly
assume
in
writingLICENSEE’s
obligations
under
this
AGREEMENT;
provided
further,
however,
that
in
case
of
any
such
action
or
transaction
described
in
the
immediatelypreceding
proviso,
if
the
same
constitutes
a
CHANGE
OF
CONTROL
nothing
in
this
Section
17.6
shall
remove
such
transaction
from
Section
5.4
or
5.7.
Sublicenses
shall
not
be
deemed
a
sale
or
other
transfer
of
assets
by
LICENSEE
governed
by
this
Section
17.6,
but
instead
shall
be
governed
by
Article
4
and,
inrespect
of
milestone
royalties
by
Sections
5.5
and
5.8.
Any
attempted
assignment
in
contravention
of
this
Section
17.6
shall
be
null
and
void
and
shall
constitute
amaterial
breach
of
this
AGREEMENT.
37
17.7.
LICENSEE,
or
any
SUBLICENSEE
or
assignee,
will
not
create,
assume
or
permit
to
exist
any
lien,
pledge,
security
interest
or
otherencumbrance
on
this
AGREEMENT
or
any
sublicense.
17.8.
The
failure
of
any
party
hereto
to
enforce
at
any
time,
or
for
any
period
of
time,
any
provision
of
this
AGREEMENT
shall
not
be
construed
as
awaiver
of
either
such
provision
or
of
the
right
of
such
party
thereafter
to
enforce
each
and
every
provision
of
this
AGREEMENT.
17.9.
This
AGREEMENT
may
be
executed
in
any
number
of
counterparts
and
any
party
may
execute
any
such
counterpart,
each
of
which
whenexecuted
and
delivered
shall
be
deemed
to
be
an
original
and
all
of
which
counterparts
taken
together
shall
constitute
but
one
and
the
same
instrument.
17.10.
Neither
YALE
nor
LICENSEE
shall
be
liable
to
perform
its
obligations
as
required
by
this
AGREEMENT,
or
shall
be
in
default
of
itsobligations
under
this
AGREEMENT,
to
the
extent
such
failure
to
perform
or
default
is
caused
by
any
reason
beyond
such
party’s
control,
including,
withoutlimitation,
any
of
the
following:
labor
disturbances
or
disputes
of
any
kind,
accidents,
failure
of
any
required
governmental
approval,
civil
disorders,
acts
ofaggression,
acts
of
God,
energy
or
other
conservation
measures,
failure
of
utilities,
delays
or
defaults
by
common
carrier,
mechanical
breakdowns,
materialshortages,
disease,
or
similar
occurrences.
In
case
of
any
such
reason
beyond
a
party’s
control,
the
time
for
performance
of
such
party’s
obligations
affectedthereby
shall
be
extended
by
the
period
of
the
event
or
circumstance
constituting
such
reason
and
for
a
reasonable
period
of
time
thereafter.
17.11.
YALE
has
provided
LICENSEE
with
the
Yale
University
Patent
Policy
in
effect
as
of
the
EFFECTIVE
DATE,
a
copy
of
which
is
attachedhereto
as
Appendix
E.
As
described
in
the
recitals
to
this
AGREEMENT,
as
of
the
EFFECTIVE
DATE,
SCHLESSINGER
serves
on
the
LICENSEE
Board
ofDirectors
and
the
LICENSEE
Scientific
Advisory
Board,
and
as
a
paid
consultant
to
LICENSEE.
LICENSEE
agrees
that,
for
so
long
as
SCHLESSINGER
is
anemployee
of
YALE,
LICENSEE’s
rights
to
any
INVENTIONS
of
SCHLESSINGER
created
other
than
in
his
capacity
as
a
YALE
employee
shall
be
subject
to
theattached
Yale
University
Patent
Policy,
and
that
any
agreement,
past
or
future,
between
SCHLESSINGER
and
LICENSEE
regarding
INVENTIONS
ofSCHLESSINGER
shall
be
construed
in
accordance
therewith.
[signature
page
follows]
This
Space
Intentionally
Left
Blank
38
IN
WITNESS
to
their
agreement,
the
parties
have
caused
this
AGREEMENT
to
be
executed
in
duplicate
originals
by
their
duly
authorized
representatives.
YALE UNIVERSITY
KOLLTAN PHARMACEUTICALS, INC.
By:/s/
E.
Jonathan
Soderstrom
By:/s/
Gerald
McMahon
E.
Jonathan
Soderstrom,
Ph.D.
Gerald
McMahonManaging
Director
President
and
Chief
Executive
OfficerOffice
of
Cooperative
Research
Date:17
May
2013
Date:3/14/13
39
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Appendix A
LICENSED PATENTS
(Shaded Rows = International (PCT) and Foreign Applications)
M&E Matter No. Yale Reference No. Serial No. Title Filing Date Status[**]
[**]
[**]
[**]
[**]
[**]
Confidential
Materials
omitted
and
filed
separately
with
the
Securities
and
Exchange
Commission.
A
total
of
8
pages
were
omitted.
[**]
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions. Appendix B
THE PLAN
[**]
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Appendix C
UNPATENTED VISITING SCIENTIST IP
[**]
Appendix D
THIRD PARTY RIGHTS
NONE
Appendix E
YALE UNIVERSITY PATENT POLICY
Yale
University
Office
of
Cooperative
Research
http://www.yale.edu/ocr/pfg/policies/patents.html
Yale University
Disclose
an
Invention
Licensing
Opportunities
YEI
FAQs
Contact
Us
Yale
University
Patent
Policy
1.
Encouragement
or
Patents.
In
the
course
of
teaching,
research,
and
other
intellectual
and
administrative
activity
by
faculty,
staff
fellows,
students,and
other
individuals
in
the
University
community,
discoveries
or
inventions
both
patentable
and
practical
occur.
Encouragement
of
suchinventions
in
appropriate
ways
is
both
supportive
of
the
public
interest
and
consistent
with
the
advancement
or
knowledge
for
its
own
sake,
theprimary
purpose
of
teaching
and
research
in
a
university.
The
University
Patent
Policy
states
the
procedure
to
be
followed
in
the
administration
ofinventions
which
result
from
teaching,
research,
and
other
intellectual
activity
performed
under
University
auspices
except
as
further
defined
inparagraph
6.
2.
Purpose
of
Patent
Policy.
The
purposes
of
this
University
Patent
Policy
are
(1)
to
help
assure.
In
the
public
interest,
that
the
patentability
(or
othermeans
or
explanation)
and
practicality
of
inventions
will
be
evaluated
by
qualified
persons,
and
that
the
income
from
inventions
will
be
used
tosupport
further
research
or
other
desirable
University
activities;
and
(2)
to
define
remuneration
to
the
inventor
or
inventors
(hereinafter
the“Inventor”)
and
the
University
as
long
as
the
invention
is
productive
of
royalties.
3.
Procedure
as
to
Inventions.
The
University
has
established
a
Committee
on
Cooperative
Research,
Patents,
and
Licensing(../../../provost/html/comm_coopresearch.html)
appointed
from
among
members
of
the
faculty
and
administration.
One
function
of
the
Committeeis
to
advise
the
University
on
matters
of
patents
policy
and
administration.
The
University
has
also
established
an
Office
of
Cooperative
Researchto
facilitate
transfer
of
its
inventions/discoveries
in
the
public
interest.
a.
Patent
Applications.
All
inventions
of
the
kind
referred
to
in
paragraph
1
shall
be
reported
promptly
in
writing
to
the
Provost
through
theDirector
of
the
Office
of
Cooperative
Research.
The
Director,
with
the
advice
of
the
Committee
on
Cooperative
Research,
Patents,
andLicensing,
shall
conduct
an
initial
screening
followed,
when
indicated,
by
a
detailed
evaluation
of
the
invention.
This
may
be
done
throughan
internal
review,
or
by
referral
to
an
external
organization
that
manages
the
evaluation.
After
the
evaluation,
the
University
may,
alone
orwith
the
assistance
of
an
external
organization,
make
application
for
letters
patent.
At
the
request
of
the
office
of
Cooperative
Research,
theInventors
shall
execute
assignments
or
other
documents
assigning
to
the
University
all
their
rights
in
the
invention
and
any
patentapplications
or
resulting
patents
on
the
invention.
Yale
will
retain
title
to
all
such
patent
applications
and
resulting
patents.
If
theUniversity
decides
that
it
does
not
wish,
and
has
no
legal
obligation,
to
participate
in
the
patenting
or
licensing
of
an
invention,
theUniversity
may
release
to
the
Inventor
the
University’s
interest
in
the
invention,
and
the
Inventor
shall
then
be
free
to
dispose
of
theinvention
as
he
or
she
wishes.
b.
License
Agreement.
i.
If
the
University
decides
to
participate
in
the
patenting
or
licensing
or
an
invention,
the
Office
of
Cooperative
Research
will
seekto
enter
into
appropriate
licensing
arrangements
to
commercialize
the
invention.
The
objective
of
the
University
is
to
assure
thedevelopment
of
its
technology
in
furtherance
of
its
own
educational
mission
and
for
the
benefit
of
society
in
general.
Therefore,
asa
general
policy,
the
University
will
set
the
terms
or
its
licenses
so
as
to
further
the
achievement
of
this
objective.
Exclusivelicenses
will
be
granted
if
it
appears
to
the
Office
of
Cooperative
Research
that
this
is
the
most
effective
way
of
ensuringdevelopment
to
the
point
that
the
public
will
benefit.
Any
exclusive
license
agreement
will
be
so
drawn
as
to
protect
against
failureof
the
licensee
to
carry
out
effective
development
and
marketing
within
a
specified
time
period.
ii.
In
research
grants
or
contracts
sponsored
by
industrial
companies
there
will
typically
be
a
section
covering
patents
on
futureinventions,
if
any,
as
in
all
government
grants.
When
deemed
appropriate,
the
sponsor
may
be
granted
a
license
to
any
inventionsdeveloped
during
the
term
of
the
grant
or
contract
in
accordance
with
the
policies
outlined
in
I)
above.
4.
4.
Division
of
Royalties.
a.
Definition.
For
purposes
of
this
policy,
“royalties”
shall
include
running
royalties,
advances
against
running
royalties,
up-front
license
fees,milestone
payments,
shares
of
stock
or
other
securities
issued
by
the
licensee
or
another
corporation
(“equity”),
and
any
other
paymentsreceived
by
the
University
under
a
license
agreement
in
consideration
for
licensing
an
invention,
but
shall
not
include
amounts
received
froma
licensee
or
others
in
sponsorship
of
research
or
under
other
agreements
for
other
goods,
services
or
rights.
b.
Recovery
of
Expenses.
Royalties
shall
be
used
first
to
offset
out-of-pocket
expenses
incurred
by
the
University
in
applying
for,
obtaining,and
defending
a
patent
and
in
developing
and
negotiating
license
agreements
during
the
1
life
of
the
patent.
Expenses
for
this
purpose
will
include
fees
paid
be
outside
legal,
consulting,
and
licensing
organizations
and
any
other
out-of-pocket
costs
incurred
by
the
University.
The
fees
paid
to
the
external
individuals
or
organizations
for
such
services
may
be
of
fixed
dollaramount
or
may
be
in
the
form
of
an
agreed-upon
fraction
or
the
gross
royalty
income,
if
any,
or
in
any
other
form
directly
associated
withcommercialization/licensing
of
the
invention.
In
addition,
10%
or
Royalties,
after
reduction
as
provided
above
for
out-of-pocket
expenses,received
in
any
year
from
an
invention
made
on
or
after
April
11,
1992
shall
be
retained
by
the
University
and
applied
toward
the
generalsupport
of
the
Office
or
Cooperative
Research;
provided,
that
if
the
total
or
such
recoveries
in
any
year
exceeds
the
Office’s
approvedbudget,
the
excess
shall
be
allocated
in
a
pro
rata
basis
among
those
inventions
from
which
it
was
recovered
and
shall
be
distributed
as
partof
Net
Royalties
in
accordance
with
subparagraph
(d).
c.
Net
Royalties.
Alter
recovery
of
expenses
by
the
University
as
provided
in
subparagraph
(b),
the
remaining
royalties
will
be
designated
NetRoyalties.
d.
Distribution
or
Net
Royalties.
The
Net
Royalties
as
defined
above
shall
be
divided
between
the
Inventor(s)
(as
defined
under
the
patent
law)and
the
University
as
follows:
·
The
first
$100,000
of
Net
Royalties
50%
to
the
Inventor(s)
50%
allocated
to
the
general
support
of
University
research,
as
described
in
paragraph
5.
·
Net
Royalties
between
$100,000
and
$200,000
40%
to
the
Inventor(s)
60%
allocated
to
the
general
support
of
University
research,
as
described
in
paragraph
5.
·
Net
Royalties
exceeding
$200,000
30%
to
the
Inventor(s)
70%
allocated
to
the
general
support
of
University
research,
as
described
in
paragraph
5
.
For
purposes
of
applying
the
above
Net
Royalty
distribution
formula
(i.e.,
whether
aggregate
Net
Royalties
are
$100,000
or
less,
between$100,000
and
$200,000,
or
more
than
$200,000),
equity
shall
be
deemed
to
have
the
per-share
value
agreed
upon
in
a
good-faith
negotiationbetween
the
University
and
the
licensee
at
the
time
the
license
agreement
is
executed,
and
the
equity
shall
be
deemed
received
after
all
cashNet
Royalties
received
at
or
before
the
time
the
equity
is
issued.
In
the
absence
of
such
negotiated
value,
the
Inventors
shall
receive
32%
ofthe
equity
Net
Royalties.
In
its
discretion,
the
University
may
either
distribute
equity
to
the
Inventor(s)
when
it
is
received
or
arrange
for
the
licensee
to
issue
theInventor’s
share
of
equity
directly
to
the
Inventor(s).
As
used
in
this
document,
the
term
“Inventor”
may
represent
two
or
more
individuals.
These
individuals
will
be
expected
to
agree
amongthemselves
on
the
fractional
distribution
of
the
“Inventor”
share
of
any
royalties.
A
written
agreement
must
be
signed
by
all
the
individualsinvolved,
and
deposited
for
the
record
in
the
Office
of
Cooperative
Research.
(Appropriate
forms
are
available
from
the
Office
ofCooperative
Research.)
If
no
written
agreement
has
been
deposited
at
the
time
of
a
distribution
of
Net
Royalties,
the
Inventors’
share
of
suchdistribution
shall
be
divided
equally
among
the
Inventors.
e.
Overriding
Agreements
with
Third
Parties.
The
foregoing
provisions
of
this
paragraph
and
the
rest
of
this
University
Patent
Policy
aresubject
to
the
terms
of
applicable
grants
and
contracts
with
third
parties.
See
paragraph
7.
5.
5.
General
Research
Support
from
Net
Royalties.
The
University’s
share
or
Net
Royalties
will
be
used
in
support
of
research,
or
if
not
specificallyprohibited
by
the
funding
agency
contract,
will
accrue
to
the
Science
Development
Fund
or
other
appropriate
research
fund,
and
will
be
allocatedby
the
Provost.
Before
allocating
funds,
the
Provost
shall
consult
with
the
relevant
subdivision
of
the
University
concerning
the
research
to
besupported.
6.
Inventions
Not
under
University
Auspices.
Inventions
by
university
employees
usually
result
from
teaching,
research,
or
other
intellectual
activityinvolving
University
facilities
or
personnel.
Accordingly,
all
inventions
by
University
employees
must
be
reported
to
the
Office
of
CooperativeResearch.
When
the
University
determines
that
an
invention
by
a
University
employee
is
unrelated
to
the
activities
for
which
the
individual
isemployed
and
has
not
involved
the
use
of
University
facilities,
then
the
University
will
make
no
claim
to
such
an
invention.
All
inventions
madeor
conceived
under
circumstances
involving
University
facilities
or
personnel
are
the
property
or
the
University.
An
invention
made
by
a
faculty
member
in
the
course
of
a
paid
consulting
engagement
for
a
company
may
be
assigned
to
the
company
only
if
itis
unrelated
to
the
activities
for
which
the
faculty
member
is
employed
by
Yale
and
it
was
not
made
or
conceived
under
circumstances
involvingUniversity
facilities
or
personnel.
Such
an
invention
will
be
considered
unrelated
to
the
activities
for
which
the
faculty
member
is
employed
byYale
if
the
invention
arises
directly
out
or
consulting
activity
paid
for
by
the
company,
and,
for
example,
it
is
made
in
response
to
a
problemposed
by
the
company
or
is
based
on
nonpublic
information
provided
by
the
company
to
the
faculty
member
for
use
in
the
consulting
2
engagement.
It
will
be
considered
not
to
have
involved
the
use
of
University
facilities
if
no
University
facilities
or
resources
(including
but
notlimited
to
space,
computers,
laboratory
equipment
and
supplies),
no
University-administered
funds,
and
no
University
personnel
other
than
thefaculty
member
himself
or
herself,
are
involved
in
the
conception
or
reduction
to
practice
or
the
invention.
All
inventions
made
by
Yale
facultymembers
in
the
course
of
consulting,
and
any
assignments
of
rights
to
such
inventions,
must
be
reported
promptly
to
the
Office
of
CooperativeResearch.
That
Office
will
agree
to
abide
by
reasonable
confidentiality
restrictions
for
disclosures
of
inventions
and
assignments
made
in
thecourse
of
consulting.
7.
When
Arrangements
with
Outside
Organizations
Override
This
Policy.
Arrangements
with
outside
organizations
that
propose
terms
which
areexceptions
to
this
Policy
must
be
submitted
to
the
President
or
Provost
for
review
by
the
University
with
he
advice
of
the
Committee
onCooperative
Research,
Patents,
and
Licensing,
If
approved
by
the
University
the
terms
shall
be
binding
upon
all
members
or
the
faculty,
staff,
andemployees
of
the
University
conducting
such
research
or
utilizing
such
facilities,
and
will
supersede
the
provisions
of
the
patent
policy
to
theextent
that
the
terms
are
inconsistent
therewith.
a.
Inventions
by
Staff
Resulting
from
Performance
or
the
Responsibilities
of
Their
Employment.
Not
infrequently,
in
the
course
of
carrying
outassigned
responsibilities
of
their
employment,
staff
employees
may
make
commercially
useful
inventions
or
develop
licensable
property,
(i.e.,
theemployee
received
salary
or
wages
for
the
specific
function
of
developing
the
work
which
ultimately
has
commercial
value).
In
such
cases,
thereis
no
presumption
that
the
University
will
share
royalty
(or
other)
revenues
with
the
employee.
Normally,
the
University
does
not
share
revenueswith
staff
except
in
cases
where
it
appears
that
the
invention
or
commercially
valuable
property
has
not
resulted
from
the
performance
of
assignedduties.
In
these
Instances,
the
invention
(or
other
commercially
valuable
work)
will
be
reviewed
by
the
Committee
on
Cooperative
Research,Patents,
and
Licensing
and
a
recommendation
will
be
made
to
the
Provost.
In
these
cases,
the
division
of
royalties
as
specified
in
paragraph4(d)
of
this
policy
may
not
apply
and
the
Provost
may
substitute
different
provisions
after
review
of
the
recommendations
of
the
Committee
onCooperative
Research,
Patents,
and
Licensing.
9.
Governmental
Rights
in
Certain
Inventions.
Current
governmental
regulations
permit
educational
institutions
to
retain
rights
and
title
topatentable
inventions
which
results
from
federally
funded
experimental,
developmental
and
research
work.
Retention
of
rights
by
University
iscontingent
upon
the
fulfilling
of
a
number
of
obligations
on
the
part
of
the
University
and
of
the
Inventor(s)
and
these
obligations
must
bedischarged
in
order
to
protect
the
Interests
of
all
parties.
Though
the
University
may
retain
rights
and
title
to
such
patentable
inventions,
thefederal
government
retains
a
royalty
free
license
and
places
certain
other
restrictions
upon
the
ultimate
disposition
or
the
patents(s).
Details
of
theimplementing
regulations
may
be
obtained
from
the
Office
or
Cooperative
Research.
Incumbent
upon
members
of
the
University
community
whoapply
for
and
receive
federal
finding
to
support
research
or
who
use
federal
monies
in
the
conduct
of
their
research
is
the
requirement
for
writtenagreement
that
they
will
promptly
disclose
patentable
inventions
to
the
University
and
will
execute
all
instruments
necessary
to
protect
the
rightsof
the
government
and/or
the
University.
Forms
for
this
agreement
will
be
provided
to
all
faculty
and
will
be
available
for
other
participants
(i.e.collaborators,
post-doctoral
students,
graduate
students)
from
the
appropriate
departmental
chairman
or,
at
the
Chairman’s
option,
from
theDepartmental
Business
Office.
10.
Revocation
or
Amendment.
This
patent
policy
is
subject
to
revocation
or
amendment
by
the
Corporation.
In
case
of
doubt
as
to
the
interpretationof
this
patent
policy,
a
definitive
interpretation
will
be
provided
by
the
President
or
Provost
after
receiving
the
advice
of
the
Committee
onCooperative
Research,
Patents,
and
Licensing.
This
patent
policy
is
effective
as
to
all
inventions/discoveries
made
on
or
after
February
23,
1998.
Revised
February,
1998
Copyright
@
2011,
Yale
University
Office
of
Cooperative
Research,
New
Haven,
Connective,
USA.Email:
OCR@yale.edu
|
Telephone:
(203)
436-8096
|
Fax:
(203)
436-8086
3
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
Appendix F
KOLLTAN PATENTS
(Shaded Rows = International (PCT) and Foreign Applications)
Jones Day Matter No. Kolltan Reference No. Serial No. Title Filing Date Status[**]
[**]
[**]
[**]
[**]
Confidential
Materials
omitted
and
filed
separately
with
the
Securities
and
Exchange
Commission.
A
total
of
2
pages
were
omitted.
[**]
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
AMENDMENT NUMBER ONE TO THIRD AMENDED AND RESTATED LICENSE AGREEMENT
YALE
UNIVERSITY,
a
corporation
organized
and
existing
under
and
by
virtue
of
a
charter
granted
by
the
general
assembly
of
the
Colony
and
State
ofConnecticut
and
located
in
New
Haven,
Connecticut
(“YALE”),
and
KOLLTAN
PHARMACEUTICALS,
INC.,
a
corporation
organized
and
existing
under
thelaws
of
the
State
of
Delaware,
and
with
principal
offices
located
at
300
George
Street,
New
Haven,
CT
06511
(“LICENSEE”),
have
entered
into
that
certain
ThirdAmended
and
Restated
License
Agreement,
dated
March
14,
2013,
as
amended
and/or
restated
from
time
to
time
(the
“Agreement”),
an
exclusive
license
toYALE’s
receptor
tyrosine
kinases
(RTKs)
intellectual
property,
which
agreement
YALE
internally
designates
as
contract
number
[**].
As
set
forth
herein,
theparties
now
wish
to
amend
the
Agreement.
This
Amendment
Number
One
to
Third
Amended
and
Restated
License
Agreement
(“Amendment
No.
1”),
whichYALE
will
internally
designate
as
[**],
shall
be
effective
as
of
March
21,
2014
(“Effective
Date”).
WHEREAS,
an
invention
[**]
was
originally
jointly
owned
by
YALE
and
The
Governing
Council
of
the
University
of
Toronto,
an
institution
of
higher
educationhaving
offices
located
at
the
Innovations
&
Partnerships
Office,
100
College
Street,
Toronto,
ON,
Canada
M5G
1L5
(“TORONTO”);
WHEREAS,
YALE
has
prepared
a
provisional
patent
application
[**]
from
the
invention
disclosed
as
[**]
naming
inventors
from
YALE
and
from
TORONTO(the
“PATENT
APPLICATION”),
a
copy
of
which
has
been
provided
by
YALE
to
LICENSEE
and
which
as
of
the
EFFECTIVE
DATE
has
been
filed
with
theUnited
States
Patent
and
Trademark
Office;
WHEREAS,
LICENSEE
and
TORONTO
have
entered
into
an
agreement,
effective
as
of
December
5,
2013,
pursuant
to
which
TORONTO
has
assigned
toLICENSEE
all
of
TORONTO’s
interests
in
[**]
and
the
[**]
PATENTS
(defined
below)
(the
“ASSIGNMENT”);
and
WHEREAS,
[**]
is,
as
of
the
effective
date
of
the
ASSIGNMENT,
jointly
owned
by
YALE
and
LICENSEE;
NOW,
THEREFORE,
in
consideration
of
the
premises
and
of
the
mutual
covenants
set
forth
herein,
the
parties
agree
as
follows:
I.
Memorandum
of
Understanding
1.
Filing
.
LICENSEE
hereby
agrees
to
pay
the
invoiced
expenses
for
the
[**]
PATENTS
pursuant
to
the
terms
of
the
Agreement
(as
amended
by
AmendmentNo.
1);
provided
that,
upon
assumption
of
prosecution
of
the
[**]
PATENTS
pursuant
to
Section
I.3.
below,
such
section
will
govern
all
expenses
associatedwith
the
[**]
PATENTS
incurred
thereafter.
2.
Schlessinger
Involvement
.
The
parties
acknowledge
that
the
[**]
PATENTS
being
included
as
“LICENSED
PATENTS”
under
the
Agreement
(as
amendedby
Amendment
No.
1)
were
made,
created,
developed,
discovered,
conceived
or
first
reduced
to
practice
while
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
SCHLESSINGER
was
MEANINGFULLY
INVOLVED
AT
KOLLTAN
and
MEANINGFULLY
INVOLVED
AT
YALE
as
defined
in
Section
2.26(b)
underthe
Agreement
(as
amended
by
Amendment
No.
1).
3.
Prosecution
.
Notwithstanding
Article
10
of
the
Agreement
(as
amended
by
Amendment
No.
1),
LICENSEE
shall
be
entitled,
at
its
sole
expense,
to
assumeprosecution
of
the
PATENT
APPLICATION
and
any
other
United
States
or
foreign
patents
or
patent
applications
claiming
[**],
including
any
continuations,divisionals,
and
continuations-in-part,
and
continued
prosecution
application(s),
any
reissues,
re-examinations,
renewals,
or
extensions,
substitutes,
and
therelevant
international
equivalents
(collectively,
the
“[**]
PATENT(S)”).
Any
additional
patent
applications
claiming,
using,
derived
from,
or
arising
from
[**]or
an
[**]
PATENT
shall
be
an
[**]
PATENT.
Upon
request
from
LICENSEE
,
YALE
will
timely
transfer
to
LICENSEE
responsibility
for
prosecution
of
the
[**]
PATENTS.
All
[**]
PATENTS
shall
beprepared,
prosecuted,
filed
and
maintained
by
independent
patent
counsel
chosen
by
LICENSEE
and
reasonably
acceptable
to
YALE.
Said
independent
patentcounsel
shall
be
ultimately
responsible
to
LICENSEE,
but
YALE
shall
also
be
the
client
of
said
patent
counsel.
YALE
shall
have
the
right
to
retain,
at
its
ownexpense,
separate
patent
counsel
to
advise
YALE
regarding
such
patent
matters.
LICENSEE
shall
instruct
patent
counsel
to
keep
LICENSEE,
YALE
andYALE’s
patent
counsel,
if
such
counsel
should
be
engaged
by
YALE,
fully
informed
of
the
progress
of
all
[**]
PATENTS,
and
to
give
both
LICENSEE
andYALE
reasonable
opportunity
to
comment
on
the
type
and
scope
of
useful
claims
and
the
nature
of
supporting
disclosures
and
other
matters
in
the
course
ofpatent
prosecution
and
maintenance.
In
making
its
decisions
regarding
patent
matters
related
to
[**]
PATENTS,
LICENSEE
shall
(a)
give
due
regard
to
the
advice
of
its
patent
counsel,
(b)
instructits
patent
counsel
to
consider
any
advice
offered
by
YALE
and
YALE’s
patent
counsel,
if
such
counsel
should
be
engaged
by
YALE,
and
(c)
conduct
suchpreparation,
prosecution
and
maintenance
of
[**]
PATENTS
in
a
manner
that
is
commercially
reasonable
in
order
to
commercialize
PRODUCTS
INCLASS
and/or
LICENSED
METHODS
for
which
royalties
will
be
payable
by
LICENSEE
to
YALE
pursuant
to
the
Agreement.
In
the
event
of
adisagreement
concerning
the
prosecution
of
the
[**]
PATENTS,
LICENSEE
shall
have
the
right
to
make
the
final
decision
concerning
such
the
prosecution.
LICENSEE
shall
have
no
liability
to
YALE
for
damages,
whether
direct,
indirect
or
incidental,
consequential
or
otherwise,
allegedly
arising
from
its
goodfaith
decisions,
actions
and
omissions
taken
in
compliance
with
the
Agreement
in
connection
with
such
patent
prosecution.
If
LICENSEE
desires
to
abandon
any
[**]
PATENT,
LICENSEE
will
provide
YALE
with
sufficient
prior
written
notice,
and
YALE
may
then
assumeprosecution
of
such
patent;
and,
thereafter,
(i)
if
the
[**]
PATENT
remains
a
“LICENSED
PATENT”
under
the
Agreement,
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
then
the
provisions
in
the
Agreement
governing
prosecution
costs
will
apply;
and
(ii)
if
the
[**]
PATENT
ceases
to
be
a
“LICENSED
PATENT”
under
theAgreement,
YALE’s
prosecution
of
such
patent
will
be
at
YALE’s
expense,
and,
in
the
case
of
this
clause
(ii),
LICENSEE
will
timely
assign
LICENSEE’sjoint
ownership
interests
in
such
[**]
PATENTS
that
are
being
abandoned
by
LICENSEE
to
YALE.
4.
Joint
Ownership
.
YALE
represents
that
it
has
not
entered
into
any
agreement
with
TORONTO
directly
relating
to
[**]
or
the
[**]
PATENTS.
To
the
extentthat
YALE’s
consent,
as
a
joint
owner
of
[**]
or
the
[**]
PATENTS
with
TORONTO,
was
needed
for
TORONTO’s
assignment
of
[**]
or
the
[**]
PATENTSto
LICENSEE,
YALE
hereby
consents
to
TORONTO’s
assignment
of
[**]
and
the
[**]
PATENTS
to
LICENSEE.
As
a
result
of
the
assignment
of
rights
from
TORONTO
to
LICENSEE
making
YALE
and
LICENSEE
joint
owners
of
[**]
and
the
[**]
PATENTS,
YALEand
LICENSEE
agree
that
each
of
LICENSEE
and
YALE
will
have
the
right
to
practice
and
exploit
[**]
and
any
[**]
PATENTS
without
the
duty
ofaccounting
to
the
other
party
or
seeking
consent
(for
licensing,
assigning,
or
otherwise
exploiting
[**]
or
any
[**]
PATENTS)
from
the
other
party
by
reasonof
the
joint
ownership
thereof
but
subject
to
compliance
with
the
terms
and
conditions
of
the
Agreement
(as
amended
by
Amendment
No.
1)
or,
if
theAgreement
has
expired
or
terminated
(entirely
or
with
respect
to
[**]
or
a
particular
[**]
PATENT(S)),
any
surviving
terms
of
the
Agreement
applicable
to[**]
and
such
[**]
PATENTS,
as
applicable;
and
each
party
hereby
waives
any
right
it
may
have
under
the
laws
of
any
jurisdiction
to
require
any
suchapproval
or
accounting,
and,
to
the
extent
there
are
any
applicable
laws
that
prohibit
such
a
waiver,
each
party
will
be
deemed
to
so
consent.
The
parties
acknowledge
that
LICENSEE
has
a
separate
ownership
interest
in
[**]
and
the
[**]
PATENTS
obtained
through
LICENSEE’s
assignment
fromTORONTO,
and
the
inclusion
of
[**]
and
the
[**]
PATENTS
under
the
Agreement
(as
amended
by
Amendment
No.
1)
only
relates
to
YALE’s
interest
inthem;
as
such,
Licensee
will
continue
to
have
the
right
to
practice
and
exploit
[**]
and
[**]
PATENTS
even
if
[**]
and
[**]
PATENTS
cease
to
be“LICENSED
PATENTS”
under
the
Agreement
(as
amended
by
Amendment
No.
1)
or
the
Agreement
(as
amended
by
Amendment
No.
1)
expires
orterminates.
II.
Amendments
1.
Definitions
.
All
capitalized
terms
used
herein
shall
have
the
meaning
given
to
such
terms
in
the
Agreement,
unless
otherwise
specifically
defined
inAmendment
No.
1.
2.
Additional
LICENSED
PATENTS
.
The
parties
agree
that
the
[**]
PATENTS
are
“LICENSED
PATENTS”
under
the
Agreement
(as
amended
by
Amendment
No.
1).
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
3.
Addition
of
the
[**]
PATENTS
to
Appendix
A
LICENSED
PATENTS
.
Appendix
A
of
the
Agreement
is
hereby
amended
to
add
the
PATENTAPPLICATION
as
follows:
M&E Matter No. Yale Reference No. Serial No./ Patent No. Title Filing Date/ Issue Date Status[**]
[**]
[**]
[**]
[**]
[**]
4.
Entire
Agreement
.
Except
as
explicitly
amended
by
Amendment
No.
1,
all
other
terms
and
conditions
of
the
Agreement
shall
remain
in
full
force
and
effectand
apply
fully
to
the
terms
of
Amendment
No.
1
as
if
part
of
the
Agreement.
Signature Page Follows
IN
WITNESS
WHEREOF,
the
parties
hereto
have
caused
their
duly
authorized
representatives
to
execute
this
Amendment
No.
1
(including
the
associatedMemorandum
of
Understanding
herein).
YALE
UNIVERSITYKOLLTAN
PHARMACEUTICALS,
INC.
By:/s/
E.
Jonathan
Soderstrom
By:/s/
Gerald
McMahon
E.
Jonathan
Soderstrom,
Ph.D.
Gerald
McMahonManaging
Director
President
and
Chief
Executive
OfficerOffice
of
Cooperative
Research
Date:10
April
2014
Date:3-24-2014
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
AMENDMENT NUMBER TWO TO THIRD AMENDED AND RESTATED LICENSE AGREEMENT
YALE
UNIVERSITY,
a
corporation
organized
and
existing
under
and
by
virtue
of
a
charter
granted
by
the
general
assembly
of
the
Colony
and
State
ofConnecticut
and
located
in
New
Haven,
Connecticut
(“YALE”),
and
KOLLTAN
PHARMACEUTICALS,INC.,
a
corporation
organized
and
existing
under
thelaws
of
the
State
of
Delaware,
and
with
principal
offices
located
at
300
George
Street,
New
Haven,
CT
06511
(“LICENSEE”),
have
entered
into
that
certain
ThirdAmended
and
Restated
License
Agreement,
dated
March
14,
2013,
as
amended
by
that
certain
Amendment
Number
One
to
Third
Amended
and
Restated
LicenseAgreement,
effective
March
21,2014,
and
as
amended
and/or
restated
from
time
to
time
(the
“Agreement”),
an
exclusive
license
to
YALE’s
receptor
tyrosinekinases
(RTKs)
intellectual
property,
which
agreement
YALE
internally
designates
as
contract
number
[**].
As
set
forth
herein,
the
parties
now
wish
to
amend
theAGREEMENT.
This
Amendment
Number
Two
to
Third
Amended
and
Restated
License
Agreement
(“AMENDMENT
NO.
2”),
which
YALE
will
internallydesignate
as
[**],
shall
be
effective
as
of
December
1,
2014
(“AMENDMENT
NO.
2
EFFECTIVE
DATE”).
WHEREAS,
an
invention
titled
[**]
was
developed
pursuant
to
the
RESEARCH
AGREEMENT
and
is
a
“Joint
Invention”
under
the
RESEARCH
AGREEMENT;
WHEREAS,
LICENSEE
has
prepared
a
provisional
patent
application
titled
“[**]”
from
the
invention
disclosed
as
[**]
naming
inventors
from
YALE
andLICENSEE
(the
“[**]
PATENT
APPLICATION,”
described
in
the
table
II(3)
below),
which
as
of
the
AMENDMENT
NO.
2
EFFECTIVE
DATE
has
been
filedwith
the
United
States
Patent
and
Trademark
Office;
WHEREAS,
an
invention
titled
“[**]”
(“[**]”)
was
developed
pursuant
to
the
RESEARCH
AGREEMENT
and
is
a
“Joint
Invention”
under
the
RESEARCHAGREEMENT;
WHEREAS,
LICENSEE
has
prepared
a
provisional
patent
application
titled
“[**]”
from
the
invention
disclosed
as
[**]
naming
inventors
from
YALE
andLICENSEE
(the
“[**]
PATENT
APPLICATION,”
described
in
the
table
II(3)
below),
which
as
of
the
AMENDMENT
NO.
2
EFFECTIVE
DATE
has
been
filedwith
the
United
States
Patent
and
Trademark
Office;
and
WHEREAS,
YALE
and
LICENSEE
desire
to
confirm
the
[**]
PATENT
APPLICATION
and
the
[**]
PATENT
APPLICATION
as
LICENSED
PATENTS
underthe
AGREEMENT;
NOW,
THEREFORE,
in
consideration
of
the
promises
and
of
the
mutual
covenants
set
forth
herein,
the
parties
agree
as
follows:
I.
Memorandum
of
Understanding
1.
Schlessinger
Involvement
.
The
parties
acknowledge
that
the
[**]
PATENT
APPLICATION
and
the
[**]
PATENT
APPLICATION
being
included
as“LICENSED
PATENTS”
under
the
AGREEMENT
(as
amended
by
AMENDMENT
NO.
2)
claim
RTK
TECHNOLOGY
that
was
made,
created,
developed,discovered,
conceived
or
first
reduced
to
practice
by
or
on
behalf
of
SCHLESSINGER,
LAX
the
SCHLESSINGER
LAB,
or
LAX
LAB
while
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
SCHLESSINGER·was
MEANINGFULLY
INVOLVED
AT
YALE
as
defined
in
Section
2.26(b)
under
the
AGREEMENT
(as
amended
by
AMENDMENT
NO.2).
2.
Prosecution
.
Notwithstanding
Article
10
of
the
Agreement
(as
amended
by
AMENDMENT
No.
2),
the
following
prosecution
provisions
will
govern
theprosecution
of
the
[**]
PATENT
APPLICATION
and
the
[**]
PATENT
APPLICATION,
including
any
continuations,
divisionals,
and
continuations-in-part,and
continued
prosecution
application(s),
any
reissues,
reexaminations,
renewals,
or
extensions,
substitutes,
and
the
relevant
international
equivalents
of
eachthereof
(collectively,
the
“AMENDMENT
NO.
2
PATENT(S)”).
LICENSEE
shall
have
the
right
to
prepare,
file
and
prosecute
patent
applications
jointly
in
the
name
of
LICENSEE
and
in
the
name
of
YALE
claimingAMENDMENT
NO.
2
PATENTS.
LICENSEE
will
provide
YALE
with
a
copy
of
any
such
patent
applications,
in
a
timely
manner,
for
LAX’s
and
YALE’sreview
and
comment
prior
to
the
first
filing
thereof
and
YALE
and
LAX
shall
review
the
same
and
respond
to
LICENSEE
in
a
timely
manner.
LICENSEEwill
further
provide
YALE
with
a
copy
of
all
material
correspondence
between
the
applicable
patent
office
and
LICENSEE’s
patent
counsel,
if
said
counsel
isnot
shared
by
the
parties,
concerning
the
prosecution
of
such
patent
application(s)
in
a
timely
manner
to:
Yale
UniversityOffice
of
Cooperative
ResearchAttn:
Director
of
Intellectual
Property433
Temple
StreetNew
Haven,
CT
06511P:
203-436-4675F:
203-436-8086E:
diane.k.morrissey@yale.edu
or
to
such
other
address
as
YALE
may
specify
for
such
purpose
by
notice
to
LICENSEE,
and
shall
reference
the
RESEARCH
AGREEMENT
([**]).
LAXand
YALE
will
cooperate
with
and
provide
assistance
to
LICENSEE
in
connection
with
such
activities,
including,
without
limitation,
execution
of
alldocuments,
and
performance
of
all
acts
reasonably
necessary,
to
prepare,
file
and
prosecute
such
patent
applications,
and
maintain,
enforce
and
defend
suchpatents.
LICENSEE
shall
bear
all
of
its
own
expenses,
including,
without
limitation,
the
fees
of
LICENSEE’s
legal
counsel,
and
any
out-of-pocket
expensesof
YALE
associated
with
the
preparation,
filing
and
prosecution
of
such
patent
applications,
and
the
maintenance
of
any
patents
issued
therefrom.
If
LICENSEE
elects
not
to
file
or
thereafter
prosecute
specific
claims
and/or
applications
of
an
AMENDMENT
NO.2
PATENT
in
any
country,
LICENSEEwill
promptly
notify
YALE
at
the
address
listed
above,
or
to
such
other
address
as
YALE
may
specify
for
such
purpose
by
notice
to
LICENSEE,
and
shallreference
the
RESEARCH
AGREEMENT
([**]).
In
such
event,
YALE,
at
its
expense,
will
have
the
right
to
file
and
prosecute
such
application,
and/ormaintain
such
patent
in
such
country,
jointly
in
its
and
LICENSEE’s
names
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
3.
Joint
Ownership
.
As
joint
owners
of
each
of
[**],[**]
and
the
AMENDMENT
NO.
2
PATENTS,
YALE
and
LICENSEE
agree
that
each
of
LICENSEE
andYALE
will
have
the
right
to
practice
and
exploit
each
of
[**],[**]
and
the
AMENDMENT
NO.
2
PATENTS
without
the
duty
of
accounting
to
the
other
partyor
seeking
consent
(for
licensing,
assigning,
or
otherwise
exploiting
[**],[**],
or
any
AMENDMENT
NO.
2
PATENT)
from
the
other
party
by
reason
of
thejoint
ownership
thereof,
but
subject
to
compliance
with
the
terms
and
conditions
of
the
AGREEMENT
(as
amended
by
AMENDMENT
NO.
2)
or,
if
theAGREEMENT
has
expired
or
terminated
(entirely
or
with
respect
to
any
of
[**],[**],
or
the
AMENDMENT
NO.
2
PATENTS),
any
surviving
terms
of
theAGREEMENT
applicable
to
[**],[**]
or
such
AMENDMENT
NO.
2
PATENT,
as
applicable;
and
each
party
hereby
waives
any
right
it
may
have
under
thelaws
of
any
jurisdiction
to
require
any
such
approval
or
accounting,
and,
to
the
extent
there
are
any
applicable
laws
that
prohibit
such
a
waiver,
each
party
willbe
deemed
to
so
consent.
For
clarity,
each
of
YALE
and
LICENSEE
will
continue
to
have
the
right
to
practice
and
exploit
each
of
[**],[**]
and
theAMENDMENT
NO.
2
PATENTS
even
if
[**],[**]
or
the
AMENDMENT
NO.
2
PATENTS
cease
to
be
“LICENSED
PATENTS”
under
the
AGREEMENT(as
amended
by
AMENDMENT
NO.
2).
This Space Intentionally Left Blank: Amendments Follow
Confidential
Materials
omitted
and
filed
separately
with
theSecurities
and
Exchange
Commission.
Double
asterisks
denote
omissions.
II.
Amendments
1.
Definitions
.
All
capitalized
terms
used
herein
shall
have
the
meaning
given
to
such
terms
in
the
AGREEMENT,
unless
otherwise
specifically
defined
inAMENDMENT
NO.
2.
2.
Additional
LICENSED
PATENTS
.
Subject
to
Section
I(2)
herein,
the
parties
agree
that
the
AMENDMENT
NO.
2
PATENTS
are
“LICENSED
PATENTS”
under
the
AGREEMENT
(as
amendedby
AMENDMENT
NO.
2).
3.
Addition
of
the
[**]
PATENT
APPLICATION
and
the
[**]
PATENT
APPLICATION
to
Appendix
A
LICENSED
PATENTS
.
Appendix
A
of
theAGREEMENT
is
hereby
amended
to
add
the
[**]
PATENT
APPLICATION
and
the
[**]
PATENT
APPLICATION
as
follows:
JD Matter No. Yale Reference No. Serial No./ Patent No. Title Filing Date/ Issue Date Status[**]
[**]
[**]
[**]
[**]
[**][**]
[**]
[**]
[**]
[**]
[**]
4.
Entire
Agreement
.
Except
as
explicitly
amended
by
AMENDMENT
NO.
2,
all
other
terms
and
conditions
of
the
Agreement
shall
remain
in
full
force
andeffect
and
apply
fully
to
the
terms
of
Amendment
No.
2
as
if
part
of
the
Agreement.
Signature Page Follows
IN
WITNESS
WHEREOF,
the
parties
hereto
have
caused
their
duly
authorized
representatives
to
execute
this
AMENDMENT
NO.
2
(including
the
associatedMemorandum
of
Understanding
herein).
YALE
UNIVERSITYKOLLTAN
PHARMACEUTICALS,
INC.
By:/s/
E.
Jonathan
Soderstrom,
Ph.D.
By:/s/
Gerald
McMahonE.
Jonathan
Soderstrom,
Ph.D.
Gerald
McMahonManaging
Director
President
and
Chief
Executive
OfficerOffice
of
Cooperative
Research
Date:December
1,
2014
Date:December
5,
2014
Exhibit 10.27
CELLDEX THERAPEUTICS, INC.
2008 STOCK OPTION AND INCENTIVE PLAN
as amended and restated, effective as of June 15, 2017
Section
1.
GENERAL
PURPOSE
OF
THE
PLAN;
DEFINITIONS
The
name
of
the
plan
is
the
Celldex
Therapeutics,
Inc.
2008
Stock
Option
and
Incentive
Plan
(the
“Plan”).
The
purpose
of
the
Plan
is
to
encourage
andenable
the
officers,
employees,
Non-Employee
Directors
and
other
key
persons
(including
consultants
and
prospective
employees)
of
Celldex
Therapeutics,
Inc.(the
“Company”)
and
its
Subsidiaries
upon
whose
judgment,
initiative
and
efforts
the
Company
largely
depends
for
the
successful
conduct
of
its
business
to
acquirea
proprietary
interest
in
the
Company.
It
is
anticipated
that
providing
such
persons
with
a
direct
stake
in
the
Company’s
welfare
will
assure
a
closer
identificationof
their
interests
with
those
of
the
Company
and
its
stockholders,
thereby
stimulating
their
efforts
on
the
Company’s
behalf
and
strengthening
their
desire
to
remainwith
the
Company.
The
following
terms
shall
be
defined
as
set
forth
below:
“
Act
”
means
the
Securities
Act
of
1933,
as
amended,
and
the
rules
and
regulations
thereunder.
“
Administrator
”
means
either
the
Board
or
the
compensation
committee
of
the
Board
or
a
similar
committee
performing
the
functions
of
thecompensation
committee
and
which
is
comprised
of
not
less
than
two
Non-Employee
Directors
who
are
independent.
“
Award
”
or
“
Awards
,”
except
where
referring
to
a
particular
category
of
grant
under
the
Plan,
shall
include
Incentive
Stock
Options,
Non-QualifiedStock
Options,
Stock
Appreciation
Rights,
Deferred
Stock
Awards,
Restricted
Stock
Awards,
Unrestricted
Stock
Awards,
Cash-Based
Awards,
Performance
ShareAwards
and
Dividend
Equivalent
Rights.
“
Award
Agreement
”
means
a
written
or
electronic
agreement
setting
forth
the
terms
and
provisions
applicable
to
an
Award
granted
under
the
Plan.
EachAward
Agreement
is
subject
to
the
terms
and
conditions
of
the
Plan.
“
Board
”
means
the
Board
of
Directors
of
the
Company.
“
Cash-Based
Award
”
means
an
Award
entitling
the
recipient
to
receive
a
cash-denominated
payment.
“Change
of
Control”
is
defined
in
Section
20.
“
Code
”
means
the
Internal
Revenue
Code
of
1986,
as
amended,
and
any
successor
Code,
and
related
rules,
regulations
and
interpretations.
“
Covered
Employee
”
means
an
employee
who
is
a
“Covered
Employee”
within
the
meaning
of
Section
162(m)
of
the
Code.
“
Date
of
Grant
”
means
the
date
on
which
an
Award
under
the
Plan
is
granted
by
the
Administrator,
or
such
later
date
as
the
Administrator
may
specify
tobe
the
effective
date
of
an
Award.
“
Deferred
Stock
Award
”
means
an
Award
of
phantom
stock
units
to
a
grantee.
“
Disability
”
means
a
grantee
being
considered
“disabled”
within
the
meaning
of
Section
409A
and
Treasury
Regulation
1.409A-3(i)(4),
as
well
as
anysuccessor
regulation
or
interpretation.
“
Dividend
Equivalent
Right
”
means
an
Award
entitling
the
grantee
to
receive
credits
based
on
cash
dividends
that
would
have
been
paid
on
the
shares
ofStock
specified
in
the
Dividend
Equivalent
Right
(or
other
award
to
which
it
relates)
if
such
shares
had
been
issued
to
and
held
by
the
grantee.
“
Effective
Date
”
means
the
date
on
which
the
amended
and
restated
Plan
is
approved
by
stockholders
as
set
forth
in
Section
22.
“
Exchange
Act
”
means
the
Securities
Exchange
Act
of
1934,
as
amended,
and
the
rules
and
regulations
thereunder.
“
Fair
Market
Value
”
of
a
share
of
Stock
shall
be,
as
applied
to
a
specific
date
(i)
the
closing
price
of
a
share
of
Stock
as
of
the
date
of
determination
onthe
principal
established
stock
exchange
or
national
market
system
on
which
the
Stock
is
then
traded
(or,
if
there
is
no
trading
in
the
Stock
as
of
such
date,
theclosing
price
of
a
share
of
Stock
on
the
most
recent
date
preceding
the
date
of
determination
on
which
trades
of
the
Stock
were
recorded),
or
(ii)
if
the
shares
ofStock
are
not
then
traded
on
an
established
stock
exchange
or
national
market
system
but
are
then
traded
in
an
over-the-counter
market,
the
average
of
the
closingbid
and
asked
prices
for
the
shares
of
Stock
in
such
over-the-counter
market
as
of
the
date
of
determination
(or,
if
there
are
no
closing
bid
and
asked
prices
for
theshares
of
Stock
as
of
such
date,
the
average
of
the
closing
bid
and
the
asked
prices
for
the
shares
of
Stock
on
the
most
recent
date
preceding
such
date
on
whichsuch
closing
bid
and
asked
prices
are
available
on
such
over-the-counter
market),
or
(iii)
if
the
shares
of
Stock
are
not
then
listed
on
a
national
securities
exchangeor
national
market
system
or
traded
in
an
over-the-counter
market,
the
price
of
a
share
of
Stock
as
determined
by
the
Administrator
in
its
discretion
in
a
mannerconsistent
with
Section
409A
of
the
Code
and
Treasury
Regulation
1.409A-1(b)(5)(iv),
as
well
as
any
successor
regulation
or
interpretation.
“
Incentive
Stock
Option
”
means
any
Stock
Option
designated
and
qualified
as
an
“incentive
stock
option”
as
defined
in
Section
422
of
the
Code.
“
Non-Employee
Director
”
means
a
member
of
the
Board
who
is
not
also
an
employee
of
the
Company
or
any
Subsidiary.
“Non-Qualified
Stock
Option”means
any
Stock
Option
that
is
not
an
Incentive
Stock
Option.
2
“
Option
”
or
“
Stock
Option
”
means
any
option
to
purchase
shares
of
Stock
granted
pursuant
to
Section
5.
“
Performance-Based
Award
”
means
any
Restricted
Stock
Award,
Deferred
Stock
Award,
Performance
Share
Award
or
Cash-Based
Award
granted
to
aCovered
Employee
that
is
intended
to
qualify
as
“performance-based
compensation”
under
Section
162(m)
of
the
Code
and
the
regulations
promulgated
thereunder.
“
Performance
Criteria
”
means
the
performance
criteria
used
in
performance
goals
governing
Performance-based
Awards
granted
to
Covered
Employeeswhich
may
include
any
or
all
of
the
following:
(i)
the
Company’s
return
on
equity,
assets,
capital
or
investment,
(ii)
pre-tax
or
after-tax
profit
levels
of
theCompany
or
any
Subsidiary,
a
division,
an
operating
unit
or
a
business
segment
of
the
Company,
or
any
combination
of
the
foregoing;
(iii)
cash
flow,
funds
fromoperations,
year-end
cash
and
equivalents
balance
or
similar
measure;
(iv)
total
shareholder
return;
(v)
changes
in
the
market
price
of
the
Stock;
(vi)
sales
or
marketshare;
(vii)
earnings
per
share;
(viii)
partnerships,
collaborations,
joint
ventures,
alliances
and
similar
arrangements
involving
the
Company;
(ix)
mergers,acquisitions
and
business
combinations
of
or
by
the
Company;
or
(x)
the
Company’s
rights
to
intellectual
property
and
scientific
discoveries.
“
Performance
Cycle
”
means
one
or
more
periods
of
time,
which
may
be
of
varying
and
overlapping
durations,
as
the
Administrator
may
select,
overwhich
the
attainment
of
one
or
more
Performance
Criteria
will
be
measured
for
the
purpose
of
determining
a
grantee’s
right
to
and
the
payment
of
a
RestrictedStock
Award,
Deferred
Stock
Award,
Performance
Share
Award
or
Cash-Based
Award.
“
Performance
Goals
”
means,
for
a
Performance
Cycle,
the
specific
goals
established
in
writing
by
the
Administrator
for
a
Performance
Cycle
basedupon
the
Performance
Criteria.
“
Performance
Share
Award
”
means
an
Award
entitling
the
recipient
to
acquire
shares
of
Stock
upon
the
attainment
of
specified
Performance
Goals.
“
Restricted
Stock
Award
”
means
an
Award
entitling
the
recipient
to
acquire,
at
such
purchase
price
(which
may
be
zero)
as
determined
by
theAdministrator,
shares
of
Stock
subject
to
such
restrictions
and
conditions
as
the
Administrator
may
determine
at
the
time
of
grant.
“
Sale
Event
”
shall
mean
(i)
the
sale
of
all
or
substantially
all
of
the
assets
of
the
Company
on
a
consolidated
basis
to
an
unrelated
person
or
entity,
(ii)
amerger,
reorganization
or
consolidation
in
which
the
outstanding
shares
of
Stock
are
converted
into
or
exchanged
for
securities
of
the
successor
entity
and
theholders
of
the
Company’s
outstanding
voting
power
immediately
prior
to
such
transaction
do
not
own
a
majority
of
the
outstanding
voting
power
of
the
successorentity
immediately
upon
completion
of
such
transaction,
or
(iii)
the
sale
of
all
of
the
Stock
of
the
Company
to
an
unrelated
person
or
entity.
“
Sale
Price
”
means
the
value
as
determined
by
the
Administrator
of
the
consideration
payable,
or
otherwise
to
be
received
by
stockholders,
per
share
ofStock
pursuant
to
a
Sale
Event.
3
“
Section
409A
”
means
Section
409A
of
the
Code
and
the
regulations
and
other
guidance
promulgated
thereunder.
“Stock”
means
the
Common
Stock,par
value
$.01
per
share,
of
the
Company,
subject
to
adjustments
pursuant
to
Section
3.
“
Stock
Appreciation
Right
”
means
an
Award
entitling
the
recipient
to
receive
shares
of
Stock
having
a
value
equal
to
the
excess
of
the
Fair
Market
Valueof
the
Stock
on
the
date
of
exercise
over
the
exercise
price
of
the
Stock
Appreciation
Right
multiplied
by
the
number
of
shares
of
Stock
with
respect
to
which
theStock
Appreciation
Right
shall
have
been
exercised.
“
Subsidiary
”
means
any
corporation
or
other
entity
(other
than
the
Company)
in
which
the
Company
has
at
least
a
50
percent
interest,
either
directly
orindirectly.
“
Ten
Percent
Owner
”
means
an
employee
who
owns
or
is
deemed
to
own
(by
reason
of
the
attribution
rules
of
Section
424(d)
of
the
Code)
more
than
10percent
of
the
combined
voting
power
of
all
classes
of
stock
of
the
Company
or
any
parent
or
subsidiary
corporation.
“
Unrestricted
Stock
Award
”
means
an
Award
of
shares
of
Stock
free
of
any
restrictions.
Section
2.
ADMINISTRATION
OF
PLAN;
ADMINISTRATOR
AUTHORITY
TO
SELECT
GRANTEES
AND
DETERMINE
AWARDS
(a)
Administration
of
Plan
.
The
Plan
shall
be
administered
by
the
Administrator.
To
the
extent
advisable
or
otherwise
required
by
applicable
law,regulation
or
rule,
it
is
intended
that
each
member
of
the
Administrator
shall
qualify
as
(i)
a
“non-
employee
director”
under
Rule
16b-3,
(ii)
an
“outside
director”under
Section
162(m)
of
the
Code
and
the
regulations
thereunder
and
(iii)
an
“independent
director”
under
the
rules
of
any
national
securities
exchange
on
whichthe
shares
of
Stock
are
then
listed.
If
it
is
later
determined
that
one
or
more
members
of
the
Administrator
do
not
so
qualify,
actions
taken
by
the
Administratorshall
be
valid
despite
such
failure
to
qualify.
(b)
Powers
of
Administrator
.
The
Administrator
shall
have
the
power
and
authority
to
grant
Awards
consistent
with
the
terms
of
the
Plan,including
the
power
and
authority:
(i)
to
select
the
individuals
to
whom
Awards
may
from
time
to
time
be
granted;
(ii)
to
determine
the
time
or
times
of
grant,
and
the
extent,
if
any,
of
Incentive
Stock
Options,
Non-Qualified
Stock
Options,
StockAppreciation
Rights,
Restricted
Stock
Awards,
Deferred
Stock
Awards,
Unrestricted
Stock
Awards,
Cash-Based
Awards,
Performance
Share
Awards
andDividend
Equivalent
Rights,
or
any
combination
of
the
foregoing,
granted
to
any
one
or
more
grantees;
(iii)
to
determine
the
number
of
shares
of
Stock
to
be
covered
by
any
Award;
(iv)
to
determine
and
modify
from
time
to
time
the
terms
and
conditions,
including
restrictions,
not
inconsistent
with
the
terms
of
the
Plan,of
any
Award,
which
terms
and
conditions
may
differ
among
individual
Awards
and
grantees,
and
to
approve
the
form
of
written
instruments
evidencingthe
Awards;
4
(v)
to
accelerate
the
exercisability
or
vesting
of
all
or
any
portion
of
any
Award
upon
(1)
a
grantee’s
death,
(2)
a
grantee’s
Disability,
or(3)
a
Change
of
Control
or
Sale
Event;
(vi)
subject
to
the
provisions
of
Section
5(b),
to
extend
at
any
time
the
period
in
which
Stock
Options
may
be
exercised;
and
(vii)
at
any
time
to
adopt,
alter
and
repeal
such
rules,
guidelines
and
practices
for
administration
of
the
Plan
and
for
its
own
acts
andproceedings
as
it
shall
deem
advisable;
to
interpret
the
terms
and
provisions
of
the
Plan
and
any
Award
(including
related
written
instruments);
to
make
alldeterminations
it
deems
advisable
for
the
administration
of
the
Plan;
to
decide
all
disputes
arising
in
connection
with
the
Plan;
and
to
otherwise
supervisethe
administration
of
the
Plan.
All
decisions
and
interpretations
of
the
Administrator
shall
be
binding
on
all
persons,
including
the
Company
and
Plan
grantees.
(c)
Delegation
of
Authority
to
Grant
Options
.
Subject
to
applicable
law,
the
Administrator,
in
its
discretion,
may
delegate
to
the
Chief
ExecutiveOfficer
of
the
Company
all
or
part
of
the
Administrator’s
authority
and
duties
with
respect
to
the
granting
of
Options,
to
individuals
who
are
(i)
not
subject
to
thereporting
and
other
provisions
of
Section
16
of
the
Exchange
Act
and
(ii)
not
Covered
Employees.
Any
such
delegation
by
the
Administrator
shall
include
alimitation
as
to
the
amount
of
Options
that
may
be
granted
during
the
period
of
the
delegation
and
shall
contain
guidelines
as
to
the
determination
of
the
exerciseprice
and
the
vesting
criteria.
The
Administrator
may
revoke
or
amend
the
terms
of
a
delegation
at
any
time
but
such
action
shall
not
invalidate
any
prior
actions
ofthe
Administrator’s
delegate
or
delegates
that
were
consistent
with
the
terms
of
the
Plan.
(d)
Award
Agreement
.
Awards
under
the
Plan
shall
be
evidenced
by
Award
Agreements
that
set
forth
the
terms,
conditions
and
limitations
for
eachAward
which
may
include,
without
limitation,
the
term
of
an
Award,
the
provisions
applicable
in
the
event
employment
or
service
terminates,
and
the
Company’sauthority
to
unilaterally
or
bilaterally
amend,
modify,
suspend,
cancel
or
rescind
an
Award.
(e)
Indemnification
.
Neither
the
Board
nor
the
Administrator,
nor
any
member
of
either
or
any
delegate
thereof,
shall
be
liable
for
any
act,omission,
interpretation,
construction
or
determination
made
in
good
faith
in
connection
with
the
Plan,
and
the
members
of
the
Board
and
the
Administrator
(andany
delegate
thereof)
shall
be
entitled
in
all
cases
to
indemnification
and
reimbursement
by
the
Company
in
respect
of
any
claim,
loss,
damage
or
expense(including,
without
limitation,
reasonable
attorneys’
fees)
arising
or
resulting
therefrom
to
the
fullest
extent
permitted
by
law
and/or
under
the
Company’s
articlesor
bylaws
or
any
directors’
and
officers’
liability
insurance
coverage
which
may
be
in
effect
from
time
to
time
and/or
any
indemnification
agreement
between
suchindividual
and
the
Company.
Section
3.
STOCK
ISSUABLE
UNDER
THE
PLAN;
MERGERS;
SUBSTITUTION
(a)
Stock
Issuable
.
The
maximum
number
of
shares
of
Stock
reserved
and
available
for
issuance
under
the
Plan
shall
be
20,000,000
shares,
subjectto
adjustment
as
provided
in
5
Section
3(b)
(the
“Share
Reserve”);
provided
that
not
more
than
500,000
shares
shall
be
issued
in
the
form
of
Unrestricted
Stock
Awards,
Restricted
Stock
Awards,Deferred
Stock
Awards
or
Performance
Share
Awards.
For
purposes
of
this
limitation,
the
shares
of
Stock
underlying
the
Awards
granted
under
the
Plan
that
areforfeited,
canceled
or
otherwise
terminated
(other
than
by
exercise)
shall
be
added
back
to
the
shares
of
Stock
available
for
issuance
under
the
Plan.
Shares(i)
tendered
or
withheld
in
payment
of
an
Option,
(ii)
tendered
or
withheld
to
satisfy
any
tax
withholding
obligation
or
(iii)
repurchased
by
the
Company
withOption
proceeds,
shall
not
revert
to
or
be
added
back
to
the
Share
Reserve.
Further,
shares
of
Stock
covered
by
a
Stock
Appreciation
Right,
to
the
extent
that
it
isexercised
and
settled
in
shares
of
Stock,
and
whether
or
not
shares
of
Stock
are
actually
issued
to
the
grantee
upon
the
exercise
of
the
Stock
Appreciation
Right,shall
be
considered
issued
or
transferred
pursuant
to
the
Plan.
Subject
to
such
overall
limitations,
shares
of
Stock
may
be
issued
up
to
such
maximum
numberpursuant
to
any
type
or
types
of
Award;
provided,
however,
that
Stock
Options
or
Stock
Appreciation
Rights
with
respect
to
no
more
than
2,000,000
shares
ofStock
may
be
granted
to
any
one
individual
grantee
during
any
one
calendar
year
period.
The
shares
available
for
issuance
under
the
Plan
may
be
authorized
butunissued
shares
of
Stock
or
shares
of
Stock
reacquired
by
the
Company.
(b)
Changes
in
Stock
.
Subject
to
Section
3(c)
hereof,
if,
as
a
result
of
any
reorganization,
recapitalization,
reclassification,
stock
dividend,
stocksplit,
reverse
stock
split
or
other
similar
change
in
the
Company’s
capital
stock,
the
outstanding
shares
of
Stock
are
increased
or
decreased
or
are
exchanged
for
adifferent
number
or
kind
of
shares
or
other
securities
of
the
Company,
or
additional
shares
or
new
or
different
shares
or
other
securities
of
the
Company
or
othernon-cash
assets
are
distributed
with
respect
to
such
shares
of
Stock
or
other
securities,
or,
if,
as
a
result
of
any
merger
or
consolidation,
sale
of
all
or
substantiallyall
of
the
assets
of
the
Company,
the
outstanding
shares
of
Stock
are
converted
into
or
exchanged
for
securities
of
the
Company
or
any
successor
entity
(or
a
parentor
subsidiary
thereof),
the
Administrator
shall
make
an
appropriate
or
proportionate
adjustment
in
(i)
the
maximum
number
of
shares
reserved
for
issuance
underthe
Plan,
including
the
maximum
number
of
shares
that
may
be
issued
in
the
form
of
Unrestricted
Stock
Awards,
Restricted
Stock
Awards,
Deferred
Stock
Awardsor
Performance
Share
Awards,
(ii)
the
number
of
Stock
Options
or
Stock
Appreciation
Rights
that
can
be
granted
to
any
one
individual
grantee
in
one
calendar
yearand
the
maximum
number
of
shares
that
may
be
granted
under
a
Performance-Based
Award,
(iii)
the
number
and
kind
of
shares
or
other
securities
subject
to
anythen
outstanding
Awards
under
the
Plan,
(iv)
the
repurchase
price,
if
any,
per
share
subject
to
each
outstanding
Restricted
Stock
Award,
and
(v)
the
price
for
eachshare
subject
to
any
then
outstanding
Stock
Options
and
Stock
Appreciation
Rights
under
the
Plan,
without
changing
the
aggregate
exercise
price
(i.e.,
the
exerciseprice
multiplied
by
the
number
of
Stock
Options
and
Stock
Appreciation
Rights)
as
to
which
such
Stock
Options
and
Stock
Appreciation
Rights
remainexercisable.
The
Administrator
shall
also
make
equitable
or
proportionate
adjustments
in
the
number
of
shares
subject
to
outstanding
Awards
and
the
exerciseprice
and
the
terms
of
outstanding
Awards
to
take
into
consideration
cash
dividends
paid
other
than
in
the
ordinary
course
or
any
other
extraordinary
corporateevent.
The
adjustment
by
the
Administrator
shall
be
final,
binding
and
conclusive.
No
fractional
shares
of
Stock
shall
be
issued
under
the
Plan
resulting
from
anysuch
adjustment,
but
the
Administrator
in
its
discretion
may
make
a
cash
payment
in
lieu
of
fractional
shares.
(c)
Mergers
and
Other
Transactions
.
Upon
the
effective
time
of
the
Sale
Event,
the
Plan
and
all
outstanding
Awards
granted
hereunder
shallterminate,
unless
provision
is
made
in
6
connection
with
the
Sale
Event
in
the
sole
discretion
of
the
parties
thereto
for
the
assumption
or
continuation
by
the
successor
entity
of
Awards
theretofore
granted,or
the
substitution
of
such
Awards
with
new
Awards
of
the
successor
entity
or
parent
thereof,
with
appropriate
adjustment
as
to
the
number
and
kind
of
shares
and,if
appropriate,
the
per
share
exercise
prices,
as
such
parties
shall
agree
(after
taking
into
account
any
acceleration
hereunder).
In
the
event
of
such
termination,(i)
the
Company
shall
have
the
option
(in
its
sole
discretion)
to
make
or
provide
for
a
cash
payment
to
the
grantees
holding
Options
and
Stock
Appreciation
Rights,in
exchange
for
the
cancellation
thereof,
in
an
amount
equal
to
the
difference
between
(A)
the
Sale
Price
multiplied
by
the
number
of
shares
of
Stock
subject
tooutstanding
Options
and
Stock
Appreciation
Rights
(to
the
extent
then
exercisable
(after
taking
into
account
any
acceleration
hereunder)
at
prices
not
in
excess
ofthe
Sale
Price)
and
(B)
the
aggregate
exercise
price
of
all
such
outstanding
Options
and
Stock
Appreciation
Rights;
or
(ii)
each
grantee
shall
be
permitted,
within
aspecified
period
of
time
prior
to
the
consummation
of
the
Sale
Event
as
determined
by
the
Administrator,
to
exercise
all
outstanding
Options
and
StockAppreciation
Rights
held
by
such
grantee.
(d)
Substitute
Awards
.
The
Administrator
may
grant
Awards
under
the
Plan
in
substitution
for
stock
and
stock
based
awards
held
by
employees,directors
or
other
key
persons
of
another
corporation
in
connection
with
the
merger
or
consolidation
of
the
employing
corporation
with
the
Company
or
aSubsidiary
or
the
acquisition
by
the
Company
or
a
Subsidiary
of
property
or
stock
of
the
employing
corporation.
The
Administrator
may
direct
that
the
substituteawards
be
granted
on
such
terms
and
conditions
as
the
Administrator
considers
appropriate
in
the
circumstances.
Any
substitute
Awards
granted
under
the
Planshall
not
count
against
the
share
limitation
set
forth
in
Section
3(a).
Section
4.
ELIGIBILITY
Grantees
under
the
Plan
will
be
such
full
or
part-time
officers
and
other
employees,
Non-Employee
Directors
and
key
persons
(including
consultants
andprospective
employees)
of
the
Company
and
its
Subsidiaries
as
are
selected
from
time
to
time
by
the
Administrator
in
its
sole
discretion.
Section
5.
STOCK
OPTIONS
Any
Stock
Option
granted
under
the
Plan
shall
be
in
such
form
as
the
Administrator
may
from
time
to
time
approve.
Stock
Options
granted
under
thePlan
may
be
either
Incentive
Stock
Options
or
Non-Qualified
Stock
Options.
Incentive
Stock
Options
may
be
granted
only
to
employees
of
the
Company
or
anySubsidiary
that
is
a
“subsidiary
corporation”
within
the
meaning
of
Section
424(f)
of
the
Code.
To
the
extent
that
any
Option
does
not
qualify
as
an
Incentive
StockOption,
it
shall
be
deemed
a
Non-Qualified
Stock
Option.
Stock
Options
granted
pursuant
to
this
Section
5
shall
be
subject
to
the
following
terms
and
conditions
and
shall
contain
such
additional
terms
andconditions,
not
inconsistent
with
the
terms
of
the
Plan,
as
the
Administrator
shall
deem
desirable.
(a)
Exercise
Price
.
The
exercise
price
per
share
for
the
Stock
covered
by
a
Stock
Option
granted
pursuant
to
this
Section
5
shall
be
determined
bythe
Administrator
at
the
time
of
7
grant
but
shall
not
be
less
than
100
percent
of
the
Fair
Market
Value
on
the
Date
of
Grant.
In
the
case
of
an
Incentive
Stock
Option
that
is
granted
to
a
Ten
PercentOwner,
the
option
price
of
such
Incentive
Stock
Option
shall
be
not
less
than
110
percent
of
the
Fair
Market
Value
on
the
Date
of
Grant.
(b)
Option
Term
.
The
term
of
each
Stock
Option
shall
be
fixed
by
the
Administrator,
but
no
Stock
Option
shall
be
exercisable
more
than
ten
yearsafter
the
date
the
Stock
Option
is
granted.
In
the
case
of
an
Incentive
Stock
Option
that
is
granted
to
a
Ten
Percent
Owner,
the
term
of
such
Stock
Option
shall
beno
more
than
five
years
from
the
Date
of
Grant.
(c)
Exercisability;
Rights
of
a
Stockholder
.
Stock
Options
shall
become
exercisable
at
such
time
or
times,
whether
or
not
in
installments,
as
shallbe
determined
by
the
Administrator
at
or
after
the
grant
date.
The
Administrator
may
accelerate
the
exercisability
of
all
or
any
portion
of
any
Stock
Option
upon(1)
a
grantee’s
death,
(2)
a
grantee’s
Disability,
or
(3)
a
Change
of
Control
or
Sale
Event.
An
optionee
shall
have
the
rights
of
a
stockholder
only
as
to
sharesacquired
upon
the
exercise
of
a
Stock
Option
and
not
as
to
unexercised
Stock
Options.
(d)
Method
of
Exercise
.
Stock
Options
may
be
exercised
in
whole
or
in
part,
by
giving
written
notice
of
exercise
to
the
Company,
specifying
thenumber
of
shares
to
be
purchased.
Payment
of
the
purchase
price
may
be
made
by
one
or
more
of
the
following
methods
to
the
extent
provided
in
the
OptionAward
Agreement:
(i)
In
cash,
by
certified
or
bank
check
or
other
instrument
acceptable
to
the
Administrator;
(ii)
Through
the
delivery
(or
attestation
to
the
ownership)
of
shares
of
Stock
that
have
been
purchased
by
the
optionee
on
the
open
marketor
that
are
beneficially
owned
by
the
optionee
and
are
not
then
subject
to
restrictions
under
any
Company
plan.
Such
surrendered
shares
shall
be
valued
atFair
Market
Value
on
the
exercise
date.
To
the
extent
required
to
avoid
variable
accounting
treatment
under
applicable
accounting
rules,
such
surrenderedshares
shall
have
been
owned
by
the
optionee
for
at
least
six
months;
or
(iii)
By
the
optionee
delivering
to
the
Company
a
properly
executed
exercise
notice
together
with
irrevocable
instructions
to
a
broker
topromptly
deliver
to
the
Company
cash
or
a
check
payable
and
acceptable
to
the
Company
for
the
purchase
price;
provided
that
in
the
event
the
optioneechooses
to
pay
the
purchase
price
as
so
provided,
the
optionee
and
the
broker
shall
comply
with
such
procedures
and
enter
into
such
agreements
ofindemnity
and
other
agreements
as
the
Administrator
shall
prescribe
as
a
condition
of
such
payment
procedure.
Payment
instruments
will
be
received
subject
to
collection.
The
transfer
to
the
optionee
on
the
records
of
the
Company
or
of
the
transfer
agent
of
theshares
of
Stock
to
be
purchased
pursuant
to
the
exercise
of
a
Stock
Option
will
be
contingent
upon
receipt
from
the
optionee
(or
a
purchaser
acting
in
hisstead
in
accordance
with
the
provisions
of
the
Stock
Option)
by
the
Company
of
the
full
purchase
price
for
such
shares
and
the
fulfillment
of
any
otherrequirements
contained
in
the
Option
Award
Agreement
or
8
applicable
provisions
of
laws
(including
the
satisfaction
of
any
withholding
taxes
that
the
Company
is
obligated
to
withhold
with
respect
to
the
optionee).
In
the
event
an
optionee
chooses
to
pay
the
purchase
price
by
previously-owned
shares
of
Stock
through
the
attestation
method,
the
number
of
shares
ofStock
transferred
to
the
optionee
upon
the
exercise
of
the
Stock
Option
shall
be
net
of
the
number
of
attested
shares.
In
the
event
that
the
Companyestablishes,
for
itself
or
using
the
services
of
a
third
party,
an
automated
system
for
the
exercise
of
Stock
Options,
such
as
a
system
using
an
internetwebsite
or
interactive
voice
response,
then
the
paperless
exercise
of
Stock
Options
may
be
permitted
through
the
use
of
such
an
automated
system.
(iv)
Annual
Limit
on
Incentive
Stock
Options.
To
the
extent
required
for
“incentive
stock
option”
treatment
under
Section
422
of
the
Code,the
aggregate
Fair
Market
Value
(determined
as
of
the
time
of
grant)
of
the
shares
of
Stock
with
respect
to
which
Incentive
Stock
Options
granted
underthis
Plan
and
any
other
plan
of
the
Company
or
its
parent
and
subsidiary
corporations
become
exercisable
for
the
first
time
by
an
optionee
during
anycalendar
year
shall
not
exceed
$100,000.
To
the
extent
that
any
Stock
Option
exceeds
this
limit,
it
shall
constitute
a
Non-Qualified
Stock
Option.
Section
6.
STOCK
APPRECIATION
RIGHTS
(a)
Exercise
Price
of
Stock
Appreciation
Rights
.
The
exercise
price
of
a
Stock
Appreciation
Right
shall
not
be
less
than
100
percent
of
the
FairMarket
Value
of
the
Stock
on
the
Date
of
Grant.
(b)
Grant
and
Exercise
of
Stock
Appreciation
Rights
.
Stock
Appreciation
Rights
may
be
granted
by
the
Administrator
independently
of
any
StockOption
granted
pursuant
to
Section
5
of
the
Plan.
(c)
Terms
and
Conditions
of
Stock
Appreciation
Rights
.
Stock
Appreciation
Rights
shall
be
subject
to
such
terms
and
conditions
as
shall
bedetermined
from
time
to
time
by
the
Administrator.
Section
7.
RESTRICTED
STOCK
AWARDS
(a)
Nature
of
Restricted
Stock
Awards
.
The
Administrator
shall
determine
the
restrictions
and
conditions
applicable
to
each
Restricted
StockAward
at
the
time
of
grant.
Conditions
may
be
based
on
continuing
employment
(or
other
service
relationship)
and/or
achievement
of
pre-established
performancegoals
and
objectives.
The
grant
of
a
Restricted
Stock
Award
is
contingent
on
the
grantee
executing
the
Restricted
Stock
Award
Agreement.
The
terms
andconditions
of
each
such
Award
Agreement
shall
be
determined
by
the
Administrator,
and
such
terms
and
conditions
may
differ
among
individual
Awards
andgrantees.
(b)
Rights
as
a
Stockholder
.
Upon
execution
of
the
Restricted
Stock
Award
Agreement
and
payment
of
any
applicable
purchase
price,
a
granteeshall
have
the
rights
of
a
stockholder
with
respect
to
the
voting
of
the
Restricted
Stock,
subject
to
such
conditions
contained
in
the
Restricted
Stock
AwardAgreement.
Unless
the
Administrator
shall
otherwise
determine,
(i)
uncertificated
Restricted
Stock
shall
be
accompanied
by
a
notation
on
the
records
of
theCompany
or
the
transfer
agent
to
the
effect
that
they
are
subject
to
forfeiture
until
such
9
Restricted
Stock
are
vested
as
provided
in
Section
7(d)
below,
and
(ii)
certificated
Restricted
Stock
shall
remain
in
the
possession
of
the
Company
until
suchRestricted
Stock
is
vested
as
provided
in
Section
7(d)
below,
and
the
grantee
shall
be
required,
as
a
condition
of
the
grant,
to
deliver
to
the
Company
suchinstruments
of
transfer
as
the
Administrator
may
prescribe.
(c)
Restrictions
.
Restricted
Stock
may
not
be
sold,
assigned,
transferred,
pledged
or
otherwise
encumbered
or
disposed
of
except
as
specificallyprovided
herein
or
in
the
Restricted
Stock
Award
Agreement.
Except
as
may
otherwise
be
provided
by
the
Administrator
either
in
the
Award
Agreement
or,subject
to
Section
18
below,
in
writing
after
the
Award
Agreement
is
issued
if
a
grantee’s
employment
(or
other
service
relationship)
with
the
Company
and
itsSubsidiaries
terminates
for
any
reason,
any
Restricted
Stock
that
has
not
vested
at
the
time
of
termination
shall
automatically
and
without
any
requirement
of
noticeto
such
grantee
from
or
other
action
by
or
on
behalf
of,
the
Company
be
deemed
to
have
been
reacquired
by
the
Company
at
its
original
purchase
price
(if
any)from
such
grantee
or
such
grantee’s
legal
representative
simultaneously
with
such
termination
of
employment
(or
other
service
relationship),
and
thereafter
shallcease
to
represent
any
ownership
of
the
Company
by
the
grantee
or
rights
of
the
grantee
as
a
stockholder.
Following
such
deemed
reacquisition
of
unvestedRestricted
Stock
that
are
represented
by
physical
certificates,
a
grantee
shall
surrender
such
certificates
to
the
Company
upon
request
without
consideration.
(d)
Vesting
of
Restricted
Stock
.
The
Administrator
at
the
time
of
grant
shall
specify
the
date
or
dates
and/or
the
attainment
of
pre-establishedperformance
goals,
objectives
and
other
conditions
on
which
the
non-transferability
of
the
Restricted
Stock
and
the
Company’s
right
of
repurchase
or
forfeitureshall
lapse.
Notwithstanding
the
foregoing,
in
the
event
that
any
such
Restricted
Stock
granted
to
employees
shall
have
a
performance-based
goal,
the
restrictionperiod
with
respect
to
such
shares
shall
not
be
less
than
one
year,
and
in
the
event
any
such
Restricted
Stock
granted
to
employees
shall
have
a
time-basedrestriction,
the
total
restriction
period
with
respect
to
such
shares
shall
not
be
less
than
three
years;
provided,
however,
that
Restricted
Stock
with
a
time-basedrestriction
may
become
vested
incrementally
over
such
three-year
period.
Subsequent
to
such
date
or
dates
and/or
the
attainment
of
such
pre-establishedperformance
goals,
objectives
and
other
conditions,
the
shares
on
which
all
restrictions
have
lapsed
shall
no
longer
be
Restricted
Stock
and
shall
be
deemed“vested.”
Except
as
may
otherwise
be
provided
by
the
Administrator
either
in
the
Award
Agreement
or,
subject
to
Section
18
below,
in
writing
after
the
AwardAgreement
is
issued
(but
in
such
case
only
with
respect
to
acceleration
of
vesting
upon
(1)
a
grantee’s
death,
(2)
a
grantee’s
Disability,
or
(3)
a
Change
of
Controlor
Sale
Event),
a
grantee’s
rights
in
any
shares
of
Restricted
Stock
that
have
not
vested
shall
automatically
terminate
upon
the
grantee’s
termination
of
employment(or
other
service
relationship)
with
the
Company
and
its
Subsidiaries
and
such
shares
shall
be
subject
to
the
provisions
of
Section
7(c)
above.
Section
8.
DEFERRED
STOCK
AWARDS
(a)
Nature
of
Deferred
Stock
Awards
.
The
Administrator
shall
determine
the
restrictions
and
conditions
applicable
to
each
Deferred
Stock
Awardat
the
time
of
grant.
Conditions
may
be
based
on
continuing
employment
(or
other
service
relationship)
and/or
achievement
of
pre-established
performance
goalsand
objectives.
The
grant
of
a
Deferred
Stock
Award
is
contingent
on
the
grantee
executing
the
Deferred
Stock
Award
Agreement.
The
terms
10
and
conditions
of
each
such
Award
Agreement
shall
be
determined
by
the
Administrator,
and
such
terms
and
conditions
may
differ
among
individual
Awards
andgrantees.
Notwithstanding
the
foregoing,
in
the
event
that
any
such
Deferred
Stock
Award
granted
to
employees
shall
have
a
performance-based
goal,
therestriction
period
with
respect
to
such
Award
shall
not
be
less
than
one
year,
and
in
the
event
any
such
Deferred
Stock
Award
granted
to
employees
shall
have
atime-based
restriction,
the
total
restriction
period
with
respect
to
such
Award
shall
not
be
less
than
three
years;
provided,
however,
that
any
Deferred
Stock
Awardwith
a
time-based
restriction
may
become
vested
incrementally
over
such
three-year
period.
At
the
end
of
the
deferral
period,
the
Deferred
Stock
Award,
to
theextent
vested,
shall
be
settled
in
the
form
of
shares
of
Stock.
To
the
extent
that
a
Deferred
Stock
Award
is
subject
to
Section
409A,
it
may
contain
such
additionalterms
and
conditions
as
the
Administrator
shall
determine
in
its
sole
discretion
in
order
for
such
Award
to
comply
with
the
requirements
of
Section
409A.
(b)
Election
to
Receive
Deferred
Stock
Awards
in
Lieu
of
Compensation
.
The
Administrator
may,
in
its
sole
discretion,
permit
a
grantee
to
elect
toreceive
a
portion
of
future
cash
compensation
otherwise
due
to
such
grantee
in
the
form
of
a
Deferred
Stock
Award.
Any
such
election
shall
be
made
in
writingand
shall
be
delivered
to
the
Company
no
later
than
the
date
specified
by
the
Administrator
and
in
accordance
with
Section
409A
and
such
other
rules
andprocedures
established
by
the
Administrator.
Any
such
future
cash
compensation
that
the
grantee
elects
to
defer
shall
be
converted
to
a
fixed
number
of
phantomstock
units
based
on
the
Fair
Market
Value
of
Stock
on
the
date
the
compensation
would
otherwise
have
been
paid
to
the
grantee
if
such
payment
had
not
beendeferred
as
provided
herein.
The
Administrator
shall
have
the
sole
right
to
determine
whether
and
under
what
circumstances
to
permit
such
elections
and
to
imposesuch
limitations
and
other
terms
and
conditions
thereon
as
the
Administrator
deems
appropriate.
(c)
Rights
as
a
Stockholder
.
A
grantee
shall
have
the
rights
as
a
stockholder
only
as
to
shares
of
Stock
acquired
by
the
grantee
upon
settlement
of
aDeferred
Stock
Award;
provided,
however,
that
the
grantee
may
be
credited
with
Dividend
Equivalent
Rights
with
respect
to
the
phantom
stock
units
underlyinghis
Deferred
Stock
Award,
subject
to
such
terms
and
conditions
as
the
Administrator
may
determine.
(d)
Termination
.
Except
as
may
otherwise
be
provided
by
the
Administrator
either
in
the
Award
Agreement
or,
subject
to
Section
18
below,
inwriting
after
the
Award
Agreement
is
issued
(but
in
such
case
only
with
respect
to
acceleration
of
vesting
upon
(1)
a
grantee’s
death,
(2)
a
grantee’s
Disability,
or(3)
a
Change
of
Control
or
Sale
Event),
a
grantee’s
right
in
all
Deferred
Stock
Awards
that
have
not
vested
shall
automatically
terminate
upon
the
grantee’stermination
of
employment
(or
cessation
of
service
relationship)
with
the
Company
and
its
Subsidiaries
for
any
reason.
Section
9.
UNRESTRICTED
STOCK
AWARDS
Grant
or
Sale
of
Unrestricted
Stock.
The
Administrator
may,
in
its
sole
discretion,
grant
(or
sell
at
par
value
or
such
higher
purchase
price
determined
bythe
Administrator)
an
Unrestricted
Stock
Award
under
the
Plan.
Unrestricted
Stock
Awards
may
be
granted
in
respect
of
past
services
or
other
valid
consideration,or
in
lieu
of
cash
compensation
due
to
such
grantee.
11
Section
10.
CASH-BASED
AWARDS
Grant
of
Cash-Based
Awards.
The
Administrator
may,
in
its
sole
discretion,
grant
Cash-Based
Awards
to
any
grantee
in
such
number
or
amount
and
uponsuch
terms,
and
subject
to
such
conditions,
as
the
Administrator
shall
determine
at
the
time
of
grant.
The
Administrator
shall
determine
the
maximum
duration
ofthe
Cash-Based
Award,
the
amount
of
cash
to
which
the
Cash-Based
Award
pertains,
the
conditions
upon
which
the
Cash-Based
Award
shall
become
vested
orpayable,
and
such
other
provisions
as
the
Administrator
shall
determine.
Each
Cash-Based
Award
shall
specify
a
cash-denominated
payment
amount,
formula
orpayment
ranges
as
determined
by
the
Administrator.
Payment,
if
any,
with
respect
to
a
Cash-Based
Award
shall
be
made
in
accordance
with
the
terms
of
theAward
and
may
be
made
in
cash
or
in
shares
of
Stock,
as
the
Administrator
determines.
Section
11.
PERFORMANCE
SHARE
AWARDS
(a)
Nature
of
Performance
Share
Awards
.
The
Administrator
may,
in
its
sole
discretion,
grant
Performance
Share
Awards
independent
of,
or
inconnection
with,
the
granting
of
any
other
Award
under
the
Plan.
The
Administrator
shall
determine
whether
and
to
whom
Performance
Share
Awards
shall
begranted,
the
Performance
Goals,
the
periods
during
which
performance
is
to
be
measured,
and
such
other
limitations
and
conditions
as
the
Administrator
shalldetermine.
(b)
Rights
as
a
Stockholder
.
A
grantee
receiving
a
Performance
Share
Award
shall
have
the
rights
of
a
stockholder
only
as
to
shares
actuallyreceived
by
the
grantee
under
the
Plan
and
not
with
respect
to
shares
subject
to
the
Award
but
not
actually
received
by
the
grantee.
A
grantee
shall
be
entitled
toreceive
shares
of
Stock
under
a
Performance
Share
Award
only
upon
satisfaction
of
all
conditions
specified
in
the
Performance
Share
Award
agreement
(or
in
aperformance
plan
adopted
by
the
Administrator).
(c)
Termination
.
Except
as
may
otherwise
be
provided
by
the
Administrator
either
in
the
Award
agreement
or,
subject
to
Section
18
below,
inwriting
after
the
Award
agreement
is
issued
(but
in
such
case
only
with
respect
to
acceleration
of
vesting
upon
(1)
a
grantee’s
death,
(2)
a
grantee’s
Disability,
or(3)
a
Change
of
Control
or
Sale
Event),
a
grantee’s
rights
in
all
Performance
Share
Awards
shall
automatically
terminate
upon
the
grantee’s
termination
ofemployment
(or
cessation
of
service
relationship)
with
the
Company
and
its
Subsidiaries
for
any
reason.
Section
12.
PERFORMANCE-BASED
AWARDS
TO
COVERED
EMPLOYEES
(a)
Performance-Based
Awards
.
Any
employee
or
other
key
person
providing
services
to
the
Company
and
who
is
selected
by
the
Administratormay
be
granted
one
or
more
Performance-Based
Awards
in
the
form
of
a
Restricted
Stock
Award,
Deferred
Stock
Award,
Performance
Share
Awards
or
Cash-Based
Award
payable
upon
the
attainment
of
Performance
Goals
that
are
established
by
the
Administrator
and
relate
to
one
or
more
of
the
Performance
Criteria,
ineach
case
on
a
specified
date
or
dates
or
over
any
period
or
periods
determined
by
the
Administrator.
The
Administrator
shall
define
in
an
objective
fashion
themanner
of
calculating
the
Performance
Criteria
it
selects
to
use
for
any
Performance
Period.
Depending
on
the
12
Performance
Criteria
used
to
establish
such
Performance
Goals,
the
Performance
Goals
may
be
expressed
in
terms
of
overall
Company
performance
or
theperformance
of
a
division,
business
unit,
or
an
individual.
The
Administrator,
in
its
discretion,
may
adjust
or
modify
the
calculation
of
Performance
Goals
for
suchPerformance
Period
in
order
to
prevent
the
dilution
or
enlargement
of
the
rights
of
an
individual
(i)
in
the
event
of,
or
in
anticipation
of,
any
unusual
orextraordinary
corporate
item,
transaction,
event
or
development,
(ii)
in
recognition
of,
or
in
anticipation
of,
any
other
unusual
or
nonrecurring
events
affecting
theCompany,
or
the
financial
statements
of
the
Company,
or
(iii)
in
response
to,
or
in
anticipation
of,
changes
in
applicable
laws,
regulations,
accounting
principles,
orbusiness
conditions
provided
however,
that
the
Administrator
may
not
exercise
such
discretion
in
a
manner
that
would
increase
the
Performance-Based
Awardgranted
to
a
Covered
Employee.
Each
Performance-Based
Award
shall
comply
with
the
provisions
set
forth
below.
(b)
Grant
of
Performance-Based
Awards
.
With
respect
to
each
Performance-Based
Award
granted
to
a
Covered
Employee,
the
Administrator
shallselect,
within
the
first
90
days
of
a
Performance
Cycle
(or,
if
shorter,
within
the
maximum
period
allowed
under
Section
162(m)
of
the
Code)
the
PerformanceCriteria
for
such
grant,
and
the
Performance
Goals
with
respect
to
each
Performance
Criterion
(including
a
threshold
level
of
performance
below
which
no
amountwill
become
payable
with
respect
to
such
Award).
Each
Performance-Based
Award
will
specify
the
amount
payable,
or
the
formula
for
determining
the
amountpayable,
upon
achievement
of
the
various
applicable
performance
targets.
The
Performance
Criteria
established
by
the
Administrator
may
be
(but
need
not
be)different
for
each
Performance
Cycle
and
different
Performance
Goals
may
be
applicable
to
Performance-Based
Awards
to
different
Covered
Employees.
(c)
Payment
of
Performance-Based
Awards
.
Following
the
completion
of
a
Performance
Cycle,
the
Administrator
shall
meet
to
review
and
certifyin
writing
whether,
and
to
what
extent,
the
Performance
Goals
for
the
Performance
Cycle
have
been
achieved
and,
if
so,
to
also
calculate
and
certify
in
writing
theamount
of
the
Performance-Based
Awards
earned
for
the
Performance
Cycle.
The
Administrator
shall
then
determine
the
actual
size
of
each
Covered
Employee’sPerformance-Based
Award,
and,
in
doing
so,
may
reduce
or
eliminate
the
amount
of
the
Performance-Based
Award
for
a
Covered
Employee
if,
in
its
solejudgment,
such
reduction
or
elimination
is
appropriate.
(d)
Maximum
Award
Payable
.
The
maximum
Performance-Based
Award
payable
to
any
one
Covered
Employee
under
the
Plan
in
respect
of
anycalendar
year
is
(i)
250,000
shares
of
Stock
(subject
to
adjustment
as
provided
in
Section
3(b)
hereof)
for
a
Performance-Based
Award
that
is
a
Restricted
StockAward,
Deferred
Stock
Award
or
Performance
Share
Award
and
(ii)
$1,000,000
in
value
for
a
Performance-Based
Award
that
is
a
Cash-Based
Award.
In
the
caseof
Performance
Goals
based
on
Performance
Cycles
beginning
and
ending
in
different
calendar
years,
the
number
of
shares
of
Stock
or
cash
amount
which
is
paidin
respect
of
each
calendar
year
during
the
Performance
Cycle
shall
be
determined
by
multiplying
the
total
number
of
shares
of
Stock
or
cash
amount,
asapplicable,
paid
for
the
Performance
Cycle
by
a
fraction,
of
which
(i)
the
numerator
is
the
number
of
days
during
the
Performance
Cycle
in
that
particular
calendaryear,
and
(ii)
the
denominator
is
the
total
number
of
days
during
the
Performance
Cycle.
The
limitations
in
this
Section
12(d)
shall
be
interpreted
and
applied
in
amanner
consistent
with
Section
162(m)
of
the
Code
and
the
regulations
thereunder.
13
Section
13.
DIVIDEND
EQUIVALENT
RIGHTS
(a)
Dividend
Equivalent
Rights
.
A
Dividend
Equivalent
Right
may
be
granted
hereunder
to
any
grantee
as
a
component
of
a
Deferred
StockAward,
Restricted
Stock
Award
or
Performance
Share
Award
or
as
a
freestanding
award.
The
terms
and
conditions
of
Dividend
Equivalent
Rights
shall
bespecified
in
the
Award
Agreement.
Dividend
equivalents
credited
to
the
holder
of
a
Dividend
Equivalent
Right
may
be
paid
currently
or
may
be
deemed
to
bereinvested
in
additional
shares
of
Stock,
which
may
thereafter
accrue
additional
equivalents.
Any
such
reinvestment
shall
be
at
Fair
Market
Value
on
the
date
ofreinvestment
or
such
other
price
as
may
then
apply
under
a
dividend
reinvestment
plan
sponsored
by
the
Company,
if
any.
Dividend
Equivalent
Rights
may
besettled
in
cash
or
shares
of
Stock
or
a
combination
thereof,
in
a
single
installment
or
installments.
A
Dividend
Equivalent
Right
granted
as
a
component
of
aDeferred
Stock
Award,
Restricted
Stock
Award
or
Performance
Share
Award
may
provide
that
such
Dividend
Equivalent
Right
shall
be
settled
upon
settlement
orpayment
of,
or
lapse
of
restrictions
on,
such
other
Award,
and
that
such
Dividend
Equivalent
Right
shall
expire
or
be
forfeited
or
annulled
under
the
sameconditions
as
such
other
Award.
A
Dividend
Equivalent
Right
granted
as
a
component
of
a
Deferred
Stock
Award,
Restricted
Stock
Award
or
Performance
ShareAward
may
also
contain
terms
and
conditions
different
from
such
other
Award.
(b)
Interest
Equivalents
.
Any
Award
under
this
Plan
that
is
settled
in
whole
or
in
part
in
cash
on
a
deferred
basis
may
provide
in
the
grant
forinterest
equivalents
to
be
credited
with
respect
to
such
cash
payment.
Interest
equivalents
may
be
compounded
and
shall
be
paid
upon
such
terms
and
conditions
asmay
be
specified
by
the
grant.
(c)
Termination
.
Except
as
may
otherwise
be
provided
by
the
Administrator
either
in
the
Award
Agreement
or,
subject
to
Section
18
below,
inwriting
after
the
Award
Agreement
is
issued
(but
in
such
case
only
with
respect
to
acceleration
of
vesting
upon
(1)
a
grantee’s
death,
(2)
a
grantee’s
Disability,
or(3)
a
Change
of
Control
or
Sale
Event),
a
grantee’s
rights
in
all
Dividend
Equivalent
Rights
or
interest
equivalents
granted
as
a
component
of
a
Deferred
StockAward,
Restricted
Stock
Award
or
Performance
Share
Award
that
has
not
vested
shall
automatically
terminate
upon
the
grantee’s
termination
of
employment
(orcessation
of
service
relationship)
with
the
Company
and
its
Subsidiaries
for
any
reason.
Section
14.
TRANSFERABILITY
OF
AWARDS
(a)
Transferability
.
Except
as
provided
in
Section
14(b)
below,
during
a
grantee’s
lifetime,
his
or
her
Awards
shall
be
exercisable
only
by
thegrantee,
or
by
the
grantee’s
legal
representative
or
guardian
in
the
event
of
the
grantee’s
incapacity.
No
Awards
shall
be
sold,
assigned,
transferred
or
otherwiseencumbered
or
disposed
of
by
a
grantee
other
than
by
will
or
by
the
laws
of
descent
and
distribution.
No
Awards
shall
be
subject,
in
whole
or
in
part,
toattachment,
execution,
or
levy
of
any
kind,
and
any
purported
transfer
in
violation
hereof
shall
be
null
and
void.
(b)
Administrator
Action
.
Notwithstanding
Section
14(a),
the
Administrator,
in
its
discretion,
may
provide
either
in
the
Award
Agreementregarding
a
given
Award
or
by
subsequent
written
approval
that
the
grantee
(who
is
an
employee
or
director)
may
transfer
his
or
14
her
Awards
(other
than
any
Incentive
Stock
Options)
to
his
or
her
immediate
family
members,
to
trusts
for
the
benefit
of
such
family
members,
or
to
partnerships
inwhich
such
family
members
are
the
only
partners,
provided
that
the
transferee
agrees
in
writing
with
the
Company
to
be
bound
by
all
of
the
terms
and
conditions
ofthis
Plan
and
the
applicable
Award.
(c)
Family
Member
.
For
purposes
of
Section
14(b),
“family
member”
shall
mean
a
grantee’s
child,
stepchild,
grandchild,
parent,
stepparent,grandparent,
spouse,
former
spouse,
sibling,
niece,
nephew,
mother-in-law,
father-in-law,
son-in-
law,
daughter-in-law,
brother-in-law,
or
sister-in-law,
includingadoptive
relationships,
any
person
sharing
the
grantee’s
household
(other
than
a
tenant
of
the
grantee),
a
trust
in
which
these
persons
(or
the
grantee)
have
morethan
50
percent
of
the
beneficial
interest,
a
foundation
in
which
these
persons
(or
the
grantee)
control
the
management
of
assets,
and
any
other
entity
in
which
thesepersons
(or
the
grantee)
own
more
than
50
percent
of
the
voting
interests.
(d)
Designation
of
Beneficiary
.
Each
grantee
to
whom
an
Award
has
been
made
under
the
Plan
may
designate
a
beneficiary
or
beneficiaries
toexercise
any
Award
or
receive
any
payment
under
any
Award
payable
on
or
after
the
grantee’s
death.
Any
such
designation
shall
be
on
a
form
provided
for
thatpurpose
by
the
Administrator
and
shall
not
be
effective
until
received
by
the
Administrator.
If
no
beneficiary
has
been
designated
by
a
deceased
grantee,
or
if
thedesignated
beneficiaries
have
predeceased
the
grantee,
the
beneficiary
shall
be
the
grantee’s
estate.
Section
15.
TAX
WITHHOLDING
(a)
Payment
by
Grantee
.
Each
grantee
shall,
no
later
than
the
date
as
of
which
the
value
of
an
Award
or
of
any
Stock
or
other
amounts
receivedthereunder
first
becomes
includable
in
the
gross
income
of
the
grantee
for
Federal
income
tax
purposes,
pay
to
the
Company,
or
make
arrangements
satisfactory
tothe
Administrator
regarding
payment
of,
any
Federal,
state,
or
local
taxes
of
any
kind
required
by
law
to
be
withheld
by
the
Company
with
respect
to
such
income.
The
Company
and
its
Subsidiaries
shall,
to
the
extent
permitted
by
law,
have
the
right
to
deduct
any
such
taxes
from
any
payment
of
any
kind
otherwise
due
to
thegrantee.
The
Company’s
obligation
to
deliver
evidence
of
book
entry
(or
stock
certificates)
to
any
grantee
is
subject
to
and
conditioned
on
tax
withholdingobligations
being
satisfied
by
the
grantee.
(b)
Payment
in
Stock
.
Subject
to
approval
by
the
Administrator,
a
grantee
may
elect
to
have
the
Company’s
minimum
required
tax
withholdingobligation
satisfied,
in
whole
or
in
part,
by
authorizing
the
Company
to
withhold
from
shares
of
Stock
to
be
issued
pursuant
to
any
Award
a
number
of
shares
withan
aggregate
Fair
Market
Value
(as
of
the
date
the
withholding
is
effected)
that
would
satisfy
the
withholding
amount
due.
Section
16.
SECTION
409A
AWARDS.
To
the
extent
applicable,
it
is
intended
that
the
Plan
and
all
Awards
hereunder
comply
with
the
requirements
of
Section
409A
or
an
exemption
thereto,
andthe
Plan
and
all
Award
Agreements
shall
be
interpreted
and
applied
by
the
Administrator
in
a
manner
consistent
with
this
intent
in
order
to
avoid
the
imposition
ofany
additional
tax
under
Section
409A.
15
Notwithstanding
anything
in
the
Plan
or
an
Award
Agreement
to
the
contrary,
in
the
event
that
any
provision
of
the
Plan
or
an
Award
Agreement
is
determined
bythe
Administrator,
in
its
sole
discretion,
to
not
comply
with
the
requirements
of
Section
409A
or
an
exemption
thereto,
the
Administrator
shall,
in
its
solediscretion,
have
the
authority
to
take
such
actions
and
to
make
such
interpretations
or
changes
to
the
Plan
or
an
Award
Agreement
as
the
Administrator
deemsnecessary,
regardless
of
whether
such
actions,
interpretations,
or
changes
shall
adversely
affect
a
grantee,
subject
to
the
limitations,
if
any,
of
applicable
law.
Tothe
extent
that
any
Award
is
determined
to
constitute
“nonqualified
deferred
compensation”
within
the
meaning
of
Section
409A
(a
“
409A
Award
”),
the
Awardshall
be
subject
to
such
additional
rules
and
requirements
as
specified
by
the
Administrator
from
time
to
time
in
order
to
comply
with
Section
409A.
In
this
regard,if
any
amount
under
a
409A
Award
is
payable
upon
a
“separation
from
service”
(within
the
meaning
of
Section
409A)
to
a
grantee
who
is
then
considered
a“specified
employee”
(within
the
meaning
of
Section
409A),
then
no
such
payment
shall
be
made
prior
to
the
date
that
is
the
earlier
of
(i)
six
months
and
one
dayafter
the
grantee’s
separation
from
service,
or
(ii)
the
grantee’s
death,
but
only
to
the
extent
such
delay
is
necessary
to
prevent
such
payment
from
being
subject
tointerest,
penalties
and/or
additional
tax
imposed
pursuant
to
Section
409A.
Further,
the
settlement
of
any
such
Award
may
not
be
accelerated
except
to
the
extentpermitted
by
Section
409A.
In
no
event
whatsoever
shall
the
Company
be
liable
for
any
additional
tax,
interest
or
penalties
that
may
be
imposed
on
any
grantee
bySection
409A
or
any
damages
for
failing
to
comply
with
Section
409A.
Section
17.
TRANSFER,
LEAVE
OF
ABSENCE,
ETC.
For
purposes
of
the
Plan,
the
following
events
shall
not
be
deemed
a
termination
of
employment:
(a)
a
transfer
to
the
employment
of
the
Company
from
a
Subsidiary
or
from
the
Company
to
a
Subsidiary,
or
from
one
Subsidiary
to
another;
or
(b)
an
approved
leave
of
absence
for
military
service
or
sickness,
or
for
any
other
purpose
approved
by
the
Company,
if
the
employee’s
right
to
re-employment
is
guaranteed
either
by
a
statute
or
by
contract
or
under
the
policy
pursuant
to
which
the
leave
of
absence
was
granted
or
if
the
Administratorotherwise
so
provides
in
writing.
Section
18.
AMENDMENTS
AND
TERMINATION
The
Board
may,
at
any
time,
amend
or
discontinue
the
Plan
and
the
Administrator
may,
at
any
time,
amend
or
cancel
any
outstanding
Award
for
thepurpose
of
satisfying
changes
in
law
or
for
any
other
lawful
purpose,
but
no
such
action
shall
(a)
adversely
affect
rights
under
any
outstanding
Award
without
the
holder’s
consent
or
(b)
except
as
provided
in
Section
3(b)
or
3(c),
without
theprior
approval
of
the
Company’s
stockholders,
(1)
reduce
the
exercise
price
of
or
otherwise
reprice,
including
through
replacement
grants,
any
outstanding
StockOption
or
Stock
Appreciation
Right
or
(2)
cancel
in
exchange
for,
or
otherwise
exchange
for,
cash
or
other
securities
any
outstanding
Stock
Option
or
StockAppreciation
Right
with
an
exercise
price
at
or
above
the
then-current
Fair
Market
Value
of
the
Stock
.
To
the
extent
required
under
the
rules
of
any
securitiesexchange
or
market
16
system
on
which
the
Stock
is
listed,
to
the
extent
determined
by
the
Administrator
to
be
required
by
the
Code
to
ensure
that
Incentive
Stock
Options
granted
underthe
Plan
are
qualified
under
Section
422
of
the
Code
or
to
ensure
that
compensation
earned
under
Awards
qualifies
as
performance-based
compensation
underSection
162(m)
of
the
Code,
Plan
amendments
shall
be
subject
to
approval
by
the
Company
stockholders
entitled
to
vote
at
a
meeting
of
stockholders.
Nothing
inthis
Section
18
shall
limit
the
Administrator’s
authority
to
take
any
action
permitted
pursuant
to
Section
3(c).
Section
19.
STATUS
OF
PLAN
With
respect
to
the
portion
of
any
Award
that
has
not
been
exercised
and
any
payments
in
cash,
Stock
or
other
consideration
not
received
by
a
grantee,
agrantee
shall
have
no
rights
greater
than
those
of
a
general
creditor
of
the
Company
unless
the
Administrator
shall
otherwise
expressly
determine
in
connectionwith
any
Award
or
Awards.
In
its
sole
discretion,
the
Administrator
may
authorize
the
creation
of
trusts
or
other
arrangements
to
meet
the
Company’s
obligationsto
deliver
Stock
or
make
payments
with
respect
to
Awards
hereunder,
provided
that
the
existence
of
such
trusts
or
other
arrangements
is
consistent
with
theforegoing
sentence.
Section
20.
CHANGE
OF
CONTROL
PROVISIONS
Upon
the
occurrence
of
a
Change
of
Control
as
defined
in
this
Section
20:
(a)
Unless
provision
is
made
in
connection
with
the
Change
of
Control
for
the
assumption
or
continuation
by
the
successor
entity
of
Awardstheretofore
granted,
or
the
substitution
of
such
Awards
with
new
Awards
of
the
successor
entity
or
parent
thereof,
with
appropriate
adjustment
as
to
the
number
andkind
of
shares
and,
if
appropriate,
the
per
share
exercise
prices,
as
such
parties
shall
agree,
each
outstanding
Stock
Option,
Stock
Appreciation
Right
and
DividendEquivalent
Right
shall
automatically
become
fully
exercisable.
(b)
Unless
provision
is
made
in
connection
with
the
Change
of
Control
for
the
assumption
or
continuation
by
the
successor
entity
of
Awardstheretofore
granted,
or
the
substitution
of
such
Awards
with
new
Awards
of
the
successor
entity
or
parent
thereof,
with
appropriate
adjustment
as
to
the
number
andkind
of
shares
as
such
parties
shall
agree,
(i)
conditions
and
restrictions
on
each
outstanding
Restricted
Stock
Award,
Deferred
Stock
Award
and
Performance
ShareAward
which
relate
solely
to
the
passage
of
time
and
continued
employment
will
be
removed.
Performance
or
other
conditions
(other
than
conditions
andrestrictions
relating
solely
to
the
passage
of
time
and
continued
employment)
will
continue
to
apply
unless
otherwise
provided
in
the
applicable
Award
Agreement.
(c)
“Change
of
Control”
shall
mean
the
occurrence
of
any
one
of
the
following
events:
(i)
any
“
Person
,”
as
such
term
is
used
in
Sections
13(d)
and
14(d)
of
the
Act
(other
than
the
Company,
any
of
its
Subsidiaries,
or
anytrustee,
fiduciary
or
other
person
or
entity
holding
securities
under
any
employee
benefit
plan
or
trust
of
the
Company
or
any
of
its
Subsidiaries),
togetherwith
all
“affiliates”
and
“associates”
(as
such
terms
are
defined
in
Rule
12b-2
under
the
Act)
of
such
person,
shall
become
the
“beneficial
owner”
(as
suchterm
is
defined
in
Rule
13d-3
under
the
Act),
directly
or
indirectly,
of
securities
17
of
the
Company
representing
25
percent
or
more
of
the
combined
voting
power
of
the
Company’s
then
outstanding
securities
having
the
right
to
vote
in
anelection
of
the
Company’s
Board
of
Directors
(“Voting
Securities”)
(in
such
case
other
than
as
a
result
of
an
acquisition
of
securities
directly
from
theCompany);
or
(ii)
persons
who,
as
of
the
Effective
Date,
constitute
the
Company’s
Board
of
Directors
(the
“Incumbent
Directors”)
cease
for
any
reason,including,
without
limitation,
as
a
result
of
a
tender
offer,
proxy
contest,
merger
or
similar
transaction,
to
constitute
at
least
a
majority
of
the
Board,provided
that
any
person
becoming
a
director
of
the
Company
subsequent
to
the
Effective
Date
shall
be
considered
an
Incumbent
Director
if
such
person’selection
was
approved
by
or
such
person
was
nominated
for
election
by
either
(A)
a
vote
of
at
least
a
majority
of
the
Incumbent
Directors
or
(B)
a
vote
ofat
least
a
majority
of
the
Incumbent
Directors
who
are
members
of
a
nominating
committee
comprised,
in
the
majority,
of
Incumbent
Directors;
butprovided
further,
that
any
such
person
whose
initial
assumption
of
office
is
in
connection
with
an
actual
or
threatened
election
contest
relating
to
theelection
of
members
of
the
Board
of
Directors
or
other
actual
or
threatened
solicitation
of
proxies
or
consents
by
or
on
behalf
of
a
Person
other
than
theBoard,
including
by
reason
of
agreement
intended
to
avoid
or
settle
any
such
actual
or
threatened
contest
or
solicitation,
shall
not
be
considered
anIncumbent
Director;
or
(iii)
the
consummation
of
(A)
any
consolidation
or
merger
of
the
Company
where
the
stockholders
of
the
Company,
immediately
prior
tothe
consolidation
or
merger,
would
not,
immediately
after
the
consolidation
or
merger,
beneficially
own
(as
such
term
is
defined
in
Rule
13d-3
under
theAct),
directly
or
indirectly,
shares
representing
in
the
aggregate
more
than
50
percent
of
the
voting
shares
of
the
corporation
issuing
cash
or
securities
inthe
consolidation
or
merger
(or
of
its
ultimate
parent
corporation,
if
any),
(B)
any
sale,
lease,
exchange
or
other
transfer
(in
one
transaction
or
a
series
oftransactions
contemplated
or
arranged
by
any
party
as
a
single
plan)
of
all
or
substantially
all
of
the
assets
of
the
Company;
or
(iv)
the
stockholders
of
the
Company
shall
approve
any
plan
or
proposal
for
the
liquidation
or
dissolution
of
the
Company.
Notwithstanding
the
foregoing,
a
“Change
of
Control”
shall
not
be
deemed
to
have
occurred
for
purposes
of
the
foregoing
clause
(i)
solely
as
the
result
ofan
acquisition
of
securities
by
the
Company
which,
by
reducing
the
number
of
shares
of
Voting
Securities
outstanding,
increases
the
proportionate
number
ofshares
of
Voting
Securities
beneficially
owned
by
any
person
to
25
percent
or
more
of
the
combined
voting
power
of
all
then
outstanding
Voting
Securities;provided,
however
,
that
if
any
person
referred
to
in
this
sentence
shall
thereafter
become
the
beneficial
owner
of
any
additional
shares
of
Voting
Securities
(otherthan
pursuant
to
a
stock
split,
stock
dividend,
or
similar
transaction
or
as
a
result
of
an
acquisition
of
securities
directly
from
the
Company),
then
a
“Change
ofControl”
shall
be
deemed
to
have
occurred
for
purposes
of
the
foregoing
clause
(i).
18
Section
21.
GENERAL
PROVISIONS
(a)
No
Distribution
.
The
Administrator
may
require
each
person
acquiring
Stock
pursuant
to
an
Award
to
represent
to
and
agree
with
the
Companyin
writing
that
such
person
is
acquiring
the
shares
without
a
view
to
distribution
thereof.
(b)
Delivery
of
Stock
.
Notwithstanding
any
provision
of
the
Plan
to
the
contrary,
unless
otherwise
determined
by
the
Administrator
or
required
byany
applicable
law,
rule
or
regulation,
any
obligation
set
forth
in
the
Plan
pertaining
to
the
delivery
or
issuance
of
stock
certificates
evidencing
shares
of
Stock
maybe
satisfied
by
having
issuance
and/or
ownership
of
such
shares
recorded
on
the
books
and
records
of
the
Company
(or,
as
applicable,
its
transfer
agent
or
stockplan
administrator).
Stock
certificates
to
grantees
under
this
Plan
shall
be
deemed
delivered
for
all
purposes
when
the
Company
or
a
stock
transfer
agent
of
theCompany
shall
have
mailed
such
certificates
in
the
United
States
mail,
addressed
to
the
grantee,
at
the
grantee’s
last
known
address
on
file
with
the
Company.
Uncertificated
Stock
shall
be
deemed
delivered
for
all
purposes
when
the
Company
or
a
Stock
transfer
agent
of
the
Company
shall
have
given
to
the
grantee
byelectronic
mail
(with
proof
of
receipt)
or
by
United
States
mail,
addressed
to
the
grantee,
at
the
grantee’s
last
known
address
on
file
with
the
Company,
notice
ofissuance
and
recorded
the
issuance
in
its
records
(which
may
include
electronic
“book
entry”
records).
Notwithstanding
anything
herein
to
the
contrary,
theCompany
shall
not
be
required
to
issue
or
deliver
any
shares
of
Stock
pursuant
to
the
exercise
of
any
Award,
unless
and
until
the
Administrator
has
determined,with
advice
of
counsel
(to
the
extent
the
Administrator
deems
such
advice
necessary
or
advisable),
that
the
issuance
and
delivery
of
such
shares
is
in
compliancewith
all
applicable
laws,
regulations
of
governmental
authorities
and,
if
applicable,
the
requirements
of
any
exchange
on
which
the
shares
of
Stock
are
listed,quoted
or
traded.
All
shares
of
Stock
delivered
pursuant
to
the
Plan
shall
be
subject
to
any
stop-transfer
orders
and
other
restrictions
as
the
Administrator
deemsnecessary
or
advisable
to
comply
with
federal,
state
or
foreign
jurisdiction,
securities
or
other
laws,
rules
and
quotation
system
on
which
the
Stock
is
listed,
quotedor
traded.
The
Administrator
may
place
legends
on
any
Stock
certificate
to
reference
restrictions
applicable
to
the
Stock.
In
addition
to
the
terms
and
conditionsprovided
herein,
the
Administrator
may
require
that
an
individual
make
such
reasonable
covenants,
agreements,
and
representations
as
the
Administrator,
in
itsdiscretion,
deems
necessary
or
advisable
in
order
to
comply
with
any
such
laws,
regulations,
or
requirements.
The
Administrator
shall
have
the
right
to
require
anyindividual
to
comply
with
any
timing
or
other
restrictions
with
respect
to
the
settlement
or
exercise
of
any
Award,
including
a
window-period
limitation,
as
may
beimposed
in
the
discretion
of
the
Administrator.
(c)
Stockholder
Rights
.
Until
Stock
is
deemed
delivered
in
accordance
with
Section
21(b),
no
right
to
vote
or
receive
dividends
or
any
other
rightsof
a
stockholder
will
exist
with
respect
to
shares
of
Stock
to
be
issued
in
connection
with
an
Award,
notwithstanding
the
exercise
of
a
Stock
Option
or
any
otheraction
by
the
grantee
with
respect
to
an
Award.
(d)
Other
Compensation
Arrangements;
No
Employment
Rights
.
Nothing
contained
in
this
Plan
shall
prevent
the
Board
from
adopting
other
oradditional
compensation
arrangements,
including
trusts,
and
such
arrangements
may
be
either
generally
applicable
or
applicable
only
in
specific
cases.
Theadoption
of
this
Plan
and
the
grant
of
Awards
do
not
19
confer
upon
any
employee
any
right
to
continued
employment
with
the
Company
or
any
Subsidiary.
(e)
Trading
Policy
Restrictions
.
Option
exercises
and
other
Awards
under
the
Plan
shall
be
subject
to
such
Company’s
insider
trading
policy
andprocedures,
as
in
effect
from
time
to
time.
(f)
Forfeiture
of
Awards
under
Sarbanes-Oxley
Act
.
If
the
Company
is
required
to
prepare
an
accounting
restatement
due
to
the
materialnoncompliance
of
the
Company,
as
a
result
of
misconduct,
with
any
financial
reporting
requirement
under
the
securities
laws,
then
any
grantee
who
is
one
of
theindividuals
subject
to
automatic
forfeiture
under
Section
304
of
the
Sarbanes-
Oxley
Act
of
2002
shall
reimburse
the
Company
for
the
amount
of
any
Awardreceived
by
such
individual
under
the
Plan
during
the
12-month
period
following
the
first
public
issuance
or
filing
with
the
United
States
Securities
and
ExchangeCommission,
as
the
case
may
be,
of
the
financial
document
embodying
such
financial
reporting
requirement.
Section
22.
EFFECTIVE
DATE
OF
PLAN
This
amended
and
restated
Plan
shall
become
effective
upon
approval
by
the
holders
of
a
majority
of
the
votes
cast
at
a
meeting
of
stockholders
at
which
aquorum
is
present.
No
grants
of
Stock
Options
and
other
Awards
may
be
made
hereunder
after
the
tenth
anniversary
of
the
Effective
Date
and
no
grants
ofIncentive
Stock
Options
may
be
made
hereunder
after
the
tenth
anniversary
of
the
date
the
amended
and
restated
Plan
is
approved
by
the
Board.
Section
23.
GOVERNING
LAW
This
Plan
and
all
Awards
and
actions
taken
thereunder
shall
be
governed
by,
and
construed
in
accordance
with,
the
laws
of
the
State
of
Delaware,
appliedwithout
regard
to
conflict
of
law
principles.
ADOPTION
AND
APPROVAL
OF
PLAN
(AS
AMENDED
AND
RESTATED):
Date
Amended
and
Restated
Plan
Adopted
by
Board:
April
17,
2015Date
Amended
and
Restated
Plan
Adopted
by
Stockholders/Effective
Date:
June
10,
2015Date
Amendment
Adopted
by
Board:
March
1,
2017Date
Amendment
Adopted
by
Stockholders/Effective
Date:
June
15,
2017
20 Exhibit 10.28
CELLDEX THERAPEUTICS, INC.2004 EMPLOYEE STOCK PURCHASE PLANAs amended effective as of June 15, 2017
1.
Purpose.
The
purpose
of
the
Celldex
Therapeutics,
Inc.
2004
Employee
Stock
Purchase
Plan
(the
“Plan”)
is
to
provide
eligible
employees
of
CelldexTherapeutics,
Inc.
(the
“Company”)
and
certain
of
its
subsidiaries
with
opportunities
to
purchase
shares
of
the
Company’s
common
stock,
par
value
$.01
per
share(the
“Common
Stock”).
Four
Hundred
Thousand
(400,000)
shares
of
Common
Stock
in
the
aggregate
have
been
approved
and
reserved
for
this
purpose.
The
Planis
intended
to
constitute
an
“employee
stock
purchase
plan”
within
the
meaning
of
Section
423(b)
of
the
Internal
Revenue
Code
of
1986,
as
amended
(the
“Code”),and
shall
be
interpreted
in
accordance
with
that
intent.
2.
Administration.
The
Plan
will
be
administered
by
the
person
or
persons
(the
“Administrator”)
appointed
by
the
Company’s
Board
of
Directors
(the“Board”)
for
such
purpose.
The
Administrator
has
authority
to
make
rules
and
regulations
for
the
administration
of
the
Plan,
and
its
interpretations
and
decisionswith
regard
thereto
shall
be
final
and
conclusive.
No
member
of
the
Board
or
individual
exercising
administrative
authority
with
respect
to
the
Plan
shall
be
liablefor
any
action
or
determination
made
in
good
faith
with
respect
to
the
Plan
or
any
option
granted
hereunder.
3.
Offerings.
The
Company
will
make
one
or
more
offerings
to
eligible
employees
to
purchase
Common
Stock
under
the
Plan
(“Offerings”).
Unlessotherwise
determined
by
the
Administrator,
each
Offering
will
begin
on
the
first
business
day
occurring
on
or
after
each
January
1
and
July
1
and
will
end
on
thelast
business
day
occurring
on
or
before
the
following
June
30
and
December
31,
respectively.
The
Administrator
may,
in
its
discretion,
designate
a
different
periodfor
any
Offering,
provided
that
no
Offering
shall
exceed
27
months
in
duration
or
overlap
any
other
Offering.
4.
Eligibility.
Each
individual
classified
as
an
employee
(within
the
meaning
of
Section
3401(c)
of
the
Code
and
the
regulations
thereunder)
by
theCompany
or
a
Designated
Subsidiary
(as
defined
in
Section
12)
on
the
Company’s
or
the
Designated
Subsidiary’s
payroll
records
during
the
relevant
participationperiod
are
eligible
to
participate
in
any
one
or
more
of
the
Offerings
under
the
Plan,
provided
that
as
of
the
first
day
of
the
applicable
Offering
(the
“OfferingDate”)
they
are
customarily
employed
by
the
Company
or
a
Designated
Subsidiary
for
more
than
20
hours
a
week
and
more
than
five
months
in
the
calendar
yearduring
which
the
Offering
Date
occurs
or
in
the
calendar
year
immediately
preceding
such
year,
and
have
completed
at
least
30
days
of
employment.
5.
Participation.
An
employee
eligible
on
any
Offering
Date
may
participate
in
such
Offering
by
submitting
an
enrollment
form
to
his
appropriatepayroll
location
at
least
15
business
days
before
the
Offering
Date
(or
by
such
other
deadline
as
shall
be
established
for
the
Offering).
The
form
will
(a)
state
awhole
percentage
to
be
deducted
from
his
Compensation
(as
defined
in
Section
12)
per
pay
period,
(b)
authorize
the
purchase
of
Common
Stock
for
him
in
eachOffering
in
accordance
with
the
terms
of
the
Plan
and
(c)
specify
the
exact
name
or
names
in
which
shares
of
Common
Stock
purchased
for
him
are
to
be
issuedpursuant
to
Section
11.
An
employee
who
does
not
enroll
in
accordance
with
these
procedures
will
be
deemed
to
have
waived
his
right
to
participate.
Unless
anemployee
files
a
new
enrollment
form
or
withdraws
from
the
Plan,
his
deductions
and
purchases
will
continue
at
the
same
percentage
of
Compensation
for
futureOfferings,
provided
he
remains
eligible.
Notwithstanding
the
foregoing,
participation
in
the
Plan
will
neither
be
permitted
nor
be
denied
contrary
to
therequirements
of
the
Code.
6.
Employee
Contributions.
Each
eligible
employee
may
authorize
payroll
deductions
at
a
minimum
of
one
percent
(1%)
up
to
a
maximum
of
fifteenpercent
(15%)
of
his
Compensation
for
each
pay
period.
The
Company
will
maintain
book
accounts
showing
the
amount
of
payroll
deductions
made
by
each
participating
employee
for
each
Offering.
No
interest
will
accrue
or
be
paid
on
payroll
deductions.
7.
Deduction
Changes.
Except
as
may
be
determined
by
the
Administrator
in
advance
of
an
Offering,
an
employee
may
not
increase
or
decrease
hispayroll
deduction
during
any
Offering,
but
may
increase
or
decrease
his
payroll
deduction
with
respect
to
the
next
Offering
(subject
to
the
limitations
of
Section
6)by
filing
a
new
enrollment
form
at
least
15
business
days
before
the
next
Offering
Date
(or
by
such
other
deadline
as
shall
be
established
for
the
Offering).
TheAdministrator
may,
in
advance
of
any
Offering,
establish
rules
permitting
an
employee
to
increase,
decrease
or
terminate
his
payroll
deduction
during
an
Offering.
8.
Withdrawal.
An
employee
may
withdraw
from
participation
in
the
Plan
by
delivering
a
written
notice
of
withdrawal
to
his
appropriate
payrolllocation.
The
employee’s
withdrawal
will
be
effective
as
of
the
next
business
day.
Following
an
employee’s
withdrawal,
the
Company
will
promptly
refund
to
himhis
entire
account
balance
under
the
Plan
(after
payment
for
any
Common
Stock
purchased
before
the
effective
date
of
withdrawal).
Partial
withdrawals
are
notpermitted.
The
employee
may
not
begin
participation
again
during
the
remainder
of
the
Offering,
but
may
enroll
in
a
subsequent
Offering
in
accordance
withSection
5.
9.
Grant
of
Options.
On
each
Offering
Date,
the
Company
will
grant
to
each
eligible
employee
who
is
then
a
participant
in
the
Plan
an
option(“Option”)
to
purchase
on
the
last
day
of
such
Offering
(the
“Exercise
Date”),
at
the
Option
Price
hereinafter
provided
for,
(a)
a
number
of
shares
of
CommonStock
determined
by
dividing
such
employee’s
accumulated
payroll
deductions
on
such
Exercise
Date
by
the
lower
of
(i)
85%
of
the
Fair
Market
Value
of
theCommon
Stock
on
the
Offering
Date,
or
(ii)
85%
of
the
Fair
Market
Value
of
the
Common
Stock
on
the
Exercise
Date,
or
(b)
such
other
lesser
maximum
numberof
shares
as
shall
have
been
established
by
the
Administrator
in
advance
of
the
Offering;
provided,
however,
that
such
Option
shall
be
subject
to
the
limitations
setforth
below.
Each
employee’s
Option
shall
be
exercisable
only
to
the
extent
of
such
employee’s
accumulated
payroll
deductions
on
the
Exercise
Date.
Thepurchase
price
for
each
share
purchased
under
each
Option
(the
“Option
Price”)
will
be
85%
of
the
Fair
Market
Value
of
the
Common
Stock
on
the
Offering
Dateor
the
Exercise
Date,
whichever
is
less.
Notwithstanding
the
foregoing,
no
employee
may
be
granted
an
option
hereunder
if
such
employee,
immediately
after
the
option
was
granted,
would
betreated
as
owning
stock
possessing
five
percent
(5%)
or
more
of
the
total
combined
voting
power
or
value
of
all
classes
of
stock
of
the
Company
or
any
Parent
orSubsidiary
(as
defined
in
Section
12).
For
purposes
of
the
preceding
sentence,
the
attribution
rules
of
Section
424(d)
of
the
Code
shall
apply
in
determining
thestock
ownership
of
an
employee,
and
all
stock
which
the
employee
has
a
contractual
right
to
purchase
shall
be
treated
as
stock
owned
by
the
employee.
In
addition,no
employee
may
be
granted
an
Option
which
permits
his
rights
to
purchase
stock
under
the
Plan,
and
any
other
employee
stock
purchase
plan
of
the
Company
andits
Parents
and
Subsidiaries,
to
accrue
at
a
rate
which
exceeds
$25,000
of
the
fair
market
value
of
such
stock
(determined
on
the
option
grant
date
or
dates)
for
eachcalendar
year
in
which
the
Option
is
outstanding
at
any
time.
The
purpose
of
the
limitation
in
the
preceding
sentence
is
to
comply
with
Section
423(b)(8)
of
theCode
and
shall
be
applied
taking
Options
into
account
in
the
order
in
which
they
were
granted.
10.
Exercise
of
Option
and
Purchase
of
Shares.
Each
employee
who
continues
to
be
a
participant
in
the
Plan
on
the
Exercise
Date
shall
be
deemed
tohave
exercised
his
Option
on
such
date
and
shall
acquire
from
the
Company
such
number
of
whole
shares
of
Common
Stock
reserved
for
the
purpose
of
the
Plan
ashis
accumulated
payroll
deductions
on
such
date
will
purchase
at
the
Option
Price,
subject
to
any
other
limitations
contained
in
the
Plan.
Any
amount
remaining
inan
employee’s
account
at
the
end
of
an
Offering
will
be
refunded
to
the
employee
promptly.
11.
Issuance
of
Certificates.
Certificates
representing
shares
of
Common
Stock
purchased
under
the
Plan
may
be
issued
only
in
the
name
of
theemployee,
in
the
name
of
the
employee
and
another
person
of
legal
age
as
joint
tenants
with
rights
of
survivorship,
or
in
the
name
of
a
broker
authorized
by
theemployee
to
be
his,
or
their,
nominee
for
such
purpose.
12.
Definitions.
(a)
The
term
“Compensation”
means
the
amount
of
base
pay,
prior
to
salary
reduction
pursuant
to
either
Sections
125,
132(f)
or
401(k)
ofthe
Code,
but
excluding
overtime,
commissions,
incentive
or
bonus
awards,
allowances
and
reimbursements
for
expenses
such
as
relocation
allowances
ortravel
expenses,
income
or
gains
on
the
exercise
of
Company
stock
options,
and
similar
items.
(b)
The
term
“Designated
Subsidiary”
means
any
present
or
future
Subsidiary
(as
defined
below)
that
has
been
designated
by
the
Board
toparticipate
in
the
Plan.
The
Board
may
so
designate
any
Subsidiary,
or
revoke
any
such
designation,
at
any
time
and
from
time
to
time,
either
before
orafter
the
Plan
is
approved
by
stockholders.
(c)
The
term
“Fair
Market
Value
of
the
Common
Stock”
as
of
any
date
of
determination
shall
be
(i)
the
closing
price
of
a
share
ofCommon
Stock
as
of
such
date
on
the
principal
established
stock
exchange
or
national
market
system
on
which
the
Common
Stock
is
then
traded
(or,
ifthere
is
no
trading
in
the
Common
Stock
as
of
such
date,
the
closing
price
of
a
share
of
Common
Stock
on
the
most
recent
date
preceding
such
date
onwhich
trades
of
the
Common
Stock
were
recorded),
or
(ii)
if
the
shares
of
Common
Stock
are
not
then
traded
on
an
established
stock
exchange
or
nationalmarket
system
but
are
then
traded
in
an
over-the-counter
market,
the
average
of
the
closing
bid
and
asked
prices
for
the
shares
of
Common
Stock
in
suchover-the-counter
market
as
such
date
(or,
if
there
are
no
closing
bid
and
asked
prices
for
the
shares
of
Stock
as
of
such
date,
the
average
of
the
closing
bidand
the
asked
prices
for
the
shares
of
Common
Stock
on
the
most
recent
date
preceding
such
date
on
which
such
closing
bid
and
asked
prices
are
availableon
such
over-the-counter
market),
or
(iii)
if
the
shares
of
Common
Stock
are
not
then
listed
on
a
national
securities
exchange
or
national
market
system
ortraded
in
an
over-the-counter
market,
the
price
of
a
share
of
Common
Stock
as
determined
by
the
Administrator
in
its
discretion
in
a
manner
consistentwith
Section
409A
of
the
Code
and
Treasury
Regulation
1.409A-1(b)(5)(iv),
as
well
as
any
successor
regulation
or
interpretation.
(d)
The
term
“Parent”
means
a
“parent
corporation”
with
respect
to
the
Company,
as
defined
in
Section
424(e)
of
the
Code.
(e)
The
term
“Subsidiary”
means
a
“subsidiary
corporation”
with
respect
to
the
Company,
as
defined
in
Section
424(f)
of
the
Code.
13.
Rights
on
Termination
of
Employment.
If
a
participating
employee’s
employment
terminates
for
any
reason
before
the
Exercise
Date
for
anyOffering,
no
payroll
deduction
will
be
taken
from
any
pay
due
and
owing
to
the
employee
and
the
balance
in
his
account
will
be
paid
to
him
or,
in
the
case
of
hisdeath,
to
his
designated
beneficiary
as
if
he
had
withdrawn
from
the
Plan
under
Section
8.
An
employee
will
be
deemed
to
have
terminated
employment,
for
thispurpose,
if
the
corporation
that
employs
him,
having
been
a
Designated
Subsidiary,
ceases
to
be
a
Subsidiary,
or
if
the
employee
is
transferred
to
any
corporationother
than
the
Company
or
a
Designated
Subsidiary.
An
employee
will
not
be
deemed
to
have
terminated
employment,
for
this
purpose,
if
the
employee
is
on
anapproved
leave
of
absence
for
military
service
or
sickness,
or
for
any
other
purpose
approved
by
the
Company,
if
the
employee’s
right
to
reemployment
isguaranteed
either
by
a
statute
or
by
contract
or
under
the
policy
pursuant
to
which
the
leave
of
absence
was
granted
or
if
the
Administrator
otherwise
provides
inwriting.
14.
Special
Rules.
Notwithstanding
anything
herein
to
the
contrary,
the
Administrator
may
adopt
special
rules
applicable
to
the
employees
of
aparticular
Designated
Subsidiary,
whenever
the
Administrator
determines
that
such
rules
are
necessary
or
appropriate
for
the
implementation
of
the
Plan
in
ajurisdiction
where
such
Designated
Subsidiary
has
employees;
provided
that
such
rules
are
consistent
with
the
requirements
of
Section
423(b)
of
the
Code.
Suchspecial
rules
may
include
(by
way
of
example,
but
not
by
way
of
limitation)
the
establishment
of
a
method
for
employees
of
a
given
Designated
Subsidiary
to
fundthe
purchase
of
shares
other
than
by
payroll
deduction,
if
the
payroll
deduction
method
is
prohibited
by
local
law
or
is
otherwise
impracticable.
Any
specialrules
established
pursuant
to
this
Section
14
shall,
to
the
extent
possible,
result
in
the
employees
subject
to
such
rules
having
substantially
the
same
rights
as
otherparticipants
in
the
Plan.
15.
Optionees
Not
Stockholders.
Neither
the
granting
of
an
Option
to
an
employee
nor
the
deductions
from
his
pay
shall
constitute
such
employee
aholder
of
the
shares
of
Common
Stock
covered
by
an
Option
under
the
Plan
until
such
shares
have
been
purchased
by
and
issued
to
him.
16.
Rights
Not
Transferable.
Rights
under
the
Plan
are
not
transferable
by
a
participating
employee
other
than
by
will
or
the
laws
of
descent
anddistribution,
and
are
exercisable
during
the
employee’s
lifetime
only
by
the
employee.
17.
Application
of
Funds.
All
funds
received
or
held
by
the
Company
under
the
Plan
may
be
combined
with
other
corporate
funds
and
may
be
used
forany
corporate
purpose.
18.
Adjustment
in
Case
of
Changes
Affecting
Common
Stock.
In
the
event
of
a
subdivision
of
outstanding
shares
of
Common
Stock,
or
the
payment
of
adividend
in
Common
Stock,
the
number
of
shares
approved
for
the
Plan,
and
the
share
limitation
set
forth
in
Section
9,
shall
be
increased
proportionately,
and
suchother
adjustment
shall
be
made
as
may
be
deemed
equitable
by
the
Administrator.
In
the
event
of
any
other
change
affecting
the
Common
Stock,
such
adjustmentshall
be
made
as
may
be
deemed
equitable
by
the
Administrator
to
give
proper
effect
to
such
event.
19.
Amendment
of
the
Plan.
The
Board
may
at
any
time,
and
from
time
to
time,
amend
the
Plan
in
any
respect,
except
that
without
the
approval,
within12
months
of
such
Board
action,
by
the
stockholders,
no
amendment
shall
be
made
increasing
the
number
of
shares
approved
for
the
Plan
or
making
any
otherchange
that
would
require
stockholder
approval
in
order
for
the
Plan,
as
amended,
to
qualify
as
an
“employee
stock
purchase
plan”
under
Section
423(b)
of
theCode.
20.
Insufficient
Shares.
If
the
total
number
of
shares
of
Common
Stock
that
would
otherwise
be
purchased
on
any
Exercise
Date
plus
the
number
ofshares
purchased
under
previous
Offerings
under
the
Plan
exceeds
the
maximum
number
of
shares
issuable
under
the
Plan,
the
shares
then
available
shall
beapportioned
among
participants
in
proportion
to
the
amount
of
payroll
deductions
accumulated
on
behalf
of
each
participant
that
would
otherwise
be
used
topurchase
Common
Stock
on
such
Exercise
Date.
21.
Termination
of
the
Plan.
The
Plan
may
be
terminated
at
any
time
by
the
Board.
Upon
termination
of
the
Plan,
all
amounts
in
the
accounts
ofparticipating
employees
shall
be
promptly
refunded.
22.
Governmental
Regulations.
The
Company’s
obligation
to
sell
and
deliver
Common
Stock
under
the
Plan
is
subject
to
obtaining
all
governmentalapprovals
required
in
connection
with
the
authorization,
issuance,
or
sale
of
such
stock.
The
Plan
shall
be
governed
by
Massachusetts
law
except
to
the
extent
that
such
law
is
preempted
by
federal
law.
23.
Issuance
of
Shares.
Shares
may
be
issued
upon
exercise
of
an
Option
from
authorized
but
unissued
Common
Stock,
from
shares
held
in
the
treasuryof
the
Company,
or
from
any
other
proper
source.
24.
Tax
Withholding.
Participation
in
the
Plan
is
subject
to
any
minimum
required
tax
withholding
on
income
of
the
participant
in
connection
with
thePlan.
Each
employee
agrees,
by
entering
the
Plan,
that
the
Company
and
its
Subsidiaries
shall
have
the
right
to
deduct
any
such
taxes
from
any
payment
of
any
kindotherwise
due
to
the
employee,
including
shares
issuable
under
the
Plan.
25.
Notification
Upon
Sale
of
Shares.
Each
employee
agrees,
by
entering
the
Plan,
to
give
the
Company
prompt
notice
of
any
disposition
of
sharespurchased
under
the
Plan
where
such
disposition
occurs
within
two
years
after
the
date
of
grant
of
the
Option
pursuant
to
which
such
shares
were
purchased.
26.
Effective
Date
and
Approval
of
Shareholders.
The
Plan
was
adopted
by
the
Board
of
Directors
on
March
31,
2004
and
was
effective
upon
approvalby
the
stockholders
of
the
Company
on
May
13,
2004.
QuickLinks
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here
to
rapidly
navigate
through
this
documentExhibit
21.1
SUBSIDIARIES
OF
CELLDEX
THERAPEUTICS,
INC.
Name
Jurisdiction
of
Organization
Ownership
Percentage
Celldex
Australia
PTY
LTD
Australia
100% QuickLinks
Exhibit
21.1
SUBSIDIARIES
OF
CELLDEX
THERAPEUTICS,
INC.
QuickLinks
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here
to
rapidly
navigate
through
this
documentExhibit
23.1
CONSENT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
We
hereby
consent
to
the
incorporation
by
reference
in
the
Registration
Statements
on
Form
S-8
(Nos.
333-219867,
333-219869,
333-205694,
333-189336,333-151728
and
333-117602)
and
on
Form
S-3
(Nos.
333-214882
and
333-215747)
of
Celldex
Therapeutics,
Inc.
of
our
report
dated
March
7,
2018
relating
to
thefinancial
statements
and
the
effectiveness
of
internal
control
over
financial
reporting,
which
appears
in
this
Form
10-K./s/
PricewaterhouseCoopers
LLPBoston,
Massachusetts
March
7,
2018 QuickLinks
Exhibit
23.1
CONSENT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.1
CERTIFICATION
I,
Anthony
S.
Marucci,
certify
that:
1.
I
have
reviewed
this
annual
report
on
Form
10-K
of
Celldex
Therapeutics,
Inc.;
2.
Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;
3.
Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
thefinancial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;
4.
The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
the
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))
for
the
registrantand
have:
(a)
Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
those
entities,particularly
during
the
period
in
which
this
report
is
being
prepared;
(b)
Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposesin
accordance
with
generally
accepted
accounting
principles;
(c)
Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
theeffectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
(d)
Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recentfiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
theregistrant's
internal
control
over
financial
reporting;
and
5.
The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):
(a)
All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and
(b)
Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.Date:
March
7,
2018
By
/s/
ANTHONY
S.
MARUCCI
Name:
Anthony
S.
Marucci
Title:
President and Chief Executive Officer QuickLinks
Exhibit
31.1
CERTIFICATION
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.2
CERTIFICATION
I,
Sam
Martin,
certify
that:
1.
I
have
reviewed
this
annual
report
on
Form
10-K
of
Celldex
Therapeutics,
Inc.;
2.
Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;
3.
Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
thefinancial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;
4.
The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
the
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))
for
the
registrantand
have:
(a)
Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
those
entities,particularly
during
the
period
in
which
this
report
is
being
prepared;
(b)
Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposesin
accordance
with
generally
accepted
accounting
principles;
(c)
Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
theeffectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
(d)
Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recentfiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
theregistrant's
internal
control
over
financial
reporting;
and
5.
The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):
(a)
All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and
(b)
Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.Date:
March
7,
2018
By
/s/
SAM
MARTIN
Name:
Sam
Martin
Title:
Senior Vice President and Chief FinancialOfficer QuickLinks
Exhibit
31.2
CERTIFICATION
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
32
CERTIFICATION
OF
CHIEF
EXECUTIVE
OFFICER
AND
CHIEF
FINANCIAL
OFFICER
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTED
PURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002
Each
of
the
undersigned
hereby
certifies,
pursuant
to
18
U.S.C.
Section
1350,
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-Oxley
Act
of
2002,
in
hiscapacity
as
an
officer
of
Celldex
Therapeutics,
Inc.
(the
"Company"),
that,
to
his
knowledge,
the
Annual
Report
of
the
Company
on
Form
10-K
for
the
periodended
December
31,
2017
(the
"Form
10-K"),
fully
complies
with
the
requirements
of
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
(15
U.S.C.§78m
or
78o(d))
and
that
the
information
contained
in
such
report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
theCompany.
This
written
statement
is
being
furnished
to
the
Securities
and
Exchange
Commission
as
an
exhibit
to
the
Form
10-K.
A
signed
original
of
this
statementhas
been
provided
to
the
Company
and
will
be
retained
by
the
Company
and
furnished
to
the
Securities
and
Exchange
Commission
or
its
staff
upon
request.
This
certification
shall
not
be
deemed
"filed"
for
any
purpose,
nor
shall
it
be
deemed
to
be
incorporated
by
reference
into
any
filing
under
the
Securities
Act
of1933
or
the
Exchange
Act.Date:
March
7,
2018
By:
/s/
ANTHONY
S.
MARUCCI
Name:
Anthony
S.
Marucci
Title:
President and Chief Executive OfficerDate:
March
7,
2018
By:
/s/
SAM
MARTIN
Name:
Sam
Martin
Title:
Senior Vice President and Chief FinancialOfficer QuickLinks
Exhibit
32
CERTIFICATION
OF
CHIEF
EXECUTIVE
OFFICER
AND
CHIEF
FINANCIAL
OFFICER
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTEDPURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002