This excerpt taken from the TRCA DEF 14A filed Sep 6, 2006.
Governance. The collaboration would be overseen by a Joint Steering Committee (the Somatuline JSC), consisting of an equal number of representatives of each party. The Somatuline JSC would meet at least twice per
year for so long as the parties are carrying out joint development of any licensed product. The Somatuline JSC would make decisions unanimously, and any deadlock would be referred to the senior executives of the parties for resolution. Ipsen would have the tie-breaking vote for persisting deadlock, unless the matter in dispute relates to each partys development costs, payments, audits, certain patent litigation matters or the manufacture, supply or marketing of any licensed product in Tercicas territory, or if such tie-breaking vote would result in the elimination or reduction of Ipsens obligation to participate and fund the development activities under the initial or any subsequent development plan. The parties would also establish a Joint Finance Committee (the Somatuline JFC), consisting of one representative of each party, to oversee the parties development costs and certain payment and audit matters. The Somatuline JFC would operate by consensus and would refer any dispute to the Somatuline JSC for resolution.
Development. Ipsen would be solely responsible for the completion of its ongoing development at its cost with a view to obtaining marketing authorization in the target label in Tercicas territory. The parties would engage in certain initial co-development activities for Somatuline® Autogel® in Tercicas territory pursuant to an initial development plan, and Ipsen would be responsible for 40% of the development costs relating to such activities under the initial development plan, while Tercica would be responsible for the remaining 60% (provided that under certain conditions, this allocation may be different). Either party may propose to the other party subsequent development plans encompassing development activities for any improved product or combination product. If any such subsequent development plan is agreed upon, the parties would conduct such co-development jointly pursuant to such plan. In the event the parties do not agree on any subsequent development plan for an improved product or combination product, the party proposing such subsequent development plan may choose to perform the development activities on its own, with the other party having the right to opt-in at various time points during the development and through regulatory approval of such product by paying the other party an amount equal to a certain multiple of its allocated percentage of all past development expenses and sharing future expenses and profits for such product.
Regulatory Affairs and Commercialization. Ipsen would be solely responsible for all regulatory affairs related to obtaining regulatory authorization to sell Somatuline® Autogel® in Tercicas territory. Upon obtaining marketing authorization, Ipsen would appoint Tercica as its agent to take over responsibilities of a marketing authorization holder in countries of Tercicas territory. The parties would cooperate with each other in the submission of data or documents and would enter into a safety data exchange agreement to govern pharmacovigilance matters. Tercica would be solely responsible at its own cost for establishing resale pricing and acquiring reimbursement for Somatuline® Autogel® in Tercicas territory.
Tercica would be solely responsible and would be obligated to use diligent efforts to commercialize Somatuline® Autogel® in Tercicas territory pursuant to the commercialization plan. Specifically, Tercica would commit to an annual minimum sales requirement in each country. Tercicas failure to meet such minimum sales requirement for three consecutive years, or for two consecutive years if coupled with its failure to undertake and fund a certain level of promotional efforts, would give Ipsen the right to terminate the Somatuline License and Collaboration Agreement with respect to such country.
Manufacture and Supply. Ipsen would manufacture and supply Somatuline® Autogel® to Tercica for Tercicas clinical needs at cost and for Tercicas commercial needs at a per unit cost equal to 20% of the average net selling price in Tercicas territory, and the parties would agree on the manufacture and supply of any improved product or combination product.
Payments. In consideration of the rights granted to Tercica under the agreement, Tercica would pay Ipsen upfront payments of $25,037,000, which Tercica would satisfy through issuance of the First Convertible Note, and, upon obtaining marketing authorization of Somatuline® Autogel® in the United States for the target label (or for a label which provides access to an agreed upon number of patients), milestone payments of 30,000,000, which Tercica would satisfy through the issuance of the Second Convertible Note. If marketing authorization is obtained but the target label or access to the agreed upon patient population is not approved within three years
from the date of obtaining such initial marketing authorization, such milestone amount would not be owed. Tercica would also pay Ipsen royalties on a sliding scale from 15% to 25% of net sales in each country, depending on the annual net sales for Tercicas territory. These royalty obligations will continue for so long as Tercica maintains market exclusivity in such country with respect to Somatuline® Autogel® under patent protection, orphan drug status or regulatory protection. The royalty would be reduced for the existence of market competition, lack of valid claims covering the product or third-party royalty payments. Royalties are owed for the longer of market exclusivity or fifteen years after the first commercial sale.
Termination Rights. The Somatuline License and Collaboration Agreement, once entered into, would be effective on a product-by-product and country-by-country basis until the expiration of the royalty term with respect to such product in such country. Upon expiration of the royalty term with respect to a given Somatuline® Autogel® product, in a given country, Tercica would be granted a fully paid-up, irrevocable and perpetual non-exclusive license under Ipsens patents and know how and trademarks with respect to such Somatuline® Autogel® product. The Somatuline License and Collaboration Agreement could be terminated by either party for the other partys uncured material breach or insolvency. Subject to certain conditions, Ipsen could terminate the Somatuline License and Collaboration Agreement if Tercica elects not to exercise its opt-in rights with respect to a subsequent development plan or fails to pay Ipsen the relevant opt-in payment amount where Tercica does elect to opt-in. In addition, if Tercica undergoes a change of control and the acquiring entity is a pharmaceutical company with products that compete with those of Ipsen in any country, Ipsen has the right to terminate the license. If such change of control does not involve a competitor, Ipsen also has the right to terminate the license, but in that event Ipsen would be required to pay to Tercica the fair market value of Somatuline® Autogel® in Tercicas licensed territory as measured at that time by a third-party valuation expert.