Avalon Vertex License, Development and Commercialization Agreement

From Avalon's press release: "Vertex Pharmaceuticals Licenses VX-944 to Avalon Pharmaceuticals for Development and Commercialization in the Treatment of Cancer" of February 15, 2005:

Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) and Avalon Pharmaceuticals Incorporated today announced that they have entered into a licensing agreement for the development of the investigational agent VX-944 in oncology indications. Under the terms of the agreement, Avalon will hold exclusive rights to develop and commercialize VX-944 worldwide for the treatment of various cancers.

Avalon, a privately held company with a therapeutic focus in cancer, will make up to $73 million in up-front license fees and milestone payments to Vertex based on the successful development and commercialization of VX-944 in oncology. Upon commercialization, Vertex will receive royalties on product sales. Vertex retains certain rights to co-promote VX-944 in U.S. and European markets."

From Avalon's Form S-1 as filed on May 3, 2005:

"In February 2005, Avalon entered into a license agreement with Vertex Pharmaceuticals Incorporated for the development of AVN944 in oncology indications. Under the terms of the license, we hold exclusive rights to develop and commercialize AVN944 worldwide for the treatment or prevention of cancer. In consideration for this license, we have agreed to pay Vertex a total of $5 million in upfront license fees by November 1, 2005. In addition, we have agreed to pay Vertex milestone payments based on the achievement of the following milestones: (1) initiation of the first human clinical trial, the results of which are designed to demonstrate the safety and efficacy of AVN944 on a sufficient number of patients to support regulatory approval of the drug in any country (generally a Phase III clinical trial); (2) first filing of a new drug application for AVN944 in any country; and (3) first regulatory approval of AVN944 in any country. Assuming we achieve each of these milestones in both hematological and solid tumor indications, we will owe Vertex up to $68 million in milestone payments.
Upon commercialization, we will pay Vertex royalties on product sales. In the event we decide to contract with a third party to market or commercialize AVN944 in the United States, the United Kingdom, France, Germany, Italy, Spain or Japan, Vertex has the right of first negotiation on the marketing and commercialization of the drug product. If we fail to obtain regulatory approval and initiate sales and marketing efforts in any other countries within a year after there are commercial sales in all of the forgoing countries, Vertex has the right to market and sell AVN944 drug product on our behalf in any such other countries."

The License, Development and Commercialization Agreement is available here.