PDL/Roche Co-Development and Commercialization Agreement

The Protein Design Labs/Roche Co-Development and Commercialization Agreement was nominated for the "Most Creative and Significant Deal" at the Best of Biotech 2005 Awards at the 18th Annual Biotech CEO Meeting in Laguna Niguel, California on October 9, 2005.

From the September, 2004 press release, PDL's 2004 10-K, and the full text of the agreement:

PDL/Roche Co-Development and Commercialization Agreement

• worldwide agreement to co-develop and commercialize Zenapax (R) (daclizumab) for asthma


• based on recent positive phase II data


• $17.5 million upfront payment


• up to $187.5 million in development and commercialization milestones


• Roche and PDL will globally co-develop daclizumab in asthma and share development expenses


• US: PDL retains right to co-promote; Roche may co-promote


• ROW: PDL will receive royalties on net sales of the product in asthma

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There is a lot of history here:

• this collaboration dates from 1989, and was revised in 1999


• based on the 1999 agreement, Roche pursued transplantation as an indication, but had rights for all indications


• the relationship was amended in October 2003 by the PDL Roche Worldwide Daclizumab Agreement:


1. PDL reacquired rights for all indications other than transplant by paying $80M


2. Roche can put the transplant rights to PDL, or PDL can cause the transplant rights to revert to PDL


• after a phase II trial for asthma, PDL/Roche entered into this 2004 Asthma Collaboration

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Interesting things about this collaboration:

• the co-promotion rights are controlled by PDL, not Roche


• regulatory approvals, filings and data - are shared across territories and fields


• termination

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Termination:

• is on a region by region basis


• in all termination scenerios: (with two exceptions):


• reversion of rights to PDL


• Roche technology to PDL


• regulatory approvals, filings and data to PDL


• trademarks to PDL


• no royalties to Roche


• in the case of PDL’s default, Roche may choose instead to continue license and be relieved of due diligence obligations


• Exceptions: termination of co-promotion in US due to:


1. termination by Roche for breach of PDL: Roche continues, PDL stops; PDL can recover rights and pay Roche a royalty


2. termination by Roche for [for failure to meet sales targets?]: Roche stops; PDL pays a royalty (a different royalty!) until rights for transplantation revert

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Other things worth seeing:

• descriptions in exhibit of development expenses, marketing expenses, &&


• party abandoning joint patents enjoys immunity from suit enforcing the abandoned patents


• Roche indemnifies PDL for infringement except for methods/materials used in manufacturing not previously disclosed to Roche (license payments to third parties are shared)


• change of control language

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In a November 1, 2005 press release, PDL and Roche announced a further amendment to the relationship, restoring certain rights in the field of transplant to Roche:

• $10 million upfront payment


• up to $145 million milestones


• Roche will continue to manufacture and promote Zenapax® exclusively on a worldwide basis


• Roche and PDL will share equally global development costs


• PDL has the option to co-promote for transplant maintenance in the United States


• Outside the United States, PDL will receive royalties on net sales of the product in transplant maintenance


• PDL agreed not to exercise its option to promote Zenapax® for prevention of acute kidney transplant rejection


• PDL is no longer required to make the payment which would otherwise be due in 2007 for such right


• PDL and Roche will continue with the co-development in respiratory disorders, as announced in September 2004