Entasis – DNDi/GARDP, Gonorrhoea Medication, Collaboration Agreement

Term & termination | Effects of termination

Summary of Approaches

What are the effects of termination or withdrawal by a party?
- When Entasis terminates the entire Agreement:
  - (a) the licenses to Entasis’ regulatory dossier, background IP and foreground IP automatically terminate;
  - (b) DNDi must return or destroy confidential information;
  - (c) DNDi must transfer all marketing authorizations;
  - (d) licenses to DNDi regulatory dossiers, background IP and foreground IP become perpetual and irrevocable; and
  - (e) DNDi must train any third party that Entasis appoints to continue the development and commercialization of products.

- When Entasis terminates only as to selected countries, Entasis’ licenses only terminate as to those countries, and DNDi only transfers authorizations for those countries.
- When Entasis terminates, a 90-day period begins during which the parties must negotiate granting DNDi the right to commercialize within all or part of the Entasis territory, at DNDi’s request. When the 90-day period expires, DNDi may seek FDA market authorization if Entasis has not done so. DNDi must grant an exclusive, royalty-bearing license to Entasis to commercialize the product in the U.S., unless the parties agreed to transfer U.S. commercialization rights to DNDi.
- When DNDi terminates:
  - (a) licenses to Entasis regulatory dossiers, background IP and foreground IP become perpetual and irrevocable as to terminated countries;
  - (b) licenses to DNDi dossiers and IP continue;
  - (c) DNDi may file for FDA marketing authorization (if Entasis has not done so) and must grant Entasis an exclusive, royalty-bearing license; and
  - (d) restrictions on DNDi’s right to appoint commercial sublicensees terminate.
- Termination Due to Insolvency: When either party terminates for this reason, (a) licenses granted by the insolvent party becomes perpetual and irrevocable; and (b) the parties must negotiate concerns relating to the insolvent party’s sublicencees.
- Termination By Agreement: When the parties agree to termination, all rights and licenses terminate, and the parties must return or destroy confidential information, including information in the possession of sublicencees.
- Termination After Phase III MC Trial: When a party terminates on this ground, all licenses granted the party terminate and all licenses granted to the other party become perpetual and irrevocable.

Annotations

This collaboration agreement (“Agreement”) for the development and commercialization of a gonorrhea drug is between Entasis Therapeutics Limited, a U.K.-registered subsidiary of an antibiotic resistance biotech firm, and Drugs for Neglected Diseases initiative (“DNDi”), a nonprofit drug research and development organization. DNDi acted through the Global Antibiotic Research and Development Partnership (“GARDP”), which was then an unincorporated DNDi partnership with the World Health Organization. The parties agreed to jointly develop gonorrhoea products using Zolliflodacin, an oral antibiotic developed with support from the National Institutes of Health (“NIH”). The Agreement is effective as of July 4, 2017. In 2019, GARDP, which had become an independent nonprofit foundation, replaced DNDi as a contractual party on the same terms as in the original Agreement.

When the Agreement was executed, Entasis had already filed an investigational new drug application with the FDA, and completed two phase 1 clinical trials and a phase 2 trial. The Agreement contemplates that the parties will conduct additional studies, beginning with a QT trial in the United States, which measures the drug’s impact on an aspect of the heart’s functioning, that Entasis will conduct (“QT Study”). When the QT study is complete, DNDi will sponsor an international, multicenter phase III study (“Phase III MC Trial”). The parties will collaborate on Phase III MC Trial design. DNDi must also conduct chemistry, manufacturing and control (“CMC”) activities as part of drug development. The regulatory strategy is based in part on Entasis obtaining authorization from the FDA and EMA first.

A Joint Steering Committee (“JSC”) manages the collaboration in accordance with a development plan, regulatory plan, and manufacturing and supply plan. The development and regulatory plans were attached to the Agreement but redacted. The manufacturing and supply plan was to be negotiated after the collaboration began.

Each party grants the other an exclusive license in its background technology and foreground technology, which the Agreement calls “collaboration technology”. Both parties must share manufacturing know-how. Entasis must share API know-how needed for some DNDi development activities. The Agreement does not contemplate jointly-owned foreground technology.

The Agreement includes provisions to prevent antibiotic resistance, including a prohibition on development for “future indications” without both parties’ consent. When negotiating a manufacturing and supply plan, the parties must minimize the number of manufacturing sublicencees in order to ensure continued efficacy and responsible use of the product.

Entasis’ territory includes specified high-income countries. DNDi will commercialize products for the rest of the world. The schedule that defines each party’s exact Territory is redacted, however territory information is available in this GARDP press release.

Provision Language

12. Term and Terminationstrong>span>p>
Consequences of Terminationb>p>
12.7strong> In the event of termination by Entasis pursuant to <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement–13/” target=”_blank” rel=”noopener“>Clause 12.2a>span> (following a final determination by an arbitrator of material breach) or 12.6: span>p>
12.7.1 the licenses granted by Entasis to DNDi under Clauses <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhea–medication–collaboration–agreement/” target=”_blank” rel=”noopener“>7.3a>span>, <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement/” target=”_blank” rel=”noopener“>7.5, 7.9 and 7.10a>span>, as applicable, shall automatically terminate in so far as they relate to the terminated countries and revert to Entasis and any sublicenses granted thereunder shall automatically terminate and revert to Entasis; span>p>
12.7.2 if the entire Agreement is terminated, DNDi shall return to Entasis, or at its request destroy, all Confidential Information and materials received from Entasis pursuant to this Agreement (including in the possession of a Sublicensee); span>p>
12.7.3 DNDi shall transfer, or have transferred, to Entasis copies of all relevant <a href=”#kt“>Marketing Authorisations a> in so far as they relate to the terminated countries and, if the entire Agreement is terminated, other documents held by DNDi in relation to the Drug Product within thirty (30) days of termination and shall do all things and execute all documents necessary to give effect to such transfers. If such transfer does not comply with legal requirements for the given country, DNDi shall use reasonable efforts to ensure that Entasis has the benefit of the Marketing Authorisations and consent to any Drug <a href=”#kt“>Regulatory Authoritya> to the cross–referencing in the relevant countries to the data and information on span>file with such Drug Regulatory Authority as may be necessary to facilitate the granting of a second Marketing Authorisation for the Drug Product in the relevant countries. In such circumstances DNDi will, in so far as legally permissible cancel the first Marketing Authorisation for the Drug Product in a country, on the granting of the second Marketing Authorisation . DNDi will further, at its sole cost and expense, complete whatever procedures are necessary or desirable and do all such other acts and things necessary or desirable to enable Entasis (either itself or in conjunction with a Third Party) to develop , <a href=”#kt“>Manufacturea>, and <a href=”#kt“>Commercialise a> the Drug Product in the relevant countries. span>p>
12.7.4 the licenses granted by DNDi to Entasis pursuant to Clauses 7.3, 7.7, 7.9, and 7.10 shall survive and become perpetual, worldwide, fully paid up, exclusive, and irrevocable; and span>p>
12.7.5 DNDi shall provide the necessary training to any Third Party appointed by Entasis to implement the development of the Drug Product, regulatory activities, Manufacture and Commercialisation or to ensure continuity in the supplies of the Drug Product. span>p>
12.8strong> In the event of termination by DNDi pursuant to Clause 12.2 (following a final determination by an arbitrator of material breach): span>p>
12.8.1 the licenses granted by Entasis to DNDi under Clauses 7.3, 7.5, 7.9 and 7.10, as applicable in so far as they relate to the terminated countries, shall become perpetual and irrevocable; span>p>
12.8.2 the licenses granted by DNDi to Entasis under Clauses 7.3, 7.7 and 7.9 and 17.10, as applicable in so far as they relate to the terminated countries, shall continue; span>p>
12.8.3 to the extent Entasis has not obtained or is not in the process of obtaining Marketing Authorisations in the Field with the FDA, DNDi may file for the first Marketing Authorisation for the Drug Product in the Field with the FDA; provided, that DNDi gives Entasis sixty (60) days’ notice that DNDi plans to file such Marketing Authorisation application. To the extent DNDi obtains Marketing Authorisation from either the FDA, DNDi shall and hereby does grant Entasis an exclusive, royalty–bearing license and right of reference, with the right to grant sublicenses and further rights of reference through multiple tiers, under such Marketing Authorisation with the FDA to Commercialise the Drug Product in the Field in the Entasis Territory. If DNDi obtains a Marketing Authorisation with the FDA and Entasis elects to Commercialize the Drug Product in the United States, then Entasis will pay DNDi a three percent (3%) royalty on net sales (to be defined by the parties at the time of such termination) of Drug Product in the Field in the United States until such time as DNDi recoups one hundred percent (100%) of its out–of–pocket development and regulatory filing costs incurred by DNDi for the Marketing Authorization with the FDA as of the effective date of termination; and span>p>
12.8.4 Clause 7.6 shall cease to apply. span>p>
12.9strong> In the event of termination by either Party pursuant to Clause 12.3: span>p>
12.9.1 the licenses granted by the insolvent Party to the solvent Party under this Agreement shall become perpetual and irrevocable; span>p>
12.9.2 the Parties will negotiate in good faith to address concerns relating to sublicensees in the insolvent Party’s territory; and span>p>
12.9.3 if DNDi terminates pursuant to Clause 12.3, to the extent Entasis has not obtained or is not in the process of obtaining Marketing Authorisations in the Field with the FDA, DNDi may file for the first Marketing Authorisation for the Drug Product in the Field with the FDA; provided, that DNDi gives Entasis sixty (60) days’ notice that DNDi plans to file such Marketing Authorisation ; provided, further, that DNDi shall and hereby does grant Entasis an exclusive, perpetual, sublicenseable (through multiple tiers), royalty free license to use data contained in and reference any Marketing Authorisations from the FDA obtained by DNDi; and span>p>
12.9.4 if Entasis is the insolvent Party Clause 7.6 shall cease to apply. span>p>
12.10strong> In the event of termination by the Parties pursuant to Clause 12.4, all rights and licenses granted under this Agreement will terminate and each Party shall return to the other, or at the other’s request destroy, all Confidential Information and materials received from the other Party pursuant to this Agreement (including in the possession of a Sublicensee). span>p>
12.11strong> In the event of termination by either Party pursuant to Clause 12.5, the licenses granted to the terminating Party shall terminate and revert to the non–termination Party, and the licenses granted by the terminating Party to the non–terminating Party under this Agreement shall become perpetual and irrevocable. If Entasis is the terminating Party, at DNDi’s request, Entasis will give DNDI an exclusive first right for a period of ninety (90) days to discuss an opportunity for DNDi to commercialize the Drug Product in one or more countries in the Entasis Territory on mutually acceptable terms. Further, to the extent Entasis has not obtained or is not in the process of obtaining Marketing Authorisations in the Field with the FDA by the end of such ninety (90) day period (or such longer period as the parties may agree), DNDi may file for the first Marketing Authorisation for the Drug Product in the Field with the FDA; provided, that DNDi gives Entasis sixty (60) days’ notice that DNDi plans to file such Marketing Authorisation application. To the extent DNDi obtains Marketing Authorisation from the FDA, unless it is agreed that DNDi will commercialize the Drug Product in the United States, DNDi shall and hereby does grant Entasis an exclusive (except with respect to DNDi as agreed by the Parties after termination), royalty–bearing license and right of reference, with the right to grant sublicenses and further rights of reference through multiple tiers, under such Marketing Authorisation with the FDA to Commercialise the Drug Product in the Field in the Entasis Territory. If DNDi obtains a Marketing Authorisation with the FDA and Entasis elects to Commercialize the span> span>Drug Product in the United States, then Entasis will pay DNDi a three percent (3%) royalty on net sales (to be defined by the parties at the time of such termination) of Drug Product in the Field in the United States until such time as DNDi recoups fifty percent (50%) of its out–of–pocket regulatory filing costs incurred by DNDi for the Marketing Authorization with the FDA as of the effective date of termination.span>p>
Survival span>b>p>
12.12strong> Notwithstanding the expiration or termination of this Agreement, and except as provided expressly herein, the provisions of Clauses 1 (to the extent defined terms are contained in the following surviving Clauses), <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement–8/” target=”_blank” rel=”noopener“>6.3a>span>, <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhea–medication–collaboration–agreement/” target=”_blank” rel=”noopener“>7.1, 7.2, 7.3a>span>, each of <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement/” target=”_blank” rel=”noopener“>7.5, 7.6, 7.7, 7.8, 7.9, 7.10a>span>, and <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement–6/” target=”_blank” rel=”noopener“>7.14a>span> solely to the extent required under clauses <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement–13/” target=”_blank” rel=”noopener“>12.7a>span>—12.11, <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement–9/” target=”_blank” rel=”noopener“>11.1a>span> (with respect to any matter, fact, or circumstance arising or existing prior to the termination or expiration of this Agreement), 11.2 (with respect to any matter, fact, or circumstance arising or existing prior to the termination or expiration of this Agreement), 11.3, 11.4, 11.5, 11.6 (except as otherwise specified in Clause 12.8 and 12.9) , 11.7, 11.8, 11.9 (for a reasonable period of time following expiration or termination), 11.10, 11.11, 12.1 (as applicable), 12.7 (as applicable), 12.8 (as applicable), 12.9 (as applicable), 12.10 (as applicable), 12.11 (as applicable), this Clause 12.12, <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement–4/” target=”_blank” rel=”noopener“>13, 15.1a>span>, 16.1, 16.3, 16.7, 16.9, 16.11 (to the extent required under Clauses 12.7—12.11), 16.12, 16.13, and <a href=”https://ghiaa.org/provision_document/entasis–dndi–gardp–gonorrhoea–medication–collaboration–agreement–15/” target=”_blank” rel=”noopener“>17a> shall remain in full force effect. span>p>

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