6. ROYALTIES AND REIMBURSEMENT
6.13 Exemption for Ultra-Orphan Indication Research
(d) Upon acquisition of the clinical development from an Exempt Collaborator. Licensee shall pay PHS royalties which become payable from that point onwards in accordance with Appendix C, Section IV. Licensee must inform PHS in writing within thirty (30) days of Licensee ’s decision to acquire or not acquire clinical development from the Exempt Collaborator.
8. RECORD KEEPING
8.1 Licensee agrees to keep accurate and correct records of Licensed Products made, used, sold, or imported and Licensed Processes practicedunder this Agreement appropriate to determine the amount of royalties due PHS . These records shall be retained for at least five (5) yearsfollowing a given reporting period and shall be available during normal business hours for inspection, at the expense of PHS , by anaccountant selected by PHS for the sole purpose of verifying reports and royalty payments hereunder. The accountant shall only disclose to PHS information relating to the accuracy of reports and royalty payments made under this Agreement . Such inspections may be made nomore than once each calendar year, with reasonable efforts to minimize disruption of Licensee ’s normal business activities. Such records forany particular calendar quarter shall be subject to no more than one (1) inspection. If an inspection shows an underreporting orunderpayment in excess of five percent (5%) for any twelve (12) month period, then Licensee shall reimburse PHS for the cost of theinspection at the time Licensee pays the unreported royalties, including any additional royalties as required by Paragraph 9.8. All royaltypayments required under this Paragraph shall be due within sixty (60) days of the date PHS provides Licensee notice of the payment due.
9. REPORTS ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS
9.1 Prior to signing this Agreement, Licensee has provided PHS with the Commercial Development Plan in Appendix E, under which Licensee intends to bring the subject matter of the Licensed Patent Rights to the point of Practical Application. This Commercial Development Plan is hereby incorporated by reference into this Agreement. Based on this plan, performance Benchmarks are determined as specified in Appendix D.
9.2 Licensee shall provide written annual reports on its product development progress or efforts to commercialize under the Commercial Development Plan for each of the Licensed Fields of Use within sixty (60) days after December 31 of each calendar year. These progress reports shall include, but not be limited to: progress on research and development, status of applications for regulatory approvals, manufacturing, sublicensing, marketing, importing, and sales during the preceding calendar year, as well as, plans for the present calendar year. PHS also encourages these reports to include information on any of Licensee ’s public service activities that relate to the Licensed Patent Rights . If reported progress differs from that projected in the Commercial Development Plan and Benchmarks , Licensee shall explain the reasons for these differences. In the annual report, Licensee may propose amendments to the Commercial Development Plan , acceptance of which by PHS may not be denied unreasonably. Licensee agrees to provide any additional information reasonably required by PHS to evaluate Licensee ’s performance under this Agreement . Licensee may amend the Benchmarks at any time upon written approval by PHS . PHS shall not unreasonably withhold approval of any request of Licensee to extend the time periods of this schedule if the request is supported by a reasonable showing by Licensee of diligence in its performance under the Commercial Development Plan and toward bringing the Licensed Products to the point of Practical Application as defined in 37 C.F.R. §404.3(d). Licensee shall amend the Commercial Development Plan and Benchmarks at the request of PHS to address any Licensed Fields of Use not specifically addressed in the plan originally submitted.
9.3 Licensee shall report to PHS the dates for achieving Benchmarks specified in Appendix D and the First Commercial Sale in each country in the Licensed Territory within thirty (30) days of such occurrences.
9.4 Licensee shall submit to PHS , within sixty (60) days after each calendar half-year ending June 30 and December 31, a royalty report, as described in the example in Appendix F, setting forth for the preceding half-year period the amount of the Licensed Products sold or Licensed Processes practiced by or on behalf of Licensee in each country within the Licensed Territory , the Net Sales, and the amount of royalty accordingly due. With each royalty report, Licensee shall submit payment of earned royalties due. If no earned royalties are due to PHS for any reporting period, the written report shall so state. The royalty report shall be certified as correct by an authorized officer of Licensee and shall include a detailed listing of all deductions made under Paragraph 2.13 to determine Net Sales made under Article 6 to determine royalties due.
9.5 Licensee agrees to forward semi-annually to PHS a copy of these reports received by Licensee from its sublicensees during the preceding half-year period as shall be pertinent to a royalty accounting to PHS by Licensee for activities under the sublicense.
10.4 The Licensee agrees, after its First Commercial Sale and as part of its marketing and product promotion, to develop educational materials (e.g., brochures, website, etc.) directed to patients and physicians detailing the Licensed Products or medical aspects of the prophylactic and therapeutic uses of the Licensed Products.
10.5 The Licensee agrees to supply, to the Mailing Address for Agreement Notices indicated on the Signature Page, the Office of Technology Transfer, the NIH with inert samples of the Licensed Products or Licensed Processes or their packaging for educational and display purposes only.
APPENDIX D – BENCHMARKS AND PERFORMANCE
Licensee agrees to the following Benchmarks for its performance under this Agreement and, within thirty (30) days of achieving a Benchmark, shall notify PHS that the Benchmark has been achieved.
Benchmarks for Licensed Products of Orphan Indication (there is no formal Phase III clinical trial required for Marketing Approval) – liver
I. Initiation of first Phase I clinical trial or foreign equivalent – 2012
II. Initiation of first Phase II clinical trial or foreign equivalent – 2014
Benchmarks for Licensed Products – brain
I. Initiation of Preclinical Development phase or foreign equivalent – 2011
II. Initiation of first Phase I clinical trial or foreign equivalent – 2012
III. Initiation of first Phase II clinical trial or foreign equivalent – 2014
IV. Initiation of first Phase III clinical trial or foreign equivalent – 2017
V. Submission to Regulatory Authority of first Marketing Approval or foreign equivalent – 2020
Amendment 2: APPENDIX D — BENCHMARKS AND PERFORMANCE (L-116/2011)
Licensee agrees to the following Benchmarks for its performance under this Agreement and, within thirty (30) days after achieving a Benchmark , shall notify PHS that the Benchmark has been achieved.
Note: No formal Phase III clinical trial is required for Marketing Approval for any Orphan Indication
Benchmarks for a Licensed Product of Orphan Indication – liver
I. Initiation of first Phase I clinical trial or foreign equivalent — 2012
II. Initiation of first Phase II clinical trial or foreign equivalent — 2016
III. Submission to Regulatory Authority of first Marketing Approval or foreign equivalent — 2018
Benchmarks for a Licensed Product – brain
I. Initiation of Preclinical Development phase or foreign equivalent — 2011
II. Initiation of first Phase I clinical trial or foreign equivalent — 2013
III. Initiation of first Phase II clinical trial or foreign equivalent — 2016
IV. Submission to Regulatory Authority of first Marketing Approval or foreign equivalent —2018