Provision Language
Definitions
“FTE Rate” shall mean [**] dollars ($[**]) per FTE for the period commencing on the Effective Date and endingDecember 31, 2012. On January 1, 2013 and on January 1st of each subsequent Calendar Year, the foregoing rate shall be increased for theCalendar Year then commencing by the percentage increase, if any, in the Consumer Price Index (“CPI”) as of December 31 of the then most recently completed Calendar Year with respect to the level of the CPI on December 31, 2010. As used in this Section 1.32, Consumer Price Index Or CPI means the Consumer Price Index — Urban Wage Earners and Clerical Workers, US City Average, All Items, 1982-84 = 100, published by the US Department of Labor, Bureau of Labor Statistics (or its successor equivalent index).
“Major Countries” shall mean US, UK, Germany, France, Italy, Spain, and Japan.
“Net Sales” shall mean, for a Product in a particular period, the amount calculated by subtracting from the Sales of such Product for such period: (i) a lump sum deduction of (A) [**] percent ([**]%) of Sales, with respect to Sales in the US, (B) [**] percent ([**]%) of Sales, with respect to Sales in the Major Countries (other than the US), Canada, Brazil and Switzerland, and (C) [**] percent ([**]%) of Sales, with respect to Sales in all territories other than those set forth in clauses (A) and (B) above, in lieu of those deductions that are not accounted for within Roche on a Product-by-Product basis (e.g. , freight, postage charges, transportation insurance, packing materials for dispatch of goods, custom duties); (ii) uncollectible amounts and credit card charges (including processing fees) accrued during such period on such Sales and not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Product for such period; and (iii) government mandated fees and taxes and other government charges accrued during such period on such Sales not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Product for such period, including, for example, any fees, taxes or other charges that become due in connection with any healthcare reform, change in government pricing or discounting schemes, or other action of a government or regulatory body. Notwithstanding the foregoing, amounts received by any member of the Roche Group for the sale of Product among members of the Roche Group for resale shall not be included in the computation of Sales. As expressly contemplated in the definition of “Worldwide Net Sales” set forth in the Second SRA Amendment, this definition of “Net Sales”, together with the definition of “Sales” set forth in Section 1.78, shall be used in lieu of the Net Sales definition contained in the SRA, solely to calculate the “net sales by Licensee” pursuant to the SRA wherein such Licensee is Roche, for the sole purposes of determining the amount of “Worldwide Net Sales” pursuant to the SRA; for clarity, Sections 1.50 and 1.78 shall not otherwise be used with respect to the SRA and the definitions of “Net Sales” and “Worldwide Net Sales” as set forth in the SRA shall remain unchanged.
“Quarterly R&D Fee” shall mean the amount determined by (i) multiplying the FTE Rate by the number of FTEs contributed by PTC during the applicable Calendar Quarter or portion thereof as set forth in the then-current Research Plan, SRA Development Plan or NewProduct Development Plan, as applicable, it being understood that such amounts shall include, if not yet invoiced or paid, fees for PTC FTEs contributed prior to the applicable Calendar Quarter, and (ii) adding to the number in clause (i) all out-of-pocket costs incurred during the applicable Calendar Quarter as set forth in the then-current Research Plan, SRA Development Plan or New Product Development Plan, as applicable, it being understood that such amounts shall include, to the extent not yet invoiced or paid, any such amounts incurred by PTC prior tothe applicable Calendar Quarter.
11. Payment
11.1 Research Recognition Payment. Within [**] Business Days after the Effective Date and receipt of the invoice set forth in Appendix 11.1 (which shall be deemed issued to Roche on the Execution Date) from PTC, Roche shall make an unconditional, non-refundable, non-creditable payment to PTC of thirty million US dollars (US$ 30,000,000) in recognition of PTC’s research efforts prior to the Effective Date. This Agreement, including without limitation Section 20.5 hereof, shall terminate in its entirety and shall be void and of no further force or effect if Roche fails to make the payment required by this Section 11.1 within such [**] Business Day period.
11.2 Research and Development Funding
(a) Within [**] days after the end of each Calendar Quarter, PTC shall provide an invoice to Roche for the Quarterly R&D Fees actually incurred during such Calendar Quarter, and in prior periods with respect to amounts not yet invoiced or paid, and Roche shall pay PTC such Quarterly R&D Fees within [**] days after receipt thereof.
(b) Roche shall not be obligated to pay Quarterly R&D Fee amounts in excess of [**] percent ([**]%) above the amounts set forth in the then-current Research Plan as approved by the JSC, or in the then-current SRA Development Plan or New Product Development Plan, as applicable, unless such amounts have been pre approved by Roche in writing.
(c) If the Foundation performs any work or provides or procures any services as set forth in the Research Plan, SRA Development Plan or New Product Development Plan, then the Foundation shall provide Roche with an invoice setting forth all costs incurred by the Foundation in connection with such work or services, including out-of-pocket costs, internal costs and a reasonable allocation of overhead, and providing reasonable documentation thereof, and Roche shall pay Foundation such invoiced amount within [**] days after receipt thereof.
11.3 Research and Development Event Payments. Roche shall pay up to a total of one hundred thirty-five million US dollars (US$135,000,000) in relation to the achievements of events with respect to each Product. The payments under this Section 11.3 (each, an “R&D Event Payment”) shall be paid by Roche according to the following schedule of research and development events (each, an “R&D Event”):
[TABLE REDACTED]
Each R&D Event Payment shall be non-refundable and non-creditable, and shall be paid no more than once, for the first applicable Product reaching the applicable R&D Event; provided, however, that if an R&D Event Payment is paid for a Product and such Product subsequently is withdrawn from development for any reason, then such R&D Event Payment shall be creditable against the analogous R&D Event Payment that would be due for a subsequent Product to reach such R&D Event; that is, if the subsequent Product replaces the previous Product with respect to the R&D Event Payments. For example, if (i) [**] in accordance with the above table.
If a given Product is developed and continues to be developed (and does not fail), and one or more additional Product(s) are also developed [**], then no payments with respect to all R&D Events achieved by each subsequent Product shall be made until such time [**]. For clarity, upon [**], all payments with respect to R&D Events achieved by such subsequent Product shall be due and payable.
The achievement of an R&D Event for a Product shall result in a simultaneous obligation to pay the R&D Event Payment for each antecedent R&D Event that has not been previously paid for such Product, unless such Product is a replacement of a Product that was withdrawn from development as set forth above. For example, on a Product-by-Product and a country-by-country or regional basis, the achievement of an R&D Event in any of rows [**]shall result in a simultaneous obligation to pay the relevant earlier R&D Event Payment in rows [**], as applicable, that had not previously been paid.
Upon achievement by or on behalf of any member of the Roche Group of any of the R&D Events, Roche shall promptly (but in no event more than [**] days after achievement thereof) notify PTC and shall pay to PTC all corresponding R&D Event Payments within [**] days after(x) occurrence of the applicable R&D Event and (y) receipt of an invoice from PTC.
11.4 Sales-Based Events. Roche shall pay to PTC up to a total of three hundred twenty-five million US dollars (US$325,000,000) based on aggregate Calendar Year Net Sales of a Product in the Territory:
[TABLE REDACTED]
Each of the sales-based event payments shall be paid no more than once during the Agreement Term, at first occurrence of the event for the Product in the Territory first reaching the respective Net Sales Threshold, irrespective of whether or not the previous sales-based event payment was triggered by the same or by a different Product, and shall be non-refundable and non-creditable. Upon achievement by the Roche Group of any of the foregoing sales events, Roche shall promptly (but in no event more than [**] days after achievement thereof) notify PTC, and shall pay PTC the corresponding sales event payment within [**] days after receipt of an invoice from PTC.
11.5 Royalty Payments
11.5.1 Royalty Term. Royalties shall be payable by Roche on Net Sales of Products on a Product-by Product basis until the expiry of the Royalty Term. Thereafter, the licenses granted to Roche and its Affiliates shall be fully paid-up, royalty-free and non-exclusive with respect to such Product in such country, on a Product-by-Product and country-by-country basis.
The following royalty rates shall apply to the respective tiers of aggregate Calendar Year Net Sales of a Product per area of the Territory, on an incremental basis, as follows:
[TABLE REDACTED]
For example, if Net Sales of a Product for a given Calendar Year are US$[**], then the royalties applicable on such Net Sales of such Product for that year shall be calculated as follows: [**]
For the purpose of calculating royalties of a Product, Calendar Year Net Sales shall be subject to the adjustments set forth elsewhere in this Agreement.
11.5.2 Combination Product. If a Product is sold as part of a Combination Product in a country, the Net Sales of the Product, for the purposes of determining payments based on Net Sales, shall be determined by multiplying the Net Sales of the Combination Product in such country, during the applicable Net Sales reporting period, by the fraction, A/(A+B), where:
A is the average sale price of the Product by members of the Roche Group when sold separately in finished form in such country and B is the average sale price by members of the Roche Group of the other product(s) included in the Combination Product when sold separately in finished form in such country, in each case during the applicable Net Sales reporting period or, if sales of both the Product and the other product(s) did not occur in such period, then in the most recent Net Sales reporting period in which sales of both occurred.
If the Product is sold as part of a Combination Product and is sold separately in finished form in such country, but the other product(s) included in the Combination Product are not sold separately in finished form in such country, the Net Sales of the Product, for the purposes of determining payments based on Net Sales, shall be determined by multiplying the Net Sales of the Combination Product in such country by the fraction C/D where:
C is the average sale price, in such country, of the Product contained in such Combination Product when sold separately and D is the average sale price, in such country, for the Combination Product, in each case during the applicable Net Sales reporting period.
If the Product is not sold separately in finished form in the country, but all of the other product(s) included in the Combination Product in such country are sold separately, the Net Sales of the Product, for the purposes of determining payments based on Net Sales, shall be determined by multiplying the Net Sales of the Combination Product in such country by the fraction (D-E)/D, where:
D is the average sale price, in such country, of the Combination Product, and E is the average sale price of the other product(s) included in the Combination Product in finished form in such country, in each case during the applicable Net Sales reporting period.
If Net Sales of the Product when included in a Combination Product cannot be determined using the methods above, Net Sales for the purposes of determining payments based on Net Sales shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of F/(F+G) where:
F is the fair market value of the Product and G is the fair market value of all other pharmaceutical product(s) included in the Combination Product as reasonably determined in good faith by the Parties.
Where the preceding sentence is applicable, Roche shall in good faith propose to PTC an allocation of relative value of the Product and all other product(s) included in the Combination Product, PTC shall in good faith consider such proposal, and the Parties shall seek to reach agreement on such allocation. If the Parties are unable to reach such agreement within [**] days after Roche provides such proposal, the issue shall be referred for binding resolution to a mutually agreeable individual (not affiliated with either Party) with expertise in the marketing and sales of similar pharmaceutical products (including experience in pricing and reimbursement), such resolution to occur within [**] days after such referral.
11.5.3 No Valid Claim. Notwithstanding the foregoing, the royalty rate applicable to a Product sold in any country in the Territory shall be reduced to[**] percent ([**]%) of the rate otherwise payable during any portion of the Royalty Term when there is no Valid Claim of the PTC Patent Rights, Roche Product Patent Rights or Joint Patent Rights Covering such Product in such country; provided that such reduction shall not apply during any portion of the Royalty Term when such Product is entitled to Marketing Exclusivity in such country and there is no Generic Competition in such country.
11.5.4 Third Party Payments. The Parties, working through the JIPT, shall determine whether any Patent Rights Controlled by a Third Party are necessary or useful for the development and commercialization of Products. Roche and PTC shall each bear [**] percent ([**]%) of costs (including without limitation upfront payments, milestones and royalties) with respect to any license for any Third Party Patent Right that the JIPT (or Roche in its exercise of its final decision-making authority thereunder) reasonably determines is necessary for the development and commercialization of Products, and shall agree in good faith through the JIPT on the allocation of such costs with respect to any license for any Third Party Patent Right that is useful (but not necessary) for the development and commercialization of Products; provided that in no event shall PTC be required to pay any such costs except through a deduction from royalties payable by Roche to PTC hereunder, and no such royalty payable shall be reduced as a result of the allocation agreed by the JIPT in accordance with this Section 11.5.4 by more than [**] percent ([**]%) of the amount otherwise due to PTC with respect to the applicable Net Sales.
11.5.5 Anti-Stacking. In no event shall the combined effect of the applicable reductions pursuant to Sections 11.5.3 and 11.5.4 reduce the royalties payable to PTC below [**] percent ([**]%) of the amount otherwise payable to PTC pursuant to Section 11.5.1 or 11.5.2, as applicable. If the amount of the reduction Roche is otherwise entitled to pursuant to Sections 11.5.3 and 11.5.4 is limited by the preceding sentence, Roche shall be entitled to deduct amounts from any subsequent royalty payment(s) (subject to the [**] percent ([**]%) floor in the preceding sentence) until the entire amount of the reduction to which Roche is otherwise entitled has been so deducted.
11.5.6 Sales Prior to Regulatory Approval. If any member of the Roche Group sells Product(s) to any Third Party prior to Regulatory Approval for more than nominal consideration (“Pre-Approval Sales”), then royalties shall be payable in accordance with Sections 11.5.1 through 11.5.5 with respect to Net Sales received in connection with such Pre-Approval Sales of Product(s) in the Territory by any member of the Roche Group on a country-by-country basis commencing upon the first such Pre-Approval Sale of such Product in any country in the Territory and continuing until the First Commercial Sale of such Product in such country in the Territory.