Wellcome Trust – PTC Therapeutics, Cancer Treatment Research Funding Agreement

Liability | Indemnification & liability

Summary of Approaches

What occurrences could result in a liability claim against which one party will indemnify the other?
- PTC must indemnify the Trust for losses arising directly from the research program or the development and exploitation or foreground IP or related products
Are there any circumstances under which one party will not indemnify the other?
- PTC is not required to indemnify the Trust to the extent its losses result from the Trust’s negligence or intentional misconduct.
Is there any limitation or monetary cap on each party’s liabilities under the agreement?
- The Trust’s liability to PTC is limited to the grant award amount of $5.4 million.
- The Agreement excludes any special, indirect, incidental or consequential damages, under any legal theory, arising from a failure to perform the Agreement.
- Regardless of other provisions, the parties are liable for personal injury or death arising from negligent or willful conduct and fraud, willful misconduct or fraudulent misrepresentations.

Annotations

This research funding agreement is between Wellcome Trust (“the Trust”), a global health funder based in the U.K., and PTC Therapeutics (“PTC”), a U.S.-based biopharmaceutical company that focuses on small molecule and gene therapies for rare genetic disorders. The agreement concerns the Trust’s award of about $5.4 million in funding for early-stage research aimed at identifying small molecules that decrease the expression of BMI-1, a protein involved in tumor proliferation. The agreement is effective as of May 2010.

The research program provisions contemplate that PTC is responsible for the conduct of the funded research program, using its own intellectual property, under the supervision of a “Research Steering Group” (RSG) chaired by PTC’s principal investigator with representatives from PTC, the Trust and an independent industry expert. PTC is responsible for achieving research milestones, which entitle PTC to further tranches of the $5.4 million award.

The Trust’s “Site Visit Group” is entitled to access PTC premises and consult with PTC employees to assess the program’s progress, including whether PTC has met or is likely meet milestones or whether termination is warranted due to the program’s likelihood to achieve its overall objectives. PTC’s failure to address deficiencies identified by the Site Visit Group can entitle the Trust to terminate the agreement unilaterally.

PTC owns any foreground IP, and the agreement contemplates that either PTC or PTC licensees will develop and commercialize it. When PTC acts on a for-profit basis, it must pay royalties (or other payments) to the Trust in accordance with an attached schedule which sets out detailed revenue sharing scenarios. Nothing is owed when PTC acts on a non-profit basis, meaning that it makes sales either (i) at less than or equal to the Cost of Goods (determined in accordance with a detailed schedule); or (ii) to a charitable organization.

If PTC fails to develop or commercialize the IP or fails to do so for more than one “major market,” the Trust gains step-in rights that permit it to develop and exploit the IP. The parties will negotiate a revenue sharing arrangement if the Trust’s exploitation of the Project IP results in the receipt of revenue or other considerations. The parties agree that they will not enforce IP rights in the event of infringement or potential infringement by parties acting on a non-profit basis.

Provision Language

18. WARRANTIES AND INDEMNITIES

[…]

18.4 Subject to Clause 18.6 below, the Trust’s maximum liability in aggregate to PTC arising out of this Agreement shall not exceed the Award Amount.

18.5 Except in circumstances of fraud or wilful misconduct by a Party or its Affiliates, no Party nor any of its Affiliates shall be liable to another Party or any Affiliate of another Party for special, indirect, incidental or consequential damages, whether in contract, warranty, negligence, tort, strict liability or otherwise, arising out of any breach of or failure to perform any of the provisions of this Agreement.

18.6 Nothing in this Agreement shall limit the liability of any Party in respect of:

(a) personal injury or death arising out of that Party’s negligence or wilful misconduct, or

(b) fraud or wilful misconduct or fraudulent misrepresentation.

18.7 PTC shall be responsible for and indemnify and keep fully indemnified the Trust and its Affiliates, officers, servants, agents, sub–licensees and sub–sub–licensees (collectively the “Trust Indemnified Parties” and each a “Trust Indemnified Party”) against any and all liability, loss, damage, cost or expense (“Losses”) incurred or suffered by such Trust Indemnified Party as a result of any claim by a Third Party arising directly out of the Programme and/or the Development, use, promotion, marketing, sale, Exploitation or distribution of the Programme Intellectual Property and/or Products by, or on behalf of, PTC, except to the extent such Losses result from the negligence or intentional misconduct of the Trust Indemnified Party.

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Wellcome Trust – PTC Therapeutics, Cancer Treatment Research Funding Agreement

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Wellcome Trust – PTC Therapeutics, Cancer Treatment Research Funding Agreement

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