Under the terms of the Exclusive License Option Agreement, Teva has an exclusive option, but not an obligation, to be granted licenses to any novel therapeutics (each, a “Target”) developed during the R&D Program. The grant of the license requires Teva to make two payments of $5 million each directly to the Company. In the event Teva exercises its rights under the Exclusive Option Agreement, upon payment of the license payments to the Company, Teva would obtain a sole and exclusive license to all rights in and to the Company’s intellectual property related to the Target for commercialization and sale of the Target for all therapeutic applications worldwide with a right to sublicense at Teva’s sole discretion.
Upon the grant of the License to Teva, Teva would be obligated, at its own expense, to use commercially reasonable efforts to develop and commercialize the Target.
In consideration for the grant of a license with respect to a Target, Teva would make Milestone payments to Company based on administering the resulting product to the first patient in each of the Phase I, II, and III clinical trials. In addition, Teva would be required to make one-time payments to the Company with respect to such Target upon achievement of a specified amount of sales in a number of different geographic areas. Teva would also be required to make one-time payments to the Company upon achievement of a number of aggregate sales objectives. In addition, Teva would be obligated to pay to the Company royalties at increasing rates on aggregate annual sales of products developed based on each Target for a period of ten years.
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