On June 15, 2010, Neurocrine Biosciences, Inc. and Abbott International Luxembourg S.à r.l entered into a $575 million collaboration deal for the development and commercialization of elagolix, Neurocrine’s novel, first-in-class oral gonadotropin-releasing hormone (GnRH) antagonist for the treatment of endometriosis-related pain and uterine fibroids. The collaboration agreement was filed by Neurocrine with the U.S. Securities and Exchange Commission.  While the publicly filed agreement has been heavily redacted, a significant portion of the agreement is available for review, and there are a number of provisions that may be of interest to practitioners, business development professionals, and others in the pharma space.

Licensor Neurocrine Biosciences, Inc.
Licensee Abbott International Luxembourg S.à r.l
License Grant Worldwide, exclusive license under Neurocrine Patent Rights and Neurocrine Technology with the right to sublicense through multiple tiers for Compounds and Products in the Field of Use.
Neurocrine Patent Rights Patent rights covering Neurocrine Technology, as set forth on Exhibit C.All of Exhibit C is redacted.  It appears that future patent rights were not included in the license unless they are addressed in Exhibit C.
Neurocrine Technology All data, know-how, etc. Controlled by Neurocrine
(i) on the Effective Date or during the Term reasonably necessary or directly useful to research, develop, etc. Compounds in the Field of Use and
(ii) on the Effective Date that is reasonably necessary or directly useful to research, develop, etc. Products in the Field of Use.It appears that future know-how related to Compounds are included in the license grant, but not future know-how related to aspects of Products other than the incorporated Compound.  The definition has a specific exclusion from Neurocrine Technology that has been redacted.
Compounds Elagolix, as well as Follow-on Compounds (definition heavily redacted), prodrugs, metabolites, etc. and derivatives containing one or more atoms substituted with an isotope.
Products A product or product candidate that contains one or more Compounds, including all formulations and dosages of such Compound, all processes and delivery systems that incorporate such Compound, and any Combination Product.
Field of Use All diagnostic and therapeutic uses.
Exclusivity The agreement includes a mutual obligation not to engage in certain activities, independently or in collaboration with third parties, but the details have been redacted.
Diligence Abbott is required to use Commercially Reasonable Efforts, but other than the definition of Commercially Reasonable Efforts, the details have been redacted.
Commercially Reasonable Efforts Efforts and resources typically used by that party in the development or commercialization of products of comparable market potential, taking into account multiple factors, determined on a market-by-market and indication-by-indication basis.
License Fee $75 million
Milestone Payments Aggregate potential of $500 million in milestone payments.Separate milestone payments for elagolix and Follow-On Compounds that appear to be based on acceptance of an IND, initiation of various clinical trials, acceptance of applications for regulatory approval, regulatory approvals and sales milestones, but details have been redacted.
Royalties Tiered royalty rates are stated separately for U.S. sales and rest of world sales, and appear to be different based on whether a Product includes elagolix or a Follow-On Compound, but details have been redacted.The royalty section includes a paragraph requiring the parties to negotiate an amendment to the agreement to set forth something presumably related to the royalty obligations, but the details have been redacted.
Net Sales Gross amounts billed or invoiced, less deductions for discounts, price reductions or rebates for Governmental Authorities, taxes, insurance, transportation charges, fees for services provided by wholesalers and warehousing chains related to distribution of the Product, rejections, defects, 1% return goods allowance, recalls or returns, rebates or charge backs, administrative fees to group purchasing organizations, pharmaceutical benefit managers or Medicare Prescription Drug Plans, and any consideration paid or payable for any Delivery System related to a billed or invoiced sale of a Product.
Royalty Reductions (a) Combination product deduction in the definition of Net Sales (b) reduction for Third Party License Payments
(c) reduction when there is no Valid Claim and
(d) reduction for Generic Competition, but details have been redacted.
Royalty Term Until the later of expiration of all Valid Claims or a period of time after First Commercial Sale in the applicable country.
Joint Development Committee Abbott chairs the JDC.  The method for resolving disagreements on the JDC has been redacted, but another provision provides that, subject to JDC oversight, Abbott has the sole responsibility and authority with regard to Development of Products, manufacturing and supply and Commercialization of Products.  After the JDC is disbanded, Abbott has a reporting obligation to Neurocrine, but this appears to be limited in the event of a Change of Control of Neurocrine.
Transition Plan During a transition period, Neurocrine is responsible for certain manufacturing and development activities, and is also required to transfer data and technology to Abbott and assign regulatory filings and certain manufacturing and development contracts to Abbott.  Abbott pays for Neurocrine’s existing inventory and funds certain FTE costs of Neurocrine during the transition period, approximately $20 million through 2012 in transition costs and collaborative development activities.
Collaborative Development The parties collaborate on development activities under a Collaborative Development Plan.  Abbott funds certain FTE costs of Neurocrine under the Collaborative Development Program, approximately $20 million through 2012 in transition costs and collaborative development activities.  Abbott may request Neurocrine to assume responsibility for elagolix clinical supply production as a Collaborative Development Program activity, but no manufacturing or supply terms have been included.
Inventions Abbott owns all Program Patent Rights.The core definitions have been redacted, but it appears that Abbott owns all inventions made by either party in performance of the Transition Program or Collaborative Development Program that are necessary or useful to research, develop, etc. Compounds and Products in the Field of Use.
Patent Prosecution and Maintenance Abbott controls prosecution and maintenance of Program Patent Rights at its expense.Neurocrine controls prosecution and maintenance of Neurocrine Patent Rights, subject to Abbott review and comment.  Neurocrine is required to incorporate all comments of Abbott with respect to adversarial patent office proceedings, including interferences, oppositions or reexaminations.  Abbott appears to have an obligation to pay for prosecution and maintenance of Neurocrine Patent Rights, but the details have been redacted.
Patent Infringement Abbott controls enforcement actions and defense of patent rights.  Neurocrine has no step-in rights unless Abbott consents.
Indemnification by Abbott Indemnification by Abbott for claims arising out of the conduct of Product research, Development or Commercialization by or under the authority of Abbott (excluding Neurocrine Indemnified Parties) or breach of Abbott representations and warranties.There is a carve-out for Neurocrine negligence or willful misconduct.

There is a further carve-out for Liability arising out of or resulting from infringement of a Third Party Patent Right provided such indemnify [sic] does fall within the foregoing indemnification requirements.  The meaning of this additional carve-out is somewhat unclear.

There appears to be no indemnification of Neurocrine for its activities under the Transition Plan or Collaborative Development Plan. 

Indemnification by Neurocrine Indemnification by Neurocrine for claims arising out of the conduct of Product research, Development or Commercialization by or under the authority of Neurocrine (excluding Abbott Indemnified Parties) or breach of Neurocrine representations and warranties.There is a carve-out for Abbott negligence or willful misconduct.

There is the same additional carve-out as above regarding infringement of Third Party Patent Rights.

It appears that Neurocrine indemnifies Abbott for Neurocrine’s activities under the Transition Plan and Collaborative Development Plan.

Effects of Termination If Abbott terminates for convenience, the agreement appears to require Abbott to transfer regulatory filings, provide access to information and grant license rights to Abbott Technology and Abbott Patent Rights, but details have been redacted.The same effects of termination apply to a termination by Neurocrine for Abbott insolvency or breach and a certain additional right of Neurocrine to terminate, but the details have been redacted.

The effects of termination by Abbott for Neurocrine breach or insolvency has been redacted.

Additional provisions are included for a Change of Control of Neurocrine or a divestiture (presumably by Abbott), but the details have been redacted.