Janssen Collaboration Agreement
On May 26, 2017, we and Janssen Biotech, Inc., ("Janssen") entered into an exclusive license and collaboration agreement (the
"Janssen Collaboration Agreement") for the development, manufacture and commercialization of PTG-200 worldwide for the treatment of CD and UC. The Janssen Collaboration Agreement became effective on
July 13, 2017. Upon the effectiveness of the agreement, we became eligible for a non-refundable, upfront cash payment of $50.0 million from Janssen, which we received during the third
quarter of 2017.
the Janssen Collaboration Agreement, we granted Janssen an exclusive worldwide license to develop, manufacture and commercialize PTG-200 and related IL-23R compounds for all
indications, including CD and UC. We are responsible, at our own expense, for the conduct of the Phase 1 clinical trial for PTG-200, and Janssen will be responsible for the conduct of a
potential Phase 2 clinical trial for PTG-200 in CD. All such clinical trials would be conducted in accordance with a mutually agreed upon clinical development plan and budget. Development costs
for the Phase 2 clinical trial would be shared between the parties on an 80%/20% basis, with Janssen assuming the larger share. Should Janssen elect to retain its license following completion
of the Phase 2 clinical trial, it would be responsible, at its own expense, for the manufacture, continued development of, seeking regulatory approval for, and commercialization of PTG-200
worldwide. The parties' development activities under the Janssen Collaboration Agreement through the Phase 2 clinical trial will be overseen by a joint governance structure which will have
equal representation by both parties.
the conclusion of the planned Phase 2A portion of the Phase 2 clinical trial, if Janssen elects to maintain its license rights and continue the development of
PTG-200 in the Phase 2B portion of such clinical trial (the "First Opt-in Election"), we would be eligible to receive a $125 million payment. Following the conclusion of the planned
Phase 2B portion of the Phase 2 clinical trial, if Janssen elects again to maintain its license rights (the "Second Opt-in Election"), we would be eligible to receive a
$200 million payment. In addition to the opt-in fees, we are eligible to receive potential development, regulatory and sales milestone payments of up to an aggregate of $615 million and
tiered royalties paid as a percentage of Janssen's worldwide net sales at rates ranging from ten to the mid-teens, with certain customary reductions in certain circumstances. If Janssen does not make
either the First Opt-in Election or the Second Opt-in Election, the Janssen Collaboration Agreement would terminate. If Janssen does not make the Second Opt-in Election, or if at any time after the
Second Opt-in Election, Janssen terminates the Janssen Collaboration Agreement, we would be obligated to pay Janssen a royalty on worldwide net sales of PTG-200. We would also have an option to
provide up to 30% of the required U.S. details for PTG-200 to prescribers, using our own sales force personnel, upon commercial launch in the United States. If such right is exercised, our detailing
costs would be reimbursed by Janssen.
Janssen Collaboration Agreement contains customary representations, warranties and covenants by us and Janssen and includes an obligation by us not to develop or commercialize other
compounds which also target IL-23R outside of the Janssen Collaboration Agreement until completion of the Phase 2B portion of the Phase 2 clinical trial. We and Janssen are required to
indemnify the other party against all losses and expenses related to breaches of its representations, warranties and covenants under the Janssen Collaboration Agreement.
Janssen Collaboration Agreement remains in effect until the royalty obligations cease following patent and regulatory expiry, unless terminated earlier. Either we or Janssen may
terminate the Janssen Collaboration Agreement for uncured material breach. Janssen retains the right to terminate the Janssen Collaboration Agreement for convenience and without cause on written
notice of a certain period to us. Upon a termination of the Janssen Collaboration Agreement, all rights revert back to us, and in certain circumstances, if such termination occurs during ongoing