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MARKETING, DISTRIBUTION AND DEVELOPMENT AGREEMENT

BY AND BETWEEN

GILEAD SCIENCES, INC.

AND

CUBIST PHARMACEUTICALS, INC.

January 6, 2001

[*]=CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

TABLE OF CONTENTS

 
    
   PAGE
ARTICLE 1   DEFINITIONS   1
  1.1   "Affiliate"   1
  1.2   "Bacteremia"   1
  1.3   "CAP"   1
  1.4   "Change in Control"   1
  1.5   "Clinical Transfer Price"   1
  1.6   "Commercial Launch"   1
  1.7   "Commercialize"   1
  1.8   "Commercially Reasonable Efforts"   2
  1.9   "Compulsory License"   2
  1.10   "Confidential Information"   2
  1.11   "Control"   2
  1.12   "Core IV Products"   2
  1.13   "Core Licensed Products"   2
  1.14   "Core Trials"   2
  1.15   "CPMP"   2
  1.16   "cSST"   2
  1.17   "Cubist Development Plan"   2
  1.18   "Cubist Diligence Obligation"   2
  1.19   "Cubist Know-How"   2
  1.20   "Cubist Marks"   2
  1.21   "Cubist Patent"   2
  1.22   "Cubist Technology"   2
  1.23   "cUTI"   2
  1.24   "Daptomycin"   3
  1.25   "Daptomycin Product"   3
  1.26   "Daptomycin-Derived Product"   3
  1.27   "Development Subcommittee"   3
  1.28   "Diligence Obligation"   3
  1.29   "Directly Competitive Product"   3
  1.30   "Dollar"   3
  1.31   "Drug Approval Application"   3
  1.32   "EC"   3
  1.33   "EMEA"   3
  1.34   "Endocarditis"   3
  1.35   "Enterococcal Infection"   3
  1.36   "FDA"   3
  1.37   "Force Majeure   3
  1.38   "Free Sales Certificate"   3
  1.39   "Gilead Development Plan"   4
  1.40   'Gilead Diligence Obligation"   4
  1.41   "Gilead Indemnifiable Technology"   4
  1.42   "Gilead Indemnifiable Technology Losses"   4
  1.43   "Gilead Marks"   4
  1.44   "Gilead Project Know-How"   4
  1.45   "Gilead Project Patent"   4
  1.46   "Gilead Project Technology"   4

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  1.47   "Gilead Territory"   4
  1.48   "HAP"   4
  1.49   "Incremental Product Development Costs"   4
  1.50   "IND"   4
  1.51   "Information"   4
  1.52   "Infringement"   4
  1.53   "IV Product"   4
  1.54   "Joint Invention"   5
  1.55   "Joint Patent"   5
  1.56   "Licensed Product"   5
  1.57   "Lilly"   5
  1.58   "Lilly License"   5
  1.59   "Loss"   5
  1.60   "MAA"   5
  1.61   "Marketing Subcommittee"   5
  1.62   "MSL"   5
  1.63   "NDA"   5
  1.64   "Necessary"   5
  1.65   "Net Sales"   5
  1.66   "Oral Product"   6
  1.67   "Oral Product Fee"   6
  1.68   "Other Licensee"   6
  1.69   "Patent"   6
  1.70   "Permitted Sublicense"   6
  1.71   "Phase I Clinical Trial"   6
  1.72   "Phase II Clinical Trial"   6
  1.73   "Phase III Clinical Trials"   6
  1.74   "Phase IIIB Clinical Trials"   6
  1.75   "Phase IV Clinical Trials"   6
  1.76   "Price Approval"   7
  1.77   "Primary Endpoint"   7
  1.78   "Refund Event"   7
  1.79   "Regulatory Approval"   7
  1.80   "Regulatory Authority"   7
  1.81   "Related Gilead Know-How"   7
  1.82   "Related Gilead Project Patent"   7
  1.83   "Related Gilead Technology"   7
  1.84   "ROFR Territory"   7
  1.85   "Steering Committee"   7
  1.86   "Supply Agreement"   7
  1.87   "Term"   7
  1.88   "Third Party Royalties"   7
  1.89   "Third Party"   7
  1.90   "Transfer Price"   7
  1.91   "Valid Claim"   7
ARTICLE 2   MANAGEMENT   8
  2.1   General   8
  2.2   Steering Committee   8
  2.3   Formation of Subcommittees   9
  2.4   Project Coordinators   11

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  2.5   Collaboration Guidelines   11
  2.6   Accounting   11
ARTICLE 3   DEVELOPMENT   11
  3.1   Cubist Development, Development Plan, and Diligence Obligation   11
  3.2   Gilead Development Plan   13
  3.3   Responsibilities of the Development Subcommittee during Development   13
  3.4   Modification of Clinical Trials; Incremental Product Development Costs   13
  3.5   Determination of Cubist Diligence   14
ARTICLE 4   REGULATORY   15
  4.1   General   15
  4.2   Free Sales Certificates; Ownership of Regulatory Approvals   15
  4.3   Gilead Access to Cubist and Other Licensee Information   16
  4.4   Cubist and Other Licensee Access to Gilead Information   17
  4.5   Adverse Event Reporting   17
  4.6   Communications   17
  4.7   Applications for Regulatory Exclusivity   17
  4.8   Recalls and Voluntary Withdrawals   17
  4.9   Label   18
ARTICLE 5   COMMERCIALIZATION; DILIGENCE   19
  5.1   Right   19
  5.2   Responsibilities of the Marketing Subcommittee during Commercialization   19
  5.3   Marketing Plan   19
  5.4   Activities by MSLs in Gilead Territory   19
  5.5   Diligence Obligation   20
  5.6   Determination of Gilead's Diligence   21
  5.7   Diversion of Resources for Directly Competitive Product   21
  5.8   Discounting   22
  5.9   Gilead Compliance   22
ARTICLE 6   LICENSE; RIGHTS OF FIRST REFUSAL; EXCLUSIVITY   22
  6.1   Patent Licenses to Gilead   22
  6.2   Patent Licenses to Cubist   22
  6.3   Nonexclusive Know-How License to Gilead   23
  6.4   Nonexclusive Know-How License to Cubist   23
  6.5   Rights of First Refusal and Negotiation   23
  6.6   Exclusivity   24
  6.7   Trademark License   24
  6.8   Third Party Technology   25
    (a) Required   25
    (b) Desirable   25
  6.9   Sublicensed Technology   25
  6.10   Related Gilead Technology.   26
  6.11   Sublicensing   26
  6.12   Use of Patents and Know-How   26
  6.13   Field   26
ARTICLE 7   MANUFACTURE AND SUPPLY   26
  7.1   Supply by Cubist   26
  7.2   Transfer Price   27
ARTICLE 8   COMPENSATION   28
  8.1   License Fee   28
  8.2   Milestone Payments   28

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  8.3   Royalties   29
  8.4   Term of Royalties   30
  8.5   Third Party Royalties and Other Payments   30
  8.6   Royalty Payments and Reports   30
  8.7   Taxes   30
  8.8   Blocked Currency   30
  8.9   Foreign Exchange   30
  8.10   Payments to or Reports by Affiliates   31
  8.11   Late Payments.   31
ARTICLE 9   INTELLECTUAL PROPERTY   31
  9.1   Ownership of Inventions   31
  9.2   Prosecution of Patents   31
  9.3   Patent Term Extensions.   32
  9.4   Non-Patent Regulatory Exclusivity   32
  9.5   Infringement of Patents by Third Parties   32
  9.6   Infringement of Third Party Rights   34
  9.7   Royalty Reduction   35
  9.8   Patent Marking   35
  9.9   Selection and Registration of Product Trademarks   35
  9.10   Infringement of Trademarks by Third Parties   36
  9.11   Patent Oppositions   36
    (a) Third Party Patent Rights   36
    (b) Parties' Patent Rights   36
    (c) Noncontravention   36
  9.12   Lilly License   36
ARTICLE 10   REPRESENTATIONS AND WARRANTIES   36
  10.1   Mutual Representations and Warranties   36
  10.2   Cubist   37
  10.3   Disclaimer   38
  10.4   No Other Representations   38
ARTICLE 11   INDEMNIFICATION   38
  11.1   Indemnification by Cubist   38
  11.2   Indemnification by Gilead   38
  11.3   Procedure   38
  11.4   Insurance   39
  11.5   No Application to Third Party Infringement Claims   39
  11.6   Limitation of Liability   39
ARTICLE 12   RECORDS; PUBLICATIONS   39
  12.1   Records   39
  12.2   Publications   40
ARTICLE 13   CONFIDENTIALITY   40
  13.1   Treatment of Confidential Information   40
  13.2   Authorized Disclosure   41
  13.3   Publicity   41
ARTICLE 14   TERM AND TERMINATION   41
  14.1   Term   41
  14.2   Termination by Gilead   41
  14.3   Termination for Breach   42
  14.4   Cubist Rights upon Certain Terminations of the Agreement or as to Certain Licensed Products   42

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  14.5   Gilead Rights upon Certain Terminations   43
  14.6   Survival   43
  14.7   Clarification with respect to Supply Agreement.   43
  14.8   Repurchase of Inventory   43
ARTICLE 15   DISPUTE RESOLUTION   44
  15.1   Disputes   44
  15.2   Governing Law; Judicial Resolution   44
  15.3   Patent and Trademark Dispute Resolution   44
  15.4   [*] Resolution of Certain Disputes   44
ARTICLE 16   MISCELLANEOUS   45
  16.1   Entire Agreement; Amendment   45
  16.2   Force Majeure   45
  16.3   Notices   45
  16.4   Maintenance of Records   46
  16.5   No Strict Construction   46
  16.6   Assignment   46
  16.7   Performance by Affiliates   46
  16.8   Counterparts   47
  16.9   Further Actions   47
  16.10   Severability   47
  16.11   Headings   47
  16.12   No Waiver   47

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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

MARKETING, DISTRIBUTION AND DEVELOPMENT AGREEMENT

    THIS MARKETING, DISTRIBUTION AND DEVELOPMENT AGREEMENT (the "Agreement") is made effective as of the 6th day of January, 2001 (the "Effective Date") by and between GILEAD SCIENCES, INC., a Delaware corporation having its principal place of business at 333 Lakeside Drive, Foster City, CA 94404 ("Gilead"), and CUBIST PHARMACEUTICALS, INC., a Delaware corporation having its principal place of business at 24 Emily Street, Cambridge, Massachusetts 02139 ("Cubist"). Cubist and Gilead are sometimes referred to herein individually as a "Party" and collectively as the "Parties", and references to "Gilead" and "Cubist" shall include their respective Affiliates.

RECITALS

    WHEREAS, Cubist has in-licensed and continues to develop a proprietary compound known under the generic name of daptomycin;

    WHEREAS, Cubist is currently conducting clinical trials of an intravenous formulation of daptomycin for the treatment of various gram-positive bacterial infections in humans, and is evaluating an oral formulation of daptomycin in preclinical studies;

    WHEREAS, Gilead possesses extensive capabilities in the development, promotion and marketing of anti-infective pharmaceutical products in Europe and desires to seek regulatory approval for and market daptomycin in Europe; and

    WHEREAS, Gilead desires to obtain the exclusive right to develop and commercialize daptomycin in the European Community and certain additional countries, and Cubist desires to grant Gilead such rights in such countries all as set forth below;

    NOW THEREFORE, based on the foregoing premises and the mutual covenants and obligations set forth below, the Parties agree as follows:


ARTICLE 1
DEFINITIONS

    The following terms shall have the following meanings as used in this Agreement:

    1.1 "Affiliate" shall mean, except as provided below, an entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with Cubist or Gilead.

    1.2 "Bacteremia" shall mean the treatment of a blood-borne infection caused by any bacteria.

    1.3 "CAP" shall mean the treatment of community acquired pneumonia.

    1.4 "Change in Control" shall mean that a Third Party shall have become the beneficial owner of securities representing [*] or more of the aggregate voting power of the then outstanding voting securities of Cubist, or any sale by Cubist of all or substantially all of Cubist's assets.

    1.5 "Clinical Transfer Price" shall have the meaning assigned such term in Section 7.2.

    1.6 "Commercial Launch" shall mean the first sale of a Licensed Product to a Third Party in a given country.

    1.7 "Commercialize" shall have the meaning assigned such term in Section 5.1 and "Commercialization" shall be interpreted accordingly.

    1.8 "Commercially Reasonable Efforts" shall mean, with respect to a Party's obligation under this Agreement to develop or commercialize Licensed Product, the level of efforts required to carry out such obligation in sustained manner consistent with the efforts a similarly situated biopharmaceutical company devotes to a product of similar market potential, profit potential or strategic value resulting from its own research efforts, based on conditions then prevailing.

    1.9 "Compulsory License" shall mean a compulsory license under any Cubist Patent obtained by a Third Party through the order, decree, or grant of a governmental authority of competent jurisdiction, authorizing such Third Party to manufacture, use, sell, offer for sale or import a product competitive with a Licensed Product in one or more countries within the Gilead Territory.

    1.10 "Confidential Information" shall mean all Information, and other information and materials, received by either Party from the other Party pursuant to this Agreement, other than that portion of such information or materials which:

        (a) is publicly disclosed by the disclosing Party, either before or after it becomes known to the receiving Party;

        (b) was known to the receiving Party, without obligation to keep it confidential, prior to when it was received from the disclosing Party;

        (c) is subsequently disclosed to the receiving Party by a Third Party lawfully in possession thereof without obligation to keep it confidential;

        (d) has been publicly disclosed other than by the disclosing Party and without breach of an obligation of confidentiality with respect thereto; or

        (e) has been independently developed by the receiving Party without the aid, application or use of Confidential Information, as demonstrated by competent written proof.

    1.11 "Control" shall mean possession of the ability to grant a license or sublicense as provided for herein without violating the terms of any agreement or other arrangement with any Third Party.

    1.12 "Core IV Products" shall mean those IV Products whose primary therapeutic indication is CAP or cSST.

    1.13 "Core Licensed Products" shall mean those Licensed Products whose primary therapeutic indication is CAP or cSST.

    1.14 "Core Trials" shall mean the clinical trials listed on Exhibit A under the title "Core Trials."

    1.15 "CPMP" shall mean the Committee for Proprietary Medicinal Products, which represents the medicine authorities of the European Community member states.

    1.16 "cSST" shall mean the treatment of complicated skin and soft tissue bacterial infection.

    1.17 "Cubist Development Plan" shall have the meaning assigned such term in Section 3.1.

    1.18 "Cubist Diligence Obligation" shall have the meaning assigned such term in Section 3.5.

    1.19 "Cubist Know-How" shall mean all Information which is [*]. Notwithstanding anything herein to the contrary, Cubist Know-How shall exclude Information [*].

    1.20 "Cubist Marks" shall mean (i) all [*] listed at Exhibit B; (ii) the [*]; and (iii) any other [*] that the Parties may agree in writing to designate for [*].

    1.21 "Cubist Patent" shall mean any Patent which (i) covers [*]; and (ii) is [*], including [*].

    1.22 "Cubist Technology" shall mean all Cubist Patents and Cubist Know-How.

    1.23 "cUTI" shall mean the treatment of complicated urinary tract infections.

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    1.24 "Daptomycin" shall mean the compound set forth and identified as the primary daptomycin molecule on Exhibit C, [*] of such compound, which [*], and all [*] of such primary daptomycin molecule, [*].

    1.25 "Daptomycin Product" shall mean any pharmaceutical composition containing Daptomycin, but only if such pharmaceutical composition is formulated for use for oral delivery [*] or for delivery via injection [*], and that [*]; provided, however, that in any event, [*] is developing pursuant to its [*] for development of [*] shall be deemed to be a Licensed Product.

    1.26 "Daptomycin-Derived Product" shall mean any pharmaceutical composition   [*] and that [*], but excluding Daptomycin Products.

    1.27 "Development Subcommittee" shall have the meaning assigned such term in Section 2.3(a).

    1.28 "Diligence Obligation" shall mean the Gilead Diligence Obligation and/or the Cubist Diligence Obligation.

    1.29 "Directly Competitive Product" shall mean any antibiotic in any formulation marketed and sold (i) primarily for [*] (provided that this clause (i) shall apply solely for the purpose of determining whether a product is competitive with [*] Licensed Product and shall not apply for the purpose of determining whether a product is competitive with any Licensed Product other than [*]), (ii) primarily to [*] in humans, and (iii) for [*] approved by a Regulatory Authority in the Gilead Territory including, as the primary indication for the product, an indication that is also included on the label approved by a Regulatory Authority in the Gilead Territory for any Licensed Product. The Parties shall, at the time Cubist or Gilead commences Phase III Clinical Trials for an Oral Product that is a Licensed Product, modify this definition by mutual agreement to accommodate products competitive with such Oral Product, considering the terms of this Section 1.29 as guiding principles (it being understood that [*] of such Oral Product may not necessarily be [*]). If the Parties do not agree, the issue shall be submitted for resolution [*] as provided in Section 15.4.

    1.30 "Dollar" shall mean a United States dollar, and "$" shall be interpreted accordingly.

    1.31 "Drug Approval Application" shall mean an application for Regulatory Approval required before commercial sale or use of a Licensed Product as a drug in a regulatory jurisdiction, including without limitation an NDA filed in the United States.

    1.32 "EC" shall mean the European Community.

    1.33 "EMEA" shall mean the European Medicines Evaluation Agency, or any successor thereto, which coordinates the scientific review of human pharmaceutical products under the centralized licensing procedures of the European Community.

    1.34 "Endocarditis" shall mean the treatment of inflammation of the heart and/or its valves resulting from a bacterial infection.

    1.35 "Enterococcal Infection" shall mean the treatment of enterococcal bacterial infections.

    1.36 "FDA" shall mean the United States Food and Drug Administration, or any successor thereto.

    1.37 "Force Majeure" shall mean any event beyond the control of the relevant Party, including, without limitation, fire, flood, earthquakes, riots, strikes, epidemics, war (declared or undeclared and including the continuance, expansion or new outbreak of any war or conflict now in existence), embargoes and governmental actions or decrees.

    1.38 "Free Sales Certificate" shall mean market approval sufficient for the manufacture, distribution, use and sale of Licensed Products outside of the United States which can be obtained primarily on the basis of U.S. FDA, EMEA or other European Regulatory Approval and without the conduct of additional clinical trials, and shall include both market approvals referred to commonly as

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"free sales certificates" and similar market approvals or certificates referred to by other names, provided that such similar market approvals or certificates do not impose a substantially greater burden on the applicant than those market approvals commonly referred to as "free sales certificates."

    1.39 "Gilead Development Plan" shall have the meaning assigned such term in Section 3.2.

    1.40 "Gilead Diligence Obligation" shall have the meaning assigned such term in Section 5.6.

    1.41 "Gilead Indemnifiable Technology" shall have the meaning assigned such term in Section 9.6(d)(ii).

    1.42 "Gilead Indemnifiable Technology Losses" shall have the meaning assigned such term in Section 9.6(d)(ii).

    1.43 "Gilead Marks" shall mean (i) all [*] listed at Exhibit D as it may be updated from time to time; (ii) any [*] in connection with Licensed Products in the Gilead Territory; and (iii) any other [*] that the Parties may agree in writing to designate for [*].

    1.44 "Gilead Project Know-How" shall mean all Information that (i) Gilead [*], (ii) covers the [*] and (iii) is [*]. Gilead Project Know-How shall exclude Information [*]. Gilead Project Know-How shall include any [*] that the Parties agree in writing to include in the Gilead Project Know-How [*].

    1.45 "Gilead Project Patent" shall mean any Patent that (i) claims [*] (ii) covers the [*], (iii) is [*], and (iv) is [*]. Gilead Project Patents include Gilead's interest in [*] that the Parties agree in writing to include in the Gilead Project Patents [*].

    1.46 "Gilead Project Technology" shall mean the Gilead Project Know-How and Gilead Project Patents.

    1.47 "Gilead Territory" shall mean the countries listed in Exhibit E and any other country that is added to the Gilead Territory pursuant to Section 6.5(a), and the possessions and territories of each such country.

    1.48 "HAP" shall mean the treatment of hospital-acquired pneumonia.

    1.49 "Incremental Product Development Costs" shall mean the costs attributed to the implementation of a Proposed Modification, as determined by the Steering Committee pursuant to Section 3.4.

    1.50 "IND" shall mean an Investigational New Drug Application as defined in the United States Food, Drug and Cosmetic Act and applicable regulations promulgated thereunder by the FDA or the equivalent application to the equivalent agency in any other country or group of countries, the filing of which is necessary to commence clinical testing of Licensed Product in humans in a particular jurisdiction.

    1.51 "Information" shall mean (i) techniques and data specifically relating to development, manufacture, use or sale of Licensed Products, including, but not limited to, inventions, practices, methods, knowledge, know-how, skill, experience, test data including pharmacological, toxicological and clinical test data, analytical and quality control data, regulatory submissions, correspondence and communications, marketing, pricing, distribution, cost, sales, manufacturing, patent and legal data or descriptions and (ii) compositions of matter, assays and biological materials specifically relating to development, manufacture, use or sale of Licensed Products.

    1.52 "Infringement" shall have the meaning assigned in Section 9.5.

    1.53 "IV Product" shall mean any Daptomycin Product formulated for intravenous delivery, including without limitation the formulation described by the specifications set forth in a letter that Cubist has provided to Gilead prior to the Effective Date.

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    1.54 "Joint Invention" shall have the meaning assigned in Section 9.1.

    1.55 "Joint Patent" shall have the meaning assigned such term in Section 9.2.

    1.56 "Licensed Product" shall mean all Daptomycin Products, and all Daptomycin—Derived Products that become Licensed Products pursuant to Section 6.5(b).

    1.57 "Lilly" shall mean Eli Lilly and Company.

    1.58 "Lilly License" shall mean that certain Licensing Agreement between Cubist and Lilly dated October 6, 2000, which restated the prior agreement between such parties dated November 7, 1997, as amended.

    1.59 "Loss" shall have the meaning assigned such term in Section 11.1.

    1.60 "MAA" shall mean an application filed with the EMEA for regulatory approval to market and sell Licensed Products in the European Union, or an application filed through the mutual recognition procedures in the European Union having a similar purpose to the NDA in the United States.

    1.61 "Marketing Subcommittee" shall have the meaning assigned such term in Section 2.3(b).

    1.62 "MSL" shall mean a Cubist employee serving as a medical science liaison for commercialization of Licensed Products, as provided in Section 5.4.

    1.63 "NDA" shall mean a New Drug Application for Regulatory Approval filed in the United States.

    1.64 "Necessary" shall have the meaning assigned such term in Section 6.8(a).

    1.65 "Net Sales" shall mean, with respect to a particular time period, the amount billed by Gilead, its Affiliates and Permitted Sublicensees for sales of Licensed Products made in such time period to a Third Party less:

          (i)  discounts, including cash and quantity discounts, charge-back payments and rebates granted to managed health care organizations or to federal, state and local governments, their agencies, purchasers and reimbursers or to trade customers;

          (ii) credits or allowances actually granted upon claims, damaged goods, rejections or returns of such Licensed Products, including recalls;

          (iii) freight, postage, shipping, transportation and insurance charges actually allowed or paid for delivery of Licensed Products; and

          (iv) taxes (other than income taxes), duties or other governmental charges levied on, absorbed or otherwise imposed on sale of such Licensed Products, including without limitation value-added taxes, or other governmental charges otherwise measured by the billing, as adjusted for rebates and refunds.

    If Gilead sells Licensed Products in the form of a combination product containing one or more active ingredients in addition to Daptomycin (which may be either combined in a single formulation or packaged as separate formulations sold as a single package), Net Sales for such combination product will be calculated by multiplying actual Net Sales of such combination product by the fraction A/(A+B) where A is the invoice price of the Licensed Product if sold separately, and B is the total invoice price of the other active ingredient or ingredients in the combination, if sold separately. If, on a country-by-country basis, the other active ingredient or ingredients in the combination are not sold separately in said country, Net Sales for the purpose of determining royalties of the combination product shall be calculated by multiplying actual Net Sales of such combination product by the fraction A/C where A is the invoice price of the Licensed Product if sold separately, and C is the invoice price of the combination product. If, on a country-by-country basis, the Licensed Product is not sold

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separately in said country, Net Sales for the purposes of determining royalties of the combination product shall be determined by the Steering Committee in good faith on the basis of the fair market value of the Licensed Product.

    Notwithstanding the foregoing, amounts received by Gilead, its Affiliates or Permitted Sublicensees for the sale of Licensed Products among Gilead, its Affiliates and Permitted Sublicensees for resale shall not be included in the computation of Net Sales hereunder.

    For purposes of this definition and the other provisions of this Agreement, no distributor of Gilead that sells a Licensed Product shall be deemed to be a Permitted Sublicensee of Gilead unless expressly so agreed in writing by the Parties. If any distributor of Licensed Products makes any payment to Gilead, its Affiliates or Permitted Sublicensees in consideration of being a distributor of any Licensed Product, which payment would not, but for the provisions of this sentence, be included in the definition of Net Sales, then the amount of such payment to Gilead, its Affiliates or Permitted Sublicensees shall be included in Net Sales in the quarter in which Gilead, its Affiliates or Permitted Sublicensees received such payment for purposes of calculating the royalty due to Cubist pursuant to Article 8.

    1.66 "Oral Product" shall mean any Daptomycin Product formulated for oral delivery, [*].

    1.67 "Oral Product Fee" shall have the meaning assigned such term in Section 8.1(b).

    1.68 "Other Licensee" shall mean any Third Party to whom Cubist has granted or grants a license and/or sublicense to develop or commercialize a Licensed Product.

    1.69 "Patent" shall mean (i) unexpired letters patent (including inventor's certificates) which have not been held invalid or unenforceable by a court of competent jurisdiction from which no appeal can be taken or has been taken within the required time period, including without limitation any substitution, extension, registration, confirmation, reissue, re-examination, renewal or any like filing thereof and (ii) pending applications for letters patent, including without limitation any provisional, converted provisional, continued prosecution application, continuation, divisional or continuation-in-part thereof.

    1.70 "Permitted Sublicense" shall have the meaning assigned such term in Section 6.11.

    1.71 "Phase I Clinical Trial" shall mean those trials on sufficient numbers of normal volunteers and patients that are designed to establish that a pharmaceutical product is safe for its intended use, and to support its continued testing in Phase II Clinical Trials.

    1.72 "Phase II Clinical Trial" shall mean those trials on sufficient numbers of patients that are designed to establish the safety, dosage and biological activity of a pharmaceutical product for its intended use, and to define warnings, precautions and adverse reactions that are associated with the pharmaceutical product in the dosage range to be prescribed.

    1.73 "Phase III Clinical Trials" means those trials on sufficient numbers of patients that are designed to establish that a drug is safe and efficacious for its intended use, and to define warnings, precautions and adverse reactions that are associated with the drug in the dosage range to be prescribed, and supporting Regulatory Approval of such drug or label expansion of such drug.

    1.74 "Phase IIIB Clinical Trials" means product support clinical trials of a Licensed Product (i.e., a clinical trial which is not required for receipt of Regulatory Approval but which may be useful in providing additional drug profile data) commenced before receipt of Regulatory Approval in the country where such trial is being conducted.

    1.75 "Phase IV Clinical Trials" means product support clinical trials of a Licensed Product commenced after receipt of Regulatory Approval in the country where such trial is being conducted.

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    1.76 "Price Approval" shall mean, with respect to any country in which the price at which Gilead sells Licensed Product must be approved by a governmental authority for reimbursement or payment purposes, the receipt of approval by the applicable governmental authority with respect to such price.

    1.77 "Primary Endpoint" shall mean, with respect to a clinical trial, the point at which equivalence to the comparator agent has been achieved with respect to a clinical or microbiological outcome as specified in the protocol for such trial as set forth in Exhibit A, unless otherwise agreed by the Parties in writing.

    1.78 "Refund Event" shall have the meaning assigned such term in Section 8.1(c).

    1.79 "Regulatory Approval" shall mean any approvals (including supplements, amendments, pre- and post-approvals and Price Approvals), licenses, registrations or authorizations of any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, necessary for the manufacture, distribution, use or sale of Licensed Products in a regulatory jurisdiction.

    1.80 "Regulatory Authority" shall mean a foreign counterpart of the FDA.

    1.81 "Related Gilead Know-How" shall mean all Information [*] (i) which is [*], (ii) is [*] and (iii) relates to [*].

    1.82 "Related Gilead Project Patent" shall mean any Patent other than a Gilead Project Patent which (i) covers [*]; and (ii) is [*], including Gilead's interest in [* ].

    1.83 "Related Gilead Technology" shall mean the Related Gilead Know-How and Related Gilead Project Patents.

    1.84 "ROFR Territory" shall mean those countries listed at Exhibit F and their territories and possessions. The ROFR Territory shall also include [*], but shall exclude [*] and with respect to which [*]; provided, however, that any such country that is not included in the ROFR Territory [* ] shall be included in the ROFR Territory upon and from the date [*].

    1.85 "Steering Committee" shall mean the committee formed as described in Section 2.2.

    1.86 "Supply Agreement" shall have the meaning assigned such term in Section 7.1.

    1.87 "Term" shall mean the term of this Agreement.

    1.88 "Third Party Royalties" shall mean royalties payable to any Third Party as a result of the manufacture, use or sale of Licensed Products pursuant to, and in accordance with, the provisions of this Agreement or the Supply Agreement, including without limitation royalties due under the Lilly License.

    1.89 "Third Party" shall mean any entity other than Cubist or Gilead or an Affiliate of either of them.

    1.90 "Transfer Price" shall mean the price to Gilead for supply of a unit of Licensed Product manufactured by or for Cubist, which shall be determined annually in accordance with Section 7.2.

    1.91 "Valid Claim" shall mean (i) an unexpired claim of an issued patent within Cubist Patents which has not been found to be unpatentable, invalid or unenforceable by a court or other authority in the subject country, from which decision no appeal is taken or can be taken; or (ii) a claim of a pending application within the Cubist Patents, which application claims a first priority no more than [* ] prior to the date upon which pendency is determined.

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ARTICLE 2
MANAGEMENT

    2.1 General. The Parties desire to establish a committee that will oversee the Parties' activities under this Agreement, and establish two (2) or more subcommittees to exchange information regarding, and to discuss the Parties' development and commercialization of, Licensed Products both within and outside of the Gilead Territory. Such committee and subcommittees shall have the responsibilities and authority set forth in this Article 2 and in other provisions of this Agreement.

    2.2 Steering Committee.

        (a) Formation. Within thirty (30) days after the Effective Date, Cubist and Gilead shall establish the Steering Committee, which shall have overall responsibility for the success of the Parties' efforts under this Agreement. The purposes of the Steering Committee shall be (i) to coordinate the [*], (ii) to coordinate the Parties' activities hereunder, (iii) to resolve issues that the subcommittees of the Steering Committee cannot resolve, and (iv) to approve [*], all based on the principles of prompt and diligent development of the Licensed Products in the Gilead Territory consistent with good pharmaceutical practices and the maximization of long-term profits derived from the sale of Licensed Products in the Gilead Territory.

        (b) Membership. Cubist and Gilead each shall designate three (3) representatives with appropriate expertise to serve as members of the Steering Committee. Each Party shall select one (1) person appointed by it to the Steering Committee to serve as co-chair. Either Party may designate substitutes for its committee representatives to participate if one or more of such Party's designated representatives is unable to be present at a meeting. A Party may replace its representatives serving on the Steering Committee from time to time by written notice to the other Party specifying the prior representative(s) to be replaced and the replacement(s) therefor. The Steering Committee will have the power to form subcommittees in addition to the Development Subcommittee and the Marketing Subcommittee expressly provided for in this Agreement, or working groups with appropriate representation from Cubist, Gilead, their Affiliates, and appropriate Third Parties. The co-chairpersons shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting, and preparing and issuing minutes of each meeting within [*] days thereafter.

        (c) Meetings. The Steering Committee shall hold meetings at such times as it elects to do so, but in no event shall such meetings be held less frequently than once every [*]. The Steering Committee shall meet alternately at Cubist's facilities in Cambridge, Massachusetts and Gilead's facilities in Foster City, California, or at such locations as the Parties may otherwise agree. With the consent of the representatives of each Party serving on the Steering Committee, other representatives of each Party or of Third Parties involved in the manufacture, development or commercialization of the Licensed Products may attend meetings of the Steering Committee as nonvoting participants. Meetings of the Steering Committee may be held by audio or video teleconference with the consent of each Party, provided that at least one (1) meeting per year shall be held in person. Each Party shall be responsible for all of its own expenses of participating in the Steering Committee. Meetings of the Steering Committee shall be effective only if at least two (2) representatives of each Party are present or participating. The co-chairpersons will alternate responsibility for preparing minutes of each meeting of the Steering Committee, which minutes will not be finalized until the co-chairperson that did not prepare such minutes reviews and confirms the accuracy of such minutes in writing.

        (d) Specific Responsibilities. In addition to its overall responsibility for overseeing the Parties' activities under this Agreement, the Steering Committee shall in particular:

           (i) review and comment upon [*], and review and comment upon the [* ];

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          (ii) review strategies for [*];

         (iii) review [*] as it becomes available;

          (iv) review and discuss the Parties' [*];

          (v) review the Parties' [*] with respect to Licensed Products;

          (vi) approve the implementation of [*], and the allocation of [*] for any approved [*];

         (vii) review and discuss the Parties' [*] relating to Licensed Products; and

        (viii) perform such other functions as appropriate to further the purposes of this Agreement as determined by the Parties, including the periodic evaluation of the Parties' performance under this Agreement.

        (e) Limited Authority; Decision-Making.

          (i)  Except with respect to the matters set forth in Section 3.4, the role of the Steering Committee shall be [*]. The Steering Committee shall serve as a forum for the sharing of information and for the purpose of preventing, or informally resolving, disputes between the Parties. However, the Parties intend to operate [*] in developing and commercializing Licensed Products in their respective territories. The rights and responsibilities of each Party shall be governed by this Agreement, including the exhibits hereto, and the Steering Committee shall not have [*].

          (ii) The Steering Committee shall operate by consensus. With respect to matters to be discussed by the Steering Committee, the representatives of each Party shall present a unified position on behalf of such Party. In the absence of consensus of Steering Committee members with respect to any matter before the Steering Committee, such matter shall be deemed not to have been approved by the Steering Committee, and the Parties shall be free to proceed independently as they see fit (subject always to compliance by the Parties with their respective obligations under this Agreement). Specifically, in the absence of consensus of Steering Committee members for [*] that requires Steering Committee approval, such approval shall be deemed not to have been granted, and the Parties shall have the rights to proceed independently with respect to [*].

        (f)  Meeting Agendas. Each Party will disclose to the other Party its final agenda items along with appropriate related Information at least [*] in advance of each meeting of the Steering Committee.

    2.3 Formation of Subcommittees.

        (a) Development Subcommittee. Within [*] after the Effective Date, the Parties shall form a subcommittee of the Steering Committee to address development issues relating to Licensed Products as provided below in Article 3 (the "Development Subcommittee").

        (b) Marketing Subcommittee. At a time designated by the Steering Committee in advance of Commercial Launch, the Parties shall form a subcommittee of the Steering Committee to address marketing issues relating to Licensed Products in the Gilead Territory (the "Marketing Subcommittee").

        (c) Additional Subcommittees. The Steering Committee may form such additional subcommittees of the Steering Committee as it may deem to be desirable to address other aspects of Licensed Product development and commercialization.

        (d) Membership. Cubist and Gilead each shall designate three (3) representatives with appropriate expertise to serve as members of each of the subcommittees formed under this

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    Section 2.3. One (1) of each Party's members of the Development Subcommittee shall also be one of such Party's members of the Marketing Subcommittee and shall have expertise in the area of marketing pharmaceutical products. One of each Party's members of the Marketing Subcommittee shall also be one of such Party's members of the Development Subcommittee and shall have expertise in the area of developing pharmaceutical products. Each Party shall select one (1) person appointed by it to each such subcommittee to serve as co-chair. Either Party may designate substitutes for its committee representatives to participate if one or more of such Party's designated representatives is unable to be present at a meeting. A Party may replace its representatives serving on a subcommittee from time to time by written notice to the other Party specifying the prior representative(s) to be replaced and the replacement(s) therefor. The co-chairpersons shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting, and preparing and issuing minutes of each meeting within [*] thereafter.

        (e) Meetings. Each subcommittee shall hold meetings at such times as it elects to do so, but in no event shall such meetings be held less frequently than once every [*]. Each subcommittee shall meet alternately at Cubist's facilities in Cambridge, Massachusetts and Gilead's facilities in Foster City, California, or at such locations as the Parties may otherwise agree. With the consent of the representatives of each Party serving on a subcommittee, other representatives of each Party or of Third Parties involved in the manufacture, development or commercialization of Licensed Products may attend meetings of the Steering Committee as nonvoting participants. Meetings of each subcommittee may be held by audio or video teleconference with the consent of each Party, provided that at least [*] shall be held in person. Each Party shall be responsible for all of its own expenses of participating in the subcommittees. Meetings of each subcommittee shall be effective only if at least two (2) representatives of each Party are present or participating. The co-chairpersons will alternate responsibility for preparing minutes of each meeting of each subcommittee, which minutes will not be finalized until the co-chairperson that did not prepare such minutes reviews and confirms the accuracy of such minutes in writing.

        (f)  Specific Responsibilities of the Development Subcommittee. In addition to its overall responsibility for overseeing the Parties' development activities under this Agreement, the Development Subcommittee shall in particular:

          (i)  review and comment upon the [*], review and comment upon the [*], discuss the requirements for [*] and review any [*];

          (ii) work to achieve [*] by coordinating efforts with the Marketing Subcommittee;

          (iii) evaluate the Parties' [*] to provide for sufficient [*]; and

          (iv) perform such other functions as appropriate to further the purposes of this Agreement as determined by the Steering Committee.

        (g) Specific Responsibilities of the Marketing Subcommittee. In addition to its overall responsibility for overseeing the Parties' marketing and commercialization activities under this Agreement, the Marketing Subcommittee shall in particular:

          (i)  consider and discuss [*];

          (ii) work to achieve a [*] by coordinating efforts with the Development Subcommittee, including without limitation coordinating the Parties' efforts with respect to [*];

          (iii) evaluate the Parties' needs for [*];

          (iv) consider and discuss the Parties' efforts to [*]; and

          (v) perform such other functions as appropriate to further the purposes of this Agreement as determined by the Steering Committee.

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        (h) Limited Authority; Decision-Making.

          (i)  The role of each subcommittee shall be [*], with the goal of serving as [*]. However, the parties intend to operate [*] in developing and commercializing Licensed Products in their respective territories. The rights and responsibilities of each Party shall be governed by this Agreement, including the exhibits hereto, and no subcommittee shall have any power to amend, modify or waive compliance with this Agreement.

          (ii) Each subcommittee shall operate by consensus. With respect to matters to be discussed by the subcommittee, the representatives of each Party shall present a unified position on behalf of such Party. Any disagreement among the members of a subcommittee will be submitted for resolution by the Steering Committee.

          (i)  Meeting Agendas. Each Party will disclose to the other Party its final agenda items along with appropriate related Information at least [*] in advance of each meeting of each subcommittee.

    2.4 Project Coordinators. Each Party will, promptly after the formation of each subcommittee pursuant to Section 2.3, assign an appropriately expert and experienced individual to the other Party to facilitate communication and coordination of activities relating to the development and commercialization of Licensed Products and to provide support and guidance to the subcommittee (the "Project Coordinator"). Each Project Coordinator shall be experienced in project management.

    2.5 Collaboration Guidelines.

        (a) General. In all matters relating to this Agreement, the Parties shall seek to comply with good pharmaceutical and environmental practices.

        (b) Independence. Subject to the terms of this Agreement, the activities and resources of each Party shall be managed by such Party, acting independently and in its individual capacity. The relationship between Cubist and Gilead is that of independent contractors and neither Party shall have the power to bind or obligate the other Party in any manner, other than as is expressly set forth in this Agreement.

    2.6 Accounting. Each Party shall determine Incremental Product Development Costs and all other costs and expenses that may be shared with or reimbursed to a Party under this Agreement or the Supply Agreement (including without limitation the amounts Gilead shall pay to Cubist for supply of Licensed Products pursuant to the Supply Agreement), if any, using its standard accounting procedures, consistently applied, to the maximum extent practical as if such Licensed Product were a solely owned product of the determining Party, except as specifically provided in this Agreement. The Parties also recognize that such procedures may change from time to time and that any such changes may affect the definition of Incremental Product Development Costs and such other costs and expenses. The Parties agree that, where such changes are economically material to either Party, adjustments shall be made to compensate the affected Party in order to preserve the same economics as reflected under this Agreement under such Party's accounting procedures in effect as of the Effective Date.

ARTICLE 3
DEVELOPMENT

    3.1 Cubist Development, Development Plan, and Diligence Obligation.

        (a) Development Obligation. Subject to the limitations and other provisions set forth in this Section 3.1, the Parties intend that during the Term, Cubist shall continue to develop Licensed Products by conducting the Core Trials to support Regulatory Approval of Core IV Products in the United States. Additionally, subject to the limitations and other provisions set forth in this

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    Section 3.1, Cubist shall use Commercially Reasonable Efforts to conduct (A) a [*] for the treatment of [*]; (B) a [*] for the treatment of [*]; (C) [*] in such territories and for such indications [*], having reasonably [*] of the Development Subcommittee; and (D) such additional clinical trials and preclinical studies for the IV Product and such additional formulations of Licensed Products as Cubist determines to conduct, [*] having reasonably [*] that the Development Subcommittee may make.

        (b) Development Plan. The development activities, including both preclinical and clinical development activities, that Cubist will conduct for Licensed Products shall be covered by a development plan that Cubist shall prepare and submit to the Development Subcommittee for review [*] after the Effective Date (such plan, the "Cubist Development Plan"). The Cubist Development Plan shall include at least the [*] in clauses (A), (B) and (C) above in Section 3.1(a). The Cubist Development Plan shall [*]. Subject to its overall diligence obligations contained in this Section 3.1, Cubist reserves the right to change or modify the Cubist Development Plan (except with respect to the [*]) or any of the preclinical studies or clinical trials (other than the [*]) described in the Cubist Development Plan in response to (i)   [*], (ii) [*], (iii) [*] or (iv) [*]. Cubist additionally reserves the right to change or modify any Core Trial (1) [*] such trial in accordance with the then-current protocol therefor as a result of [*], or (2) in response to any [*]; provided, however, that Cubist recognizes that Gilead's efforts to [*] will depend upon [*] and further provided that the foregoing ability to change or modify a Core Trial shall not contravene Cubist's obligations to provide [*]. Accordingly, if Cubist has the right to change or modify a Core Trial pursuant to the foregoing sentence, it shall so notify Gilead, the Parties shall discuss any proposed modification to the Core Trial at issue or other alternative arrangement to address the reason giving rise to Cubist's right to change or modify the Core Trial while providing for [*] from Cubist to [*], and Cubist shall implement any such proposed modification or alternative arrangement to which the Parties mutually agree. Cubist shall modify the Cubist Development Plan from time to time to reflect timing or protocol changes to the Core Trials or any other trials, and to reflect additional trials that Cubist conducts or trials Cubist terminates for any Licensed Product during the Term. Cubist shall also revise the Cubist Development Plan from time to time to reflect each new indication for or formulation of Licensed Products that Cubist is developing or plans to develop. Additionally, [*], Cubist shall update the Cubist Development Plan no later [*] and submit such plan to the Development Subcommittee for review and comment. Cubist acknowledges that [*]. Accordingly, Cubist shall use Commercially Reasonable Efforts to obtain Regulatory Approval of Core IV Products in the United States.

        (c) Conduct of Clinical Trials Described in Development Plan. Subject to the provisions of the next sentence and solely with respect to clinical trials that are not Core Trials, Cubist shall use Commercially Reasonable Efforts to conduct, and to continue to conduct, if not already begun as of the Effective Date, all of the clinical trials of Licensed Products described in the Cubist Development Plan. Gilead acknowledges that it may be consistent with Commercially Reasonable Efforts for Cubist to suspend or terminate a clinical trial (other than a Core Trial) or activity referred to in the Cubist Development Plan [*] including without limitation [*].

        (d) Cubist Trials in Gilead Territory. Any clinical trials conducted by Cubist may be run at sites within the Gilead Territory, provided that Cubist first confers with Gilead on the design of any such trials that begin after the Effective Date, and that the data generated in any such trial shall be used by Cubist, its Affiliates and Other Licensees solely to support Regulatory Approval or marketing of Licensed Products outside of the Gilead Territory.

        (e) Oral Product Development. Anything to the contrary in Section 3.1(b) and 3.1(c) notwithstanding, Cubist's diligence obligation with respect to the development of Oral Products shall be as described in this Section 3.1(e). Until the Oral Product enters the clinical development phase, Cubist's diligence obligation hereunder with respect to Oral Products shall be [*] with

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    respect to the development of the Oral Product; and Cubist shall provide Gilead with [*] updates regarding its preclinical development of the Oral Product, whenever possible, in advance of the Development Subcommittee meetings so that the Development Committee may discuss such updates. From the date, if ever, that Cubist decides to commence clinical development of an Oral Product, Cubist's diligence obligation with respect to such Oral Product shall be to use Commercially Reasonable Efforts to clinically develop and seek Regulatory Approval for the Oral Product [*] and to provide Gilead with a clinical data package sufficient to support Regulatory Approval of the Oral Product in the Gilead Territory.

        (f)  Determination. Determination of whether Cubist has met its development diligence obligations pursuant to this Section 3.1 shall be determined solely in accordance with Section 3.5.

    3.2 Gilead Development Plan. Gilead may, but shall not be obligated to, conduct [*] for Licensed Products, and such other development activities that Gilead, in its discretion, deems desirable to [*] for Licensed Products for which Regulatory Approval has been obtained. Such studies may also include [*] on Licensed Products. Any development activities that Gilead may conduct for the Licensed Products shall be set forth in a development plan which Gilead shall prepare and submit to the Steering Committee for review promptly after Gilead has designed such trial, but in no event later than the date provided in Section 3.4 for submission of a protocol for consideration by the Steering Subcommittee (such plan, the "Gilead Development Plan"). Gilead shall modify the Gilead Development Plan from time to time to reflect changes to the timing or protocol for the clinical trials described therein, or to reflect trials that Gilead determines, in its sole discretion, to conduct or terminate during the Term. Any clinical trials that Gilead conducts under this Section 3.2 may be run at sites outside of the Gilead Territory, provided that Gilead confers with Cubist on the design of any such trial, and that the data generated therein shall be used by Gilead, its Affiliates or Permitted Sublicensees solely to support Regulatory Approval in the Gilead Territory. Gilead shall update the Gilead Development Plan [*] and submit such plan to the Development Subcommittee for review and comment. [*] shall [*] in connection with any of the activities reflected in the Gilead Development Plan, except as otherwise provided in Section 3.4.

    3.3 Responsibilities of the Development Subcommittee during Development. The Development Subcommittee will review the overall strategy for and design of all programs under the Cubist Development Plan and the Gilead Development Plan. The Development Subcommittee shall review and make recommendations to the Steering Committee whether to approve any proposals by one Party to modify clinical trials being planned by the other Party, as described in Section 3.4 and prepare initial estimates and budgets for shared Incremental Product Development Costs as may be required under Section 3.4.

    3.4 Modification of Clinical Trials; Incremental Product Development Costs.

        (a) Notice. Each Party shall have the right to propose modifications to a clinical trial for Licensed Products being conducted by the other Party as provided in this Section 3.4. Each Party shall notify the other Party at least [*] days before commencing any clinical trial not commenced prior to or on the Effective Date to support Regulatory Approval of a Licensed Product in such Party's territory (i.e., the Gilead Territory for Gilead, and all countries outside the Gilead Territory for Cubist). If such Party giving notice with respect to a clinical trial it is planning to commence (the "Conducting Party") has not previously disclosed in the Gilead Development Plan or Cubist Development Plan, as applicable, the protocol for such trial pursuant to Section 3.1 or 3.2, then such notice shall be accompanied by such protocol. Thereafter, the Conducting Party shall, upon request by the other Party (the "Non-Conducting Party"), provide such relevant information as the Non-Conducting Party may reasonably request within [*] days after receiving notice from the Conducting Party under this Section 3.4 to enable the Non-Conducting Party to determine its

13

    interest in using data obtained in such clinical trial to support a filing for Regulatory Approval of or another regulatory filing for Licensed Products in the Non-Conducting Party's territory.

        (b) Response. If the Non-Conducting Party is interested in so using such data, and if the Non-Conducting Party desires to propose a modification to a protocol for a clinical trial to be conducted by the Conducting Party, the Non-Conducting Party shall so notify the Conducting Party and specify the proposed modification to such protocol (the "Proposed Modification") within [*] days of receiving all information the Conducting Party is required to provide the Non-Conducting Party pursuant to the foregoing sentence.

        (c) Steering Committee Role; Agreement. The Steering Committee shall confer regarding such Proposed Modification promptly after the Conducting Party receives such notice, and the Steering Committee shall, within [*] after the Conducting Party receives such notice, meet to determine whether implementation of such Proposed Modification is acceptable to the Parties, and the costs attributable to implementing the Proposed Modification (the "Incremental Product Development Costs"). The Steering Committee may request that the Development Subcommittee develop a budget for implementation of the Proposed Modification and total Incremental Product Development Costs therefor, and that the Development Subcommittee make a recommendation of the allocation of such Incremental Product Development Costs between the Parties based upon [*], assuming a [*] of such trial. The Development Subcommittee shall also evaluate the possibility of [* ]. If the Steering Committee approves the Proposed Modification and agrees upon the appropriate allocation of Incremental Product Development Costs between the Parties, the Parties may enter into a written agreement as to the details of the Proposed Modification and Incremental Product Development Costs associated with such Proposed Modification providing for the Conducting Party to modify the protocol for the relevant clinical trial to incorporate the Proposed Modification and amend its development plan hereunder to reflect such change. If the Steering Committee does not approve the Proposed Modification, or the Parties do not enter into such an agreement within [*] after the Steering Committee approves the Proposed Modification, then the Conducting Party shall have no obligation to modify the protocol for the relevant clinical trial to incorporate the Proposed Modification and the Non-Conducting Party shall have no obligation to pay the Incremental Product Development Costs if the Conducting Party does nonetheless implement the Proposed Modification. Any such agreement between the Parties may provide for the Steering Committee to, at least [*], review the Incremental Product Development Costs actually incurred and to be incurred in connection with a relevant clinical trial and modify the budget for such Incremental Product Development Costs as appropriate to reflect the Parties' progress with respect to such clinical trial.

        (d) Oral Products. In accordance with the rest of this Section 3.4 above, the Parties recognize that Gilead may request Proposed Modifications to clinical trials of Oral Products for the purpose of obtaining data to support Regulatory Approval therefor in the Gilead Territory, and the Parties may enter into an agreement pursuant to Section 3.4(c). Any agreement between the Parties with respect to a Proposed Modification of an Oral Product clinical trial may include [*] with respect to the Oral Product if [*] will be required [*] the Proposed Modification pursuant to such Agreement.

    3.5 Determination of Cubist Diligence. If Gilead believes that Cubist is not meeting its diligence obligation pursuant to Section 3.1 (such obligation, the "Cubist Diligence Obligation") with respect to any Licensed Product, Gilead shall notify Cubist. Cubist shall respond in writing to Gilead's notice as to Cubist's activities that it believes meets the Cubist Diligence Obligation with respect to such Licensed Product as well as the circumstances surrounding Cubist's development of the Licensed Products within [ *] of Cubist's receipt of such notice from Gilead. Gilead shall reply to Cubist within [*] after receiving such written response from Cubist whether, in light of such response, Gilead continues to believe that Cubist has not met the Cubist Diligence Obligation with respect to such

14

Licensed Product. If, after following the foregoing procedures in this Section 3.5, the Parties continue to disagree whether Cubist has met the Cubist Diligence Obligation with respect to such Licensed Product, the Parties shall [*] to be convened within [*] of such reply from Cubist. [*] shall examine and discuss for [ *] Cubist's efforts to develop such Licensed Product [*]. After such examinations and discussions:

        (a) If the Parties are [*] the Cubist Diligence Obligation with respect to such Licensed Product, then Cubist shall [*] its development of such Licensed Product [*].

        (b) If Cubist [*] to meet the Cubist Diligence Obligation with respect to such Licensed Product, then Cubist shall [*] with respect to such Licensed Product as promptly as is reasonably practicable under the circumstances [*]; provided that if Gilead [*]. If, after following such procedure, the Parties are in disagreement as to whether Cubist has met the Cubist Diligence Obligation with respect to such Licensed Product, then Section 3.5(c) shall apply.

        (c) If, after having followed the procedure set forth in Sections 3.5(a) and 3.5 (b), the Parties disagree as to whether [*] describes [*] the Cubist Diligence Obligation with respect to a particular Licensed Product, then the Parties shall submit the issue of whether the [*] is sufficient to meet the Cubist Diligence Obligation with respect to such Licensed Product to [*] by [*]. Such [*] shall determine whether Cubist has met the Cubist Diligence Obligation with respect to such Licensed Product or whether a [*] is sufficient to enable Cubist to meet the Cubist Diligence Obligations with respect to such Licensed Product. If such [*] determines that Cubist has met such Cubist Diligence Obligation, then Cubist shall be free to proceed with the development of such Licensed Product [*]; otherwise, such [*] shall formulate [*] to enable Cubist to meet such Cubist Diligence Obligation and Cubist shall use Commercially Reasonable Efforts to perform under such [* ].

        (d) In no event shall Cubist be deemed to breach the Cubist Diligence Obligation with respect to any Licensed Product if any delay, omission or action by Gilead has contributed to Cubist's delay or failure.


ARTICLE 4
REGULATORY

    4.1 General. Gilead shall devote Commercially Reasonable Efforts to file for and obtain Regulatory Approval for those Licensed Products in the Gilead Territory for which Cubist obtains Regulatory Approval in the United States and regarding which Cubist provides Gilead with clinical data sufficient to support Regulatory Approval in the Gilead Territory. Notwithstanding anything in this Agreement to the contrary, Gilead shall not be required pursuant to this Agreement, but may elect, to [*]. In recognition that Gilead's efforts to obtain Regulatory Approval for Licensed products in the Gilead Territory will depend upon its ability to use data relating to Licensed Products generated by Cubist outside of the Gilead Territory in making regulatory filings within the Gilead Territory, Cubist shall devote Commercially Reasonable Efforts to obtain clinical data to support, file for and obtain Regulatory Approval for Core Licensed Products outside the Gilead Territory in accordance with the provisions of Article 3.

    4.2 Free Sales Certificates; Ownership of Regulatory Approvals.

        (a) Cubist shall apply for and use Commercially Reasonable Efforts to obtain Free Sales Certificates for Licensed Products in all countries within the Gilead Territory where such certificates are available and Gilead requests in writing that Cubist obtain them. Gilead shall cooperate in all such efforts [*]. Gilead shall [*] in seeking such Free Sales Certificates. Once Cubist obtains any Free Sales Certificates for Licensed Products in the Gilead Territory, to the extent permitted by law, Cubist shall transfer them to Gilead and Gilead shall thereafter assume all responsibility for communication with Regulatory Authorities and compliance with law in each

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    case in relation to the Free Sales Certificates. In any country in which transfer of a Free Sales Certificate to Gilead is not permitted by law, Cubist shall maintain such Free Sales Certificate and reasonably cooperate with Gilead to effect communications with Regulatory Authorities in connection therewith to the extent desired and requested by Gilead.

        (b) In all other countries of the Gilead Territory, Gilead shall [*] Drug Approval Applications and Regulatory Approvals for Licensed Products, and shall be [* ] responsible for all communications with regulatory authorities in such countries.

        (c) Gilead shall apply for and use Commercially Reasonable Efforts to obtain Free Sales Certificates for Licensed Products in all countries outside the Gilead Territory where such certificates are available and Cubist requests in writing that Gilead obtain them. Cubist shall cooperate in all such efforts [*]. Cubist shall [*] in seeking such Free Sales Certificates. Once Gilead obtains any Free Sales Certificates for Licensed Products outside the Gilead Territory, to the extent permitted by law, Gilead shall transfer them to Cubist and Cubist shall thereafter assume all responsibility for communication with regulatory authorities and compliance with law in each case in relation to the Free Sales Certificates. In any country in which transfer of a Free Sales Certificate to Cubist is not permitted by law, Gilead shall maintain such Free Sales Certificate and reasonably cooperate with Cubist to effect communications with Regulatory Authorities in connection therewith to the extent desired and requested by Cubist.

    4.3 Gilead Access to Cubist and Other Licensee Information.

        (a) Regulatory Data as of the Effective Date. Cubist will, as soon as possible after the Effective Date, provide Gilead copies of all regulatory filings, including without limitation the IND for the IV Product in the United States, and the results of all clinical and non-clinical testing of IV Products performed by or on behalf of Cubist or Other Licensees (subject to applicable restrictions on disclosure of such Information) to the extent that such filings or information existing prior to the Effective Date has not already been provided to Gilead prior to the Effective Date.

        (b) Regulatory Data Generated After the Effective Date. During the Term, Cubist will provide to Gilead for use in Gilead's development efforts relating to Licensed Products all Information owned or Controlled by Cubist regarding Licensed Products necessary or useful for making regulatory filings for, or marketing of, Licensed Products in the Gilead Territory as such Information becomes available.

        (c) Other Licensee Permission. Cubist shall attempt to obtain from any Other Licensees permission for Cubist to provide to Gilead any information relating to Licensed Products that is necessary for Gilead to make regulatory filings for Licensed Products in the Gilead Territory and that, if such information were owned or Controlled by Cubist, would be Information that Cubist must provide to Gilead pursuant to Section 4.3(a) or (b). Cubist shall require Other Licensees to allow Cubist to disclose to Gilead all information relating to adverse events that Cubist must report pursuant to Section 4.5. Gilead shall not provide any Information it receives from Cubist pursuant to this Article 4 (other than Information relating to adverse events provided by Cubist pursuant to Section 4.5) to any Permitted Sublicensee unless and until such Permitted Sublicensee permits Gilead to provide to Cubist any and all information owned or Controlled by such Permitted Sublicensee that, if such information were owned or Controlled by Gilead, would be Information that Gilead must provide to Cubist pursuant to Section 4.4.

        (d) Gilead Use of Information. Gilead shall have a right of access, a right of reference and the right to use and incorporate all information provided to it pursuant to this Section 4.3 in its Drug Approval Applications for Regulatory Approvals of Licensed Products within the Gilead Territory. The Parties shall discuss, via their participation in the Steering Committee, the form in which the Parties shall exchange Information pursuant to this Section 4.3 and Section 4.4.

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    4.4 Cubist and Other Licensee Access to Gilead Information.

        (a) Provision to Cubist. During the Term, Gilead will provide to Cubist for use in Cubist's development efforts relating to Licensed Products all Information in Gilead's possession regarding Licensed Products necessary or useful for making regulatory filings for Licensed Products outside the Gilead Territory as such Information becomes available. Cubist shall have a right of access, a right of reference and the right to use and incorporate all Information provided it pursuant to the foregoing sentence in Drug Approval Applications in Licensed Products outside of the Gilead Territory. Such rights shall be transferable solely as provided in Section 4.4(b).

        (b) Sublicensee Permission; Transferability to Sublicensees. Gilead shall attempt to obtain from any Permitted Sublicensees permission for Gilead to provide to Cubist any information relating to Licensed Products that is necessary for Cubist to make regulatory filings for Licensed Products in the Cubist Territory and that, if such information were owned or Controlled by Gilead, would be Information that Gilead must provide to Cubist pursuant to Section 4.4(a). Gilead shall require its Permitted Sublicensees to allow Gilead to disclose to Cubist all i