Jazz may exercise its option with respect to IMGN632 at any time prior to a pivotal study or any time prior to a biologics license application (BLA) upon payment of an option exercise fee of mid-double digit millions or low-triple digit millions, respectively. The option exercise fee for IMGN632 is subject to certain adjustments depending on the indication(s) for which initial regulatory approval of this product is based. After any option exercise by Jazz, we will share equally with Jazz the costs associated with developing and obtaining regulatory approvals of IMGN632 in the U.S. and the European Union, and Jazz will be solely responsible for such costs with respect to all other territories worldwide. We are also entitled to receive milestone payments upon US and EU regulatory approvals for IMGN632, plus tiered royalties as a percentage of commercial sales which, depending on sales levels and the stage of development at the time of Jazz’s option exercise, range from the mid- to high-single digits in the lowest tier, to low 10’s to low 20’s in the
highest tier. If we designate IMGN632 for co-commercialization, in lieu of receiving a milestone payment based on receiving regulatory approval in the U.S., or royalties on sales in the U.S., we will share equally with Jazz the activities, costs, and profits associated with commercialization in the U.S. The standard termination provisions discussed below apply to the Option Agreement and the license agreement associated with IMGN632 (“License Agreements”), except that if IMGN632 is being co-commercialized by the parties in the U.S., the License Agreement shall remain in effect as long as the parties continue to be engaged in such co-commercialization activities, subject to earlier termination in the event of a material breach.
If Jazz does not exercise its option to IMGN632 or opts out of IMGN632, rights to that product revert to us, and we may continue development and commercialization of IMGN632 without any further involvement by Jazz, except that we would pay Jazz royalties at a rate specified in the Option Agreement or License Agreement, as applicable, on our commercial sales of such product.