COLLABORATION AND LICENSE AGREEMENT

by and between

Incyte Corporation

and

Merus N.V.

dated as of December 20, 2016

TABLE OF CONTENTS

EXHIBITS

COLLABORATION AND LICENSE AGREEMENT

THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”) is entered into as of December 20, 2016 (the “Execution Date”), by and between Incyte Corporation, a Delaware corporation having an office at 1801 Augustine Cut-off, Wilmington, DE 19803, United States of America (“Incyte”), and Merus N.V., a company incorporated in the Netherlands, having an office at Yalelaan 62, 3584 CM Utrecht, The Netherlands (“Merus”).

WHEREAS, Merus is a clinical stage immuno-oncology company in the business of research and development of innovative bi-specific Antibodies;

WHEREAS, Incyte is in the business of research, development and commercialization of pharmaceutical and biologic products; and

WHEREAS, Incyte and Merus are interested in collaborating on activities relating to certain bi-specific Antibodies to Develop such Antibodies in the Field;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

When used in this Agreement, each of the following terms shall have the meanings set forth in this ARTICLE I:

1.1       “Accounting Standards” means (a) with respect to Incyte, that Incyte shall maintain records and books of accounts in accordance with (i) US GAAP (United States Generally Accepted Accounting Principles) or (ii) if mandated by the SEC, IFRS (International Financial Reporting Standards) and (b) with respect to Merus, that Merus shall maintain records and books of accounts in accordance with IFRS. Notwithstanding the above, prior period restatements needed in conjunction with the IFRS adoption shall not impact royalty payments, milestone payments and Development Costs already paid prior to the IFRS adoption except for the fiscal year immediately prior to the fiscal year in which the change in accounting standards is implemented.

1.2       “Additional Co-Development Product” means a Novel Program Product arising from an Additional Co-Development Program.

1.3       “Additional Co-Development Program” means a Novel Program for which the Additional Co-Development Option has been timely exercised pursuant to Section 5.5(a).

1.4       “Affiliate” means, with respect to any Person, another Person which controls, is controlled by or is under common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. Without limiting the generality of the foregoing, a Person shall be deemed to control another Person if any of the following conditions is met: (i) in the case of

corporate entities, direct or indirect ownership of more than [**] of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of more than [**] of the equity interest with the power to direct the management and policies of such non-corporate entities. For the purposes of this Agreement, in no event shall Incyte or any of its Affiliates be deemed Affiliates of Merus or any of its Affiliates, nor shall the Merus or any of its Affiliates be deemed Affiliates of Incyte or any of its Affiliates.

1.5       “Allowable Expenses” means, subject to the other provisions of this Agreement, the following expenses to the extent specifically identifiable or reasonably allocable to, as applicable, (i) the [**] Co-Development Product, if any, or (ii) an Additional Co-Development Product, if any, with respect to Commercialization in the United States, or the manufacture for use in such Commercialization activities, by or on behalf of Incyte, or with respect to co-Detailing activities for the [**] Co-Detailing Product, Merus, and their respective Affiliates, or, where such Commercialization rights have been sublicensed by Incyte to a Third Party, such sublicensee:

(a)         FTE and Out-of-Pocket costs specifically identifiable or reasonably allocable to the Commercialization of the [**] Co-Development Product or an Additional Co-Development Product in the United States (including co-Detailing costs of the Parties pursuant to Section 7.3(a); provided that each Party shall, in accordance with applicable Accounting Standards, prorate all such costs in the event that its sales representatives detail product in addition to a Co-Detailing Product during the same Detailing visit);

(b)         Manufacturing Costs for the [**] Co-Development Product or an Additional Co-Development Product, as applicable, for sale in the United States (including [**] of the [**] Co-Development Product or such Additional Co-Development Product);

(c)         Regulatory Expenses (including [**] to the extent allocable to sales of the [**] Co-Development Product or an Additional Co-Development Product);

(d)         Development Costs incurred on or after First Commercial Sale;

(e)         costs for the coordination of medical information requests and field based medical scientific liaisons in the United States;

(f)         costs associated with patient assistance programs;

(g)         costs for filing, maintaining and enforcing Patent Rights pursuant to Sections 8.3(c) and 8.4, in each case to the extent not (i) otherwise reimbursed through recoveries obtained in connection with any litigation as contemplated under Section 8.4 or (ii) Merus’s responsibility pursuant to Section 8.5(d) or ARTICLE XI;

(h)         costs of securing trademarks for the [**] Co-Development Product or an Additional Co-Development Product, as applicable, pursuant to Section 7.4(b);

(i)         product liability insurance in the event the Parties obtain a joint policy that covers the [**] Co-Development Product or an Additional Co-Development Product;

(j)         Third Party Payments (in accordance with Section 8.5(a) – (c));

(k)         FTE and Out-of-Pocket costs associated with recall or withdrawal of the [**] Co-Development Product or an Additional Co-Development Product other than such costs that result from a Party’s or its Affiliate’s breach of this Agreement (which costs will be borne solely by such Party);

(l)         FTE and Out-of-Pocket Costs incurred in relation to (i) Product Liability claims and (ii) Third Party infringement claims, except for any such infringement claim with respect to which either Party is required to indemnify the other Party pursuant to ARTICLE XI, in each case arising from the Development, manufacture and Commercialization of the [**] Co-Development Product or an Additional Co-Development Product; and

(m)         any other costs and expense of Incyte, its Affiliates, and its sublicensees specifically identifiable or reasonably allocable to the Commercialization of the [**] Co-Development Product or an Additional Co-Development Product in the United States;

provided that Allowable Expenses shall exclude Development Costs incurred prior to First Commercial Sale and further provided that expenses incurred for [**] by or on behalf of either Party in relation to the [**] Co-Detailing Product shall only be included within “Allowable Expenses” [**]. For clarity, Allowable Expenses will not include [**] with respect to [**] Product (whether under the [**] Program or as a Novel Program Product under any Novel Program), other than the [**] Co-Detailing Product; provided that the foregoing would not limit [**] right to [**] to the extent provided under this Agreement.

1.6       “Annual Net Sales”  means Net Sales of the applicable Licensed Products for a particular Program in any Calendar Year, or, in the first or last year of the applicable Royalty Term, the portion of such Calendar Year during which this Agreement is in effect.

1.7       “Antibody”  means a molecule that comprises or contains: (a) one or more immunoglobulin variable domains; (b) fragments, variants, modifications or derivatives of such immunoglobulin variable domains irrespective of origin or source, including antigen binding portions including Fab, Fab’, F(ab’)₂, Fv, dAb and CDR fragments, single chain antibodies (scFv), chimeric antibodies, diabodies and polypeptides (including humanized versions thereof), in each case that contain at least a portion of an immunoglobulin that is sufficient to confer specific antigen binding; or (c) the nucleic acid consisting of a sequence of nucleotides encoding (or complementary to a nucleic acid encoding) any of the foregoing molecules in (a) or (b). 

1.8       “Arising IP” means all Inventions and Know-How discovered, made or conceived, or information created by either Party or jointly by the Parties or any of their Affiliates, employees, independent contractors or consultants in the course of conducting activities under this Agreement, together with all Intellectual Property Rights therein; including Platform Arising IP, Discovery Arising IP, Target Pair Arising IP, Sole Arising IP and Joint Arising IP.

1.9       “Bankruptcy Event” means with respect to a Party (a) the entry of an order for relief under the Bankruptcy Code (or any other bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect) by such Party; (b) the commencement of

an involuntary proceeding under the Bankruptcy Code or any other bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect against such Party, if not dismissed, bonded or stayed within [**] after such commencement; (c) the making by such Party of a general assignment for the benefit of creditors; or (d) the appointment of or taking possession by a receiver, liquidator, assignee, custodian, or trustee of all or substantially all of the business or property of such Party.

1.10     “Bi-Specific Construct”  means an Antibody that recognizes two or more different Targets or two or more distinct epitopes on the same Target through binding by distinct V-Regions on each Fab region of such bi-specific Antibody.  Where “Bi-Specific Construct” is used in connection with a Program, it applies to the Bi-Specific Constructs generated (or that could be generated based on the General Monoclonal Antibodies) for such Program, including with respect to Program 1 and Program 2, prior to the Effective Date.

1.11     “BLA” means (a) (i) a Biologics License Application or New Drug Application submitted to the FDA, or any successor application or procedure, as more fully defined in the United States Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq., as amended from time to time, or under Section 351 of the Public Health Service Act (PHSA), which is codified at 42 U.S.C. §262, or (ii) any non-United States counterpart of such a New Drug Application or Biologics License Application, and (b) all supplements and amendments, including supplemental New Drug Applications and Biologics License Applications (and any non-United States counterparts) that may be filed with respect to the foregoing.

1.12     “Business Day” means any day except Saturday, Sunday and any day on which banking institutions in New York, New York or Utrecht, Netherlands, generally are closed as a result of federal, state or local holiday.

1.13     “Calendar Quarter” means a calendar quarter ending on the last day of March, June, September or December.

1.14     “Calendar Year” means (a) for the first year of the Term, the period beginning on the Effective Date and ending on December 31, 2017, (b) for each year of the Term thereafter, each successive period of time commencing on January 1 and ending twelve (12) consecutive calendar months later on December 31, and (c) for the last year of the Term, the period beginning on January 1 of the year in which this Agreement expires or terminates and ending on the effective date of expiration or termination of this Agreement.

1.15     “Candidate Nomination” means, with respect to a Program and its associated Target Pair, that [**] in such Program.

1.16     “[**]  Antibody” means any Antibody that binds to [**].

1.17     “Change of Control” means, with respect to either Party, the occurrence of any of the following after the Effective Date:

(a)         Any “person” or “group” (as such terms are defined below) (i) becomes the “beneficial owner” (as defined below), directly or indirectly, of shares or other interests (including

partnership interests) of a Party then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the appointment or election of the directors, the managers, the members of the management board or the members of the supervisory board or similar positions (“Voting Stock”) of such Party representing [**] or more of the total voting power of all outstanding classes of Voting Stock of such Party or (ii) has the power, directly or indirectly, to elect [**] of the members of such Party’s directors, managers, management board, supervisory board, or similar governing body (“Board of Directors”); or

(b)         A Party enters into a merger, consolidation or similar transaction with another Person (whether or not such Party is the surviving entity) and as a result of such merger, consolidation or similar transaction (i) the members of a Board of Directors of such Party immediately prior to such transaction, immediately following such transaction, (A) constitute less than [**] of the members of a Board of Directors of such surviving Person or (B) do not jointly hold [**] of the voting power within the Board of Directors or (ii) the Persons that beneficially owned, directly or indirectly, the shares of Voting Stock of such Party immediately prior to such transaction cease to beneficially own, directly or indirectly, shares of Voting Stock of such Party representing at least [**] of the total voting power of all outstanding classes of Voting Stock of the surviving Person in substantially the same proportions as their ownership of Voting Stock of such Party immediately prior to such transaction; or

(c)         A Party sells or transfers to any Third Party, in one or more related transactions, properties or assets representing all or substantially all of such Party’s assets to which this Agreement relates; or

(d)         The general meeting of shareholders of a Party adopt a resolution or the holders of shares or other interests of a Party approve a proposal, as applicable, for the dissolution of such Party or for the approval of a resolutions or a plan, as applicable, resulting in the liquidation of all or substantially all of such Party’s assets.

(e)          For the purpose of this definition of Change of Control, (a) “person” and “group” have the meanings given such terms under Section 13(d) and 14(d) of the United States Securities Exchange Act of 1934 and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the said Act; (b) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the aforesaid Act; and (c) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner.”

1.18     “Clinical Trial” means a Phase I Study, a Phase II Study, a Phase III Study, a Pivotal Study, a Phase IV Study or a combination of two (2) or more of any of the foregoing studies in any jurisdiction.

1.19     “Commercialization” or “Commercialize” means any activities directed to obtaining pricing and/or reimbursement approvals, marketing, promoting, distributing, importing, Detailing, offering to sell, and/or selling a product (including establishing the price for such product).

1.20     “Commercially Reasonable Efforts” of a Party means the reasonable, diligent, good faith efforts of the type to accomplish such objective as such Party would normally use to accomplish a similar objective under similar circumstances, it being understood and agreed that, with respect to efforts to be expended in relation to a Licensed Product, such efforts shall be substantially consistent with those efforts and resources commonly used by such Party for any other product owned by it or in relation to which it may have rights, which other product is at a similar stage in its Development or product life and is of similar market and economic potential as products expected to result from the Licensed Antibodies at a similar stage in their Development or product life provided that such efforts continue to be commercially reasonable in light of the scientific and economic outlook for the product, all as measured by the facts and circumstances at the time such efforts are due.

1.21     “Confidential Information” means (a) all confidential or proprietary information relating to Licensed Antibodies, and (b) all other confidential or proprietary documents, technology, Know-How or other information (whether or not patentable) actually disclosed by one Party to the other pursuant to this Agreement or the Prior Confidentiality Agreements.

1.22     “Control” or “Controlled” means, with respect to any (a) material, document, item of information, method, data or other Know-How or (b) other Intellectual Property Rights, the possession by a Party or its Affiliates, whether by ownership or license (other than by licenses granted under this Agreement), of the ability to grant to the other Party access, a license and/or a sublicense as provided herein without requiring the consent of a Third Party or violating the terms of any agreement or other arrangement with any Third Party, in each case as of the Execution Date, or if any of the same are acquired or created after the Execution Date, at the date it is acquired or created by the relevant Party or its Affiliate.

1.23     “Cover”, “Covering” or “Covered” means, with respect to a product, technology, process or method, that, but for a license granted to a Person under a Valid Claim included in the Patent Rights under which such license is granted, the Development, manufacture, Commercialization, importation, and/or other use of such product or the practice of such technology, process, or method by such Person would infringe such Valid Claim (or, in the case of a Valid Claim that has not yet issued, would infringe such Valid Claim if it were to issue).

1.24     “Data Package” means, on a Program-by-Program basis, a data package intended to support the achievement of the Candidate Nomination for a Bi-Specific Construct in such Program, including the following information, in a form reasonable under the circumstances and to the extent applicable to the given Research Plan: (a) a written report summarizing any [**] the applicable Program, and all [**] the applicable Research Plan, (b) a [**] relating to the [**] Antibodies for the applicable [**] and the [**], (c) available information and data relating to the [**] Bi-Specific Constructs [**] applicable Target Pair, and any results and data relating to [**], (d) a list of all Patents Controlled by Merus that at the time of submission of such data package would be licensed to Incyte for Development and Commercialization of such Bi-Specific Construct(s) set forth in (c) as Licensed Antibodies and Licensed Products under this Agreement and any Patents Controlled by Merus Covering the Antibodies set forth in (b), and (e) any other information and data that the JRC agrees, at the time of designation of such Target Pair (in

accordance with Sections 4.4 or 4.5) or prior to Candidate Nomination, should be included within such Data Package to support the determination of Candidate Nomination for such Program.

1.25     “Detail” means the act of presenting information on the [**] Co-Detailing Product in a manner consistent with the Detailing Plan. When used as a verb “Detail” or “Detailing” means to engage in a Detail.

1.26     “Development” or “Develop” means, with respect to a biologic molecule or Antibody, any activity directed to obtaining or maintaining Regulatory Approval, including all preclinical and clinical drug or biologic product development activities, including: the conduct of Clinical Trials, vector construction, cell line development, master cell bank generation, test method development and stability testing, toxicology, formulation and delivery system development, process development, pre-clinical and clinical Licensed Antibody and Licensed Product supply, manufacturing scale-up, development-stage manufacturing, quality assurance/quality control procedure development and performance with respect to clinical materials, statistical analysis and report writing and clinical studies, regulatory affairs with respect to the foregoing, and all activities conducted under a Development Plan. Development expressly excludes activities conducted under the [**] Discovery Plan, Novel Discovery Plans and the Research Plans. When used as a verb, “Develop” means to engage in Development. For clarity, “Development” shall include Phase IV Studies or any other Clinical Trial commenced after Regulatory Approval.

1.27     “Development Costs” means the costs and expenses incurred by or on behalf of a Party attributable to, or reasonably allocable to, the Development of Licensed Products in accordance with the applicable Development Plan and the Program 1 Joint Development Budget, the [**] Co-Development Budget, or an Additional Co-Development Budget (if any), as applicable. Development Costs shall not include [**]. “Development Costs” shall include (a) the costs of [**], (b) the [**] costs of the relevant Party or its Affiliates [**] performing Development activities, (c) all Out-of-Pocket Costs incurred by the Parties or their Affiliates, including payments made to Third Parties with respect to any of the foregoing (except to the extent that [**]), (d) [**], (e) the cost of [**]  and (f) the cost of [**], including: (i) all costs of [**] used in Development, [**], (ii) expenses incurred to [**], and (iii) costs and expenses of [**], in each case of (i) through (iii), to the extent associated with Development activities under the applicable Development Plan and Development Budget. Development Costs expressly include Research Costs for Program 1 Antibodies but exclude Research Costs for Program 2 Antibodies, [**] Antibodies, and Novel Program Antibodies.

1.28     “Development Plan” means the Program 1 Joint Development Plan, the Program 1 Incyte Territory Development Plan, the Program 1 US Development Plan, the [**] Co-Development Plan, and an Additional Co-Development Plan (if any), as applicable.

1.29     “Discovery Arising IP” means all Inventions and Know-How discovered, made or conceived, or information created by either Party or jointly by the Parties or any of their Affiliates, employees, independent contractors or consultants in the course of conducting activities under any Research Plan, [**] Discovery Plan, or Novel Discovery Plan under this Agreement, together with all Intellectual Property Rights therein, including [**]; provided that Discovery Arising IP excludes [**].

1.30     “Drop Date” means, with respect to a Dropped Program and the corresponding Dropped Target Pairs, the date of Incyte’s written notice to Merus of its desire to drop the applicable Program pursuant to Section 4.8.

1.31     “Dropped Bi-Specific Construct” means a Bi-Specific Construct that is part of a Dropped Program and that was [**] for such Dropped Program.

1.32     “Dropped Bi-Specific Product” means a product or product candidate (other than a Licensed Antibody or Licensed Product) that contains a Dropped Bi-Specific Construct as an active ingredient, including all formulations and dosages.

1.33     “Dropped Program” means a Program that is dropped by Incyte in accordance with Section 4.8 prior to achievement of Program Selection for such Program.

1.34     “Dropped Target Pair” means the Target Pair that was the subject of research activities under a Dropped Program.

1.35     “EMA” means the European Medicines Agency, or a successor agency thereto.

1.36     “Executive Officers” means the Chief Executive Officer of Incyte (or a senior executive officer of Incyte designated by Incyte’s Chief Executive Officer) and the Chief Executive Officer of Merus (or a senior executive officer of Merus or its Affiliate as designated by Merus’s Chief Executive Officer).

1.37     “Existing Program Patents”  means those Patent Rights filed by Merus with respect to (i) Program 1 and Program 2, (ii) any IMOD Pipeline Product, or (iii) a [**] Program that exist as of the Execution Date, as set forth on Exhibit 1.37.

1.38     “FDA” means the United States Food and Drug Administration, or a successor agency thereto.

1.39     “Field” means all fields of use.

1.40     “First Commercial Sale” means, with respect to a Licensed Product, the first arm’s length commercial sale for monetary value of such Licensed Product to a Third Party (who is not a sublicensee) by, as applicable, Merus or its Affiliates or sublicensees or Incyte or its Affiliates or sublicensees in a country following applicable Regulatory Approval (other than applicable governmental price and reimbursement approvals) of such Licensed Product in such country. Sales or transfers (a) to an Affiliate or sublicensee (unless the Affiliate or sublicensee is the last entity in the distribution chain of the Licensed Product), or (b) of reasonable quantities of Licensed Product for Clinical Trial purposes, for a bona fide charitable purpose, or for compassionate or similar use shall not be considered a First Commercial Sale. For purposes of clarification, except as otherwise provided in the previous sentence, any first arm’s length commercial sale to a distributor or wholesaler under any non-conditional sale arrangement would be a First Commercial Sale.

1.41     “Force Majeure Event” means an event, act, occurrence, condition or state of facts, in each case outside the reasonable control of a Party, including: acts of God; acts of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; terrorism and invasion; in each case that interfere with the normal business operations of such Party.

1.42     “FPFV” means the first patient’s first screening visit in a Clinical Trial at or prior to which such subject signs an informed consent to participate in such Clinical Trial.

1.43     “FTE” means a full-time equivalent person year (consisting of a total of [**]  hours per year) of scientific, technical or commercialization work undertaken by Incyte or Merus employees, as applicable.

1.44     “FTE Rate” means the rate per FTE (which may be prorated on a daily basis as necessary) of [**] per annum, with respect to Development or Commercialization activities conducted pursuant to this Agreement, subject to annual adjustment by the rate of the Employment Cost Index for total compensation for the “management, professional and related” occupational group, as published by the United States Department of Labor, Bureau of Labor Statistics (or any similar index agreed upon by the Parties if such index ceases to be compiled and published). 

1.45     “General Monoclonal Antibody” means, with respect to a Target Pair designated by Incyte for inclusion in a Research Plan, the [**] but which are [**].

1.46     “Generic Competition” means, with respect to a Licensed Product in any country, that one or more Generic Products [**] in such country, and such Generic Product(s) have a market share (in the aggregate) of [**] or greater in a Calendar Quarter. Market share shall be based on the aggregate market in such country of such Licensed Product and the Generic Product(s), based on units of such Licensed Product sold and units of such Generic Product(s) sold in the aggregate, as reported by IMS International, or if such data are not available, such other reliable data source as reasonably agreed by the Parties.

1.47     “Generic Product” means, on a Licensed Product-by-Licensed Product and country-by-country basis, any pharmaceutical or biological product (a) that contains (i) an identical Licensed Antibody or active ingredient(s) as such Licensed Product, or (ii) a “highly similar” active ingredient(s) as such Licensed Product, as the phrase “highly similar” is used in 42 U.S.C. § 262(i)(2), and subject to the factors set forth in FDA’s Guidance for Industry, “Quality Considerations in Demonstrating Biosimilarity of a Therapeutic Protein Product to a Reference Product,” (April 2015), at Section V, and any successor FDA guidance thereto, (b) for which Regulatory Approval is obtained by referencing Regulatory Materials of such Licensed Product, (c) is approved for use in such country pursuant to a Regulatory Approval process governing approval of interchangeable or biosimilar biologics as described in 42 U.S.C. § 262, or an equivalent process for Regulatory Approval in any country outside the United States, or any other equivalent provision that comes into force, or is the subject of a notice with respect to such Licensed Product under 42 U.S.C. § 262(l)(2) or any other equivalent provision that comes into force in such country, and (d) is sold in the same country (or is commercially available in the same

country via import from another country) as such Licensed Product by any Third Party that is not a sublicensee of a Party or its Affiliates and did not purchase such product in a chain of distribution that included any of a Party or any of its Affiliates or its Sublicensees.

1.48     “HCDR3” means the third heavy chain complementarity-determinant region determined by the amino acid sequence of the variable (V) domain that is flanked by the invariant cysteine 104 and the invariant tryptophan 118 according to the IMGT system of numbering (as set forth at http://www.imgt.org/IMGTScientificChart/Nomenclature/IMGT-FRCDRdefinition.html) corresponding to cysteine 92 and tryptophan 103 in the Kabat system and cysteine 92 and tryptophan 103 of the Chothia system.

1.49     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereto.

1.50     “IMOD Pipeline Product” means [**] product or product candidate that contains a Bi-Specific Construct specifically binding to an IMOD Target Pair, including all formulations and dosages of such Bi-Specific Construct.

1.51     “IMOD Target Pair” means a Target Pair comprised of any two (2) IMOD Targets, or any two (2) distinct epitopes on any IMOD Target.

1.52       “IMOD Targets” means collectively [**], and each of (a) through (g) individually, an “IMOD Target”.

1.53     “Incyte Group Member” means Incyte and any direct or indirect wholly owned subsidiary of Incyte.

1.54     “Incyte IP” means Incyte Know-How and Incyte Patent Rights.

1.55     “Incyte Know-How” means all Know-How that (a) is Controlled by Incyte or any of its Affiliates as of the Execution Date or, subject to Section 5.3(d)(iv) (with respect to Program 1), during the Term (subject to Section 15.4(c)) and (b) is [**] to Develop, manufacture, or Commercialize any Licensed Antibodies or Licensed Products; provided that Incyte Know-How includes Know-How in Incyte’s Sole Arising IP but excludes Know-How in Target Pair Arising IP and Joint Arising IP.

1.56     “Incyte Patent Rights” means all Patent Rights that (a) are Controlled by Incyte or any of its Affiliates as of the Execution Date or during the Term (subject to Section 15.4(c)) and (b) are [**] to Develop, manufacture, use or Commercialize any Licensed Antibodies or Licensed Products; provided that Incyte Patent Rights include Patent Rights in Incyte’s Sole Arising IP, but excludes Patent Rights in Target Pair Arising IP and Joint Arising IP.

1.57     “[**] Targets” means a list of [**] Targets [**] within [**].

1.58     “Incyte Territory” means the entire world other than the United States.

1.59     “IND” means an Investigational New Drug Application filed with the FDA under 21 C.F.R. Part 312 or similar non-United States application or submission in any country or group of countries for permission to conduct human clinical investigations.

1.60     “Indication” means any disease, condition or syndrome, or sign or symptom of, or associated with, a disease or condition.

1.61     “Initial Research Term” means the period commencing on the Effective Date and ending on the [**] of the Effective Date.

1.62     “Initiation” or “Initiate” means, with respect to a Clinical Trial, the first dosing of the first human subject in such Clinical Trial.

1.63     “Intellectual Property Rights” means (a) Patent Rights, (b) Know-How, (c) copyrights (whether registered or unregistered), (d) rights in software, (e) trademarks, service marks, trade names, trade dress, domain names and similar rights, including goodwill therein, and (f) any other forms of proprietary or industrial rights pertaining to inventions, original works, and other forms of intellectual property now known or recognized in any jurisdiction, including the right to bring a claim with respect to any of the foregoing for past, present or future infringement, and any applications or registrations thereof.

1.64     “Internal Merus Program” means a bona fide internal program of research and development activities that [**] conducted by Merus or any of its Affiliates and that is directed to the identification, research and development of any Bi-Specific Constructs directed to one or more named Target Pair(s) where (a) [**] such research and development activities, and (b) [**] research, Development or Commercialization under this Agreement. [**] Internal Merus Program, (i) such [**], with respect to each such named Target Pair, be [**] under this Agreement and (ii) such [**], with respect to each such Target Pair, be [**] under this Agreement. For purposes of this definition, [**] and [**].

1.65     “Inventions” means all inventions, discoveries, improvements and other technology that are discovered, made or conceived by or on behalf of either Party or its respective Affiliates or both Parties or the respective Affiliates, whether solely or jointly with any Third Party, during and in the course of activities performed under this Agreement.

1.66     “Joint Arising IP” means all Inventions and Know-How discovered, made or conceived or information created, jointly by both Parties or any of their Affiliates, employees, independent contractors or consultants in the course of conducting activities under this Agreement, together with all Intellectual Property Rights therein; provided that Joint Arising IP excludes Platform Arising IP, Discovery Arising IP, and Target Pair Arising IP.

1.67     “Know-How” means any information, ideas, data, inventions, works of authorship, database rights, trade secrets, technology, practices, techniques, procedures, knowledge, skill, experience or materials, including formulations, molecules, assays, reagents, compounds, biologic molecules, compositions, human or animal tissue, samples or specimens, and combinations or components thereof, whether or not proprietary or patentable, or public or confidential, and whether stored or transmitted in oral, documentary, electronic or other form, including all

Regulatory Documentation, but excluding any such information or materials publicly disclosed in Patent Rights.

1.68     “Law” means any law, statute, rule, regulation, ordinance or other pronouncement having the effect of law, of any federal, national, multinational, state, provincial, county, city or other political subdivision, including (a) good clinical practices and adverse event reporting requirements, guidance from the International Conference on Harmonization or other generally accepted conventions, and all other rules, regulations and requirements of the Department of Health and Human Services, including the FDA, Center for Medicare & Medicaid Services (CMS) and other applicable Regulatory Authorities, (b) the Foreign Corrupt Practices Act of 1977, as amended, or any comparable laws in any country, and (c) all export control laws.

1.69     “Licensed Antibody” means a Program 1 Antibody, Program 2 Antibody, a [**] Antibody, or a Novel Program Antibody.

1.70     “Licensed Patent Rights” means (a) with respect to the Patent Rights licensed to Merus hereunder, the Incyte Patent Rights, and (b) with respect to the Patent Rights licensed to Incyte hereunder, the Merus Patent Rights and Patent Rights in the Merus Platform IP.

1.71     “Licensed Product” means a Program 1 Product, Program 2 Product, [**] Product, or Novel Program Product, as applicable. As used in this Agreement, except where not appropriate in context, a Licensed Product also includes the Licensed Antibody contained in such Licensed Product.

1.72     “Licensed Target Pair” means the Program 1 Target Pair, Program 2 Target Pair, [**] Target Pairs and Novel Program Target Pairs.

1.73     “Major Market” means the United States and the Non-U.S. Major Markets.

1.74     “Manufacturing Cost” means the fully burdened cost, including any internal and Out-of-Pocket Costs and expenses incurred to manufacture a Bi-Specific Construct, Licensed Antibody or Licensed Product, in each case solely to the extent allocable to such manufacture, including: 

(a)         costs of [**];

(b)         costs associated with [**];

(c)         costs of [**] costs;

(d)         operating costs of facilities and equipment [**];  

(e)         costs to [**] in compliance with cGMP;

(f)         [**] costs;

(g)         charges for [**] costs;

(h)     [**] costs;

(i)     a [**] of [**];  

(j)     any [**] paid or payable in relation to the manufacture of a Bi-Specific Construct, Licensed Antibody or Licensed Product or any portion or component thereof; and

(k)     amounts that are paid to a Third Party, in connection with manufacturing a Bi-Specific Construct, Licensed Antibody or Licensed Product.

1.75     “Merus IP” means Merus Know-How and Merus Patent Rights.

1.76     “Merus Know-How” means all Know-How that (a) is Controlled by Merus or any of its Affiliates as of the Execution Date or, subject to Section 5.3(d)(iv) (with respect to Program 1), during the Term (subject to Section 15.4(c)) and (b) is necessary or useful to Develop, manufacture, or Commercialize any Licensed Antibodies or Licensed Products; provided that Merus Know-How includes Know-How in Merus’s Sole Arising IP and Discovery Arising IP, but excludes Know-How in Target Pair Arising IP, Joint Arising IP, and Merus Platform IP.

1.77     “Merus Patent Rights” means all Patent Rights that (a) are Controlled by Merus or its Affiliates as of the Execution Date or during the Term (subject to Section 15.4(c)) and (b) are necessary or useful to Develop, manufacture, use or Commercialize any Licensed Antibodies or Licensed Products; provided that Merus Patent Rights include Patent Rights in Existing Program Patents, Divisionals, Merus’s Sole Arising IP and Discovery Arising IP, but excludes Patent Rights contained in the Target Pair Arising IP, Joint Arising IP, and Merus Platform IP.

1.78     “Merus Platform” means Merus’s proprietary (a) Biclonics® [**] technology, (b) technology for [**] into Bi-Specific Constructs, including the technology used to [**] to generate Bi-Specific Constructs, (c) [**] and [**], and (d) [**] technology and other [**], including any modifications or improvements to the foregoing as may be made from time to time.

1.79     “Merus Platform IP” means all Know-How and Patent Rights that are Controlled by Merus or any of its Affiliates on the Execution Date or at any time during the Term (subject to Section 15.4(c)) that relates to the Merus Platform, including the Platform Arising IP.

1.80     “MHLW” means the Japanese Ministry of Health, Labor and Welfare, or a successor agency thereto.

1.81     “Net Profits” and, with correlative meaning, “Net Losses”, means Net Sales of the [**] Co-Development Products or an Additional Co-Development Product, as applicable, in the United States less Allowable Expenses.

1.82     “Net Sales” means, with respect to any Licensed Product, the net sales on behalf of a Royalty Paying Party or its Affiliates, licensees or sublicensees sold to Third Parties as determined in accordance with the Royalty Paying Party’s (or its Affiliate’s, licensee’s, or sublicensee’s, as applicable) usual and customary accounting methods, which are in accordance

with Accounting Standards, as consistently applied by such Royalty Paying Party (or its Affiliate, licensee, or sublicensee, as applicable), including [**] and [**] Licensed Products.

(a)     In the case of any sale or other disposal of the Licensed Product between or among a Royalty Paying Party and its Affiliates, licensees and sublicensees for resale, Net Sales shall be deemed to occur and shall be calculated as above only on the [**]  sale thereafter to a Third Party.

(b)     In the case of any sale that is not invoiced or is delivered before invoice, Net Sales shall be calculated at the time all the revenue recognition criteria under the applicable Accounting Standards are met.

(c)     In the case of any sale or other disposal for value, such as barter or counter-trade, of Licensed Product, or part thereof, other than in an arm’s length transaction exclusively for cash, Net Sales shall be calculated as above on the [**] of the [**] received or the [**] (if higher) of the Licensed Product in the country of sale or disposal, as determined in accordance with the Accounting Standards.

(d)     In the event the Licensed Product is sold in a finished dosage form containing the Licensed Product in combination with one or more other active ingredients (a “Combination Product”), the Net Sales of the Licensed Product, for the purposes of determining royalty payments, shall be determined:

(i)     if the Licensed Product and other active ingredients contained in the Combination Product are each sold separately in finished form, by multiplying the Net Sales (as defined above in this Section 1.82) of the Combination Product by the fraction, A/(A+B) where [**] is the [**] in the prior Calendar Year when sold separately in finished form and [**] is the [**] in the prior Calendar Year of the other product(s) sold separately in finished form;

(ii)     if the Licensed Product contained in the Combination Product is sold separately in finished form but the other active ingredients are not sold separately in finished form, by multiplying the Net Sales (as defined above in this Section 1.82) of the Combination Product by the fraction, A/C where [**] is the [**] of the Licensed Product in the prior Calendar Year when sold separately in finished form and [**] is the [**] in the prior Calendar Year of the Combination Product sold separately in finished form

(iii)     if neither clauses (i) or (ii) above is applicable, by mutual agreement of the Parties based on the relative value contributed by each component, such agreement shall not be unreasonably withheld.

1.83     “Non-U.S. Major Market” means [**].

1.84     “Not Available” means, subject to Section 2.8(c), that as of the date of a notice from Incyte proposing a given Target Pair pursuant to Section 4.4(c) (with respect to a [**] Target Pair) or Section 4.5(b) (with respect to a Novel Program Target Pair): (a) [**] such Target Pair that would prevent Merus from granting the license and other rights to Incyte hereunder if such Target Pair were selected by Incyte pursuant to Section 4.4(c) (with respect to a [**] Target Pair) or

Section 4.5(b) (with respect to a Novel Program Target Pair); provided that [**] (i) the program for such Target Pair [**] and (ii) [**] as applicable, unless [**] at a time when the [**]; or (b) [**] (i) Merus [**] Sections 4.4 or 4.5, and Incyte declined to include such Target Pair under this Agreement at such time, and (ii) [**] with respect to the applicable Target Pair. For clarity, (A) no [**] Target Pair may be Not Available during the [**] Exclusivity Period, (B) during the IMOD Reserved Period, the Reserved IMOD Target Pairs cannot be Not Available and (C) during the Research Term, all [**] Antibodies Controlled by Merus or any of its Affiliates will be made available for Bi-Specific Constructs under this Agreement. The Parties hereby agree and acknowledge that only those Target Pairs set forth on Exhibit 1.84 are Not Available as of the Execution Date.

1.85     “Novel Program”  means a program of research, Development and Commercialization activities conducted pursuant to this Agreement with respect to the Novel Program Products.

1.86     “Novel Program Antibody” means, on a Novel Program Target Pair-by-Novel Program Target Pair basis, (a) any Bi-Specific Construct specifically binding to a given Novel Program Target Pair, and (b) the Selected Monoclonal Antibodies used to generate the Target Pair Biclonics Matrix under the Research Plan (or Bi-Specific Constructs that could be generated by combining General Monoclonal Antibodies for each Target in the Novel Program Target Pair) for such Novel Program Target Pair. For clarity, a “Novel Program Antibody” includes [**] for such Novel Program Target Pair (including the lead Bi-Specific Construct and any back-up Bi-Specific Constructs), and any modification or derivative thereof.

1.87     “Novel Program Product” means a product or product candidate that contains a Novel Program Antibody as an active ingredient, including all formulations and dosages of such Novel Program Antibody.

1.88     “Novel Program Target Pair” means any Target Pair that is the subject of activities under this Agreement that is not (a) a Program 1 Target Pair, (b) a Program 2 Target Pair, or (c) a [**] Target Pair.

1.89     “Out-of-Pocket Costs” means, with respect to certain activities hereunder, direct expenses paid or payable by either Party or its Affiliates to Third Parties (other than employees of such Party or its Affiliates) that are specifically identifiable and incurred to conduct such activities for the applicable Licensed Products, have been recorded in accordance with the Accounting Standards, and for the avoidance of doubt [**].

1.90     “Party” means Merus or Incyte. “Parties” means Merus and Incyte.

1.91     “Patent Rights” means all patents and patent applications in any country in the world, including any continuations, continuations-in-part, divisionals, provisionals or any substitute applications, any patent issued with respect to any such patent applications, any reissue, reexamination, renewal or extension (including any Patent Term Extension in the United States or supplemental protection certificate) of any such patent, and any confirmation patent or registration

patent or patent of addition based on any such patent, and all non-United States counterparts of any of the foregoing.

1.92     “Patent Term Extension” means any patent term extension, adjustment or restoration or supplemental protection certificates anywhere in the world.

1.93     “Person” means any natural person, general or limited partnership, corporation, limited liability company, limited liability partnership, firm, association or organization or other legal entity.

1.94     “Phase I Study” means a study in humans which provides for the first introduction into humans of a product, conducted in healthy volunteers or patients to obtain information on product safety, tolerability, pharmacological activity or pharmacokinetics, as more fully defined in 21 C.F.R. § 312.21(a) (or the non-United States equivalent thereof).

1.95     “Phase II Study” means a study in humans of the safety, dose ranging and efficacy of a product, which is prospectively designed to generate sufficient data (if successful) to commence Pivotal Studies, as further defined in 21 C.F.R. § 312.21(b) (or the non-United States equivalent thereof).

1.96     “Phase III Study” means a controlled study in humans of the efficacy and safety of a product, which is prospectively designed to demonstrate statistically whether such product is effective and safe for use in a particular Indication in a manner sufficient to submit a BLA to obtain Regulatory Approval to market the product, as further defined in 21 C.F.R. § 312.21(c) (or the non-United States equivalent thereof).

1.97     “Phase IV Study” means a human clinical trial which is conducted on a product after Regulatory Approval of the product has been obtained from an appropriate Regulatory Authority, and includes (a) trials conducted voluntarily for enhancing marketing or scientific knowledge or (b) trials conducted after Regulatory Approval due to request or requirement of a Regulatory Authority or as a condition of a previously granted Regulatory Approval.

1.98     “Pivotal Study” means a human clinical trial of a product on a sufficient number of subjects that, prior to commencement of the trial, satisfies both of the following ((a) and (b)): 

(a)     such trial is designed to establish that such product has an acceptable safety and efficacy profile for its intended use, and to determine warnings, precautions, and adverse reactions that are associated with such product in the dosage range to be prescribed, which trial is intended to support Regulatory Approval of such product in the United States or European Union and will provide substantial evidence of safety and effectiveness for reliance by Regulatory Authorities in granting Regulatory Approval; and

(b)     such trial is a registration trial sufficient for submitting an application for Regulatory Approval for such product in the United States or the European Union, as evidenced by (i) an agreement with or statement from the FDA or the EMA on a Special Protocol Assessment or equivalent, or (ii) other guidance or minutes issued by the FDA or EMA, for such registration trial.

1.99     “Platform Arising IP” means all Inventions and Know-How discovered, made or conceived, or information created by either Party or jointly by the Parties or any of their Affiliates, employees, independent contractors or consultants in the course of conducting activities under this Agreement, together with all Intellectual Property Rights therein, where such Inventions are [**].

1.100     “Prior Confidentiality Agreements” means the Mutual Confidential Disclosure Agreement by and between Incyte and Merus, dated May 17, 2016.

1.101     “Product Arising Claim” means a claim within Patent Rights that claims (a) a Licensed Antibody [**], (b) a Licensed Product [**], or (c) the [**] of a Licensed Antibody or Licensed Product.

1.102     “Product Liability” means any product liability claim asserted or filed by a Third Party (without regard to their merit or lack thereof), seeking damages or equitable relief of any kind, relating to personal injury, wrongful death, medical expenses, an alleged need for medical monitoring, consumer fraud or other alleged economic losses, allegedly caused by any Licensed Antibody or Licensed Product, and including claims by or on behalf of users (including spouses, family members and personal representatives of such users) of any Licensed Antibody or Licensed Product (as applicable) relating to the use, sale, distribution or purchase of any Licensed Antibody or Licensed Product (as applicable) sold by a Party, its Affiliates, sublicensees or distributors, including claims by Third Party payers, such as insurance carriers and unions.

1.103     “Program” means Program 1, Program 2, any [**] Program or any Novel Program.

1.104     “Program 1” means the program of research, Development and Commercialization activities for Program 1 Products conducted pursuant to this Agreement.

1.105     “Program 1 Antibody” means (a) any Bi-Specific Construct specifically binding to the Program 1 Target Pair and (b) the Selected Monoclonal Antibodies used to generate the Target Pair Biclonics Matrix under the Research Plan (or Bi-Specific Constructs that could be generated by combining General Monoclonal Antibodies for each Target in the Program 1 Target Pair) for such Program 1 Target Pair. For clarity, a “Program 1 Antibody” includes [**] for such Program 1 Target Pair (including the lead Bi-Specific Construct and any back-up Bi-Specific Constructs) and any modification or derivative thereof.

1.106     “Program 1 Product” means a product or product candidate that contains a Program 1 Antibody as the active ingredient, including all formulations and dosages of such Program 1 Antibody.

1.107     “Program 1 Manufacturing Plan” means the plan for the clinical and commercial manufacture of Program 1 Antibody and Program 1 Product.

1.108     “Program 1 Target Pair” means [**].

1.109     “Program 2” means the program of research, Development and Commercialization activities with respect to Program 2 Products conducted under this Agreement.

1.110     “Program 2 Antibody” means (a) any Bi-Specific Construct specifically targeting the Program 2 Target Pair and (b) the Selected Monoclonal Antibodies used to generate the Target Pair Biclonics Matrix under the Research Plan (or Bi-Specific Constructs that could be generated by combining General Monoclonal Antibodies for each Target in the Program 2 Target Pair) for such Program 2 Target Pair. For clarity, a “Program 2 Antibody” includes all Bi-Specific Constructs [**] for such Program 2 Target Pair (including the lead Bi-Specific Construct and any back-up Bi-Specific Constructs) and any modification or derivative thereof.

1.111     “Program 2 Product” means a product or product candidate that contains a Program 2 Antibody as the active ingredient, including all formulations and dosages of such Program 2 Antibody.

1.112     “Program 2 Target Pair” means [**].

1.113     “Program Selection” means, with respect to a Program, the [**] for the first Bi-Specific Construct directed to the Target Pair that is the subject of such Program. For purposes of this definition, [**] means that [**] for such Bi-Specific Construct [**].

1.114     “Proof of Concept”  means the [**] at a [**], each as defined in the protocol of a Phase II Study or equivalent Clinical Trial.

1.115     “Publication” means any publication in a scientific journal, any abstract to be presented to any scientific audience, any presentation at any scientific conference, including slides and texts of oral or other public presentations, any other scientific presentation and any other oral, written or electronic disclosure directed to a scientific audience which pertains to the Licensed Antibody, the Licensed Product or the use of the Licensed Product.

1.116     “Regulatory Approval” means all approvals (including any applicable governmental price and reimbursement approvals), licenses, registrations, and authorizations of any federal, national, multinational, state, provincial or local Regulatory Authority, department, bureau and other governmental entity that are necessary for the marketing and sale of a product in a country or group of countries.

1.117     “Regulatory Authority” means, with respect to a country, the regulatory authority or regulatory authorities of such country (including state and local) with authority over the testing, manufacture, use, storage, disposal, importation, promotion, marketing, pricing or sale of a pharmaceutical or biologic product in such country.

1.118     “Regulatory Documentation” means, with respect to the Licensed Antibodies and Licensed Products, all INDs and other regulatory applications submitted to any Regulatory Authority, Regulatory Approvals, pre-clinical and clinical data and information, regulatory materials, drug dossiers, master files (including Drug Master Files, as defined in 21 C.F.R. 314.420 and any non-United States equivalents), and any other reports, records, regulatory correspondence and other materials relating to Development or Regulatory Approval of a Licensed Antibody or Licensed Product, or required to manufacture, distribute or sell the Licensed Products, including any information that relates to pharmacology, toxicology, chemistry, manufacturing and controls data, batch records, safety and efficacy, and any safety database.

1.119     “Regulatory Exclusivity” means, on a Licensed Product-by-Licensed Product and country-by-country basis, that (a) a Party or any of its Affiliates or sublicensees have been granted the exclusive legal right by a Regulatory Authority (or is otherwise entitled to the exclusive legal right by operation of Law) to exclude Third Parties from Commercializing such Licensed Product in such country, including without limitation by orphan drug exclusivity, pediatric designation, or new product designation, or (b) the data and information submitted by a Party or any of its Affiliates or sublicensees to the relevant Regulatory Authority in such country for purposes of obtaining Regulatory Approval is subject to regulatory exclusivity and may not be disclosed, referenced or relied upon in any way by any Person other than such Party, its Affiliates or sublicensees (including by relying upon the Regulatory Authority’s previous findings regarding the safety or effectiveness of such Licensed Product) to support the Regulatory Approval or marketing of any product by a Third Party in such country.

1.120     “Regulatory Expenses” means, with respect to a Licensed Antibody or Licensed Product, all FTE and Out-of-Pocket Costs incurred by or on behalf of a Party in connection with the preparation and filing of regulatory submissions for Licensed Product and obtaining of, maintaining, enhancing or expanding Regulatory Approvals.  

1.121     “Research Costs” means the costs and expenses incurred by or on behalf of a Party that are attributable to, or reasonably allocable to, activities conducted with respect to a given Target Pair and associated Bi-Specific Constructs in accordance with the applicable Research Plan, [**] Discovery Plan or Novel Discovery Plan and associated budgets. Research Costs shall [**]. “Research Costs” shall include (a) the costs of [**] for a given Target Pair, including [**] associated therewith, (b) the [**] costs of a Party or its Affiliates [**] Research Plan, (c) all Out-of-Pocket Costs incurred by a Party or its Affiliates, including payments made to Third Parties with respect to any of the foregoing (except to the extent that such costs have been included in [**] costs), and (d) costs associated with [**] for such Target Pair, including the [**] in relation to [**] under Sections 4.11 and 4.12(b), in each case of (a) through (d) to the extent associated with research activities under the applicable Research Plan, [**] Discovery Plan or Novel Discovery Plan.

1.122     “Reserved IMOD Target Pairs” means [**].

1.123     “Right of Reference or Use” means a “Right of Reference or Use” as that term is defined in 21 C.F.R. §314.3(b), and any non-United States equivalents.

1.124     “Royalty Paying Party” means the Party required to pay royalties to the other Party with respect to a Licensed Product pursuant to Section 9.3.

1.125     “Royalty Receiving Party” means the Party that is entitled to receive royalties from the other Party with respect to a Licensed Product pursuant to Section 9.3.

1.126     “SEC” means the United States Securities and Exchange Commission.

1.127     “Selected Monoclonal Antibodies” means, with respect to a Target Pair designated by Incyte for inclusion in a Research Plan, the monoclonal Antibodies generated or used in the applicable Research Plan that are selected by Incyte, in its sole discretion, in writing based on data

generated by Merus and Incyte, and used to generate the Target Pair Biclonics Matrix. For clarity, the Selected Monoclonal Antibodies will be [**] Target Pair Biclonics Matrix and will include [**] Antibodies. Any General Monoclonal Antibody deemed a Selected Monoclonal Antibody by Incyte pursuant to Section 4.11 will also be a Selected Monoclonal Antibody. The Selected Monoclonal Antibodies will [**]. The number of Selected Monoclonal Antibodies shall not exceed [**] for a given Program (or exceed [**] for a given Program if Incyte [**] Selected Monoclonal Antibodies above [**], provided that the number of Selected Monoclonal Antibodies [**] a Target Pair; and further provided that if Incyte selects more than [**] Selected Monoclonal Antibodies for a given Program, within [**] after [**] for such Program, Incyte shall designate, in its sole discretion, the number of Selected Monoclonal Antibodies [**] such that there will thereafter be only [**] Selected Monoclonal Antibodies for such Program and not more than [**] Selected Monoclonal Antibodies [**] in the relevant Target Pair. Notwithstanding the foregoing, upon determination of the final Selected Monoclonal Antibodies for a given Target Pair, the number of Selected Monoclonal Antibodies [**] Target Pair, but in no event may the number of Selected Monoclonal Antibodies on [**] Target Pair exceed [**]. For clarity, all Bi-Specific Constructs created by the [**] Selected Monoclonal Antibody panel for such Program would remain included as Licensed Antibodies.

1.128     “Share Subscription Agreement” means the share subscription agreement entered into on even date hereof by and between Merus and Incyte (or one of its Affiliates) providing for Incyte’s (or one of its Affiliate’s) purchase of common shares of Merus.

1.129     “Sole Arising IP” means Inventions discovered, made or conceived, or information created, by one of either Party or any of its Affiliates, employees, independent contractors or consultants in the course of conducting activities under this Agreement, together with all Intellectual Property Rights therein; provided that Sole Arising IP excludes Platform Arising IP, Discovery Arising IP, and Target Pair Arising IP.

1.130     “Target” means (a) a specific biological molecule that is identified by a GenBank accession number or similar information, or by its amino acid or nucleic acid sequence, (b) any naturally occurring mutant or allelic variant of a molecule disclosed in the foregoing clause (a), including transcriptional and posttranscriptional isoforms (e.g., alternative splice variants), and post-translational modification variants (e.g., protein processing, maturation and glycosylation variants), and (c) truncated forms (including fragments thereof); in each case of (b) and (c) that have a biological function substantially identical to that of a molecule disclosed in the foregoing clause (a). For clarity, in the case of a Target Pair that consists of two (2) distinct epitopes on the same Target, the term “Target” shall refer to each such epitope.

1.131     “[**] Transaction” means any transaction in which Merus enters into a [**] with a Third Party pursuant to which Merus grants to such Third Party the right to develop or commercialize Antibodies that bind to a [**] Target (the “[**] Target”) where such [**] would prevent Incyte from including within a Program under this Agreement [**] Target in a Target Pair, provided that notwithstanding the foregoing, any transaction in which Merus enters into a [**] with a Third Party where Merus grants rights to develop or commercialize Antibodies that bind to [**] Target Pairs ([**] Target Pairs) where such Target Pairs [**] Target and [**] Target(s) that are [**] such Agreement, shall not be a [**] Transaction.

1.132     “Target Pair” means (a) two (2) different Targets or (b) two (2) distinct epitopes on the same Target. Reference to an Antibody or Bi-Specific Construct “specifically binding” to a Target Pair means that one V-Region on such Antibody or Bi-Specific Construct binds to one of the Targets in such Target Pair and a second V-Region on such Antibody or Bi-Specific Construct binds to the other Target in the Target Pair. For clarity, the use of the term “Target Pair” in this Agreement shall be construed in the context in which it is used to refer either to a Target Pair generally that is not within the scope of this Agreement, or to a Target Pair designated by the Parties under the terms of ARTICLE IV as included within the scope of this Agreement for an applicable Program (e.g., Program 1 Target Pair), in each case, as applicable.

1.133     “Target Pair Arising IP” means all Inventions and Know How discovered, made or conceived, or information created by either Party or jointly by the Parties or any of their Affiliates, employees, independent contractors or consultants in the course of conducting activities under this Agreement, together with all Intellectual Property Rights therein, directed to [**] Antibodies, Novel Program Antibodies, Program 1 Antibodies, and Program 2 Antibodies generated under the respective Research Plan, but excluding [**]; provided, that the Target Pair Arising IP excludes [**].

1.134     “Target Pair Biclonics Matrix” means, with respect to a given Target Pair designated by Incyte for inclusion within the collaboration, the matrix of Bi-Specific Constructs directed to such Target Pair that is generated using the Selected Monoclonal Antibodies for such Target Pair. For example, if there are [**] Selected Monoclonal Antibodies designated by Incyte for one Target in such Target Pair and [**] Selected Monoclonal Antibodies designated by Incyte for the other Target in such Target Pair, the Target Pair Biclonics Matrix includes [**] Bi-Specific Constructs corresponding to the combinations of such Selected Monoclonal Antibodies.

1.135     “Terminated Product” means any product containing a Bi-Specific Construct within a Terminated Program that was a Licensed Product as of the effective date of termination.

1.136     “Terminated Program” means (a) with respect to the termination of this Agreement with respect to a Program pursuant to Sections 10.2(a), 10.2(b), or 10.2(c), the Program subject to such termination, including all of the associated Licensed Antibodies and Licensed Products, and (b) with respect to termination of this Agreement in its entirety, all Programs and all of the associated Licensed Antibodies and Licensed Products; provided that, if a Program becomes a Terminated Program prior to Program Selection and prior to expiration of the Research Term, it shall be treated under this Agreement as a Dropped Program.

1.137     “Terminated Target Pair” means a Target Pair that was the subject of a Terminated Program.

1.138     “[**]” means (a) [**] having [**]; (b) any naturally occurring mutant or allelic variant of a molecule disclosed in the foregoing clause (a), including transcriptional and posttranscriptional isoforms (e.g., alternative splice variants), and post-translational modification variants (e.g., protein processing, maturation and glycosylation variants); and (c) truncated forms (including fragments thereof); in each case of (b) and (c), that have a biological function substantially identical to that of a molecule disclosed in the foregoing clause (a). For the purposes

of this Agreement, [**] shall also include any cell surface protein that specifically binds to any molecule described in (a), (b) or (c).

1.139     “[**] Antibodies” means, on a [**] Target Pair-by-[**] Target Pair basis, (a) all Bi-Specific Constructs specifically binding to such [**] Target Pair, and (b) the Selected Monoclonal Antibodies used to generate the Target Pair Biclonics Matrix under the Research Plan (or Bi-Specific Constructs [**] Target Pair) for such [**] Target Pair. For clarity, a “[**] Antibody” includes all Bi-Specific Constructs generated under the Research Plan [**] for such [**] Target Pairs (including the [**] Bi-Specific Constructs), and any modification or derivative thereof.

1.140     “[**] Co-Development Product” means a [**] Product arising from the [**] Co-Development Program.

1.141     “[**] Co-Development Program” means a [**] Program for which the [**] Co-Development Option has been timely exercised pursuant to Section 5.4.

1.142     “[**] Exclusivity Period” means the period beginning on the Execution Date and ending [**] following the Effective Date.

1.143     “[**] Non-Co Product” means a [**] Product arising from a [**] Non-Co Program.

1.144     “[**] Non-Co Program” means all [**] Programs other than the [**] Co-Development Program.

1.145     “[**] Product”  means a product or product candidate that contains a [**] Antibody as the active ingredient, including all formulations and dosages of such [**] Antibody.

1.146     “[**] Program” means the program of research, Development and Commercialization activities conducted with respect to any [**] Product. [**] Programs include the [**] Co-Development Program (if any) and the [**] Non-Co Programs.

1.147     “[**] Target Pair” means a Target Pair where at least one Target is [**].

1.148     “Third Party” means any Person other than a Party or any of its Affiliates.

1.149     “United States” means the United States of America and its territories and possessions.

1.150     “V-Region” means the V-DOMAIN of the immunoglobulin (IG), encoded by the V-J-REGION (VL) and the rearranged V-D-J-REGION (VH).

1.151     “Valid Claim” means (a) a claim of an issued patent that has not expired or been abandoned, or been revoked, held invalid, unpatentable, or unenforceable by a patent office, court or other governmental agency of competent jurisdiction in a final and non-appealable judgment (or judgment from which no appeal was taken within the allowable time period) or (b) a claim within a patent application that has not been revoked, cancelled, withdrawn, held invalid,

unpatentable, or finally abandoned and that has not been pending for more than [**] from the date of its earliest priority date.

1.152     Additional Definitions. Each of the following definitions is set forth in the Section of this Agreement indicated below:

1.153     Construction. In construing this Agreement, unless expressly specified otherwise:

(a)     references to Sections and Exhibits are to sections of, and exhibits to, this Agreement;

(b)     except where the context otherwise requires, use of either gender includes the other gender, and use of the singular includes the plural and vice versa;

(c)     headings and titles are for convenience only and do not affect the interpretation of this Agreement;

(d)     any list or examples following the word “including” shall be interpreted without limitation to the generality of the preceding words;

(e)     the word “days” means calendar days unless otherwise specified;

(f)     all references to “dollars” or “$” or “USD” herein shall mean U.S. Dollars; and

(g)     each Party represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting hereof. In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption will apply against the Party which drafted such terms and provisions.

ARTICLE II
Collaboration OVERVIEW; LICENSES

2.1     Overview of Collaboration. The Parties shall undertake a collaboration under this Agreement consisting, in general, of the following major component programs:

(a)     Program 1. A worldwide collaboration with respect to Program 1 Products, pursuant to which the Parties may share Development Costs for agreed upon studies, Incyte shall have the exclusive right to Develop, manufacture, and Commercialize Program 1 Products in the Incyte Territory, and Merus shall have the exclusive right to Develop, manufacture, and Commercialize Program 1 Products in the United States, all as more fully set forth in this Agreement, including Sections 4.10(b), 5.3, 7.2(a), and ARTICLE VI;

(b)     Program 2. A worldwide collaboration with respect to Program 2 Products, pursuant to which Incyte shall have the exclusive worldwide right to Develop, manufacture and Commercialize Program 2 Products, all as more fully set forth in this Agreement, including Sections 4.10(b), 5.1(a), and 7.2(c);

(c)     [**] Program. A worldwide collaboration with respect to multiple potential [**] Products, pursuant to which Incyte shall have the exclusive worldwide right to Develop, manufacture and Commercialize [**] Products, except that Merus shall have the right with respect to one [**] Product to co-fund development and share in profits and losses in the United States, and Co-Detail in the United States, all as more fully set forth in this Agreement, including Sections 4.4 4.10(a), 4.10(b), 5.1(b), 5.4, 7.2(b), 7.3, and 9.6; and

(d)     Novel Programs. A worldwide collaboration with respect to multiple Novel Program Products, pursuant to which Incyte shall have the exclusive worldwide right to Develop, manufacture and Commercialize such Novel Program Products, except that Merus shall have the right as set forth in Section 5.5 with respect to up to two (2) Novel Programs to co-fund development and share in profits and losses in the United States, all as more fully set forth in this Agreement, including Sections 4.5, 4.10(b), 5.1(a), and 7.2(c).

2.2     Goal of Research Plans. The overall goal of the Research Plans under this Agreement is for Merus to generate and deliver to Incyte suitable Bi-Specific Constructs for the Target Pair of each Program such that a total of eleven (11) Programs achieve Program Selection. Such eleven (11) Programs include Program 1, Program 2, [**] Programs and [**] Novel Programs; provided that for each of Program 1, Program 2, and all the [**] Programs that are dropped prior to Program Selection, the number of possible Novel Programs shall be increased by

[**] (or if all of the foregoing are dropped, [**]), increasing the total number of Novel Programs to [**].  

2.3     Rights Granted by Merus to Incyte.  

(a)     Program 1. Subject to the terms of this Agreement, Merus hereby grants to Incyte (i) a co-exclusive (with Merus and its Affiliates), worldwide license, with the right to sublicense (subject to Section 2.5), under Merus IP, Merus Platform IP and Merus’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP, to conduct research and Development activities under the Program 1 Incyte Territory Development Plan and Program 1 Joint Development Plan and (ii) an exclusive (even as to Merus and its Affiliates) license, with the right to sublicense (subject to Section 2.5), under Merus IP, Merus Platform IP and Merus’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP, to Commercialize, make, have made, use, offer for sale, sell and import Program 1 Antibodies and Program 1 Products in the Incyte Territory and to make and have made Program 1 Antibodies and Program 1 Products worldwide for purposes of Commercialization in the Incyte Territory.

(b)     Program 2. Subject to the terms of this Agreement, Merus hereby grants to Incyte an exclusive (even as to Merus and its Affiliates), worldwide license, with the right to sublicense (subject to Section 2.5), under Merus IP, Merus Platform IP and Merus’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP, to research, Develop, Commercialize, make, have made, use, offer for sale, sell and import Program 2 Antibodies and Program 2 Products.

(c)     [**] Program. Subject to the terms of this Agreement, Merus hereby grants to Incyte, an exclusive (even as to Merus and its Affiliates), worldwide license, with the right to sublicense (subject to Section 2.5), under Merus IP, Merus Platform IP and Merus’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP, to research, Develop, Commercialize, make, have made, use, offer for sale, sell and import [**] Antibodies and [**] Products. The grant set forth in this Section 2.3(c) is effective as of the Effective Date for purposes of the [**] Discovery Plan and will automatically become effective on a [**] Program basis upon the designation of a [**] Target Pair for the applicable [**] Program (or, as the case may be, a Novel Program, by Incyte pursuant to Section 4.4, as applicable).

(d)     Novel Programs. Subject to the terms of this Agreement, Merus hereby grants to Incyte an exclusive (even as to Merus and its Affiliates), worldwide license, with the right to sublicense (subject to Section 2.5), under Merus IP, Merus Platform IP and Merus’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP, to research, Develop, Commercialize, make, have made, use, offer for sale, sell and import Novel Program Antibodies and Novel Program Products. The grant set forth in this Section 2.3(d) is effective as of the Effective Date for purposes of any Novel Discovery Plan and will automatically become effective on a Novel Program basis upon the designation of a Novel Program Target Pair (or, as the case may be, a [**] Target Pair, by Incyte pursuant to Section 4.4, as applicable) for the applicable Novel Program in accordance with Section 4.5.

2.4     Rights Granted by Incyte to Merus for Program 1. Subject to the terms of this Agreement, Incyte hereby grants to Merus under Incyte IP and Incyte’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP (a) a co-exclusive (with Incyte and its Affiliates), worldwide license, with the right to sublicense (subject to Section 2.5), to research and conduct Development activities under the Program 1 US Development Plan and Program 1 Joint Development Plan and (b) an exclusive (even as to Incyte and its Affiliates) license, with the right to sublicense (subject to Section 2.5), to Commercialize, use, offer for sale, sell and import Program 1 Antibodies and Program 1 Products in the United States.

2.5     Sublicenses.  

(a)     Incyte shall have the right to grant sublicenses through multiple tiers of sublicensees under the licenses granted in Section 2.3 to its Affiliates and to Third Parties that are conducting research, Development, or Commercialization activities with Incyte or its Affiliates with respect to the Licensed Antibodies and the Licensed Products; provided that Incyte shall remain responsible for its obligations under this Agreement and shall be responsible for the performance of the relevant sublicensee, and any such sublicenses shall be pursuant to a written agreement that is consistent with the terms and conditions of this Agreement.

(b)     Subject to Section 2.10, Merus shall have the right to grant sublicenses, through multiple tiers of sublicensees, under the licenses granted in Section 2.4, to its Affiliates and to Third Parties that are conducting research, Development, or Commercialization activities with Merus or its Affiliates with respect to the Licensed Antibodies and the Licensed Products; provided that Merus shall remain responsible for its obligations under this Agreement and shall be responsible for the performance of the relevant sublicensee, and any such sublicenses shall be pursuant to a written agreement that is consistent with the terms and conditions of this Agreement.

(c)     If either Party grants a sublicense to a Third Party as permitted by this Section 2.5, then such Party shall provide the other Party prompt written notice thereof and shall provide the other Party with an executed copy of any such sublicense (redacted as necessary to protect confidential or commercially sensitive information). Except as otherwise agreed by the Parties in writing, each Party shall be jointly and severally responsible with its sublicensees to the other Party for failure by its sublicensees to comply with this Agreement. If (i) the sublicensee fails to cure a material breach or to take reasonable steps to cure such breach under any such sublicense within [**] after notice of such breach and (ii) such material breach also constitutes a breach of this Agreement, the Party that granted such sublicense shall terminate the sublicense at the request of the other Party.

2.6     Section 365(n) of the Bankruptcy Code; License Registration.  

(a)     Section 365(n) of the Bankruptcy Code.  All rights and licenses granted under or pursuant to any Section of this Agreement, including the licenses granted under this ARTICLE II and the rights granted under Sections 4.1(c) and 5.3(e), are and will otherwise be deemed to be for purposes of Section 365(n) of the United States Bankruptcy Code (Title 11, U.S. Code), as amended (the “Bankruptcy Code”), licenses of rights to “intellectual property” as defined in Section 101(35A) of the Bankruptcy Code. The Parties will retain and may fully exercise all of

their respective rights and elections under the Bankruptcy Code. Each Party agrees that the other Party, as licensee of such rights under this Agreement, will retain and may fully exercise all of its rights and elections under the Bankruptcy Code or any other provisions of applicable Law outside the United States that provide similar protection for “intellectual property.” The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party under the Bankruptcy Code or analogous provisions of applicable Law outside the United States, the other Party will be entitled to a complete duplicate of (or complete access to, as the other (non-bankrupt) Party deems appropriate) such intellectual property and all embodiments of such intellectual property, which, if not already in such Party’s possession, will be promptly delivered to it upon such Party’s written request thereof. Any agreements supplemental hereto will be deemed to be “agreements supplementary to” this Agreement for purposes of Section 365(n) of the Bankruptcy Code.

(b)     License Agreement Registration. A Party may, in its sole discretion, register or record the existence of this Agreement, the exclusivity of the licenses under this Agreement and the Patent Rights licensed to such Party under this Agreement with applicable intellectual property registers, patent offices or other governmental authorities as necessary to support the rights licensed to such Party under this Agreement in an applicable territory. Upon a Party’s request, the other Party will execute and record such documents as are necessary in connection with such registration or recordation.

2.7     Retained Rights.

(a)     No Implied Licenses or Rights. Except as expressly provided in this Agreement, all rights in and to the Merus IP, Merus Platform IP, and Merus’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP and any other Patent Rights or Know-How of Merus and its Affiliates, are hereby retained by Merus and its Affiliates. Except as expressly provided in Section 2.4, and subject to Section 2.8, all rights in and to the Incyte IP, Incyte’s and its Affiliates’ interests in Joint Arising IP and Target Pair Arising IP and any other Patent Rights or Know-How of Incyte and its Affiliates, are hereby retained by Incyte and its Affiliates.

(b)     Other Retained Rights. Notwithstanding (i) the licenses granted to Incyte pursuant to Section 2.3, Merus retains the right to practice under the Merus IP, Merus Platform IP, Joint Arising IP, and Target Pair Arising IP to perform its obligations under this Agreement and (ii) the licenses granted to Merus pursuant to Section 2.4, Incyte retains the right to practice under the Incyte IP, Joint Arising IP, and Target Pair Arising IP to perform its obligations under this Agreement.

2.8     Exclusivity; Certain Covenants.  

(a)       Merus.  

(i)     For the duration of the Term, and except as otherwise permitted under Section 10.5, neither Merus nor any of its Affiliates shall, with respect to [**], (A) itself develop or commercialize, or collaborate or partner with any Third Party to develop or commercialize any product which contains an Antibody, (B) authorize any Third Party to develop,

manufacture or commercialize any product which contains an Antibody, or (C) provide or make available to any Third Party any Antibody or the sequence information therefor, wherein the [**] in each case of (A) through (C) has (1) [**] or greater homology and/or (2) [**] relative to the [**], provided that the foregoing limitations in this Section 2.8(a)(i) shall not apply to any [**]. Notwithstanding the foregoing, the restrictions in (A)–(C) shall not be construed to (x) limit Merus’s rights under Section 10.5 following termination of a Program, or (y) obligate Merus or its Affiliates to [**] a Third Party from [**] manufacturing, developing or commercializing a Bi-Specific Construct [**] that such Third Party [**] generated, where such Third Party’s [**] is a [**] created or developed by Merus for such Third Party in compliance with this Section 2.8(a)(i) and the terms of this Agreement.

(ii)     During the [**] Exclusivity Period, neither Merus nor any of its Affiliates shall (or shall authorize any Third Party to) Develop or Commercialize outside of this Agreement any Bi-Specific Construct specifically binding to [**].

(iii)     For the duration of the applicable Term with respect to a Licensed Product arising from a [**] Program, neither Merus nor any of its Affiliates shall (or shall authorize any Third Party to) Develop or Commercialize outside of this Agreement any Bi-Specific Construct specifically binding to the [**] Target Pair for such [**] Program, unless (A) such [**] Target Pair is a Dropped Target Pair, in which case Section 4.8 shall apply, or (B) the corresponding [**] Program is a Terminated Program.

(iv)     For the duration of the applicable Term with respect to a Licensed Product arising from a Program (other than a [**] Program, but including a Novel Program for which the Target Pair is a [**] Target Pair, in accordance with Section 4.4), neither Merus nor any of its Affiliates shall (or shall authorize any Third Party to) Develop or Commercialize outside of this Agreement any Bi-Specific Construct specifically binding to a Target Pair for such Program, unless (A) such Target Pair is a Dropped Target Pair, in which case Section 4.8 shall apply, or (B) the corresponding Program is a Terminated Program.

(v)     For the duration of the Research Term, (A) Merus shall not exclusively license rights to a [**] to any Third Party and (B) any and all [**] Controlled by Merus or its Affiliates will be available for use in Bi-Specific Constructs under this Agreement, provided that the foregoing shall not be construed to limit Merus’s ability to grant exclusivity to a Third Party with respect to a Target Pair that includes a [**] (or Bi-Specific Constructs directed to such Target Pair), provided that no exclusivity is granted with respect to the [**] arm of such Target Pair, or any specific sequences thereof.

(b)       Incyte.  

(i)     For the duration of the Term, and except as provided in this Agreement, neither Incyte nor any of its Affiliates shall, with respect to [**], (A) itself develop or commercialize, or collaborate or partner with any Third Party to develop or commercialize any product which contains an Antibody, (B) authorize any Third Party to develop, manufacture or commercialize any product which contains an Antibody, or (C) provide or make available to any Third Party any Antibody or the sequence information therefor, wherein the [**] in each case of

(A) through (C) has (1) [**] or greater homology and/or (2) [**] relative to the [**]; provided that the foregoing limitations in this Section 2.8(b)(i) shall not apply (I) to any [**] or (II) to any [**] before the Execution Date [**] as demonstrated by reasonable evidence. Notwithstanding the foregoing, the restrictions in (A)–(C) shall not be construed to (x) limit Incyte’s rights set forth elsewhere in this Agreement, or (y) obligate Incyte or its Affiliates to [**] a Third Party from [**] manufacturing, developing or commercializing a Bi-Specific Construct [**] that such Third Party [**] generated, where such Third Party’s [**] is a [**] created or developed by Incyte for such Third Party in compliance with this Section 2.8(b)(i) and the terms of this Agreement.

(ii)     During the [**] Exclusivity Period, neither Incyte nor any of its Affiliates shall (or shall authorize any Third Party to) Develop or Commercialize outside of this Agreement any Bi-Specific Construct specifically binding to [**].

(iii)     For the duration of the applicable Term with respect to a Licensed Product arising from a [**] Program, neither Incyte nor any of its Affiliates shall (or shall authorize any Third Party to) Develop or Commercialize outside of this Agreement any Bi-Specific Construct specifically binding to the [**] Target Pair for such [**] Program, unless (A) such [**] Target Pair is a Dropped Target Pair, in which case Section 4.8 shall apply, or (B) the corresponding [**] Target Program is a Terminated Program.

(iv)     For the duration of the applicable Term with respect to a Licensed Product arising from a Program (other than a [**] Program, but including a Novel Program for which the Target Pair is a [**] Target Pair, in accordance with Section 4.4), neither Incyte nor any of its Affiliates shall (or shall authorize any Third Party to) Develop or Commercialize outside of this Agreement any [**] specifically binding to a Target Pair for such Program, unless (A) such Target Pair is a Dropped Target Pair, in which case Section 4.8 shall apply, or (B) the corresponding Program is a Terminated Program.

(c)       Certain Covenants.

(i)     Without limiting Merus’s obligations under Section 2.8(a), during the Research Term, neither Merus nor any of its Affiliates shall (A) enter into any [**] Transaction or (B) [**] any Third Party [**] Transaction (i.e., the [**] Transaction must be [**] a Third Party), where, as of the proposed execution date of such agreement or the proposed date of [**], the applicable [**] Target is also contained in any Target Pair that is either (1) the [**] under this Agreement or (2) a [**] Target Pair or [**] Target Pair.

(ii)     During the Research Term, if Merus intends to enter into a [**] Transaction, then, prior to entering into such [**] Transaction, Merus shall notify the Gatekeeper in writing of the [**] Target that is proposed to be the subject of such [**] Transaction. Within [**] following the Gatekeeper’s receipt of such notice, the Gatekeeper shall verify whether such [**] Target is an [**] Target. If such proposed [**] Target is [**] Target, the Gatekeeper shall provide written notice to both Merus and Incyte including the identity of such Target that is [**] Target. Incyte shall have [**] following such notification from the Gatekeeper in which to notify Merus in writing that it wishes to designate a Target Pair including [**]  Target to be the subject of a Novel Program under this Agreement; provided that the Novel Program Cap has not been

reached; provided further that [**] a Novel Program Target Pair if such Novel Program Cap has been reached. If Incyte provides such notice to Merus, then such designated Target Pair shall thereafter be a Novel Program Target Pair, the terms of Section 2.8(c)(i) will apply (including to any [**] Transaction that includes such Target as [**] Target), and Merus may not enter into such [**] Transaction. If Incyte does not provide such notice within such time period, Merus may enter into such [**] Transaction.

(iii)     Without limiting Sections 2.8(c)(i) and 2.8(c)(ii) above, during the Research Term, Merus may not enter into any agreement with any Third Party that grants rights to such Third Party to [**] potential Target Pairs [**] such agreement, where such grant of rights would [**] Incyte of [**] such Third Party agreement for inclusion under this Agreement (in accordance with the terms of this Agreement), prior to the [**] by such Third Party. Once [**] it shall [**] if the program for such Target Pair would [**] if it were [**]. For clarity, Merus may enter into an agreement with a Party that grants rights to such Third Party to [**] potential Target Pairs [**] such agreement, so long as such Third Party’s [**] is subject to Incyte’s rights and Merus’s obligations under this Agreement.

(iv)     For clarity, the obligations in this Section 2.8(c) are in addition to the obligations set forth in Section 4.5(a) and are not intended to limit in any manner Section 4.5(a).

2.9     IMOD Target Pair Availability. Beginning on the Effective Date and for a period of [**] thereafter (the “IMOD Reserved Period”), the Reserved IMOD Target Pairs cannot be Not Available and Incyte may designate any or all such IMOD Target Pairs as Novel Program Target Pairs pursuant to Section 4.5(b) without going through the Gatekeeper process set forth therein. Merus shall (a) within [**] of the Effective Date, and (b) not more than [**], but not less than [**], prior to the expiration of the IMOD Reserved Period, provide Incyte with a written report with respect to any research conducted and data generated by Merus on any of the Reserved IMOD Target Pairs, in order for Incyte to determine whether it wishes to designate any such IMOD Target Pair as a Novel Program Target Pair prior to the expiration of the IMOD Reserved Period. In addition, during the IMOD Reserved Period, Merus shall also provide Incyte with updates on any material developments with respect to the IMOD Target Pairs. During and following the expiration of the IMOD Reserved Period, the terms of Section 4.5(a) shall apply to the Reserved IMOD Target Pairs; provided that the [**]  period set forth in Section 4.5(a) shall begin during the IMOD Reserved Period if Merus meets the requirements of Section 4.5(a) for a Reserved IMOD Target Pair during the IMOD Reserved Period.

2.10     [**] Right of First Refusal.  

(a)     If, at any time during the Term applicable to Program 1, Merus intends (i) [**], or (ii) [**], then, prior to entering into any discussions or negotiations with [**] for [**] of the [**] or promptly following [**] of [**] in the United States, as applicable, Merus shall provide Incyte with prior written notice and [**] relating to such [**], as applicable, and, for a period of [**] after receipt of such notice and information, Incyte will have an exclusive right of first negotiation to enter into a definitive agreement with Merus for such [**]. Notwithstanding the

foregoing, the rights in this Section 2.10(a) shall not apply to (i) any [**]; (ii) any [**] or (iii) rights granted for the [**] for or on behalf of Merus or its Affiliates’ for its or their [**].

(b)     If the Parties fail to enter into a definitive agreement prior to the expiration of the [**] period set forth in Section 2.10(a), Merus may enter into negotiations with [**] for such [**], on [**], provided that, prior to entering into any definitive agreement with [**], Merus shall be required to first offer to Incyte in writing (the “[**] Notice”) a [**] and that in [**] by [**] (or, if [**] is making such an offer, [**] such [**]) (such terms, the “[**] Terms”) for Incyte to determine whether it wishes to [**] to Merus for the [**]. Incyte shall have [**] following such [**] Notice to offer to Merus [**] (including [**] that [**] the [**] Terms (“Incyte [**] Terms”). If Incyte provides Incyte [**] Terms that is  [**] the [**] Terms, Merus may, [**] (i) [**] to [**] a  definitive agreement for such [**] based on such [**], or (ii) [**] (based on a [**] of the [**]) a [**] to [**] that are, [**] than the [**]. If [**] terms to Merus, taken in the aggregate, than the Incyte [**] Terms, then [**], based on such [**] Terms, provided that Incyte shall have [**] in which to [**] of [**] Terms with a [**] Incyte [**] Terms. If [**] does not [**] to Merus, [**] the Incyte [**] Terms, then Merus and Incyte shall [**] for such [**] of Incyte [**] Terms.

(c)     Merus shall [**] Incyte the [**] terms than the [**] Terms, until either (i) Merus elects to negotiate and enter into a definitive agreement with Incyte on [**] Incyte [**] Terms, or (ii) Incyte either notifies Merus in writing that [**] terms than the [**] Terms [**], or [**] Incyte [**] Terms to Merus within the [**] period following a [**] Notice. Notwithstanding the foregoing, if Merus does not [**] with Incyte or with [**] in [**] within [**] of such election under the foregoing clause (ii), this Section 2.10 shall apply if Merus [**] with respect to [**] to [**]. Either Party may terminate the negotiations under this Section 2.10 at any time in its sole discretion; provided that the terms of this Section 2.10 [**] Merus if Merus [**] such agreement with respect to [**], and thereafter intends to [**] set forth in Sections 2.10(a)(i) or 2.10(a)(ii) with respect to [**] in or to abandon [**] under Section 2.10(a).

ARTICLE III
GOVERNANCE

3.1       Joint Steering Committee.

(a)     Establishment. The Parties shall establish a joint steering committee (“JSC”) within [**] after the Effective Date that will have the responsibility for the overall coordination and oversight of the Parties’ activities with respect to each Program under this Agreement. As soon as practicable following the Effective Date (but in no event more than [**] following the Effective Date), each Party shall designate its initial [**] representatives on the JSC. The JSC may increase or decrease the number of representatives that each Party may appoint on the JSC, provided that each Party has the same number of representatives. Each Party’s representatives and any substitute for a representative shall be bound by the obligations of confidentiality set forth in ARTICLE XIII. The JSC may invite non-members (including scientific consultants and advisors of a Party who are under an obligation of confidentiality consistent with this Agreement) to participate in the discussions and meetings of the JSC, provided that such participants shall have no voting authority at the JSC. A representative from Incyte shall act as the chairperson of the JSC. The chairperson shall not have any greater authority than any other

representative on the JSC and shall conduct the following activities of the JSC: (i) calling meetings of the JSC; (ii) preparing and issuing minutes of each such meeting within [**] thereafter; (iii) ensuring that any decision-making delegated to the JSC is carried out in accordance with Section 3.5; and (iv) preparing and circulating an agenda for the upcoming meeting. Each Party shall be free to change its representatives on notice to the other or to send a substitute representative to any JSC meeting; provided that each Party shall ensure that, at all times during the existence of the JSC, its representatives on the JSC are appropriate in terms of expertise and seniority (including at least one member of senior management) for the then-current stage of Development and Commercialization of the Licensed Products and have the authority to bind such Party with respect to matters within the purview of the JSC.

(b)     Responsibilities. The JSC shall provide strategic guidance to the Parties, facilitate communications between the Parties, and shall have responsibility for: (i) the general oversight of the collaboration, including approval of the [**] Discovery Plan, any Novel Discovery Plan, Research Plans, Development Plans, Program 1 Joint Development Budget, Program 1 Manufacturing Plan and the Detailing Plan (if any), and amendments thereto and review of the [**] Co-Development Budget and Additional Co-Development Budgets and amendments thereto; (ii) periodic review of the overall goals and strategy of the Programs; (iii) attempting to resolve any disputes arising from any Subcommittee, and to consider any other issues brought to its attention by the Parties; (iv) determining a joint course of action with respect to any Third-Party Infringement in accordance with Section 8.4; and (v) performing such other functions as appropriate to further the purposes of this Agreement, as mutually agreed upon by the Parties in writing.

3.2       Subcommittees. The JSC may by unanimous decision (with each Party’s representatives together having a single vote) establish and disband such subcommittees (“Subcommittees”) as deemed necessary by the JSC including based on the then current stage of Development and Commercialization. Each such Subcommittee shall consist of the same number of representatives designated by each Party, which number shall be mutually agreed by the Parties. Each Party shall be free to change its representatives or increase or decrease the number of its representatives on notice to the other or to send a substitute representative to any Subcommittee meeting; provided that each Party shall ensure that, at all times during the existence of any Subcommittee, its representatives on such Subcommittee are appropriate in terms of expertise and seniority for the then-current stage of Development and Commercialization of the Licensed Product in the Field and have the authority to bind such Party with respect to matters within the purview of the relevant Subcommittee. Each Party’s representatives and any substitute for a representative shall be bound by the obligations of confidentiality set forth in ARTICLE XIII. Except as expressly provided in this Agreement, no Subcommittee shall have the authority to bind the Parties hereunder and each Subcommittee shall report to, and any decisions shall be made by, the JSC. The initial Subcommittees will be the Joint Research Committee (“JRC”), the Joint Development Committee for Program 1 (“Program 1 JDC”), the Joint Development Committee for the [**] Co-Development Product (“[**] JDC”), the Joint Development Committee for an Additional Co-Development Product (“Additional JDC”), the Joint Commercialization Committee for the Program 1 Product (“Program 1 JCC”), the Joint Commercialization Committee for the [**] Co-Detailing Product (“[**] JCC”), the Joint Manufacturing Committee (“JMC”), the Joint Intellectual Property Committee (“JIPC”) and the Joint Finance Committee (“JFC”). The JSC may

by unanimous decision (with each Party’s representatives together having a single vote) modify the structure of the JRC to create project-specific or multi-project specific JRCs as necessary.

(a)       Joint Research Committee.

(i)     The JRC will have the responsibility for the overall coordination and oversight of the pre-clinical and non-clinical research activities with respect to Program 1 and Program 2 under the Initial Research Plans and for each of the [**] Programs and the Novel Programs pursued pursuant to the relevant Research Plan prepared in accordance with Section 4.10(b). As soon as practicable following the Effective Date (but in no event more than [**] following the Effective Date), each Party shall designate its initial [**] representatives on the JRC. Incyte shall appoint a person from among its representatives on the JRC to serve as the chairperson of the JRC. The chairperson shall not have any greater authority than any other representative on the JRC and shall conduct the following activities of the JRC: (A) calling meetings of the JRC; (B) preparing and issuing minutes of each such meeting within [**] thereafter; (C) preparing and circulating an agenda for the upcoming meeting; and (D) ensuring that any decision-making delegated to the JRC is carried out in accordance with Section 3.5. The JRC may create project-specific teams as needed to facilitate management and coordination of research activities.

(ii)     The JRC shall have responsibility for (A) overseeing the initial transfer of information and designated activities from Merus to Incyte relating to each Target Pair pursuant to Section 4.1(a); (B) reviewing and discussing proposed Target Pairs; (C) preparing a Research Plan for each Program and any amendments thereto and presenting them to the JSC for approval; (D) overseeing the subsequent flow and transfer of information between the Parties related to the Target Pairs pursuant to Section 4.1(b) and with respect to, including the Data Package pursuant to Section 4.12, pursuant to Section 4.1(b); and (E) overseeing, reviewing and coordinating the pre-clinical and non-clinical research activities for each of the Programs under the relevant Research Plans.

(b)       Program 1 Joint Development Committee.  

(i)     The Program 1 JDC will be the principal body through which the Development of the Program 1 Product is planned, administered and evaluated, and shall have the responsibility for the overall coordination and oversight of the Development activities for the Program 1 Product. At least [**] prior to Initiation of IND-enabling studies, each Party shall designate its initial three (3) representatives on the Program 1 JDC. A representative of Incyte shall act as the chairperson of the Program 1 JDC. The chairpersons shall not have any greater authority than any other representative on the Program 1 JDC and shall conduct the following activities of the Program 1 JDC: (A) calling meetings of the Program 1 JDC; (B) preparing and issuing minutes of each such meeting within [**] thereafter; (C) preparing and circulating an agenda for the upcoming meeting; and (D) ensuring that any decision-making delegated to the Program 1 JDC is carried out in accordance with Section 3.5. The Program 1 JDC shall automatically terminate if Program 1 is terminated or dropped from this Agreement.

(ii)     The Program 1 JDC shall have responsibility for (A) discussing potential initial and subsequent Indications for Development for Program 1 Products; (B) reviewing and commenting on the Program 1 Incyte Territory Development Plan (or any amendments or updates thereto) prepared by Incyte pursuant to Section 5.3(a)(ii), and the Program 1 US Development Plan (or any amendments or updates thereto) prepared by Merus pursuant to Section 5.3(a)(ii), and, in each case, present such plans to the JSC for approval; (C) evaluating and commenting upon any proposal from either Party to conduct Clinical Trials or other Development activities on a joint basis, as provided in Section 5.3(a)(ii), and if it determines such proposed activity could be a Global Study, presenting such Global Study to the JSC for its consideration and potential approval; (D) preparing the Program 1 Joint Development Plan and any amendments thereto to include any Global Study which the Parties agree to conduct as a Program 1 Joint Development Activity, including a Program 1 Joint Development Budget therefor, pursuant to Section 5.3(b), and presenting them to the JSC for approval; (E) overseeing the flow of and transfer of information between the Parties related to Program 1; and (F) overseeing, reviewing and coordinating the conduct of activities and work under the Program 1 Incyte Territory Development Plan, Program 1 US Development Plan and Program 1 Joint Development Plan, as each may be amended.

(c)       [**] Joint Development Committee.

(i)     The [**] JDC will be the principal body through which the Development of the [**] Co-Development Product is planned, administered and evaluated, and shall have the responsibility for the overall coordination and oversight of the Development activities for the [**] Co-Development Product. Within [**] after Merus’s exercise of its [**] Co-Development Right, each Party shall designate its initial three (3) representatives on the [**] JDC. Incyte shall appoint a person from among its representatives on the [**] JDC to serve as the chairperson of the [**] JDC. The chairperson shall not have any greater authority than any other representative on the [**] JDC and shall conduct the following activities of the [**] JDC: (A) calling meetings of the [**] JDC; (B) preparing and issuing minutes of each such meeting within [**] thereafter; (C) preparing and circulating an agenda for the upcoming meeting; and (D) ensuring that any decision-making delegated to the [**] JDC is carried out in accordance with Section 3.5. The [**] JDC shall automatically terminate if there is no longer a [**] Co-Development Product under this Agreement.

(ii)     The [**] JDC shall have responsibility for (A) reviewing and commenting on any amendment or update to the [**] Co-Development Plan and [**] Co-Development Budget and presenting the [**] Co-Development Plan and the [**] Co-Development Budget to the JSC for discussion and approval and (B) overseeing, reviewing and coordinating the conduct of activities and work under the [**] Co-Development Plan.

(d)       Additional Joint Development Committee.

(i)     The Additional JDC will be the principal body through which the Development of an Additional Co-Development Product is planned, administered and evaluated, and shall have the responsibility for the overall coordination and oversight of the Development activities for such Additional Co-Development Product. Within [**] after Merus’s exercise of an

Additional Co-Development Option, each Party shall designate its initial [**] representatives on the Additional JDC. Incyte shall appoint a person from among its representatives on the Additional JDC to serve as the chairperson of the Additional JDC. The chairperson shall not have any greater authority than any other representative on the Additional JDC and shall conduct the following activities of the Additional JDC: (A) calling meetings of the Additional JDC; (B) preparing and issuing minutes of each such meeting within [**] thereafter; (C) preparing and circulating an agenda for the upcoming meeting; and (D) ensuring that any decision-making delegated to the Additional JDC is carried out in accordance with Section 3.5. The Additional JDC shall automatically terminate if there is no longer an Additional Co-Development Product under this Agreement.

(ii)     The Additional JDC shall have responsibility for (A) reviewing and commenting on any amendment or update to each Additional Co-Development Plan and Additional Co-Development Budget and presenting each Additional Co-Development Plan and Additional Co-Development Budget to the JSC for discussion and approval and (B) overseeing, reviewing and coordinating the conduct of activities and work under the Additional Co-Development Plan.

(e)       Program 1 Joint Commercialization Committee.  

(i)     The Program 1 JCC shall oversee Commercialization of Program 1 Products worldwide. At least [**] prior to anticipated NDA filing of a Program 1 Product in the United States, each Party shall designate its initial [**] representatives on the Program 1 JCC. A representative of Incyte shall act as the chairperson of the Program 1 JCC. The chairperson shall not have any greater authority than any other representative on the Program 1 JCC and shall conduct the following activities of the Program 1 JCC: (A) calling meetings of the Program 1 JCC; (B) preparing and issuing minutes of each such meeting within [**] thereafter; (C) preparing and circulating an agenda for the upcoming meeting; and (D) ensuring that any decision-making delegated to the Program 1 JCC is carried out in accordance with Section 3.5. The Program 1 JCC shall automatically terminate if Program 1 Product terminated or dropped from this Agreement.

(ii)     The Program 1 JCC shall be responsible for: (A) overseeing, reviewing and coordinating the Commercialization of the Program 1 Products in the Field worldwide; (B) discussing, and if agreed pursuant to Section 7.4(a), developing and overseeing the Global Branding Strategy; (C) setting overall strategic objectives and plans related to Commercialization of the Program 1 Products in the Field in each of the United States and the Incyte Territory, consistent with the Parties’ rights under this Agreement and Section 7.2(a); (D) reviewing Commercialization issues for the Program 1 Products in the Incyte Territory that will have an impact on Commercialization of the Program 1 Products in the United States; (E) reviewing Commercialization issues for the Program 1 Products in the United States that will have an impact on Commercialization of the Program 1 Products in the Incyte Territory; (F) providing a forum for the Parties to discuss the Commercialization of the Program 1 Products in the Field worldwide; and (G) such other responsibilities as may be assigned to the Program 1 JCC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

(f)       [**] Joint Commercialization Committee.  

(i)     The [**] JCC shall oversee Detailing of [**] Co-Detailing Product in the United States. Within [**] after Merus’s exercise of the Co-Detailing Right, each Party shall designate its initial three (3) representatives on the [**] JCC. A representative of Incyte shall act as the chairperson of the [**] JCC. The chairperson shall not have any greater authority than any other representative on the [**] JCC and shall conduct the following activities of the [**] JCC: (A) calling meetings of the [**] JCC; (B) preparing and issuing minutes of each such meeting within [**] thereafter; (C) preparing and circulating an agenda for the upcoming meeting; and (D) ensuring that any decision-making delegated to the [**] JCC is carried out in accordance with Section 3.5. The [**] JCC shall automatically terminate if there is no longer a [**] Co-Detailing Product under this Agreement.

(ii)     The [**] JCC shall be responsible for: (A) overseeing the implementation of, reviewing and coordinating the Detailing of the [**] Co-Detailing Product in the Field in the United States; (B) applying the Global Branding Strategy (or other branding strategy, if appropriate) to the [**] Co-Detailing Product in the United States; (C) setting overall strategic objectives and plans related to Detailing [**] Co-Detailing Product in the Field in the United States; (D) reviewing, commenting on and approving any amendment or update to the Detailing Plan and Detailing Budget, and presenting the Detailing Plan and the Detailing Budget to the JSC and to Incyte for approval; (E) reviewing Detailing issues for the [**] Co-Detailing Product; (F) providing a forum for the Parties to discuss the Detailing of the [**] Co-Detailing Product in the Field in the United States; and (G) such other responsibilities as may be assigned to the [**] JCC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

(g)       Joint Manufacturing Committee.  

(i)     The JMC shall oversee the manufacture of Licensed Products worldwide. As soon as practicable following the Effective Date (but in no event more than [**] following the Effective Date), each Party shall designate its initial [**] representatives on the JMC. A representative of Incyte shall act as the chairperson of the JMC. The chairperson shall not have any greater authority than any other representative on the JMC and shall conduct the following activities of the JMC: (A) calling meetings of the JMC; (B) preparing and issuing minutes of each such meeting within [**] thereafter; (C) preparing and circulating an agenda for the upcoming meeting; and (D) ensuring that any decision-making delegated to the JMC is carried out in accordance with Section 3.5.

(ii)     The JMC shall be responsible for: (A) overseeing, reviewing and coordinating the manufacture of Program 1 Products worldwide; (B) discussing and preparing the Program 1 Manufacturing Plan and presenting it to the JSC for approval, (C) providing a forum for the Parties to discuss the clinical and commercial requirements for and manufacture of Program 1 Products; (D) overseeing the manufacturing process transfer from Merus to Incyte pursuant to Section 6.1; (E) overseeing, reviewing and coordinating the Parties’ activities with respect to Licensed Antibody and Bi-Specific Construct [**] for Licensed Products; and (F) such other responsibilities as may be assigned to the JMC pursuant to this Agreement or as may be mutually agreed upon by the Parties from time to time.

(h)     Joint Intellectual Property Committee.

(i)     The JIPC shall provide a platform for the exchange of information between the Parties, and for decision-making with respect to actions allocated to the Parties under ARTICLE VIII, relating to the filing, prosecution and maintenance of all Patent Rights licensed by one Party to the other in Sections 2.3 and 2.4; provided, that the Parties shall discuss filing, prosecution and maintenance of the Merus Platform IP only with respect to the Licensed Antibodies and Licensed Products. As soon as practicable following the Effective Date (but in no event more than [**] following the Effective Date), each Party shall designate its [**] representatives on the JIPC. A representative of Incyte shall act as the chairperson of the JIPC. The chairperson shall not have any greater authority than any other representative on the JIPC and shall conduct the following activities of the JIPC: (A) calling meetings of the JIPC at least every quarter; (B) preparing and issuing minutes of each such meeting within [**] thereafter; and (C) preparing and circulating an agenda for the upcoming meeting.

(ii)     The JIPC shall discuss the following with respect to Patent Rights described under Section 3.2(h)(i): (A) [**]; (B) [**]; and (C) [**], except with respect to [**]. With respect to [**], the JIPC shall discuss [**] the Licensed Antibodies or the Licensed Products. In discussing the foregoing matters, the JIPC shall [**] Parties and shall [**] Intellectual Property [**] under this agreement to both Parties including the [**] one Party to the other. The applicable Party or the Parties shall determine such foregoing matters as set forth in ARTICLE VIII based on decision-making of the JIPC with respect to the foregoing matters.

(i)     Joint Finance Committee. The JFC shall provide a forum for the discussion and exchange of information between the Parties relating to Research Costs, the Program 1 Joint Development Budget, the [**] Co-Development Budget, the Additional Co-Development Budget, Allowable Expenses, Net Profits and Net Losses. As soon as practicable following the Effective Date (but in no event more than [**] following the Effective Date), each Party shall designate its [**] representatives on the JFC. A representative of Incyte shall act as the chairperson of the JFC. The chairperson shall not have any greater authority than any other representative on the JFC and shall conduct the following activities of the JFC: (A) calling meetings of the JFC at least every quarter; (B) preparing and issuing minutes of each such meeting within [**] thereafter; and (C) preparing and circulating an agenda for the upcoming meeting.

3.3     Committee Meetings. Commencing in the first Calendar Quarter of 2017, the JSC and each of the Subcommittees that have been established shall each hold at least one (1) meeting per Calendar Quarter at such times during such Calendar Quarter as the chairperson elects to do so. Except where a Party fails to appoint a member or members to the JSC or its Subcommittees or fails to participate in meetings of the JSC or its Subcommittees pursuant to Section 3.5(b)(i), meetings of the JSC and the Subcommittees, respectively, shall be effective only if at least one (1) representative of each Party is present or participating. The JSC and its Subcommittees may meet either (i) in person at either Party’s facilities or at such locations as the Parties may otherwise agree or (ii) by audio or video teleconference; provided that no less than one (1) meeting during each Calendar Year shall be conducted in person, with such in-person meetings alternating between the locations of each Party, or as otherwise mutually agreed. Other representatives of each Party involved with the Licensed Product may attend meetings as non-voting participants, subject to the

confidentiality provisions set forth in ARTICLE XIII. Additional meetings of the JSC and its Subcommittees may also be held with the consent of each Party, or as required under this Agreement, and neither Party shall unreasonably withhold its consent to hold such additional meetings. Each Party shall be responsible for all of its own expenses incurred in connection with participating in all such meetings.

3.4     Authority. The JSC and any Subcommittee shall have only the powers assigned expressly to it in this ARTICLE III and elsewhere in this Agreement, and shall not have any power to amend, modify or waive compliance with or the terms of this Agreement. In furtherance thereof, each Party shall retain the rights, powers and discretion granted to it under this Agreement and no such rights, powers or discretion shall be delegated or vested in the JSC or any Subcommittee unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing.

3.5       Decisions.  

(a)     Initial Dispute Resolution Procedures. Subject to the provisions of this Section 3.5, actions to be taken by the JSC and each of the Subcommittees shall be taken only following a unanimous vote, with all of each Party’s representatives together having one (1) vote. If any Subcommittee fails to reach unanimous agreement on a matter (with each Party’s representatives together having a single vote) before it for decision for a period in excess of [**], either Party may refer the matter to the JSC.

(b)     Final Decision-Making. If the JSC, using good faith efforts in compliance with Section 3.5(c), fails to reach unanimous agreement on a matter within the scope of the JSC’s authority (with each Party’s representatives together having a single vote) before it for decision (whether originating there or referred to it by a Subcommittee) for a period in excess of [**], the following provisions shall apply:

(i)     The JSC representatives appointed by [**] shall have the deciding vote on [**] other than (A) those matters for which [**] has the deciding vote pursuant to Section 3.5(b)(ii) and (B) those matters related to [**] requiring the consent of both Parties’ representatives and as to which neither Party has final say as expressly provided in Section 3.5(b)(iii). [**] shall have the right to appeal any such final decision of the [**] representatives to the JSC by referring such dispute to the [**] Executive Officer or a designee of the [**] Executive Officer with decision-making authority for resolution, in which case the [**] Executive Officer or designee shall make himself or herself reasonably available to [**] representatives for a period of [**] to review and discuss such issue, including holding an in-person meeting with [**] representatives, if requested. In such case, the [**] Executive Officer or designee shall have the deciding vote on such issue. For clarity, Incyte shall have final decision-making authority over the budgets for all Development Plans and for the [**].

(ii)     Except for those matters related to [**] requiring the consent of both Parties’ representatives and as to which neither Party has final say as expressly provided in Section 3.5(b)(iii), the JSC representatives appointed by [**] shall have the deciding vote on any matter involving (A) the [**] of any [**] Antibody or [**] Product in or for the United States,

including (1) [**] in the United States, (2) the [**] or [**] thereto, and (3) any disputes regarding whether an activity under Sections 5.3(a)(iii) or 5.3(c) is [**] of [**] Products in the United States; provided that the [**] JSC representatives must make such determination reasonably; and (B) any matter within the scope of responsibility of the JIPC pertaining to Patent Rights contained within [**] or pertaining to [**].[**] shall have the right to appeal any such decision of the JSC to the [**] Executive Officer or a designee of the [**] Executive Officer with decision-making authority for resolution, in which case the [**] Executive Officer or designee shall make himself or herself reasonably available to [**] representatives for a period of [**] to review and discuss such issue, including holding an in-person meeting with [**] representatives, if requested. In such case, the [**] Executive Officer or designee shall have the deciding vote on such issue.

(iii)     Neither Party shall have the final say over a matter that relates to any [**] or any [**] and/or its related [**], as contemplated in Section 5.3(b), and, unless and until both Parties’ representatives on the JSC approve such [**] and associated [**],  neither Party shall [**], and either Party shall have the right to [**], in accordance with Section 5.3(c). In addition, neither Party shall have final say over (A) the [**] Products for the [**], and, if the Parties are unable to agree [**] on a [**] Products applicable to [**], each Party shall have the right to [**], or (B) the [**] for [**] and, if the Parties are unable to agree through the JSC on the [**] for [**], each Party shall have the right to pursue [**] for its territory.

(c)     Good Faith.  In conducting themselves on the JSC or any Subcommittees, and in exercising their rights under this ARTICLE III, all representatives of both Parties shall consider diligently, reasonably and in good faith all input received from the other Party, and shall use reasonable efforts to reach consensus on all matters before them. Notwithstanding such final decision making rights of a Party, neither Party shall exercise its right to finally resolve a dispute pursuant to Section 3.5(b): (i) in a manner that excuses such Party from any of its obligations specifically enumerated under this Agreement; (ii) in a manner that negates any consent rights or other rights specifically allocated to the other Party under this Agreement; (iii) to resolve any dispute regarding whether a Party may [**]; (iv) to [**]; (v) to resolve any dispute regarding whether a milestone event set forth in Section 9.2 has been achieved; (vi) in a manner that would require the other Party to perform any act that it reasonably believes to be inconsistent with any Law or any approval, order, policy or guidelines of a Regulatory Authority; or (vii) or in a manner that has a material adverse impact on the rights or ability of a Party to [**] Products in its territory.

3.6       Committee Membership.

(a)     Appointment is a Right. The appointment of members of the JSC and any Subcommittees is a right of each Party and not an obligation and shall not be a “deliverable” as referenced in any existing authoritative accounting literature. Each Party shall be free to determine not to appoint members to the JSC or any Subcommittee.

(b)     Consequence of Non-Appointment. If a Party does not appoint members of the JSC or any Subcommittee, it shall not be a breach of this Agreement, nor shall any consideration be required to be returned, and unless and until such members are appointed, the Parties shall discharge the roles of the JSC or any Subcommittee thereof directly.

3.7     Alliance Manager. Each Party shall appoint a person(s) who shall oversee contact between the Parties for all matters between meetings of the JSC and each Subcommittee and shall have such other responsibilities as the Parties may agree in writing after the Effective Date (each, an “Alliance Manager”). Each Party may replace its Alliance Manager at any time by notice in writing to the other Party.

ARTICLE IV
TARGET PAIR AND PROGRAM SELECTION; RESEARCH

4.1       Information Transfer.

(a)     Initial Information Transfer. Merus shall make available to Incyte, in a mutually-agreed upon format and without further financial consideration, (i) the Merus Know-How related to the Initial Research Plans and Program 1 and Program 2 and any research plan Merus has in place related to [**], in each case within [**] after the Effective Date and (ii) the Merus Know-How and any research plan Merus has in place related to any other Program within [**] after Incyte’s designation of the Target Pair for such Program in accordance with this ARTICLE IV. In addition, within [**] after the Effective Date, Merus shall disclose summaries of currently existing Merus Know-How [**] regarding Target Pairs [**].  

(b)     Technical Assistance; Continuing Information Transfer. From the Effective Date through the [**] thereof, Merus shall make its relevant scientific and technical personnel and any academic collaborators, as applicable, reasonably available to Incyte to answer any questions or provide instruction as reasonably requested by Incyte concerning the information delivered pursuant to Section 4.1(a). On an ongoing and Program-by-Program basis during the Research Term, every [**] (or such other frequency as determined by the Parties), (i) prior to Candidate Nomination, each Party shall make available to the other Party, in a mutually agreed-upon format, material data generated under the [**] Discovery Plan, any Novel Discovery Plan and each Research Plan, and (ii) following Candidate Nomination, each Party shall make available to the other Party material data generated under the applicable Development Plan, and such other aspects of the Incyte Know-How or Merus Know-How, as applicable, that arise from such Party’s [**] and (A) that are [**] the other Party’s conduct of activities, in each case [**], or (B) that are [**] the other Party.

(c)     Right of Reference or Use. Merus hereby grants to Incyte, solely for the purposes set forth in this Agreement, a [**] relating to Licensed Antibodies or Licensed Products arising from Programs and existing as of the Execution Date or [**], and agrees to sign, and cause its Affiliates to sign, any instruments reasonably requested by Merus in order to effect such grant.

4.2      Gatekeeper.  

(a)     Generally. Incyte shall promptly, but in no case later than [**] after the Effective Date, engage and retain an independent Third Party [**] and [**] (the “Gatekeeper”) for the purpose of confirming whether a proposed Target Pair is Not Available and confirming whether a proposed [**] Target is an Incyte Specified Target, such engagement to include provisions relating to confidentiality substantially similar to those contained in this Agreement.

Incyte will provide Merus a copy of the agreement for review reasonably prior to execution (which may be redacted to remove any sensitive financial or competitive information), and shall consider in good faith any Merus comments thereto. The cost of the Gatekeeper shall be borne by [**]. Until [**], the Gatekeeper will be responsible for maintaining the list of Incyte Specified Targets and an up-to-date list of Target Pairs that are Not Available (the “Not Available List”). Upon notice from Incyte of engagement of the Gatekeeper, Merus shall provide the Gatekeeper (with a copy to Incyte) with the initial Not Available List (which shall include the reason for each Target Pair being Not Available). All communications regarding the availability of a Target Pair between the Parties shall be exchanged through the Gatekeeper.

(b)     Notice of Not Available. During the Research Term, Merus shall promptly, but in no case later than [**] after the occurrence of the events in the following subsections (i) or (ii), notify the Gatekeeper (i) if any Target Pair becomes Not Available and provide the reason for such Target Pair becoming Not Available and (ii) if any Target Pair ceases to be Not Available. Upon receipt of such notification, the Gatekeeper shall update the Not Available List accordingly. For clarity, Merus shall [**] at the time such [**]; provided that Merus shall be [**] to Incyte if Incyte seeks to designate a Target Pair for a Program in accordance with Section 4.4(c) or Section 4.5(b), as applicable. 

4.3      Target Pairs; Program Caps.  

(a)     Generally.  The Parties agree that, as of the Effective Date, the Target Pairs under each of Program 1 and Program 2 have been designated, and that Program 1 and Program 2 are the only Programs for which a Target Pair has been designated. For each of the [**] Programs and Novel Programs, subject to Sections 4.2, 4.4 and 4.5, Incyte has the sole right to designate a Target Pair as the subject of further research activities pursuant to a Research Plan. For clarity, except with respect to the rights granted to Incyte for Selected Monoclonal Antibodies binding to individual Targets composing a particular Target Pair and the right of Incyte to [**] for a [**] as a Licensed Antibody as described in Section 4.3(b), the designation by Incyte of a Target Pair for inclusion in a Program does not grant to Incyte any rights to Develop and Commercialize Antibodies binding to either (i) an [**] Target Pair, or (ii) any [**] in such Target Pair and [**] in any other Target Pair that has been [**] this Agreement, unless Incyte has elected or elects, subject to the Novel Program Cap or [**] Program Cap, as applicable, to include such [**]  as the subject of a Novel Program under this Agreement. By way of example only, if Incyte designates each of (i) Target A x Target B and (ii) Target C x Target D as Target Pairs in two Programs under this Agreement, Incyte [**] this Agreement to Develop or Commercialize Antibodies [**] (unless Incyte had [**] Target), or to [**] Target Pair that is a [**] (e.g., [**])), unless Incyte has designated a Novel Program or [**] Program around such Target or Target Pair, subject to the Novel Program Cap or [**] Program Cap, as applicable. For clarity, nothing under this Section 4.3(a) shall prevent Incyte from Developing or Commercializing Antibodies directed at any single Target outside this Agreement, subject to Section 2.8(b)(i).

(b)     Program Caps. At any given time during the Research Term, there may be a maximum of eleven (11) Programs being actively pursued under this Agreement. More specifically, subject to the adjustments set forth below, in addition to Program 1 and Program 2, there may be an active maximum of (i) [**] Novel Programs (including any Novel Programs that

have passed Program Selection, irrespective of whether such Programs have been terminated) (the “Novel Program Cap”), and (ii) [**] Programs (including any [**] Programs that have passed Program Selection, irrespective of whether such Programs have been terminated) unless no [**] Target Pairs are designated by Incyte during the [**] Exclusivity Period, in which case the maximum shall be [**] Programs (the “[**] Program Cap”); provided that if the [**] Program Cap has been reached, any additional [**] Target Pair that Incyte wishes to designate may be included as a Novel Program Target Pair for a Novel Program if, at such time, the Novel Program Cap has not been reached. Furthermore, (A) if [**] becomes a Dropped Program, then the Novel Program Cap shall be [**], (B) if [**] becomes a Dropped Program, then the Novel Program Cap shall be [**], and (C) if (a) Incyte never designated any [**] Programs or (b) all [**] Programs included within the [**] Program Cap become Dropped Programs, then the Novel Program Cap shall be [**] such that, if all of the foregoing (A), (B), and (C) occur, the Novel Program Cap shall be [**]. Notwithstanding the foregoing, the Parties may mutually agree at any time to increase the Novel Program Cap or the [**] Program Cap, either temporarily (e.g., to facilitate the conduct of research activities under particular Programs), or for the remainder of the Research Term. For clarity, if Incyte chooses to pursue a Selected Monoclonal Antibody as a Licensed Antibody and Licensed Product, Incyte would provide to Merus written notice thereof, and such Selected Monoclonal Antibody will be included as a Program within the Novel Program Cap or [**] Program Cap, as applicable, and subject to the terms of this Agreement.

4.4       [**] Target Pairs.  

(a)     Generally. Pursuant to the [**] Discovery Plan, the Parties will seek to identify one or more Target Pairs for nomination by Incyte as [**] Target Pairs.  Potential [**] Target Pairs can arise de novo from the research or be defined by either of the Parties as set forth below.

(b)     [**] Idea Sharing by Merus. During the Initial Research Term, Merus shall promptly propose to Incyte in writing all Target Pairs that Merus has identified for the potential creation of Bi-Specific Constructs, for which one of the Fab regions specifically binds to [**].  In each case where Merus proposes a [**] Target Pair to Incyte, Merus shall make available to Incyte, in a mutually-agreed upon format and without further financial consideration, and as applicable, the Merus Know-How related to such [**] Target Pairs and the proposed monoclonal Antibodies (and sequences therefor) and actual or proposed Bi-Specific Constructs specifically binding to such [**] Target Pairs, if any, which shall include a written report [**] the research and Development of Bi-Specific Constructs directed to such [**] Target Pair; provided that the absence or unavailability of any of such information shall not limit Merus’s obligations to promptly propose Target Pair ideas to Incyte (but the [**] period set forth below shall not commence until such information is provided). Incyte may evaluate such [**] Target Pairs and the associated Bi-Specific Constructs and provide written notice to Merus not later than [**] after disclosure of such proposal and information thereof as to whether Incyte desires to designate such Target Pair as a [**] Target Pair under this Agreement. For clarity, a [**] Target Pair may include an IMOD Target. Notwithstanding anything in this Section 4.4(b), after the [**] Exclusivity Period, Merus is not required to disclose or offer to Incyte for inclusion under this Agreement any [**] Target Pairs that are [**] by [**] and [**] activities under this Agreement.

(c)     [**] Idea Sharing by Incyte. Subject to the [**] Cap, at any time during the Research Term, Incyte may, in its sole discretion, provide written notice to Merus that Incyte wishes to propose a Target Pair for designation under a Program under this Agreement. Within [**] thereafter, Merus shall provide an updated Not Available List to the Gatekeeper (which shall include the reason for each Target Pair being Not Available); provided that such update shall be based on the status as of the date of Incyte’s notice. Incyte may then, in its sole discretion, provide written notice to the Gatekeeper proposing one or more [**] Target Pairs for designation under a [**] Program, provided that [**], any such [**] Target Pair would only be able to be included within the collaboration [**]. Within [**] following the Gatekeeper’s receipt of such notice, the Gatekeeper shall verify whether such [**] Target Pair requested by Incyte is on the Not Available List and notify Incyte in writing (the “[**] Gatekeeper Notice”) with respect thereto and, if it is Not Available, provide the reason given by Merus when placing such Target Pair on the Not Available List; provided that no [**] Target Pair proposed by Incyte shall be Not Available at any time during the [**] Exclusivity Period. If such proposed Target Pair requested by Incyte is on the Not Available List, then, at Incyte’s request, Merus shall provide Incyte with written evidence [**] to Incyte that such Target Pair is Not Available. If such proposed [**] Target Pair requested by Incyte is not on the Not Available List, then the Gatekeeper shall also notify Merus of Incyte’s proposed [**] Target Pair, and subject to the [**] Program Cap, such proposed [**] Target Pair shall be designated as a [**] Target Pair. For clarity, if the [**] Cap has been reached and the Novel Program Cap has not yet been reached, Incyte may nominate [**] Target Pairs for inclusion as Novel Programs pursuant to Section 4.5. If the [**] Gatekeeper Notice indicates that the proposed [**] Target Pair is Not Available, then Incyte shall have the right to pursue such [**] Target Pair and Bi-Specific Constructs directed to such [**] Target Pair outside of this Agreement.

(d)     Ongoing [**] Target Pair Idea Sharing by Merus. Once the [**] Program Cap has been reached, Merus shall have no further obligation to offer potential [**] Target Pairs to Incyte pursuant to Section 4.4(b) (but shall remain required to disclose such Target Pairs pursuant to Section 4.5(a) if the Novel Program Target Cap has not been reached). Notwithstanding the foregoing, if during the Initial Research Term, a [**] Program [**], such that there are [**] Programs (that were not included under Novel Programs) at such time than the [**] Program Cap, [**] to Merus’s [**] to Incyte for inclusion under a [**] Program under this Agreement (including with respect to any [**]). For clarity, (i) Section 4.4(b) shall not apply following [**] to any Target Pairs that are Not Available and (ii) Section 4.8 shall apply to any new Bi-Specific Constructs that [**] that [**] identifies after the applicable [**].

4.5       Novel Program Target Pairs.  

(a)     Target Pair Idea Sharing by Merus. During [**] until the Novel Program Cap is reached, Merus shall promptly propose to Incyte in writing [**] Bi-Specific Constructs (excluding any [**] Target Pair already disclosed to Incyte pursuant to Section 4.4 and, for clarity, including any Target Pair where one or both of the Targets is an IMOD Target), and shall make available to Incyte, in a mutually-agreed upon format and without further financial consideration, the Merus Know-How related to such Target Pairs and the proposed monoclonal Antibodies (and sequences therefor) and actual or proposed Bi-Specific Constructs specifically binding to such Target Pairs, if any, which shall include a written report [**] Bi-Specific Constructs directed to such Target Pair; provided that the absence or unavailability of any of such information shall not

limit Merus’s obligations to promptly propose Target Pair ideas to Incyte (but the [**] set forth below shall not commence until such information is provided). Incyte may evaluate such Target Pairs and the associated Bi-Specific Constructs for inclusion as Novel Program Target Pairs under this Agreement. For a period of [**] after Incyte’s receipt of such proposal and information, such Target Pair may not be considered Not Available or added to the Not Available List and Incyte may designate such Target Pair as a Novel Program Target Pair hereunder, but may be added to the Not Available list at Merus’s discretion following the expiration of such period, provided that Merus had satisfied the criteria for an Internal Merus Program at the time such Target Pair was offered to Incyte. At any time after such [**] period, Incyte may propose such Target Pair pursuant to Section 4.5(b). Notwithstanding anything in this Section 4.5(a), Merus is not required to disclose or offer to Incyte for inclusion under this Agreement any Targets or Target Pairs that are [**] by [**] and [**] activities under this Agreement.  

(b)     Target Pair Idea Sharing by Incyte. Subject to the Novel Program Cap, at any time during the Research Term, Incyte may, in its sole discretion, provide written notice to Merus that Incyte wishes to propose a Target Pair for designation under a Program under this Agreement. Within [**] thereafter, Merus shall provide an updated Not Available List to the Gatekeeper (which shall include the reason for each Target Pair being Not Available); provided that such update shall be based on the status as of the date of Incyte’s notice. Incyte may then,  in its sole discretion, provide written notice to the Gatekeeper proposing Target Pairs (other than and in addition to the Program 1 Target Pair, Program 2 Target Pair and any [**] Target Pairs included in the [**] Program Cap) for inclusion as a Novel Program Target Pair under this Agreement, provided that after the expiration of the Initial Research Term, any such Target Pair would only be able to be included within the collaboration as a replacement for a Dropped Target Pair. For clarity, Target Pairs proposed by Incyte under this Section 4.5(b) may (i) be [**] Target Pairs or (ii) include one or more IMOD Targets. Within [**] following the Gatekeeper’s receipt of such notice, the Gatekeeper shall verify whether such Target Pair requested by Incyte is on the Not Available List and notify Incyte in writing (the “Novel Gatekeeper Notice”) with respect thereto and, if it is Not Available, provide the reason given by Merus when placing such Target Pair on the Not Available List; provided that no Novel Program Target Pair containing [**] as a Target shall be Not Available at any time during the [**] Exclusivity Period, and no Reserved IMOD Target Pair may be Not Available during the IMOD Reserved Period. If such proposed Novel Program Target Pair requested by Incyte is on the Not Available List, then, at Incyte’s request, Merus shall [**] such Novel Program Target Pair is Not Available. If such proposed Novel Program Target Pair requested by Incyte is not on the Not Available List, then the Gatekeeper shall also notify Merus of Incyte’s proposed Target Pair and, subject to the Novel Program Cap, such proposed Novel Program Target Pair shall be a Novel Program Target Pair. If the Novel Gatekeeper Notice indicates that the proposed Novel Program Target Pair is Not Available, then Incyte shall have the right to pursue such Novel Program Target Pair and Bi-Specific Constructs directed to such Novel Program Target Pair outside of this Agreement.

(c)     Ongoing Novel Program Target Pair Idea Sharing by Merus. Once the Novel Program Cap has been reached, Merus shall have no further obligation to offer potential Targets and Target Pairs to Incyte for inclusion as Novel Program Target Pairs under this Agreement pursuant to Section 4.5(a). Notwithstanding the foregoing, if [**], a Novel Program [**], such that there are [**] applicable Novel Program Cap, [**] to Merus’s [**] Targets and

Target Pairs to Incyte for inclusion as Novel Program Target Pairs under this Agreement (including with respect to [**]). For clarity, (i) Section 4.5(a) shall not apply following a Drop Date to any Target Pairs that are Not Available and (ii) Section 4.8 shall apply to any new Bi-Specific Constructs that specifically bind to the Dropped Target Pair that Merus identifies after the applicable Drop Date.

4.6       Back-Up Bi-Specific Construct Substitution. At any time during the Term, Incyte may elect, at its discretion, to cease Development of one or more of the Bi-Specific Construct(s) for a Program (including both Novel Programs and [**] Programs). At any time during the Term, Incyte may elect, at its discretion, to advance one or more back-up Bi-Specific Constructs directed at the same Target Pair. If such election is made by Incyte [**] for the applicable Program, Incyte shall provide written notice to Merus and (a) the Parties shall [**] directed to such back-up Bi-Specific Constructs, and (b) the time period in which [**] shall be no less than [**] from the date of such notice.

4.7       Change in Status. If, at any time during the Research Term, any Target Pair that was identified as Not Available in a [**] Gatekeeper Notice or Novel Gatekeeper Notice is no longer Not Available, Merus shall promptly, but in any case within [**] provide written notice to Incyte and make available, [**], the Merus Know-How related to such Target Pairs and the Bi-Specific Constructs specifically binding to the Target Pairs. Incyte may, in its sole discretion, select such Target Pair for inclusion in this Agreement, subject to this ARTICLE IV.

4.8       Dropped Programs and Dropped Target Pairs.  

(a)     Program 1 and Program 2. Incyte may elect, at its sole discretion, to drop from this Agreement either or both of Program 1 and Program 2 (and the corresponding Target Pair and all Bi-Specific Constructs that are the subject of such Program) by written notice to Merus delivered prior to Program Selection for Program 1 or Program 2, as applicable, and each such Program and associated Target Pair(s) will, effective as of the date of Incyte’s notice to Merus, become a Dropped Program and Dropped Target Pair, as applicable. Effective upon the date of such notice, such Dropped Target Pair shall no longer be a Program 1 Target Pair or Program 2 Target Pair. Simultaneous with such notice, or [**], Incyte may, at its discretion, designate one additional Novel Program Target Pair in lieu of such Dropped Target Pair, for each of Program 1 and/or Program 2, as applicable, pursuant to Section 4.5. Upon effectiveness of each such notice designating such additional Novel Program Target Pair, the Program covering such additional Target Pair shall thereafter be treated as a Novel Program.

(b)     [**] Programs. For [**] Programs, on a Program-by-Program basis,  at any time prior to the expiration of the Research Term, and prior to Program Selection for such [**] Program, Incyte may elect, at its discretion and by written notice to Merus, to drop any one or more [**] Programs (and the [**] Target Pair and all Bi-Specific Constructs that are the subject of such Program) from this Agreement, and each such Program and associated [**] Target Pair(s) will, effective as of the date of Incyte’s notice to Merus, become a Dropped Program and Dropped Target Pair, as applicable. Simultaneous with such notice, or [**], Incyte may, at its discretion, either (i) designate a replacement [**] Target Pair in lieu of such Dropped Target Pair to be the subject of research activities hereunder or (ii) if [**], such that there are no longer any [**]

Programs under this Agreement (not including any [**] Programs falling under the Novel Program Cap), designate [**] pursuant to Section 4.5 [**] to be the [**] hereunder. Upon effectiveness of each such notice designating such additional [**] Target Pair or Novel Program Target Pair, as applicable, the Program covering such additional Target Pair shall thereafter be treated as a [**] Program or Novel Program, as applicable.

(c)     Novel Programs. For Novel Programs, on a Program-by-Program basis, at any time prior to the expiration of the Research Term, and prior to Program Selection for such Program, Incyte may elect, at its discretion and by written notice to Merus, to drop such Programs (and the Target Pair and all Bi-Specific Constructs that are the subject of such Program) from this Agreement, and each such Program and associated Target Pair(s) will, effective as of the date of Incyte’s notice to Merus, become a Dropped Program and Dropped Target Pair, as applicable. Simultaneous with such notice, or at any time thereafter prior to expiration of the Research Term, Incyte may, at its discretion, designate a replacement Target Pair in lieu of such Dropped Target Pair to be the subject of research activities hereunder. Upon effectiveness of each such notice designating such additional Novel Program Target Pair, the Program covering such additional Target Pair shall thereafter be treated as a Novel Program.

(d)     Ongoing Right to Drop and Replace. For clarity, Incyte’s right to drop Programs and, at its discretion, elect to replace them pursuant to Sections 4.8(a), 4.8(b), and 4.8(c) applies also to Programs that replaced such Dropped Programs. For example, if Incyte drops Program 1 and replaces it with a Novel Program pursuant to Section 4.8(a), that Novel Program may subsequently be dropped and replaced with another Novel Program pursuant to Section 4.8(c) and so on until the earlier of either expiration of the Research Term or Program Selection for such Novel Program.

(e)     Release of Exclusivity. Upon any Target Pair becoming a Dropped Target Pair pursuant to Sections 4.8(a), 4.8(b) or 4.8(c) above then, subject to the applicable terms of this Agreement, Merus may thereafter Develop or Commercialize any Bi-Specific Construct that specifically binds to the applicable Dropped Target Pair.

(f)     [**] New Bi-Specific Constructs on Dropped Target Pairs. During the Research Term, if Merus or an Affiliate commences internal research and Development activities with respect to any Bi-Specific Construct that specifically binds any Dropped Target Pair, and such Bi-Specific Construct [**], Merus [**] with respect to such [**] for consideration as a potential Novel Program Target Pair in accordance with Section 4.5(a), or a potential [**] Target Pair in accordance with Section 4.4(b), as applicable. Subject to the [**] Program Cap and the Novel Program Cap, as applicable (provided that Incyte may elect to drop a Target Pair pursuant to Section 4.8(a), 4.8(b), or 4.8(c) if such caps have been reached), Incyte shall have the right, exercisable within [**] following [**], to re-designate such Dropped Target Pair hereunder. If Incyte determines that it wishes to re-designate such Dropped Target Pair, Incyte shall reimburse Merus, within [**] following receipt of an invoice, for [**] of Merus’s [**] incurred in [**] with respect to the [**] such Bi-Specific Construct and such Dropped Target Pair following the Drop Date. Upon Merus’s receipt of such payment, such Dropped Target Pair will be reinstated under this Agreement and shall count towards the [**] Program Cap or the Novel Program Cap, as applicable.

(g)     License Grant. Promptly following Merus’s request after a Program becoming a Dropped Program pursuant to this Section 4.8, Incyte for itself and on behalf of its Affiliates, shall and hereby does grant to Merus a non-exclusive (subject to Incyte’s rights with respect to Selected Monoclonal Antibodies), worldwide, license (subject to the royalties set forth in Section 9.3(a)(ii)) in and to (i) any Incyte IP that is [**] or [**] Dropped Bi-Specific Products [**] for such Dropped Program for the Development, manufacture, or Commercialization of such Dropped Bi-Specific Products and (ii) all Arising Manufacturing Patents and Arising Product-Specific Patents, discovered, made or conceived under such Dropped Program for the Development, manufacture, or Commercialization of such Dropped Bi-Specific Products. Incyte shall also provide to Merus copies of all data generated by Incyte with respect to the Dropped Target Pair and Merus may use and disclose such data under reasonable confidentiality protections to the extent necessary for the Development, manufacture, or Commercialization of such Dropped Bi-Specific Products. Notwithstanding the foregoing, Incyte shall retain the license under Section 2.3 to the Selected Monoclonal Antibodies that were part of such Dropped Program for use in connection with any other Programs then existing or that may begin during the Research Term.

4.9       Research Term.  

(a)     Research Term Duration. Commencing on the Effective Date, pursuant to the terms of this Agreement, the Parties shall collaborate to conduct discovery and research activities, including the activities set forth in this ARTICLE IV, until the earlier of (a) the date upon which a total of [**] Program Selections have occurred in relation to Bi-Specific Constructs arising from Programs conducted under this Agreement, and (b) the [**] of the Effective Date, (such period ending on the earlier of (a) or (b), including any extensions under the remainder of this Section 4.9, collectively, the “Research Term”), provided that, following the expiration of the Initial Research Term, the total number of Programs being pursued under this Agreement may not be increased (e.g., if there are a total of seven (7) Programs ongoing at end of the Initial Research Term, no new Programs can be added but each of those seven (7) Programs may be dropped and a substitute selected one or more times pursuant to Section 4.8). Notwithstanding the foregoing, following the expiration of the Initial Research Term and during the remainder of the Research Term, Section 4.8 shall continue to apply, and Incyte may, [**], [**] for any [**]. If, as of the [**] of the Effective Date, fewer than [**] Program Selections have occurred (or such number of Program Selections corresponding to the total number of Programs that had either achieved Program Selection or were ongoing as of the expiration of the Initial Research Term, if less than [**]), Incyte shall have the right, at its discretion, to extend the Research Term for successive additional [**] periods (each, an “Extension Period”), by providing written notice to Merus no later than [**] prior to the [**] (and each subsequent [**]) of the Effective Date, and paying an extension fee (the “Research Term Extension Fee”) for each such [**] extension, of [**] within [**] following an invoice from Merus for such amount. Incyte’s ability to extend the Research Term in accordance with the foregoing sentence shall apply until the achievement of [**] Program Selections (or such number of Program Selections corresponding to the total number of Programs that had either achieved Program Selection or were ongoing as of the expiration of the Initial Research Term, if less than [**]).

(b)     Expiration of the Research Term. If the Research Term expires at the end of an Extension Period because Incyte elects not to pay a Research Term Extension Fee under Section 4.9, and at such time [**] Program Selections have not been achieved, then if Merus is conducting activities under any Research Plan for a Program that has not yet achieved Program Selection, Merus shall, in accordance with the applicable Research Plan, (i) [**] all Programs that have not yet achieved Program Selection, and (ii) [**] for any Program for which a Target Pair has been designated pursuant to Sections 4.4 and/or 4.5 prior to the expiration of the Research Term but for which research activities have not yet commenced, in each case of (i) and (ii), until the earlier of (A) [**] under this Agreement, or (B) Incyte notifies Merus in writing that it [**]. Without limiting the foregoing, if at the expiration of the Research Term at the end of an Extension Period in accordance with this Section 4.9(b), regardless of whether [**] Program Selections have been achieved, Merus shall [**] with respect to any other active Programs, until [**].  

4.10      Conduct of Discovery and Research Activities 

(a)       Discovery Activities.  

(i)     [**] Discovery Activities. Within [**] after the Effective Date, the JRC will prepare a plan and budget for review and approval by the JSC for the discovery of suitable [**] Target Pairs during the [**] Exclusivity Period (“[**] Discovery Plan”). The [**] Discovery Plan will assign responsibility for activities needed to identify Target Pairs for designation by Incyte as [**] Target Pairs. Merus shall use [**] to perform the obligations allocated to it under [**] Discovery Plan in accordance with the budget. Incyte may, in its sole discretion (A) perform activities set forth in the [**] Discovery Plan in parallel with Merus, (B) perform an activity in lieu of Merus, if Merus has not performed such activity pursuant to the timeline set forth in the [**] Discovery Plan, or (C) perform any other discovery activity. The duration of the [**] Discovery Plan shall be determined by the JRC.

(ii)     Novel Discovery Activities.  Should the Parties mutually agree that discovery activities directed toward a potential Novel Program should be conducted under this Agreement, the JRC will prepare a plan and budget for review and approval by the JSC for the discovery of suitable Novel Program Target Pairs (“Novel Discovery Plan”). The Novel Discovery Plan will assign responsibility for activities needed to identify Target Pairs for designation by Incyte as Novel Program Target Pairs. Merus shall use [**] to perform the obligations allocated to it under any Novel Discovery Plan in accordance with the budget. Incyte may, in its sole discretion (A) perform activities set forth in the Novel Discovery Plan in parallel with Merus, (B) perform an activity in lieu of Merus, if Merus has not performed such activity pursuant to the timeline set forth in the Novel Discovery Plan, or (C) perform any other discovery activity. The duration of each Novel Discovery Plan shall be determined by the JRC.

(b)       Research Plans. Within [**] after the Effective Date, the JRC shall prepare a research plan and budget for research activities for Program 1 and Program 2 (the “Initial Research Plans”). The Initial Research Plans shall include the Selected Monoclonal Antibodies and General Monoclonal Antibodies for Program 1 and Program 2 previously generated by Merus. For a period of [**] after receipt of the Initial Research Plans, Incyte shall [**] such Selected Monoclonal Antibodies [**] and [**] Selected Monoclonal Antibodies which thereafter shall be

the Selected Monoclonal Antibodies for Program 1 or Program 2, as applicable. Within [**] after designation of each Target Pair hereunder (other than the Program 1 Target Pair and Program 2 Target Pair), the JRC shall prepare a research plan and budget for research activities related to such Target Pair and the associated Bi-Specific Constructs through to Candidate Nomination (together with the Initial Research Plans, the “Research Plans”) for review and approval by the JSC. For each such Program, Incyte shall have the right, in its discretion, to select the Selected Monoclonal Antibodies that will be used to generate the Target Pair Biclonics Matrix. The Research Plans shall (i) assign responsibilities to Merus including for generating Antibodies and Bi-Specific Constructs to be incorporated within each of the Licensed Products and conducting in vitro and in vivo pharmacology on such Bi-Specific Constructs and providing resulting materials and information to Incyte and (ii) include a budget, timeline, milestones and desired pre-clinical target characteristics for research and Development activities through to Candidate Nomination. The intent of each Research Plan is to set forth the activities necessary to achieve Candidate Nomination with respect to a given Program. The duration of each Research Plan shall be less than or equal to [**] unless otherwise determined by the JRC; provided that Merus shall not be obligated to create a Target Pair Biclonics Matrix for more than (A) [**] Target Pairs per year during Calendar Years [**] or (B) [**] Target Pairs per Calendar Year thereafter. Merus shall use [**] to perform the obligations allocated to it under each Research Plan in accordance with the budget and shall ensure that any obligations Merus has to Third Parties do not cause Merus to have insufficient capacity to perform its obligations under this Agreement. Incyte may, in its sole discretion, (x) perform Research activities set forth in the Research Plans in parallel with Merus, (y) perform a research activity in lieu of Merus, if Merus has not performed such activity pursuant to the timeline set forth in a Research Plan, or (z) perform any other research activity related to such Program.

(c)       Discovery and Research Activity Costs. All Research Costs for Program 1 are Development Costs and shared equally by the Parties pursuant to Section 5.3(b)(iii). All Research Costs for Program 2, and each Novel Program, and for the [**] Discovery Plan, any Novel Discovery Plan and each [**] Program, up to [**] of the amount budgeted in the [**] Discovery Plan, any Novel Discovery Plan and applicable Research Plan (the “Reimbursable Research Costs”) shall be borne by Incyte. If Merus in good faith believes it will be necessary to incur costs in excess of the Reimbursable Research Costs in carrying out activities that are necessary in order to fulfil the requirements of the [**] Discovery Plan, any Novel Discovery Plan or a Research Plan, it shall secure Incyte’s prior written consent before conducting such activities. Provided such prior written consent has been secured, such costs will also be reimbursed by Incyte. Merus shall have no obligation to carry out any research activities that will incur Research Costs that exceed the Reimbursable Research Costs unless Incyte has provided its consent to reimburse such excess Research Costs or unless it is necessary for Merus to re-perform research activities that were improperly performed under a Research Plan and are necessary for Merus to provide a complete and accurate Data Package. At the time the [**] Discovery Plan, any Novel Discovery Plan or any Research Plan for which there are Reimbursable Research Costs is created by the JRC and approved by the JSC, the Parties shall agree on a [**] reporting and payment structure to implement the cost sharing set forth in this Section 4.10(c). If Incyte performs an activity in lieu of Merus pursuant to Section 4.10(a), the cost of performing such activity shall be removed from the budget allocated to Merus for such activity and Incyte shall not be required to reimburse Merus for such costs, provided it so notified Merus in advance that it was performing itself such activity.

(d)       Reporting. Merus shall provide the JRC with a written report at least [**] summarizing in reasonable detail Merus’s and its Affiliates’ activities, progress and expenditures compared to allocated budget under the [**] Discovery Plan, any Novel Discovery Plans and Research Plans. Incyte shall provide the JRC with a written report at least [**] summarizing in reasonable detail Incyte’s and its Affiliates’ activities, if any, under the [**] Discovery Plan, any Novel Discovery Plans and Research Plans, or any other activities it elected to undertake, as contemplated under Section 4.10(a).

4.11     Additional Research Activities. The JRC may require that certain activities under the Research Plans be repeated, new research be conducted, that Bi-Specific Constructs be created, modified or re-engineered or other research-related activities related to the Licensed Antibodies be performed and the JRC will adjust the applicable Research Plan and the associated budget accordingly. In each case, [**] shall be responsible for all Research Costs incurred under any such amended Research Plan budget that is approved by the JSC. During the Term, in connection with Development activities under any Program, Incyte may, in its discretion, select by written notice to Merus, one or more General Monoclonal Antibodies for potential use in the generation of a Bi-Specific Construct under such Program. Promptly after such notice, Merus will notify Incyte whether Merus has granted rights to such General Monoclonal Antibody to any Third Party. If Merus has granted rights to such General Monoclonal Antibody to a Third Party, Incyte may (but shall not be required to) request that Merus create a monoclonal Antibody that is less than [**] homologous in HCDR3 to such General Monoclonal Antibody and subsequently deem such modified General Monoclonal Antibody a Selected Monoclonal Antibody under such Program. Incyte may request that Merus generate Bi-Specific Constructs using such modified General Monoclonal Antibody (in which case, the provisions of Section 2.8(b) shall not be applicable to such modified General Monoclonal Antibody). If Merus has not granted rights to the General Monoclonal Antibody to any Third Party, Incyte may deem such General Monoclonal Antibody as a Selected Monoclonal Antibody under such Program. If Incyte wishes to designate one or more General Monoclonal Antibodies as Selected Monoclonal Antibodies under this Section 4.11, and the total number of Selected Monoclonal Antibodies would subsequently exceed the applicable number authorized by Section 1.127, Incyte shall contemporaneously designate an equal number of Selected Monoclonal Antibodies of its choice to become General Monoclonal Antibodies such that there will thereafter be only the number of Selected Monoclonal Antibodies authorized by Section 1.127 for such Program. If Incyte deems one or more General Monoclonal Antibodies as Selected Monoclonal Antibodies under this Section 4.11, and the total number of Selected Monoclonal Antibodies on either individual arm of a Target Pair would subsequently exceed [**], Incyte shall contemporaneously designate an equal number of Selected Monoclonal Antibody of its choice to become a General Monoclonal Antibody such that there will thereafter be no more than [**] Selected Monoclonal Antibodies on either individual arm of such Target Pair in accordance with Section 1.127. Once such Selected Monoclonal Antibodies becomes a General Monoclonal Antibodies, all licenses granted to Incyte under such Antibody as a Selected Monoclonal Antibody shall terminate.

4.12     Candidate Nomination.  

(a)     Data Packages. Merus shall: (i) at the direction of the JRC, provide to Incyte the Data Package for Program 1 and Program 2 and their corresponding Bi-Specific Constructs,

and (ii) on a Program-by-Program basis, use Commercially Reasonable Efforts to provide to Incyte within [**] (or such other longer period as may be set forth in the applicable Research Plan) following designation of each Target Pair pursuant to Sections 4.4 or 4.5, the Data Package for such Target Pair, including the corresponding General Monoclonal Antibodies, Selected Monoclonal Antibodies and the Bi-Specific Construct(s) that specifically bind to such Target Pair that are the subject of such Program, and which have been the subject of research activities under the applicable Research Plan.

(b)     Data Package Review. Following Incyte’s receipt of a Data Package, Incyte shall have [**], or such other period as the Parties may mutually agree, in which to review the applicable Data Package to determine whether it wishes to proceed with Candidate Nomination, provided that if Incyte requests additional reasonable information and clarifications during such [**] period, then such [**] period will be automatically extended (as necessary) for up to an additional [**] period, during which period Incyte may continue to request additional reasonable information and clarifications and Merus shall provide such information and clarifications to Incyte. For clarity, Incyte may [**] set forth in the applicable Research Plan [**] as set forth in Section 4.11. Incyte will use [**] to initiate the vector construction activities required for Candidate Nomination once Incyte has received all additional reasonable information and clarification that it has requested from Merus under this Section 4.12(b) with respect to a complete and accurate Data Package.

ARTICLE V
DEVELOPMENT; REGULATORY MATTERS

5.1       Conduct of Development Activities.  

(a)     Program 2, Novel Programs and [**] Non-Co Products. Incyte will, subject to the terms of this Agreement, have the sole right, at its expense, to conduct the Development of: Program 2 Antibodies and Program 2 Products; [**] Antibodies and [**] Products (other than the [**] Co-Development Product, if any) and Novel Program Antibodies and Novel Program Products (other than Additional Co-Development Products, if any), in each case worldwide. At the time of Candidate Nomination for each Program, the Parties shall discuss and agree, through the JRC, on a plan for (i) information sharing in relation to Development activities conducted between Candidate Nomination and Program Selection for the applicable Program, and (ii) achieving Program Selection for such Program.

(b)     [**] Co-Development Product. The Development of the [**] Co-Development Product, if any, shall be governed by a written Development plan that describes the proposed program of worldwide Development for the [**] Co-Development Product (the “[**] Co-Development Plan”) and associated budget for such worldwide Development (“[**] Co-Development Budget”). Incyte shall have the sole right and responsibility for preparing and amending the [**] Co-Development Plan and preparing and approving the [**] Co-Development Budget. Except as otherwise provided in this Agreement, and subject to Section 5.4, all decisions with respect to the creation, modification and implementation of the [**] Co-Development Plan and all Development activities for the [**] Co-Development Product, shall be made by Incyte in its sole discretion.

(c)     Additional Co-Development Plans. The Development of an Additional Co-Development Product shall be governed by a written Development plan that describes the proposed program of worldwide Development for such Additional Co-Development Product (the “Additional Co-Development Plan”) and associated budget for such worldwide Development (“Additional Co-Development Budget”). [**] shall have the [**] responsibility for preparing and amending the Additional Co-Development Plan and preparing and approving the Additional Co-Development Budget. Except as otherwise provided in this Agreement, and subject to Section 5.5, all decisions with respect to the creation, modification and implementation of the Additional Co-Development Plan and all Development activities for the Additional Co-Development Product shall be made by Incyte in its sole discretion.

(d)     Potential Merus Activities. Notwithstanding Sections 5.1(a) and 5.1(b), Incyte may request that Merus conduct (i) additional research activities for one or more of the Programs following Candidate Nomination for such Programs, or (ii) certain Development activities that are included within Development plans for such Programs between Candidate Nomination and Program Selection for each such Program, by making a written proposal (which may be in PowerPoint or other format) setting out the research and Development activities that Incyte desires Merus to conduct, and the deliverables, estimated timeline and resource requirements for such activities. Subject to the capacity limitations set forth in Section 4.10(b), Merus shall [**] additional research and/or Development activities, and to the extent that Merus performs such activities, Incyte shall reimburse Merus for the associated documented costs as Research Costs hereunder.

5.2       Development Diligence for Programs. For each Program achieving Candidate Nomination under this Agreement, excluding Program 1, but including Program 2, each [**] Program, and each Novel Program, Incyte shall use [**] (a) to progress research and Development activities for each such Program and (b) to [**] for [**] Bi-Specific Construct arising therefrom within [**] following Candidate Nomination for such Program, as such period may be extended by the JSC. Following Program Selection, and on a Program-by-Program basis, Incyte shall use [**] (i) to Develop the Program 2 Product, [**] Products (including both the [**] Non-Co Product and the [**] Co-Development Product), and the Novel Program Products in the Major Markets, and (ii) to seek and obtain Regulatory Approval for [**] Licensed Product arising from each such Program in each Major Market.

5.3       Program 1 Products.  

(a)       Generally.  

(i)     From and after the Effective Date, (A) Incyte will, subject to the terms of this Agreement, be responsible, at its expense, for the Development of the Program 1 Product for Regulatory Approval in the Incyte Territory; and (B) Merus will be responsible, at its expense, for the Development of the Program 1 Product for Regulatory Approval in the United States. The Parties will strive to work together on particular projects; however, the Parties will have the right to conduct Development and Commercialization of the Program 1 Product independently as provided in this Section 5.3. The Parties shall provide access to certain information related to the Development and Commercialization of the Program 1 Product to the

Program 1 JDC, the Program 1 JCC, the JSC, and to each other as expressly described in this Agreement and subject to the terms of this Section 5.3.

(ii)     The Development of the Program 1 Product shall be governed by a Development plan that describes the proposed overall program of Development for the Program 1 Product in the United States (the “Program 1 US Development Plan”) and in the Incyte Territory (the “Program 1 Incyte Territory Development Plan”) as well as a Program 1 Joint Development Plan covering Program 1 Joint Development Activities. Incyte shall have the sole right and responsibility for preparing the Program 1 Incyte Territory Development Plan. Except as otherwise provided in this Agreement (including as provided in Section 5.3(b)), with respect to the Program 1 Product in the Incyte Territory, all decisions with respect to the creation, modification and implementation of the Program 1 Incyte Territory Development Plan and Program 1 Joint Development Plan and all Development activities shall be made by Incyte in its sole discretion; provided that Incyte shall present to the Program 1 JDC a draft of the Program 1 Incyte Territory Development Plan and any material changes to the Program 1 Incyte Territory Development Plan, and shall give due consideration to any comments of Merus thereto. Merus shall have the sole right and responsibility for preparing the Program 1 US Development Plan. Except as otherwise provided in this Agreement (including as provided in Sections 5.3(b)), with respect to the Program 1 Product in the United States, all decisions with respect to the creation, modification and implementation of the Program 1 US Development Plan and Program 1 Joint Development Plan and all Development activities shall be made by Merus in its sole discretion; provided that Merus shall present to the Program 1 JDC a draft of the Program 1 US Development Plan and any material changes to the Program 1 US Development Plan, and shall give due consideration to any comments of Incyte thereto.

(iii)     Notwithstanding the foregoing, prior to commencing any independent Clinical Trial or other Development activities as part of Program 1 (i.e., not including any proposed Global Studies, which are subject to Section 5.3(b)) that may have an effect on Development of Program 1 Product in the United States (in case of such activities by Incyte) or in the Incyte Territory (in the case of such activities by Merus), the Party that proposes to conduct such Clinical Trial or other Development activities shall first submit to the Program 1 JDC the proposed protocol for such proposed Clinical Trial or Development activities and a written summary, in a form mutually agreed by the Parties, of such Clinical Trial or Development activities for review by the Program 1 JDC; provided that neither Party may proceed with such Clinical Trial or Development activities if the non-proposing Party reasonably determines that such Clinical Trial or Development activities is reasonably likely to have a material adverse effect on the Development or Commercialization of the Program 1 Product in the non-proposing Party’s territory; and provided further that such Clinical Trial or Development activities shall be subject to the non-proposing Party’s rights to buy-in to the results generated thereunder in accordance with Section 5.3(d).

(b)       Program 1 Joint Development Activities.

(i)     Prior to a Party conducting any Clinical Trial or Development activity that may support the worldwide (i.e., both the United States and one or more countries in the Incyte Territory) Development of a Program 1 Product, it shall be required to submit to the

Program 1 JDC a proposal to collaborate with the other Party to conduct Clinical Trials or other Development activities in connection with the Development of a Program 1 Product; provided that such proposal is submitted in writing as far in advance as reasonably practicable and in any event not later than [**] before (A) the planned FPFV, in the case of Clinical Trials or (B) planned commencement of such other Development activities. Such proposal shall contain, at a minimum, information supporting the rationale for the proposed activity related to the Program 1 Product from a scientific, regulatory and commercial standpoint, as well as an estimated developmental critical path and an estimate of the cost of such Development. The Program 1 JDC may review and comment on such proposal and shall present it to the JSC for approval.

(ii)     At any time during the period between when such proposal has been presented to the Program 1 JDC and the JSC has approved such Clinical Trial or other Development activity, and for [**] after such approval, the other Party may elect to participate in such Clinical Trial or other Development activity.

(iii)     In the event (A) the Program 1 JDC determines that such Clinical Trial or Development activity may support the worldwide Development of Program 1 Products (a “Global Study”); (B) the Program 1 JDC approves such proposal, with the consent of both Parties, or, if the JDC does not approve such proposal and the matter is escalated to the JSC, the JSC approves such proposal, with the consent of both Parties and with neither Party having final say; and (C) the Parties agree to collaborate to conduct such Clinical Trial or other Development activity with respect to the Program 1 Product (any of the items in (A) through (C), a “Program 1 Joint Development Activity”), then the Parties shall, through the Program 1 JDC, create a development plan (the “Program 1 Joint Development Plan”) that includes a detailed description of the Program 1 Joint Development Activity to be undertaken by the Parties (or if a Program 1 Joint Development Plan already exists, amend such plan to include the new Program 1 Joint Development Activity) and develop a detailed annual budget for all Development Costs for such Joint Development Activity to be included in the Program 1 Joint Development Plan (the “Program 1 Joint Development Budget”). Each Party shall use [**] to perform the obligations allocated to such Party under the Program 1 Joint Development Plan. All Development Costs set forth in the Program 1 Joint Development Budget shall be shared equally by the Parties whether incurred by Merus or Incyte or their respective Affiliates (i.e., each Party shall be responsible for fifty percent (50%) of the Development Costs set forth in the Program 1 Joint Development Budget). At the time Program 1 Joint Development Plan and associated Program 1 Joint Development Budget (or any amendments thereto) is established by the Program 1 JDC and approved by the JSC, the Parties shall agree on a [**] reporting and payment structure to implement the cost sharing set forth in the preceding sentence. In the event either Party fails to timely make an undisputed payment under such agreed on payment structure, the payment amount shall be reflected as a credit against the monies due by the other Party under ARTICLE IX, or, if no such credit is available as no such monies are due by the other Party, shall be paid by such Party within [**] after invoice, and the terms of subsection (iv) below shall apply.

(iv)     Should either Party (A) fail to timely pay any such invoice for Development Costs for activities set forth and in accordance with the Program 1 Joint Development Budget within [**] following written notice from the other Party, or (B) elect, by [**] advance written notice to the other Party, to cease funding Program 1 Development Costs

under the Program 1 Joint Development Budget (such action, a “Program 1 Opt-Out”), then such Party shall continue to have the right to Develop and Commercialize the Program 1 Product in the United States (in the case of Merus) or the Incyte Territory (in the case of Incyte) in accordance with the terms of this Agreement, but shall thereafter have no right to access or use any clinical and non-clinical data generated as a result of any Joint Development Activity occurring under the Program 1 Joint Development Plan, or any activities conducted by Incyte in relation to the Development and Commercialization of the Program 1 Product, in each case after the date of the occurrence of either of the events in (A) or (B) (such date, the “Program 1 Opt-Out Date”). If such Party subsequently desires to obtain access to any such data generated after the Program 1 Opt-Out Date, the terms of Section 5.3(d) shall apply.

(c)     Right to Proceed with Development Activity. If the other Party declines or does not elect to participate in a proposed Program 1 Joint Development Activity at least [**] prior to (i) in the case of Clinical Trials, the estimated FPFV date (as notified by the submitting Party in its proposal for such Program 1 Joint Development Activity) or (ii) planned date of commencement of such other Program 1 Joint Development Activities, the submitting Party may proceed with such Clinical Trial or Development activity for its territory and would be solely responsible for the conduct and costs of such Clinical Trial or Development activity; provided that neither Party may proceed with such Clinical Trial or Development activity if a Party reasonably determines that the activity is reasonably likely to have a material adverse impact on the Development and/or Commercialization of the Program 1 Products in its territory. Any dispute regarding whether an activity is reasonably likely to have a material adverse impact on the Development and/or Commercialization of the Program 1 Product in a Party’s territory shall be resolved in accordance with Section 3.5(b).

(d)       Program 1 Buy-In Right.  

(i)     If (A) a Party fails to elect to participate in a Clinical Trial or Development activity pursued by the other Party pursuant to Section 5.3(b), (B) either Party exercises a Program 1 Opt Out with respect to any Program 1 Joint Development Activity or (C) a Party desires to access data generated by a Clinical Trial or Development activity performed independently by the other Party, such Party (the “Buy-In Party”) may obtain access to and use of all clinical and non-clinical data generated pursuant to the relevant Clinical Trial or Development activity (the “Buy-In Data”), as if such Party had co-funded such Clinical Trial or Development activity from the outset, in accordance with the following procedure: At least on a semi-annual basis, the Party participating in a Clinical Trial or Development activity pursuant to Section 5.3(a) shall update the Buy-In Party on the status of such Clinical Trial or Development activity, including a summary of relevant Buy-In Data. At any time, the Buy-In Party may provide the other Party with notice of its election to participate in such Clinical Trial or Development activity, and promptly thereafter the other Party shall provide the Buy-In Party with an invoice for [**] of the Development Costs incurred by the other Party in the generation of such clinical data as of the date of the Buy-In Party’s written request, which invoice the Buy-In Party shall pay within [**] after receipt. Thereafter, to the extent the Development activity has not been completed, the Buy-In Party shall be responsible for [**] of the Development Costs incurred by the other Party through to completion of such Development activity. Such payment shall entitle the Buy-In Party to (1) use the Buy-In Data to the same extent as such Party would have been permitted to use such Buy-

In Data if it had co-funded such Clinical Trial or Development activity as a Program 1 Joint Development Activity from the outset under Section 5.3(b), and (2) the rights set forth in Section 5.3(e). The other Party shall, as applicable, provide copies of, and/or a Right of Reference or Use of, the requested Buy-In Data to the Buy-In Party promptly after receipt of the invoiced amount.

(ii)     For the avoidance of doubt, the buy-in right pursuant to this Section 5.3(d) does not include the right to operational participation in the conduct of the Clinical Trial or Development activity unless, at the sole discretion of the Party that initiated the Clinical Trial or Development activity, such Party grants operational participation to the Buy-In Party.

(iii)     In the event the Buy-In Party fails to meet any payment obligation pursuant to this Section 5.3(d), and such failure continues for [**] after the original due date of the payment, until such delinquency is cured, the Buy-In Data with respect to such exercise of the buy-in right shall not be shared with the Buy-In Party. In the event such delinquency is not cured within such [**] period, the Buy-In Party’s notice of election to participate shall be considered void.

(iv)     With respect to Buy-In Data falling within Section 5.3(d)(i)(C), such Buy-In Data will not be included, with respect to Program 1, within (A) the Merus Know-How for purposes of Section 2.3 (where Incyte is the Buy-In Party) or (B) the Incyte Know-How for purposes of Section 2.4 (where Merus is the Buy-In Party), until the Buy-In Party has fully satisfied its payment obligations with respect to such Buy-In Data under this Section 5.3(d). Following payment, such Buy-In Data will be included for Program 1 within the Merus Know-How, or the Incyte Know-How, as applicable, that is licensed to the other Party under this Agreement.

(v)     If a Party does not buy in pursuant to this Section 5.3(d), then such Party shall have no right to obtain access to or to use the Buy-In Data in accordance with Section 5.3(e) below, except to the extent such Buy-In Data is relevant to or necessary to address issues relating to the safety of the Program 1 Product, including data relating to adverse effects associated with the Program 1 Product and safety related clinical, manufacturing and controls activities relating to the Program 1 Product, in each case solely (A) to the extent required to be reported to or made available to Regulatory Authorities in such Party’s Territory, and (B) solely in such countries where such Party has the right to Develop and Commercialize the Program 1 Product.

(e)       Rights to Data and Documentation. With respect to any Program 1 Joint Development Activities or where the Buy-In Party buys in:

(i)     Subject to Section 5.3(d), each Party shall have the right to possess, retain and use all clinical and non-clinical data and related Regulatory Documentation Controlled by either Party and generated in the course of Program 1 Joint Development Activities in order to Develop, obtain Regulatory Approval for and Commercialize the Program 1 Product in such Party’s territory in accordance with the terms of this Agreement;

(ii)     Each Party hereby grants to the other Party a Right of Reference or Use to any and all such Regulatory Documentation, and agrees to sign, and cause its Affiliates to sign, from time to time, promptly upon request, any instruments reasonably requested by such other Party in order to effect such grant;

(iii)     Each Party shall maintain complete and accurate records of all results, data, Development Costs and developments made pursuant to its efforts under the Program 1 Joint Development Plan. Such records shall appropriately reflect all work done and results achieved in the performance of Program 1 Joint Development Activities in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes;

(iv)     In any agreement between either Party and a clinical research organization related to a Program 1 Joint Development Activity, the contracting Party shall use reasonable efforts to name the other Party as a third party beneficiary for the purpose of receiving data derived from Clinical Trials related to such Program 1 Joint Development Activity from such clinical research organization; and

(v)     Each Party shall be invited to and shall have the right to have a reasonable number of its representatives join in calls and meetings with vendors and contractors performing Program 1 Joint Development Activities on behalf of the other Party.

5.4       [**] Antibody Co-Development Option.

(a)     [**] Co-Development Option. At any time following Candidate Nomination for a [**] Program, and with respect to only one [**] Program or [**] Program that is a Novel Program, Merus shall have the option (the “[**] Co-Development Option”) to co-Develop [**] Products arising from such [**] Program (i.e., that are directed to the [**] Target Pair that is the subject of such [**] Program or Novel Program, as applicable). The [**] Co-Development Option shall be exercisable by Merus by providing Incyte written notice any time after Program Selection for the applicable [**] Program, but no later than [**] prior to the anticipated date of the FPFV for the first Clinical Trial for the first [**] Antibody arising from such [**] Program, of which Incyte shall inform Merus in writing (the “[**] Option Period”). For clarity, unless Section 5.5 applies, (i) Merus is not required to exercise the [**] Co-Development Option for the first [**] Program anticipated to reach FPFV, or at all, but Merus may only exercise the [**] Co-Development Option once, for a single [**] Program (or Novel Program, as applicable) and (ii) if Merus does not exercise the [**] Co-Development Option for any [**] Program within the applicable [**] Option Period, then products arising from such [**] Program will thereafter be [**] Non-Co Products and will not be available for substitution under Section 5.4(e).

(b)     [**] Co-Development Plan and Budget. Upon or before the earlier of (i) [**] following Merus’s exercise of the [**] Co-Development Option or (ii) if Merus has not yet exercised the [**] Co-Development Option, no later than [**] prior to expected FPFV for the first Clinical Trial (with an update provided one time upon Merus’s request during such [**] period), Incyte shall present to the [**] JDC for consideration the then-current draft of the [**] Co-Development Plan for each [**] Co-Development Product (or the then current development plan and budget for the applicable [**] Product if the [**] Co-Development Option has not been

exercised. Merus may provide comments on the [**] Co-Development Plan and [**] Co-Development Budget, and Incyte shall consider such comments in good faith; provided that the [**] Co-Development Plan and [**] Co-Development Budget (and any amendments thereto) shall be prepared and approved by Incyte in its sole discretion. For so long as there is a [**] Co-Development Program, Incyte will present any proposed amendments to the [**] Co-Development Plan to the [**] JDC for discussion at least annually, prior to [**] of each Calendar Year.

(c)     [**] Co-Development Cost Share and Profit Share. If Merus exercises the [**] Co-Development Option, Merus shall be responsible for co-funding thirty-five percent (35%) of Incyte’s global Development Costs for such [**] Program that are incurred after the exercise of the [**] Co-Development Option. Upon Merus’s exercise of the [**] Co-Development Option, Section 9.6 shall apply to such [**] Co-Development Product, provided that, if Merus fails to timely pay any Development Costs due with respect to a [**] Co-Development Program as required in Section 5.4(d) within [**] of notice of such failure, the following shall apply at the end of such [**]: (i) such Program shall no longer be a [**] Co-Development Program or [**] Co-Development Product under this Agreement, (ii) Merus will be deemed to have delivered a [**] Co-Funding Termination Notice with respect to such Program under Section 5.4(f), (iii) Section 5.4(f), Section 9.2(a)(ii) and Section 9.3(b)(ii) (rather than Section 9.6) shall apply to Licensed Products arising from such Program, and (iv) Merus’s obligation to co-fund Development Costs for such [**] Program shall cease.

(d)     Payment; Reporting. Within [**] following the end of each Calendar Quarter after Merus has exercised the [**] Co-Development Option, Incyte shall prepare and deliver to Merus a [**] report detailing its Development Costs incurred during such period with respect to the [**] Co-Development Program together with an invoice for thirty-five percent (35%) of such Development Costs identified. Merus shall pay all undisputed amounts payable under any such invoice within [**] after its receipt of such invoice, provided that, with respect to any Development Costs incurred by Incyte in relation to the [**] Co-Development Product in excess of [**] of the then-approved [**] Co-Development Budget without prior notification to Merus and the approval of the [**] JDC (and if not approved by the [**] JDC, the JSC), Merus shall be required to pay any undisputed excess amounts within [**] after its receipt of the invoice including such excess costs. Merus shall have the right to audit the records of Incyte with respect to any purported Development Costs included in such reports, in accordance with Section 9.8.

(e)     [**] Co-Development Product Substitution. If Incyte terminates this Agreement with respect to a [**] Co-Development Program and advances an alternative [**] Program pursuant to Section 4.8(b), then Merus shall have the right to exercise the [**] Co-Development Option with respect to such alternative [**] Program; provided that, to exercise the [**] Co-Development Option on such alternative [**] Program, Merus must (i) be current on reimbursement of its share of Development Costs for the [**] Co-Development Program, (ii) provide written notice of such exercise to Incyte any time after Program Selection for such alternative [**] Program, but no later than [**] prior to the anticipated date of the FPFV for the first Clinical Trial for the first [**] Antibody arising from such alternative [**] Program, of which Incyte shall inform Merus in writing, and (iii) reimburse Incyte for [**] of all Research Costs and Development Costs then-incurred by Incyte. 

(f)     Termination of [**] Co-Funding. At any time following the exercise of the [**] Co-Development Option, Merus may provide written notice to Incyte indicating that Merus wishes to permanently cease co-funding the [**] Co-Development Program (the “[**] Co-Funding Termination Notice”) (it being understood that such notice shall be deemed to have been delivered in accordance with Section 5.4(c)(ii)). Effective as of the date of the Co-Funding Termination Notice (the “[**] Co-Funding Termination Date”), the [**] Co-Development Program shall be a [**] Non-Co Program, there shall be no [**] Co-Development Program under this Agreement, and from and after the [**] Co-Funding Termination Date, Section 9.2(a)(ii) shall apply to the [**] Non-Co Program [**] the [**] Co-Funding Termination Date. After the [**] Co-Funding Termination Date, Incyte shall pay Merus an additional royalty at the applicable rate set forth in the table below on Annual Net Sales of the [**] Non-Co Product in the United States under such [**] Non-Co Program that was formerly the [**] Co-Development Program in addition to any royalties that are due on Annual Net Sales of such [**] Non-Co Product in the United States pursuant to Section 9.3(b)(ii) (e.g., if [**] of the [**] Costs, additional Development Costs for such Additional Co-Development Program and applicable Net Losses, if any, are paid by Merus, Merus will receive a royalty of [**] on Annual Net Sales of [**] Non-Co Product in the United States plus the amount specified in Section 9.3(b)(ii)), with the applicable additional royalty rate determined as set forth in the table below.

The determination of whether Merus has paid greater than its share of [**] of the [**] Costs shall be made by Incyte promptly after [**] based on the [**] Costs. If the [**] Co-Funding Termination Notice is delivered following [**] and Merus has paid less than its share of [**] of the actual [**] Costs but paid more than its share of [**] of the amount [**] Costs, then promptly following the completion and finalization of actual [**] Costs, Incyte shall provide written notice to Merus of such actual [**] Costs and Merus shall have the right to reimburse Incyte within [**] after receipt of such notice for additional Development costs for the [**] Co-Development Program so that it has paid its share of [**] of such actual [**] Costs. After Incyte’s timely receipt of such

reimbursement, Merus shall receive the [**] additional royalty set forth in the table above. If Merus does not timely make such reimbursement, Merus shall receive the [**] additional royalty set forth in the table.

5.5       Additional Co-Development Options.  

(a)     Additional Co-Development Options. In addition to the rights granted to Merus in connection with the [**] Co-Development Option, Merus shall have the option to co-fund Development of Licensed Products arising from up to [**] additional Programs (each, an “Additional Co-Development Option”) under this Agreement as follows:

(i)     Provided that [**] Novel Programs [**], Merus shall have the right to exercise an Additional Co-Development Option for the [**] Novel Program (including any Novel Program selected after Program 1, Program 2 or all [**] Programs become Dropped Programs) under this Agreement [**] during the Research Term.

(ii)     During the Research Term, if [**] becomes a Dropped Program, then, Merus shall have the right to exercise an Additional Co-Development Option for the Novel Program (which may cover a [**] Target Pair if included under the Novel Program Cap) that is the [**] Novel Program (including in such count the Program that replaces [**], any Novel Program that [**] and any Novel Program that replaces [**] Programs) under this Agreement [**] during the Research Term.

(b)     Exercise of an Additional Co-Development Option.  

(i)     An Additional Co-Development Option shall be exercisable by Merus by providing Incyte written notice any time after Program Selection for the Novel Program falling within Section 5.5(a)(i) or 5.5(a)(ii), as applicable, but no later than [**] after the end of the Research Term in the case of Section 5.5(a)(i) or [**] prior to [**] in the case of Section 5.5(a)(ii), which date Incyte shall inform Merus of in writing, (the “Additional Option Period”). For clarity, (i) Merus is not required to exercise either Additional Co-Development Option, (ii) a Novel Program to which an Additional Co-Development Option applies may cover a [**] Target Pair to the extent permitted in Section 4.3(b), and (iii) if Merus does not exercise an Additional Co-Development Option within the applicable Additional Option Period, then Licensed Products arising from such Novel Program will be Novel Program Products or [**] Non-Co Products and not Additional Co-Development Products.

(c)     Additional Co-Development Plans. Upon or before the earlier of (i) [**] following Merus’s exercise of an Additional Co-Development Option, or (ii) if Merus has not yet exercised an applicable Additional Co-Development Option, no later than [**] prior to [**] (with an update provided one time upon Merus’s request during such [**]) for the applicable Novel Program that is eligible for the exercise of the Additional Co-Development Option, Incyte shall present to the JSC for consideration the then current draft of the Additional Co-Development Plan for such Additional Co-Development Product, and Merus shall have the right to provide comments on such Additional Co-Development Plan and the associated Additional Co-Development Budget, and Incyte shall consider such comments in good faith; provided that the Additional Co-

Development Plan and Additional Co-Development Budget (and any amendments thereto) shall be prepared and approved by Incyte in its sole discretion. For so long as there is an applicable Additional Co-Development Program, Incyte shall present any proposed amendments to each Additional Co-Development Plan to the Additional JDC for discussion at least annually, prior to [**] of each Calendar Year.

(d)     Additional Co-Development Cost Share and Profit-Share. Following the exercise of the Additional Co-Development Option, Incyte shall prepare and deliver to Merus a report covering the Research Costs and Development Costs incurred for the applicable Program prior to exercise of such Additional Co-Development Option and Merus shall reimburse Incyte for [**] of such costs within [**] of invoicing by Incyte. Thereafter, Merus shall be responsible for co-funding thirty-five percent (35%) of Incyte’s global Development Costs for such Additional Co-Development Program that are incurred after the exercise of the Additional Co-Development Option. Upon Merus’s exercise of an Additional Co-Development Option, Section 9.6 shall apply to such Additional Co-Development Product; provided that provided that if Merus fails to timely pay any Development Costs due with respect to an Additional Co-Development Program as required in this Section 5.5(d) within [**] of notice of such failure, the following shall apply at the end of such [**]: (i) such Program shall no longer be an Additional Co-Development Program under this Agreement, (ii) Merus will be deemed to have delivered an Additional Co-Funding Termination Notice with respect to such Program under Section 5.5(f), (iii) Section 5.5(f), Section 9.2(a)(ii) and Section 9.3(b)(ii) (rather than Section 9.6) shall apply to Licensed Products arising from such Program, and (iii) Merus’s obligation to co-fund Development Costs for such Additional Program shall cease. Notwithstanding the foregoing, with respect to any Development Costs incurred by Incyte in relation to the Additional Co-Development Product in excess of one [**] of the then-approved Additional Co-Development Budget without prior notification to Merus and the approval of the Additional JDC (and if not approved by the Additional JDC, the JSC), Merus shall be required to pay any undisputed excess amounts within [**] after its receipt of the invoice including such excess Development Costs.

(e)     Reporting. Within [**] following the end of each Calendar Quarter after Merus has exercised the Additional Co-Development Option, Incyte shall prepare and deliver to Merus a [**] report detailing its Development Costs incurred during such period with respect to such Additional Co-Development Program together with an invoice for thirty-five percent (35%) of such Development Costs identified. Merus shall pay all undisputed amounts payable under any such invoice within [**] after its receipt of such invoice. Merus shall have the right to audit the records of Incyte with respect to any purported Development Costs included in such reports, in accordance with Section 9.8.

(f)     Termination of Additional Co-Development Program Co-Funding. At any time following the exercise of any Additional Co-Development Option, Merus may provide written notice to Incyte indicating that Merus wishes to permanently cease co-funding the applicable Additional Co-Development Program (the “Additional Co-Funding Termination Notice”) (it being understood that such notice shall be deemed to have been delivered in accordance with Section 5.5(d)(ii)). Effective as of the date of the Co-Funding Termination Notice (the “Additional Co-Funding Termination Date”), such Program shall no longer be an Additional Co-Development Program, and from and after the Additional Co-Funding Termination Date,

Section 9.2(a)(ii) shall apply [**] the Additional Co-Funding Termination Date. After the Additional Co-Funding Termination Date, Incyte shall pay Merus an additional royalty at the applicable rate set forth in the table below on Annual Net Sales in the United States of the applicable Novel Program Product under the Program that was formerly the Additional Co-Development Program in addition to any royalties that are due on such Novel Program Product pursuant to Section 9.3(b)(ii) (e.g., if [**] of the Additional Pivotal Period Costs, additional Development Costs for such Additional Co-Development Program and applicable Net Losses, if any, are paid by Merus, Merus will receive a royalty of [**] on Annual Net Sales of the Additional Non-Co Product in the United States plus the amount specified in Section 9.3(b)(ii))), with the applicable additional royalty rate determined as set forth in the table below.

The determination of whether Merus has paid greater than its share of [**] of the [**] Costs shall be made by Incyte promptly after [**] based on the [**] Costs. If the Additional Co-Funding Termination Notice is delivered following [**] and Merus has paid less than its share of [**] of the actual [**] Costs but paid more than its share of [**] of the amount [**] Costs, then promptly following the completion and finalization of actual [**] Costs Incyte shall provide written notice to Merus of such actual [**] Costs and Merus shall have the right to reimburse Incyte within [**] after receipt of such notice for additional Development costs for the Additional Co-Development Program so that it has paid its share of [**] of such actual [**] Costs. After Incyte’s timely receipt of such reimbursement, Merus shall receive the [**] additional royalty set forth in the table above. If Merus does not timely make such reimbursement, Merus shall receive the [**] additional royalty set forth in the table.

5.6       Development Reports. 

(a)     Merus shall provide the Program 1 JDC with a written report (which may be in PowerPoint or other format) at least [**] summarizing in reasonable detail Merus’s and its Affiliates’ activities and progress related to the Development of the Program 1 Product in the United States, including information concerning the conduct of non-clinical activities and Clinical Trials, applications for and securing of Regulatory Approvals, First Commercial Sale of such Licensed Products on a country-by-country basis and any future planned Development activities.

(b)     Incyte shall provide the Program 1 JDC, [**] JDC or Additional JDC, as applicable, with a written report (which may be in PowerPoint or other format) at least [**] summarizing in reasonable detail Incyte’s and its Affiliates’ and sublicensees’ activities and progress related to the Development of (i) Program 1 Products in the Incyte Territory and (ii) the [**] Co-Development Product and an Additional Co-Development Product worldwide, including information concerning the conduct of non-clinical activities and Clinical Trials, applications for and securing of Regulatory Approvals, First Commercial Sale of such Licensed Products and any future planned Development activities.

5.7       Regulatory Matters Related to Licensed Products.

(a)        Regulatory Submissions. Merus shall develop, produce, oversee, monitor and coordinate all regulatory actions, communications and filings with, and submissions to, the FDA with respect to the Program 1 Product in the United States; provided that Merus shall [**] to enable Incyte to [**]. Incyte shall oversee, monitor and coordinate all regulatory actions, communications and filings with, and submissions to: (i) except as provided above, all Regulatory Authorities with respect to the Program 1 Product, provided that Incyte shall [**] to enable Merus to [**], and (ii) all Regulatory Authorities with respect to the Program 2 Product, [**] Products, and Novel Program Products, provided that with respect to the [**] Co-Development Products and an Additional Co-Development Product, if any, Incyte shall provide Merus with copies of [**] to enable Merus to [**]. Each Party shall keep the Program 1 JDC, and Incyte shall keep the [**] JDC and Additional JDC, reasonably informed in connection with the preparation of all Regulatory Documentation, Regulatory Authority review of Regulatory Documentation, and Regulatory Approvals, annual reports, annual re-assessments, and variations and labeling, in each case with respect to the Program 1 Product, the [**] Co-Development Product, or an Additional Co-Development Product, if any, as applicable; provided that the providing Party shall have the right to redact any information to the extent not related to the Program 1 Products, the [**] Co-Development Products, or an Additional Co-Development Product, if any. Each Party shall respond within a reasonable time frame to all reasonable inquiries by the other Party with respect to any information provided pursuant to this Section 5.7(a). Unless already the Confidential Information of a Party, any information disclosed pursuant to this Section 5.7(a) shall be the Confidential Information of the Disclosing Party.

(b)       Regulatory Meetings and Correspondence.

(i)     Merus shall be responsible for interfacing, corresponding and meeting with the FDA with respect to Program 1 Product in the United States. Incyte shall be responsible for interfacing, corresponding and meeting with: (A) all Regulatory Authorities with

respect to the Program 1 Products in the Incyte Territory and (B) all Regulatory Authorities with respect to the Program 2 Product, [**] Products, and Novel Program Products.

(ii)     The Party not responsible for interfacing, corresponding and meeting with the applicable Regulatory Authorities in a country with respect to the Program 1 Products shall have the right to have a senior, experienced employee reasonably acceptable to the responsible Party, participate as an observer in material or scheduled face-to-face meetings, video conferences and any teleconferences, involving participation of personnel beyond regulatory experts, with Regulatory Authorities in the Major Markets, and shall be provided with advance access to the responsible Party’s material documentation prepared for such meetings. Prior to submission of material correspondence to the applicable Regulatory Authority, the responsible Party shall, sufficiently in advance for the other Party to review and comment, provide the other Party any material correspondence with Regulatory Authorities in the Major Markets related to such meetings. The responsible Party shall also provide the other Party with copies of any material correspondence with Regulatory Authorities in the Major Markets relating to Development of, or the process of obtaining Regulatory Approval for, the Program 1 Product, and respond within a reasonable time frame to all reasonable inquiries by the other Party with respect thereto.

(c)       Global Safety Database; Pharmacovigilance Agreement. Incyte shall establish, hold and maintain the global safety database for Program 1 Product (the “Global Safety Database”) into which it shall enter information on all adverse events concerning the Program 1 Product occurring anywhere in the world and reported to either of the Parties in accordance with a pharmacovigilance agreement for the Program 1 Product to be negotiated and entered into by the Parties at least [**] prior to FPFV for the first Clinical Trial (each, a “Pharmacovigilance Agreement”). Pursuant to the terms of the Pharmacovigilance Agreement, such database shall comply in all material respects with all Laws reasonably applicable to pharmacovigilance anywhere the Program 1 Product is being or has been Developed or Commercialized. The Pharmacovigilance Agreement shall, among other things, govern cooperation between the Parties that will enable each of them to comply with its respective obligations under applicable Laws with regard to adverse event data collection, analysis and reporting to Regulatory Authorities and to enable each Party to satisfy its duty of care, and to govern the Global Safety Database. Pursuant to the terms of the Pharmacovigilance Agreement, Merus shall have access and rights to use the Global Safety Database, and each Party shall provide information on all adverse events concerning Program 1 Product for the Global Safety Database.

5.8       Recall or Withdrawal of Program 2 Product, [**] Products and Novel Program Products. Incyte shall be responsible for all recalls, withdrawals and market notifications of the Program 2 Product, [**] Products and Novel Program Products worldwide.

5.9       Recall or Withdrawal of the Program 1 Product. If any Regulatory Authority threatens or initiates any action to remove the Program 1 Product from the market anywhere in the world, the Party receiving notice thereof shall notify the other Party of such communication immediately, but in no event later than [**], after receipt thereof. Notwithstanding the foregoing, in all cases Incyte (acting as the holder of the Regulatory Approval in the Incyte Territory) shall determine whether to initiate any recall, withdrawal or market notification of the Program 1 Product in the Incyte Territory, and Merus, as holder of the Regulatory Approval in the United

States shall determine whether to initiate any such recall, withdrawal or market notification of the Program 1 Product in the United States, including the scope of such recall or withdrawal (e.g., a full or partial recall, or a temporary or permanent recall) or market notification; provided, however that before Incyte or Merus (as the case may be) initiates a recall, withdrawal or market notification, the Parties shall promptly meet and discuss in good faith the reasons therefor, provided that such discussions shall not delay any action that Incyte or Merus (as the case may be) reasonably believes has to be taken in relation to any recall, withdrawal or market notification. In the event of any such recall, withdrawal or market notification, Incyte or Merus (as the case may be), as the holder of the Regulatory Approval in its respective territory, shall determine the necessary actions to be taken in its territory, and, shall implement such action, with the other Party providing reasonable input (which the first Party shall in good faith consider and incorporate into any recall, withdrawal or market notification strategy) and reasonable assistance, to conduct such recall, withdrawal or market notification. Each Party shall be responsible for all recall, withdrawal or market notification related costs it incurs in connection with its respective territory.

ARTICLE VI     
PRECLINICAL, CLINICAL AND COMMERCIAL SUPPLY

6.1       Manufacturing Technology Transfer.  Within [**] after the Effective Date with respect to Program 1 and Program 2, and as reasonably requested by Incyte at any time following the designation of a Program hereunder, Merus, through the JMC, shall transfer to Incyte (and/or its designated Affiliates or contractors) Merus’s manufacturing technology for the applicable Licensed Antibodies and shall provide to Incyte copies or tangible embodiments of all data, information, materials and Know-How included within such manufacturing technology for such Licensed Antibodies. In addition, upon the request of Incyte from time-to-time during the Term, Merus shall provide to Incyte (and/or its designated Affiliates or contractors) such reasonable technical assistance, at Incyte’s cost for any material activities, as Incyte may request in connection with the manufacture of the applicable Licensed Antibodies. With respect to Program 1, the costs related to any manufacturing technology transfer under this Section 6.1 are Development Costs.

6.2       Pre-Clinical Supply. Unless otherwise mutually agreed by the Parties, Merus shall be responsible, until completion of the manufacturing technology transfer to Incyte, for preclinical manufacture and supply of Program 1 Antibody and Program 2 Antibody (and any other Licensed Antibody for which Merus has commenced manufacturing activities for Bi-Specific Constructs with respect to such Licensed Antibody), with reasonable amounts and lead time provided by the JRC. The costs of such preclinical manufacture and supply of Program 1 Antibody are Development Costs. The costs of such preclinical manufacture and supply of Program 2 Antibody and any other Licensed Antibody are Research Costs.

6.3       Program 1 Clinical and Commercial Product Supply.  

(a)       Process Development. The Parties shall coordinate through the JMC for the joint development and establishment of the manufacturing process that the Parties intend to use globally with respect to Program 1 Product (the “Program 1 Joint Manufacturing Process”), which shall include processes for both early-stage clinical supply (i.e., Phase I Study and Phase 2 Studies) and for late-stage clinical (i.e., Phase III Studies) and commercial supply of Program 1 Product.

Incyte shall be the lead Party for the development and establishment of such Program 1 Joint Manufacturing Process, including the preparation of a plan therefor, which may include the engagement of one or more Third Party contract manufacturing organizations to perform activities, including process development, scale up and manufacturing, in relation to Program 1 Product. The Parties shall jointly make all decisions regarding the Program 1 Joint Manufacturing Process, notwithstanding anything to the contrary in this Agreement. The development and establishment of the Program 1 Joint Manufacturing Process is a Development Cost. If the Parties fail to agree on a Program 1 Joint Manufacturing Process and the Parties are unable to resolve such dispute within a reasonable period of time, then each Party may independently develop a manufacturing process for Program 1 Product for its respective territory (i.e., Merus in the United States and Incyte in the Incyte Territory). If the Parties elect to develop separate manufacturing processes for Program 1 Product, each Party shall thereafter be solely responsible for manufacture of Program 1 Product in its respective territory.

(b)       Technology Transfer of Program 1 Joint Manufacturing Process. If the Parties develop a Program 1 Joint Manufacturing Process, and to the extent that a Party has manufacturing technology for such Program 1 Joint Manufacturing Process, such Party shall, upon the other Party’s written request (i) transfer to the requesting Party (or its Affiliates, sublicensees or designated Third Party contract manufacturer) the manufacturing technology and copies or tangible embodiments of all data, information, materials and Know-How covering the Program 1 Joint Manufacturing Process (“Program 1 Joint Manufacturing Technology”), and (ii) provide to the requesting Party reasonable technical assistance in relation to the establishment of such Program 1 Joint Manufacturing Process in such Party’s territory. Each Party shall grant, and hereby grants to the other Party co-exclusive (with rights to grant sublicenses to contract manufacturers), royalty-free, non-terminable license for so long a Party is Developing, using, or Commercializing Program 1 Product in its territory, with the right to grant sublicenses through multiple tiers (in accordance with the terms and conditions of this Agreement), in and to (A) in the case of Incyte’s license to Merus, the Incyte IP necessary or useful to practice the Program 1 Manufacturing Technology, and (B) in the case of Merus’s license to Incyte, the Merus IP necessary or useful to practice the Program 1 Joint Manufacturing Technology, in each case of (A) and (B), to the extent necessary for each Party and its Affiliates and designated contract manufacturers to manufacture and have manufactured anywhere in the world Program 1 Antibody and Program 1 Product for development, use and commercialization in such Party’s territory. The costs associated with performing the technology transfer activities and providing the technical assistance described in (i) above shall be Development Costs. Merus may request two Program 1 Joint Manufacturing Process technology transfer for early-stage clinical supply and two for late-stage clinical/commercial supply of Program 1 Product.

(c)       Clinical Supply.  

(i)     Generally. The Parties shall cooperate to mutually establish one or more sources of supply for the clinical supply of the Program 1 Antibody and Program 1 Product. Upon request of either Party, Incyte may negotiate and enter into a clinical supply agreement, for supply of Program 1 Antibody and Program 1 Product for use in Clinical Trials, including formulation and CMC work which shall be included within Program 1 Joint Development Activities. Incyte shall permit Merus to review and comment on any such supply agreement prior

to execution, and shall consider Merus’s comments in good faith. If the Parties have agreed on a Program 1 Joint Manufacturing Process, the Parties shall discuss through the JMC, taking into account restrictions imposed by Third Parties, which of the following would be the most suitable mechanism for Merus to secure supply: (A) Merus becomes a party to such Third Party supply agreement for the purposes of obtaining its clinical supply of Program 1 Antibody and Program 1 Product, (B) Merus negotiates with and enter into a supply agreement directly with such Third Party with whom Incyte has entered into a supply agreement Incyte for the purposes of obtaining Merus’s clinical supply of Program 1 Antibody and Program 1 Product at the same cost at which Incyte is obtaining its clinical supply of Program 1 Antibody and Program 1 Product, or (C) the Parties negotiate a supply agreement pursuant to which Incyte will supply Merus with such Program 1 Antibody and Program 1 Product at Incyte’s Manufacturing Cost if Incyte is manufacturing Program 1 Antibody and Program 1 Product.

(ii)     Joint Activities. The Parties shall cooperate to mutually agree on supply of Program 1 Antibody and Program 1 Product for Program 1Joint Development Activities reasonably prior to such Joint Development Activity and based on a reasonable, mutually agreed allocation. Incyte shall be the lead Party for clinical supply for any Program 1Joint Development Activities, provided that Incyte shall consult with Merus and shall consider Merus’s comments in relation to such clinical supply activities in good faith and accommodate any reasonable request by Merus to provide Program 1 Antibody and Program 1 Product for Program 1 Joint Development Activities. All such manufacture will be conducted as a Program 1 Joint Development Activity in accordance with the Program 1 Manufacturing Plan and costs thereof treated as Development Costs.

(iii)     Independent Activities.  Each Party shall be responsible (itself or through an Affiliate or Third Party contract manufacturer), at its discretion and expense, for manufacture and clinical supply of Program 1 Antibody and Program 1 Product for use in independent clinical Development activities for such Party’s territory. If either Party wishes to use the same manufacturer for clinical supply as that used by the other Party, such Party may make such a request in writing, and the other Party shall use reasonable efforts to assist such first Party in accessing such manufacturer for clinical supply of Program 1 Antibody and Program 1 Product.

(iv)     Supply Shortage. If there is insufficient clinical supply of Program 1 Antibody or Program 1 Product to satisfy planned or ongoing Clinical Trials in both the United States and the Incyte Territory at any given time, the Party responsible for supplying such clinical supply shall make half of such supply available for the United States and half available for the Incyte Territory (or such other allocation as may be mutually agreed by the Parties).

(d)       Commercial Supply. Each Party shall be responsible for, and have the right to manufacture and supply (itself or through a Third Party contract manufacturer) at its cost, all Program 1 Antibody and Program 1 Product for commercialization purposes in such Party’s territory. If the Parties agreed on a Program 1 Joint Manufacturing Process, Incyte shall lead process development for commercial supply in accordance with Section 6.3(a) and the Parties shall coordinate through the JMC to determine second source and supply continuity matters applicable to each Party’s territory with each Party having the right to determine the supply chain for its respective territory. All costs of either Party for such process development will be treated as

Development Costs. The Parties may also mutually agree that one Party shall be responsible for commercial supply of Program 1 Product and Program 1 Antibody worldwide, and in such case the Parties shall cooperate in good faith to agree upon the terms of such supply, which may include either Party or both Parties entering into a commercial supply agreement with a Third Party contract manufacturer for such supply. Whichever Party the Parties determine that will manufacture Program 1 Antibody and Program 1 Product for commercialization, the other Party may request that the manufacturing Party supply such Program 1 Antibody and Program 1 Product to such other Party. Upon such Party’s request for supply of Program 1 Antibody and Program 1 Product, the Parties shall negotiate in good faith a commercial supply agreement that provides for the manufacturing Party to supply such other Party with Program 1 Antibody and Program 1 Product for Commercialization purposes at the [**], as well as other customary terms and provisions. If the Parties agree to contract with a Third Party contract manufacturer for commercial supply of Program 1 Antibody and Program 1 Product, [**] shall lead such negotiations, shall permit [**] to review and comment on any draft supply agreements, and shall consider [**] comments in good faith. [**] may request, and [**] shall consider, at its discretion, that [**] becomes a party to such Third Party supply agreement for the purposes of obtaining its commercial supply of Program 1 Antibody and Program 1 Product.

(e)       Technology Transfer of [**] Program 1 Manufacturing Process.  If either Party is [**] manufacturing or having manufactured Program 1 Product, such Party shall, upon the other Party’s written request made from time to time, (i) [**] and (ii) provide to the requesting Party [**]. The requesting Party shall reimburse the transferring Party for [**] of the transferring Party’s costs with respect to [**] Program 1 manufacturing process.

6.4      Program 2, [**] Programs and Novel Program Clinical and Commercial Product Supply. Incyte shall be responsible (itself or through an Affiliate or Third Party) for all clinical and commercial supply of Licensed Antibodies and Licensed Products for Program 2, all [**] Programs, and Novel Programs, including all activities related to such manufacture. The Manufacturing Costs for research activities in an applicable Research Plan for the [**] Co-Development Product and any Additional Co-Development Product shall be deemed Development Costs.

ARTICLE VII      
COMMERCIALIZATION AND CO-DETAILING OPTION

7.1       Commercialization Diligence.  

(a)     Program 1 Product. Merus shall use Commercially Reasonable Efforts to Commercialize the Program 1 Product for at least one Indication in the United States after receipt of Regulatory Approval therefor. Incyte shall use Commercially Reasonable Efforts to Commercialize the Program 1 Product for at least one Indication in the Non-U.S. Major Markets after receipt of Regulatory Approval therefor.

(b)     Program 2, [**] Products and Novel Program Products. Incyte shall use Commercially Reasonable Efforts to Commercialize the Program 2 Product, at least one [**]

Product per [**] Program, and at least one Novel Program Product per Novel Program, in each case for at least one Indication in the Major Markets after receipt of Regulatory Approval therefor.

7.2       Marketing Responsibilities For Licensed Products.

(a)        Program 1 Product.  

(i)     Incyte Territory. Incyte (itself or through its Affiliates or sublicensees) shall have the sole right to Commercialize Program 1 Products in the Incyte Territory, including to invoice and book sales, establish and modify all terms and conditions of sale (including contracting, pricing and discounts) and warehousing, and distribute the Program 1 Products in the Incyte Territory and to perform or cause to be performed all related services. Incyte shall handle all reimbursement, price reporting, returns, order processing, invoicing, collection, distribution, and inventory management with respect to the Program 1 Products in the Incyte Territory.

(ii)     Merus Territory. Merus (itself or through its Affiliates or sublicensees) shall have the sole right to Commercialize Program 1 Products in the United States, including to invoice and book sales, establish and modify all terms and conditions of sale (including contracting, pricing and discounts) and warehousing, and distribute the Program 1 Products in the United States and to perform or cause to be performed all related services. Merus shall handle all reimbursement, price reporting, returns, order processing, invoicing, collection, distribution, and inventory management with respect to the Program 1 Products in the United States.

(iii)     Coordination. The Parties shall coordinate their respective Commercialization activities for Program 1 Products through the Program 1 JCC.

(b)        [**] Products. Subject to Merus’s Co-Detailing Right with respect to the [**] Co-Development Product, if any, Incyte (itself or through its Affiliates or sublicensees) shall have the sole right to Commercialize [**] Products worldwide, including to invoice and book sales, establish and modify all terms and conditions of sale (including contracting, pricing and discounts) and warehousing, and distribute the [**] Products and to perform or cause to be performed all related services. Incyte shall handle all reimbursement, price reporting, returns, recalls, or withdrawals, order processing, invoicing, collection, distribution, and inventory management with respect to the [**] Products globally. Merus may co-Detail the [**] Co-Development Product if any, solely to the extent permitted pursuant to Section 7.3.

(c)        Program 2 Product and Novel Program Products. Incyte (itself or through its Affiliates or sublicensees) shall have the sole right to Commercialize the Program 2 Product and Novel Program Products worldwide. In furtherance thereof, Incyte shall have the sole right to invoice and book sales, establish and modify all terms and conditions of sale (including contracting, pricing and discounts) and warehousing, and distribute the Program 2 Products and Novel Program Products and to perform or cause to be performed all related services. Incyte shall handle all reimbursement, price reporting, returns, recalls, or withdrawals, order processing,

invoicing, collection, distribution, and inventory management with respect to the Program 2 Product, and Novel Program Products.

7.3       Merus Co-Detailing Option for the [**] Co-Development Product.

(a)       Co-Detailing Right. Subject to Merus’s having met its co-funding obligations for the [**] Co-Development Product under this Agreement, Merus shall have a one-time non-exclusive right to Detail the [**] Co-Development Product, in the United States on the terms and conditions set forth in this Section 7.3 (“Co-Detailing Right”). Prior to Merus exercising its Co-Detailing Right, Incyte shall notify Merus in writing as soon as practicable prior to the anticipated launch of the first [**] Co-Development Product in the United States, of which date Incyte shall notify Merus in writing (the “Trigger Notice”) and shall provide Merus, along with such Trigger Notice, Incyte’s then-current Detailing plan and budget (“Detailing Plan” and “Detailing Budget,” respectively) with respect to the [**] Co-Development Product in the United States. Merus may exercise its Co-Detailing Right by providing Incyte written notice at any time within the [**] period following its receipt of the complete Trigger Notice. For clarity, Incyte shall have no obligation to provide any further notification to Merus under this Section 7.3(a) after Merus has exercised its Co-Detailing Right with respect to the [**] Co-Development Program.

(b)       Effects of Exercise of Co-Detailing Right. If Merus exercises its Co-Detailing Right:

(i)     The [**] Co-Development Product shall also be referred to as the “[**] Co-Detailing Product”;

(ii)     Incyte shall, no later than [**] prior to the initial anticipated launch of the [**] Co-Detailing Product in the United States, set out the anticipated number of FTE sales representatives it determines are required for Detailing the [**] Co-Detailing Product in the United States. Merus may elect within [**] of receipt of the foregoing information to be responsible for up to [**] but not less than [**] of the Details based on a primary detail equivalent to be set forth in the [**] Co-Detailing Plan for the [**] Co-Detailing Product in the United States. Once Merus has elected a percentage of Details in the range above, such percentage shall remain unchanged unless mutually agreed by the Parties. The Parties shall review and discuss any proposed changes to the aggregate Detailing effort through the [**] JCC with any updates to be provided in the [**] Co-Detailing Plan sufficiently in advance of any material change in Detailing level;

(iii)     It is understood that any Co-Detailing Plan shall include [**], and a [**] between the Parties; provided that if such product is Detailed by a Party’s sales representatives in the [**], the [**] by or on behalf of a Party to such sales representative for such [**] shall be [**] of the [**] to such sales representative under such sales representative’s [**] offered by or on behalf of such Party;

(iv)     Merus shall be responsible for its costs in conducting co-Detailing activities as well as [**] in accordance with Section 7.3(b)(v); provided that such costs shall be included in Allowable Expenses subject to the terms thereof;

(v)     Merus’s sales representatives will be included in all training programs with respect to the [**] Co-Detailing Product that Incyte provides to its own sales representatives who are Detailing the [**] Co-Detailing Product. Such training shall be provided by Incyte to Merus [**], provided that Merus shall be responsible for [**] to that [**], including any [**] that may be incurred by [**] the [**]; provided that [**] subject to the terms thereof. Merus representatives conducting Detailing activities must do so in accordance with such training and Incyte’s standard operating procedures as provided in writing to Merus;

(vi)     Incyte shall provide Merus’s sales representatives with the same promotional materials (including any updates thereto), including literature and samples, as Incyte provides to its own similarly-situated representatives, and shall make available to Merus’s sales representatives the same information and at that same time as supplied to Incyte’s own sales representatives with respect to ex-factory sales, dispensing and distribution data, reimbursement data and the like;

(vii)     All training and promotional materials for the [**] Co-Detailing Product (including messaging) shall be subject to approval by Incyte and presented to the [**] Joint Commercialization Committee. Merus shall promote the [**] Co-Detailing Product in accordance with the standards reasonably established by Incyte for the [**] Co-Detailing Product as applicable to the Incyte representatives and provided in writing to Merus, or Merus’s own standards if more stringent and with prior notice to Incyte; and

(viii)     The costs of the foregoing Detailing activities are Allowable Expenses (subject to the terms thereof) and allocation for such expenses between the Parties shall be set forth in the Detailing Budget) based on the level of Detailing undertaken by each Party and shall be dependent upon the percentage of Detailing effort Merus elects to undertake.

7.4       Global Branding; Trademarks.

(a)       Global Branding Strategy. The Program 1 JCC shall have the right but not the obligation, from time to time during the Term, to implement (and thereafter modify and update) a global branding strategy, including global positioning (the “Global Branding Strategy”), for the Program 1 Product throughout the world. Each Party shall strive to adhere to the Global Branding Strategy in its Commercialization of the Program 1 Product in its territory. Incyte shall have sole discretion over Global Branding Strategy for the Program 2 Product, [**] Products, and Novel Program Products.

(b)       Trademarks. The Parties may mutually agree on a global trademark for Program 1 Product and appropriate ownership thereof, but, absent such agreement, Program 1 trademarks will be handled as follows. Merus and its Affiliates shall select and own the trademarks under which the Program 1 Product will be marketed in the United States; provided that not such trademark may contain the word “Incyte”. Incyte and its Affiliates shall select and own the trademarks under which the Program 1 Product will be marketed in the Incyte Territory and under which all other Licensed Products will be marketed worldwide; provided that no such trademark shall contain the word “Merus”. The owner of a respective trademark shall be solely responsible

for the prosecution of such trademark and determining what, if any, action to take in response to any alleged infringement of such trademark by Third Parties.

ARTICLE VIII     
INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS

8.1       Inventorship; Ownership.

(a)       Inventorship. Inventorship of Inventions shall be determined in accordance with the patent Laws of the United States; provided that in the event that determining inventorship in accordance with such Laws would render any Patent Right that claims or covers such Invention invalid, inventorship shall be determined in accordance with the Laws of the jurisdiction where such Patent Right is filed.

(b)       Inventor Assignment Obligation. Each Party shall cause all employees, independent contractors, consultants and others who perform activities for such Party under this Agreement to be under an obligation to assign (or, if such Party is unable to cause such person or entity to agree to such assignment obligation despite such Party using Commercially Reasonable Efforts to negotiate such assignment obligation, provide a license under) their rights in any Inventions and Intellectual Property Rights to such Party, except where applicable Law requires otherwise and except in the case of governmental, not-for-profit and public institutions which have standard policies against such an assignment (in which case a suitable license, or right to obtain such a license, shall be obtained).

(c)       Ownership and Disclosure Obligations.  

(i)     Incyte Ownership. As between the Parties, Incyte shall own all right, title and interest in and to any and all Sole Arising IP discovered, made or created solely by Incyte or any of its Affiliates or its or their employees, independent contractors or consultants.

(ii)     Merus Ownership. As between the Parties, Merus shall own all right, title and interest in and to any and all (A) Sole Arising IP discovered, made or created by solely Merus or any of its Affiliates or its or their employees, independent contractors or consultants, (B) [**], and (C) Platform Arising IP. Incyte shall promptly disclose to Merus in writing the conception, discovery, development, making, or reduction to practice of any [**] and Platform Arising IP discovered, made or created by Incyte or any of its Affiliates or its or their employees, independent contractors or consultants, or jointly with Merus or any of its Affiliates or its or their employees, independent contractors or consultants. Incyte, for itself and on behalf of its Affiliates, shall and hereby does assign to Merus all its right, title and interest in and to any [**] and Platform Arising IP. Incyte shall execute and record assignments and other necessary documents consistent with such ownership. 

(iii)     Joint Arising IP and [**]. As between the Parties, each Party shall own an equal, undivided interest in any Joint Arising IP [**]. Each Party shall promptly disclose to the other Party in writing, and shall cause its Affiliates, licensees and sublicensees to so disclose, the conception, discovery, development, making, or reduction to practice of any Joint Arising IP

[**]. Each Party shall have the right to use such Joint Arising IP, or license such Joint Arising IP to its Affiliates or any Third Party, or sell or otherwise transfer its interest in such Joint Arising IP to its Affiliates or a Third Party, in each case without the consent of the other Party and without a duty to account to the other Party, so long as such use, sale, license, or transfer is subject to and consistent with the terms of this Agreement, including exclusivity obligations. Each Party shall have the right to use such [**], or license such [**] to its Affiliates or any Third Party, or sell or otherwise transfer its interest in such [**] to its Affiliates or a Third Party, in each case for Licensed Antibodies and Licensed Products under this Agreement, without the consent of the other Party and without a duty to account to the other Party, so long as such use, sale, license, or transfer is subject to and consistent with the terms of this Agreement, including exclusivity obligations.

8.2       Patent Filing; Assignment.  

(a)       Primary Patent Estate.

(i)     Merus Platform. Merus shall be solely responsible for filing all patent applications with the appropriate patent authorities worldwide for any Patent Rights that claim the Merus Platform.

(ii)     Existing Program 1 and Program 2 Patents. Promptly after the Effective Date, the Parties, through the JIPC, shall [**] for [**] (the “[**]”). For clarity, any [**] may not [**] of the [**] of the Selected Monoclonal Antibodies for such applicable Program.

(iii)     [**] Patents and [**] Patents.  [**] shall file all patent applications with the appropriate patent authorities worldwide for any [**] and the [**].[**] shall consult with [**] through the JIPC on such Patent Rights, and shall consider in good faith [**] reasonable comments with respect to such Patent Rights. Promptly after the filing of any Patent Rights for [**] and the [**], the Parties, through the JIPC, shall discuss filing further Patent Rights (including divisionals, continuations, continuations in part, re-issues, and re-examinations) for [**] of the [**] and the [**] for such applicable Program (together with the [**], the “[**]”). For clarity, any [**] may not [**] of the [**] of the Selected Monoclonal Antibodies.

(b)       Secondary Patent Estate.  

(i)     Manufacturing Patents.  [**] shall file all patent applications with the appropriate patent authorities worldwide for any Arising IP (other than [**]) that claim the [**] Licensed Antibody or Licensed Product (“Arising Manufacturing Patent”)  [**].  [**] shall consult with [**] through the JIPC on such Arising Manufacturing Patents, and shall consider in good faith [**] reasonable comments with respect to such Arising Manufacturing Patents.

(ii)     Arising [**] Patents.  [**] shall file all patent applications with the appropriate patent authorities worldwide for any Arising IP (other than [**]) that [**] a Licensed Antibody or Licensed Product (“Arising [**] Patent”)  [**].[**]  shall consult with [**] through the JIPC on such Arising [**] Patents, and shall consider in good faith Merus’s reasonable comments with respect to such Arising [**] Patents.

8.3       Prosecution and Maintenance of Patent Rights.

(a)     Merus Platform IP. Merus shall have the sole right to prosecute and maintain all Merus Platform IP.

(b)     Merus-Prosecuted Patents.  Merus shall have the initial right to prosecute and maintain Patent Rights for (i) the [**] IP, (ii) the [**] IP, (iii) the [**] and (iv) the Program 1 Antibody and Program 1 Product, in each case using external patent counsel selected and mutually agreed upon by the Parties. If Merus declines to prosecute or maintain any such Patent Rights in any country or jurisdiction, or desires to allow any such Patent Rights to lapse in any country or jurisdiction, or desires to abandon any such Patent Rights in any country or jurisdiction before all appeals within the respective jurisdiction have been exhausted, then Merus shall provide Incyte with [**] written notice of such decision so as to permit Incyte to decide whether to prosecute or maintain such Patent Rights in the respective country or jurisdiction and to take any necessary action. Following such notice from Merus, Incyte may, by providing prompt written notice thereof to Merus, assume control of the prosecution and/or maintenance of such Patent Rights in the respective country or jurisdiction. The costs of prosecuting and maintaining such Patent Rights for Program 1, [**] Co-Development Program, and Additional Co-Development Program shall be [**].[**] shall [**] for the costs of prosecuting and maintaining such Patent Rights for [**] and [**] for Program 2, [**] Non-Co Programs and Novel Programs (other than Additional Co-Development Programs). [**] shall be responsible for the costs of prosecuting and maintaining such Patent Rights for [**] for Program 2, [**] Non-Co Programs and Novel Programs (other than Additional Co-Development Programs).

(c)     Incyte-Prosecuted Patents.  Incyte shall have the initial right to prosecute and maintain the [**] and the [**], in each case using external patent counsel [**] by the Parties [**] (except within the definition of an [**] for [**] Products) worldwide. If Incyte declines to prosecute or maintain any such Patent Rights in any country or jurisdiction, or desires to allow any such Patent Rights to lapse in any country or jurisdiction, or desires to abandon any such Patent Rights in any country or jurisdiction before all appeals within the respective jurisdiction have been exhausted, then Incyte shall provide Merus with [**] written notice of such decision so as to permit Merus to decide whether to prosecute or maintain such Patent Rights in the respective country or jurisdiction and to take any necessary action. Following such notice from Incyte, Merus may, by providing prompt written notice thereof to Incyte, assume control of the prosecution and/or maintenance of such Patent Rights in the respective country or jurisdiction.

(d)     Other Merus Patent Rights.  At Merus’s expense, Merus shall have the sole right and discretion to file, prosecute and maintain all Merus Patent Rights not covered by Sections 8.3(b) and 8.3(c).

(e)     Other Incyte Patent Rights.  At Incyte’s expense, Incyte shall have the sole right and discretion to file, prosecute and maintain all Incyte Patent Rights not covered by Sections 8.3(b) and 8.3(c).

(f)     Cooperation. For the purposes of this Section 8.3(f), a Party responsible for the filing, prosecution and maintenance of a Patent Right under this Agreement will be referred to

as the “Controlling Party” and the other Party will be referred to as the “Non-Controlling Party”. Solely with respect to the rights and obligations described in Sections 8.3(b) and 8.3(c), the following will apply:

(i)     The Non-Controlling Party shall, at the Controlling Party’s expense and reasonable request, assist and cooperate in the filing, prosecution and maintenance of or any related necessary action for the applicable Patent Rights, including by making its employees, agents, and consultants reasonably available to the Non-Controlling Party. Such cooperation will be coordinated through the JIPC.

(ii)     The Controlling Party shall keep the Non-Controlling Party reasonably informed as to Material developments with respect to the prosecution and maintenance of the Patent Rights. The Controlling Party shall provide the Non-Controlling Party sufficiently in advance, when possible, for the Non-Controlling Party to comment, with copies of all patent applications and other Material submissions and communications (including oral communications) with any patent authorities pertaining to the applicable Patent Rights.

(iii)     The Controlling Party shall consider in good faith and reasonably implement the Non-Controlling Party’s comments and recommended actions, but the Controlling Party shall have the final say in determining whether or not to incorporate such comments.

(iv)     “Material” for the purposes of this Section 8.3(f) means that the [**] could [**] the patents that claim or cover the Licensed Antibodies, Licensed Products, or Merus Platform.

(g)     Patent Term Extensions. The Controlling Party may seek and obtain Patent Term Extensions, including supplementary protection certificates and any other extensions that are now or become available in the future, wherever applicable, in the countries or other jurisdictions that it controls. The Controlling Party shall keep the Non-Controlling Party reasonably informed of its efforts to obtain such extension or supplementary protection certificate. The Non-Controlling Party shall provide prompt and reasonable assistance, as requested by the Controlling Party. For purposes of this Section 8.3(g), Merus is the Controlling Party for Patent Rights for Program 1 in the United States and Incyte is the Controlling Party for Patent Rights for Program 2, [**] Program, and Novel Program worldwide and for Patent Rights for Program 1 in the Incyte Territory.

8.4       Third-Party Infringement.

(a)      Notice. Each Party shall promptly provide the other Party with written notice reasonably detailing (i) any alleged, or threatened infringement by a Third Party of Intellectual Property Rights in Joint Arising IP, Target Pair Arising IP, Incyte IP, Merus IP, or Merus Platform IP, which infringing activities involves the using, making, importing, exporting, offering for sale or selling of Licensed Antibodies or Licensed Products, including any “patent certification” filed in the United States under 21 U.S.C. §355(b)(2) or 21 U.S.C. §355(j)(2) or biosimilar litigation initiated under 42 U.S.C. §262, or similar provisions in other jurisdictions, or (ii) any declaratory judgment for non-infringement of any such Intellectual Property Rights

described in clause (i) (each of (i) and (ii), a “Third-Party Infringement”). As soon as practicable after receipt of such notice, but no later than [**] thereafter, the Parties shall consult via the JIPC to determine the response to any Third-Party Infringement.

(b)      Enforcing Parties and Recoveries. One of the Parties, as set forth below, will have either the initial right (the “Initial Enforcing Party”) or the sole right (the “Sole Enforcing Party”) to proceed with legal enforcement against any Third-Party Infringement, including assertion, in connection with any Third-Party Infringement Claim (an “Infringement Action”) subject to the remainder of this Section 8.4(b):