1.

DEFINITIONS

1

2.

LICENSE GRANT

21

2.1.

License Grants to Takeda

21

2.2.

Sublicensing Terms

21

2.3.

Subcontractors

22

2.4.

In-Licenses

22

2.5.

Knowledge and Technology Transfer

22

2.6.

No Other Rights and Retained Rights

23

2.7.

License to Arrowhead

23

2.8.

Exclusivity and Restrictions

23

3.

DEVELOPMENT

24

3.1.

Development Responsibility

24

3.2.

Development Diligence Obligations

25

3.3.

Scientific Records

27

4.

REGULATORY MATTERS

27

4.1.

Regulatory Responsibilities

27

4.2.

Assignment of Regulatory Submissions

27

4.3.

Takeda Obligations

28

4.4.

Costs of Regulatory Affairs

29

4.5.

Pharmacovigilance Agreement

29

5.

OTHER OPERATING EXPENSES

29

5.1.

Other Operating Expenses

29

6.

MANUFACTURING

29

6.1.

Initial Manufacturing Period

29

6.2.

Supply After the Initial Manufacturing Period

31

6.3.

Observation by Takeda

31

6.4.

Manufacturing Technology Transfer

31

6.5.

Arrowhead Manufacturing Support

32

7.

COMMERCIALIZATION

32

7.1.

Commercialization of the Products

32

7.2.

Commercialization Expenses

33

7.3.

Recalls, Market Withdrawals, or Corrective Actions

33

8.

MEDICAL AFFAIRS

33

8.1.

Co-Funded Medical Affairs Plan

33

8.2.

Products Medical Affairs Expenses

34

9.

GOVERNANCE

34

9.1.

Alliance Manager

34

9.2.

Joint Steering Committee

34

9.3.

Decisions of the JSC

37

9.4.

Resolution of JSC Disputes

37

10.

PAYMENTS

38

10.1.

Upfront Payment

38

10.2.

Payments for the Compounds and Products

38

10.3.

Other Amounts Payable

39

10.4.

Payment Terms

40

11.

CONFIDENTIALITY AND PUBLICATION

42

11.1.

Nondisclosure and Non‑Use Obligations

42

11.1.2.

Non-Disclosure and Non-Use

43

11.2.

Publication and Publicity

46

12.

REPRESENTATIONS, WARRANTIES AND COVENANTS

47

12.1.

Mutual Representations and Warranties as of the Execution Date

47

12.2.

Representations and Warranties by Arrowhead

48

12.3.

Warranty Disclaimer

51

12.4.

Certain Covenants

51

13.

INDEMNIFICATION; LIMITATION OF LIABILITY; INSURANCE

52

13.1.

Indemnification by Arrowhead

52

13.2.

Indemnification by Takeda

53

13.3.

Third Party Losses for Products

53

13.4.

Indemnification Procedure

54

13.5.

Limitation of Liability

55

13.6.

Insurance

55

14.

INTELLECTUAL PROPERTY

55

14.1.

Inventions

55

14.2.

Prosecution and Maintenance of Patent Rights

56

14.3.

Third Party Infringement and Defense

59

14.4.

Patent Right Extensions

63

14.5.

Third Party Rights

63

14.6.

Orange Book Listing

63

14.7.

Trademarks

63

14.8.

Common Interest

63

15.

TERM AND TERMINATION

64

15.1.

Term

64

15.2.

Termination for Convenience

64

15.3.

Termination for Bankruptcy

64

15.4.

Termination for Material Breach

65

15.5.

Termination For Safety Reasons

66

15.6.

Effects of Termination

67

15.7.

Alternative Remedy in Lieu of Termination

69

15.8.

Survival

70

16.

EFFECTIVENESS

70

16.1.

Effective Date

70

16.2.

Filings

70

16.3.

Outside Date

71

17.

MISCELLANEOUS.

71

17.1.

Assignment

71

17.2.

Governing Law

72

17.3.

Dispute Resolution

72

17.4.

Entire Agreement; Amendments

73

17.5.

Severability

73

17.6.

Headings

73

17.7.

Waiver of Rule of Construction

73

17.8.

Interpretation

73

17.9.

No Implied Waivers; Rights Cumulative

74

17.10.

Notices

74

17.11.

Compliance with Export Regulations

76

17.12.

Force Majeure

76

17.13.

Independent Parties

76

17.14.

Further Assurances

76

17.15.

Performance by Affiliates

77

17.16.

Binding Effect; No Third Party Beneficiaries

77

17.17.

Counterparts

77

SCHEDULE 1.64

ARO-AAT Structure

SCHEDULE 1.146

Ongoing Development Trials

SCHEDULE 1.164

Pre-Existing Third Party Agreements

SCHEDULE 2.5

Transition Plan

SCHEDULE 3.1.3

Arrowhead Development Plan

SCHEDULE 4.2.3

Regulatory Submissions Dates

SCHEDULE 6.1.1

Forecasted CTM Supply Requirements

SCHEDULE 6.1.4

CTM Supply Agreement Term Sheet

SCHEDULE 10.2.1

Profit and Loss Share

SCHEDULE 10.4.1

Wire Instructions

SCHEDULE 11.2.3

Joint Press Release

SCHEDULE 12.2.1(a)

Arrowhead AAT-Specific Patent Rights

SCHEDULE 12.2.1(b)

Arrowhead Platform Patent Rights

1.

DEFINITIONS

1.1.

“AAT Gene” means an AAT gene transcript (SERPINA1) that encodes AAT Protein, including [***].

1.2.

“AAT Protein” means alpha-1 antitrypsin protein, including [***].

1.3.

“AATD” means alpha-1 antitrypsin deficiency.

1.4.

“AATD Field” means all [***] for the treatment of AATD.

1.5.

“Accounting Standards” means International Financial Reporting Standards (IFRS) or U.S. Generally Accepted Accounting Principles (GAAP), as generally and consistently applied in compliance with applicable Laws throughout a Party’s organization at the relevant time.

1.6.

“Acquired Party” and “Acquiring Party” have the meanings set forth in Section 2.8.2(c) (Permitted Competitive Products).

1.7.

“Actual Additional Study Credit” has the meaning set forth in Section 3.2.3(d) (Reimbursement for Additional Studies).

1.8.

“Additional Studies” means, collectively, (a) a Phase III Clinical Trial for a Product that is focused on the treatment of cirrhotic patients (adult F4cc) and (b) any Phase III Clinical Trials for a Product that are focused on the treatment of pediatric patients.

1.9.

“Adverse Event” or “AE” has the meaning set forth in 21 C.F.R. § 312.32 and generally means any untoward medical occurrence associated with the use of a product in human subjects, whether or not considered related to such product.  An AE does not necessarily have a causal relationship with a product, that is, an AE can be any unfavorable and unintended sign (including an abnormal laboratory finding), symptom, or disease temporally associated with the use of such product.

1.10.

“Affiliate” means, with respect to a Person, any other Person that controls, is controlled by, or is under common control with such Person.  For purposes of this Agreement, a Person will be deemed to control another Person if it owns or controls, directly or indirectly, more than 50% of the equity securities of such other Person entitled to vote in the election of directors (or, in the case that such other Person is not a corporation, for the election of the corresponding managing authority), or otherwise has the power to direct the management and policies of such other Person.  The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than 50%, and that in such case such lower percentage will be substituted in the preceding sentence, provided that such foreign investor has the power to direct the management and policies of such entity. Neither of the Parties will be deemed to be an “Affiliate” of the other solely as a result of their entering into this Agreement.

1.11.

“Agreement” has the meaning set forth in the preamble.

1.12.

“Alliance Manager” has the meaning set forth in Section 9.1 (Alliance Manager).

1.13.

“Allowable Overruns” means any amount that is [***] above the total budgeted or approved amounts for a [***] on a [***] basis set forth in the Co-Funded Development Budget, Co-Funded Commercialization Budget, or Co-Funded Medical Affairs Budget, or Other Operating Expenses Budget for such [***].

1.14.

“Annual Takeda Territory Net Sales” has the meaning set forth in Section 10.2.4 (Takeda Territory Royalties).

1.15.

“Antitrust Clearance Date” means the earliest date on which all applicable waiting periods and approvals required under Antitrust Laws with respect to the transactions contemplated under this Agreement have expired or have been terminated (in the case of waiting periods) or been received (in the case of approvals), in each case, without the imposition of any conditions.

1.16.

“Antitrust Filing” means any filing with the United States Federal Trade Commission and the Antitrust Division of the United States Department of Justice and any other applicable Governmental Authority in the Territory, as required under any Antitrust Laws with respect to the transactions contemplated under this Agreement, together with all required documentary attachments thereto.

1.17.

“Antitrust Laws” means any federal, state or foreign law, regulation, or decree, including the HSR Act, designed to prohibit, restrict, or regulate actions for the purpose or effect of monopolization or restraint of trade.

1.18.

“ARO-AAT” has the meaning set forth in Section 1.64 (Compound).

1.19.

“Arrowhead” has the meaning set forth in the preamble.

1.20.

“Arrowhead AAT-Specific Know-How” means all Arrowhead Know-How relating to (a) [***] Compounds or Products; (b) [***] Compounds or Products; (c) [***] relating to, Compounds; (d) the treatment of AATD [***]; or (e) [***] Compounds or Products.

1.21.

“Arrowhead AAT-Specific Patent Rights” means all Arrowhead Patent Rights having claims Covering (a) [***] of Compounds or Products; (b) [***] of Compounds or Products; (c) [***] relating to, Compounds; (d) the treatment of AATD [***]; (e) [***]; or (f) [***] Compounds or Products. The Arrowhead AAT-Specific Patent Rights as of the Execution Date are set forth on Schedule 12.2.1(a).

1.22.

“Arrowhead AAT-Specific Technology” means, collectively, the Arrowhead AAT-Specific Patent Rights and the Arrowhead AAT-Specific Know‑How.

1.23.

“Arrowhead Competitive Product” means any compound or product [***].

1.24.

“Arrowhead Competitor” means [***].

1.25.

“Arrowhead Development Plan” has the meaning set forth in Section 3.1.3 (Arrowhead Development Plan).

1.26.

“Arrowhead Indemnitees” has the meaning set forth in Section 13.2 (Indemnification by Takeda).

1.27.

“Arrowhead Know-How” means Know-How, other than Joint Program Know-How, owned or Controlled by Arrowhead or its Affiliates as of the Effective Date or during the Term that is necessary or reasonably useful to Exploit a Compound or a Product in the Field in the Territory, including any Program Know-How owned solely by Arrowhead. The Arrowhead Know-How as of the Execution Date includes the Arrowhead AAT-Specific Know-How and the Arrowhead Platform Know-How.

1.28.

“Arrowhead Manufacturing Activities” has the meaning set forth in Section 6.1.1 (Arrowhead Manufacturing Activities).

1.29.

“Arrowhead Patent Rights” means any Patent Rights owned or Controlled by Arrowhead as of the Effective Date or during the Term that are necessary or reasonably useful to exploit a Compound or a Product in the Field in the Territory, including any Program Patent Rights owned solely by Arrowhead. The Arrowhead Patent Rights as of the Execution Date include the Arrowhead AAT-Specific Patent Rights and the Arrowhead Platform Patent Rights.

1.30.

“Arrowhead Platform Know-How” means all Arrowhead Know-How that is not Arrowhead AAT-Specific Know-How.  

1.31.

“Arrowhead Platform Patent Right” means all Arrowhead Patent Rights that are not Arrowhead AAT-Specific Patent Rights. The Arrowhead Platform Patent Rights as of the Execution Date are set forth on Schedule 12.2.1(b).

1.32.

“Arrowhead Platform Technology” means, collectively, the Arrowhead Platform Patent Rights and the Arrowhead Platform Know‑How.

1.33.

“Arrowhead Technology” means, collectively, (a) the Arrowhead Patent Rights, (b) the Arrowhead Know‑How, and (c) Arrowhead’s interest in the Joint Program Technology.

1.34.

“Assigned Regulatory Submissions” means all INDs, MAAs, and other Regulatory Approvals or Regulatory Submissions assigned by Arrowhead to Takeda pursuant to Section 4.2 (Assignment of Regulatory Submissions).

1.35.

“Auditor” has the meaning set forth in Section 10.4.3 (Records and Audits).

1.36.

“Bankruptcy Laws” has the meaning set forth in Section 15.3.1 (Section 365(N))

1.37.

“Breaching Party” has the meaning set forth in Section 15.4.1 (Material Breach).

1.38.

“Business Day” means a calendar day other than a Saturday, Sunday, or a bank or other public holiday in Boston, Massachusetts or Pasadena, California in the United States, or Tokyo in Japan.

1.39.

“Calendar Quarter” means the respective periods of three consecutive calendar months ending on March 31, June 30, September 30, and December 31 of each Calendar Year.

1.40.

“Calendar Year” means each successive period of twelve months commencing on January 1 and ending on December 31.

1.41.

“cGMP” means the then-current good manufacturing practice standards, practices, and procedures promulgated or endorsed by the applicable Regulatory Authority as set forth in the guidelines imposed by such Regulatory Authority, as may be updated from time-to-time, including those as set forth in FDA regulations in 21 C.F.R. Parts 210 and 211 and all applicable FDA rules, regulations, orders, and guidances, and the requirements with respect to current good manufacturing practices prescribed by the European Community under provisions of “The Rules Governing Medicinal Products in the European Community, Volume 4, Good Manufacturing Practices, Annex 13, Manufacture of Investigational Medicinal Products, December 2010,” or as otherwise required by applicable Laws.

1.42.

“Change of Control” means, with respect to a Party, (a) a merger, consolidation, recapitalization, or reorganization of such Party with a Third Party that results in the holders of beneficial ownership (other than by virtue of obtaining irrevocable proxies for purposes of management voting on matters as directed by beneficial owners) of the voting securities of such Party outstanding immediately prior thereto, or any securities into which such voting securities have been converted or exchanged, ceasing to hold beneficial ownership of more than 50% of the combined voting power of the surviving entity or the parent of the surviving entity immediately after such merger, consolidation, recapitalization, or reorganization, (b) a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the direct or indirect beneficial owner

of more than 50% of the combined voting power of the outstanding securities of such Party, or (c) the sale or other transfer to a Third Party of all or substantially all of such Party’s and its controlled Affiliates’ assets.  Notwithstanding the foregoing, any transaction or series of transactions effected for the purpose of financing the operations of the applicable Party or changing the form or jurisdiction of organization of such Party (such as an initial public offering or other offering of equity securities to non‑strategic investors or corporate reorganization) will not be deemed a “Change of Control” for purposes of this Agreement.

1.43.

“Clinical Trial” means any study in humans (including a non‑interventional study) conducted to obtain information regarding a pharmaceutical or biologic product, including information relating to the safety, tolerability, pharmacological activity, pharmacokinetics, dose ranging, or efficacy of such pharmaceutical or biologic product.

1.44.

“Clinical Trial Material” or “CTM” means a Product that is in a finished pharmaceutical dosage form that is intended and suitable for administration and dosing to humans in Clinical Trials, but not intended for commercial sale (for example, in a form that does not include external packaging).

1.45.

“Clinical Trial Regulatory Submissions” means all INDs, MAAs, and other Regulatory Submissions in the Territory related to the Current Phase II/III Clinical Trial or the New Clinical Trial, as applicable.

1.46.

“CMO” means a contract manufacturing organization or a contract testing organization.

1.47.

“Co-Funded Commercialization Activities” has the meaning set forth in Section 7.1.1 (Co-Funded Commercialization Plan).

1.48.

“Co-Funded Commercialization Budget” has the meaning set forth in Section 7.1.1 (Co-Funded Commercialization Plan).

1.49.

“Co-Funded Commercialization Plan” has the meaning set forth in Section 7.1.1 (Co-Funded Commercialization Plan).

1.50.

“Co-Funded Development Activities” means (a) the Additional Studies conducted in or for the Profit-Share Territory and (b) and any PMR/PMC Activities.

1.51.

“Co-Funded Development Budget” has the meaning set forth in Section 3.1.5 (Co-Funded Development Plan).

1.52.

“Co-Funded Development Plan” has the meaning set forth in Section 3.1.5 (Co-Funded Development Plan).

1.53.

“Co-Funded Medical Affairs Activities” has the meaning set forth in Section 8.1 (Co-Funded Medical Affairs Plan).

1.54.

“Co-Funded Medical Affairs Budget” has the meaning set forth in Section 8.1 (Co-Funded Medical Affairs Plan).

1.55.

“Co-Funded Medical Affairs Plan” has the meaning set forth in Section 8.1 (Co-Funded Medical Affairs Plan).

1.56.

“Code” means the Internal Revenue Code of 1986, as amended.

1.57.

“Combination Product” means a Product that is (a) sold in the form of a combination that contains or comprises one or more additional therapeutically active pharmaceutical agents (whether coformulated or copackaged or otherwise sold for a single price) other than the Compound; (b) sold for a single price together with any delivery device (but excluding any delivery devices, such as pre-filled syringes, autoinjector devices, or other similar delivery devices, in each case, the selling price of which in combination with a Product is not material relative to the selling price of an independent Product) (each of the therapeutically active pharmaceutical agents in clause (a) and the delivery device in clause (b), an “Other Component”); or (c) defined as a “combination product” by the FDA pursuant to 21 C.F.R. §3.2(e) or its foreign equivalent, where such “combination product” is sold for a single price.

1.58.

“Commercial Milestone Event” has the meaning set forth in Section 10.2.2(b) (Commercial Milestones).

1.59.

“Commercial Milestone Payment” has the meaning set forth in Section 10.2.2(b) (Commercial Milestones).

1.60.

“Commercialization” or “Commercialize” means any and all activities directed to the marketing, promotion, distribution matters, offering for sale, sale, having sold, importing, having imported, exporting, having exported, or other commercialization of a pharmaceutical or biologic product (including pricing matters), but expressly excluding activities directed to Manufacturing, Development, or performance of Medical Affairs.  “Commercialize,” “Commercializing,” and “Commercialized” will be construed accordingly.

1.61.

“Commercially Reasonable Efforts” means, (a) with respect to Arrowhead, [***] and (b) with respect to Takeda, [***] taking into account [***]. Notwithstanding the foregoing, neither Party will be obligated to [***]. With respect to Takeda, [***].

1.62.

“Competitive Product” means, with respect to Arrowhead, an Arrowhead Competitive Product and, with respect to Takeda, a Takeda Competitive Product.

1.63.

“Competitive Infringement” means (a) the making, using, selling, offering for sale, importing, or exporting by a Third Party of a pharmaceutical or biologic product in a country that actually or potentially infringes a Valid Claim of an Arrowhead Patent Right or Joint Program Patent Right in such country or (b) the filing of an ANDA under Section 505(j) of the FD&C Act or an application under Section 505(b)(2) of the FD&C Act naming a Product as a reference listed drug and including a certification under Section 505(j)(2)(A)(vii)(IV) or 505(b)(2)(A)(IV), respectively.

1.64.

“Compound” means (a) the chemical composition internally coded by Arrowhead as ARO-AAT, the chemical structure of which is set forth on Schedule 1.64 (ARO-AAT Structure) (“ARO-AAT”), (b) [***], and (c) [***].

1.65.

“Confidential Information” means (a) any and all confidential or proprietary information and data, including scientific, pre‑clinical, clinical, regulatory, manufacturing, marketing, financial and commercial information or data, unpublished patent applications and information related thereto and set forth therein, in each case, that is or has been provided or made available by or on behalf of one Party (the “Disclosing Party” with respect to such information) to the other Party (the “Receiving Party” with respect to such information) in connection with this Agreement or any related negotiations, discussions, or diligence, whether communicated in writing or orally or by any other method, and (b) the terms of this Agreement. Notwithstanding the foregoing, “Confidential Information” excludes any information that the receiving Party can show by competent evidence (i) is known by the receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by the receiving Party’s business records; (ii) is known to the public before its receipt from the disclosing Party, or thereafter becomes generally known to the public through no breach of this Agreement by the receiving Party; (iii) is subsequently disclosed to the receiving Party without obligation of confidentiality by a Third Party who has rightfully obtained such information and who is not under an obligation of confidentiality or other contractual obligation with respect to such information; or (iv) is developed by the receiving Party independently of Confidential Information received from the disclosing Party, as documented by the receiving Party’s business records.

1.66.

“Control” means the possession by a Party (whether by ownership, license, or otherwise), other than pursuant to this Agreement, of, (a) with respect to any tangible Know-How, the legal authority or right to physical possession of such tangible Know-How, with the right to provide such tangible Know-How to the other Party on the terms set forth herein, (b) with respect to Patent Rights, Regulatory Approvals, Regulatory Submissions, intangible Know-How, or other intellectual property, the legal authority or right to grant a license, sublicense, access, or right to use (as applicable) to the other Party under such Patent Rights, Regulatory Approvals, Regulatory Submissions, intangible Know-How, or other intellectual property on the terms set forth herein, or (c) with respect to a product or component thereof, the legal authority or right to grant a license, sublicense, access, or right to use (as applicable) to the other Party under Patent Rights that Cover or proprietary Know-How that is incorporated in or embodies, such product or component on the terms set forth herein, in each case ((a), (b), and (c)), (i) without breaching or otherwise violating the terms of any arrangement or agreement with a Third Party in existence as of the time such Party or its Affiliates would first be required hereunder to grant the other Party such access, right to use, licenses, or sublicense or (ii) with respect to Know-How or Patent Rights developed, acquired, or licensed by a Party after the Effective Date, without incurring any additional payment obligations to a Third Party that are not subject to an agreed allocation between the Parties.

1.67.

“Cover,” “Covering,” or “Covered” means, with respect to a particular subject matter at issue and a relevant Patent Right or individual claim in such Patent Right, as applicable, that the manufacture, use, sale, offer for sale, or importation of such subject matter would fall within the scope of one or more claims in such Patent Right.

1.68.

“CRO” means a contract research organization.

1.69.

“Current Phase II/III Clinical Trial” means the clinical study entitled “Placebo-Controlled, Multi-dose, Phase 2/ 3 Study to Determine the Safety, Tolerability and Effect on Liver Histologic Parameters in Response to ARO-AAT in Patients With Alpha-1 Antitrypsin Deficiency (AATD),” and as identified by the ClinicalTrials.gov Identifier: NCT03945292.

1.70.

“Current Product” means the Product containing ARO-AAT that is the subject of the New Clinical Trial.

1.71.

“Data Read-Out” means, with respect to a Clinical Trial, the date that the tables, figures, and listings for such Clinical Trial are provided to the Party that is the sponsor of such Clinical Trial.

1.72.

“Develop” and “Development” means all internal and external research, discovery, development, and regulatory activities related to pharmaceutical or biologic products, including (a) research, non-clinical testing, toxicology, testing and studies, non-clinical and preclinical activities, and Clinical Trials, and (b) preparation, submission, review, and development of data or information for the purpose of submission to a Regulatory Authority to obtain authorization to conduct Clinical Trials and to obtain, support, or maintain Regulatory Approval of a pharmaceutical or biologic product and interacting with Regulatory Authorities following receipt of Regulatory Approval in the applicable country or region for such pharmaceutical or biologic product regarding the foregoing, but expressly excluding activities directed to Manufacturing, performance of Medical Affairs, or Commercialization.  Development will include development and regulatory activities for additional forms or indications for a pharmaceutical or biologic product after receipt of Regulatory Approval of such product (including label expansion) and Clinical Trials initiated following receipt of Regulatory Approval or any Clinical Trial to be conducted after receipt of Regulatory Approval that are mandated or recommended by the applicable Regulatory Authority to support or maintain such Regulatory Approval (such as post-marketing requirements, post-marketing commitments, and other observational studies, implementation and management of registries and analysis thereof, in each case, if required by any Regulatory Authority in any region in the Territory to support or maintain Regulatory Approval for a pharmaceutical or biologic product in such region). “Develop,” “Developing,” and “Developed” will be construed accordingly.

1.73.

“Development Milestone Event” has the meaning set forth in Section 10.2.2(a) (Development Milestones).

1.74.

“Development Milestone Payment” has the meaning set forth in Section 10.2.2(a) (Development Milestones).

1.75.

“Development Report” has the meaning set forth in Section 3.2.4 (Products Development Reports).

1.76.

“Directed To” means, with respect to a compound contained in a product and its target(s), that the therapeutic mechanism of such compound is intended to activate, inhibit, agonize, antagonize, or otherwise modulate the expression or activity of such target(s).

1.77.

“Disclosing Party” has the meaning set forth in Section 1.65 (Confidential Information).

1.78.

“Disputes” has the meaning set forth in Section 17.3.1 (Exclusive Dispute Resolution Mechanism).

1.79.

“Dollars” or “$” means the legal tender of the United States of America.

1.80.

“Effective Date” has the meaning set forth in Section 16.1 (Effective Date).

1.81.

“Eligible Commercialization Expenses” means all FTE Costs, Out‑of‑Pocket Costs, and other costs and expenses incurred by or on behalf of Takeda or its Affiliates that are attributable to Commercialization activities for the Products in the Profit-Share Territory in accordance with the applicable Co-Funded Commercialization Plan, including the following

(a)

[***];

(b)

[***] that is specifically allocated to sales of such Product; and

(c)

costs and expenses that are attributable to [***];

1.82.

“Eligible Development Costs Share Ratio” has the meaning set forth in Section 3.2.3(b) (PMR/PMC Activities).

1.83.

“Eligible Development Expenses” means all FTE Costs, Out-of-Pocket Costs, and other costs and expenses incurred by or on behalf of Takeda or its Affiliates that are attributable to PMR/PMC Activities in accordance with the applicable Co-Funded Development Plan, including the following:

(a)

[***];

(b)

[***]; and

1.84.

“Eligible Development Expenses Report” has the meaning set forth in Section 3.2.3(b) (PMR/PMC Activities).

1.85.

“Eligible Medical Affairs Expenses” means all FTE Costs, Out-of-Pocket Costs, and other costs and expenses incurred by or on behalf of Takeda or its Affiliates that are attributable to [***], for the Products in the Profit-Share Territory in accordance with the Co-Funded Medical Affairs Plan and Co-Funded Medical Affairs Budget, plus applicable Allowable Overruns [***]. No expense included as an Eligible Medical Affairs Expense will also be included as an Eligible Development Expense or Eligible Commercialization Expense. Eligible Medical Affairs Expenses will be recognized and calculated in accordance with the applicable Accounting Standards.

1.86.

“Eligible Shared Expenses” means the Eligible Commercialization Expenses, Eligible Medical Affairs Expenses, and Other Operating Expenses.

1.87.

“EU” means the European Union, as its membership may be constituted from time to time, and any successor thereto.

1.88.

“Execution Date” has the meaning set forth in the preamble.

1.89.

“Executive Officer” means, (a) the Chief Executive Officer of Arrowhead (or an executive officer of Arrowhead designated by the Chief Executive Officer of Arrowhead who has the power and authority to resolve such matter) and the President, Research & Development of Takeda (or an executive officer of Takeda designated by the President, Research & Development who has the power and authority to resolve such matter.) If the position of any of the Executive Officers identified in this Section 1.89 (Executive Officer) no longer exists due to a Change of Control, corporate reorganization, corporate restructuring, or the like of a Party that results in the elimination of the identified position, then the applicable Party will replace the applicable Executive Officer with another executive officer with responsibilities and seniority comparable to the eliminated Executive Officer.

1.90.

“Exploit” or “Exploitation” means to make, have made, import, have imported, export, have exported, distribute, have distributed, use, have used, sell, have sold, offer for sale, or have offered for sale, including to Develop, Manufacture, Commercialize, and perform Medical Affairs activities.

1.91.

“FD&C Act” means the United States Federal Food, Drug, and Cosmetic Act, as amended.

1.92.

“FDA” means the United States Food and Drug Administration or any successor Governmental Authority having substantially the same function.

1.93.

“Field” means all fields of use.

1.94.

“First Commercial Sale” means, [***].

1.95.

“Force Majeure” has the meaning set forth in Section 17.12 (Force Majeure).

1.96.

“FTE” means the equivalent of a full‑time person’s work time, carried out by an appropriately qualified employee of a Party or its Affiliates, on the performance of Development, Manufacturing, Commercialization, or Medical Affairs activities, based on [***] person‑hours per year, pro-rated as necessary.  Overtime, and work on weekends, holidays, and the like [***].

1.97.

“FTE Costs” means, for any period, the FTE Rate multiplied by the number of FTEs in such period.  

1.98.

“FTE Rate” means [***] per one full FTE per full 12-month Calendar Year, which rate includes all direct and indirect costs of the performing Party’s FTE, including personnel and travel expenses.  Such rate, [***].

1.99.

“Forecasted Additional Study Credit” has the meaning set forth in Section 3.2.3(d) (Reimbursement for Additional Studies).

1.100.

“GCP” means the then-current good clinical practice standards, practices, and procedures promulgated or endorsed by the applicable Regulatory Authority as set forth in the guidelines imposed by such Regulatory Authority, as may be updated from time-to-time, including those as set forth in FDA regulations in 21 C.F.R. Parts 11, 50, 54, 56, 312, 314, and 320 and all related FDA rules, regulations, orders, and guidances, and by the International Conference on Harmonization E6: Good Clinical Practices Consolidated Guideline (the “ICH Guidelines”).

1.101.

“Generic Entry” has the meaning set forth in Section 10.2.5(b) (Reduction for Generic Competition).

1.102.

“Generic Product” means any pharmaceutical product sold by a Third Party (excluding Products sold by Sublicensees on behalf of Takeda or its Affiliates in accordance with the terms of this Agreement or any settlement agreement pertaining to patent litigation arising in connection with this Agreement) that: (a) contains the same active ingredient as the applicable Product, [***]; (b) is A/B Rated with respect to such Product or otherwise approved by the Regulatory Authority in such country as a substitutable generic for such Product; or (c) is approved in reliance, in whole or in part, on a prior Regulatory Approval of such Product.

1.103.

“GLP” means the then-current good laboratory practice standards, practices, and procedures promulgated or endorsed by the applicable Regulatory Authority as set forth in the guidelines imposed by such Regulatory Authority, as may be updated from time-to-time, including those as set forth in FDA regulations in 21 C.F.R. Part 58 and all applicable FDA rules, regulations, orders, and guidances, and the requirements with respect to good laboratory practices prescribed by the European Community, the OECD (Organization for Economic Cooperation and Development Council) and the ICH Guidelines.

1.104.

“Governmental Authority” means any applicable government authority, court, council, tribunal, arbitrator, agency, department, bureau, branch, office, legislative body, commission or other instrumentality of (a) any government of any country or territory, (b) any nation, state, province, county, city, or other political subdivision thereof, or (c) any supranational body.

1.105.

“H-W Suit Notice” has the meaning set forth in Section 14.3.2(c) (Hatch-Waxman).

1.106.

“Hatch-Waxman Act” means rights conferred in the U.S. under the Drug Price Competition and Patent Term Restoration Act, 21 U.S.C. §355, as amended (or any successor statute or regulation).

1.107.

“HSR Act” means the Hart‑Scott‑Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder.

1.108.

“ICH” means International Conference on Harmonization.

1.109.

“ICH Guidelines” has the meaning set forth in Section 1.100 (GCP).

1.110.

“IND” means an Investigational New Drug Application (as defined in the FD&C Act), clinical trial application, or similar application or submission for approval to conduct human clinical investigations filed with or submitted to a Regulatory Authority anywhere in the world in conformance with the requirement of such Regulatory Authority, and any amendments thereto.

1.111.

“IND Transfer Date” has the meaning set forth in Section 4.2.1(a) (Clinical Trial Regulatory Submissions).

1.112.

“Indemnified Party” has the meaning set forth in Section 13.4.1 (Notice).

1.113.

“Indemnifying Party” has the meaning set forth in Section 13.4.1 (Notice).

1.114.

“Initial Co-Funded Commercialization Budget” has the meaning set forth in Section 7.1.1 (Co-Funded Commercialization Plan).

1.115.

“Initial Co-Funded Development Budget” has the meaning set forth in Section 3.1.5 (Co-Funded Development Plan).

1.116.

“Initial Co-Funded Medical Affairs Budget” has the meaning set forth in Section 8.1 (Co-Funded Medical Affairs Plan).

1.117.

“Initial Manufacturing Period” has the meaning set forth in Section 6.1.1 (Arrowhead Manufacturing Activities).

1.118.

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

1.119.

“IP Counsel” means the IP Head, Gastroenterology Therapeutic Area of Takeda the Vice President, IP and Associate General Counsel of Arrowhead or their designees.  

1.120.

“Joint Program Know-How” means any and all Program Know-How developed or invented jointly by or on behalf of the Parties or their respective Affiliates.

1.121.

“Joint Program Patent Rights” means the Program Patent Rights Covering any Joint Program Know-How.

1.122.

“Joint Program Technology” means the Joint Program Know-How and Joint Program Patent Rights.

1.123.

“JSC” has the meaning set forth in Section 9.2.1 (Joint Steering Committee: Purpose; Formation).

1.124.

“Know‑How” means all commercial, technical, scientific, and other know‑how and information, inventions, discoveries, trade secrets, knowledge, technology, methods, processes, practices, formulae, amino acid sequences, nucleotide sequences, instructions, skills, techniques, procedures,

experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, specifications, data and results (including biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, preclinical, clinical, safety, manufacturing and quality control data and know‑how, including regulatory data, study designs and protocols), and materials, in all cases, whether or not confidential, proprietary, patentable, in written, electronic, or any other form now known or hereafter developed, but expressly excluding all Patent Rights.

1.125.

“Laws” means all applicable laws, statutes, rules, regulations, orders, judgments, injunctions, ordinances, codes, principles of common law, or other pronouncements having the binding effect of law of any Governmental Authority, including if either Party is or becomes subject to a legal obligation to a Regulatory Authority or other Governmental Authority (such as a corporate integrity agreement or settlement agreement with a Governmental Authority).

1.126.

“Losses” has the meaning set forth in Section 13.1 (Indemnification by Arrowhead).

1.127.

“MAA” means any new drug application or other marketing authorization application, in each case, filed with the applicable Regulatory Authority in a country or other regulatory jurisdiction (and all supplements and amendments thereto), which application is required to commercially market or sell a pharmaceutical or biologic product in such country or jurisdiction, including all New Drug Applications submitted to the FDA in the United States in accordance with the FD&C Act with respect to a pharmaceutical product or any analogous application or submission with any Regulatory Authority in any other country or regulatory jurisdiction.

1.128.

“Major Market” means each of the [***], and the [***].

1.129.

“Manufacturing” or “Manufacture” means activities directed to process, analytical and formulation development, manufacturing, processing, packaging, labeling, filling, finishing, assembly, quality assurance, quality control, testing, and release, shipping, or storage of any pharmaceutical or biologic product (or any components or process steps involving any product or any companion diagnostics), placebo, or comparator agent, as the case may be, including process development, qualification, and validation, scale-up, pre-clinical, clinical, and commercial manufacture and analytic development, product characterization, and stability testing, but expressly excluding activities directed to Development, performance of Medical Affairs, or Commercialization. “Manufacturing” and “Manufactured” will be construed accordingly.

1.130.

“Manufacturing Costs” means, with respect to the Products, the consolidated fully burdened Manufacturing costs in accordance with the applicable Accounting Standards, which will be the sum of:

(a)

[***]; and

(b)

[***].

1.131.

“Manufacturing Technology Transfer” has the meaning set forth in Section 6.4 (Manufacturing Technology Transfer).

1.132.

“Marketing Approval” means, with respect to a country or extra-national territory, any and all approvals (including Regulatory Approval), licenses, registrations, or authorizations of any Regulatory Authority that are required in order to Commercialize a Product in such country or some or all of such extra-national territory, including Pricing Approval.

1.133.

“Material Shared In-License” means any Shared In-License under which Takeda reasonably anticipates owing average annual payment obligations in excess of [***].

1.134.

“Medical Affairs” means activities conducted by a Party’s medical affairs departments (or, if a Party does not have a medical affairs department, the equivalent function thereof), including medical science liaisons, medical directors, communications with key opinion leaders (including key opinion leader selection and management, health care professional and patient speakers programs), medical education and development of materials related thereto, congresses or symposia, advisory boards (to the extent related to medical affairs or clinical guidance), activities performed in connection with patient registries, real world evidence collection, and other medical programs and communications, including investigator sponsored studies, educational grants, research grants, and charitable donations to the extent related to medical affairs and not to other activities that are not conducted by a Party’s medical affairs (or equivalent) departments.

1.135.

“MWG” has the meaning set forth in Section 6.1.2 (Manufacturing Working Group).

1.136.

“Milestone Events” has the meaning set forth in Section 10.2.2(b) (Commercial Milestones).

1.137.

“Milestone Payments” has the meaning set forth in Section 10.2.2(b) (Commercial Milestones).

1.138.

“NDA” means a New Drug Application, as defined in the FD&C Act and applicable regulations promulgated thereunder by the FDA, or any analogous application or submission with any Regulatory Authority outside of the U.S.

1.139.

“Net Sales” means with respect to a Product, the gross amount invoiced in a country in the Territory by or on behalf of a [***] (each of the foregoing Persons, a “Selling Party”) for the sale or other disposition of such Product in such country to Third Parties [***], less the following deductions calculated in accordance with the applicable Accounting Standards, consistently applied throughout the Territory by the relevant Selling Party, [***]:

(a)

[***];

(b)

[***];

(c)

[***];

(d)

[***];

(e)

[***]; and

(f)

[***].

1.140.

“Neutral Expert” has the meaning set forth in Section 6.1.5(a) (Arbitration for Failure to Agree).

1.141.

“New Clinical Trial” means, collectively, the New Phase II Trial and the New Phase III Trial.

1.142.

“New Phase II Trial” means the Current Phase II/III Clinical Trial as amended with endpoints acceptable to FDA and appropriate for a Phase II Clinical Trial.

1.143.

“New Phase III Trial” means the clinical study to be designed and implemented with endpoints appropriate for a Phase III Clinical Trial.

1.144.

“Non-Breaching Party” has the meaning set forth in Section 15.4.1 (Material Breach).

1.145.

“Ongoing Development Activities” means all Development activities in support of the Ongoing Development Trials, including the activities set forth on Schedule 1.145 (Ongoing Development Activities).

1.146.

“Ongoing Development Trials” means (a) the New Phase II Trial and (b) those other non-clinical or clinical studies that are on-going as of the Effective Date, as set forth on Schedule 1.146 (Ongoing Development Trials).

1.147.

“Operating Profits or Losses” means, for all Products in the Profit-Share Territory, the profits or losses calculated in accordance with Schedule 10.2.1 (Profit and Loss Share).

1.148.

“Other Component” has the meaning set forth in Section 1.57 (Combination Product).

1.149.

“Other Operating Expenses” means [***]:

(a)

[***];

(b)

[***];

(c)

[***];

(d)

[***];

(e)

[***];

(f)

[***]; and

(g)

[***];

1.150.

“Other Operating Expenses Budget” has the meaning set forth in Section 5.1 (Other Operating Expenses).

1.151.

“Out‑of‑Pocket Costs” means, with respect to certain activities for a Product hereunder, specifically identifiable expenses paid or payable by a Party or its Affiliates to Third Parties to conduct such activities, including payments to contract personnel (including contractors, consultants and Subcontractors).

1.152.

“Overhead Costs” means costs incurred by a Party or for its account that are attributable to the performing Party’s supervisory or support services and functions, occupancy costs, corporate bonus (to the extent not charged directly to department), and its payroll, information systems, human relations or purchasing functions, and, in each case, that are allocated to company departments based on space occupied or headcount or other activity‑based method, including any costs attributed to general corporate activities including, by way of example, executive management, investor relations, business development, legal affairs, and finance.

1.153.

“Party” or “Parties” has the meaning set forth in the preamble.

1.154.

“Patent Costs” means [***].

1.155.

“Patent Offices” has the meaning set forth in Section 12.2.5 (Validity and Enforceability).

1.156.

“Patent Right” means any patent (including any utility or design patent) or patent application (including any provisional, utility, continued prosecution, continuation, continuations‑in‑part, divisional, or substitution application), or other filing claiming priority thereto or sharing any common priority therewith, whether directly or indirectly, as well as any patent that issues or has issued with respect to any such patent application, reissue, re‑examination, renewal, or extension (including any patent term adjustment, patent term extension, or supplemental protection certificate, or the equivalent thereof), registration or confirmation patent, patent resulting from a post‑grant proceeding, patent of addition, revalidation, restoration or extension thereof, or any inventor’s certificate, utility model (including any petty patent, innovation patent, utility certificate, functional design, short-term patent, minor patent, or small patent), or any equivalent or counterpart thereof in any country or jurisdiction.  For clarity, a patent filing (a patent or a patent application) is considered to have been made (or to be pending or in force) within a selected time period if the filing itself, or any other filing to which it claims priority or with which it shares any common priority, was made, within (or was pending, or in force within) the time period.

1.157.

“Payments” has the meaning set forth in Section 10.4.5(b) (Withholding Taxes).

1.158.

“Permitted Competitive Products” has the meaning set forth in Section 2.8.2(c) (Permitted Competitive Products).

1.159.

“Person” means any natural person, corporation, unincorporated organization, partnership, association, sole proprietorship, joint stock company, joint venture, limited liability company, trust or government, Governmental Authority, or any other similar entity.

1.160.

“Pharmacovigilance Agreement” has the meaning set forth in Section 4.5 (Pharmacovigilance Agreement).

1.161.

“Phase II Clinical Trial” means a Clinical Trial (or any arm thereof) of an investigational product that satisfies the requirements of U.S. federal regulation 21 C.F.R. § 312.21(b) and its successor regulation, or an equivalent Clinical Trial prescribed by the relevant Regulatory Authority in a country other than the United States.

1.162.

“Phase III Clinical Trial” means a Clinical Trial (or any arm thereof) of an investigational product on a sufficient number of patients that satisfies the requirements of U.S. federal regulation 21 C.F.R. § 312.21(c) and its successor regulation or an equivalent Clinical Trial prescribed by the relevant Regulatory Authority in a country other than the United States.

1.163.

“PMR/PMC Activities” means any post-marketing requirements, post-marketing commitments, or other Clinical Trials undertaken as a condition to obtain or maintain Regulatory Approval for a Product in the Profit-Share Territory.

1.164.

“Pre-Existing Third Party Agreements” means those certain agreements between Arrowhead and a Third Party, the applicable sections of which are set forth on Schedule 1.164 (Pre-Existing Third Party Agreements).

1.165.

“Pricing Approval” means, with respect to any country where a Governmental Authority authorizes reimbursement for, or approves or determines pricing for, pharmaceutical or biologic products, receipt (or, if required to make such authorization, approval, or determination effective,

publication) of such reimbursement authorization, pricing approval, or determination (as the case may be).

1.166.

“Product” means any pharmaceutical product comprised, in whole or in part, of the Compound, including all forms, presentations, strengths, doses, and formulations (including any method of delivery), either alone or as a Combination Product.

1.167.

“Profit-Share Territory” means the United States.

1.168.

“Program Know-How” means any Know-How developed or invented during the Term by or on behalf of a Party, any of its Affiliates or Sublicensees, either alone or jointly, in the performance of activities relating to the Exploitation of Products under this Agreement.

1.169.

“Program Patent Rights” means any Patent Right that (a) has a priority date after the Effective Date, and (b) Covers any Program Know-How.

1.170.

“Prosecution and Maintenance” or “Prosecute and Maintain” means, with regard to a particular Patent Right, the preparation, filing, and prosecution (including any interferences, reissue proceedings, reexaminations, supplemental examinations, derivation proceedings, or any other similar proceeding before a patent authority of competent jurisdiction), and maintenance (including paying maintenance fees and annuities) of such Patent Right.

1.171.

“Potential Material Shared In-License Term Sheet” has the meaning set forth in Section 2.4.2 (Shared In-License Process).

1.172.

“P&L Share” means the Parties’ equal sharing of the Operating Profits or Losses for Products pursuant to Section 10.2.1 (Profit and Loss Share).

1.173.

“Receiving Party” has the meaning set forth in Section 1.65 (Confidential Information).

1.174.

“Redacted Agreement” has the meaning set forth in Section 11.1.4(b) (Confidential Treatment).

1.175.

“Regulatory Approval” means, with respect to a particular country or other regulatory jurisdiction, any approval of a MAA or other approval, product, or establishment license, registration, or authorization of any Regulatory Authority necessary for the commercial marketing or sale of a pharmaceutical or biologic product in such country or other regulatory jurisdiction, excluding, in each case, Pricing Approval.

1.176.

“Regulatory Authority” means any Governmental Authority responsible for granting Regulatory Approvals of pharmaceutical or biologic products.

1.177.

“Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to a Product in a country or jurisdiction in the Territory, other than a Patent Right, that prohibits a Person from (a) relying on safety or efficacy data generated by or on behalf of a Party with respect to such Product in an application for Regulatory Approval of a biosimilar product, or (b) Commercializing a Product and a Generic Product thereof, including orphan drug exclusivity or rights similar thereto in other countries or regulatory jurisdictions.

1.178.

“Regulatory Lead” means Takeda; except with respect to any Regulatory Submissions for the Ongoing Development Trials prior to the IND Transfer Date, for which Arrowhead will be the Regulatory Lead.

1.179.

“Regulatory Submissions” means any regulatory application, submission, notification, communication, correspondence, registration, Regulatory Approval, or other filing made to, received from or otherwise conducted with a Regulatory Authority related to Developing, Manufacturing, or obtaining marketing authorization for a pharmaceutical or biologic product in a particular country or jurisdiction.

1.180.

“Roche Agreement” means the Stock and Asset Purchase Agreement between Arrowhead (at the time known as Arrowhead Research Corporation), and Hoffmann-La Roche Inc. and F. Hoffmann-La Roche Ltd., dated October 21, 2011.

1.181.

“Royalties” has the meaning set forth in Section 10.2.4 (Takeda Territory Royalties).

1.182.

“Royalty Rates” means the applicable royalty rate set forth in Table 10.2.4 (Royalty Payments (Takeda Territory)).

1.183.

“Royalty Report” has the meaning set forth in Section 10.4.2 (Reports and Royalty Payments).

1.184.

“Royalty Term” means, with respect to a Product and a country, the period commencing on the First Commercial Sale of such Product in such country and expiring on the latest of (a) [***], (b) [***], or (c) [***].

1.185.

“Shared In-License” has the meaning set forth in Section 2.4.1 (Shared In-Licenses).

1.186.

“SEC” means the United States Securities and Exchange Commission or any successor Governmental Authority having substantially the same function.

1.187.

“Selling Party” has the meaning set forth in Section 1.139 (Net Sales).

1.188.

“Subcontractor” means a Third Party contractor engaged by a Party or its Affiliate to perform certain obligations or exercise certain rights of such Party under this Agreement (including all Third Party Distributors, contract research organizations, clinical research organizations or CMOs), but excluding all Sublicensees.

1.189.

“Sublicense Revenue” means [***].

1.190.

“Sublicensee” means a Third Party to which Takeda or its Affiliate has granted or grants a sublicense, option to sublicense or similar right under the Arrowhead Technology to Exploit any Product, or any further sublicensee of such rights (regardless of the number of tiers, layers or levels of sublicenses of such rights), beyond the mere right to purchase any Product from or to provide services on behalf of Takeda or its Affiliates.

1.191.

“Supply Arbitration Draft” has the meaning set forth in Section 6.1.5(b) (Arbitration for Failure to Agree).

1.192.

“Takeda Competitive Product” means [***].

1.193.

“Takeda Prosecuted Patent Rights” has the meaning set forth in Section 14.2.1(a) (Takeda’s Right).

1.194.

“Takeda Program Patent Rights” means Program Patent Rights Covering inventions within the Program Know-How developed or invented solely by or on behalf of Takeda or its Affiliates.

1.195.

“Takeda Technology” means, to the extent that Takeda determines, in its sole discretion, to contribute (and provides notice thereof in writing) to any of the following for use by Arrowhead in the performance of Development or Manufacturing activities for the Product in the Territory in accordance with this Agreement, (a) Know-How Controlled by Takeda as of the Effective Date or during the Term that is necessary to Exploit a Compound or a Product in the Territory and (b) Patent Rights Controlled by Takeda as of the Effective Date or during the Term that are necessary to Develop or Manufacture a Compound or a Product under this Agreement in the Territory.

1.196.

“Takeda Territory” means worldwide, excluding the Profit-Share Territory.

1.197.

“Tax” and “Taxation” means any U.S. and non‑U.S. federal, state, local, regional, municipal, or other tax or taxation, levy, duty, charge, withholding, or other assessment of any kind (including any related fine, penalty, addition to tax, surcharge, or interest) imposed by, or payable to, a Governmental Authority, including sales, use, excise, stamp, transfer, property, value added, goods and services, withholding, and franchise taxes.

1.198.

“Term” has the meaning set forth in Section 15.1 (Term).

1.199.

“Terminated Country” has the meaning set forth in Section 15.4.1 (Material Breach).

1.200.

“Territory” means worldwide.

1.201.

“Third Party” means any Person other than Arrowhead, Takeda, or their respective Affiliates.

1.202.

“Third Party Distributor” means, with respect to a country, any Third Party that purchases Products in such country from the Selling Party or its Affiliates and is appointed as a distributor to distribute, and resell such Product in such country, even if such Third Party is granted ancillary sublicensed rights under the Arrowhead Technology to package, distribute, or sell such Product in such country.

1.203.

“Third Party Payment” has the meaning set forth in Section 2.4 (In‑Licenses).

1.204.

“Trademark” means any trademark, trade name, service mark, service name, brand, domain name, trade dress, logo, slogan, or other indicia of origin or ownership, including the goodwill and activities associated with each of the foregoing.

1.205.

“United States” or “U.S.” means the United States and its territories, possessions and commonwealths.

1.206.

“Valid Claim” means: (a) a claim of an issued and unexpired patent (as may be extended through supplementary protection certificate or patent term extension or the like) that has not been revoked, held invalid, or unenforceable by a Patent Office or other Governmental Authority of competent jurisdiction from which no appeal is taken, and which claim has not been disclaimed, denied, or admitted to be invalid or unenforceable through reissue, re-examination, or disclaimer or otherwise; or (b) a pending claim of an unissued, pending patent application, which application has been pending for [***] or less from the earliest date to which it is entitled to claim priority.

1.207.

“VAT” means, within the EU, such Tax as may be charged in accordance with (but subject to derogations from) Directive 2006/112/EC and, outside the EU, value added Tax or any form of consumption Tax, as well as all other forms of Taxes charged on the supply of a good or a service, including sales Tax and goods and services Tax.

1.208.

“Withholding Tax” has the meaning set forth in Section 10.4.5(b) (Withholding Taxes).

2.

LICENSE GRANT

2.1.

License Grants to Takeda.  

2.1.1.

AAT-Specific License Grant.  Subject to the terms and conditions of this Agreement, during the Term, Arrowhead hereby grants to Takeda and its Affiliates an exclusive (even as to Arrowhead and its Affiliates, except as set forth in Section 2.6 (No Other Rights and Retained Rights)), non‑transferable (except as provided in Section 17.1 (Assignment)), sublicensable (through multiple tiers, in accordance with Section 2.2 (Sublicensing Terms)) license under the Arrowhead AAT-Specific Technology to Exploit the Products in the Field and in the Territory. The foregoing license grant will be royalty-bearing in the Takeda Territory.

2.1.2.

Platform License Grant.  Subject to the terms and conditions of this Agreement, during the Term, Arrowhead hereby grants to Takeda and its Affiliates an exclusive (even as to Arrowhead and its Affiliates, except as set forth in Section 2.6 (No Other Rights and Retained Rights)), non‑transferable (except as provided in Section 17.1 (Assignment)), sublicensable (through multiple tiers, in accordance with Section 2.2 (Sublicensing Terms)) license under the Arrowhead Platform Technology to Exploit the Products in the AATD Field and in the Territory. The foregoing license grant will be royalty-bearing in the Takeda Territory.

2.2.

Sublicensing Terms. Subject to this Section 2.2 (Sublicensing Terms), Takeda or its Affiliates may grant sublicenses under Section 2.1 (License Grants to Takeda) to any Affiliate or Third Party; provided that [***]. Takeda will promptly notify Arrowhead of the granting of (a) each material sublicense of Commercialization rights (excluding distribution arrangements or agreements with contract sales organizations or other Subcontractors) in any Major Market and (b) each sublicense of rights, or material extension of have made rights, with respect to Manufacturing activities in any Major Market and, in each case, the name of the applicable Sublicensee. Any such sublicense will be consistent with the terms of this Agreement and obligate the Sublicensee to comply with the applicable terms of this Agreement.  Notwithstanding any sublicense, Takeda will remain primarily liable to Arrowhead for the performance of all of its obligations under, and Takeda’s compliance

with all provisions of, this Agreement, and for the performance of all obligations of its Affiliates and Sublicensees as required under this Agreement.

2.3.

Subcontractors.  Takeda and its Affiliates may perform any of its obligations under this Agreement through one or more Subcontractors, provided that: (a) neither Takeda nor its Affiliates will engage any Subcontractor that has been debarred by any Regulatory Authority, (b) the Subcontractor undertakes in writing obligations of confidentiality and non-use applicable to the Confidential Information of Arrowhead that are at least as stringent as those set forth in Article 11 (Confidentiality and Publication), and (c) Takeda will be liable for any act or omission of any Subcontractor that is a breach of any of Takeda’s obligations under this Agreement as though the same were a breach by Takeda. Arrowhead may perform any of its obligations under this Agreement through one or more Subcontractors set forth in the Arrowhead Development Plan or, subject to Takeda’s prior written approval, not to be unreasonably withheld, through any new Subcontractor that Arrowhead proposes to engage to perform material Development activities under the Arrowhead Development Plan.

2.4.

In-Licenses.  The Parties agree that (a) all milestone, royalty, and other payments to any Third Party in respect of any Shared In-License that are specific to the Exploitation of the Products in the Profit-Share Territory and (b) [***], in each case ((a) and (b)), will be deemed a “Third Party Payment” subject to this Section 2.4 (In‑Licenses).

2.4.1.

Shared In-Licenses.  Subject to Section 2.4.2 (Shared In-License Process), Takeda may enter into any agreement for rights (whether by acquisition or license) under any Patent Rights or Know‑How Controlled by a Third Party for the specific purpose of Exploiting any Product in the Profit-Share Territory (a “Shared In-License”). [***].

2.4.2.

Shared In-License Process.  [***].

2.4.3.

Shared In-License Payments.  [***].

2.5.

Knowledge and Technology Transfer.  Schedule 2.5 (Transition Plan) attached hereto sets forth a proposed outline for the plan and timeline for the transition to Takeda of Development activities related to the Compounds and the Product ongoing as of the Effective Date.  Promptly following the Effective Date, the Parties, through their respective Alliance Managers, will finalize such transition plan and timeline. Subject to Section 4.2 (Assignment of Regulatory Submissions), (a) within [***] after the Effective Date, Arrowhead will deliver to Takeda copies of the written Arrowhead Know-How that are available in the site hosted for purposes of this Agreement on Intralinks as of the Effective Date, and (b) within [***] after the Effective Date, Arrowhead will deliver to Takeda copies of all other written Arrowhead Know-How not previously provided pursuant to clause.  Each Party will use reasonable efforts to perform the activities assigned to it under Schedule 2.5 (Transition Plan).  Thereafter during the Term, Arrowhead will promptly disclose to Takeda all additional Arrowhead Know-How in existence as of the Effective Date or that comes into existence as a result of performance by or behalf of Arrowhead of activities under this Agreement and not previously transferred to Takeda.  Arrowhead will provide any assistance as reasonably requested by Takeda in connection with its Exploitation of the Arrowhead Know-How and the Compounds and Products for a period up to [***] after the date on which Arrowhead delivers to Takeda such Arrowhead Know-How.  [***].

2.6.

No Other Rights and Retained Rights.  Except as otherwise expressly provided in this Agreement, under no circumstances will a Party or any of its Affiliates, as a result of this Agreement, obtain any ownership interest, license, or other right in or to any Know‑How, Patent Rights, or other intellectual property of the other Party, including tangible or intangible items owned, controlled, or developed by the other Party, or provided by the other Party to the receiving Party at any time, pursuant to this Agreement.  [***].

2.7.

License to Arrowhead.  Subject to the terms and conditions of this Agreement, Takeda hereby grants to Arrowhead and its Affiliates a non-exclusive, non-transferable, non-sublicensable license under the Takeda Technology, solely to the extent necessary to enable Arrowhead to perform its obligations in accordance with the terms of this Agreement.

2.8.

Exclusivity and Restrictions.   

2.8.1.

Exclusivity Covenants.  Subject to Section 2.8.2 (Acquisition of or by Third Parties), except as expressly permitted under this Agreement, during the Term, (a) Arrowhead will not, and will ensure that its Affiliates do not, independently or for or with any Third Party, Exploit any Arrowhead Competitive Product in the Field in the Territory and (b) Takeda will not, and will ensure that its Affiliates do not, independently or for or with any Third Party, Exploit any Takeda Competitive Product in the Field in the Territory (the “Competitive Activities”).

2.8.2.

Acquisitions of or by Third Parties.

(a)

Options.  If a Party or any of its Affiliates acquires or is acquired by a Third Party (whether such transaction occurs by way of a sale of assets, merger, consolidation, or similar transaction) and at such time such Third Party or any of its Affiliates is performing Competitive Activities with respect to one or more Competitive Products or is engaged in activities that would, upon the closing of such acquisition transaction, otherwise constitute a breach of Section 2.8.1 (Exclusivity Covenants), then such Party will provide the other Party with written notice promptly after the consummation of such acquisition transaction as permitted under applicable Law, subject to any obligations of confidentiality to such Third Party, and unless the Parties agree otherwise in writing, the acquired or acquiring Party, as applicable, will take one of the following actions set forth below in clauses (i) or (ii), and will notify the other Party of which of the actions in the following clauses (i) or (ii) the such acquired or acquiring Party will pursue:

(i)

divest, or cause its relevant Affiliates to divest, whether by license or otherwise, its interest (excluding a solely economic interest) in such Competitive Products; or

(ii)

terminate, or cause its relevant Affiliates to terminate, any further Competitive Activities with respect to such Competitive Products.

(b)

Time Periods.  If the acquired or acquiring Party, as applicable, notifies the other Party in writing that it intends to divest the applicable Competitive Products or terminate the performance of further Competitive Activities with respect to such

Competitive Products as provided in Section 2.8.2(a) (Acquisitions of or by Third Parties; Options), then such Party or its relevant Affiliate will effect (i) the consummation of such divestiture within [***] or such other period as may be required to comply with applicable Law or (ii) effect such termination of the applicable Competitive Activities with respect to the Competitive Product within [***], in each case ((i) and (ii)), after the closing of the relevant acquisition transaction and will confirm to the other Party in writing when it completes such divestiture pursuant to clause (i) or termination pursuant to clause (ii).  The acquired or acquiring Party will keep the other Party reasonably informed of its efforts and progress in effecting such divesture or termination until such Party completes the same.

(c)

Permitted Competitive Products.  (i) Neither Arrowhead nor any of its then-existing Affiliates (the “Acquired Party”) will be in breach of the restrictions set forth in Section 2.8.1 (Exclusivity Covenants) or Section 2.8.2 (Acquisition of or by Third Parties) if such Acquired Party undergoes a Change of Control with a Third Party (such Third Party and its Affiliates, the “Acquiring Party”) that is performing Competitive Activities with respect to one or more Arrowhead Competitive Products; (ii) any such Acquiring Party shall not be obligated to terminate or divest any Competitive Products pursuant to Section 2.8.2 (Acquisition of or by Third Parties) unless such Competitive Product is a Takeda Competitive Product (in which case such Acquiring Party shall terminate or divest such Takeda Competitive Product); and (iii) any such Acquiring Party shall be restricted from performing future Competitive Activities with respect to Arrowhead Competitive Products that were not Exploited prior to such Change of Control only with respect to any compound or product for the treatment of liver diseases associated with AATD, but shall not be restricted with respect to any Arrowhead Competitive Product for the treatment of diseases or conditions for any other diseases or conditions (any Competitive Products with respect to which Competitive Activities are permitted under clauses (i), (ii) and (iii) of this Section 2.8.2(c), (“Permitted Competitive Products”)); provided that, in each case ((i) through (iii)), (A) no Arrowhead Technology or Takeda Technology is used by or on behalf of such Acquired Party or Acquiring Party in connection with any subsequent performance of any such Competitive Activities with respect to any such Permitted Competitive Products, and (B) such Acquired Party or Acquiring Party institutes commercially reasonable technical and administrative safeguards to ensure the requirements set forth in the foregoing clause (A) are met, including by creating “firewalls” between the personnel working on such Permitted Competitive Products and the personnel teams charged with working on any Product (or component thereof) or having access to data from activities performed under this Agreement or Confidential Information of the Parties.

3.

DEVELOPMENT

3.1.

Development Responsibility.

3.1.1.

Arrowhead Responsibility.  Arrowhead will be solely responsible for conducting the Ongoing Development Trials and all associated Ongoing Development Activities in accordance with the Arrowhead Development Plan.

3.1.2.

Changes to Development Plan.  [***].

3.1.3.

Arrowhead Development Plan.  A written plan of Development activities to be conducted by Arrowhead for ARO-AAT until completion of the Ongoing Development Trials is attached hereto as Schedule 3.1.3 (Arrowhead Development Plan) and, as such plan may be updated in accordance with this Agreement, referred to as the “Arrowhead Development Plan.”  The Arrowhead Development Plan includes (and all updates will include) [***].  Arrowhead, through the JSC, will propose updates to the Arrowhead Development Plan on [***] basis.  In addition, in addition to updates to be made pursuant to Section 3.1.2 (Changes to Development Plans), Arrowhead may propose updates to the Arrowhead Development Plan as necessary. The JSC will review, discuss, and determine whether to approve each such [***] update and any other such update to the Arrowhead Development Plan.  

3.1.4.

Takeda Responsibility.  For each Product, except as set forth in Section 3.1.1 (Arrowhead Responsibility) with respect to the Ongoing Development Trials and associated Ongoing Development Activities, Takeda will have sole control over and decision-making authority for the Development of such Product, including [***]. For the avoidance of doubt, other than with respect to the New Phase II Trial, Takeda will have sole control over and decision-making authority with respect to the conduct of all Clinical Trials for the Product, including [***].

3.1.5.

Co-Funded Development Plan.  At least [***] prior to the commencement of any Co-Funded Development Activities, Takeda will prepare a detailed written plan for such activities and submit such plan to the JSC to review, discuss, and determine whether to approve. The development plan for the Co-Funded Development Activities is referred to as the “Co-Funded Development Plan.”  The Co-Funded Development Plan will include: (a) [***] and (b) a detailed written budget, on an activity-by-activity basis, of expected FTE Costs, Out-of-Pocket Costs, and other costs and expenses relating to the performance of such PMR/PMC Activities and Additional Studies under the Co-Funded Development Plan on a [***] basis for the subsequent [***], which budget will include [***] (as may be updated by the Parties from time to time, the “Initial Co-Funded Development Budget”, and together with such budget in respect of each subsequent Calendar Year, each, a “Co-Funded Development Budget”). Takeda, through the JSC, will propose updates to the Co-Funded Development Plan on [***] basis, and will propose a Co-Funded Development Budget for each subsequent [***] no later than [***] of the then-current [***].  In addition, Takeda may propose updates to the Co-Funded Development Plan and the Co-Funded Development Budget as necessary from time-to-time during a Calendar Year. The JSC will review, discuss, and determine whether to approve the proposed Co-Funded Development Plan, including the Initial Co-Funded Development Budget, and each [***] update and any other such proposed material update, in accordance with Section 9.2.3 (Responsibilities of JSC).

3.2.

Development Diligence Obligations.

3.2.1.

Arrowhead Development Diligence Obligations.  Arrowhead will use Commercially Reasonable Efforts to [***].

3.2.2.

Takeda Development Diligence Obligations.  Subject to Arrowhead’s satisfaction of its Development diligence obligations set forth in Section 3.2.1 (Arrowhead Development Diligence Obligations), Takeda will use Commercially Reasonable Efforts to [***].

3.2.3.

Development and Manufacturing Expenses.  

(a)

Co-Funded Expenses.  (i) The Parties will share the Eligible Development Expenses incurred [***] and (ii) Arrowhead will [***].

(b)

PMR/PMC Activities.  Commencing from and after the Execution Date and during the Term, the Parties will share all Eligible Development Expenses [***] at a ratio of [***] (Takeda: Arrowhead) (the “Eligible Development Costs Share Ratio”) in accordance with [***].  Within [***] after the end of each [***] after the Effective Date, [***] (each such report, an “Eligible Development Expenses Report”) and [***].  Arrowhead will [***].

(c)

Other Expenses.  Arrowhead will be solely responsible for all costs and expenses associated with (i) the Ongoing Development Activities and (ii) the Manufacture of Compounds or Products necessary for Takeda’s conduct of the New Phase III Trial or such other Phase III Clinical Trials as may be required to obtain Regulatory Approval for a Product comprising ARO-AAT pursuant to Section 3.1.2 (Changes to Development Plans).  Except as expressly set forth in this Section 3.2.3 (Development and Manufacturing Expenses), Takeda will be solely responsible for all costs and expenses associated with the Development of Products in the Takeda Territory.

(d)

Reimbursement for Additional Studies.  Prior to the commencement of each Additional Study, Takeda will submit an invoice to Arrowhead for [***] (the “Forecasted Additional Study Credit”). For each Additional Study, Takeda may [***] and (ii) [***].  No later than [***] following the completion of each Additional Study, Takeda will provide Arrowhead with [***] ([***] the “Actual Additional Study Credit”), and (A) if [***] and (B) [***].  

3.2.4.

Products Development Reports.  Each Party will keep the JSC informed regarding the progress of its respective Development activities for the Products.  Following the disbandment of the JSC pursuant to Section 9.2.1 (Purpose; Formation), each Party will provide the other Party [***] update regarding the progress of its Development activities for the Products within [***] following the start of each [***].  In addition, Arrowhead will provide to the JSC reasonably in advance of each meeting of the JSC a report (by means of a slide presentation or otherwise) summarizing results and describing progress made against timelines in the Arrowhead Development Plan, and Ongoing Development Activities planned to be undertaken for the Products for the next [***], and (b) for each Product, a reasonable summary of results, information, and data generated from Clinical Trials for such Product, and updates regarding intellectual property issues (each such report, a “Development Report”). Arrowhead will promptly share with Takeda all other

material developments and information that it comes to possess relating to the Development of the Products conducted by or on behalf of Arrowhead, including any additional information regarding the Development of the Products reasonably requested by Takeda through the JSC from time to time to the extent and in the form readily available to Arrowhead and able to be disclosed to Takeda.

3.3.

Scientific Records.  Arrowhead (with respect to the Ongoing Development Activities) and Takeda (with respect to all other Development activities hereunder) will maintain scientific records in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, and in compliance with GLP, cGMP, and GCP with respect to activities intended to be submitted in regulatory filings (including INDs), all of which records will fully and accurately reflect all work done and results achieved in the performance of the Development activities and Clinical Trials by or on behalf of such Party with respect to Products.

4.

REGULATORY MATTERS

4.1.

Regulatory Responsibilities.  Prior to the IND Transfer Date, Arrowhead will be the Regulatory Lead for all regulatory matters in the Territory relating to the Arrowhead Development Activities. Subject to Section 4.2 (Assignment of Regulatory Submissions), Takeda (itself or through its Affiliate or Sublicensee) will be solely responsible as the Regulatory Lead for all other regulatory matters in the Territory relating to the Products. Arrowhead will provide Takeda with a copy of all proposed Regulatory Submissions to be filed with or submitted to any Regulatory Authority for Takeda’s review and comment sufficiently in advance of Arrowhead’s filing or submission thereof, and Arrowhead will reasonably consider incorporating any reasonable comments received from Takeda into such Regulatory Submissions.  Subject to Section 4.2 (Assignment of Regulatory Submissions), Takeda (itself or through its Affiliate or Sublicensee) will own all INDs, MAA, Regulatory Approvals, other Regulatory Submissions, and related regulatory documents, in the Territory with respect to such Products (in each case, as applicable).  Notwithstanding any provision to the contrary set forth in this Agreement, Takeda will be the Regulatory Lead for all meetings with applicable Regulatory Authorities upon the end of the New Phase II Trial.

4.2.

Assignment of Regulatory Submissions.  

4.2.1.

Clinical Trial Regulatory Submissions.

(a)

Clinical Trial Regulatory Submissions.  Within [***] after the Data Read-Out for the New Phase II Trial, or such other date as the Parties may agree, Arrowhead will transfer and assign to Takeda all rights, title, sponsorship, and interests in and to the Clinical Trial Regulatory Submissions and assist Takeda with such transfer and assignment.  The date of such transfer will be the “IND Transfer Date.” Takeda will take over as Regulatory Lead for all Products on the IND Transfer Date.  Prior to or on the IND Transfer Date, Arrowhead will submit written notification to the FDA informing it of the transfer of the Clinical Trial Regulatory Submissions from Arrowhead to Takeda. Arrowhead will provide reasonable assistance from Arrowhead’s FTEs at no cost to Takeda as set forth in Section 2.5 (Knowledge and Technology Transfer).

(b)

Other Assigned Regulatory Submissions.  Promptly after the IND Transfer Date, Arrowhead will transfer or otherwise make available to Takeda copies (in electronic or other format) of other Regulatory Approvals or Regulatory Submissions in the Territory Controlled by Arrowhead or its Affiliates as of the IND Transfer Date and not transferred to Takeda prior to the IND Transfer Date pursuant to Section 4.2.1(a) (Clinical Trial Regulatory Submissions), to the extent such materials specifically relate to the Compounds or any Product. No later than [***] after the completion of all transition activities set forth in this Section 4.2.1(b) (Other Assigned Regulatory Submissions), Arrowhead will send a letter to each applicable Regulatory Authority to record and notify such Regulatory Authority of the transfer to Takeda of all Regulatory Approvals and Regulatory Submissions for all Products.

(c)

Clinical Trial Data.  In connection with the transfer of Regulatory Submissions provided for in this Section 4.2.1 (Clinical Trial Regulatory Submissions), Arrowhead will provide to Takeda separate copies (in electronic or other format) of the study reports and underlying data (to the extent not previously provided to Takeda) from the Ongoing Development Activities.

4.2.2.

Other Regulatory Submissions.  To the extent not addressed in Section 4.2.1 (Clinical Trial Regulatory Submissions), (a) Arrowhead will transfer and assign to Takeda, upon a date to be agreed by the JSC (or, with respect to any orphan drug designation, within [***] after the Effective Date), all of Arrowhead’s rights, title, and interests in and to all INDs, MAAs, and other Regulatory Approvals or Regulatory Submissions in the Territory for the Compounds or any Product; (b) the Parties will complete all other transition activities of such transition to Takeda of the Regulatory Lead within [***] after the Effective Date; and (c) no later than [***] after the completion of all transition activities set forth in the foregoing clause (b), Arrowhead will send a letter to each Regulatory Authority as applicable to a specific country or jurisdiction to record and notify such Regulatory Authority of the transfer to Takeda of all Regulatory Approvals and Regulatory Submissions for such Compound in such country or jurisdiction.

4.2.3.

Cooperation. Subject to the terms and conditions of this Agreement, within a reasonable time following Takeda’s request, Arrowhead will execute and deliver, or will cause to be executed and delivered, to Takeda such endorsements, assignments, and other documents as may be reasonably necessary to assign, convey, transfer, and deliver to Takeda all of Arrowhead’s rights, title, and interests in and to the Assigned Regulatory Submissions. Schedule 4.2.3 (Regulatory Submissions Dates) sets forth upcoming dates of Regulatory Submission for each of the Compounds as of the Execution Date.

4.3.

Takeda Obligations.  Takeda will provide Arrowhead, through the JSC at least [***], with written notice of each of the following events with regard to each Product for which Takeda is the Regulatory Lead: (a) to the extent notice was not previously provided, the submission to the applicable Regulatory Authorities of any filings or applications for Regulatory Approval of such Products in the Profit-Share Territory; and (b)  all Regulatory Submissions (as well as orphan drug applications and designations) that were filed for any Products in the Profit-Share Territory during such preceding [***]; provided, however, that Takeda will inform Arrowhead of such event under (a) or (b) prior to public disclosure of such event by Takeda.

4.4.

Costs of Regulatory Affairs.  Except as otherwise expressly provided in this Article 4 (Regulatory Matters), (a) the Parties will share the costs and expenses associated with obtaining and maintaining Regulatory Approval for the Products in the Profit-Share Territory, and related regulatory affairs activities as set forth in this Article 4 (Regulatory Matters) for such Product in the Profit-Share Territory as Other Operating Expenses, accordance with Section 10.2.1 (Profit and Loss Share) and (b) except as otherwise expressly set forth in this Agreement, Takeda will be solely responsible for all costs and expenses associated with obtaining and maintaining Regulatory Approval in the Takeda Territory for the Products.

4.5.

Pharmacovigilance Agreement.  As soon as reasonably practicable (and in any event no later than [***]) following the Effective Date, the Parties will use good faith efforts to negotiate and execute a pharmacovigilance agreement, on reasonable and customary terms that will provide, among other things, guidelines and responsibilities for (a) the receipt, investigation, recording, review, communication, reporting, and exchange between the Parties of Adverse Event reports and other safety information relating to the Compounds and Products, (b) appropriate reconciliation procedures to ensure adequate and compliant exchange of safety data, (c) contact with Regulatory Authorities with respect to the foregoing, and (d) the maintenance of a global safety database with respect to the Compounds and Products, in each case ((a) – (d)), in accordance with applicable Law (the “Pharmacovigilance Agreement”). The Pharmacovigilance Agreement will contain terms no less stringent than those required by ICH or other applicable guidelines in order to allow the Parties to meet the applicable regulatory and legal requirements regarding the management of safety data in their respective territories. Pending entry into such Pharmacovigilance Agreement, the Parties will, if necessary, within [***] following the Effective Date implement an interim procedure for exchange of any and all information concerning all Adverse Events related to use of the Product.

5.

OTHER OPERATING EXPENSES

5.1.

Other Operating Expenses.  No later than [***] following the Effective Date, Takeda will prepare a reasonably detailed, written budget, on a [***] basis, of the following categories of Other Operating Expenses anticipated to be incurred by Takeda in the performance of Exploitation activities or sublicensing activities for the Products in the Profit-Share Territory: (a) [***], (b) [***], and (c) [***] (as may be updated by Takeda from time to time, the “Initial Other Operating Expenses Budget”, and together with such budget in respect of each subsequent Calendar Year, each, an “Other Operating Expenses Budget”).  Takeda, through the JSC, will propose an Other Operating Expenses Budget for each subsequent [***] no later than [***] of the then-current [***].  In addition, Takeda may propose updates to the Other Operating Expenses Plan and the Other Operating Expenses Budget as reasonably necessary from time-to-time during a Calendar Year. The JSC will review, discuss, and determine whether to approve the proposed Initial Other Operating Expenses Budget, and each [***] update and any other such proposed update in accordance with Section 9.2.3 (Responsibilities of JSC).

6.

MANUFACTURING

6.1.

Initial Manufacturing Period.

6.1.1.

Arrowhead Manufacturing Activities.  Subject to the authority of the JSC, during the Initial Manufacturing Period, Arrowhead will be responsible for all Manufacturing activities for Clinical Trial Material for the Current Product, including, as applicable, all

CMC activities and stability studies and the Manufacture and supply of the quantity of Clinical Trial Material required for the conduct of the Current Phase II/III Clinical Trial or New Clinical Trial, as applicable (the “Arrowhead Manufacturing Activities”). The “Initial Manufacturing Period” will commence on the Effective Date and continue until the earliest to occur of (a) the date on which Takeda confirms that the Manufacturing Technology Transfer for the Current Product is complete, such that Takeda’s (or its designee’s) facilities has been qualified and otherwise received all Regulatory Approvals required to Manufacture such Product, and (b) the delivery by Arrowhead of all of the quantities of Clinical Trial Material required for Takeda’s conduct of the New Phase III Trial or such other Phase III Clinical Trial as is required to obtain Regulatory Approval for a Product comprising ARO-AAT pursuant to Section 3.1.2 (Changes to Development Plans), and will allocate sufficient reserved capacity for the foregoing. During the Initial Manufacturing Period, Arrowhead may conduct the Arrowhead Manufacturing Activities itself or through [***] or any other CMO approved in writing by Takeda.  Arrowhead will be solely responsible for all Manufacturing Costs that it incurs in performing the Arrowhead Manufacturing Activities, whether itself or through a Third Party, during the Initial Manufacturing Period.

6.1.2.

Manufacturing Working Group.  Notwithstanding Arrowhead’s responsibility for the Arrowhead Manufacturing Activities, within [***] after the Effective Date, the JSC will establish a manufacturing working group (“MWG”) that will (a) facilitate and monitor the Arrowhead Manufacturing Activities; (b) evaluate and select a replacement CMO for drug product; (c) prepare a plan for the conduct of the Manufacturing Technology Transfer described in Section 6.4 (Manufacturing Technology Transfer); and (d) ensure such other plans and processes are developed to enable uninterrupted supply of Clinical Trial Materials under and in accordance with this Agreement and the CTM Supply Agreement. The MWG will include representatives from each Party’s pharmaceutical science, manufacturing and supply, and quality groups.

6.1.3.

Manufacture by CMO.  Unless otherwise agreed by the Parties, if Arrowhead is performing the Arrowhead Manufacturing Activities through one or more CMOs, then, in connection with the transition of Manufacturing responsibility to Takeda, the Parties will discuss in good faith the assignment or transfer to Takeda of the agreements between Arrowhead and one or more of such CMOs. Arrowhead will use reasonable efforts to ensure that any such agreement between Arrowhead and such a CMO that is specific to a Product under this Agreement permits Arrowhead to assign such agreement to Takeda.

6.1.4.

CTM Supply Agreement.  No later than [***] after the Effective Date, the Parties will negotiate in good faith the terms of an agreement for the Manufacture and supply to Takeda of the Clinical Trial Material for each applicable Product (the “CTM Supply Agreement”), which CTM Supply Agreement will include the terms set forth on Schedule 6.1.4 (CTM Supply Agreement Term Sheet).  The CTM Supply Agreement will include customary terms for supply of material to a collaboration partner for Clinical Trials.  The CTM Supply Agreement will be subordinate to this Agreement.   

6.1.5.

Arbitration for Failure to Agree.  If the Parties cannot reach agreement and enter into the CTM Supply Agreement within the applicable period set forth in Section 6.1.4 (CTM

Supply Agreement), then the final terms and conditions of such CTM Supply Agreement will be determined through binding arbitration as follows:

(a)

[***].

(b)

[***].

(c)

[***].

(d)

[***].

6.1.6.

Takeda’s Assumption of Manufacturing Responsibility.  Takeda will have the right, at its election [***], to assume all Manufacturing responsibilities for the Products on terms to be set forth in additional detail in the plan for the Manufacturing Technology Transfer to be agreed pursuant to Section 6.4 (Manufacturing Technology Transfer). Arrowhead will work collaboratively and in good faith with Takeda to complete the Manufacturing Technology Transfer in order to enable Takeda to so Manufacture the Products.

6.2.

Supply After the Initial Manufacturing Period.  After Takeda assumes responsibility for the Manufacture of the Products, then following successful Manufacturing Technology Transfer as set forth in Section 6.4 (Manufacturing Technology Transfer), Takeda will have sole control over and decision-making authority with respect to, all Manufacturing activities for the Manufacture of the Products and responsibility for all costs and expenses associated therewith.

6.3.

Observation by Takeda.  Arrowhead will provide Takeda with the opportunity, upon Takeda’s reasonable request during normal business hours, to observe the Manufacturing processes and procedures for the Compounds and Products (e.g., review assays, batch records, and release processes and procedures) for the purpose of enabling Takeda (or a Third Party CMO designated by Takeda) to Manufacture the Compounds and Products pursuant to Section 6.4 (Manufacturing Technology Transfer).  If Arrowhead utilizes a CMO for the Manufacture of any Compound or Product, then Arrowhead will take reasonable actions, including entering into a three-party agreement with Takeda and such CMO, to enable Takeda to exercise its rights under this Section 6.3 (Observation by Takeda).  For the avoidance of doubt, all information learned or observed by Takeda in connection with such observations that otherwise falls within the definition of Arrowhead Know-How, will be Arrowhead Know-How licensed to Takeda and subject to the non-use and non-disclosure obligations set forth herein.

6.4.

Manufacturing Technology Transfer.  In addition to the initial technology transfer set forth in Section 2.5 (Knowledge and Technology Transfer), upon Takeda’s election to assume Manufacturing responsibility pursuant to Section 6.1.6 (Takeda’s Assumption of Manufacturing Responsibility), Arrowhead will work with Takeda to transfer to Takeda (a) all Arrowhead Know-How that is necessary or that has been identified by either Party as reasonably useful to enable the Manufacture of the Compounds and Products, to the extent not previously transferred to Takeda under this Agreement, by providing copies or samples of relevant documentation, materials, and other embodiments of any such Arrowhead Know-How, and by making available its qualified technical personnel on a reasonable basis to consult with Takeda with respect to such Know-How, and (b) subject to the conditions in this Section 6.4 (Manufacturing Technology Transfer), any materials (as well as any intermediates and impurities of such materials) used by Arrowhead or its

Affiliates or Subcontractors in the Manufacture of such Product (the “Manufacturing Technology Transfer”).  The Manufacturing Technology Transfer will be conducted pursuant to and will be subject to a written plan developed and agreed by the Parties in good faith at least [***] prior to the anticipated commencement of the Manufacturing Technology Transfer, the purpose of which plan will be to carry out the complete and timely transfer of such Arrowhead Know-How in a manner that is consistent with then-current reasonable internal technology transfer corporate standards (or equivalent policy) of Takeda.  Without limiting the foregoing, in connection with the development of the Manufacturing Technology Transfer plan, Arrowhead will identify to Takeda any Third Party intellectual property used by Arrowhead in the Manufacture of the Products that may contain restrictions or conditions applicable to the use thereof by or on behalf of Takeda. If requested by Takeda, Arrowhead will use reasonable efforts to facilitate Takeda’s access to or right to use or have used any such Third Party intellectual property.

6.5.

Arrowhead Manufacturing Support.  Following the Manufacturing Technology Transfer contemplated by Section 6.4 (Manufacturing Technology Transfer) it may be necessary for Takeda from time to time to seek assistance and cooperation from Arrowhead in connection with the Manufacture of Products, including with respect to scale-up activities.  Arrowhead will use reasonable efforts to provide any such assistance and cooperation reasonably requested by Takeda within [***] following the completion of the Manufacturing Technology Transfer.  [***].

7.

COMMERCIALIZATION

7.1.

Commercialization of the Products.

7.1.1.

Co-Funded Commercialization Plan.  No later than [***] prior to the anticipated First Commercial Sale for each Product in the Profit-Share Territory, Takeda will prepare a reasonably detailed written plan for Commercialization of the Products in the Profit-Share Territory (as may be updated from time to time, a “Co-Funded Commercialization Plan,” and the Commercialization activities described in the Co-Funded Commercialization Plan, the “Co-Funded Commercialization Activities”) and submit such plan to the JSC to review and discuss such plan. The Co-Funded Commercialization Plan will include: (a) [***] and (b) a detailed, written budget of the expected FTE Costs, Out-of-Pocket Costs, and other costs and expenses within Eligible Shared Expenses for such Commercialization activities on a [***] basis for the subsequent [***], including [***] (as may be updated by Takeda from time to time, the “Initial Co-Funded Commercialization Budget”, and together with such budget in respect of each subsequent [***], each, a “Co-Funded Commercialization Budget”). Takeda, through the JSC, will propose updates to the Co-Funded Commercialization Plan on [***] basis, and will propose a Co-Funded Commercialization Budget for the subsequent [***] no later than [***] of the then-current [***]. In addition, Takeda may propose updates to the Co-Funded Commercialization Plan and the Co-Funded Commercialization Budget as necessary from time-to-time during a [***]. The JSC will review, discuss and determine whether to approve the proposed Co-Funded Commercialization Plan, including the Initial Co-Funded Commercialization Budget, and each [***] update and any other such proposed material update in accordance with Section 9.2.3 (Responsibilities of JSC).

7.1.2.

Commercialization Diligence Obligations. Takeda will use Commercially Reasonable Efforts to perform the Co-Funded Commercialization Activities under the Co-Funded

Commercialization Plan and to otherwise Commercialize each Product in each Major Market in which such Product receives Marketing Approval.  Takeda will have no other diligence obligations under this Agreement to Commercialize any Products, and Arrowhead’s sole and exclusive remedy with respect to any breach of Takeda’s diligence obligations under this Section 7.1.2 (Commercialization Diligence Obligations) will be its right to terminate this Agreement in accordance with Section 15.4 (Termination for Material Breach).  

7.1.3.

Commercialization Responsibility.  As between the Parties, Takeda will lead and have sole control over and decision-making authority with respect to all Commercialization activities in the Profit-Share Territory and in the Takeda Territory.

7.2.

Commercialization Expenses.  The Parties will share the Eligible Commercialization Expenses for all Products for the Profit-Share Territory as set forth in Section 10.2.1 (Profit and Loss Share), and Takeda will be solely responsible for all costs and expenses relating to the Commercialization of all Products in the Takeda Territory.

7.3.

Recalls, Market Withdrawals, or Corrective Actions.  Prior to the time that Takeda assumes responsibility for the Manufacture of the Products, either Party may decide whether to conduct any recall or other similar market withdrawal or other action for any Product and the manner in which any such recall will be conducted (including any such recall requested by a Regulatory Authority). After Takeda assumes responsibility for the Manufacture of the Products, Takeda will have the sole right to decide whether to conduct any recall or other similar market withdrawal or other action for any Product and the manner in which any such recall will be conducted (including any such recall requested by a Regulatory Authority). The Parties will share the applicable expenses incurred pursuant to this Section 7.3 (Recalls, Market Withdrawals, or Corrective Actions) for such Product in the Profit-Share Territory in accordance with Section 10.2.1 (Profit and Loss Share) and Takeda will bear all such costs and expenses for all Products in the Takeda Territory, subject to Article 13 (Indemnification; Limitation of Liability; Insurance).

8.

MEDICAL AFFAIRS

8.1.

Co-Funded Medical Affairs Plan.  No later than [***] prior to the anticipated First Commercial Sale for a Product in the Profit-Share Territory, Takeda will prepare a reasonably detailed written plan for the Medical Affairs activities and any other activities related to patient advocacy or health economics and outcomes research, in each case, for Products in the Profit-Share Territory (as may be updated from time to time, the “Co-Funded Medical Affairs Plan,” and all activities set forth under the Co-Funded Medical Affairs Plan, the “Co-Funded Medical Affairs Activities”), and submit such plan to the JSC for its review and discussion.  The Co-Funded Medical Affairs Plan for a Product will contain (a) [***], (b) [***], and (c) a written budget of the expected FTE Costs and Out-of-Pocket Costs for all activities under the Co-Funded Medical Affairs Plan on a [***] basis for the subsequent [***] (as may be updated by Takeda from time to time, the “Initial Co-Funded Medical Affairs Budget”, and together with such budget in respect of each subsequent [***], each, a “Co-Funded Medical Affairs Budget.”).  Takeda, through the JSC, will propose updates to the Co-Funded Medical Affairs Plan on [***] basis, and will propose a Co-Funded Medical Affairs Budget for each subsequent [***] no later than [***] of the then-current [***]. In addition, Takeda may propose updates to the Co-Funded Medical Affairs Plan and the Co-Funded Medical Affairs Budget as reasonably necessary from time-to-time during a [***]. The JSC will

review, discuss, and determine whether to approve the proposed Co-Funded Medical Affairs Plan, including the Initial Co-Funded Medical Affairs Budget, and each annual update thereto and any other such proposed material update in accordance with Section 9.2.3 (Responsibilities of JSC).

8.2.

Products Medical Affairs Expenses.  The Parties will share the Eligible Medical Affairs Expenses for all Products for the Profit-Share Territory as set forth in Section 10.2.1 (Profit and Loss Share), and Takeda will be solely responsible for all costs and expenses relating to Medical Affairs for all Products in the Takeda Territory.

9.

GOVERNANCE

9.1.

Alliance Manager.  Promptly following the Effective Date each Party will designate an individual to facilitate communication and coordination of the Parties’ activities under this Agreement relating to the Products and to provide support and guidance to the JSC, including preparing agendas, meeting materials, and meeting minutes for JSC meetings (each, an “Alliance Manager”).  Each Alliance Manager may, but is not required to, serve as a representative of its respective Party on the JSC, but the Alliance Managers or suitable designees will attend all meetings of the JSC. The Alliance Managers may bring to the attention of the JSC any matters or issues either of them reasonably believes should be discussed by the JSC. Each Party may replace its Alliance Manager at any time by written notice to the other Party. The Alliance Managers will be responsible for creating and maintaining a constructive work environment between the Parties. Without limiting the generality of the foregoing, the Alliance Managers will: (a) identify and timely bring to the attention of their respective managements any disputes arising between the Parties related to this Agreement; (b) provide a single point of communication between the Parties with respect to this Agreement and the Parties’ respective activities hereunder; (c) ensure that meetings of the JSC occur as set forth in this Agreement, that procedures are followed with respect to such meetings (including the giving of proper notice and the preparation and approval of minutes) and that relevant action items resulting from such meetings are appropriately carried out or otherwise addressed; and (d) undertake such other responsibilities as the Parties may mutually agree in writing.

9.2.

Joint Steering Committee.  

9.2.1.

Purpose; Formation.  Within [***] after the Effective Date, the Parties will establish a joint steering committee (the “JSC”) that will monitor and provide strategic oversight of the activities under this Agreement and facilitate communication between the Parties, in each case, with respect to the Development of all Products and Commercialization of the Products in the Profit-Share Territory, all in accordance with the terms of this Agreement. The JSC will disband upon the earlier of (a) the date on which there are no Products being Exploited in the Profit-Share Territory and (b) the receipt of Regulatory Approval of the Current Product in each Major Market.

9.2.2.

Composition.  Each Party will initially appoint [***] representatives to the JSC, with each representative having knowledge and expertise in the Exploitation of assets and products similar to the Products, and having sufficient seniority within the applicable Party to provide meaningful input and make decisions arising within the scope of the JSC’s responsibilities.  The JSC may change its size from time to time by [***] of the Parties, provided that, unless otherwise agreed by the Parties in writing, the JSC will consist at all times of [***] of representatives of each Party.  Each Party may replace its JSC

representatives at any time upon written notice to the other Party.  The JSC may invite non‑members to participate in the discussions and meetings of the JSC, but such participants will have no voting authority at the JSC and must be bound under written obligations of confidentiality no less protective of the Parties’ Confidential Information than those set forth in this Agreement.  The Alliance Managers will prepare and circulate agendas and ensure the preparation and approval of minutes.  

9.2.3.

Responsibilities of JSC.  In addition to its overall responsibility for monitoring and providing strategic oversight with respect to the Parties’ activities with respect to the Development of all Products and Commercialization of the Products under this Agreement, the JSC will have the following responsibilities:

(a)

review, discuss, and determine whether to approve (i) the Co-Funded Development Plan, Co-Funded Development Budget, and any updates thereto (ii) [***], and (iii) [***];

(b)

review, discuss, and determine whether to approve (i) the Co-Funded Commercialization Plan, Co-Funded Commercialization Budget, and any updates thereto, (ii) Co-Funded Medical Affairs Plan, Co-Funded Medical Affairs Budget, and any updates thereto, (iii) [***], (iv) [***];

(c)

review, discuss, and determine whether to approve an amendment to the Current Phase II/III Trial to reflect the New Phase II Trial and New Phase III Trial, as described in Section 3.1.2 (Changes to Development Plan);

(d)

review, discuss, and determine whether to approve any proposed amendments to the Arrowhead Development Plan, as described in Section 3.1.3 (Arrowhead Development Plan);

(e)

review, discuss, and determine whether to approve any proposed material amendments to the Co-Funded Development Plan, as described in Section 3.1.5 (Co-Funded Development Plan);

(f)

review, discuss, and determine the appropriate course of action in the event of a safety signal with respect to a Product or a recall decision by any Regulatory Authority with respect to a Product;

(g)

review discuss, and determine whether to approve any proposed material amendments to the Co-Funded Commercialization Plan, as described in Section 7.1.1 (Co-Funded Commercialization Plan);

(h)

review discuss, and determine whether to approve any proposed material amendments to the Co-Funded Medical Affairs Plan, as described in Section 8.1 (Co-Funded Medical Affairs Plan);

(i)

[***];

(j)

review and discuss any proposed publication by either Party, as described in Section 11.2 (Publication and Publicity);

(k)

review, discuss, and determine, if requested by either Party, an alternate timeframe for Takeda’s negotiation of an agreement with a qualified vendor for purposes of the transfer and storage of inventory of Product or for Arrowhead’s transfer to Takeda of inventory of one or more Compounds, as described on Schedule 2.5 (Transition Plan);

(l)

serve as a forum for exchange of information for the Parties in relation to the Products, or any activities undertaken by or on behalf of either Party under this Agreement, including Development Reports, as described in Section 3.2.4 (Products Development Reports) and notices and Regulatory Submissions, as described in Section 4.3 (Takeda Obligations);

(m)

establish a MWG, as described in Section 6.1.2 (Manufacturing Working Group);

(n)

[***];

(o)

form such other committees or working groups under the JSC as may be necessary or desirable to facilitate the activities under this Agreement as the Parties may agree and oversee the activities of any such other committees or working groups;

(p)

attempt to resolve any disputes on matters within the JSC’s authority on an informal basis and in good faith prior to the institution of escalation or other formal dispute resolution mechanisms hereunder; and

(q)

perform such other functions expressly allocated to the JSC in this Agreement or by the written agreement of the Parties.

9.2.4.

JSC Meetings.  The JSC will meet at least [***] unless the Parties mutually agree in writing to a different frequency. No later than [***] prior to any meeting of the JSC (or such shorter time period as the Parties may agree), the Alliance Managers will prepare and circulate an agenda for such meeting; provided, however, that either Party may propose additional topics to be included on such agenda, either prior to or in the course of such meeting. Either Party may also call a special meeting of the JSC (by videoconference, teleconference, or in person) by providing at least [***] prior written notice to the other Party if such Party reasonably believes that a significant matter must be addressed prior to the next scheduled meeting, in which event such Party will work with the Alliance Managers to provide the members of the JSC, no later than [***] prior to the special meeting, with an agenda for the meeting and materials reasonably adequate to enable an informed decision on the matters to be considered. In addition to any items set forth on the agenda for a meeting of the JSC, at each meeting of the JSC, Takeda will provide an update on all activities performed by or on behalf of Takeda in connection with the Exploitation of the Products since the last meeting of the JSC, and evaluate the activities performed against all relevant plans.  The JSC may meet in person, by videoconference or by teleconference.  In‑person JSC meetings will be held at agreed locations.  Each Party will bear the expense of its respective JSC members’ participation in JSC meetings.  Meetings

of the JSC will be effective only if at least [***] of each Party (which [***] is not such Party’s Alliance Manager) is present or participating in such meeting.  The Alliance Managers will be responsible for preparing reasonably detailed written minutes of all JSC meetings that reflect material decisions made and action items identified at such meetings.  The Alliance Managers will send draft meeting minutes to each member of the JSC for review and approval within [***] after each JSC meeting.  Such minutes will be deemed approved unless [***] members of the JSC object to the accuracy of such minutes within [***] of receipt.

9.3.

Decisions of the JSC.  The JSC has the authority (a) for matters specifically delegated to it or expressly specified in this Agreement and (b) with respect to any other matter agreed to by the Parties in writing.  All decisions of the JSC will be made by [***] vote, with each Party’s representatives having one vote (i.e., one vote per Party).  No action taken at any meeting of the JSC will be effective unless there is a quorum at such meeting, and at all such meetings, a quorum will be reached if [***] voting representatives of each Party are present or participating in such meeting.  For clarity, the JSC will not have any power to amend, modify, or waive compliance with this Agreement.  The JSC has no other authority under this Agreement than what is expressly granted under this Agreement.  The JSC will use good faith, commercially reasonable efforts in compliance with this Section 9.3 (Decisions of the JSC) to promptly resolve any such matter for which it has authority. If the JSC is unable to reach consensus with respect to any such matter for which it is responsible within [***] after a Party affirmatively states to the other Party that a decision needs to be made, then such matter will be subject to Section 9.4 (Resolution of JSC Disputes).

9.4.

Resolution of JSC Disputes.

9.4.1.

Referral to Executive Officers.  Either Party may make an election under Section 9.3 (Decisions of the JSC) to refer a matter as to which the JSC cannot reach a consensus decision to the Executive Officers, following which the JSC will promptly submit in writing the respective positions of the Parties to their respective Executive Officers.  Such Executive Officers will use good faith efforts, in compliance with this Section 9.4.1 (Referral to Executive Officers), to resolve promptly such matter within [***] after the JSC’s submission of such matter to such Executive Officers, which good faith efforts will include [***].  

9.4.2.

Final Decision-Making Authority.  If the Executive Officers are unable to reach agreement on any such matter referred to them under Section 9.4.1 (Referral to Executive Officers) within the applicable [***] period, then:

(a)

No Decision.  Neither Party will have final decision-making authority on [***].

(b)

Takeda Final Decision-Making Authority. [***].

9.4.3.

Eligible Shared Expense Disputes.  [***].

9.4.4.

Limitations on Decisions.  Notwithstanding any provision to the contrary set forth in this Agreement, without the other Party’s prior written consent, no exercise of a Party’s decision‑making authority on any such matters may, without the other Party’s prior written consent, (a) [***], (b) [***], or (c) otherwise conflict with, or constitute a modification of or waiver under, this Agreement.

10.

PAYMENTS

10.1.

Upfront Payment.  Within [***] after Takeda’s receipt of an invoice from Arrowhead, to be submitted promptly following the Effective Date, in consideration of the licenses granted to Takeda hereunder, Takeda will pay to Arrowhead a non-refundable, non-creditable upfront payment in the amount of $300,000,000 via wire transfer of immediately available funds in accordance with the instructions attached hereto as Schedule 10.4.1 (Wire Instructions).

10.2.

Payments for the Compounds and Products.

10.2.1.

Profit and Loss Share.  Arrowhead and Takeda will share the Operating Profits or Losses for all Products in the Profit-Share Territory as follows: Takeda will bear (and be entitled to) 50%, and Arrowhead will bear (and be entitled to) 50%, of such Operating Profits or Losses.  Schedule 10.2.1 (Profit and Loss Share) sets forth the procedures for [***] reporting of actual results and review and discussion of potential discrepancies, [***] reconciliation, reasonable forecasting, and other finance and accounting matters.  To the extent Arrowhead, in bearing 50% of Operating Profits or Losses for the Profit-Share Territory [***], [***], [***].

10.2.2.

Milestone Payments.  

(a)

Development Milestones.  Subject to this Section 10.2.2(a) (Development Milestones), either (i) Takeda will make one-time milestone payments (each, an “Development Milestone Payment”) to Arrowhead upon the first achievement by Takeda or its Affiliates or Sublicensees of each of the development milestone events set forth in Table 10.2.2(a)(i) (Development Milestones – Scenario A) below (each, an “Development Milestone Event”) for the first Product to achieve the applicable Development Milestone Event, [***], [***], or (ii) Takeda will make Development Milestone Payments to Arrowhead upon the first achievement by Takeda or its Affiliates or Sublicensees of each of the Development Milestone Events set forth in Table 10.2.2(a)(ii) (Development Milestones – Scenario B) below for the first Product to achieve the applicable Development Milestone Event, [***], [***].  Takeda will notify Arrowhead in writing of the achievement of a Development Milestone Event by Takeda or its Affiliates or Sublicensees no later than [***] after the achievement thereof.  Thereafter, Arrowhead will provide Takeda with an invoice for the corresponding Development Milestone Payment, and Takeda will pay to Arrowhead such Development Milestone Payment no later than [***] after its receipt of an invoice for such Development Milestone Payment. For the avoidance of doubt, a given Product may achieve the Development Milestone Events set forth in one of the following Tables (Table 10.2.2(a)(i) (Development Milestones – Scenario A) or Table 10.2.2(a)(ii) (Development Milestones – Scenario B)), but not both Tables.

Table 10.2.2(a)(i) –Development Milestones – Scenario A

Development Milestone Event

Development Milestone Payment

[***]

[***]

[***]

[***]

[***]

[***]

[***]

If (i): [***]

or

if (ii): [***]

Table 10.2.2(a)(ii) –Development Milestones – Scenario B

Development Milestone Event

Development Milestone Payment

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

(b)

Commercial Milestones.  Subject to this Section 10.2.2(b) (Commercial Milestones), Takeda will make one-time commercial milestone payments (each, a “Commercial Milestone Payment” and together with the Development Milestone Payments, the “Milestone Payments”) to Arrowhead upon the achievement by Takeda or its Affiliates or Sublicensees of each of the sales-based milestones events set forth in Table 10.2.2(b) (Commercial Milestones) below (each, a “Commercial Milestone Event” and together with the Development Milestone Events, the “Milestone Events”) with respect to the aggregate annual Net Sales of all Products in the Territory, provided that Net Sales of any Product in any country in the Territory will not be included after the Royalty Term for such Product and country has ended. Takeda will notify Arrowhead in writing of the achievement of a Commercial Milestone Event by Takeda or its Affiliates or Sublicensees no later than [***] after the end of the [***] in which such Commercial Milestone Payment is payable pursuant to the preceding sentence. Thereafter, Arrowhead will provide Takeda with an invoice for the corresponding Commercial Milestone Payment, and Takeda will pay to Arrowhead such Commercial Milestone Payment no later than [***] after receipt of the applicable invoice from Arrowhead.

Table 10.2.2(b) –Commercial Milestones

Commercial Milestone Event

Commercial Milestone Payment

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

10.2.3.