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VITAE PHARMACEUTICALS, INC filed this Form S-1 on 08/12/2014
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certain exclusive rights to develop and commercialize the terminated products for the treatment of indications referred to above.


        On June 4, 2009, 18 months after initiating our BACE program, we entered into a second research collaboration and license agreement with BI, or the BACE Agreement under which the companies agreed to work together to identify and develop BACE inhibitors for the treatment of Alzheimer's. As of June 30, 2014 we have received $78.2 million from BI related to BACE including a $15 million equity investment, $34.2 in upfront fees and research funding and $29 million in development milestones. In addition, we are eligible to receive up to $326.0 million in additional milestone payments based on the achievement of pre-specified events, including up to $176.0 million in development and regulatory milestone payments and up to $150.0 million in commercialization milestone payments. We are also eligible to receive 50% of the aforementioned milestone payments for any subsequent products and for any additional indications of a product to achieve those milestones. We are also eligible to receive tiered royalty payments from BI, ranging from the upper single digits up to the low double digits percentages, based on the net sales of potential future products, subject to certain reductions. We have the option to participate in funding the Phase 3 clinical trials in exchange for increased royalties. BI's obligations to pay the royalties continues on a country-by-country and product-by-product basis for the later of ten years following the first commercial sale of such product in such country, or as long as such product is covered by patents licensed to BI under the agreement or any of the patents controlled by BI as of the effective date of the BACE Agreement.

        Under the terms of the agreement, BI has the exclusive, worldwide license to use certain of our patents and other intellectual property assets to develop and commercialize BACE inhibitors. BI will control and is responsible for the expenses of preclinical and clinical development and commercialization of the product candidates resulting from the collaboration. We are responsible for carrying out certain activities relating to the identification, synthesis, characterization and optimization of compounds pursuant to an agreed-upon research plan and received research funding from BI in connection with those activities. If a particular BACE inhibitor is not advanced to the development phase, subject to the approval of the joint steering committee established pursuant to the BACE Agreement, we have the right to use our patents and other intellectual property assets licensed to BI as well as certain patents and other intellectual property assets of BI to develop and commercialize that BACE inhibitor for indications other than those referred to above.

        We have entered into three amendments to the BACE Agreement: the first in June 2011, the second in December 2012, and the third in December 2013. The June 2011 amendment modified one of the standards for selecting a potential lead product candidate in the parties' then-current research plan. The December 2012 amendment expanded the core indication definition to include diabetes and metabolic disease. In accordance with that amendment, we were obligated to provide twelve months of research contributions at no cost to, and at the option of, BI, with such contributions to be completed no later than June 30, 2014. The December 2013 amendment adjusted the timing and amount of certain of BI's development milestone payment obligations to us under the BACE Agreement. Under the terms of the December 2012 amendment, we received an upfront, nonrefundable, execution fee of $4 million. There was no incremental monetary consideration provided by either party in connection with the execution of the June 2011 or December 2013 amendments.

        Either party may terminate the BACE Agreement following an uncured material breach by the other party; however, we may not terminate the BACE Agreement following the first sale of a product in certain major markets except in the event of certain commercial conflicts or breaches by BI of its payment obligations to us under the BACE Agreement. If BI terminates the BACE Agreement due to our material breach, then, except in certain circumstances, we would continue to be eligible to receive royalty and milestone payments under the BACE Agreement. After the research phase is complete, BI also has the right to terminate the BACE Agreement in its entirety or on a product-by-product basis, in which case we would obtain certain exclusive rights to develop and commercialize the terminated products for the treatment of Alzheimer's, diabetes or metabolic disease.