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`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page1 of 26
`
`LAWRENCE R. KATZIN (CA SBN 142885)
`LKatzin@mofo.com
`NATALIE THINGELSTAD (CA SBN 255400)
`NThingelstad@mofo.com
`AMY C. DACHTLER (CA SBN 248589)
`ADachtler@mofo.com
`MORRISON & FOERSTER LLP
`425 Market Street
`San Francisco, California 94105-2482
`Telephone: (415) 268-7000
`Facsimile: (415) 268-7522
`
`MARK L. LEVINE (admitted pro hac vice)
`mark.levine@bartlit-beck.com
`JASON L. PELTZ (admitted pro hac vice)
`jason.peltz@bartlit-beck.com
`BRIAN C. SWANSON (admitted pro hac vice)
`brian.swanson@bartlit-beck.com
`J. SCOTT MCBRIDE (admitted pro hac vice)
`scott.mcbride@bartlit-beck.com
`BARTLIT BECK HERMAN PALENCHAR & SCOTT LLP
`54 West Hubbard St., Suite 300
`Chicago, IL 60654
`Telephone: (312) 494-4400
`Facsimile: (312) 494-4440
`
`Attorneys for Defendants
`B AYER CORPORATION, BAYER HEALTHCARE LLC , BAYER AG AND
`BAYER SCHERING PHARMA AG
`
`UNITED STATES DISTRICT COURT
`
`NORTHERN DISTRICT OF CALIFORNIA
`
`SAN FRANCISCO DIVISION
`
`ONYX PHARMACEUTICALS, INC.,
`
`Plaintiff,
`
`v.
`
`BAYER CORPORATION, et al.,
`
`Defendants.
`
`Case No. CV 09 2145 MHP
`
`
`ANSWER AND AFFIRMATIVE
`DEFENSES OF BAYER AG AND
`BAYER SCHERING PHARMA AG
`TO ONYX PHARMACEUTICALS,
`INC.’S FIRST AMENDED
`COMPLAINT
`
`DEMAND FOR JURY TRIAL
`
`Bayer AG and Bayer Schering Pharma AG (collectively, the “German Bayer Entities”)
`
`respond to the First Amended Complaint of Onyx Pharmaceuticals, Inc. (“Onyx”) as follows:
`
`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
`
`FUSTIBAL Ex. 1003
`
`

`
`
`
`
`
`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page2 of 26
`
`1. Onyx files this lawsuit to stop Bayer Corporation (“Bayer”) from seizing for itself
`what the parties agreed to share – the proceeds from a potentially lifesaving and lucrative
`cancer drug discovered through the parties’ longstanding scientific collaboration.
`
`ANSWER: The German Bayer Entities admit that Onyx has filed a lawsuit. The
`
`German Bayer Entities deny any remaining allegations not expressly admitted herein.
`
`2. That collaboration, first formalized in a 1994 Collaboration Agreement, merged
`Onyx’s expertise regarding a biochemical process associated with the growth of cancer cells
`(and potential therapies for preventing growth of those cells) with Bayer’s experience with
`small molecule pharmaceutical compounds. Following years of investigation and analysis, the
`parties identified a compound, known as sorafenib, as a promising candidate, and agreed to
`move forward with development activities, including clinical trials. Under the Collaboration
`Agreement, the parties equally shared the costs of development. For Bayer, the American arm
`of a multinational pharmaceutical giant, the costs were modest. But for Onyx, a start-up
`company with few assets beyond the human capital of its scientists, the investment in sorafenib
`literally was a “bet the company” proposition. To finance its share of the cost, Onyx was
`forced to sacrifice all activities not essential to the development of sorafenib: the company shut
`down all of its discovery efforts on other compounds, laid off its entire drug discovery team,
`and terminated an unrelated clinical program.
`
`ANSWER: The German Bayer Entities admit (1) that under a 1994 Collaboration
`
`Agreement (together with its two amendments, the “Collaboration Agreement”), Bayer identified
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`and the parties developed the anti-cancer compound sorafenib, and (2) that the Collaboration
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`Agreement outlined how the parties would allocate costs as well as profits from the development
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`of compounds covered by the Collaboration Agreement. The German Bayer Entities are without
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`knowledge or information sufficient to form a belief as to the truth of the allegations relating to
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`the burden on Onyx of the development of sorafenib, and therefore denies those allegations. The
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`German Bayer Entities deny any remaining allegations not expressly admitted herein.
`
`3. Ultimately, Onyx’s gamble paid off. Sorafenib (marketed as “Nexavar®”) received
`regulatory approvals worldwide for the treatment of advanced kidney cancer and liver cancer,
`and has generated sales to date of more than a billion dollars, as well as substantial profits,
`which the parties have shared. From Onyx’s perspective, the Collaboration Agreement has
`been an overwhelming success.
`
`ANSWER: The German Bayer Entities admit (1) that sorafenib has received regulatory
`
`approval in over 70 countries for treatment of kidney and liver cancer under the brand name
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`Nexavar®, and (2) that Nexavar® has generated total sales to date of more than a billion dollars.
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`The German Bayer Entities are without knowledge or information sufficient to form a belief as
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`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
`
`-2-
`
`

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` to the truth of the allegation relating to Onyx’s perspective on the success of the Collaboration
`
`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page3 of 26
`
`Agreement, and therefore deny that allegation. The German Bayer Entities deny any remaining
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`allegations not expressly admitted herein.
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`4. Bayer, as it turns out, held a different view. Now that Onyx had taught Bayer how
`to identify effective targeted cancer therapies and introduced Bayer to a class of compounds
`with potent anti-cancer properties, Bayer was no longer satisfied with the division of
`sorafenib’s profits. Bayer therefore devised a plan in an effort to bypass the Collaboration
`Agreement’s profit-sharing formula and appropriate for itself a substantially greater share of
`the joint venture’s blockbuster discovery. Bayer embarked on a secret program to develop a
`compound that the parties first identified early in their collaboration. This compound, known
`as fluoro-sorafenib, is identical to sorafenib, except for the substitution of a single fluorine
`atom in the place of a hydrogen atom. Bayer, together with its parent company, Bayer AG,
`and its affiliates, including Bayer HealthCare LLC (“Bayer HealthCare”) and Bayer Schering
`Pharma AG (“Bayer Schering Pharma”), then moved forward to develop the compound outside
`the Collaboration Agreement, surreptitiously filing patent applications and initiating clinical
`trials. When Onyx recently discovered this scheme and confronted defendants, they refused to
`concede Onyx’s rights in fluoro-sorafenib and refused to allow Onyx to join in bringing the
`compound to market.
`
`ANSWER: The German Bayer Entities admit that Bayer HealthCare LLC, a subsidiary
`
`of Bayer Corp., is developing a new anti-cancer compound, known internally as DAST and
`
`known publicly under the official International Nonproprietary Name of regorafenib, in which
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`Onyx has no rights. The German Bayer Entities deny that this development was part of a
`
`“scheme” or “secret program” done in an “effort to bypass the Collaboration Agreement” or that
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`it was “surreptitiously” undertaken. The German Bayer Entities further deny that regorafenib is
`
`“known as fluoro-sorafenib.” The German Bayer Entities deny any remaining allegations not
`
`expressly admitted herein.
`
`5. Onyx brings this suit to establish its rights to fluoro-sorafenib and to recover the
`damages caused by defendants’ actions.
`
`ANSWER: The German Bayer Entities deny (1) that Onyx has rights to regorafenib,
`
`(2) that any Bayer entity has caused Onyx any damage alleged in this lawsuit, and (3) that there
`
`is a compound known as “fluoro-sorafenib.” The German Bayer Entities are without knowledge
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`or information sufficient to form a belief as to the truth of the remaining allegations in this
`
`paragraph, and therefore deny them.
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`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
`
`-3-
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`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page4 of 26
`
`The Parties
`
`6. Plaintiff, Onyx Pharmaceuticals, Inc., is a small but innovative biopharmaceutical
`company based in Emeryville, California. Onyx was founded in 1992 by a team of scientists
`internationally recognized for their understanding of the biochemical mechanisms of cancer
`cells. In particular, the Onyx scientists had a specialized understanding of an intracellular
`pathway, known as the Ras Pathway, associated with the uncontrolled growth of cancer cells.
`Onyx’s highly specialized knowledge of the Ras Pathway enabled it to identify targets for
`pharmaceutical compounds that would inhibit cancer cell proliferation and to devise laboratory
`tests or “assays” to assess a compound’s efficacy in doing so. Onyx also possessed a “library,”
`or collection, of chemical compounds to test once the assays were developed. Onyx was thus
`uniquely positioned with the talent and know-how to search for and identify novel drugs for
`treating cancer. A number of large pharmaceutical companies recognized Onyx’s unique
`capabilities and sought research partnerships to tap into Onyx’s expertise.
`
`ANSWER: The German Bayer Entities admit (1) that Onyx is based in Emeryville,
`
`California, (2) that Onyx had an understanding of the Ras Pathway, (3) that Onyx developed
`
`“assays” to identify compounds that inhibited the Ras Pathway, and (4) that Onyx possessed a
`
`small “library” of compounds available to test for inhibition of the Ras Pathway. The German
`
`Bayer Entities are without knowledge or information sufficient to form a belief as to the truth of
`
`the allegations relating to the founding of Onyx, and therefore deny them. The German Bayer
`
`Entities deny any remaining allegations not expressly admitted herein.
`
`7. Onyx’s commitment to translating its knowledge of cellular processes into effective
`cancer treatments has proved successful. Its lead cancer drug, sorafenib, is approved in over
`70 countries for the treatment of patients with advanced kidney cancer and/or liver cancer.
`Sorafenib also is being evaluated for treatment of patients with lung cancer, breast cancer, and
`other cancers.
`
`ANSWER: The German Bayer Entities admit that Bayer’s compound Nexavar® has
`
`been approved in over 70 countries for treatment of kidney and liver cancer, and that Bayer
`
`HealthCare LLC is evaluating Nexavar® for certain types of treatment of patients with lung
`
`cancer, breast cancer, and other cancers. The German Bayer Entities are without knowledge or
`
`information sufficient to form a belief as to the remaining allegations in this paragraph, and
`
`therefore deny them.
`
`8. Onyx is a corporation organized and existing under the laws of the State of
`Delaware, with its principal place of business located in Emeryville, California.
`
`ANSWER: Admitted.
`
`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
`
`-4-
`
`

`
`
`
`
`
`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page5 of 26
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`9. Bayer Corporation is, and at all relevant times was, a corporation organized and
`existing under the laws of the State of Indiana, with its principal place of business located in
`Pittsburgh, Pennsylvania. Before approximately March 28, 1995, Bayer Corporation operated
`under the name Miles Inc.
`
`ANSWER: Admitted.
`
`10. Onyx is informed and believes, and on that basis alleges, that Bayer HealthCare is a
`limited liability company whose sole owner and member is Bayer Corporation. Onyx is
`further informed and believes, and on that basis alleges, that in 2007, the right, title, and
`interest in and to the Collaboration Agreement were assigned to Bayer HealthCare LLC.
`
`ANSWER: Admitted.
`
`11. Bayer Schering Pharma is a corporation organized and existing under the laws of
`Germany, with its principal place of business located in Berlin, Germany.
`
`ANSWER: Admitted.
`
`12. Bayer Corporation, Bayer HealthCare and Bayer Schering Pharma are part of Bayer
`AG, a German holding company with over 100,000 employees, operations in nearly every
`country in the world, and sales in 2008 exceeding 32 billion Euros. Bayer AG is a corporation
`organized and existing under the laws of Germany, with its principal place of business located
`in Leverkusen, Germany.
`
`ANSWER: The German Bayer Entities admit (1) that Bayer AG is a German
`
`corporation with its principal place of business in Leverkusen, Germany, (2) that Bayer
`
`Corporation and Bayer Schering Pharma AG are wholly-owned subsidiaries of Bayer AG and
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`(3) that Bayer HealthCare LLC is a subsidiary of Bayer Corp. The German Bayer Entities deny
`
`any remaining allegations not expressly admitted herein.
`
`Jurisdiction And Venue
`
`13. This Court has original jurisdiction pursuant to 28 U.S.C. § 1332(a), in that this is a
`civil action between citizens of different states in which the matter in controversy exceeds,
`exclusive of costs and interest, seventy-five thousand dollars ($75,000.00).
`
`ANSWER: The German Bayer Entities admit that this action is styled on its face as a
`
`diversity action under 28 U.S.C. § 1332(a), for which Onyx is claiming the matter in controversy
`
`exceeds, exclusive of costs and interest, seventy-five thousand dollars ($75,000.00). The
`
`German Bayer Entities deny any remaining allegations not expressly admitted herein.
`
`14. This Court has jurisdiction over the defendants because they actively do business in
`California and have sufficient minimum contacts in California, or otherwise intentionally
`availed themselves of the benefits of conducting business in California to be subject to the
`
`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
`
`-5-
`
`

`
` court’s jurisdiction. In particular, the Collaboration Agreement was negotiated within the
`
`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page6 of 26
`
`jurisdiction of this Court, and the parties understood that Onyx’s obligations under the
`Agreement would be performed within this Court’s jurisdiction. The Collaboration Agreement
`and the Letter Agreement (described below) expressly provide that they are governed by
`California law.
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`ANSWER: The German Bayer Entities admit that the Court has specific personal
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`jurisdiction over Bayer AG and Bayer Schering Pharma AG in this matter. The German Bayer
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`Entities deny that the Court has general jurisdiction over Bayer AG and Bayer Schering Pharma
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`AG. The German Bayer Entities deny any remaining allegations not expressly admitted herein.
`
`15. Venue is proper in this district pursuant to 28 U.S.C. § 1391(a) and (c). A
`substantial part of the events underlying this action occurred within this district. This Court
`also has personal jurisdiction over defendants and, accordingly venue is proper.
`
`ANSWER: The German Bayer Entities admit that venue is proper in this district.
`
`Intradistrict Assignment
`
`16. The appropriate Intradistrict Assignment for this case is the San Francisco Division
`or the Oakland Division, pursuant to Civ. L.R. 3-2(c) and (d). A substantial part of the events
`underlying this action occurred within Alameda County and Contra Costa County.
`
`ANSWER: The German Bayer Entities admit that the San Francisco or Oakland
`
`Division is an appropriate Intradistrict Assignment for this case. The German Bayer Entities
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`deny any remaining allegations not expressly admitted herein.
`
`Common Allegations
`
`17. In the early 1990s, Bayer AG established the goal of exploiting new business
`opportunities in the market for targeted cancer therapies. Bayer AG and its affiliates, however,
`lacked the scientific expertise to research and develop these therapies independently. Bayer
`AG recognized the expertise of Onyx’s scientists in the Ras Pathway, and understood that
`identifying compounds that inhibit proteins in the Ras Pathway could be the key to success in
`targeted cancer research. Bayer AG therefore approached Onyx and sought to gain access to
`the company’s technology, know-how, and library of chemical compounds that could have
`effects on the Ras Pathway.
`
`ANSWER: The German Bayer Entities admit (1) that in the early 1990’s Bayer entities
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`sought opportunities in the field of targeted cancer therapies, and (2) that Bayer AG and Onyx
`
`engaged in discussions about technology relating to the Ras Pathway. The German Bayer
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`Entities deny that Bayer AG and its affiliates lacked the scientific expertise to research and
`
`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
`
`-6-
`
`

`
` develop these therapies independently. The German Bayer Entities deny any remaining
`
`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page7 of 26
`
`allegations not expressly admitted herein.
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`18. Bayer AG and Onyx engaged in extensive negotiations over the terms of the
`proposed collaboration to develop cancer drugs. Late in the negotiations, Bayer AG informed
`Onyx that Bayer (then known as Miles Inc.), not Bayer AG, would be the party that would sign
`a contract with Onyx. Shortly thereafter, on April 22, 1994, Onyx and Bayer entered into a
`Collaboration Agreement. Under the Collaboration Agreement and its 1996 and 1999
`amendments, the parties committed to work together to discover, develop and market chemical
`compounds having activity against proteins in the Ras Pathway.
`
`ANSWER: The German Bayer Entities admit that Onyx and Bayer AG negotiated
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`various terms of the 1994 Collaboration Agreement, and ultimately Onyx and Miles (corporate
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`predecessor to Bayer Corporation) entered into the 1994 Collaboration Agreement on April 22,
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`1994, under which Miles and Onyx agreed to certain specific obligations relating to the research,
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`development, and marketing of certain specifically-defined compounds having activity inhibiting
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`Ras Function. The German Bayer Entities deny any remaining allegations not expressly
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`admitted herein.
`
`19. Onyx recognized that other companies within the Bayer AG family of companies
`might assist Bayer in performing under the Collaboration Agreement, and was concerned by
`Bayer AG’s late substitution of Bayer as the contracting party. Accordingly, “as an
`inducement to Onyx to execute the Agreement,” Bayer AG entered into an agreement (the
`“Letter Agreement”) with Bayer, contemporaneous with the signing of the Collaboration
`Agreement, confirming that, to the extent Bayer AG or any of its “Affiliates” conducted
`research, development, or marketing or otherwise undertook Bayer’s obligations under the
`Collaboration Agreement, the Affiliates would “do so in accordance with the provisions of the
`Agreement.” “Affiliate” was defined in the Collaboration Agreement and the Letter Agreement
`as any entity that, directly or indirectly, is under common ownership with Bayer. The Letter
`Agreement between Bayer and Bayer AG expressly recognized Onyx as a third-party
`beneficiary. Onyx recently was informed by Bayer, and on that basis alleges, that the Letter
`Agreement was transferred to Bayer Schering Pharma. Pursuant to such transfer, Bayer
`Schering Pharma now holds (jointly with Bayer AG) Bayer AG’s rights and obligations there-
`under.
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`ANSWER: The German Bayer Entities admit that Bayer AG signed an April 22, 1994
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`letter to Miles Inc. (corporate predecessor to Bayer Corporation). The April 22, 1994 letter
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`speaks for itself and the German Bayer Entities deny Onyx’s characterization of that letter. The
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`German Bayer Entities further admit (1) that the Collaboration Agreement defined “Affiliate” as
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`“any entity that directly or indirectly Owns, is Owned by, or is under common Ownership” with
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`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
`
`-7-
`
`

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` Miles, (2) that on March 11, 2003, Bayer AG and Bayer HealthCare AG executed a “Hive-Down
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`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page8 of 26
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`and Transfer Agreement” between them that transferred to Bayer HealthCare AG all contracts
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`exclusively or primarily allocated to the health care business, and (3) that this transfer would
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`necessarily include the April 22, 1994 letter to the extent it is found to be a contract. On
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`December 30, 2008, Bayer HealthCare AG merged into Bayer Schering Pharma AG and, per the
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`relevant German law regulating the transformation of companies, Bayer HealthCare AG ceased
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`to exist and all assets and liabilities of Bayer HealthCare AG (including any rights and/or
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`obligations that may exist as a result of the April 22, 1994 letter) were transferred to Bayer
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`Schering Pharma AG. The German Bayer Entities deny any remaining allegations not expressly
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`20. The Collaboration Agreement defined two categories of compounds, referred to as
`“Collaboration Compounds” and “Post-Collaboration Compounds,” that are the subject of joint
`development. Collaboration Compounds generally cover compounds that, before January 31,
`2000, were “discovered, identified or synthesized” by Onyx or Bayer and “recognized” as
`satisfying the standard for cancer inhibiting activity set forth in Exhibit D to the Collaboration
`Agreement. Post-Collaboration Compounds generally cover those compounds (a) whose
`chemical genus both covers a Collaboration Compound and is claimed in an Onyx or Bayer
`patent and (b) that were “synthesized, identified or discovered” and recognized before a later
`cutoff date as satisfying the standard in Exhibit D.
`
`ANSWER: The German Bayer Entities admit that the Collaboration Agreement defines
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`“Collaboration Compounds” and “Post-Collaboration Compounds” in sections 1.9 and 1.39,
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`respectively, as amended, which speak for themselves. The German Bayer Entities deny the
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`factual allegations in this paragraph to the extent they purport to summarize the definitions of
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`Collaboration Compounds and Post-Collaboration Compounds in a manner inconsistent with the
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`explicit language of sections 1.9 and 1.39 of the Collaboration Agreement. The German Bayer
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`Entities deny any remaining allegations not expressly admitted herein.
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`21. The Collaboration Agreement specifies the requirements for developing
`Collaboration Compounds and Post-Collaboration Compounds into marketable, FDA-approved
`products. The Collaboration Agreement requires the parties to work together in such
`development and allows one party to pursue independent pre-clinical research of a
`Collaboration Compound only if the other party is first given the opportunity for joint pre-
`clinical research and declines to participate. Even then, however, the party pursuing
`independent pre-clinical research must offer the other party the opportunity to collaborate in
`development if the research looks promising.
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`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
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`ANSWER: The German Bayer Entities admit that the Collaboration Agreement’s
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`various sections define the requirements and exceptions that existed during the Research Term
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`that were associated with co-development of Collaboration Compounds and Post-Collaboration
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`Compounds into FDA-approved products, as well as the requirements for either party to pursue
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`independent research and development. The German Bayer Entities deny the remaining factual
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`allegations in this paragraph to the extent they purport to summarize the detailed requirements of
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`the Collaboration Agreement’s relevant sections in a manner inconsistent with the language of
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`the Collaboration Agreement. The German Bayer Entities deny any remaining allegations not
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`expressly admitted herein.
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`22. The Collaboration Agreement established a Joint Research and Development
`Committee (JRDC), populated by representatives of Bayer and Onyx, to govern the
`collaboration. The role of the JRDC was to manage and make decisions regarding the
`collaboration. The JRDC, later renamed the Joint Development Committee, still exists and
`continues to meet.
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`ANSWER: The German Bayer Entities admit that the Collaboration Agreement
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`established a Joint Research and Development Committee (JRDC), populated by representatives
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`of Bayer and Onyx, and that the role of the JRDC is set forth in section 3 of the Collaboration
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`Agreement. The German Bayer Entities deny that the JRDC was “later renamed the Joint
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`Development Committee.” The German Bayer Entities admit that there currently is a “Joint
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`Development Committee” that was established as a subcommittee of the “Executive
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`Committee,” which is the successor to the JRDC created after the end of the Research Term.
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`The German Bayer Entities deny any remaining allegations not expressly admitted herein.
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`23. So that those decisions could be well informed, the Collaboration Agreement
`established numerous obligations for information disclosure and good faith between the
`parties. Article 10.1 of the Collaboration Agreement, for example, requires full disclosure to
`the other party of “the Information and all other significant information, data, and results
`known or developed by each party as of the Effective Date and during the Research Term”
`(defined to end on January 31, 1999) “as soon as practicable” after the information is obtained
`or its significance is appreciated.
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`ANSWER: The German Bayer Entities admit that the Collaboration Agreement
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`established and defined the limits of the parties’ collaboration obligations, including any
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`obligations for information disclosure during the “Research Term.” The German Bayer Entities
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`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
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` further admit that there is a section 10.1 of the Collaboration Agreement, and it states that “Onyx
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`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page10 of 26
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`and Miles shall make available and disclose to each other the Information and all other
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`significant information, data, and results known or developed by each party as of the Effective
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`Date and during the Research Term, relating to the Field and the Field of Collaborative
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`Research,” “with significant discoveries or advances [in the Field and the Field of Collaborative
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`Research] being communicated as soon as practicable after such information is obtained or its
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`significance is appreciated.” The German Bayer Entities deny the factual allegations in this
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`paragraph to the extent they purport to summarize section 10.1 in a manner inconsistent with its
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`express language, and specifically deny that the Collaboration Agreement defines an express
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`contractual obligation of “good faith” between the parties. The German Bayer Entities deny any
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`24. Article 10.2 of the Collaboration Agreement extends the obligation to make
`quarterly reports to the JRDC beyond the Research Term, such that, if a party continues work
`on Collaboration Compounds not yet in development as of the end of the Research Term, it
`must provide sufficient disclosure to enable the other party to assess whether or not to pursue
`joint funding of pre-clinical research and/or development.
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`ANSWER: The German Bayer Entities admit that section 10.2 of the Collaboration
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`Agreement states that parties shall submit quarterly reports to the JRDC beyond the Research
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`Term “regarding all work being done by such Party with respect to Collaboration Compounds
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`not yet in Development and other compounds under active investigation in the Research as of the
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`end of the Research Term, at a level of detail sufficient to enable the other Party to understand
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`the progress being made and to evaluate whether to participate in funding such preclinical work
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`under Section 9.6.” The German Bayer Entities deny any remaining allegations not expressly
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`admitted herein.
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`25. Article 20.2 addresses patent disclosures, obligating a party to disclose to the other
`party patentable inventions arising in the course of the collaboration. This section also requires
`a party to furnish the other party with drafts of any patent application that discloses a
`Collaboration Compound, allowing adequate time for review and comment before filing.
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`ANSWER: The German Bayer Entities admit that section 20.2 addresses “Disclosure of
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`Patentable Inventions,” the language of which speaks for itself. The German Bayer Entities deny
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`the factual allegations in this paragraph to the extent they purport to summarize section 20.2 in a
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`ANSWER AND AFFIRMATIVE DEFENSES OF BAYER AG AND BAYER
`SCHERING PHARMA AG TO ONYX PHARMACEUTICALS, INC.’S FIRST
`AMENDED COMPLAINT, CASE NO. CV 09 2145 MHP
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` manner inconsistent with that section’s explicit language. The German Bayer Entities deny any
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`Case3:09-cv-02145-MHP Document35 Filed08/12/09 Page11 of 26
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`remaining allegations not expressly admitted herein.
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`26. Article 26.2 of the Collaboration Agreement recognizes (similar to the Bayer AG
`Letter Agreement) that Bayer may perform its obligations through Affiliates and provides that,
`in such cases, Bayer “shall remain responsible and be guarantor” of the Affiliates’ compliance
`with the provisions of the Collaboration Agreement.
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`ANSWER: The German Bayer Entities admit that section 26.2 of the Collaboration
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`agreement recognizes that either party may perform some or all of its obligations through
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`Affiliates and provides that, in such cases, each party “shall remain responsible and be guarantor
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`of the performance by such Affiliates and shall cause such Affiliates to comply with the
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`provisions of this [Collaboration] Agreement in connection with such performance.” The
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`German Bayer Entities deny any remaining allegations not expressly admitted herein.
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`27. Article 28.1 of the Collaboration Agreement provides that any assignment of rights
`or obligations under the Agreement by Bayer to any Affiliate shall not relieve Bayer of its
`responsibilities for performance of its obligations under the Agreement.
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`ANSWER: The German Bayer Entities admit that section 28.1 of the Collaboration
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`Agreement addresses “Assignment,” and allows in subsection (a) that “[e]ither Party may assign
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`any of its rights or obligations under the Agreement in any country to any Affiliates; provided,
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`however, that such assignment shall not relieve the assigning Party of its responsibilities for
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`performance of its obligations under this Agreement.” The German Bayer Entities deny any
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`remaining allegations not expressly admitted herein.
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`28. In the course of negotiations, the parties emphasized the importance of a
`collaborative relationship built on principles of trust and good faith. To embody this model,
`the parties included in Article 3.6