💡 Plain English Explanation

This clause specifically protects drug compound data, molecular structures, and assay results exchanged between biotech and pharmaceutical companies. In the life sciences industry, compound data represents billions of dollars in R&D investment and can be the difference between market leadership and obsolescence.

Drug compound data includes chemical structures, synthesis pathways, screening results, pharmacokinetic profiles, and structure-activity relationship (SAR) data. This information is uniquely sensitive because even partial disclosure can enable competitors to reverse-engineer years of research or file blocking patents.

This clause addresses critical biotech-specific concerns:

⚠ Why This Clause Matters

For the Disclosing Party (Compound Owner): Your compound data is often your most valuable asset. Generic NDA definitions may not adequately protect molecular structures, which can be disclosed through databases, publications, or patent applications. This clause ensures SAR data, hit compounds, and optimization strategies remain protected even when discussing potential partnerships or licensing deals.

For the Receiving Party (Potential Partner/Licensee): You need clarity on what constitutes protected compound data versus publicly available chemical information. Overly broad definitions could prevent you from working on similar compound classes or pursuing independent research programs. This clause provides specific boundaries.

Regulatory Considerations: Unlike most business information, compound data may eventually become public through patent applications or FDA submissions. The clause must address this lifecycle and clarify when protection ends for published data while maintaining protection for unpublished backup compounds and proprietary screening data.

📄 Clause Versions

Balanced Version: Provides comprehensive protection for compound data while maintaining reasonable boundaries. Includes standard carve-outs for publicly available structures and independent development. Suitable for most collaboration discussions and due diligence processes. 
"Compound Data" means Confidential Information relating to chemical compounds, drug candidates, and related research data disclosed by the Disclosing Party, including without limitation:

(a) molecular structures, chemical formulas, stereochemistry, salt forms, polymorphs, and crystalline structures;

(b) synthesis routes, manufacturing processes, and purification methods for compounds;

(c) structure-activity relationship (SAR) data, medicinal chemistry strategies, and compound optimization approaches;

(d) assay results, including binding affinities, IC50/EC50 values, selectivity profiles, and high-throughput screening data;

(e) ADME (absorption, distribution, metabolism, excretion) data, pharmacokinetic profiles, and toxicology findings;

(f) formulation data, stability studies, and analytical methods specific to disclosed compounds; and

(g) any derivatives, analogs, metabolites, prodrugs, or structural modifications thereof.

The Receiving Party agrees that Compound Data shall be used solely for evaluating a potential business relationship between the parties and shall not be used to: (i) design around disclosed compounds; (ii) file patent applications claiming structures derived from Compound Data; or (iii) conduct research programs targeting the same biological targets using insights from Compound Data.

Compound Data does not include structural information that has been published in peer-reviewed journals or publicly disclosed through issued patents as of the date of disclosure under this Agreement.
Disclosing Party Favor: Maximum protection for pharmaceutical R&D assets. Includes broad derivative protection, competitive research restrictions, and extended protection for patent-pending compounds. Use when sharing lead compounds or late-stage development candidates. 
"Compound Data" means all information of any kind relating to chemical compounds, drug candidates, biological molecules, and pharmaceutical research disclosed by or on behalf of the Disclosing Party, or learned by the Receiving Party through access to the Disclosing Party's facilities, personnel, or research materials, including without limitation:

(a) all molecular structures, chemical formulas, three-dimensional conformations, stereochemistry, tautomers, salt forms, hydrates, solvates, polymorphs, co-crystals, and any other physical or chemical forms of compounds;

(b) all synthesis routes, reaction conditions, reagents, intermediates, manufacturing processes, purification methods, and analytical techniques;

(c) all structure-activity relationship (SAR) data, medicinal chemistry strategies, hit-to-lead optimization data, lead optimization data, and any insights regarding compound design or modification;

(d) all biological and pharmacological data, including assay results, binding affinities, functional activity, selectivity profiles, screening data (including negative results), mechanism of action studies, and target engagement data;

(e) all ADME-Tox data, including absorption, distribution, metabolism, excretion, pharmacokinetic profiles, bioavailability, half-life, drug-drug interaction data, toxicology studies, safety pharmacology, and genotoxicity data;

(f) all formulation data, drug delivery technologies, stability data, shelf-life studies, and analytical methods;

(g) all derivatives, analogs, metabolites, prodrugs, conjugates, or any structural modifications conceived using or derived from disclosed Compound Data; and

(h) all research strategies, target rationale, compound prioritization criteria, and development timelines.

The Receiving Party shall not, directly or indirectly, for a period of five (5) years following disclosure:
(i) synthesize, have synthesized, or obtain any compound disclosed hereunder or any derivative thereof;
(ii) initiate or continue any research program targeting the same biological target as any disclosed compound;
(iii) file any patent application or other intellectual property right claiming or covering any compound disclosed hereunder or any derivative, analog, or modification thereof;
(iv) use Compound Data to design around the Disclosing Party's intellectual property; or
(v) disclose Compound Data to any third party, including contract research organizations, without prior written consent.

Compound Data shall remain Confidential Information even after public disclosure through patent applications or regulatory filings, to the extent such information provides competitive advantage regarding compound optimization, formulation, manufacturing, or development strategy not evident from the public disclosure itself.
Receiving Party Favor: Narrower definition with clear boundaries protecting independent research rights. Requires specific designation of protected compounds and preserves freedom to operate in adjacent chemical space. Suitable for companies with active internal research programs. 
"Compound Data" means only that information which:

(a) relates specifically to the chemical compounds identified by structure in Exhibit A attached hereto (the "Designated Compounds"); and

(b) is disclosed in writing and clearly marked as "Confidential Compound Data" at the time of disclosure.

Compound Data includes only the following categories of information for Designated Compounds:
(i) the specific molecular structures depicted in Exhibit A, including stereochemistry and salt forms actually disclosed;
(ii) synthesis routes and manufacturing processes actually provided in writing;
(iii) assay data and pharmacological results actually provided in writing; and
(iv) formulation and stability data actually provided in writing.

Compound Data expressly does not include:
(i) general knowledge, techniques, or methodologies applicable to pharmaceutical research;
(ii) information about biological targets, disease biology, or therapeutic approaches;
(iii) compounds or compound classes not specifically depicted in Exhibit A, including structural analogs, derivatives, or modifications;
(iv) any information that has been published or disclosed in patent applications;
(v) information independently developed by the Receiving Party, as evidenced by contemporaneous written records; or
(vi) general medicinal chemistry principles or structure-activity relationships known in the field.

Nothing in this Agreement shall restrict the Receiving Party from:
(i) conducting independent research on any biological target, including targets of Designated Compounds;
(ii) developing compounds structurally distinct from Designated Compounds, even if such compounds act on the same biological target; or
(iii) publishing general scientific findings that do not disclose specific Compound Data.

The Receiving Party's confidentiality obligations with respect to Compound Data shall terminate upon the earlier of: (i) three (3) years from the date of disclosure; or (ii) public disclosure of such information through patent publication or regulatory filing.

💬 Key Considerations