OPINION OF THE COURT
Andrias, J.
In this action for breach of contract, plaintiff, New York University (NYU), seeks to recover from defendant, Pfizer, Inc., as the successor in interest to Sugen, Inc., royalties on the sale of the cancer treatment drug, Xalkori®. Xalkori®, a tyrosine kinase receptor (TKR) inhibitor, was approved by the Food and Drug Administration (FDA) in 2011 to target the chemical receptor EML4-ALK, which was discovered by Japanese scientists after Sugen’s ownership changed and its research project with NYU had ended. NYU alleges that it is neverthe[44]*44less entitled to royalties under section 9 of the governing Second Amended Research and License Agreement because Xalkori®’s active ingredient, a small molecule inhibitor drug substance named “crizotinib,” was derived from its research and “know-how.” In the face of the countervailing reasonable interpretations presented by the parties, which cannot be resolved at this procedural stage, we find that the language in section 9 delineating whether NYU is entitled to royalties under these circumstances is ambiguous, and that the motion court erred in granting Pfizer’s motion to dismiss the complaint (see U.S. Bank N.A. v Lightstone Holdings LLC, 103 AD3d 458, 459 [1st Dept 2013]).
Effective as of September 1, 1991, Sugen agreed to sponsor NYU’s research into TKRs in human cells, disorders of which are causative factors for many life-threatening cancers. The goal was to understand the mechanisms underlying the actions of TKRs and how they can be regulated, with NYU, among other things, “to determine the three dimensional structure of the protein tyrosine kinase domain in complex with inhibitors using x-ray crystallography.” In return, Sugen received an exclusive worldwide license to use NYU’s “Research Technology” for the development, manufacture, use, and sale of drugs that would inhibit TKRs, with Sugen agreeing to pay NYU certain royalties on sales of those drugs.
NYU’s research technology included the determination of a three-dimensional crystal structure of the tyrosine kinase domain of the FGFR1, which enabled Sugen to systematically design and efficiently test candidate small molecule compounds as TKR inhibitors. NYU alleges that relying on this “pioneering technology,” Sugen decided to pursue small-molecule inhibitors of the “c-Met” receptor, leading to the development of the chemical structure of “SU11274,” which was later optimized by Sugen to generate “PHA-665752.”
In 1996, in contemplation of Sugen being acquired by a third party, the parties executed the Second Amended Research and Licensing Agreement. Towards that end, NYU agreed to reduce the royalty rates then due in exchange for the right to royalties on certain later developed products, and the parties added section 9, captioned “SUGEN Ownership Change,” which states:
“[1] In the event that SUGEN is acquired or merged with another company, or that SUGEN acquires or forms a joint venture with another company, then SUGEN may at its option notify NYU that such [45]*45other company wishes to make a determination as to which targets shall be included under the terms of the Agreement prior to the effective date of any such acquisition, merger, or joint venture, or as soon as possible thereafter. This determination shall be made in good faith by NYU and SUGEN and shall be based on an examination of SUGEN’s lab books and other information available to the parties, full access (under appropriate confidentiality agreements) to which will be provided to NYU.
“[2] With respect to targets that were adopted by SUGEN into drug discovery prior to the effective date of the acquisition, merger, or joint venture, SUGEN Products developed based on such targets shall be subject to the license payments described in Section 8 hereto.
“[3] SUGEN Products that are developed based on Receptor targets which were not adopted into drug discovery at the time of the effective date of such acquisition, merger, or joint venture shall be subject to a), a royalty of 2.5% on Net Sales of SUGEN, and/or Corporation Entity, which may be offset by 50% of the royalties paid by SUGEN to third parties (other than MPG), provided that the royalties due to NYU shall not be less than 1.5% of Net Sales of SUGEN and/or Corporation Entity and b). 10% of License Revenues with respect to any SUGEN Product, provided that with respect to such SUGEN Product there exists a Patentable Invention with respect to such target and/or its utility which is derived from or based on the Research Technology, and provided further that such SUGEN Product shall include a product irrespective of whether an IND application is filed with respect thereto within 4 years from the end of the Research Period, or not.”
Sugen was acquired by Pharmacia in 1999. Pharmacia was acquired by Pfizer in 2003. Pfizer then optimized PHA-665752 to develop crizotinib (PF-02341066), and, on December 12, 2005, filed an IND application (a request for authorization from the FDA to administer an investigational drug to humans) for the drug substance as an inhibitor of the c-Met receptor. NYU alleges that information and direction from its drug [46]*46discovery process led to the design of crizotinib, which was developed from studying and comparing the binding of Sugen’s various candidate compounds in complex with the FGFR1 kinase crystals, with c-Met homology models derived from NYU’s FGFR1 kinase crystals, and later in complex with a c-Met kinase crystal.
In 2007, EML4-AJLK, a mutated form of the “ALK” TKR, was discovered by researchers at a Japanese university unaffiliated with NYU or Pfizer as a cause of non-small cell lung cancer (NSCLC) in a subset of patients. After it determined that crizo-tinib inhibited the EML4-ALK receptor, Pfizer amended its IND for crizotinib to include clinical studies of lung cancer patients who tested positive for the EML4-ALK receptor. In August 2011, the FDA approved the drug, which Pfizer named Xalkori®. After Pfizer rejected NYU’s demand for royalties on sales of Xalkori®, NYU commenced this action.
The dissent finds that because crizotinib was developed based on the receptor c-Met, which was adopted by Sugen into drug discovery, any product based on that patentable invention, including Xalkori®, is subject to the royalty provisions of section 8, which are inapplicable because no IND was filed within four years of the end of the Research Period. However, while crizotinib has a nexus to c-Met, the language employed in section 9 does not preclude the finding that crizotinib (and the patents derived from it) also has a relevant nexus to EML4-ALK. Section 9 (2) provides that “[w]ith respect to targets that were adopted by SUGEN into drug discovery prior to the effective date of the [change in ownership], SUGEN Products developed based on such targets shall be subject to the license payments described in Section 8 hereto” (emphasis added). Although c-Met was adopted into discovery before Sugen was acquired, the Sugen product, Xalkori®, is based on the target EML4-ALK, not c-Met. Thus, we must consider whether NYU is entitled to royalties under section 9 (3).
Whether NYU is entitled to royalties under section 9 (3) turns on the meaning of the language entitling NYU to royalties on
“SUGEN Products that are developed based on Receptor targets which were not adopted into drug discovery at the time of the effective date of [Sugen’s change in ownership] . . .
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OPINION OF THE COURT
Andrias, J.
In this action for breach of contract, plaintiff, New York University (NYU), seeks to recover from defendant, Pfizer, Inc., as the successor in interest to Sugen, Inc., royalties on the sale of the cancer treatment drug, Xalkori®. Xalkori®, a tyrosine kinase receptor (TKR) inhibitor, was approved by the Food and Drug Administration (FDA) in 2011 to target the chemical receptor EML4-ALK, which was discovered by Japanese scientists after Sugen’s ownership changed and its research project with NYU had ended. NYU alleges that it is neverthe[44]*44less entitled to royalties under section 9 of the governing Second Amended Research and License Agreement because Xalkori®’s active ingredient, a small molecule inhibitor drug substance named “crizotinib,” was derived from its research and “know-how.” In the face of the countervailing reasonable interpretations presented by the parties, which cannot be resolved at this procedural stage, we find that the language in section 9 delineating whether NYU is entitled to royalties under these circumstances is ambiguous, and that the motion court erred in granting Pfizer’s motion to dismiss the complaint (see U.S. Bank N.A. v Lightstone Holdings LLC, 103 AD3d 458, 459 [1st Dept 2013]).
Effective as of September 1, 1991, Sugen agreed to sponsor NYU’s research into TKRs in human cells, disorders of which are causative factors for many life-threatening cancers. The goal was to understand the mechanisms underlying the actions of TKRs and how they can be regulated, with NYU, among other things, “to determine the three dimensional structure of the protein tyrosine kinase domain in complex with inhibitors using x-ray crystallography.” In return, Sugen received an exclusive worldwide license to use NYU’s “Research Technology” for the development, manufacture, use, and sale of drugs that would inhibit TKRs, with Sugen agreeing to pay NYU certain royalties on sales of those drugs.
NYU’s research technology included the determination of a three-dimensional crystal structure of the tyrosine kinase domain of the FGFR1, which enabled Sugen to systematically design and efficiently test candidate small molecule compounds as TKR inhibitors. NYU alleges that relying on this “pioneering technology,” Sugen decided to pursue small-molecule inhibitors of the “c-Met” receptor, leading to the development of the chemical structure of “SU11274,” which was later optimized by Sugen to generate “PHA-665752.”
In 1996, in contemplation of Sugen being acquired by a third party, the parties executed the Second Amended Research and Licensing Agreement. Towards that end, NYU agreed to reduce the royalty rates then due in exchange for the right to royalties on certain later developed products, and the parties added section 9, captioned “SUGEN Ownership Change,” which states:
“[1] In the event that SUGEN is acquired or merged with another company, or that SUGEN acquires or forms a joint venture with another company, then SUGEN may at its option notify NYU that such [45]*45other company wishes to make a determination as to which targets shall be included under the terms of the Agreement prior to the effective date of any such acquisition, merger, or joint venture, or as soon as possible thereafter. This determination shall be made in good faith by NYU and SUGEN and shall be based on an examination of SUGEN’s lab books and other information available to the parties, full access (under appropriate confidentiality agreements) to which will be provided to NYU.
“[2] With respect to targets that were adopted by SUGEN into drug discovery prior to the effective date of the acquisition, merger, or joint venture, SUGEN Products developed based on such targets shall be subject to the license payments described in Section 8 hereto.
“[3] SUGEN Products that are developed based on Receptor targets which were not adopted into drug discovery at the time of the effective date of such acquisition, merger, or joint venture shall be subject to a), a royalty of 2.5% on Net Sales of SUGEN, and/or Corporation Entity, which may be offset by 50% of the royalties paid by SUGEN to third parties (other than MPG), provided that the royalties due to NYU shall not be less than 1.5% of Net Sales of SUGEN and/or Corporation Entity and b). 10% of License Revenues with respect to any SUGEN Product, provided that with respect to such SUGEN Product there exists a Patentable Invention with respect to such target and/or its utility which is derived from or based on the Research Technology, and provided further that such SUGEN Product shall include a product irrespective of whether an IND application is filed with respect thereto within 4 years from the end of the Research Period, or not.”
Sugen was acquired by Pharmacia in 1999. Pharmacia was acquired by Pfizer in 2003. Pfizer then optimized PHA-665752 to develop crizotinib (PF-02341066), and, on December 12, 2005, filed an IND application (a request for authorization from the FDA to administer an investigational drug to humans) for the drug substance as an inhibitor of the c-Met receptor. NYU alleges that information and direction from its drug [46]*46discovery process led to the design of crizotinib, which was developed from studying and comparing the binding of Sugen’s various candidate compounds in complex with the FGFR1 kinase crystals, with c-Met homology models derived from NYU’s FGFR1 kinase crystals, and later in complex with a c-Met kinase crystal.
In 2007, EML4-AJLK, a mutated form of the “ALK” TKR, was discovered by researchers at a Japanese university unaffiliated with NYU or Pfizer as a cause of non-small cell lung cancer (NSCLC) in a subset of patients. After it determined that crizo-tinib inhibited the EML4-ALK receptor, Pfizer amended its IND for crizotinib to include clinical studies of lung cancer patients who tested positive for the EML4-ALK receptor. In August 2011, the FDA approved the drug, which Pfizer named Xalkori®. After Pfizer rejected NYU’s demand for royalties on sales of Xalkori®, NYU commenced this action.
The dissent finds that because crizotinib was developed based on the receptor c-Met, which was adopted by Sugen into drug discovery, any product based on that patentable invention, including Xalkori®, is subject to the royalty provisions of section 8, which are inapplicable because no IND was filed within four years of the end of the Research Period. However, while crizotinib has a nexus to c-Met, the language employed in section 9 does not preclude the finding that crizotinib (and the patents derived from it) also has a relevant nexus to EML4-ALK. Section 9 (2) provides that “[w]ith respect to targets that were adopted by SUGEN into drug discovery prior to the effective date of the [change in ownership], SUGEN Products developed based on such targets shall be subject to the license payments described in Section 8 hereto” (emphasis added). Although c-Met was adopted into discovery before Sugen was acquired, the Sugen product, Xalkori®, is based on the target EML4-ALK, not c-Met. Thus, we must consider whether NYU is entitled to royalties under section 9 (3).
Whether NYU is entitled to royalties under section 9 (3) turns on the meaning of the language entitling NYU to royalties on
“SUGEN Products that are developed based on Receptor targets which were not adopted into drug discovery at the time of the effective date of [Sugen’s change in ownership] . . . , provided that with respect to such SUGEN Product there exists a [47]*47Patentable Invention with respect to such target and/or its utility which is derived from or based on the Research Technology.”
Adopting Pfizer’s interpretation that “and/or its utility” is a modifier of “such target,” the dissent finds that the only commercially reasonable way to interpret section 9 (3) is that the “Patentable Invention” must be related to the “target,” which must have been identified as part of the NYU research project prior to the change in ownership, and not to the drug substance found to inhibit the target. Thus, the dissent finds that NYU is not entitled to royalties because Xalkori® was not “derived from or based on the Research Technology” since EML4-ALK and its utility (namely, its association with NSCLC) were discovered by Japanese researchers without benefit of NYU’s research technology, and Pfizer did not rely on NYU’s confidential information or know-how to discover that crizotinib was an effective EML4-ALK inhibitor.
Although this may be one reasonable interpretation of section 9 (3), the disputed language “on its face is reasonably susceptible of more than one interpretation” (Chimart Assoc. v Paul, 66 NY2d 570, 573 [1986]; see also Duane Reade, Inc. v Cardtronics, LP, 54 AD3d 137, 144 [1st Dept 2008]). The phrase “provided that with respect to such SUGEN Product there exists a Patentable Invention with respect to such target and/or its utility which is derived from or based on [NYU’s] Research Technology,” implies that the nexus between the invention and the target need not be direct. It does not require Patentable Inventions on a target per se — which, NYU argues, would be a legally impossible requirement, since a target is an unpatentable product. Thus, the phrase may be reasonably interpreted to provide that any “Sugen Product” containing a “Patentable Invention,” “derived” in part through NYU’s “Research Technology,” may be the source of royalty payments. Xalkori® is a Su-gen product, developed based on the use of a “patentable invention,” crizotinib, which was developed using NYU’s know-how (e.g., X-ray crystallography), “with respect to” the “non-adopted” receptor, ELM4-ALK. In other words, Pfizer’s patents on crizotinib have the requisite nexus to the “utility” of the EML4-ALK receptor because Xalkori® is FDA approved only to target that receptor.
To the extent Pfizer, on its own, discovered that crizotinib could treat ELM4-ALK, the discovery of crizotinib was still derived in part through NYU’s research technology. Further, [48]*48nothing in the plain language of section 9 (3) can be read to require that the section only applies to sales of a drug treating a “non-adopted target” discovered by NYU prior to the ownership change or that NYU was obligated to discover the target based on its know-how. In contrast, section 11 of the 1996 Agreement, the only other section that discusses targets, refers to targets “identified directly by NYU in the course of the NYU Research Project,” which can become “Validated Targets.” As NYU argues, this shows that when the parties wished to limit the applicability of a section of the 1996 Agreement to targets “identified directly by NYU,” they knew how to do so.
Thus, because section 9’s language delineating when Pfizer owes NYU royalties with respect to non-adopted targets is ambiguous, we cannot determine on this motion to dismiss that either party’s interpretation of the agreement controls as a matter of law.
The dissent’s contention that NYU’s reading would lead to a commercially unreasonable result because it would obligate Pfizer to pay “a royalty on any drug that targets any receptor that is discovered at any time by anyone,” does not withstand scrutiny. NYU’s reading reflects the commercially reasonable bargain between NYU and Sugen to reduce NYU’s royalties in the short term in exchange for a royalty on certain future products developed by Sugen’s successor, even with respect to targets discovered by third parties, as long as the products were based on or derived from NYU technology. Absent that connection, no royalties would be due.
Accordingly, the judgment of the Supreme Court, New York County (Shirley Werner Kornreich, J.), entered February 8, 2016, dismissing the complaint, and bringing up for review an order of the same court and Justice, entered December 21, 2015, which granted defendant’s motion to dismiss, should be reversed, on the law, without costs, the judgment vacated, the motion denied, and the complaint reinstated.