Manufacturing and Supply Agreement - JPI Pharmaceutica International, Janssen Pharmaceutica Inc. and Alkermes Controlled Therapeutics Inc. II
MANUFACTURING AND SUPPLY AGREEMENT
Entered into this 6th day of August 1997 (hereinafter "Effective Date") by and
between
JPI PHARMACEUTICA INTERNATIONAL, a division of Cilag AG
International Zug, a company duly organized and existing under the
laws of Switzerland, having its principal office in CH-6300 Zug,
Kollerstrasse 38, Switzerland (hereinafter referred to as "JPI")
and
JANSSEN PHARMACEUTICA Inc., 1125 Trenton-Harbourton Road,
Titusville, NJ 08560, USA (hereinafter referred to as "JANSSEN
US") (JPI and JANSSEN US collectively referred to herein as
"JANSSEN")
and
Alkermes Controlled Therapeutics Inc. II, a company organized and
existing under the laws of the Commonwealth of Pennsylvania,
having its principal office at 64 Sidney Street, Cambridge, MA
02139-4136, U.S.A. ( hereinafter referred to as "ACT II").
WITNESSETH
WHEREAS, JPI and ACT II (as assignee of Medisorb Technologies International LP
("MTI")) have entered into an agreement dated December 23, 1993 for the
development of a Risperidone depot formulation incorporating ACT II's
proprietary technology concerning bioabsorbable polymer technologies as duly
amended by the Second Amendment on March 8, 1997 (hereinafter "Development
Agreement"); and
WHEREAS, JANSSEN and ACT II (an assignee of MTI) have entered into two License
agreements dated February 21, 1996 granting JANSSEN certain exclusive rights
with respect to the use of ACT II's proprietary technology in the development,
manufacturing, promotion and sale of Risperidone depot formulations (hereinafter
"License Agreements"); and
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
WHEREAS, further to the provisions of Article 4 (b) of the License Agreements,
ACT II has a right of first refusal with respect to the manufacture of such
Risperidone depot formulations and JANSSEN has further to such provision agreed
to entrust the manufacturing of Products (as hereinafter defined) to ACT II
under the terms and conditions set forth hereinafter.
ARTICLE 1 : DEFINITIONS
The following terms shall, for the purpose of this Agreement, have the following
meaning unless the context clearly requires otherwise and the singular shall
include the plural and vice versa :
1.1 "Affiliate" shall mean any company controlling, controlled by, or under
common control with a party by ownership, directly or indirectly, of
fifty percent (50%) or more of the total ownership or by the power to
control the policies and actions of such company.
1.2 "Compound" shall mean the active ingredient risperidone.
1.3 "Final Product" shall mean the final presentation form of the Product
registered and marketed by Janssen, their Affiliates and licensees, ready
for sale to the final customer.
1.4 "Janssen GMP Manual" shall mean the Janssen Pharmaceutical GMP Policies
Manual, a numbered copy of which has been provided to ACT II and which
Manual, together with any possible amendment and/or addition is deemed to
constitute an integral part of this Agreement.
1.5 "Licensed Net Selling Price" shall mean the [***] JANSSEN, their
Affiliates or licensees in a given calendar year to independent third
parties for the Final Product for sale in the Territory, less deductions
for (i) transportation charges, including insurance; (ii) sales and
excise taxes paid by JANSSEN, their Affiliates or licensees and any other
governmental charges imposed upon the production, importation, use or
sale of the Final Product; (iii) trade, cash and ordinary business
discounts allowed and (iv) allowances or credits to customers on account
of rejection or return of Final Product (v) and managed care rebates or
allowances and mandatory price allowances imposed by governments.
If JANSSEN, its Affiliates or licensees sell Final Product in a country
in such a manner that the net sales value of the same is not readily
identifiable then the net sales determination for that
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THE SECURITIES AND EXCHANGE COMMISSION.
country shall be whichever is the higher of (i) the fair market value of
such Final Product or (ii) the proportion of the bundled price attributed
to the Final Product by JANSSEN, its Affiliates or licensees whenever
Product is sold as part of a package of products or services.
For the purpose hereof "fair market value" shall mean, without
limitation, the value of Final Products sold to similar third parties in
similar quantities. If the fair market value can not be determined in any
given country, the fair market value will be determined by the value of
the Final Product sold to similar customers in countries with similar
pricing and reimbursement structures and for similar quantities.
1.6 "Manufacture, Manufacturing" shall mean all steps and operations involved
in the production of Product, starting from Compound, including supply of
the polymers or other critical excipients, pharmaceutical formation,
packaging, in process and quality control and storage of Compound and
Product, until delivery for shipment of the Product to JANSSEN US, JPI or
their designee.
1.7 "Manufacturing Fee" shall mean the fee to be paid by JPI and JANSSEN US
to ACT II in consideration for the Manufacture of Products supplied to
each of them in accordance with the terms hereof and which fee will be
calculated as a percentage of the Licensed Net Selling Price per unit of
Product in accordance with the mechanism set forth in Article 6.
1.8 "Manufacturing Process" shall mean the process and environment required
to Manufacture Product as described in regulatory filings.
1.9 "Materials" shall mean all or any of the materials, except for Compound,
required for the Manufacture of Product (including but not limited to
inactive ingredients, diluents, excipients, vials, containers).
1.10 "Product" shall mean a depot formulation of Risperidone, based on ACT II
technologies utilizing polymers of lactic and glycolic acids which are
designed to deliver Compound over an extended period, in appropriately
labeled siliconized vials or any other immediate container agreed by both
parties and as set forth in the Specifications.
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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1.11 "Specifications" shall mean the agreed specifications of the Product, to
be attached hereto as Exhibit A, including quality control tests to be
performed by JANSSEN and a list of the methodologies to be used in
performing those tests.
1.12 "Territory" shall mean worldwide.
ARTICLE 2: PROGRAM OF COMMERCIAL MANUFACTURE AND SUPPLY OF PRODUCTS
2.1 Subject to the terms and conditions of this Agreement, JANSSEN hereby
appoints ACT II as their exclusive supplier of Product for their entire
requirements in Territory and ACT II agrees to Manufacture Product in its
own premises for the exclusive purpose to supply Product to JANSSEN or
their designee.
2.2 ACT II will provide [***], all equipment and machinery for the
Manufacture of the Product, except for those capital items owned by
JANSSEN US and identified in Exhibit B attached hereto. ACT II will only
use such equipment and machinery which complies with the Manufacturing
Process and any other requirements, such as the DMF, agreed with JANSSEN.
ACT II shall maintain such equipment and machinery in good condition and
properly validated.
2.3 In order to assist ACT II in its production planning, both parties will
discuss and agree at the latest upon finalisation of the Phase III
Clinical Trials in accordance with the Development Agreement on a rolling
ordering and forecast mechanism [***] duly considering amongst others the
required leadtimes to Manufacture the Product and to acquire the primary
container or any other Material. In principle the first period of such
rolling forecast will be considered a firm commitment, the other periods
being indicative and non binding. Such forecast will be periodically
updated at the moment of sending the orders for the next period. To the
extent required such a forecast mechanism may include a buffer mechanism
providing for an upper and lower variation limit of the eventual orders
against the latest forecast and a reasonable buffer mechanism in
connection with required delivery dates and ordered quantities of
Product.
The eventually agreed forecast mechanism ("hereinafter Forecast
Mechanism") will be attached hereto as Exhibit E and will be used both by
JPI and by JANSSEN US, it being understood that Janssen US and JPI may
use a slightly different Forecast Mechanism format reflecting potential
differences in the flow of goods.
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
2.4 JPI and JANSSEN US will each, in accordance with the Forecast Mechanism,
send firm orders to ACT II indicating the requirements for Products,
together with the required delivery dates and destination, and shall at
the same time advise ACT II of the estimated requirements for the
following periods in accordance with the Forecast Mechanism. JPI and/or
JANSSEN US will ship Compound to ACT II in quantities sufficient and with
sufficient lead time to enable ACT II to manufacture the ordered
Products. Together with the batch(es) of Compound, JPI and/or JANSSEN US
will send all required documents and certificates. The Compound shipped
to ACT II will comply with agreed specifications to be attached hereto as
Exhibit F. In order to insure an adequate supply of Compound, ACT II will
provide inventory data for each batch of Product shipped to Janssen as
well as quarterly summaries of inventory transactions.
2.5 Upon receipt of the Compound, ACT II will inspect the batch(es) in
accordance with to be agreed test procedures. Within thirty (30) business
days following receipt of a shipment of Compound, ACT II shall inform JPI
or JANSSEN US, depending on who was responsible for the shipment, in
writing of any qualitative and/or quantitative shortcomings of the
supplied Compound. In the event of a justifiable claim, JPI or JANSSEN US
as the case may be shall replace or cause to have replaced such
quantities of Compound in the shortest possible time and dispose of any
defective batch(es) at its own expense.
Upon receipt and control of the Compound, ACT II will proceed with the
Manufacture of the Products in accordance with the time schedule required
to meet the requested delivery dates.
2.6 All Product Manufactured by ACT II under this Agreement shall be
manufactured and packed strictly in accordance with the Specifications
and Manufacturing Process and in accordance with the provisions of the
applicable Drug Master File to which JANSSEN is granted access in
accordance with the provisions of Article 5.3.
ACT II shall be responsible for obtaining Materials in such quantities as
are necessary for the manufacturing of the amounts of Product ordered by
JANSSEN.
ACT II shall be responsible for the quality, purity, identity and potency
of the Materials used and shall only buy and use such Materials in the
Manufacturing of the Product, which strictly comply with the applicable
quality requirements and Specifications.
ACT II shall not change the validated Manufacturing process of the
Product or use any different material in the processing thereof that may
have an impact on any regulatory approval in
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THE SECURITIES AND EXCHANGE COMMISSION.
connection with the Product without JANSSEN US' (in connection with the
United States) and/or JPI's (in connection with the rest of the
Territory) explicit prior written approval and shall give the assistance
reasonably required by JANSSEN US or JPI in preparing the supplement to
any regulatory approval in connection with any change previously approved
by JANSSEN US or JPI.
2.7 ACT II shall Manufacture Product in batches as specified in the
Specifications [***].
2.8 To minimize the likelihood of a supply deficiency with respect to
Products, by the end of Phase III clinical trials in the development of
the Product in accordance with the Development Agreement, both parties
shall discuss and agree on a Disaster Recovery and Back-Up plan to be
prepared by ACT II. Such plan shall consider the possibility of
(re)building (including validation and approval) a plant within an
acceptable period of time (such period to be determined in common
agreement) in case ACT II's current premises would be destroyed as well
as transferring the Manufacture to a manufacturing facility of JANSSEN or
any of their Affiliates or the facilities of a third party. Such third
party will be an industry recognized reputable manufacturer having
experience in making injectable pharmaceutical products.
2.9 The parties hereto will at regular instances review the long term
capacity of ACT II's plant taking into account the most current forecast
of the Final Product with a view to determine the need to have additional
manufacturing capacity, either at the existing facility of ACT II or in
any other manufacturing facility and either with ACT II or any of its
Affiliates or with JANSSEN or any of their Affiliates.
2.10 The parties hereto acknowledge that after ACT II has supplied the Product
for Phase III clinical trial supplies and prior to the start of the
commercial Manufacturing of the Product, ACT II's manufacturing facility
for the Product should be kept in a manufacturing ready condition so as
to minimize the risk of supply deficiencies at the moment of start up of
the commercial Manufacturing. In order to do so ACT II will commit such
resources and undertake such maintenance activities and training programs
as agreed by both parties in a Manufacturing Readiness Plan. Such
Manufacturing Readiness Plan will be attached to this Agreement as
Exhibit H. In consideration of such maintenance activities, JANSSEN will
each pay a monthly fee to ACT II of [***]. ACT II will send monthly
invoices to JPI or JANSSEN US in connection
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with such fees in accordance with timely provided instructions and JPI
and/or JANSSEN US will pay such invoices within thirty days date of
invoice. The parties hereto will use good faith efforts to investigate
the possibility to utilize ACT II's manufacturing facility for other
manufacturing requirements of JANSSEN or any of their Affiliates during
such interim period. To the extent any such project would be identified
and agreed by the parties, the parties will in good faith negotiate an
appropriate reduction of the monthly [***] fee payable by JANSSEN.
2.11 The parties hereto agree that during the term of this Agreement, JANSSEN
will order and purchase a minimum number of Product during any given
calendar year starting on the first commercial launch of the Final
Product (the year of first commercial launch to be calculated on a pro
rata basis). Such minimum numbers are expressed in kilograms of bulk
Product (excluding for this purpose the vials) and are set forth in
Exhibit C attached hereto. In the event that JANSSEN does not achieve the
applicable minimum quantity of the Product to be Manufactured during a
given calendar year, the parties hereto will in good faith renegotiate an
adjusted Manufacturing Fee, duly considering the effect of the shortfall.
In the event the parties can not agree an adjusted Manufacturing Fee, ACT
II will be entitled to terminate this Agreement upon giving a one year
prior notice. Act II shall provide such commercially reasonable
assistance and other information in order for JANSSEN to manufacture or
have Manufactured the Product after such one year notice period.
ARTICLE 3: QUALITY ASSURANCE - GMP COMPLIANCE
3.1 ACT II will Manufacture the Product in accordance with current Good
Manufacturing Practices ("GMP") standards, including, but not limited to
the requirements set forth in Janssen's GMP Manual, the requirements
imposed by the Food and Drug Administration of the United States ("FDA"),
the Japanese health authorities and EU GMP guidelines.
3.2 ACT II shall perform in process and final quality control on Product. For
each batch of Product, ACT II shall take a sample or samples as specified
in the JANSSEN GMP Manual. Such sample(s) and records shall be retained
in accordance with the provisions of the Janssen GMP Manual. In addition
ACT II will on an annual basis submit revalidation data to JANSSEN or
their designee in compliance with the provisions of the Sterilization
Policy in the Janssen GMP Manual.
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
3.3 JANSSEN shall have the right, upon reasonable advance notice and during
regular business hours, to send its quality control inspectors to inspect
and audit the processes, facilities and equipment being used by ACT II in
the Manufacturing of the Product and the polymers used in Product to
assure compliance with Articles 2 and 3 of this Agreement as well as any
applicable laws, rules and regulations, provided that such quality
control inspectors shall be subject to the confidentiality provisions
provided for in Article 7. Such inspection and audit shall be conducted
at JPI's or JANSSEN US' (as the case may be) sole cost and expense and in
a manner so as to minimize disruption of ACT II's business operations.
The above audit right shall also extend to ACT II's supplier of the
siliconized vials.
ACT II shall or shall cause its suppliers of the siliconized vials or any
other primary container to remedy, within the timelimits provided for in
the GMP audit report or determined in accordance with the Janssen GMP
Manual any deficiencies reported by such auditor in the audit report
issued following any such audit and which deficiencies relate to GMP,
Specifications, Manufacturing Process, applicable laws, rules and
regulations including JANSSEN's current quality control procedures,
provided that, with respect to the latter, ACT II received an updated
version prior to any such audit. ACT II and JANSSEN will reasonably
collaborate with each other in order to insure that the manufacturer of
the siliconized vials or any other primary container complies with
applicable GMP rules (including the JANSSEN GMP Manual) and
Specifications and Manufacturing Process. Such collaboration includes the
possibility to organize joint audits or to have such GMP audit performed
by JANSSEN. During such period, ACT II shall continuously use
commercially reasonable efforts to remedy such deficiencies as promptly
as possible. In the event that ACT II does not remedy any of such
deficiencies within the above-referred timelimits, then JANSSEN shall be
entitled to cover by Manufacturing themselves or to have a third party
manufacture the Products. ACT II shall provide such commercially
reasonable assistance and other information as shall be necessary in
order for JANSSEN to manufacture itself or have a third party manufacture
the related Products. In the event that JANSSEN uses a third party
manufacturer for the Product pursuant to this Article, JANSSEN shall
require such third party to be bound by the same confidentiality
provisions as are contained in this Agreement.
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THE SECURITIES AND EXCHANGE COMMISSION.
3.4 In the event ACT II receives a deficiency notice from the FDA or any
other regulatory agency regarding its compliance with any applicable
laws, rules and regulations regarding its Manufacture of the Product, ACT
II shall promptly notify JPI and JANSSEN US. ACT II shall use
commercially reasonable effects to remedy such deficiencies as promptly
as possible and in any event within the time period requested by the
agency. In the event that ACT II does not remedy any of such deficiencies
within the period provided for in the notice of the regulatory agency,
then JANSSEN shall be entitled to manufacture or have manufactured the
Products in accordance with the provisions of Article 3.3.
3.5 Upon reasonable request of JANSSEN US, JPI or any of their Affiliates,
ACT II will enter into a separate Quality Assurance Agreement with
JANSSEN US, JPI or any such Affiliate, which Quality Assurance Agreement
will confirm the quality assurance provisions set forth in this Agreement
and will clearly identify the respective responsibilities of the parties
in the Manufacturing of the Product.
ARTICLE 4: SHIPMENT - RISK AND TITLE
4.1 By the required delivery date, ACT II will ship the Products to JANSSEN
or their designee in accordance with the ordering instructions as set
forth in Article 2 hereof. Together with such shipment ACT II will send
shipping documents and Certificates of Analysis of the batches shipped.
Products shall be shipped using a carrier appointed by JANSSEN on the
basis of FOB, port of shipment. The term "FOB" shall be interpreted in
accordance with the latest INCOTERMS.
4.2 Upon receipt of a batch of Product JPI , JANSSEN US or their designee
shall perform or have performed an inspection of the batch documents and
perform such test on the Product in accordance with procedures to be
agreed upon. Should a batch of Product fail to meet the established
standards of quality as set forth in Article 3 or should the Product or
the Manufacturing Process thereof not comply with the Specifications and
Manufacturing instructions, JPI or JANSSEN US, as the case may be, shall
inform ACT II in writing of the alleged shortcomings within fifteen (15)
business days after receiving such defect and the batch number.
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ACT II shall, at JPI's or JANSSEN US' option, depending who ordered the
batch (i) re-process or replace in accordance with the Specifications and
the Manufacture Process, at its own cost (which cost excludes the cost of
the Compound) the whole or part of the deficient batch of Product so
rejected, or, if the related Manufacturing Fee due by JPI or JANSSEN US
in accordance with Article 6 was already paid , provide either (ii) a
refund of the Manufacturing Fee paid in relation to the rejected
batch(es) or (iii) issue a credit note for future orders for the full
amount of the Manufacturing Fee paid in relation to the rejected
batch(es) and shall destroy upon JPI's or JANSSEN US' instructions the
rejected batch of Product which can not be corrected or improved.
Furthermore, ACT II compensate or credit JPI or JANSSEN [***] per
kilogram of Compound for JPI's or JANSSEN US' cost for the Compound used
in such deficient batch of Product. If JANSSEN US or JPI request the
receipt of such [***] payment, such payment will be made within forty
five (45) days date of invoice.
Both parties will make good faith efforts to resolve disagreements in
connection with any such alleged shortcomings. In the event the in-house
experts of the parties are unable to agree on any alleged shortcoming of
the Product or the Manufacturing process thereof, then the parties will
appoint an independent expert skilled in the art who will analyse samples
of the alleged deficient batch and all process deviations. Both parties
will supply such expert with copies of specifications, documents,
test results etc., that the expert may reasonably require in connection
with such analysis. The expert's decision as to whether such batch has
met the specifications shall be final and binding to the parties. The
expenses of such expert shall be borne by the party whose contention is
rejected by the expert.
4.3 Title in the Compound and Product shall at any time remain with JPI or
JANSSEN US, depending on which company ordered the Product, whereas title
to the Material shall remain with ACT II until incorporation in the
Product. Risk of loss and damage in relation to the Compound and the
Product shall pass to ACT II upon delivery of the Compound at the ACT II
premises and shall again pass to JPI and/or JANSSEN US upon delivery of
the Product to the common carrier. ACT II shall provide adequate and safe
storage for the Compound and Products while at its premises and shall
have sufficient insurance coverage in connection with the above risk.
4.4 ACT II represents and warrants that at the time of Manufacture all
Product supplied hereunder shall be manufactured and supplied by ACT II
in accordance with the Specifications and
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Manufacturing Process and in compliance with (i) this Agreement and (ii)
any applicable law, rule or regulations.
EXCEPT FOR THE ABOVE WARRANTY, THERE ARE NO WARRANTIES OF MERCHANTIBILITY
OR FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 5: REGULATORY PROVISIONS
5.1 JANSSEN and its Affiliates will be responsible for filing any regulatory
approval application in connection with the Product and the Final
Product, in their own name and at their own cost, all in accordance with
the provisions of the Development Agreement and the License Agreement.
5.2 ACT II will give reasonable regulatory support in connection with
regulatory approvals filed by JANSSEN in relation to the Product and/or
the Final Product and will do so [***]. Amongst others, ACT II will
prepare and maintain all the necessary supporting documentation requested
by JANSSEN such as certificates or other administrative documents
required for reference in any regulatory filing, if necessary in a format
requested by JANSSEN. Notwithstanding the above, it is agreed that if any
such request from JANSSEN or the health authorities in a given country
entails extraordinary costs beyond the normal and ordinary regulatory
support efforts in connection with the filing and maintenance of the
regulatory approvals directed to the Product or Final Product, the
parties will in good faith discuss and agree on a sharing mechanism with
respect to such extraordinary costs related to such support activities in
such country or countries.
5.3 ACT II shall be responsible for obtaining and maintaining all necessary
permits and approvals to Manufacture the Products and in general to
perform its responsibilities as set forth in this Agreement.
Amongst others ACT II shall submit a Drug Master File ("DMF") with the
health authorities identifying ACT II's method of manufacture, release
specifications and testing methods used in the manufacture of the
polymers and shall cause the supplier of the siliconized vials or any
other primary container to do the same in relation to such vials or such
other primary container. Similarly ACT II shall prepare and file an
appropriate facility DMF with respect to the facilities where ACT II
Manufactures the Product and the polymers. ACT II shall cause the
supplier of the siliconized vials (or any other primary container) or any
other Material used in the Manufacture of Product to do the same.
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Upon request by JPI or JANSSEN US, ACT II agrees to provide JPI, JANSSEN
US or their Affiliates or licensees with a Letter of Authorisation
permitting the Health Authorities to refer to ACT II's DMF in its review
of JANSSEN's or their Affiliates' applications for Product manufactured
by ACT II. ACT II shall cause the supplier of the siliconized vials (or
any other primary container) or any other Material used in the
Manufacture of Product to do the same. A representative of JANSSEN will
be entitled to review at ACT II's facilities those parts of the polymer
DMF and the appropriate facility DMF pertaining to the Manufacture of the
Product. ACT II shall maintain its Manufacturing facilities,
Manufacturing records and its DMF's in such a manner as required to live
up to the above obligation during the entire term of this Agreement.
5.4 JANSSEN shall inform ACT II promptly (and whenever possible within 24
hours of receipt by JPI and/or JANSSEN US) of any information or request
for information received from the FDA or any other regulatory agency
relating to the NDA and/or registration of Product whenever such
information or communication is related to ACT II technology. Parties
shall promptly discuss such information and in the event that a reply is
required to such form question from the FDA or any other regulatory
agency or any communication has to be made with respect to Product and
related to ACT II technology, Parties will agree on the content of any
communication before it is made.
5.5 ACT II shall inform JANSSEN promptly (and whenever possible within 24
hours of receipt by ACT II) of any information or request for information
received from the FDA or any other regulatory agency relating to ACT II
technology whenever such information or communication is relevant to
Product. It being understood that ACT II shall not disclose to JANSSEN
any third party confidential information or trade secrets. Parties shall
promptly discuss such information and in the event that a reply is
required to such formal question from the FDA or any other regulatory
agency or any communication has to be made that involves Product, Parties
will agree on the content of such communication before it is made.
ARTICLE 6: MANUFACTURING FEE
6.1 In consideration of the manufacturing activities to be performed by ACT
II hereunder, JPI and JANSSEN US will pay the Manufacturing Fee for the
Products supplied to each of them. The Manufacturing Fee will be
calculated as a certain percentage of the Licensed Net Selling Price. The
actual percentage that shall apply with respect to a given calendar year
will be
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determined in a function of the total volume of Products Manufactured by
ACT II and invoiced to JANSSEN during such calendar year and will be
calculated in accordance with the brackets set forth in Exhibit D
attached hereto.
The actual Manufacturing Fee due during any given calendar year will be
calculated as follows;
6.1.1 The Manufacturing Fee for the initial batches of Product
Manufactured and invoiced by ACT II prior to the expiration of the
first calendar year following the first commercial launch of the
Final Product shall be calculated as a percentage of the estimated
weighted average price offered by JANSSEN, its Affiliates or
licensees to independent unrelated third parties for the Final
Product. Such weighted average price will be calculated by
multiplying the forecasted net selling price of the Final Product
(expressed in USD at the exchange rates then applied by JANSSEN in
accordance with its normal accounting procedures) in each country
of Territory where JANSSEN intends to launch the Final Product in
the calendar year following the calendar year of the first
commercial launch of the Final Product times the total number of
units of the Final Product JANSSEN forecasts to sell in those
countries during such period.
The actual percentage to be paid as Manufacturing Fee in such
period will be calculated on the basis of the total number of
units of the Product ACT II is required to Manufacture and ship to
JANSSEN during such period based on the forecast provided by
JANSSEN in accordance with Article 2.3.
Within [***] following the end of every calendar quarter either
party may request a recalculation of the then applicable
Manufacturing Fee whenever there is a deviation of more than [***]
in the total number of Products actually Manufactured and shipped
by ACT II to JANSSEN during such quarter and the number of units
forecasted by JANSSEN. The parties will at such moment recalculate
and adjust the Manufacturing Fee based on (i) the revised supply
forecast and (ii) the then current Licensed Net Selling Price.
In the month of January following such first full calendar year
adjustment shall be made if there is deviation between (i) the
estimated weighted average price and the actual Licensed Net
Selling Price of the Final Product (expressed in USD at the
exchange rates then applied by JANSSEN in accordance with its
normal accounting procedures) and /or
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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT
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THE SECURITIES AND EXCHANGE COMMISSION.
(ii) the total volume of units of Product actually Manufactured
and invoiced by ACT II during such period.
Any corrective payment to be made resulting from such
reconciliation will be paid by the party owing such a payment
within [***] after such reconciliation and in accordance with the
provisions of Article 6.4.
6.1.2 The Manufacturing Fee for any calendar year following the initial
period as specified under Article 6.1.1 above will be calculated
on the basis of the forecasted (i) Licensed Net Selling Price
(expressed in USD at the exchange rates then applied by JANSSEN in
accordance with its normal accounting procedures) and (ii) the
amount of Product expressed in units to be Manufactured and
shipped by ACT II for such calendar year.
Within [***] following the end of every calendar quarter either
party may request a recalculation of the then applicable
Manufacturing Fee whenever there is a deviation of more than [***]
in the total number of Products actually Manufactured and shipped
by ACT II during such quarter and the number of units forecasted
by JANSSEN. The parties will at such moment recalculate and adjust
the Manufacturing Fee for the remainder of the calendar year based
on (i) the revised supply forecast and (ii) the then current
Licensed Net Selling Price.
In the month of January following any calendar year adjustment
shall be made if there is deviation between (i) the estimated
weighted average price and the actual Licensed Net Selling Price
of the Final Product (expressed in USD at the exchange rates then
applied by JANSSEN in accordance with its normal accounting
procedures) and/or (ii) the total volume of units of Product
actually Manufactured and invoiced by ACT II during such calendar
year. Any corrective payment to be made resulting from such
reconciliation will be paid by the party owing such a payment
within [***] after such reconciliation and in accordance with the
provisions of Article 6.4.
6.2 JANSSEN will keep accurate records of the Licensed Net Selling Price with
a view to determine the accuracy of the Manufacturing Fee calculation for
a period of at least two (2) years after expiry of the year they concern.
ACT II shall have the right to nominate an independent certified public
accountant acceptable to and approved by JANSSEN US or JPI as the case
may be who
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shall have access, on reasonable notice, to JPI's or JANSSEN US' records
during reasonable business hours for the purpose of verifying the
calculation of the Licensed Net Selling Price. This right may not be
exercised more than once in any calendar year, and once a calendar year
is audited it may not be reaudited, and said accountant shall disclose to
ACT II information relating solely to the accuracy of the Licensed Net
Selling Price calculation.
6.3 ACT II shall invoice JPI or JANSSEN US for the Manufacturing Fee due with
respect to each batch of Product supplied to each of them or their
respective designee when shipped pursuant to Article 4. JPI and JANSSEN
US shall be pay such invoice within [***] after the date of the invoice.
6.4 All payments required to be paid hereunder shall be made in United States
Dollars by wire transfer of immediately available funds to the financial
institution, account number, account party's name and wire transfer
information designated in writing by ACT II to JPI and JANSSEN US as the
place of payment.
6.5 No party shall have the right to reduce, by set off, counterclaim,
adjustment or otherwise, any amount owed by it to the other party
pursuant to this Agreement, unless explicitly provided for otherwise.
ARTICLE 7: CONFIDENTIALITY
The parties refer to Article to the confidentiality provisions of Article 9 of
the License Agreements which provisions are incorporated by reference herein.
ARTICLE 8: RECALL
In the event of a Product recall ("Recall"), JPI or JANSSEN US, as the case may
be, shall be responsible for the coordination of Recall activities. Where the
Recall is caused by ACT II's negligence or willful misconduct or breach of this
Agreement and without prejudice to the provisions of Article 10, ACT II agrees
to pay the following costs and expenses of any Recall: (i) costs of retrieving
the Product previously delivered to JPI's or JANSSEN US' agents or customers,
(ii) costs and expenses that JPI and/or JANSSEN US is required to pay for
reasonable notification, shipping and handling charges, provided JPI
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and/or JANSSEN US provides ACT II with supporting documentation of all
such reimbursable costs and expenses, and (iii) cost of replacing
Products that are unsalable as a result of the Recall. If the Recall is
not primarily caused by ACT II's negligence, willful misconduct or
breach, JPI and/or JANSSEN US shall pay all of the costs and expenses
described above for such Recall.
ARTICLE 9: INDEMNIFICATIONS
9.1 JANSSEN shall indemnify, defend and hold ACT II and its Affiliates, and
each of their officers, directors, employees, agents and consultants
(each an "ACT II Indemnitee") harmless from, against and in respect of
any damages, claims made by third parties, losses, liabilities, charges,
actions, suits, proceedings, penalties and reasonable costs and expenses
(including without limitation reasonable attorneys' fees) (collectively,
the "Losses"), arising out of or resulting from the use by or
administration to any person of Product or Final Product of JPI, its
Affiliates or licensees, except to the extent such Losses arose or
resulted from the failure of ACT II or its Affiliates to Manufacture
Products in accordance with GMP, the Specifications and Manufacturing
Process for such Product(s) or from ACT II's failure to comply with its
obligations or covenants contained herein, so long as (i) the ACT II
Indemnitee allows JANSSEN to participate in or, at JANSSEN's sole option
but without any obligation, to conduct at JPI's expense the defense of a
claim or action for which indemnification is sought under this Article
9.1. (provided that the ACT II Indemnitee may participate in such defense
at its own expense), and (ii) neither party may compromise or settle such
claim or action without the other party's prior written consent, which
shall not be unreasonably withheld ; provided, however, that a ACT II
Indemnitee shall not be indemnified under this Article 9.1 to the extent
that actions taken or failed to have been taken by JANSSEN under the
direction of, or at request of, the ACT II Indemnitee were the primary
cause of the events giving rise to the ACT II Indemnitee's claim for
indemnification.
9.2 ACT II shall indemnify, defend and hold JANSSEN, their Affiliates and
Licensees and each of their officers, directors, employees, agents and
consultants (each a "JANSSEN Indemnitee") harmless from and against all
Losses to the extent such losses arise out of or result from the failure
of ACT II or its Affiliates to Manufacture the Product(s) in accordance
with the Specifications and Manufacturing Process, or, its failure to
comply with its obligations or covenants contained herein, unless such
failure was the result of actions taken or failed to have
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
been taken by the ACT II under the direction of, or at the request of
JANSSEN. The JANSSEN Indemnitee shall allow ACT II to participate in, or,
at ACT II's sole option, to conduct at ACT II's expense the defense of a
claim or action for which indemnification is sought under this Article
9.2. (provided that the JANSSEN Indemnitee may participate in such
defense at its own expense), and neither party shall compromise or settle
such claim or action without the other party's prior written consent,
which shall not be unreasonably withheld.
9.3 In no event shall either party be liable for any consequential or
indirect damages of the other party, including but not limited to lost
profits.
9.4 Both parties shall obtain, and shall maintain at all times during the
term of this Agreement, an insurance policy or policies providing
coverage against product liability claims related to the above
indemnification.
ARTICLE 10: TERM AND TERMINATION
10.1 The term of this Agreement shall be commensurate with the term of the
License Agreements, unless sooner terminated as provided hereinafter.
10.2 This Agreement may be terminated:
10.2.1 by mutual agreement of JANSSEN and ACT II in a writing signed by
the parties;
10.2.2 by written notice of one party in the event of a material breach
by the other party in the performance of any of its obligations
hereunder, if the party not in default shall have given the
defaulting party written notice specifying such default within 45
days after the occurrence of such breach and the defaulting party
has not made substantial and diligent progress in remedying or
correcting the default within 60 days after such notice is given,
with such termination becoming effective at the end of such 60
days;
10.2.3 by written notice of JANSSEN or ACT II in the event that the other
party makes an assignment for the benefit of its creditors, files
a petition under bankruptcy or insolvency laws, a receiver or
custodian is appointed for such party's business, proceedings are
instituted against such party under bankruptcy or insolvency laws
that
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
have not been stayed within 90 days, all or substantially all or
such party's business or assets become subject to attachment,
garnishment or other process, or such a party becomes unable to
pay its obligations as they become due;
10.2.4 by JANSSEN prior to any commercial Manufacturing upon giving
thirty days prior written notice and following the commencement of
the commercial manufacturing upon giving a six month prior written
notice, provided that with respect to the latter the Agreement
shall not be terminated by JANSSEN without cause during the first
two calendar years following the commencement of the commercial
Manufacturing, unless JANSSEN decides also to terminate the
License Agreements.
10.2.5 by ACT II in accordance with the provisions of Articles 2.11
10.3 Upon termination of this Agreement for any reason whatsoever ACT II will
cease the Manufacturing of the Products. Termination of this Agreement
shall not affect the rights and obligations of the parties accrued prior
to the termination hereof. Notwithstanding the termination of this
Agreement, the confidentiality provisions of Article 3.3, the obligations
set forth in Articles 7, 8, 9, and 12.9 shall continue and survive the
termination hereof.
ARTICLE: 11 FORCE MAJEURE
Each party shall be relieved of its obligations to the extent that fulfillment
of such obligations shall be prevented by acts beyond the reasonable control of
such party affected, including, without limitation, acts of God, fire,
explosion, flood, drought, war, riot, sabotage, embargo, strikes or other labor
trouble, prohibitions against imports or exports of Products, impossibility of
obtaining or shortages in supply of raw materials, or compliance with any order
or regulation of any government entity acting under color of right. If such
cause continues unabated for a period of thirty (30) days, both parties will
promptly meet to discuss the possibilities to overcome such case of Force
Majeure and the potential implications on the further performance under this
Agreement.
ARTICLE: 12 MISCELLANEOUS
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12.1 Status. Neither JANSSEN or ACT II shall make any representation or incur
any obligation in the name of or in behalf of the other party, except as
explicitly authorized hereunder. Nothing in this Agreement shall be
deemed to establish a relationship of principal and agent between ACT II
and JPI or JANSSEN US, nor any of their agents or employees for any
purpose whatsoever. Nothing in this Agreement shall be deemed to
constitute the parties as a partnership, association or other
relationship.
12.2 Public Announcements. No public announcement with respect to the Product
or the existence of this Agreement may be made by either party without
the prior written approval of the other party.
12.3 Modifications. Any amendment or supplement to this Agreement shall be
effective only if contained in a writing signed by each of the parties
hereto.
12.4 Assignments. Except as otherwise provided herein, this Agreement shall
not be assignable by any party, without the other party's written
consent, such consent not to be unreasonably withheld, except that such
consent is not required in connection with the assignment of either
party's obligations to an affiliate of such party ; provided, however,
that any such assignment shall not relieve the parties hereto from any
obligations under this Agreement.
12.5 Prior Agreements. The parties hereto acknowledge that this Agreement
contains the entire agreement between the parties pertaining to the
Manufacturing and supply of Product in Territory and terminates and
supersedes all prior agreements, understandings, letters or other
instruments whatsoever, whether written or oral, between the parties or
any of their affiliates with respect to such matters.
12.6 Waiver. No waiver by JANSSEN or ACT II of any breach of this Agreement
will constitute a waiver of any subsequent breach, and no exercise by
either JANSSEN or ACT II of any right of termination will constitute a
waiver of any right of such party for recovery of any monies then due it
hereunder or any other right or remedy such a party may have at law, in
equity or otherwise.
12.7 Representations. Each party represents and warrants that it has the right
to enter into this Agreement and that it is under no obligation to any
third party, express or implied, conflicting with the terms and
conditions of this Agreement.
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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12.8 Separability. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of
this agreement where affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other jurisdiction.
12.9 Governing Law; Dispute Resolution.
12.9.1 In the event a dispute ("Dispute") arises between the parties
arising out of or relating to this Agreement, the parties shall
use all reasonable efforts to resolve the Dispute through direct
discussions for a period of sixty (60) days, unless and to the
extent this Agreement provides for other and shorter periods. The
senior management of each party commits itself to respond to any
such Dispute. Subsequent to such sixty (60) day period either
party may, but shall not be required to resort to the binding
arbitration procedures set out hereinafter in this Article 12.9.
12.9.2 If the parties are unable after exerting all reasonable efforts to
resolve a Dispute between the parties, the Dispute shall be
resolved through binding arbitration pursuant to the Commercial
Arbitration Rules of the American Arbitration Association in
accordance with the following provisions:
(a) If a Dispute arises between the parties, the place of
arbitration shall be New York, New York.
(b) To the extent the parties can not immediately agree on a
single arbitrator, the arbitration shall be conducted by a
panel of three neutral arbitrators ("Arbitrators"). One
member shall be appointed by each party and the third
member shall be appointed by the two arbitrators appointed
by the parties. The parties will select an arbitrator
within fifteen (15) business days following the demand for
arbitration. The two arbitrators selected by the parties
will appoint the third member within ten (10) days
following their appointment.
(c) The language to be used in the arbitration shall be
English.
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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(d) Any arbitrator selected by the parties may be of any
nationality, and need not be a lawyer or hold any other
professional status or membership but will be selected on
the basis of his or her qualifications and expertise with
respect to the matter under dispute.
(e) The Arbitrators shall resolve the Dispute on the basis of a
written record consisting of an initial and rebuttal
submission by each party (together with documentary
evidence (including affidavits) supporting the positions
taken in such submissions); provided that the Arbitrators
shall have the right to require the parties to make or
participate in such other written or oral submissions,
presentations, or examinations as the Arbitrators shall
deem necessary for the proper resolution of such Dispute,
all of which shall be made or submitted directly to the
Arbitrators and shall become part of the record in the
proceeding.
(f) The specific pleading schedule for each proceeding shall be
determined by the parties in consultation with the
Arbitrators within fifteen business days after the date on
which the Arbitration panel is constituted, but it shall in
each case provide that the parties' respective initial
submissions shall be filed simultaneously with the
Arbitrators, as shall the parties' respective reply
submissions.
(g) Unless the parties otherwise agree at the time a particular
Dispute is submitted for arbitration, the Arbitrators shall
be required as a condition to their engagement to agree to
render a decision within 30 days of the date on which the
record in the proceeding is completed, but in no case more
than 90 days after the date of the last hearing on the
substantive issues.
(h) The parties shall use reasonable efforts to schedule and
make their submissions, and to take all other necessary
actions in connection with the proceeding, at a time and in
a manner which will permit the Arbitrators to render its
decision in accordance with the schedule set forth herein.
(i) All communications with the Arbitrators during the pendency
of the proceeding shall be made in writing, with a copy
thereof delivered simultaneously to the other party to the
proceeding, or if made orally, made only in the presence of
the other party to the proceeding or its representative.
The existence of the Dispute
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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and the related proceedings shall be kept confidential in
accordance with the provisions of Article 7.
(j) All decisions by the Arbitrators shall be done by majority
vote. The arbitration award shall be rendered in writing
and shall state the reasons for the award, and shall be
final and binding upon the parties. In rendering their
decision, the Arbitrators shall apply the substantive law
of the state, of New York, without regard to its conflict
of law provisions, provided that the Arbitrators shall base
their decision on the express terms and conditions of this
Agreement.
(k) The Arbitrators are empowered to award any remedy allowed
by law, including money damages and to grant final or
interlocutory relief. Notwithstanding the foregoing
punitive or multiple damages may not be awarded and the
express terms of this Agreement may not be altered.
(l) Each party shall bear its own expenses and attorneys' fees
in connection with the arbitration.
12.10 Notices. Any notice required or permitted to be given under this
Agreement shall be mailed by registered or certified air mail,
postage prepaid, addressed to the party to be notified at its
address stated below, or at such other address as may hereafter be
furnished in writing to the notifying party or by telefax to the
numbers set forth below or to such changed telefax numbers as may
thereafter be furnished, If to ACT II:
Alkermes Controlled Therapeutics Inc. II
64 Sidney Street
Cambridge
MA 02139-4136
U.S.A.
Telefax: +1-617-494-9263
attention: Chief Financial Officer
If to JANSSEN:
Janssen Pharmaceutica International, a division of Cilag AG
International,
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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CH-6300 Zug, Chollerstrasse 38, Switzerland Telefax: 041
748 3667
and
Janssen Pharmaceutica Inc.
1125 Trenton-Harbourton Road
Titusville
NJ 08560
U.S.A.
Telefax: +1-609-730-2323
Any such notice shall be deemed to have been received when it has
been delivered in the ordinary course of post or received by telefax.
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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IN WITNESS WHEREOF, JPI, JANSSEN US AND ACT II have caused this instrument to be
executed by their respective duly authorized officers, the date of execution to
relate back to the day and year last below written.
Alkermes Controlled Therapeutics, Inc. II
This 8th day of August of 1997
/s/ J. Duncan Higgons By /s/ Michael Landine
----------------------------- -------------------------------------------
(title) Vice President (title) Vice President
JANSSEN PHARMACEUTICA INTERNATIONAL represented
by CILAG INTERNATIONAL
This 27th day of August of 1997
/s/ illegible signature By /s/ illegible signature
----------------------------- -------------------------------------------
(title) (title)
Janssen Pharmaceutica Inc.
This 3rd day of September of 1997
/s/ illegible signature By /s/ illegible signature
----------------------------- --------------------------------------------
(title) (title) President
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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EXHIBIT A
SPECIFICATIONS
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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EXHIBIT B
EQUIPMENT: CAPITAL ITEMS
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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EXHIBIT C
MINIMUM QUANTITIES
[***]
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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EXHIBIT D
MANUFACTURING FEE
[***]
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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EXHIBIT E
THE FORECAST MECHANISM
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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EXHIBIT F
SPECIFICATION OF COMPOUND
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
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EXHIBIT G
[***]
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REQUEST. REDACTED MATERIAL IS MARKED WITH "*" AND HAS BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.
EXHIBIT H
MANUFACTURING READINESS PLAN