Memorandum of Understanding - DSM Fine Chemicals Netherlands BV and Cubist Pharmaceuticals Inc.
MEMORANDUM OF UNDERSTANDING
between
DSM Fine Chemicals Netherlands B.V.
Noorderpoort 9, 5900 AB Venlo, The Netherlands
(hereinafter referred to as "DSM")
and
Cubist Pharmaceuticals, Inc..
24 Emily Street, Cambridge, MA 02139, USA
(hereinafter referred to as "CUBIST")
CUBIST has a project to introduce a new pharmaceutical, which will consume
DAPTOMYCIN, a lipopeptide antibiotic bulk drug substance.
CUBIST is interested in engaging DSM as a supplier of Daptomycin and DSM is
interested in manufacturing and supplying Daptomycin to CUBIST in accordance
with the principles set forth in this MOU.
This memorandum represents the joint understanding of both companies regarding
the future supply of DAPTOMYCIN.
DSM is the signatory to this Memorandum on behalf of all DSM affiliate companies
which are involved in the development and production of DAPTOMYCIN.
1. INVESTMENTS
DSM agrees to carry out the investments described in Annex 1 to this MOU at its
Capua site which are required to construct a bulk drug facility for the
production of DAPTOMYCIN in accordance with cGMP standards. DSM further agrees
to test and validate this bulk drug facility in accordance with cGMP standards.
<PAGE>
Construction, testing and validation of such facility shall be finalized within
12 months from the execution of this MOU.
2. COST REIMBURSEMENT
CUBIST agrees to reimburse DSM [ ]* which will be incurred by DSM in connection
with the carrying out of the above described investments, testing and validation
up to an aggregate maximum amount of [ ]*. A preliminary cost estimation as well
as the payment schedule are attached to this MOU as Annex 2. The parties agree
that the above limit of [ ]* is based on the investments described in Annex 1.
In the event CUBIST should demand modifications of said investments and/or
additional investments which lead to increased costs to DSM, CUBIST will fully
reimburse DSM also for such part of the costs which exceed the above limit of
[ ]*.
3. CONTRACT
A detailed contract regarding the carrying out of the investments (including
cost reimbursement) and regarding the long-term supply of DAPTOMYCIN
(hereinafter called "definitive Supply Agreement") is targeted to be signed by
both companies before [ ]*. The definitive Manufacturing and Supply Agreement
will cover the years up to and including [ ]*, and will include the terms stated
in this MOU plus standard representation and warranties; standard non-disclosure
and publicity clauses; standard covenants and clauses regarding: enabling
licenses; ownership and retention of intellectual property rights; information
exchange; order, delivery and acceptance procedures; quality control; product
recalls; traceability program; maintenance of cost and production records; risk
allocation (indemnity and insurance); failure to perform, termination;
assignment and independent status. After [ ]*, the definitive Manufacturing and
Supply Agreement will have evergreen conditions for periods of one year with one
year's notice for cancellation.
4. MINIMUM VOLUMES
From [ ]* until [ ]* CUBIST will purchase from DSM an aggregate minimum quantity
of [ ]* kgs of DAPTOMYCIN. Notwithstanding the foregoing sentence the minimum
volumes of DAPTOMYCIN to be purchased by CUBIST from DSM per single calendar
year are
[ ]*
* Confidential treatment requested: Material has been omitted and filed with
the Commission.
<PAGE>
Subject to sufficient lead time (Art. 7) DSM agrees to cover an additional
demand of CUBIST for DAPTOMYCIN up to [ ]* kgs per year.
6. PRICING / DELIVERY TERMS.
During the initial term of the definitive Supply Agreement the price for
DAPTOMYCIN shall be [ ]*-- per kg.
If CUBIST's purchases of DAPTOMYCIN from DSM in [ ]* have cumulatively surpassed
a volume of [ ]* kgs and CUBIST's binding orders for DAPTOMYCIN for [ ]* and
[ ]* exceed an aggregate volume of [ ]* kgs, the parties will negotiate in good
faith a reasonable reduction of the per kg price valid in [ ]*.
Delivery dates will be discussed [ ]* in advance.
7. ROLLING FORECAST
[ ]* in advance of every year, on a quarterly basis, volumes of DAPTOMYCIN will
be fixed for the year to come [ ]*. In addition, CUBIST will provide DSM with a
quarterly rolling forecast of DAPTOMYCIN volumes for the subsequent four
quarters.
8. IMPROVEMENTS: INTELLECTUAL PROPERTY RIGHTS
DSM will implement the CUBIST Process (which will be clearly defined in an Annex
of the definitive Manufacturing and Supply Agreement) and will not research or
significantly alter this process. In the event the parties agree to undertake
any research, development or enhancement of the process they shall enter into a
separate agreement concerning such activity. DAPTOMYCIN-specific process
improvements and technology will remain the property of CUBIST, while general
knowhow relating to fermentation and manufacturing knowhow will remain the
property of DSM.
CUBIST shall be responsible and indemnify DSM against all loss, liability,
damage and expense incurred by DSM and DSM affiliate companies which are
involved in the development and production of DAPTOMYCIN arising out of any
infringement of intellectual property rights of third parties in connection with
the manufacture of DAPTOMYCIN in accordance with the CUBIST Process.
* Confidential treatment requested: Material has been omitted and filed with
the Commission.
<PAGE>
9. CONFIDENTIALITY
Terms and conditions similar to those set forth in the Secrecy Agreement between
CUBIST and DSM dated May 11, 1999 shall be agreed in the definitive
Manufacturing and Supply Agreement mutatis mutandis.
10. AFFILIATES
The parties agree that they may have their rights and obligations performed by
their respective affiliates, however, each party shall not be relieved from its
obligations hereunder and shall remain liable for their performance hereunder.
11. GOVERNING LAW. ARBITRATION
This Memorandum of Understanding is (and the subsequent definitive Manufacturing
and Supply Agreement will be) subject to the laws of the United Kingdom
excluding its conflict of law rules. Disputes that cannot be solved amicably
shall be finally settled by arbitration according to the Arbitration Rules of
the London Court of Intentional Arbitration (LCIA) by one or more arbitrators
appointed in accordance with such Rules. Venue of arbitration shall be London,
U.K. and the language of arbitration shall be English.
12. EFFECTIVE DATE
This Memorandum of Understanding shall become effective upon execution by both
parties and approval of the investment by the Board of DSM and shall remain
valid until the signature of the contemplated definitive Supply Agreement.
DEVELOPMENT PROPOSAL
The parties have agreed upon a program for the technology transfer, design,
validation and production of [ ]* NDA qualification batches in a total value of
[ ]*. This program is subject to a separate agreement between the parties and is
not amended or superseded by this MOU.
* Confidential treatment requested: Material has been omitted and filed with
the Commission.
<PAGE>
In connection with this program the parties have agreed upon the following
milestone payments:
PAYMENT MILESTONE TIMING
[ ]*
- if the manufacture of the [ ]* consistency batches and the preparation of
NDA documents (milestone 5) are completed after [ ]* but before [ ]*,
CUBIST shall pay to DSM an amount of [ ]*,--.
- If the manufacture of the [ ]* consistency batches and the preparation of
NDA documents (milestone 5) are completed before [ ]*, CUBIST shall pay to
DSM an additional amount of [ ]*,--.
- If the manufacture of the [ ]* consistency batches and the preparation of
NDA documents (milestone 5) are completed after [ ]*, DSM shall pay to
CUBIST an amount of [ ]*.
Dutch State Mines Fine Chemicals Cubist Pharmaceuticals, Inc.
Netherlands B.V.
/s/ Henk Nuwman /s/ Scott M. Rocklage
----------------------------------------- ---------------------------------
H. Nuwman Scott M. Rocklage
Business Unit Director President & CEO
Date: 1/26/00 Date: 1/4/00
* Confidential treatment requested: Material has been omitted and filed with
the Commission.