FluMist(R) Supply Agreement [Amendment No. 2] - MedImmune Vaccines Inc. and Wyeth
SECOND AMENDMENT TO
FLUMIST(R)SUPPLY AGREEMENT
RECITALS
WHEREAS, MedImmune, Inc. acquired Aviron, Inc. ("Aviron") in January 2002, and Aviron survived such acquisition as a wholly-owned subsidiary of MedImmune, Inc., which subsidiary was renamed MedImmune Vaccines, Inc.; and
WHEREAS, American Home Products Corporation changed its corporate name to Wyeth in March 2002; and
WHEREAS, Wyeth and MedImmune Vaccines have entered into that certain United States License and Co-Promotion Agreement dated January 11, 1999 regarding the marketing and co-promotion of MedImmune Vaccines's proprietary intranasally delivered cold-adapted vaccine formulation against influenza and influenza-associated illnesses, including otitis media infection, known as FluMist(R)or FluEnz(TM)(collectively, "FluMist"), in the United States and its territories and possessions (as amended on even date herewith, the "U.S. Agreement"); and
WHEREAS, Wyeth has the right, pursuant to that certain International FluMist(R)License Agreement dated January 11, 1999, by and between Aviron and American Home Products Corporation, to exclusively market and sell FluMist in certain territories outside of the United States and its territories and possessions (the "International Agreement"); and
WHEREAS, that certain FluMist(R)Supply Agreement between Aviron and American Home Products Corporation dated January 11, 1999 (as amended January 1, 2001, and by this Amendment) the "Supply Agreement"), provides for the manufacture and supply of the Frozen Product and the Liquid Product for distribution and sale by Wyeth under the terms and conditions of the U.S. Agreement and International Agreement; and
WHEREAS, the Parties desire to amend the Supply Agreement to provide a new forecasting mechanism for the Frozen Product and the Liquid Product, reallocate the manufacturing risk among the Parties, and change the timing for the supply payments by Wyeth for doses of MedImmune Vaccines-Manufactured Product supplied hereunder; and
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and agreements contained herein, the Parties hereby agree as follows:
1. All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Supply Agreement.
2. Each reference in the Supply Agreement to "Aviron, Inc." shall be replaced by "MedImmune Vaccines, Inc." Each reference in the FluMist Agreement to "Aviron" shall be replaced by "MedImmune Vaccines".
3. Each reference in the Supply Agreement to "American Home Products Corporation", "AHPC", "Wyeth-Ayerst Laboratories Division", and "Wyeth-Ayerst" shall be replaced with "Wyeth."
4. "Cost of Goods" means MedImmune Vaccines' standard unit cost of the MedImmune Vaccines-Manufactured Product as reflected in MedImmune Vaccines financial records, and consistent with generally accepted accounting principles plus or minus, as the case may be: manufacturing cost variances allocable to such Product, and prior period adjustments allocable to such Product. The standard unit cost shall mean the cost for those items specified below, which costs have been incurred by MedImmune Vaccines in manufacturing Product:
| (a) | Direct Materials Materials used in the manufacturing process that are traced directly to the completed materials or Product, as applicable, and include, but not limited to: - Inert raw materials or excipients - Active substances/ingredients at the cost reflected in MedImmune Vaccines's financial records - Packaging components such as sprayers, labels and cartons - Sales, excise taxes, and duties |
| (b) | Direct Labor The cost of employees engaged in production activities which are directly identifiable with manufacturing the Product, as applicable. Excludes supervision and production support activities such as inspection, plant and equipment maintenance labor, and material handling personnel. Direct Labor cost includes: - Base pay, overtime, vacation and holidays, illness, personal time with pay and shift differential. - Cost of employee fringe benefits such as health and life insurance, payroll taxes, welfare, pension and profit sharing. |
| (c) | Allocated Costs Costs which are allocated to manufacturing the Product based on standard direct labor hours of the manufacturing process or alternate bases, such as MedImmune Vaccines deems applicable. These allocated costs include, but are not limited to: - Utilities - expenses incurred for fuel, electricity, nitrogen, steam and water in providing power for production and other plant equipment - Maintenance and repairs - amount of expense incurred in-house or purchased to provide services for plant maintenance and repairs of facilities, buildings, site infrastructure and equipment. - Depreciation - of plant and equipment utilizing the straight-line method of calculation and amortization of the cost of contractual obligations - Insurance - cost of comprehensive and other insurance necessary for the safeguard of manufacturing plant and equipment. - Sewer and waste disposal. - Property taxes. - Lease payments. - Shipping, receiving and freight. - Permits and Licenses - fees payable to governmental agencies or authorities to obtain or maintain permits or licenses that are necessary for the operation of facilities used to manufacture Product, as applicable. - Costs of the following manufacturing services Purchasing and Accounting
Production Scheduling
Inventory Management
Plant Materials Management
Supervision, Administration and Production Support
Warehousing.
Information Technology.
Technical Support.
Various bases may be used for allocating these costs to manufacturing operating departments
including headcount, square feet, metered utilities use, estimated services rendered, EDP computer
hours, machine hours, etc. For purposes of clarity, in the event the impact of underutilized
facilities exceeds ten percent (10%) of the Fully-Absorbed Standard Cost, the entire impact will
be excluded from this calculation. |
| (d) | Testing Costs - direct labor, materials, supervision, and all other relevant costs for Quality Assurance ("QA") testing and approving materials used in manufacturing and completed manufacturing batches and finished Products. This includes all manufacturing in-process testing and testing of finished materials, as well as contract services incurred in conjunction with any of the foregoing. In addition, environmental monitoring costs, as well as any and all other quality related costs necessary to ensure that the site and manufacturing facilities continue to be in compliance with FDA regulations, are included. Excluded costs are QA costs related to research and development, stability testing, etc. |
Notwithstanding the foregoing, Cost of Goods shall exclude administrative costs (allocation of executive management expenditures) other than indirect manufacturing labor specifically attributable to the MedImmune Vaccines-Manufactured Product being manufactured.
5. The Forecast for the Frozen Product in the U.S. Territory for the 2002-03 Flu Season, and the payments, if any, to be made by Wyeth to MedImmune Vaccines for the manufacture and supply of the Frozen Product for such Flu Season are governed solely by the terms of that certain letter agreement dated effective as of the date hereof entered into by and between Wyeth and MedImmune Vaccines. The 2002-03 Flu Season shall not be considered the first Flu Season for purposes of Articles 3 and 7 of the Supply Agreement.
6. Article 3 of the Supply Agreement shall be deleted in its entirety and replaced with the following new Article 3:
"3. PRODUCT FORECASTS FOR U.S. TERRITORY
3.1 U.S. Frozen Forecast.
(a) At any time after the Amendment Effective Date, but in no event later than thirty (30) days after Regulatory Approval of the Frozen Product in the U.S. Territory has been obtained, the JCC shall prepare and present to MedImmune Vaccines and Wyeth a rolling twenty-four (24) month forecast of the anticipated market demand for the Frozen Product in the U.S. Territory for the applicable Flu Season, subject to Section 2.2, together with an estimate of Net Sales in the U.S. Territory for such Flu Season. Such forecast shall set forth the quantities of doses of Frozen Product to be supplied by MedImmune Vaccines to Wyeth in each month of the forecast for the applicable Flu Season. If Regulatory Approval of the Frozen Product in the U.S. Territory is obtained during the 2002-03 Flu Season, the first Flu Season covered by the forecast under this Section 3.1 will be the 2003-04 Flu Season.
(b) The forecast for the Frozen Product shall be updated by the JCC regularly, and in no event later than thirty (30) days after the end of each calendar quarter, and shall be non-binding except as follows: The updated forecast provided to MedImmune Vaccines and Wyeth after the end of the fourth calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins may not vary by more than (CONFIDENTIAL TREATMENT REQUESTED) from the updated forecast provided after the end of the first calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins. The Parties agree to review the relevance of the first and fourth calendar quarter dates and determine the appropriateness of alternative dates. The forecast provided after the end of the fourth calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins shall thereafter be deemed the "U.S. Frozen Forecast" for such Flu Season, provided that if MedImmune Vaccines reasonably believes that for such Flu Season it will be unable to meet the forecast set by the JCC, MedImmune Vaccines shall inform the JCC of the amount of Frozen Product which it reasonably believes it will be in a position to supply to Wyeth for such Flu Season, and upon the JCC's confirmation of MedImmune Vaccines's estimate of its production capacity for Frozen Product for such Flu Season, such amount shall then be deemed to be the U.S. Frozen Forecast for such Flu Season. Notwithstanding the foregoing, the JCC's original forecast shall be deemed the "JCC Forecast" for purposes of awarding to MedImmune Vaccines the supply goal payments pursuant to Section 8.3 of the U.S. Agreement. MedImmune Vaccines shall use Commercially Reasonable Efforts to manufacture and supply Frozen Product to Wyeth in accordance with the U.S. Frozen Forecast for distribution and sale by Wyeth under the U.S. Agreement.
(c) MedImmune Vaccines shall be deemed to have met its supply obligations under the U.S. Frozen Forecast if MedImmune Vaccines delivers all doses of the Frozen Product prior to or in the month in which such doses are to be supplied under the Forecast and such doses are accepted by Wyeth pursuant to Section 6.3(a). Notwithstanding the foregoing, during the first four Flu Seasons of the Frozen Product excluding the 2002-03 Flu Season, if it occurs, MedImmune Vaccines will not be deemed to have failed to meet the U.S. Frozen Forecast for the applicable Flu Season if MedImmune Vaccines has used Commercially Reasonable Efforts to meet the U.S. Frozen Forecast and has delivered at least the following cumulative percentages of such Forecast by the end of each month as set forth below and such doses are accepted by Wyeth pursuant to Section 6.3(a):
| MONTH | PERCENTAGE OF CUMULATIVE FORECAST FOR THE APPLICABLE FLU SEASON |
| September | (CONFIDENTIAL TREATMENT REQUESTED) |
| October | (CONFIDENTIAL TREATMENT REQUESTED) |
| November | (CONFIDENTIAL TREATMENT REQUESTED) |
The delivery obligations for the Frozen Product under the U.S. Frozen Forecast set forth in the above table shall be hereinafter referred to as the "Modified Forecast." If MedImmune Vaccines fails to deliver all doses in accordance with the Modified Forecast, or if, in the fifth Flu Season or any Flu Season thereafter, MedImmune Vaccines fails to deliver all doses of the Frozen Product prior to or in the month in which such doses are to be supplied under the applicable Forecast, MedImmune Vaccines will have failed to meet the U.S. Frozen Forecast for such year, and Wyeth shall have the remedy set forth in Section 3.1(e) below.
(d) Wyeth shall have no obligation to accept doses of Product delivered late compared to the Forecast or Modified Forecast, as applicable. Should Wyeth in its sole discretion choose to purchase all or part of such late doses, then Wyeth shall use Commercially Reasonable Efforts to sell such doses in the U.S. territory during the applicable Flu Season. For purposes of clarity, in the event that a shortfall occurs for a particular month, the subsequent month's shipments shall first satisfy the obligations of that next month. Only doses delivered in the subsequent month that exceed that subsequent month's allocated percentage shall be considered late doses.
(e) If MedImmune Vaccines fails to meet the Modified Forecast or the U.S. Frozen Forecast for a given Flu Season, Wyeth's sole remedy shall be to reduce its committed level of spending as set forth in Section 7.7 of the U.S. Agreement, provided that Wyeth may not reduce any of its R&D Expenses, the amount of any event payment, supply goal payment, transfer price, or royalty payment payable to MedImmune Vaccines, or the amount of any reimbursement of MedImmune Vaccines's Commercialization Expenses or Sales and Marketing Expenses, under the U.S. Agreement or the International Agreement.
(f) Article 7 shall govern Wyeth's purchase of those doses of Frozen Product supplied by MedImmune Vaccines in accordance with the U.S. Frozen Forecast and accepted by Wyeth pursuant to Section 6.3(a).
3.2 U.S. Liquid Forecast. At any time after the Amendment Effective Date, but in no event later than thirty (30) days after Regulatory Approval of the Liquid Product in the U.S. Territory has been obtained, the JCC shall prepare and present to MedImmune Vaccines and Wyeth a rolling twenty-four (24) month forecast of the anticipated market demand for the Liquid Product in the U.S. Territory for the applicable Flu Seasons, subject to Section 2.2, together with an estimate of Net Sales and Gross Sales Revenue in the U.S. Territory for such Flu Seasons. Such forecast shall be updated by the JCC regularly, but in no event later than thirty (30) days after the end of each calendar quarter, shall set forth the quantities of doses of Liquid Product to be supplied to Wyeth in each month of the forecast, and shall be non-binding except as follows: The updated forecast provided to MedImmune Vaccines and Wyeth after the end of the [fourth calendar quarter] of the year immediately prior to the year in which the applicable Flu Season begins may not vary by more than (CONFIDENTIAL TREATMENT REQUESTED) from the updated forecast provided after the end of the first calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins. The Parties agree to review the relevance of the first and fourth calendar quarter dates and determine the appropriateness of alternative dates. The updated forecast provided after the end of the fourth calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins shall thereafter be deemed the "U.S. Liquid Forecast" for such Flu Season. Article 7 shall govern Wyeth's purchase of those doses of Liquid Product supplied by MedImmune Vaccines in accordance with the U.S. Liquid Forecast and accepted by Wyeth pursuant to Section 6.3(a).
3.3 Adjustment of Forecasts. During a given Flu Season and on a calendar quarter basis, the JCC may adjust its figures for the U.S. Frozen Forecast and/or the U.S. Liquid Forecast for such Flu Season, subject to Section 2.2, and further provided that:
(a) the JCC may increase a Forecast without the Parties' prior consent, and each Party shall use Commercially Reasonable Efforts to meet such increased Forecast, provided that a Party's failure to meet any such increased Forecast shall not be a breach of this Agreement;
(b) in the event that the JCC decreases or cancels a Forecast for a given Flu Season, MedImmune Vaccines shall use Commercially Reasonable Efforts to wind down any Secondary Manufacturing then occurring or planned to produce doses of the applicable Finished Product in excess of the JCC's revised Forecast, and Wyeth shall reimburse MedImmune Vaccines for all non-cancelable manufacturing expenses including the costs incurred to date, as well as those costs which MedImmune Vaccines can not reduce or eliminate, going forward in the manufacture and supply of the applicable Finished Product for such Flu Season in fulfilling its obligation to meet the Forecast first specified by the applicable JCC for such Flu Season. Notwithstanding the foregoing, the provisions of this Section 3.3(b) shall not apply in the event that the JCC decreases or cancels a Forecast for a given Flu Season because Regulatory Approval has not been obtained for the applicable Product (Frozen Product or Liquid Product) in the U.S. Territory; and
(c) if the JCC increases the U.S. Frozen Forecast for such Flu Season, the original JCC Forecast for such Flu Season, and not the increased figure, shall be the basis for determining whether MedImmune Vaccines has achieved the supply goals set forth in Section 8.3 of the U.S. Agreement, as amended."
7. Article 4 of the Supply Agreement shall be deleted in its entirety and replaced with the following new Article 4:
"4. LIQUID PRODUCT FORECASTS FOR INTERNATIONAL TERRITORY
4.1 Forecasts.
(a) At any time after the Amendment Effective Date, but in no event later than thirty (30) days after Regulatory Approval of the Liquid Product in the International Territory has been obtained, the ICC shall prepare and present to the Parties, in coordination with the JCC pursuant to Section 3.1 of the International Agreement, a rolling twenty-four (24) month forecast of the market demand for Liquid Product in the International Territory, in accordance herewith and with Section 2.2 (the "International Forecast"). Such Forecast shall include (i) the Specifications for the Working Seeds to be manufactured and supplied by MedImmune Vaccines to Wyeth for the manufacture of Liquid Monovalent, (ii) the amount and Specifications for the Liquid Monovalent to be manufactured by each Party, (iii) a schedule for the foregoing activities, (iv) the quantities of doses of Liquid Product to be supplied to Wyeth in each month of the Forecast, and (v) an estimate of Gross Sales Revenue in the International Territory for such Flu Season. Such Forecast shall be updated regularly and shall be non-binding except as follows:
(i) For Flu Seasons in the Northern Hemisphere, the ICC shall update such Forecast in writing to the Parties regularly, but in no event later than thirty (30) days after the end of each calendar quarter, in coordination with the JCC, provided that the Forecast provided after the end of the fourth calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins may not vary by more than (CONFIDENTIAL TREATMENT REQUESTED) from the Forecast provided after the end of the first calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins.
(ii) For Flu Seasons in the Southern Hemisphere, the ICC shall update such Forecast in writing to the Parties regularly, but in no event later than thirty (30) days after the end of each calendar quarter, in coordination with the JCC, provided that the Forecast provided after the end of the third calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins may not vary by more than (CONFIDENTIAL TREATMENT REQUESTED) from the Forecast provided after the end of the second calendar quarter of the year immediately prior to the year in which the applicable Flu Season begins.
(iii) The Parties agree to review the relevancy of the first and fourth quarter calendar dates and determine the appropriateness of alternative dates.
(b) Each Party shall use Commercially Reasonable Efforts to conduct the manufacture and supply activities anticipated hereunder in order to produce a sufficient quantity of Liquid Product to meet such Forecast for each Flu Season. Wyeth agrees to purchase all Working Seeds, International Liquid Monovalent and Liquid Product supplied by MedImmune Vaccines in accordance with the International Forecast and accepted by Wyeth as provided herein."
8. The following new Article 4A is added to the Supply Agreement:
"4A. Manufacturing Risk
4A.1 Manufacturing Risk. Unless agreed to otherwise by the JCC, all manufacturing expenses for the activities to be undertaken prior to a Forecast shall be the responsibility of MedImmune Vaccines or Wyeth, respectively, as follows:
MedImmune Vaccines: Frozen Product and assigned steps for the Liquid Product as set forth in the Supply Agreement.
Wyeth: Assigned steps for the Liquid Product as set forth in the Supply Agreement.
9. Article 7 of the Supply Agreement shall be deleted in its entirety and replaced with the following new Article 7:
"7. PRICING AND PAYMENT FOR MEDIMMUNE VACCINES-MANUFACTURED PRODUCT
7.1 Transfer Price. The transfer price for each dose of each MedImmune Vaccines-Manufactured Product supplied by MedImmune Vaccines to Wyeth hereunder and accepted by Wyeth pursuant to Section 6.3(a) shall be (CONFIDENTIAL TREATMENT REQUESTED) of the average Net Sales per dose for the relevant Flu Season, which average shall be determined by dividing the Net Sales of the applicable Product by the number of doses of such Product actually sold in the relevant Flu Season (the "Transfer Price"). Such Transfer Price shall be payable in accordance with this Article 7. For example, if the Net Sales of the Frozen Product in a particular Flu Season total (CONFIDENTIAL TREATMENT REQUESTED) and Wyeth actually sold (CONFIDENTIAL TREATMENT REQUESTED) doses of the Frozen Product during such Flu Season, the average Net Sales per dose of such Product in such Flu Season would be (CONFIDENTIAL TREATMENT REQUESTED) per dose and the Transfer Price for each dose of the Frozen Product supplied by MedImmune Vaccines to Wyeth during such Flu Season would be (CONFIDENTIAL TREATMENT REQUESTED) per dose.
7.2 First Four Flu Seasons. For the first four Flu Seasons, Wyeth shall be obligated to purchase all doses of MedImmune Vaccines-Manufactured Product (Frozen Product or Liquid Product) delivered by MedImmune Vaccines prior to or in the month in which such doses are to be supplied in accordance with the applicable Forecast/Modified Forecast for the applicable Flu Season ("Forecast Doses"), subject to Wyeth's acceptance of such doses under Section 6.3(a). If MedImmune Vaccines delivers doses of MedImmune Vaccines-Manufactured Product to Wyeth later than the month in which such doses are to be delivered under the applicable Forecast/Modified Forecast for the applicable Flu Season ("Late Doses"). Wyeth shall not be obligated to pay for Late Doses from MedImmune Vaccines, except as set forth in Section 7.2(b).
(a) Estimated Transfer Price Payments for Forecast Doses. Wyeth shall pay MedImmune Vaccines for the supply of Forecast Doses on an as-accepted basis, as follows: upon Wyeth's acceptance of a shipment of Forecast Doses under Section 6.3(a) of the Supply Agreement, Wyeth shall provide to MedImmune Vaccines a written calculation of the estimated Net Sales per dose of the applicable Product for the applicable Flu Season, and shall pay to MedImmune Vaccines (CONFIDENTIAL TREATMENT REQUESTED) of the estimated Net Sales per dose multiplied by the number of Forecast Doses in such shipment (the "Estimated Transfer Price Payment").
(b) Payments for Late Doses. Wyeth shall only be obligated to pay for Late Doses from MedImmune Vaccines as set forth in this Section 7.2(b). Should Wyeth in its sole discretion choose to purchase all or any part of such Late Doses, Wyeth shall use Commercially Reasonable Efforts to sell such Late Doses. For all such Late Doses actually sold in the applicable Flu Season, Wyeth shall pay MedImmune Vaccines the Transfer Price for such Late Doses in accordance with Section 7.2(c). With respect to those Late Doses accepted by Wyeth that are not sold in the applicable Flu Season and that were either delivered to Wyeth in accordance with the Forecast/Modified Forecast, or delivered to Wyeth late (and not in accordance with the Forecast/Modified Forecast), in either case due to a later-than-usual designation by the relevant government organization of the influenza strains to be included in influenza vaccines in the Territory for that influenza season or Force Majeure, Wyeth shall pay MedImmune an amount equal to the lesser of (A) (CONFIDENTIAL TREATMENT REQUESTED) of the average Net Sales per dose for the relevant Flu Season, which average shall be determined by dividing the Net Sales of the applicable Product by the number of doses of such Product actually sold in the relevant Flu Season, and then multiplying the resulting sum by the number of such unsold Late Doses, and (B) (CONFIDENTIAL TREATMENT REQUESTED) of MedImmune Vaccines' Cost of Goods for such unsold Late Doses. For all other Late Doses, Wyeth shall have no payment obligations to MedImmune Vaccines.
(c) Reconciliation. Within thirty (30) days following the end of each of the first four Flu Seasons, Wyeth shall provide MedImmune Vaccines with a written report setting forth (i) the number of doses of Product actually sold for the applicable Flu Season, (ii) a calculation of the Transfer Price of such doses, and (iii) the amount, if any, owed by Wyeth under Section 7.2(b) for unsold Late Doses. The total amount owed by Wyeth to MedImmune Vaccines under the Supply Agreement for the manufacture and supply of MedImmune Vaccines-Manufactured Product during the first four Flu Seasons shall be equal to the sum of (A) the number of doses of Product actually sold during the applicable Flu Season, multiplied by the average Net Sales price per dose, plus (B) any amounts owed by Wyeth under Section 7.2(b) for unsold Late Doses (the "Total Actual Supply Payment").
(d) Total Actual Supply Payment. If the Estimated Transfer Price Payment made by Wyeth in accordance with Section 7.2(a) for MedImmune Vaccines-Manufactured Product for a given Flu Season exceeds the amount of the Total Actual Supply Payment for such Flu Season, MedImmune Vaccines shall pay Wyeth the difference between such amounts within thirty (30) days after MedImmune Vaccines's receipt from Wyeth of the written report under Section 7.2(c). If the Estimated Transfer Price Payment made by Wyeth in accordance with Section 7.2(a) for MedImmune Vaccines-Manufactured Product for a given Flu Season is less than the amount of the Total Actual Supply Payment for such Flu Season, Wyeth shall pay MedImmune Vaccines the difference between such amounts within thirty (30) days after MedImmune Vaccines's receipt from Wyeth of the written report under Section 7.2(c).
7.3 Fifth and Subsequent Flu Seasons. For the fifth Flu Season and all Flu Seasons thereafter, Wyeth shall be obligated to purchase all doses of MedImmune Vaccines--Manufactured Product (Frozen Product or Liquid Product) delivered by MedImmune Vaccines prior to or in the month in which such doses are to be supplied in accordance with the applicable Forecast for the applicable Flu Season ("Forecast Doses"), subject to Wyeth's acceptance of such doses under Section 6.3(a). If MedImmune Vaccines delivers doses of MedImmune Vaccines--Manufactured Product to Wyeth later than the month in which such doses are to be delivered under the applicable Forecast for the applicable Flu Season ("Late Doses"), Wyeth shall not be obligated to pay for such Late Doses from MedImmune Vaccines except as set forth in Section 7.3(b).
(a) Estimated Transfer Price Payments for Forecast Doses. Wyeth shall pay MedImmune Vaccines for the supply of Forecast Doses on an as-accepted basis, as follows: upon Wyeth's acceptance of a shipment of Forecast Doses under Section 6.3(a) of the Supply Agreement, Wyeth shall provide to MedImmune Vaccines a written calculation of the estimated Net Sales per dose of the applicable Product for the applicable Flu Season, and shall pay to MedImmune Vaccines (CONFIDENTIAL TREATMENT REQUESTED) of the estimated Net Sales per dose multiplied by (CONFIDENTIAL TREATMENT REQUESTED) of the number of Forecast Doses in such shipment.
(b) Payments for Late Doses. Wyeth shall only be obligated to pay for Late Doses from MedImmune Vaccines as set forth in this Section 7.3(b). Should Wyeth in its sole discretion choose to purchase all or any part of such Late Doses, Wyeth shall use Commercially Reasonable Efforts to sell such Late Doses. For all Such Late Doses actually sold in the applicable Flu Season, Wyeth shall pay MedImmune Vaccines the Transfer Price for such Late Doses in accordance with Section 7.3(c). With respect to those Late Doses accepted by Wyeth that are not sold in the applicable Flu Season and that were delivered to Wyeth late due to a later-than-usual designation by the relevant government organization of the influenza strains to be included in influenza vaccines in the Territory for that influenza season or Force Majeure, Wyeth shall pay MedImmune an amount equal to the lesser of (A) (CONFIDENTIAL TREATMENT REQUESTED) of the average Net Sales per dose for the relevant Flu Season, which average shall be determined by dividing the Net Sales of the applicable Product by the number of doses of such Product actually sold in the relevant Flu Season, and then multiplying the resulting sum by the number of such unsold Late Doses, and (B) (CONFIDENTIAL TREATMENT REQUESTED) of MedImmune Vaccines's Cost of Goods for such unsold Late Doses, which (CONFIDENTIAL TREATMENT REQUESTED) amount shall not exceed (CONFIDENTIAL TREATMENT REQUESTED) per dose (the "Cost of Goods Cap") for Frozen Product and Liquid Product for which MedImmune Vaccines does not supply Liquid Monovalent. The Parties shall negotiate in good faith the Cost of Goods Cap for Liquid Product for which MedImmune Vaccines performs, or has performed, Secondary Manufacture using Liquid Monovalent supplied by Wyeth. For all other Late Doses, Wyeth shall have no payment obligations to MedImmune Vaccines.
(c) Reconciliation. Within thirty (30) days following the end of each of Flu Season, Wyeth shall provide MedImmune Vaccines with a written report setting forth (i) the number of doses of Product actually sold for the applicable Flu Season, (ii) a calculation of the Transfer Price of such doses, and (iii) the amount, if any, owed by Wyeth under Section 7.3(b) for unsold Late Doses. The total amount owed by Wyeth to MedImmune Vaccines under the Supply Agreement for the manufacture and supply of MedImmune Vaccines-Manufactured Product during the Fifth Flu Season and each Flu Season thereafter shall be equal to the sum of following amounts: (A) the greater of (1) the number of doses of Product actually sold during the applicable Flu Season, and (2) the number of doses of Product equal to (CONFIDENTIAL TREATMENT REQUESTED) of the Forecast Doses accepted by Wyeth under Section 6.3(a) for such Flu Season, multiplied by the average Net Sales price per dose; (B) any amounts owed by Wyeth under Section 7.3(b) for unsold Late Doses; and (C) (CONFIDENTIAL TREATMENT REQUESTED) of MedImmune Vaccines's Manufacturing Costs for unsold Forecast Doses accepted by Wyeth pursuant to Section 6.3(a) (which number of Doses shall in any event be capped at that number equal to (CONFIDENTIAL TREATMENT REQUESTED) of the Forecast Doses accepted by Wyeth under Section 6.3(a) for such Flu Season), which (CONFIDENTIAL TREATMENT REQUESTED) amount shall not exceed the Cost of Goods Cap. If the amount of the payments made by Wyeth in accordance with Section 7.3(a) for MedImmune Vaccines-Manufactured Product for a given Flu Season exceeds the amount of the total supply payment owed to MedImmune Vaccines under this Section 7.3(c) for such Flu Season, MedImmune Vaccines shall pay Wyeth the difference between such amounts within thirty (30) days after MedImmune Vaccines's receipt from Wyeth of the written report under this Section 7.3(c). If the amount of the payments made by Wyeth in accordance with Section 7.3(a) for MedImmune Vaccines-Manufactured Product for a given Flu Season is less than the amount of the total supply payment owed to MedImmune Vaccines under this Section 7.3(c) for such Flu Season, Wyeth shall pay MedImmune Vaccines the difference between such amounts within thirty (30) days after MedImmune Vaccines's receipt from Wyeth of the written report under this Section 7.3(c).
7.4 Adjustment of Cost of Goods Cap. On each anniversary of the Amendment Effective Date, the Cost of Goods Cap shall be adjusted to reflect any year-to-year increase or decrease in the Consumer Price Index, as compared to the Consumer Price Index in effect on the Amendment Effective Date.
7.5 Audits. MedImmune Vaccines shall have the right to audit Wyeth's records in order to confirm its calculation of the Transfer Price, the Total Actual Supply Price, and any other payments owed to MedImmune Vaccines under this Article 7. Wyeth shall have the right to audit MedImmune Vaccines's records in order to confirm its calculation of the Cost of Goods under this Article 7. Any audits conducted by the Parties as permitted under this Section 7.5 shall be conducted in accordance with the procedures provided in Section 17.4 of the U.S. Agreement or Section 16.4 of the International Agreement, as applicable, provided that such audit shall be made within ninety (90) days of the end of the relevant Flu Season, but in no event more than once per each Calendar Year."
10. Section 15.1(b) of the Supply Agreement shall be amended by deleting "President of Wyeth Global Pharmaceuticals" and inserting in its place "President of Wyeth Pharmaceuticals".
11. The Parties' addresses for notices in Section 16.5 of the Supply Agreement shall be replaced with the following:
| If to MedImmune Vaccines: | MedImmune, Inc. 35 West Watkins Mill Road Gaithersburg, Maryland 20878 Attention: Chief Executive Officer Telephone: (301) 527-4256 Facsimile: (301) 527-4201 |
| If to Wyeth: | Wyeth Pharmaceuticals 555 Lancaster Avenue St. Davids, Pennsylvania Attention: Sr. Vice President Global Business Development Telephone: (610) 688-5809 Facsimile: (610) 688-9498 |
| With copies to: | Wyeth Five Giralda Farms Madison, New Jersey 07940 Attention: Executive Vice President and General Counsel Telephone: (973) 660-6040 Facsimile: (973) 660-7155 |
12. Except as amended hereby, all terms and conditions of the Supply Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, MedImmune Vaccines and Wyeth have caused this Amendment to be executed as of the date first written above by their respective officers thereunto duly authorized.
| WYETH, ACTING THROUGH ITS WYETH PHARMACEUTICALS DIVISION | MEDIMMUNE VACCINES, INC. |
| By: /s/ Ronald Alice | By: /s/ Melvin D. Booth |
| Name: Ronald Alice | Name: Melvin D. Booth |
| Title: Vice President, Law Department | Title: President, Chief Operating Officer |