Exhibit 10.43

 

***Text Omitted and Filed Separately

Confidential Treatment Requested

Under 17 C.F.R. §§ 200.80(b)(4)

And 240.24b-2

 

COMMERCIAL SUPPLY AGREEMENT

 

This Commercial Supply Agreement (this “Agreement”) is entered into and effective this 14th day of February, 2005 (the “Effective Date”) by and between Baxter Pharmaceutical Solutions LLC (“BAXTER”), a Delaware limited liability company having a place of business at 927 South Curry Pike, Bloomington, Indiana 47403, and Amylin Pharmaceuticals, Inc. (“AMYLIN”), a Delaware corporation having a principal place of business at 9360 Towne Centre Drive, Suite 110, San Diego, California 92121.

 

RECITALS

 

1.             AMYLIN is engaged in the development of pharmaceutical products;

 

2.             BAXTER is engaged in the filling, labeling and packaging of pharmaceutical products;

 

3.             AMYLIN and BAXTER are parties to a Drug Product Development Agreement dated February 27, 2004 (the “Development Agreement”), related to the Product (as defined below); and

 

4.             AMYLIN and BAXTER desire to have BAXTER fill, package, inspect, label, and test Product for distribution and sale by AMYLIN.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

 

Article 1.  DEFINITIONS

 

As used in this Agreement, the following words and phrases shall have the following meanings:

 

1.1           “Affiliate” of a party hereto shall mean any entity that controls or is controlled by such party, or is under common control with such party.  For purposes of this definition, an entity shall be deemed to control another entity if it owns or controls, directly or indirectly, at least fifty percent (50%) of the voting equity of another entity (or other comparable ownership interest for an entity other than a corporation).

 

 

1.2           “AMYLIN Trademarks” shall mean the proprietary mark(s) for Product owned by AMYLIN.

 

1.3           “Annual Forecast” shall be defined in Section 4.1.

 

1.4           “Annual Obligation” shall be defined in Section 4.3.

 

1.5           “Batch” shall mean a specific quantity of a Product or placebo comprising a number of Units mutually agreed upon between AMYLIN and BAXTER, and that (a) is intended to have uniform character and quality within specified limits, and (b) is Produced according to a single manufacturing order during the same cycle of Production.

 

1.6           “Collaboration Partner” shall mean Eli Lilly and Company, or its successor, with whom AMYLIN has entered into a collaboration arrangement regarding Product.

 

1.7           “Components” shall mean all Components used by BAXTER in the Production of Product under this Agreement.  Components are listed in Exhibit D, such Components identified as Components supplied by AMYLIN (“AMYLIN Supplied Components”) and Components supplied by BAXTER (“BAXTER Supplied Components”).

 

1.8           “Component Specifications” shall mean the specifications and testing to be performed for the Components, as set forth in Exhibit D.

 

1.9           “Confidential Information” shall mean all information and data provided by one party to the other party except any portion of such information and data which:

 

(i)            is known to the recipient as evidenced by its written records before receipt thereof from the disclosing party;

 

(ii)           is disclosed to the recipient, as demonstrated by competent evidence, by a third person who has the right to make such disclosure;

 

(iii)          is or becomes part of the public domain through no fault of the recipient; or

 

(iv)          the recipient can reasonably establish is independently developed by recipient without use of the information disclosed by the disclosing party.

 

1.10         “Contaminant” shall mean any substance contained in Product that (a) causes Product to fail to meet Product Requirements, (b) causes Product to be adulterated

 

 

within the meaning of the FD&C Act, or (c) is present in Product at a level that exceeds the level allowed under cGMP.

 

1.11         “Current Good Manufacturing Practices” or “cGMP” shall mean (a) the good manufacturing practices required by the FDA and set forth in the FD&C Act or FDA Regulations (including without limitation 21 CFR 210 and 211), the principles and guidelines specified in Chapter II of European Commission Directive 91/356/Eed, including the rules governing medicinal products (in the European Union Volume 4), policies or guidelines, in effect at any time during the term of this Agreement, for the Production and testing of pharmaceutical materials as applied solely to Products, and (b) the corresponding requirements of each applicable Regulatory Authority.

 

1.12         “Delivery Date” shall mean the date that Product is delivered to a common carrier designated by AMYLIN.

 

1.13         “Effective Date” shall mean the date of this Agreement as set forth above.

 

1.14         “Exenatide Drug Substance” shall mean a dry powder preparation containing exenatide peptide as provided by AMYLIN for further manufacture or Production into Product by BAXTER

 

1.15         “FDA” shall mean (a) the United States Food and Drug Administration or any successor entity thereto and (b) the corresponding agency of each applicable Regulatory Authority.

 

1.16         “FD&C Act” shall mean the United States Federal Food, Drug and Cosmetic Act, as may be amended from time to time, or such similar statute in jurisdictions other than the United States.

 

1.17         “Long Range Forecast” shall be defined in Section 4.1.

 

1.18         “Master Batch Record” shall mean, with respect to each Presentation of Product to be Produced hereunder, a formal set of instructions and criteria for the Production of each Presentation of such Product.

 

1.19         “NDA” shall mean the FDA-required New Drug Application, and any amendments or supplements thereto, or other applicable similar submissions to a Regulatory Authority.

 

1.20         “Presentation” shall have the meaning set forth on Exhibit A.

 

1.21         “Produce” or “Production” shall mean the formulation, filling, packaging, inspecting, labeling, and testing of Product by BAXTER.

 

1.22         “Product” shall mean Exenatide BID or placebo in cartridges packaged in bulk as specified in Exhibit A and the Project Plan and either Produced after the first

 

 

Regulatory Approval therefore or Produced as part of the Process Validation Batches, provided regulatory approval is obtained which allow commercial sale of such Process Validation Batches.

 

1.23         “Process Validation Batches” shall mean Exenatide BID in cartridges produced for the purposes of validating the processing parameters for Production of Product produced pursuant to the terms of the Development Agreement.  The parties agree that the Product Produced in the Process Validation Batches may be sold commercially provided regulatory approval is obtained which allows commercial sale of such Process Validation Batches and that all the terms of this Agreement, except Article 7, shall apply to the Product Produced in the Process Validation Batches.

 

1.24         “Product Specifications” shall mean with respect to each Product, the analytical specifications and testing to be performed for the Exenatide Drug Substance and the Product, in connection with release and/or stability testing that are set forth in Product-specific standard operating procedures and the Master Batch Records.  The Product Specifications include only those tests that BAXTER is required to conduct or cause to be conducted as specified in Exhibit C.  The Product Specifications may be modified from time to time only by written agreement of AMYLIN and BAXTER.

 

1.25         “Product Requirements” shall mean the Product Specifications, Master Batch Record, and the Project Plan.

 

1.26         “Project Plan” shall mean the manual containing the parameters for the Production of each Presentation of Product.  The Project Plan will be prepared by BAXTER and agreed to in writing by AMYLIN.  In no event shall BAXTER be required to schedule or commence the Production of the applicable Product unless and until a Project Plan for such Presentation of Product has been approved in writing by both parties.

 

1.27         “Purchase Order” shall mean written orders from AMYLIN to BAXTER which shall specify (a) the quantity of Product ordered, (b) shipping instructions, (c) delivery dates, and (d) delivery destinations.

 

1.28         “Purchase Price” shall mean the amount to be paid by AMYLIN for Product as set forth in Exhibit B and as may be amended from time to time by the parties pursuant to Section 5.3.

 

1.29         “Regulatory Approval” shall mean all authorizations by the appropriate Regulatory Authority necessary for commercial sale of Product in a jurisdiction, including without limitation, approval of labeling, price, reimbursement and production.

 

1.30         “Regulatory Authority” shall mean the FDA in the United States, or the applicable regulatory agency or entity having the responsibility, jurisdiction, and

 

 

authority to approve the manufacture, use, importation, packaging, labeling, marketing, and sale of Product in any jurisdiction other than the United States, as specified in Exhibit E, as may be amended from time to time by mutual agreement of the parties.

 

1.31         “Regulatory Plan” shall mean the manual containing the regulatory services and support for the development and maintenance of regulatory submissions and/or other filings, updates, or documentation required by a Regulatory Authority to be performed by BAXTER, if requested by AMYLIN.  The Regulatory Plan will be prepared by BAXTER and agreed to in writing by AMYLIN.  BAXTER shall have no obligation to conduct regulatory services for Product until the Regulatory Plan, if requested by AMYLIN, for such Product has been approved in writing by both parties.

 

1.32         “Release” shall mean the delivery of the Released Executed Batch Record to Amylin by Baxter.

 

1.33         “Released Executed Batch Record” shall mean the completed batch record and associated documentation as described in the Quality Agreement.

 

1.34         “Rolling Forecast” shall be defined in Section 4.1.

 

1.35         “Unit” shall mean an individually packaged dose of Product or placebo, as specified in Exhibit A.

 

Article 2,  Reserved

 

Article 3, PURCHASE AND SUPPLY OF PRODUCT

 

3.1           Agreement to Purchase and Supply.  Pursuant to the terms and conditions of this Agreement, AMYLIN shall purchase from BAXTER the Product, and BAXTER shall Produce and deliver to AMYLIN the Product in accordance with Article 4 of this Agreement.

 

3.2           Reproduction, Rework or Reprocessing.  If during the Production of any Batch of Product, any reprocessing, rework, or reproduction is required in order to meet the Product Specifications, BAXTER shall conduct such reprocessing, rework, or reproduction in compliance with the terms of the Quality Agreement, cGMPs, and the NDA.  Any reprocessing, rework or reproduction, and the related costs and expenses, must be approved in writing by AMYLIN prior to implementation, such approval not to be unreasonably withheld and/or delayed.  Re-packaging and re-inspection are not considered reproduction, rework or reprocessing.  Unless such reprocessing, rework, or reproduction is required as a result of the negligence or willful misconduct of BAXTER, AMYLIN shall be responsible for, and promptly

 

 

reimburse BAXTER for, all costs and expenses incurred in connection with such reprocessing, rework, or reproduction.

 

3.3           Exenatide Drug Substance and AMYLIN Supplied Components.  AMYLIN, at its expense, shall deliver or cause to be delivered, (a) a reasonably sufficient amount of Exenatide Drug Substance and applicable certificate of analysis therefore and (b) all other AMYLIN Supplied Components, if any, all to be delivered to BAXTER at least two weeks (2) weeks in advance of the filling date set forth in Section 4.2.  Upon receipt of the AMYLIN Supplied Components, if any, and Exenatide Drug Substance as set forth above, BAXTER’s sole obligation with respect to evaluation of the AMYLIN Supplied Components and Exenatide Drug Substance shall be to confirm, in accordance with the terms of the Quality Agreement, that the Exenatide Drug Substance and AMYLIN Supplied Components, if any, conform with the Product Specifications and Component Specifications, respectively.  BAXTER shall have no responsibility for delays in Release or delivery of Product caused by delays in receipt of Exenatide Drug Substance or AMYLIN Supplied Components. AMYLIN shall maintain at BAXTER the Exenatide Drug Substance and AMYLIN Supplied Components in quantities sufficient to meet AMYLIN’s Purchase Orders for Product and Rolling Forecast submitted by AMYLIN to BAXTER pursuant to Article 4.  When AMYLIN is aware of an expected delay in delivery of Exenatide Drug Substance or AMYLIN Supplied Components, AMYLIN shall promptly notify BAXTER of such delay.

 

3.4           BAXTER Supplied Components and Component Delivery Delays:  BAXTER will purchase the BAXTER Supplied Components in quantities sufficient to meet AMYLIN’s Purchase Orders for Product and Rolling Forecasts submitted by AMYLIN to BAXTER pursuant to Article 4.  BAXTER shall control such materials and shall assist AMYLIN with evaluation and purchase of modified materials in the event that AMYLIN requests a change in Presentation.  BAXTER shall not initiate any changes to materials without written approval from AMYLIN.  When BAXTER is aware of an expected delay in meeting AMYLIN’s Purchase Order, BAXTER shall promptly notify AMYLIN of such delay.

 

3.5           Material Safety Data Sheet.  AMYLIN shall provide BAXTER a Material Safety Data Sheet for Exenatide Drug Substance and for Product.  BAXTER shall immediately notify AMYLIN of any unusual health or environmental occurrence relating to the Product, including, but not limited to any claim or complaint by any employee of BAXTER or any of its Affiliates or third party that the operations of BAXTER pursuant to this Agreement have resulted in any adverse health or safety effect on an employee or third party.  BAXTER agrees to advise AMYLIN immediately of any safety or toxicity problems of which it becomes aware regarding the Product.

 

 

3.6           Importer of Record.  In the event any material or equipment to be supplied by AMYLIN, including without limitation AMYLIN Supplied Components and Exenatide Drug Substance, is imported into the United States for delivery to BAXTER (“Imported Goods”), such Imported Goods shall be imported DDP Bloomington, IN (Incoterms 2000).  AMYLIN shall be the “Importer of Record” of such Imported Goods.  As the Importer of Record, AMYLIN shall be responsible for all aspects of the Imported Goods including, without limitation (a) customs and other regulatory clearance of Imported Goods, (b) payment of all tariffs, duties, customs, fees, expenses and charges payable in connection with the importation and delivery of the Imported Goods, and (c) keeping all records, documents, correspondence and tracking information required by applicable laws, rules and regulations arising out of or in connection with the importation or delivery of the Imported Goods.

 

3.7           Storage.

 

3.7.1           Product Storage.  BAXTER shall store Product free of charge for [***] ([***]) calendar days after AMYLIN’s acceptance of Product pursuant to Article 7 (the “Storage Period”).  Following the Storage Period, BAXTER may continue to store Product at BAXTER for an additional period of not more than [***] ([***]) months (the “Additional Storage Period”) or at a third party facility in accordance with the terms of Section 3.7.4. AMYLIN shall reimburse BAXTER for all costs incurred in connection with such storage beyond the Storage Period pursuant to Exhibit B.  If AMYLIN fails to provide approval of a third party storage facility, pursuant to Section 3.7.4, within the Additional Storage Period, AMYLIN shall take possession of the Product at such time by providing BAXTER with shipping instructions.

 

3.7.2           Component Storage.  BAXTER shall be required to store such supply of Components necessary to fulfill [***] ([***]) months of the Rolling Forecast.

 

3.7.3           Exenatide Drug Substance Storage.  BAXTER shall not be required to store quantities of Exenatide Drug Substance in excess of the capacity of AMYLIN’s freezer(s) located at BAXTER.

 

3.7.4           Third Party Storage.  BAXTER shall be permitted to store Product and Components in third party storage facilities, which are subject to audit and prior written approval by AMYLIN pursuant to a mutually agreed upon Project Plan.  BAXTER shall have no liability for, and AMYLIN releases all claims against BAXTER arising out of any damage or loss to Product or Components arising out of, or in connection with, the storage in such third party facility, unless such claims are a result of the negligence or willful misconduct of BAXTER. If AMLYN does not take possession of Product prior to the expiration of the Additional Storage Period, Baxter may store Product in a third party storage facility.  BAXTER will notify AMYLIN at least [***] ([***]) calendar days before moving Product to said third party storage facility and AMYLIN will notify BAXTER within [***] ([***]) calendar days after receipt

 

* Confidential Treatment Request(ed)

 

 

of said notice if AMYLIN does not want Product to be moved to the third party storage facility and provide BAXTER alternate shipping instructions.  If BAXTER fails to hear from AMYLIN within the [***] ([***]) day notice period, BAXTER may move Product to a third party storage facility in accordance with the terms herein.

 

Article 4,  FORECASTS, ORDERS, and CAPACITY

 

4.1           Forecasts and Order Limits.

 

4.1.1        Commencing on the date of this Agreement, and prior to October 1 of each year thereafter, AMYLIN will provide to BAXTER in writing an annual forecast for each calendar year during the remainder of the Term of AMYLIN’s estimated contract requirements for Product (the “Long Range Forecast”).  The annual forecast for the first full year of the Long Range Forecast shall be the “Annual Forecast”.  Commencing on the date of this Agreement and prior to each January 1, April 1, July 1 and October 1, of each year thereafter, AMYLIN will provide BAXTER in writing an [***] rolling forecast of AMYLIN’s estimated contract requirements for Product by Presentation (the “Rolling Forecast”).  BAXTER specifically agrees that such Long Range Forecasts and Rolling Forecasts submitted by AMYLIN will be for general planning purposes only, and shall not be binding on AMYLIN or BAXTER, except as specified in Section 4.1.2.

 

4.1.2        During each calendar quarter, BAXTER shall supply AMYLIN with the quantity of Product ordered by AMYLIN, unless the quantity ordered in any calendar [***] exceeds [***] percent ([***]%) of the quantity purchased in the previous calendar [***], in which event BAXTER shall use good faith efforts to supply quantities in excess of such amount.  For each Rolling Forecast submitted by AMYLIN, in no event shall AMYLIN purchase less than (a) [***] percent ([***]%) of the quantity forecasted by Presentation for the [***] quarter of such Rolling Forecast, (b) [***] percent ([***]%) of the quantity of Product forecasted by Presentation for the [***] quarter of such Rolling Forecast, and (c) [***] percent ([***]%) of the quantity of Product forecasted by Presentation for the [***] quarter of such Rolling Forecast (collectively, the “Minimum Quantity”).  Notwithstanding the foregoing, there shall be no Minimum Quantity for the first calendar year after Regulatory Approval of the Product in the United States.  In each succeeding calendar [***], in the event AMYLIN purchases in any given [***] less than the corresponding portion of the Minimum Quantity for said [***] within [***] ([***]) days after the end of such [***] AMYLIN shall pay to BAXTER the difference between the Purchase Price of Product actually purchased and the Purchase Price of the

 

* Confidential Treatment Request(ed)

 

 

 

corresponding portion of the Minimum Quantity in said quarter, provided, however, AMYLIN shall not be required to make any such payments to the extent AMYLIN has submitted Purchase Orders for the Minimum Quantity and BAXTER confirmed such Purchase Orders to be Firm Purchase Orders, but BAXTER was unable to deliver such quantities of Product due to the negligence of BAXTER.  In any given Rolling Forecast, (a) the quantity forecasted for the [***] of such Rolling Forecast shall not be less than (a) [***] percent ([***]%) of the [***] forecast in the immediately preceding Rolling Forecast and (b) [***] percent ([***]%) of the [***] forecast in the immediately preceding Rolling Forecast.

 

4.2           Purchase Orders.  AMYLIN shall submit Purchase Orders to BAXTER covering AMYLIN’s purchases of Product pursuant to this Agreement.  AMYLIN shall not, without the written consent of BAXTER, designate a delivery date in a Purchase Order earlier than [***] ([***]) calendar days from the date AMYLIN submits the Purchase Order.  Within ten (10) calendar days of BAXTER’s receipt of the Purchase Order, BAXTER shall provide a confirmation of receipt of each Purchase Order setting forth a Batch (or lot) number (if available), the delivery date that BAXTER will meet and setting forth BAXTER’s filling date for such order.  Upon AMYLIN’s receipt of such confirmation, such Purchase Order shall become a non-cancelable “Firm Purchase Order”, and AMYLIN shall be obligated to purchase from BAXTER all Product ordered in a Firm Purchase Order.  If BAXTER is unable to meet the specified delivery date BAXTER shall so notify AMYLIN and provide to AMYLIN an alternative delivery date which shall not be more than [***] ([***]) calendar days later than the initial delivery date designated by AMYLIN in its Purchase Order; provided that the alternative delivery date is no longer than [***] and [***] ([***]) calendar days from the issue of the AMYLIN Purchase Order.  To the extent of any conflict between Purchase Orders submitted by AMYLIN and this Agreement, this Agreement shall control.

 

4.3           Annual Obligation.  AMYLIN shall be obligated to purchase from BAXTER a minimum number of Units of such Product in each calendar year during the Term of this Agreement as specified in Exhibit F (the “Annual Obligation”), which Annual Obligation shall be pro rated for any partial calendar year.  Within [***] ([***]) days after the end of each calendar year, AMLYIN shall pay to BAXTER the difference between the Purchase Price of the Product actually purchased pursuant to Sections 4.1 and 4.2 by AMYLIN and the Purchase Price of the Annual Obligation of the Product.  BAXTER specifically agrees there shall be no Annual Obligation for the first calendar year after Regulatory Approval in the United States.

 

4.4           Annual Order Increases.  In any calendar year after the first calendar year and during the Term of this Agreement, in no event shall BAXTER be obligated to Produce more than the lesser of (a) the greater of (i) [***] percent ([***]%) of the

 

* Confidential Treatment Request(ed)

 

 

quantity of Product Produced by BAXTER in the preceding calendar year or (ii) [***] ([***]) Units in excess of the quantity of Product Produced by BAXTER in the preceding calendar year, and (b) [***] ([***]) Units of Product; provided, however, BAXTER will use good faith efforts to meet such increased demand.

 

Article 5,  PRICE

 

5.1           Regulatory Services Price.  The price to be paid by AMYLIN for regulatory services shall be set forth in Exhibit B.

 

5.2           Product Purchase Price.  The Purchase Price will be fixed for the Initial Term (as hereinafter defined) of this Agreement as specified in Exhibit B.  The Purchase Price for Product for each calendar year will be the price specified in Exhibit B corresponding to the annual volume which is the greater of (a) [***] percent ([***]%) of the Annual Forecast or (b) the Annual Obligation for such calendar year. AMYLIN shall pay the Purchase Price as determined above for all Product, including Units accepted by AMYLIN pursuant to Article 7 samples consumed by BAXTER for release testing, samples shipped for AMYLIN release and stability testing, and any retention samples; except as provided for in Article 7.  In the event AMYLIN requests a change in scope for Production of Product or Regulatory Authority associated with the Production, BAXTER may adjust the Purchase Price for Product or for a particular Presentation of Product as set forth in a revision to Exhibit B as mutually agreed to by the parties.

 

5.3           Purchase Price Adjustment.  Upon expiration of the Initial Term or any extension thereof, BAXTER may adjust the Purchase Price of Product to reflect changes in the cost of materials provided by BAXTER, labor costs paid by BAXTER in connection with the Production of such Product, improvements in the manufacturing process, and any other improvements.  Following the first year of Regulatory Approval, AMYLIN and BAXTER agree to meet no less than [***] per calendar year to formally review continuous improvement activities and other improvements resulting from experience in operating the new process. AMYLIN and BAXTER shall work together to obtain process improvements and any net cost savings achieved by the parties shall be [***], after taking into account any necessary [***] or [***] costs related to the process improvements and any current [***] and [***] cost increases.  [***] calendar quarters prior to expiration of the Initial Term or any extension thereof, BAXTER shall provide to AMYLIN notification of such Purchase Price adjustment.  If the parties cannot in good faith agree on the proposed Purchase Price adjustment, the dispute will be discussed between the senior management of both AMYLIN and BAXTER.  In no event may BAXTER increase the Purchase Price following the Initial Term by a percent which exceeds the lesser of (i) the percentage change in the [***] ([***]) for the

 

* Confidential Treatment Request(ed)

 

 

previous [***] ([***]) months or (ii) [***] percent ([***]%) of the original Purchase Price.

 

5.4           Inventory Levels.  At the end of each calendar year, the parties will review the inventory levels of Components purchased by BAXTER pursuant to AMYLIN’s Rolling Forecast.  In the event AMYLIN fails to consume pursuant to AMYLIN’s Firm Purchase Orders [***] percent ([***]%) of the Components purchased by BAXTER, AMYLIN shall pay to BAXTER the costs of such Components purchased by BAXTER and not consumed by AMYLIN.  The amount of such payments will be deducted from the Purchase Price of Product purchased by AMYLIN after BAXTER’s receipt of such payments until such time as all such paid-up Components have been consumed.

 

5.5           Yield Requirement.  Following the Production of (a) the [***] ([***]) process validation Batches of each Presentation of Product and (b) the initial [***] ([***]) post-process validation Batches of each Presentation of Product (the “Yield Batches”) the parties will determine the expected yield (“EY”) for each Presentation of Product, which EY shall be equal to the [***] by Presentation resulting from the Yield Batches less [***].  If there is a manufacturing anomaly in one or more of the Yield Batches, the parties may agree to eliminate such Batch from the EY calculation or may require an additional Batch be included.  In the event Baxter fails to meet such EY on average for Batches Produced in the first quarter after which EY was determined, provided such Presentation of Product was Produced in such quarter, BAXTER will deliver on average during any calendar quarter thereafter not less than such mutually agreed upon EY for each Presentation of Product for all Batches Released during such quarter, provided a minimum of [***] ([***]) such Batches have been Released for each Presentation, including all Units Released by BAXTER, samples consumed by BAXTER for release testing, samples shipped for AMYLIN release and stability testing, and any retention samples.  If [***] ([***]) Batches of each Presentation of Product were not Released in such calendar quarter, the reconciliation process described herein will be performed when the [***] ([***]) such Batch, following the most recent reconciliation, is Released and invoiced by BAXTER.  In the event that BAXTER delivers, on average, an actual yield (“AY”) for Batches Released in any calendar quarter which is lower than EY set out above, at the end of such calendar quarter, Baxter will reimburse AMYLIN according to the following formula:

[***];

provided, however, such amount shall not exceed [***] percent ([***]%) of the Purchase Price of such Presentation of Product purchased by AMYLIN in such calendar quarter, or applicable time period.  If the actual yield is low due to additional sampling, testing, technical transfer, stability, or AMYLIN requested samples for a given Batch, such Batch will not be included in the quarterly calculation and BAXTER will not reimburse AMYLIN for such deficit.  The

 

* Confidential Treatment Request(ed)

 

 

foregoing represents the sole liability of BAXTER and the sole and exclusive remedy of AMYLIN for yield shortfall.

 

5.6           Loss of Exenatide Drug Substance.  If any lot of Exenatide Drug Substance is destroyed, damaged or lost while in BAXTER’s custody, control or storage unless such destruction, damage or loss was outside of the reasonable control of BAXTER, BAXTER shall reimburse AMYLIN for its actual out-of-pocket costs for the Exenatide Drug Substance, provided such reimbursement shall not exceed [***] percent ([***]%) of the Purchase Price of a Batch of Product that would have been Produced from such Batch or lot of Exenatide Drug Substance, and AMYLIN shall not be responsible for payment of the Purchase Price to BAXTER for any Batch that would have been produced for such Exenatide Drug Substance.  The foregoing represents the sole liability of BAXTER and the sole and exclusive remedy of AMYLIN for the loss of a Batch or Exenatide Drug Substance except as set forth in Article 7.

 

5.7           Effects of Certain Events.  In addition to the costs and expenses payable in Section 8.7, in the event of termination of this Agreement, except by AMYLIN as a result of a breach by BAXTER under Section 8.2 or by AMYLIN pursuant to Sections 8.3 or 8.5, AMYLIN shall pay BAXTER as liquidated damages and not as a penalty an amount equal to[***] percent ([***]%) of the greater of the Annual Obligation or the Rolling Forecast prorated for the next [***] ([***]) months.

 

Article 6,  SHIPMENT AND INVOICING

 

6.1           Delivery Terms.  Product shall be delivered to AMYLIN, or to a location designated by AMYLIN in the Purchase Order, EXW (Incoterms, 2000) BAXTER’s facility in Bloomington, Indiana freight collect, by a common carrier designated by AMYLIN in the Purchase Order, at AMYLIN’s expense; provided, however, BAXTER shall be responsible for the loading of the Product on departure and shall bear all costs of such loading. AMYLIN shall procure, at its cost, insurance covering damage or loss to the Product during shipping.

 

6.2           Exporter of Record.  AMYLIN or its Collaboration Partner shall be the exporter of record for any Product shipped out of the United States, as AMYLIN or its Collaboration Partner remains the owner of the Product.  AMYLIN or Collaboration Partner warrants that all shipments of Product exported from the United States will be made in compliance with all applicable United States export laws and regulations and all applicable import laws and regulations into the country of importation.

 

AMYLIN or its Collaboration Partner shall be responsible for obtaining and paying for any licenses or other governmental authorization(s) necessary for the exportation from the United States.  AMYLIN or its Collaboration Partner shall

 

* Confidential Treatment Request(ed)

 

 

select and pay the freight forwarder who shall solely be AMYLIN’s or its Collaboration Partner’s agent.  AMYLIN or its Collaboration Partner’s and its freight forwarder shall be solely responsible for preparing and filing the Shipper’s Export Declaration and any other documentation required for the export.

 

6.3           Foreign Corrupt Practices Act.  AMYLIN acknowledges it is not the agent of BAXTER and represents and warrants that it has not, and covenants that it will not, pay anything of value to any government employee in connection with the resale of the Product.

 

6.4           Payment Terms.  The following invoicing and payment terms apply:

 

Status		Invoice Date		Payment Due
Commercial Production		BAXTER’s Release of Batch Record		Invoice Date + [***] days
Regulatory Services		Monthly		Invoice Date + [***] days
Article 8 Payments		Upon notice		Invoice Date + [***] days

 

For the avoidance of doubt, the process validation Batches will be manufactured under the Drug Product Development Agreement dated February 27, 2004 and will be billed according to the terms contained therein.

 

Payments shall be made in U.S. dollars by check delivered to BAXTER by overnight delivery with a reputable overnight delivery service.  Each invoice shall be payable by AMYLIN in accordance with the terms noted above.  Any payment due under this Agreement not received within the times noted above shall bear interest at the lesser of (a) the maximum rate permitted by law, or (b) [***]% per month on the outstanding balance compounded [***].

 

6.5           Default in Payment Obligations.  In addition to all other remedies available to BAXTER in the event of a AMYLIN default, if AMYLIN fails to make payments as required hereunder within thirty calendar days of notice of such failure to make payments, BAXTER may refuse all further Purchase Orders or refuse to Produce any Product until AMYLIN’s account is paid in full, place the account on a letter of credit basis, require full or partial payment in advance and/or suspend deliveries of Product until AMYLIN provides assurance of performance reasonably satisfactory to BAXTER.

 

* Confidential Treatment Request(ed)

 

 

Article 7,  ACCEPTANCE OF PRODUCT

 

7.1           Product Conformity.  Within [***] ([***]) days from the date of receipt by AMYLIN of samples of Product or [***] ([***]) calendar days from the date of receipt by AMYLIN of the Released Executed Batch Record to AMYLIN, whichever is later, AMYLIN shall determine whether such Batch conforms to the Product Requirements.

 

7.1.1        If AMYLIN fails to notify BAXTER within the applicable time period as specified in Section 7.1, that any Batch does not conform to the Product Requirements, then AMYLIN shall be deemed to have accepted the Batch and waived its right to revoke acceptance.

 

7.1.2        If AMYLIN believes any Batch does not conform to the Product Requirements, it shall notify BAXTER by telephone including a detailed explanation of the non-conformity and shall confirm such notice in writing via overnight delivery to BAXTER.  Upon receipt of such notice, BAXTER, in accordance with the terms of the Quality Agreement, will investigate such alleged non-conformity, and (i) if BAXTER agrees such Batch is non-conforming, deliver to AMYLIN a corrective action plan within [***] ([***]) calendar days after receipt of AMYLIN’s written notice of non-conformity, or such additional time as is reasonably required if such investigation or plan requires data from sources other than AMYLIN or BAXTER, or (ii) if BAXTER disagrees with AMYLIN’s determination that the Batch is non-conforming, BAXTER shall so notify AMYLIN by telephone within the [***] ([***]) calendar day period and confirm such notice in writing by overnight delivery.

 

7.1.3        If the parties dispute whether a Batch is conforming or non-conforming, the shipment of Product will be submitted to a mutually acceptable laboratory or consultant for resolution, whose determination of conformity or non-conformity, and the cause thereof if non-conforming, shall be binding upon the parties.

 

7.2           Remedies for Non Conforming Product.

 

7.2.1        In the event BAXTER agrees that a Batch is non-conforming or the laboratory determines that a Batch is non-conforming, BAXTER shall provide replacement Product for such non-conforming Batch which shall be Released by BAXTER within the latter of (a) [***] ([***]) calendar days from receipt of replacement Exenatide Drug Substance from AMYLIN or (b) [***] ([***]) calendar days from the date of determination by the third party of non-conformity or agreement by BAXTER of such non-conformity.

 

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7.2.2        AMYLIN shall pay for all Product, including replacement Product and the cost of Exenatide Drug Substance therefore, except as specifically set forth in Section 7.2.3.

 

7.2.3        In the event BAXTER agrees, or the laboratory or consultant determines, that a Batch is non-conforming, solely as a result of the negligence or willful misconduct of BAXTER, AMYLIN shall not be required to pay for such Batch, BAXTER shall provide replacement Product as specified in Section 7.2.1., shall reimburse AMYLIN for its actual cost of the Exenatide Drug Substance for the non-conforming Batch, which cost shall not exceed [***] percent ([***]%) of the Purchase Price for Units comprising the non-conforming Batch of Product, and shall bear the costs of such laboratory or consultant and any storage fees incurred by AMYLIN for the non-conforming Batch.  The foregoing shall be AMYLIN’s sole and exclusive remedy and BAXTER’s sole liability for replacement of conforming Product.

 

7.3      Latent Defect:  If, within [***] ([***]) days after AMYLIN’s acceptance of a Batch, AMYLIN discovers a latent defect such as a Contaminant in such Batch that existed in the Batch on or before AMYLIN’s acceptance of the Batch, AMYLIN shall notify BAXTER immediately of such discovery, and AMYLIN shall have the right to reject such Batch under the procedures regarding rejection set forth in Section 7.1 and 7.2 above, provided however, if BAXTER disagrees with AMYLIN’s determination that a latent defect exists or that the latent defect existed in the Batch on or before AMYLIN’s acceptance of the Batch, then BAXTER shall so notify AMYLIN within [***] ([***]) days after receiving AMYLIN’s notification about the latent defect, and in such cases, samples of the Batch of Product will be submitted to a mutually acceptable laboratory or consultant for resolution, whose determination of conformity or non-conformity, and the cause thereof if non-conforming, shall be binding upon the parties.  AMYLIN shall bear the costs of such laboratory or consultant, unless the laboratory or consultant determines that the non-conformance is due to the negligence or willful misconduct of BAXTER in which event BAXTER shall bear the costs of such laboratory or consultant.

 

7.4      Non-conforming Exenatide Drug Substance.  If Product is rejected by AMYLIN, and such Product’s failure to meet the Product Requirements is the result of non-conforming Exenatide Drug Substance, then BAXTER shall not bear any liability under this Article 7.

 

Article 8,  TERM AND TERMINATION

 

8.1           Initial Term.  This Agreement shall be effective on the Effective Date and shall continue for sixty (60) months thereafter  (the “Initial Term”), unless earlier

 

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terminated in accordance with the terms of this Agreement.  This Agreement will be renewed automatically for one (1) additional twenty-four (24) month period commencing at the expiration of the Initial Term and any extensions thereof unless either AMYLIN or BAXTER terminates the Agreement by giving the other party written notice of intent to terminate at least twenty-four (24) months prior to the expiration of the Initial Term or any extension thereof.  The Initial Term as may be extended is referred to herein as the “Term.”

 

8.2           Termination for Breach.  Either party may terminate this Agreement upon the breach of any provision of this Agreement by the other party if such breach is not cured by the breaching party within fifteen (15) calendar days for monetary defaults, and thirty (30) calendar days for non-monetary defaults (or such additional time reasonably necessary to cure such non-monetary default provided the breaching party has commenced a cure within the thirty (30) day period and is diligently pursuing completion of such cure) after receipt by the breaching party of written notice of such default.  At the option of the non-breaching party, such termination may be with respect to the entire Agreement, or only with respect to the Product which is the subject of the breach.

 

8.3           Termination for Financial Matters.  This Agreement may be terminated immediately by either party by giving the other party written notice thereof in the event such other party makes a general assignment for the benefit of its creditors, or proceedings of a case are commenced in any court of competent jurisdiction by or against such party seeking (a) such party’s reorganization, liquidation, dissolution, arrangement or winding up, or the composition or readjustment of its debts, (b) the appointment of a receiver or trustee for or over such party’s property, or (c) similar relief in respect of such party under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debt, and such proceedings shall continue undismissed, or an order with respect to the foregoing shall be entered and continue unstated, for a period of more than sixty (60) days.

 

8.4           Termination Related to AMYLIN Regulatory Status.  AMYLIN may immediately terminate this Agreement by giving written notice to BAXTER, including a certification as to the grounds for termination signed by the chief regulatory officer of AMYLIN and/or a copy of the relevant Regulatory Authority notice(s), if any Regulatory Authority (a) denies approval of Exenatide, (b) withdraws approval of Exenatide, or (c) does not approve BAXTER as a manufacturer of Product within eighteen (18) months after Regulatory Approval.

 

8.5           Termination Related to Regulatory Compliance.  AMYLIN may terminate this Agreement by giving ninety (90) days written notice to BAXTER if BAXTER (i) has its manufacturing authorizations for Product suspended or withheld; (ii) in the case of a PAI for Product, fails to pass an inspection by a Regulatory Authority due to an act or omission of BAXTER; or (iii) in the case of a regulatory

 

 

inspection (which directly relates to or directly impacts Product) by a Regulatory Authority fails to pass an inspection and has not completed the corrective action(s) agreed upon with the Regulatory Authority within the time period agreed upon with such Regulatory Authority, unless otherwise agreed by BAXTER and either AMYLIN (for a United States Regulatory Authority) or Collaboration Partner (for all Regulatory Authorities outside the United States).  BAXTER may terminate this Agreement by giving ninety (90) days written notice to AMYLIN if AMYLIN, with respect to Exenatide Drug Substance (a) has its manufacturing authorizations suspended or withheld; (b) in the case of a PAI, fails to pass an inspection by a Regulatory Authority due to an act or omission of Amylin; or (c) in the case of a regulatory inspection (which directly relates to or directly impacts Exenatide Drug Substance) by a Regulatory Authority fails to pass an inspection and has not completed the corrective action(s) agreed upon with the Regulatory Authority within the time period agreed upon with such Regulatory Authority, unless otherwise agreed by BAXTER and AMYLIN.

 

8.6           Additional Rights and Remedies.  Subject to Section 13.1, termination under this Article 8 shall be in addition to the other rights and remedies of the terminating party.  Unless otherwise provided herein, termination of this Agreement for any reason shall not relieve any party of any obligations accruing prior to such termination.

 

8.7           Non-cancelable Costs and Expenses.  In the event of the termination or cancellation of this Agreement, except by AMYLIN as a result of a breach by BAXTER under Section 8.2 or by AMLYIN pursuant to Section 8.3 or 8.5, AMYLIN shall (a) reimburse BAXTER for all actual out-of-pocket expenses incurred or accrued for all Components ordered prior to termination and not reasonably usable by BAXTER within six (6) months of termination not cancelable at no or reduced costs to BAXTER and (b) pay BAXTER for any work in process or finished goods pursuant to any outstanding Firm Purchase Orders.  In addition, in the event of termination or cancellation for any reason other than termination by AMYLIN pursuant to Sections 8.3 or 8.5, AMYLIN shall pay prices described in Article 5 for (i) all work-in-process commenced by BAXTER and (ii) all finished goods of BAXTER.  BAXTER shall ship such materials to AMYLIN pursuant to Section 6.1.  AMYLIN shall make payment for all expenses described in this Section 8.6 forty-five (45) calendar days from the invoice date.

 

8.8           Survival.  Termination, expiration, cancellation or abandonment of this Agreement through any means or for any reason, except as set forth in Section 13.1, shall be without prejudice to the rights and remedies of either party with respect to any of the provisions of this Agreement.  The provisions of Sections 12, 13, 14, 15, 16, 17 and 18 hereof shall survive expiration or termination of this Agreement.

 

 

Article 9,  PRODUCTION OF PRODUCT

 

9.1           Production.  BAXTER shall Produce Product in accordance with cGMP and Product Specifications. Subject to compliance with reasonable rules and regulations of BAXTER, AMYLIN and its Collaboration Partner shall have the right to be present during Production for observational purposes only and according to BAXTER’s policies.  Production deviations and investigations which occur during Production of Product and which do not cause the Production to be non-compliant with either cGMP or Product Specifications shall not be deemed to cause such Product to be non-conforming.  BAXTER will provide AMYLIN notice, in the event BAXTER is unable to supply Product.

 

9.2           Audits.  AMYLIN and its Collaboration Partner shall have the right to audit BAXTER’s facilities to determine compliance with (a) cGMP and (b) applicable federal, state, and local laws, regulations and rules.  Such audits shall be scheduled at mutually agreeable times upon reasonable advance written notice to BAXTER, and (a) shall be at AMYLIN’s expense, and (b) shall not occur more than one (1) time per calendar year, in either case unless related to BAXTER’s compliance status or AMYLIN’s or its Collaboration Partner’s obligations as a license holder.  If AMYLIN requests additional audits which are not due the reasons stated above and BAXTER agrees to such audits, AMYLIN will incur fees as set forth on Exhibit B.  Such fees shall be paid promptly upon completion of such audits.  AMYLIN may request an additional follow-up audit, at no charge to AMYLIN, if any audit determines that BAXTER is not in compliance with the above requirements for the primary purpose of confirming that appropriate corrective actions have been implemented. In connection with performing such audits, AMYLIN or its Collaboration Partner shall comply with all reasonable rules and regulations promulgated by BAXTER.  All information disclosed or reviewed in such inspections shall be deemed to be the property of BAXTER and BAXTER Confidential Information.  For purposes of clarity, a site visit, the primary purpose of which is for business or technical discussions, shall not be considered an audit under this Section 9.2.  AMYLIN shall have the right to conduct a physical inventory audit of its inventory at BAXTER’s facilities, at AMYLIN’s expense, once per year.  Such physical inventory audit does not count as AMYLIN’s annual audit as described in this Section.

 

9.3           Testing.  BAXTER shall test, or cause to be tested by third party testing facilities as directed by AMYLIN or its Collaboration Partner, in accordance with the Product Specifications, samples of each Batch of Product Produced pursuant to this Agreement before delivery to AMYLIN.  Samples of each Batch are to be delivered to AMYLIN or AMYLIN’s designee within [***] ([***]) calendar days of completion of filling of such Batch. A certificate of analysis for each Batch of Product delivered to AMYLIN shall set forth the items tested by BAXTER, specifications, and test results.  BAXTER shall send, or cause to be sent, such certificates along with one (1) copy of the Released Executed Batch Record and

 

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associated documentation described in the Quality Agreement to AMYLIN prior to or at the same time of shipment of Product to AMYLIN and within thirty days from the completion date of capping if such Batch requires no investigations and/or additional testing.  As required by the FDA and Regulatory Authorities, AMYLIN shall assume full responsibility for final release of each lot of the Product.

 

9.4           Stability Testing.  At AMYLIN’s cost and expense, AMYLIN or a party selected by AMYLIN shall perform all stability testing required to be performed on Batches of Product.  If performed by BAXTER, such testing shall be performed in accordance with the procedures set out in the Product-specific protocols agreed to between AMYLIN and BAXTER.

 

9.5           Permits and Licenses.  AMYLIN or its Collaboration Partner shall have sole responsibility, at its expense, for obtaining all permits and licenses necessary or required for the sale, marketing and commercialization of each Product Produced by BAXTER hereunder.  BAXTER shall be responsible, at its expense, to obtain and maintain all permits and licenses required for it to carry out its development, regulatory and Production obligations hereunder.

 

9.6           Regulatory Requirements.  Each party shall promptly notify the other of new regulatory requirements of which it becomes aware which are relevant to the Production of a Product under this Agreement and which are required by the FDA, any other applicable Regulatory Authority or other applicable laws or governmental regulations, and shall confer with each other with respect to the best means to comply with such requirements.

 

9.7           Drug Master File.  BAXTER shall file and maintain the appropriate Drug Master File (“DMF”) and related reference applications (e.g. Site Master File) for its Production of each Product hereunder in accordance with 21 CFR 314.420, as may be amended from time to time, and other regulatory requirements or required by Regulatory Authorities at BAXTER’s expense.

 

9.8           Customer Complaints and Adverse Events: AMYLIN or its Collaboration Partner, as required by the applicable Regulatory Authority which granted Regulatory Approval, shall maintain all customer complaint and adverse event files.  Any such complaints received by BAXTER shall be forwarded to AMYLIN, which shall forward appropriate complaints or adverse event files to its Collaboration Partner.  AMYLIN or its Collaboration Partner shall be responsible for the review of the complaint or adverse event to determine the need for an investigation or the need to report to the applicable Regulatory Authority as required.  AMYLIN and its Collaboration Partner shall send to BAXTER all Product performance or manufacturing-related complaints which require investigation and shall provide to BAXTER Product which is the subject of such complaints in accordance with the

 

 

Quality Agreement.  If BAXTER receives such returned samples, BAXTER shall conduct an investigation for each Product performance or manufacturing-related complaint and shall report findings and follow-up of each investigation to AMYLIN at no cost to AMYLIN, which shall forward appropriate findings to its Collaboration Partner.  AMYLIN or its Collaboration Partner shall make these complaint files available to BAXTER in the event they are required during an inspection by a Regulatory Authority.  Typical timelines are five (5) calendar days for notification and twenty-eight (28) calendar days for completion of investigations.

 

9.9           Changes in Manufacturing:

 

9.9.1        Changes to Master Batch Records and Product Specifications.  BAXTER shall notify AMYLIN of and require written approval from AMYLIN for changes to Master Batch Records and Product Specifications prior to the Production of subsequent Batches of Product.

 

9.9.2        Product-Specific Changes.  If facility, equipment, process or system changes are required of BAXTER as a result of requirements set forth by the FDA or any other Regulatory Authority, and such regulatory changes apply solely to the Production and supply of Product, then AMYLIN and BAXTER will review such requirements and agree in writing to such regulatory changes, and AMYLIN shall bear [***]% of the reasonable costs thereof.

 

9.9.3        General Changes.  If such regulatory changes apply generally Product as well as to other products produced by BAXTER for itself or for third parties, then BAXTER shall pay [***] percent ([***]%) of the reasonable cost of such regulatory changes.