Exhibit 10.67

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

 

Toll Manufacturing Agreement

 

 

by and among

 

Gilead World Markets, Ltd

Queensgate House

South Church Street

PO Box 1234 GT

Grand Cayman

Cayman Islands

 

Gilead Sciences, Inc.

333 Lakeside Drive

Foster City, CA  94404

USA

 

and

 

 

ALTANA Pharma Oranienburg GmbH

Lehnitzstr. 70-98

16515 Oranienburg

Germany

 

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TOLL MANUFACTURING AGREEMENT

 

This Amended And Restated Clinical and Commercial Supply Agreement (the “Agreement”) made and effective as of the 01 day of August, 2003 (the “Effective Date”) among, on the one hand, Gilead World Markets, Ltd., a Cayman Company (“Gilead World”), whose registered address is Queensgate House, South Church Street, P.O. Box 1234GT, Grand Cayman, Cayman Islands, and Gilead Sciences, Inc, a Delaware corporation (“Gilead Sciences”) with its principal office located at 333 Lakeside Drive, Foster City, CA 94404, USA (Gilead World and Gilead Sciences collectively, “GILEAD”), and, on the other hand, Altana Pharma Oranienburg GmbH, a German corporation (“APO”) having its principal place of business at Lehnitzstrasse 70-98, 16515 Oranienburg, Germany. Gilead and APO are sometimes referred to herein individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, Gilead Sciences will require the manufacture and supply of Drug Products (as hereinafter defined) for clinical use in the Territory and Gilead World will require the manufacture and supply of Drug Products for commercial distribution and sale in the Territory; and

 

WHEREAS, GILEAD is a US biopharmaceutical company that discovers, develops and commercialises therapeutics to advance the care of patients suffering from life threatening diseases worldwide.

 

WHEREAS, GILEAD has developed the API tenofovir disoproxil fumarate (API, as hereinafter defined) and has filed patents thereto and commercializes the finished product under the trademark Viread® either by itself or through its Affiliates on a world-wide basis;

 

WHEREAS, GILEAD presently supplies the “Finished Product” (as hereinafter defined) produced by a Third Party manufacturer (“Third Party Manufacturer”) and its UK located affiliate GILEAD Sciences International Ltd. Cambridge is the holder of the Marketing Approval (Approval No.: [*]) pursuant to EU regulation 2309/93/EEC (as amended) or any implementation of it under the laws of any relevant EU member state where GILEAD markets the Finished Product;

 

WHEREAS, APO is the holder of the Manufacturing authorization pursuant to Directive 75/319/EEC (as amended) and any implementation of it under the laws of Germany for the manufacturing of products at its site at [*] and it is interested in Manufacturing the Bulk Product (as hereinafter defined) for GILEAD;

 

NOW, THEREFORE, the Parties thereby agree as follows:

 

DEFINITIONS

 

(A)   “Affiliate” of a Party shall mean a corporation or other corporate entity that owns, is owned by or is under common direct or indirect ownership with such Party, where “own”, “owned” and “ownership” refer to ownership of over fifty percent (50%) of the voting shares or other voting interest of such entity or the ability to control or direct management of such entity.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

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(B)   “API” shall mean the active pharmaceutical ingredient tenofovir disoproxil fumarate to be used by APO in the Manufacture of the Bulk Product;

 

(C)   “[*]” shall mean, for the API, the [*] value identified as such in Schedule “H” that shall be subject to credit or reimbursement by APO pursuant to Section 2.7 [*].

 

(D)   “Bulk Product(s)” shall mean the API in its finished form as coated tablet(s) containing 300 mg of API in bulk, unlabelled after completion of all processing stages up to, but not including, final packaging as identified in Schedule “A” hereto, having the Specifications contained in Schedule “C” attached hereto;

 

(E)    “cGMPs” shall mean current Good Manufacturing Practices regulations promulgated by the EU Regulatory Agencies or the FDA, in respect of medicinal products as well as by the Quality Agreement, each in their respective current versions;

 

(F)    “Components” means, collectively, raw materials, excipients and ingredients, required to be used in order to produce the Bulk Product in accordance with the Specifications, other than the API, as set forth in Schedule “D”;

 

(G)   “Confidential Information” shall have the meaning given such term in Section 15.1.

 

(H)   “Controlled” means, with respect to a patent, know-how or any other item of intellectual property, owned by or licensed to a Party with the ability to sublicense it to the other Party in accordance with this Agreement, without violating or breaching any agreement with any third party.

 

(I)     “EU Regulatory Agency” shall mean the Regulatory Agency of the European Union or their national equivalents;

 

(J)    “FDA” shall mean the U.S. Food and Drug Administration, or any successor agency.

 

(K)   “Finished Product(s)” shall mean the fully packaged Bulk Product with all necessary product information leaflets, i.e. SPC in the saleable form as approved by the relevant regulatory authority in the Territory

 

(L)    “Know-how” shall mean the information and know-how necessary for the Manufacturing of the Bulk Product to the exclusion, however, of the manufacturing know-how for the API;

 

(M)  “Inventory” means all inventories of Components and work-in-process produced or held by APO in connection with the Manufacture of the Bulk Product in accordance with the Specifications, but, for greater clarity, does not include the API;

 

(N)   “Manufacture” or “Manufacturing” shall mean the converting of API supplied by GILEAD or its appointee into Bulk Product by APO at the Manufacturing Location, including the required analyses and testing of API and such Bulk Products, and the bulk packing and dispatch labelling of such Bulk Product for shipment to GILEAD or its appointee, to the exclusion of the manufacture of API by APO;

 

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(O)   “Manufacturing Location” shall mean the Manufacturing location for the Bulk Product of APO at  [*];

 

(P)    “Marketing Authorization” means the authorization to market Finished Product in a jurisdiction issued by the appropriate Regulatory Agency in such jurisdiction.

 

(Q)   “Release Documents” means the documentation specified pursuant to Sections 2.2.3 and 2.2.4 of the Quality Agreement that is required for GILEAD to release a batch of Bulk Product and authorize shipment thereof.

 

(R)   “Quality Agreement” shall mean the agreement on the pharmaceutical responsibilities of the Parties attached to this Agreement as Schedule “B”, with Gilead Sciences performing responsibilities for itself and on behalf of Gilead World.

 

(S)    “Specification(s)” shall mean all Manufacturing, (primary) packaging, quality assurance and release specifications in regards to Bulk Products set forth in Schedule “C” and in regards to API set forth in Schedule “D” attached hereto; such Specifications shall be supplied by GILEAD at its sole responsibility;

 

(T)   “Term” shall have the meaning set forth in Section 4;

 

(U)   “Territory” shall mean all the countries of the world in which GILEAD has notified APO that Finished Products shall be marketed;

 

(V)   “Year” shall meanthe twelve month period commencing, in the case of the first Year (regarding the remaining months) of this Agreement, on the Effective Date, and thereafter commencing upon completion of the immediately preceding Year;

 

(W)  “Working Day(s)” shall mean any working day (with the exclusion of Saturday and Sunday) on which banks are normally open in USA, and in Germany for the transaction of business;

 

 

SECTION 1

BULK PRODUCT SUPPLY COMMITMENTS

 

 

1.1          General. During the term of this Agreement, APO shall Manufacture and supply to GILEAD the Bulk Product at the prices (the “Supply Price(s)”) indicated in Schedule “A” hereto (such prices being subject to adjustment in accordance with the terms hereof), and GILEAD agrees to purchase from APO the Bulk Products, subject to all other terms and conditions of this Agreement, at the Supply Prices provided for in Schedule “A”.

 

1.2          Acceptance of Manufacturing Location by Regulatory Agencies in General. Such supply and purchase obligations shall be conditional upon acceptance of the Manufacturing Location by the regulatory authorities of the Territory. With the effective date of [*], the EMEA has granted APO a manufacturing authorization to Manufacture the Bulk Product.

 

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1.3          Acceptance of Manufacturing Location by Regulatory Agencies of the European Community. APO represents and warrants that it is the holder of the Manufacturing authorization pursuant to Directive 75/319/EEC (as amended) and any implementation of it under the laws of Germany for the manufacturing of certain solid pharmaceutical products at its Manufacturing Location.

 

1.4          Manufacturing of Bulk Product for the United States of America. GILEAD may elect to have APO Manufacturing Bulk Product also for the United States, upon which terms and conditions are to be agreed. In such case, GILEAD shall inform APO of such intention in writing and duly in advance; the Parties shall determine the possible consequences of the Manufacture of the Bulk Product for the US market, and they shall initiate the necessary steps to apply to the FDA for approval of Manufacture of the Bulk Product to be placed on the USA market and to comply with the applicable laws and regulations.

 

SECTION 2

SUPPLY OF API

 

2.1          Supply of API by GILEAD. GILEAD or an Affiliate of GILEAD shall supply, or arrange for the supply by their contract manufacturers of, API to APO for the Manufacture of Bulk Product and APO shall Manufacture Bulk Product exclusively from API supplied by GILEAD, an Affiliate of GILEAD, or a contract manufacturer thereof. In respect of the supply of API, the Parties agree as follows:

 

2.2          Timely Supply. GILEAD undertakes by itself or through an assignee to timely supply API directly to the Manufacturing Location as further provided hereinafter. APO shall be under no duty to Manufacture the Bulk Products (including validation batches), nor meet delivery dates provided in the Binding Orders, to the extent that GILEAD does not supply API in a timely fashion, whether said supply is provided by GILEAD or a permitted appointee of GILEAD.

 

2.3          Conditions of Supply and Delivery. GILEAD undertakes to supply API to APO [*]. All the API provided by GILEAD shall be properly packed, marked, sealed and air-shipped [*] (Incoterms 2000) in accordance with GILEAD’s shipping and packing instructions and with APO’s instructions for delivery, provided that at GILEAD’s request and expense, APO will provide reasonable assistance in arranging for any necessary import clearance and licenses. Delivery of API shall be made at the Manufacturing Location between 9.00 a.m. and 4.00 p.m. during Working Days.

 

2.4          Certification and Incoming Inspection of API. The API delivered by GILEAD or its permitted appointee shall be in compliance with the Specifications and any other legal requirements and shall be accompanied by a Certificate of Analysis and a Certificate of Compliance. GILEAD will include the information about gross weight, net weight and tara on the label of each barrel of API.   APO agrees to inspect the API delivered and to check it solely for identity, quantity and conformity with the bill of lading and, as far as reasonably possible, any damages suffered during shipping and any other obvious defects of the API delivered within [*] following receipt.  APO will check the gross weight of each barrel within such [*] period and will confirm the net weight of each barrel in the course of performing the API weighing process for production orders.

 

2.5.         Failure of API to satisfy Incoming Inspection. If the API delivered by GILEAD or its

 

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permitted appointee to APO fails the inspections to be carried out during the [*] following receipt as provided under Section 2.4 above, due to a discrepancy from the bill of lading due to lack of identity or a difference in gross weight, or to physical damages or other obvious defects, APO undertakes to notify GILEAD without undue delay in writing. GILEAD shall, upon receiving such written notice from APO, use commercially reasonable efforts to replace the rejected API as soon as reasonably possible; in any event, the provisions of Section 2.9 shall apply.

 

2.6.         Title to API. All API (whether being held for Manufacture or in the process of Manufacture) supplied to APO by GILEAD or by a permitted appointee of GILEAD in accordance with this Agreement shall at all times be and remain the property of GILEAD, and shall be treated by APO in all respects as such, and shall be stored and handled in a manner to prevent contamination by other drugs and chemicals and in accordance with GILEAD’s instructions as set forth in Schedule “D” hereto, which GILEAD may update from time to time with APO’s approval, not to be unreasonably withheld.

 

2.7          API Lost or Destroyed. APO shall compensate GILEAD for any API lost or destroyed during the storage of API, or during the Manufacture or storage of the Bulk Product, which in any Year [*] which will be set forth in accordance with Schedule “H” hereto, at the price as likewise set forth under such Schedule “H”, [*]. In any event, it remains understood and agreed between the Parties that APO shall not be responsible for any loss or damage to the API, except where such loss or damage [*] provided under Section 1.1 or is otherwise due to [*]; and that APO’s liability shall be limited to [*] as likewise set forth under Schedule “H”. Upon a determination that API has been lost or destroyed such that APO is required to compensate GILEAD, APO shall[*] GILEAD for the compensable amount.

 

2.8.         Defects of Bulk Product attributable to Defective API. With respect to defects of the Bulk Product attributable to defective API, the provisions of Section 8.5 of this Agreement shall apply.

 

2.9.         Delays in Delivery of API or Replacement Deliveries of API pursuant to Section 2.4. If GILEAD should fail to make timely delivery of API, or of a replacement delivery of API, to APO, the provisions of Section 2.1 hereof shall apply and APO shall not be liable for any breach of its obligations hereunder due to such events caused by GILEAD, provided, however, that APO shall be liable for any breach of its obligations due to failure to properly and timely inspect API pursuant to Section 2.4.

 

2.10        Destruction of Defective API. If API in the possession of APO is determined by the Parties to be defective, then APO will destroy it in compliance with GILEAD’s instructions and applicable laws, rules and regulations, with GILEAD to bear the expenses thereof unless the defect was introduced after delivery to APO pursuant to Section 2.3.

 

SECTION 3

MANUFACTURING LICENSE; MANUFACTURING BULK PRODUCT BY APO

 

3.1          Manufacturing License. In relation to the grant of the Manufacturing license by GILEAD to APO for purposes of this Agreement, the Parties agree as follows:

 

3.1.1       Grant of Manufacturing License. GILEAD grants APO a non-exclusive, royalty-free, non-sublicensable, non-transferable license for the entire term of this Agreement, under all

 

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patents Controlled by GILEAD that, but for the grant of this license, would be infringed by the Manufacture by APO of Bulk Product in accordance with this Agreement, and under all Know-how Controlled by GILEAD that is necessary or reasonably useful to the Manufacture by APO of Bulk Product in accordance with Agreement, to Manufacture the Bulk Product at the Manufacturing Location for the sole purpose of supply for the Territory of the Bulk Product so Manufactured to GILEAD, an Affiliate, or one of their contract manufacturers of Finished Product, indicated to APO in writing duly in advance, in accordance with the terms and provisions of this Agreement.

 

APO shall be responsible for the Manufacture of Bulk Product. Accordingly, GILEAD shall be responsible for the finishing of the Bulk Product into the Finished Product and, as holder of the Marketing Authorizations for the Territory, GILEAD shall release and place the Finished Product on the market.

 

3.1.2       Transfer of Manufacturing and Quality Control Procedures. To the extent reasonably necessary for the exercise by APO of the rights granted by GILEAD under Section 3.1.1 hereof and to the extent not already performed pursuant to Section 3.2 hereof, GILEAD shall make available to APO all Manufacturing and quality control procedures, including the related Know-How of GILEAD and all the other information, necessary to carry out the contracted operations correctly in accordance with the Marketing Authorisations and any other legal requirements.

 

3.2          Validation and other Implementation Work Costs. The validation of the manufacturing process of Bulk Product and of the analytical methods is already performed.  If further validation work will be necessary, it will be charged to GILEAD based on the then-current daily rates; the daily rates will be those generally offered to APO’s customers.

 

3.3          Manufacturing Standards. In the Manufacturing of the Bulk Product, APO agrees to adhere to (i) the quality standards and testing methods of GILEAD indicated in the Specifications; (ii) the Quality Agreement; (iii) any other condition provided under the Manufacturing Authorisation and the Marketing Authorisation; (iv) the cGMPs; as well as (v) any additional manufacturing standards agreed upon by the Parties in writing. Subject to what is provided under Section 10.2 below, APO agrees not to unreasonably withhold its consent to the implementation of any such additional manufacturing standards to the extent that GILEAD reimburses APO’s out-of-pocket-costs, excluding overheads pertaining to the implementation of any such additional manufacturing standards.

 

3.4          Manufacturing Capacity. During the Term of this Agreement, APO agrees to use commercially reasonable efforts to allocate sufficient Manufacturing resources in order to meet GILEAD’s requirements of the Bulk Product scheduled for delivery in accordance with Section 5 and 6 hereof.  Nothing in this Section 3.4 is intended to negate APO’s obligations to fulfil Binding Orders accepted pursuant to Section 6.3 or to prevent GILEAD from submitting aggregate Binding Orders that APO will accept, if otherwise properly submitted, for a calendar year for the applicable Yearly Minimum Volume.

 

3.5          Quality Agreement, Change Control. The pharmaceutical responsibilities of APO and GILEAD, in particular the procedures applicable in the event of any changes of the Specifications, and/or GILEAD’s instructions for the packing and dispatch labelling of the Bulk Product, are set forth in the Quality Agreement attached hereto as Schedule “B”.

 

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SECTION 4
TERM AND RENEWAL

 

4.1.Term. Subject to any extension pursuant to Section 4.2. below, this Agreement shall commerce on the Effective Date and shall run until [*] (the “Initial Term”), unless it is terminated on an earlier date in accordance with Section 17 hereof.

 

4.2  Extension. GILEAD shall give written notice of its willingness to extend the duration of this Agreement to APO at least [*] months before expiry of the Initial Term. The Parties will negotiate in good faith the conditions of the extension of the Agreement. Should the Parties not reach an agreement on such conditions within [*] months of receipt of said written notice, then this Agreement shall expire at the end of its Initial Term.

 

SECTION 5
YEARLY MINIMUM VOLUMES OF PURCHASES

LONG TERM FORECASTS FOR BULK PRODUCT

 

5.1.         Minimum Volumes of Purchases. GILEAD undertakes to guarantee the yearly minimum volumes of purchases of Bulk Products to be Manufactured by APO as set forth in Schedule “I” attached hereto (the “Yearly Minimum Volumes”). The Yearly Minimum Volumes shall be firm and binding on GILEAD and shall not be subject to reduction, provided, however, that if GILEAD orders an amount of Bulk Product for delivery in a calendar year that is less than the applicable Yearly Minimum Volumes, GILEAD shall not be in breach of this Section 5.1 if it exceeds the applicable Yearly Minimum Volume during any of the following Years by an amount equal to the shortfall from the Yearly Minimum Volume in the that prior calendar year.

 

5.2.         Long Term Rolling Forecast for Bulk Product. Subject to what is provided under Section 5.1, for the entire term of the Agreement, within the first [*] Working Days of each calendar month (“M”), GILEAD shall submit to APO its updated written long term rolling forecast for Bulk Product, (hereinafter the “Long Term Rolling Forecast for Bulk Product”) showing GILEAD’s estimated requirements for the Bulk Product to be produced and delivered to GILEAD during the following [*] period beginning with such month M.  The forecast for months M+[*] through M+[*] shall be non-binding.

 

SECTION 6
PURCHASE ORDERS

 

6.1          Binding Orders for Bulk Product. Within the first [*] Working Days of each month M, GILEAD shall submit to APO its written binding orders (the “Binding Orders”) for Bulk Product to be manufactured and delivered by APO in month M+[*].

 

The Binding Orders submitted to APO shall specify GILEAD’s purchase order number, quantities of the Bulk Product, monthly delivery schedule and any other elements necessary to ensure the timely production and delivery of the Bulk Product by APO. The quantities of Bulk Product ordered in such written orders shall be firm and binding on GILEAD and shall not be subject to reduction.

 

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6.2          Binding Orders for Bulk Product in batch size. Subject to what is provided under Section 3.4, GILEAD shall place with APO Binding Orders for the Bulk Product for a full batch size or multiples thereof, whereby it is understood that one (1) batch shall comprise approximately [*] of the Bulk Product. It is furthermore understood by the Parties, that it is foreseen, that APO shall Manufacture the Bulk Product batches in campaigns of at least [*] batches preferably in not more than [*] campaigns per year which should be regularly distributed over the year. Therefore GILEAD shall consider this opportunity in its production planning and the following submission of its Binding Orders.

 

6.3          Acceptance of Binding Orders for Bulk Product by APO. APO is obliged to accept the Binding Orders placed by GILEAD pursuant to Sections 6.1 and 6.2 for as long as the quantities ordered do not exceed applicable Yearly Minimum Volume.

APO shall use commercially reasonable efforts to supply Bulk Product in excess of the applicable Yearly Minimum Volume (subject to Section 3.4) and to supply Bulk Product in excess of [*] of GILEAD’s previous Long Term Rolling Forecast for Bulk Product for the applicable calendar year, but shall not be obligated to supply such quantities if it is not able to do so by use of commercially reasonable efforts, and APO shall be allowed to take into consideration in making its commercially reasonable decision to supply the quantity of the excess amounts APO’s Manufacturing capacity and other manufacturing commitments.

 

6.4          Addressee of Purchase Orders. All purchase orders shall be sent by GILEAD with contemporaneous telephone notification, by email or to APO to the email or fax number set forth below or identified in writing by APO:

 

ALTANA Pharma Oranienburg GmbH

Attention: [*]

email: [*]

Tel. No.:   [*]

Fax No.:   [*]

 

APO will acknowledge and either accept or reject purchase orders within [*]

[*] business days of receipt to the email or fax number set forth below:

 

Attention: [*]

Email: [*]

Tel. No.: [*]

Fax No.: [*]

 

 

6.5          Prevailing Terms. To the extent the terms of any Binding Order or acknowledgement are inconsistent with the terms of this Agreement, the terms of this Agreement shall control, and any inconsistent terms are hereby expressly rejected.

 

 

6.6          Reliance by APO. GILEAD understands and acknowledges that APO will rely on the Binding Orders submitted pursuant to this Section 6 in ordering the Components required to meet such Binding Orders. In addition, GILEAD understands that to ensure an orderly supply of

 

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such Components and to achieve economies of scale in the costs thereof, it may be desirable for APO to purchase such Components in sufficient volumes to meet the production requirements for the Bulk Product during part or all of the forecasted periods referred to in Section 5 or to meet the production requirements of any longer period as APO and GILEAD may agree to. Accordingly, GILEAD agrees that purchases may be made by APO in respect of the Components to satisfy the production requirements for the Bulk Product for forecasted periods to meet production requirements during such longer periods as may be agreed to in writing from time to time by GILEAD at the request of APO. If such Components are not included in the Bulk Products purchased by GILEAD within [*] months after the forecasted month in respect of which such purchases have been made (or such longer period as the Parties may agree), GILEAD will pay to APO its costs thereof and, in the event such Components are incorporated into the Bulk Products subsequently purchased by GILEAD, GILEAD will receive credit for any costs of such Components previously paid to APO by GILEAD.

 

 

SECTION 7
DELIVERY

 

7.1          Terms of Delivery of Bulk Product. Prior to delivery and shipment of Bulk Product, APO will send the Release Documents to GILEAD at the following email or, with prior notification by telephone by fax, as follows:

 

Attention: [*]

Address: Unit 13, Stillorgan Industrial Park, Blackrock, Co. Dublin, Ireland

email: [*]

Fax no: [*]

Tel. no: [*]

 

APO will not deliver or ship until GILEAD has released the batch and authorized shipment.  GILEAD will either release or reject a batch within [*] business days of receipt of the Release Documents.  Bulk Product Deliveries of the Bulk Product shall be made [*] (as such term is defined in the Incoterms 2000) [*], provided that APO [*] (except as otherwise set forth below). Such title as APO has in the Bulk Products and risk of loss or of damage to the Bulk Products shall remain with APO until the Bulk Products are [*] at which time title and risk of loss or damage shall transfer to GILEAD in accordance with the Incoterms 2000 [*] clause. APO shall, in accordance with GILEAD’s instructions, (i) arrange for shipping and insurance, to be paid by [*] and (ii) at [*] risk and expense, obtain any export licence or other official authorization and carry out all customs formalities necessary to export the Bulk Products. GILEAD, at its election, may select the freight carrier used by APO to ship the Bulk Products, informing APO of the name thereof reasonably in advance, and may monitor APO’s shipping and freight practices as they pertain to this Agreement.

 

Transport conditions shall be based upon GILEAD’s instructions for the transportation of the Bulk Products.

 

7.2          Accompanying Documentation. With each shipment of the Bulk Product, APO shall provide GILEAD with the appropriate documentation, including but not limited to bills of lading, certificate of analysis and certificate of compliance, and an invoice for such shipment. APO

 

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undertakes, with prior notification by telephone, to email or fax to GILEAD a copy of each bill of lading to the attention of the following employee of GILEAD or as otherwise instructed by GILEAD in writing duly in advance:

 

Attention: [*]

Address: Unit 13, Stillorgan Industrial Park, Blackrock, Co. Dublin, Ireland

email: [*]

Fax no: [*]

Tel. no: [*]

 

7.3          Short Deliveries. Subject to what is provided under Section 8.2.4 below, acceptance by GILEAD of deliveries falling short of the quantities ordered and confirmed by APO shall be without prejudice to GILEAD’s rights in relation to any such shortage.

 

 

SECTION 8
DEFECTIVE BULK PRODUCT

 

8.1          Defective Bulk Products. Quantities of the Bulk Product shall be deemed to be defective if such quantities do not comply with APO’s warranties under Section 13.1 hereof (the “Defective Bulk Product(s)”) and, in relation to any such non-compliance with APO’s warranties under Section 13.1 (the “Defect(s)”).

 

8.2          GILEAD’s Duties to inspect and confirm; Implied Waiver. GILEAD agrees to inspect and confirm incoming shipments of Bulk Product as follows:

 

8.2.1       Incoming Inspection. GILEAD shall inspect, or cause its Affiliates or manufacturers to inspect, Bulk Product supplied by APO for transport damages, completeness, compliance as to quantity or timing as stated in the Binding Orders and, as far as reasonably possible, any other obvious defects within [*] following receipt; GILEAD shall give APO written notice of all claims for any such obvious defect within such [*] period.

 

8.2.2       Additional Quality Control Procedures. Thereafter, GILEAD may perform quality control procedures to be agreed between the Parties in writing with respect to Bulk Products supplied by APO no later than [*] after receipt of the delivered Bulk Products in order to check if the delivered Bulk Product meet the Specifications.

 

8.2.3       Notification of Defects. GILEAD shall inform APO by prompt written communication (telex, fax) of any Defect as hereinafter defined, in any event such notice to be received by APO in case of defects due to a discrepancy from the bill of lading due to lack of identity or a difference in gross weight, or to physical damages, other obvious defects, or defects that reasonably should be detected by any additional quality control procedures that GILEAD may perform under Section 8.2.2 (“Detectable Defects”), within [*] of receipt of the Bulk Product, and, in case of other Defects, i.e. those not reasonably detectable by the inspections in Section 8.2.1 or the procedures carried out pursuant to Section 8.2.2 (“Non-Detectable Defects”), within [*] of discovery by GILEAD.

 

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Any such notification of defects shall be made by notice given by courier under the following address, or, with contemporaneous telephone notification, by either fax to the number given below or email to the address below:

 

ALTANA Pharma Oranienburg GmbH

Quality Control Dept.

[*]

[*]

Germany

 

Attention:	[*]
Tel. No.:	[*]
Fax No.:	[*]
email:	[*]

 

8.2.4       Implied Waiver. Failure of GILEAD to inspect or to perform agreed quality control procedures, and to notify in writing APO in the relevant time periods specified in Sections 8.2.1, 8.2.2 and 8.2.3 above of any Detectable Defect, or to notify in writing APO within the pertaining time period specified in Section 8.2.3 above of any Non-Detectable Defect after its discovery, shall constitute a waiver of any rights relating to such Defects, unless otherwise agreed in writing.

 

8.3          Disagreement as to Defects. In the event of a disagreement between APO and GILEAD in respect of any Defects of the Bulk Product, GILEAD and APO shall conduct a joint investigation in accordance with GILEAD’s and APO’s quality control procedures governing the re-testing of the Bulk Product, in order to determine if any Bulk Product has a Defect. Should the Parties fail to agree within [*] days after receipt of GILEAD’s deficiency notice delivered to APO pursuant to Section 8.2.1 and/or Section 8.2.3 above as to whether any Bulk Product identified in such GILEAD’s notice has a Defect, the Parties shall submit a representative sample of the rejected Bulk Product to an independent laboratory acceptable to both Parties for testing under GILEAD’s quality control procedures. The findings of such third party laboratory shall be binding upon the Parties, and if such evaluation certifies that any Bulk Product is Defective, Sections 8.4, 8.5 and 8.6 below shall apply. The fees and expenses of such Third Party laboratory shall be borne by the Party against whom the finding is made.

 

8.4          Remedies in relation to Defective Bulk Products. Subject to Section 8.5 and subject to appropriate notification of GILEAD of potential Defects in Bulk Products in accordance with Section 8.2 above and to a confirmation of any such Defects in accordance with Section 8.3 above due to APO’s failure to produce the Bulk Products in compliance with the Specifications and with any other warranties as specified in Section 13.1 below, APO shall forthwith after receiving written request thereof from GILEAD (i) in case of a visible Defect, sort the rejected Bulk Product from any non-rejected Bulk Product (ii) in case of any Defect, whether visible or not, replace the rejected Bulk Product in the next available campaign.  GILEAD shall supply APO with the additional API for new batches at no additional costs for APO, provided that API quantities used to Manufacture such Defective Bulk Product shall be subject as applicable to the compensation provisions of Section 2.7. If GILEAD reasonably determines after consultation with APO that the timing of any projected replacement by APO of rejected Bulk Product during the next available campaign may cause GILEAD to have insufficient inventories of Finished

 

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Product to meet its requirements for Finished Product, GILEAD shall have the right to have another supplier provide such replacement batch of Bulk Product.  Subject to the other provisions of this Agreement, GILEAD’s remedies under this Section 8.4 shall be cumulative with other remedies it may have under this Agreement.

 

8.5          Defects of Bulk Product attributable to Deficiencies of API. Subject to what is provided under Section 2 above, APO shall have no responsibility for any Defects in the Bulk Products which are due to deficiencies of API provided that such Defects are not attributable to APO’s breach of its obligations to inspect the API delivered in accordance with Section 2.4 above.

 

8.6          Limitation of Liability. Except in the circumstances where APO has failed to comply with the Specifications and any other warranties as specified in Section 13.1 above, APO shall not be liable or have any responsibility for any deficiencies in, or other liabilities associated with, any Bulk Product manufactured by it, including, without limitation, any deficiencies contained in the formulae and procedures specified by GILEAD in the Specifications and effects deriving from compliance with legal requirements as specified in Section 13.1, or which are connected to the safety, efficacy or marketability of the Bulk Products or any distribution risk.

 

8.7          Consequential Damages. Neither Party shall be liable to the other for any consequential damages, except in the case of Party’s gross negligence or intentional misconduct.

 

 

SECTION 9
API OR BULK PRODUCT SHORTFALLS

 

If at any time during the Initial Term and any extension of this Agreement, APO is or expects that it will be unable to satisfy GILEAD’ requirements of Bulk Product, in full or in part, or GILEAD is or expects that it will be unable to satisfy APO’s requirements of API, then that Party shall promptly notify the other Party, detailing the extent to which it will not meet such requirements.  Nothing in this Section 9 is intended to relieve a Party of its other obligations under this Agreement.

 

SECTION 10
PRICING AND CHANGES

 

10.1        Supply Price. APO shall Manufacture and supply the Bulk Product to GILEAD at the Supply Price set forth in Schedule “A”. Subject to Section 10.2, the Supply Price shall be in force during the Initial Term of this Agreement.

 

10.2        Changes in Manufacturing, Quality Control and Packaging of the Bulk Product. With respect to any changes of the Manufacturing, quality control and packaging of the Bulk Product (hereinafter collectively referred to as “Change(s)”), the Parties agree with respect to the implication on the Supply Price as follows:

 

10.2.1     Changes requested by GILEAD. If GILEAD requests a Change which would result in an increase in APO’s costs for Components or for manufacturing, controlling or packaging the Bulk Product, the Parties shall discuss in good faith what impact, if any, such Change will have on the Supply Price of the Bulk Product, and APO shall propose in good faith a proposal that

 

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states the price change due to implementation of such a Change.  If GILEAD should accept a proposed price change, the proposed Change shall be implemented, and the price change shall become effective only with respect to those orders of the Bulk Product which are manufactured in accordance with the revised Specifications.  Unless a proposed Change would cause extreme disruption to APO’s other operations at the Manufacturing Facility, APO will be obligated to implement such Change if GILEAD accepts APO’s good faith proposal for a price change.

 

Notwithstanding any Change in the Specifications implemented in accordance with the terms of Art. 10.2.1 above, GILEAD agrees to purchase all the Bulk Product manufactured by APO based upon any Binding Order relying on “old” Specification at the “old” price for those Bulk Product. In addition, GILEAD agrees to purchase all Components and Inventory utilised under the “old” Specifications and purchased or maintained by APO in order to fulfil Binding Orders in accordance with Section 6 of the Agreement, to the extent that such Components and Inventory can no longer be utilised under the revised Specifications. Open purchase orders for Components no longer required under any revised Specification which were placed by APO with suppliers in order to fulfil Binding Orders in accordance with Section 6 of the Agreement shall be cancelled where possible, and where such orders are not subject to cancellation without penalty, shall be assigned to and satisfied by GILEAD.

 

10.2.2     Other Required Changes. In any event, should a Change become necessary in order to allow APO to guarantee the performance of the activities in a state of the art way or to comply with new provisions or compulsory requests of the regulatory authorities or, in any event, with APO’s obligations under this Agreement, APO shall immediately inform GILEAD accordingly and the provisions set forth in Art. 10.2.1 above shall apply, provided, however, that if such Change is not specific to the Bulk Product but instead relates to compliance of the Manufacturing Facility or APO’s general procedures with GMP, any increased costs to APO would be allocated equitably and consistently across all products manufactured by APO at the Manufacturing Facility.

 

 

SECTION 11
PAYMENT

 

11.1        Invoicing. APO shall issue invoices for the payment due from GILEAD for Bulk Product shipped to GILEAD, and all invoice amounts shall be expressed, and all payments made in Euros.

 

11.2        Payment. Payment shall be made by GILEAD to APO within [*] days of the date of each invoice sent pursuant to Section 7.2.

 

11.3        Currency. Unless otherwise agreed, all monetary amounts are expressed in this Agreement in Euros.

 

SECTION 12
GENERAL INFORMATION DUTIES

 

General Duties to inform. Each Party to this Agreement shall keep the other Party fully informed of any notification or other information, whether received directly or indirectly which

 

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might affect the marketability, safety or effectiveness of the finished drug product or which might result in the recall or seizure of the registration / market validation lots.

 

SECTION 13
WARRANTIES

 

13.1        Representations and Warranties of APO. APO makes the following representations and warranties with respect to the Bulk Product sold hereunder: (i) the Bulk Product shall be of merchantable quality and shall fully comply with all Specifications; (ii) In Manufacturing the Bulk Product, APO shall adhere to (a) the quality standards and testing methods of GILEAD set forth in the Specifications; (b) the Quality Agreement; (c) any other condition provided under the Manufacturing Authorisation and the Marketing Authorisation; (d) the cGMPs; (e) any other applicable laws, rules and regulations applicable to manufacture of Bulk Product in territories where Finished Product is to be marketed, as notified by GILEAD; (f) any additional manufacturing standards agreed upon by the Parties; as well as (g) the Binding Orders.

 

13.2        Limitation of Warranty. The above stated warranty does not apply in the event of improper storage and/or improper handling of the Bulk Product by GILEAD or by any third party.

 

13.3        Authority. Each Party represents and warrants that it has the full right and authority to enter into this Agreement, and that it is not aware of any impediment that would inhibit its ability to perform its obligations hereunder.

 

13.4        Formulae. GILEAD represents and warrants that the Specifications for the Bulk Product are its property and that GILEAD may lawfully disclose such Specifications to APO. GILEAD further represents and warrants that any trademarks utilized by APO in connection with the Bulk Product are its property and may be lawfully used as directed by GILEAD. GILEAD further represents and warrants that the Specifications for the Bulk Product conform to all applicable laws and regulations, and that the Bulk Product if labelled and formulated in accordance with such Specifications and Manufactured in compliance with this Agreement (i) may be lawfully sold and distributed in every jurisdiction in which GILEAD markets the Bulk Product, (ii) will be fit for the purpose intended, and (iii) subject to labelling and application in accordance with applicable laws will be safe for human consumption.

 

SECTION 14

INDEMNIFICATION

 

14.1        Indemnification by APO. APO shall indemnify, defend and hold harmless GILEAD, its officers, directors, agents, servants, and employees harmless against all losses, damages, judgments, liabilities, costs and expenses (including reasonable legal expenses) (“Losses”) resulting from third party claims, demands, actions, suits or proceedings (“Third Party Claims”), arising out of APO’s breach of this Agreement (including breaches of its warranties in Section 13.1) or APO’s negligence or willful misconduct in activities under this Agreement, except in each case to the extent GILEAD has an obligation of defense or indemnity with respect to such Loss or Third Party Claim pursuant to Section 14.2..

 

GILEAD shall not settle any such Third Party Claim without the prior written approval of APO, and APO shall have the right, if it so wishes, to conduct negotiations to settle, settle or to conduct any litigation arising out of, any such Third Party Claim. GILEAD shall provide prompt written notice of

 

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any such Third Party Claim to APO and shall reasonably co-operate in the defence and/or settlement of any such Third Party Claim at APO’s request and expense.

 

14.2        Indemnification by GILEAD. GILEAD shall indemnify, defend and hold harmless APO, its officers, directors, agents, servants, and employees harmless against all Losses resulting from Third Party Claims arising out of (i) GILEAD’s breach of this Agreement (including breaches of its warranties in Section 13.4), (ii) for shipments of Bulk Product, the manufacture, use, import, offer for sale, sale, distribution, testing, handling, transport or disposal of Bulk Product or Finished Product following delivery of the relevant Bulk Product pursuant to this Agreement, or (iii) GILEAD’s negligence or willful misconduct in activities under this Agreement, except in each case to the extent APO has an obligation of defense or indemnity with respect to such Loss or Third Party Claim pursuant to Section 14.1..

 

APO shall not settle any such Third Party Claim without the prior written approval of GILEAD, and GILEAD shall have the right, if it so wishes, to conduct negotiations to settle, settle or to conduct any litigation arising out of, any such Third Party Claim APO shall provide prompt written notice of any such Third Party Claim to GILEAD and shall reasonably co-operate in the defence and/or settlement of any such Third Party Claim at GILEAD’s request and expense.

 

14.3        Survival of Indemnification Obligations. The indemnification obligations set forth in this Section 14 shall survive the expiration or termination of this Agreement.

 

SECTION 15

CONFIDENTIALITY

 

15.1        General Principle.  “Confidential Information” shall mean confidential or proprietary information of a Party either disclosed orally or in writing to or otherwise learned by the other Party that should reasonably be known to be confidential or proprietary to the disclosing Party, including but not limited to such Party’s: research, development, preclinical and clinical programs, data and results; pharmaceutical or biologic candidates and products; inventions, works of authorship, trade secrets, processes, conceptions, formulas, patents, patent applications, and licenses; business, product, marketing, sales, scientific and technical strategies, programs and results, including costs and prices; suppliers, manufacturers, customers, market data, personnel, and consultants. Each Party agrees to hold in strict confidence any and all Confidential Information of the other Party disclosed to it, to use such Confidential Information only for the purposes of this Agreement, and to restrict access to such Confidential Information to those persons entrusted to carry out the activities provided for hereunder and who are subject to the same secrecy obligation. Each Party will protect the confidentiality of Confidential Information of the other Party using use the same level of effort it uses to protect its own confidential or proprietary information of a similar nature but in no event less than a commercially reasonable level of effort.

 

15.2        Exceptions. Excepted from the secrecy obligations in Section 15.1 shall be any Confidential Information: (i) which is in public domain at the time of disclosure; (ii) which is published or otherwise becomes part of the public domain through no fault of the receiving Party; (iii) which was in the possession of the receiving Party at the time of disclosure as shown by prior written records; (iv) which becomes available to the receiving Party without secrecy obligations from a third party

 

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who has the right to disclose it without breach of any obligation to the other Party; (v) or, of which the receiving Party can clearly and convincingly prove that it was independently developed by employees of the receiving Party who had no access to the Confidential Information disclosed.

 

15.3        Required Disclosure. Notwithstanding any other provision of this Agreement, each Party may disclose Confidential Information of the other Party to the extent and to the persons or entities as required by applicable governmental law, rule, regulation or order (including to Regulatory Agencies for the purposes of this Agreement), provided that it first notifies the other Party of such disclosure requirement to enable it to seek any available Excepted from this secrecy obligation shall further be Information or Know-How which has to be disclosed to the EU Regulatory Agencies for the purposes of this Agreement or which GILEAD is entitled to disclose according to this Agreement.

 

15.4        Duration of Confidentiality Obligations. The confidentiality obligations of the Parties shall survive this Agreement for a period of ten (10) years.

 

15.5        Improvements

 

15.5.1     APO acknowledges and agrees that it has no proprietary intellectual property rights in or to the current manufacturing process for the Finished Product, as set forth in the Specifications.  APO shall not perform any Manufacturing other than for Manufacture of Finished Product for supply to Gilead pursuant to this Agreement, and APO shall not perform any process development or otherwise attempt to modify the Manufacturing process without Gilead’s prior written consent.

 

15.5.2     The Parties acknowledge that they, independently or jointly, may develop improvements to the Specifications, inventions and other know-how (including without limitation data, information, processes, techniques, methods, and unpatentable inventions) in the course of fulfilling their obligations under this Agreement (“Improvements”).  Subject to Section 15.5.3, (i) APO shall own all right, title and interest in and to Improvements that are general manufacturing Improvements that have application beyond manufacture and processing of [*](including Finished Product and finished products incorporating [*] to the [*]) (“APO Improvements”), and (ii) Gilead shall own all, right, title and interest in and to all other Improvements (“Gilead Improvements”). Each Party hereby assigns its entire right, title and interest in Improvements that are to be owned by the other Party pursuant to this Section 15.5.2, and all patents and copyrights that may be obtained thereon and trade secrets and other intellectual property rights therein (“Improvements IP”), to the other Party, and each Party will take all reasonable steps and execute and deliver all documents reasonably required for the other Party to evidence or record such assignment as applicable.  Each Party shall only use in its performance under this Agreement, its employees or consultants who have agreed in writing to assign Improvements to it.

 

15.5.3     APO hereby grants to Gilead an irrevocable, nonexclusive, worldwide, royalty-free license under the APO Improvements and the APO Improvements IP to research, develop, make, have made, use, sell, offer for sale, import and otherwise commercialize Gilead’s (and its Affiliates’ and licensees’) products throughout the world, with the right to sublicense (through one or more tiers of sublicensees to Affiliates of Gilead, licensees with exclusive or co-exclusive commercialization rights to such products to in one or more countries, and contract manufacturers).

 

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SECTION 16
TERMINATION

 

16.1        Either Party’s Right to terminate for Cause. Either Party shall have the right to terminate this Agreement for cause in any of the following events:

 

16.1.1