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EXHIBIT 10.18
TERM SHEET FOR CONTRACT API SUPPLY
BETWEEN ALLOS AND HOVIONE
This Term Sheet sets forth the principal terms for a supply agreement (the
"Agreement") [ * ] (the "API") for clinical and commercial use between Allos
Therapeutics, Inc., the customer and developer of the API, a Delaware
Corporation, with its principal place of business in Denver, CO, USA, ("Allos")
and The Hovione Group ("Hovione"), herein represented by Hovione Inter Limited a
Swiss corporation, with its principal place of business in Luzern, Switzerland,
the API manufacturer. The parties shall negotiate in good faith the full and
complete terms of the Agreement, which shall be consistent with those terms set
forth in this Term Sheet, but until such Agreement is fully executed by both
parties neither party shall be obligated to enter into any agreements.
PARTIES: The parties to the Agreement shall be Allos and Hovione and
their successors and permitted assigns.
During the Agreement's Term, Hovione shall be Allos' primary
API manufacturer and Allos and its affiliates and licensees
shall purchase no less than the percentages set forth in this
Term Sheet of its [ * ] from Hovione, subject to their supply
capacity and conformance with the Agreement.
AGREEMENT Pre-commercial Supply Phase--includes all activities and API
PHASES lots manufactured after the effective date of this Agreement
and before Allos submits an NDA to FDA for the finished
product manufactured from the API.
Commercial Supply Phase--includes all activities and API lots
manufactured after Allos submits an NDA to FDA for the
finished product manufactured from the API.
PROJECT Each Party shall designate an official contact with full
MANAGEMENT: authority to represent company on technical and project
matters ("Project Managers"), Hovione and Allos (with
participation of Hovione's agent) shall hold periodic project
management and status meetings. Hovione shall provide Allos
with a monthly, written production status report, describing
progress on completion of outstanding obligations (e.g.,
process development, validation, stability data, production
runs, pending corrective actions).
The Project Managers shall approve and authorize updates of
all Master Batch Records, Validation Protocols & Reports,
Corrective Action Plans and Implementation Reports, and
Changes to the foregoing.
PROJECT SCHEDULE: Hovione will be kept advised in writing of
Xxxxx' intentions and time-lines concerning the NDA filing.
Allos shall provide Hovione with written notice of
significant time-line changes; shall milestones within the
time-line be moved by more than 3 months Hovione must be
given at least 6 months written notice where reasonably
possible; should Allos be unable to provide such notice
Hovione will only be obliged to make a best effect attempt at
meeting the new time-line. [ * ] batches will be scheduled
with at least 9 months written notice.
Confidential Term Sheet: Ver.02 Page 1 March 25, 1999
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HOVIONE Hovione shall perform the following, as more fully
OBLIGATIONS: described in Attachment A.
1. Hovione shall manufacture and deliver such quantities of
the API as ordered by Allos in accordance with the
forecasting and purchase procedures.
2. Prior to the Allos NDA submission date, Hovione shall
complete the following in time to permit completion and
submission of such NDA:
o Process scale-up and validation (including, but not
limited to, all vendors, equipment, processes,
cleaning, facilities, and methods), and revalidation,
and be prepared for an FDA and EU PAI;
o Successful manufacture and delivery of at least three
fully independent validation batches suitable for
preparing data for submission to FDA and which shall
demonstrate that the process has been successfully
validated. Hovione shall provide data to demonstrate
no less than 24 months real time bulk stability (at
least six months of data shall be available 60 days
prior to NDA submission).
o Successful characterization and delivery of samples of
final API reference standard( amount to be determined).
3. Hovione shall be responsible, at its expense, for all
ongoing validation and to ensure compliance of its
manufacturing facility.
4. All regulatory filings on the API will be made and owned
by Allos. Hovione, in consultation with Allos, shall
prepare at its expense the description of the API
manufacturing operations and related information (e.g.,
methods validation package, stability, representative data
and batch records) as required for inclusion in the filing
to FDA and other regulatory authorities (e.g., EU), which
will contain all of the manufacturing information. Hovione
will assist Allos in the preparation of annual updates and
in promptly responding to any questions from regulatory
agencies. Hovione shall provide qualified technical
representatives to attend meetings and/or teleconferences
with FDA and other regulatory authorities as needed.
5. [ * ]
6. Hovione accepts responsibility for that documentation
which is filed at the health authority for which it has
prepared the information (this shall be referred to as
"Hovione's filing at FDA"). Allos will provide Hovione with
a certified true copy of every submission and update that
directly addresses the information in Hovione's filing at
FDA at least 10 days before its filing at the health
authority, for joint approval prior to filing.
Confidential Term Sheet: Ver.02 Page 2 March 25, 1999
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FORECASTING & FORECASTING: During the Commercial Supply phase of the term
PURCHASE ORDERS of this contract, [ * ]
PURCHASE ORDERS: During the Pre-commercial Supply phase
Allos may place purchase orders with Hovione as per Davos'
offer dated 6th May 1998.
During the Term of this Agreement, Allos shall place
purchase orders for, and Hovione shall not refuse to
supply, at least the following percent of Allos' [ * ]:
(i) [ * ]
(ii) [ * ]
(i) [ * ]
(i) [ * ]
During the Commercial Supply Phase purchase orders for
specific quantities of [ * ] shall be submitted for
quarterly quantities 90 days prior to the start of each
calendar quarter. Each such purchase order shall be formally
accepted by Hovione within 30 days, and shall not be
rejected so long as Allos has not materially breached the
Agreement and failed to cure such breach following written
notice from Hovione. Purchase orders shall be based on the
API batch size. Aggregate purchase order quantities for a
quarter shall not be less than one half nor more than twice
-- of the forecast for the quarter covered by the most
recently delivered rolling forecast for that quarter,
without Hovione's consent which shall be withheld only for
reasonable cause; provided, that Hovione shall use its best
efforts to timely supply purchase orders in excess of 200%
of the applicable forecast. Deliveries shall be made on the
dates specified in the purchase orders and agreed to in the
form of an order acknowledgement by Hovione or its agent.
COST: All the work to be carried out under this Agreement prior to
NDA Submission, during the [ * ]
After NDA submission, that is during the Commercial Supply
Phase, the charge
Confidential Term Sheet: Ver.02 Page 3 March 25, 1999
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[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
[ * ]
Hovione shall notify Allos of any process improvements or of
any possible patent applications. Hovione shall not seek or
assist others in seeking, prosecuting, defending or
enforcing any patents related to [ * ] (including any
composition of matter containing [ * ]), including any
method of its manufacture or use without the approval of
Allos.
[ * ]
DELIVERY & All API lots shall be delivered to CIF Allos' designated
ACCEPTANCE drug product manufacturer location, and accompanied by
certificates of analysis and compliance with manufacturing
requirements. Upon Allos' request, in-process and finished
API test samples shall be sent to Allos' designated test lab
for testing prior to shipment of sampled lots. Any costs
incurred with special packing requirements or courier
services shall be for Allos' account.
API lots shall be considered accepted upon successful
completion of acceptance testing (which shall be initiated
upon delivery), subject to revocation upon determination of
any latent defects (e.g., subsequent inspections or audits,
stability data, failure investigations). However if the
communication of defect or complaint which would be detected
by such acceptance testing is received more than 90 days
after the airwaybill date, Hovione will be under no
obligation to replace the lot. Notwithstanding the
foregoing, Allos shall be entitled to rely on the accuracy
and validity of Hovione certificates of analysis provided
with each delivered lot.
At the request of either party, unresolved disputes over
conformance of a lot to its specifications will be referred
to mutually acceptable referee lab. Such referee lab will
rule based on Hovione's filings at the FDA, such ruling will
be final. Costs will be for the account of the party at
fault. Hovione shall be responsible for no more than the
prompt replacement of each rejected non-conforming lot, or
at Allos' election
Confidential Term Sheet: Ver.02 Page 4 March 25, 1999
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refunding the amounts paid or incurred by Allos on account
of such rejected batch.
Each party is obligated to immediately inform the other of
any information that indicates or suggests that delivered
lots do not conform to applicable requirements under the
Agreement or should not be used.
PAYMENTS & 1. [ * ]
SCHEDULE
2. [ * ]
3. Hovione or Hovione's agent shall ensure all API lots are
delivered free of any liens. Hovione has the option to
arrange the invoicing by any company of the Hovione group or
by its agent, provided Allos is notified and is in
agreement, such agreement not being unreasonably withheld.
Any such person seeking payment from Allos shall be subject
to all defenses, claims and rights that Allos might have
against Hovione. Hovione shall have no set-off rights or
remedy against Allos in the event that its agent fails to
remit payments received from Allos.
SUPPLY 1. All API manufacture shall occur at Hovione's Loures,
ASSURANCE Portugal establishment. [ * ]
2. Subject to Allos' approval, Hovione may establish
alternate API manufacturing operations at its Macau facility
under mutually acceptable conditions to be agreed to (e.g.,
time and product volume).
3. Except where not possible, or not desired by the parties
(e.g., cGMP corrective actions), Hovione shall make no
change in the API manufacture (as defined in Hovione's
filings at FDA, and the applicable Master Batch Records,
SOPs, compendia standards) and shall remain in compliance
with FDA and EU laws, regulations and guidance documents.
Allos may require production of additional safety stock,
pending completion of change validation and/or FDA approval.
All such changes shall be made in conformance to Allos'
change control policy and applicable requirements. The
implementation of changes shall be subordinated to Allos
authorization in the light of regulatory implications,
however Allos (and Allos licensees or other users of [ * ])
recognize that change is necessary to enable Hovione to
remain efficient and cost-effective and thus shall be fully
supportive of the implementation of such changes.
4. During the Commercial Phase, Hovione shall, upon Allos'
request, maintain a six-
Confidential Term Sheet: Ver.02 Page 5 March 25, 1999
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month Safety Stock inventory of all critical raw materials
or, if requested by Allos during Commercial Phase, finished
API based upon the rolling forecast. In case Hovione if
forced to keep in its inventories one or more batches of
approved API for a period greater than 180 days beyond what
was stated as firm delivery shipping dates in the annual
rolling forecast for that quantity of API, Hovione is free
to invoice such unshipped batches. Such batches shall be
kept in trust for Allos until such time as Allos requests
their shipment.
5. Should Hovione fail to supply in excess of 5% of the
amount of API specified in a purchase order for any reason,
including Force Majeure, or conditions occur in which
Hovione cannot give satisfactory assurance of supply (e.g.,
insolvency, adverse FDA actions, loss of supply). In the
event of such a failure to supply, Allos shall (among other
remedies, including termination and/or reduction of its
purchase obligations) have the right to require technology
transfer to Allos or any Allos designated manufacturer, and
Hovione shall fully assist with such transfer, and no
royalties or any obligation shall be due for such transfer
or products manufactured by the contingent supplier.
6. The parties agree to cure all material breaches within
90 days. If no agreement can be reached within 90 days of
notification of a breach, the parties agree to the use of an
independent and binding arbitrator. The arbitrator's ruling
will be binding on all parties. Allos also shall have the
right to cancel this agreement in the event the breach
cannot be cured as per the above in addition to such
arbitration.
PERFORMANCE All API lots, and the manufacture and import of such lots,
CRITERIA: shall fully conform with all of the following (as such
requirements are in effect at the time of the Manufacture of
the applicable lots):
1. Applicable specifications, Master Batch Record
procedures, and any description in Hovione's filing at the
FDA.
2. US applicable laws and regulations, specifically
including 21 CFR Parts 11, 207, 210,& 211 and the then
current version of the FDA guidance documents pertaining to
the manufacture of an Active Pharmaceutical Ingredient) and
the then current USP/NF requirements.
3. Applicable requirements established for the manufacture
and supply of the API for the European Union and Japan,
including those under statute, regulation and pharmacopoeia.
4. All other laws and regulations applicable to the
operations of Hovione.
5. Hovione shall successfully pass FDA PAI and all other
regulatory inspections carried out by FDA and other
regulatory authorities, and Allos audits, without material
objection. Except as specifically permitted in Hovione's
filing at FDA, Hovione shall not carryout any reworking,
in-process or batch blending (including recrystallization or
recycling of mother liquors or solvents) or reprocessing
without
Confidential Term Sheet: Ver.02 Page 6 March 25, 1999
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prior written authorization from Allos, and shall promptly
inform Allos of all OOS events, and provide it with the
applicable investigation report and corrective action plans
prior to release of the in-process or finished lots that are
subject to the OOS event (including related lots).
INSPECTIONS & Hovione will permit and cooperate with inspections of all
AUDITS: relevant Hovione facilities, equipment, materials,
personnel, operations, records relating to the services
performed under the Agreement by representatives of Allos,
FDA, and other US and foreign authorities. Allos full-time
employees and appointed experts may be present during any or
all parts of manufacturing activities. Hovione will provide
Allos with immediate notice of any inspections by FDA or
other authorities as the inspection pertains to Hovione's
manufacture of, or its ability to manufacture, the API.
Where possible, Allos full-time employees or a consultant to
the Allos Manufacturing or Quality Control Units will have
the right to be present for such inspections, and will in
all cases be provided a copy of any inspection reports or
communications from such inspectors or regulatory
authorities, and to review and comment on any planned
response by Hovione.
During the Commercial Phase Allos may have up to two
representatives of its Manufacturing or Quality Control
Unit, and its appointed experts, present for and observe any
manufacturing operations related to the API, and may conduct
two complete quality assurance audits each year during the
performance of manufacturing operations, upon 60 days prior
notice, and additional audits (with no fewer than 5 days
notice) upon the occurrences of any product problems, or
changes in manufacturing equipment, facilities or
operations. Allos will provide a clear identification of the
individuals it wishes to have present at Hovione facilities;
Hovione may reasonably refuse entry to individuals, other
than the Allos Directors of Manufacturing, Operations or
Quality Assurance, that it reasonably believes are present
for reasons other than a quality function.
Allos will have access to DUNE for review of analytical and
batch data in real-time. Allos shall be provided with copies
of all documentation related to process deviations and
out-of-specification or out-of trend results, and their
investigation and corrective actions proposed by Hovione.
During audits to Hovione's facilities Allos is entitled to
review all documentation that is usually made available to
an FDA inspector, in at least an equivalent manner.
There shall be no charge for any inspections or audits, and
Hovione shall cooperate with both providing of reasonable
space for review of documents and assistance of key
personnel. Allos representatives, when present at a Hovione
site, shall at all times comply with Hovione's internal
policies.
INTELLECTUAL Allos shall exclusively own and have the full right to use,
PROPERTY RIGHTS: assign and sublicense inventions, process improvements and
analytical methods developed under this Agreement that
relate to the use, manufacture or testing of [ * ], whether
patentable or not; provided, that during the term of this
Agreement Hovione shall be entitled to receive good
consideration for the use by others of its Know-how as set
forth below. Such consideration shall only be due if Hovione
is not in breach of this
Confidential Term Sheet: Ver. 02 Page 7 March 25, 1999
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Agreement, and Allos shall not authorize more than three
parties at any one time (other than Allos) to use such
improvements. Allos, with the consultation of Hovione, shall
control decisions on patent prosecution, defense and
enforcement, and Hovione at Allos' expense, shall reasonably
assist Allos in such prosecution, defense and enforcement.
Hovione shall have the right to use (but not sublicense or
disclose) generically applicable process improvements and
analytical methods; provided that such process improvements
or analytical methods shall not be used to manufacture or
test RSR13 or chemically related compounds covered by US
patents (or patent applications) owned by or exclusively
licensed to Allos (collectively the [ * ]) for any person
other than Allos until the end of all of the following three
periods (the "Exclusivity Period"):
(i) The life of the U.S. and EU patents for the [ * ]
Compounds (including any term extensions and non-patent
market exclusivity periods); and
(ii) Five years from the approval of the FDA NDA of
[ * ]; and
(iii) The number of years during which Hovione supplied
Allos with at least 65% of any of its annual
Pre-Commercial or Commercial Supply requirements, plus
24 months.
Except as directed by Xxxxx, neither Hovione, nor any of its
affiliates shall manufacture [ * ], or any other [ * ]
Compounds, during the term of the Agreement and the
Exclusivity Period.
CONSIDERATION In order to provide Hovione with an incentive to explore
FOR HOVIONE patent opportunities and process improvements; and in order
KNOW-HOW to assure that Hovione acts in the best interests of Allos
and its other manufacturers Hovione will be entitled, for as
long as it is not in breach of contract, to good
consideration as follows:
o [ * ]
[ * ]
CONFIDENTIALITY: Each party shall agree to be bound by obligations of
confidentiality, non-use and non-disclosure of the
confidential and proprietary information of the other
parties, subject to rights under the Agreement. The terms of
the confidentiality agreement dated 7th July 1998 shall be
deemed to be included in the Agreement. The period during
which the obligations of confidentiality shall continue shall
be extended to endure for ten years from the return of the
other party's confidential information that is in its
possession, so long as such information remains confidential
Confidential Term Sheet: Ver. 02 Page 8 March 25, 1999
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information.
UNINTERRUPTED During the validity of this agreement Hovione is obligated
SUPPLY AND FIRST to assure that Xxxxx has an uninterrupted supply of API:
REFUSAL RIGHT
o To this end Allos assures that it will offer to Hovione a
right of first refusal for its requirements beyond the 30
tonnes/year amount. This right of first refusal shall
only apply to the 65% of the annual demand which exceeds
30 tonnes. Hovione may exercise this right in its
entirety or in part, and must do so at a competitive
price as evidenced by written bids obtained by Allos from
equivalent third-parties
o To this end, and in the event that Hovione does not
exercise the option as set out above, Hovione is
obligated to find alternative sources of API. Hovione
must also assure that up-to-date technology is
transferred to the alternative supplier(s) as efficiently
as possible and that the regulatory process is handled
successfully.
o To this end, and in the event that Hovione cannot find
alternative sources of API which are acceptable to Allos,
Hovione at its expense shall invest in additional
capacity to meet all Allos requirements and shall remain
the primary supplier of 65% of the API needs for a
further 5 years' period at prices to be negotiated in
good faith.
TERMINATION: [ * ]
[ * ]
[ * ]
[ * ]
Confidential Term Sheet: Ver.02 Page 9 March 25, 1999
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[ * ]
In the event of the Agreement's termination by Allos because
of reasons other than Hovione material breach (but not its
expiration), Allos, at its election, will either: (i)
purchase, at Hovione's documented purchase cost, its raw and
in-process materials reasonably purchased for production of
[ * ] and that cannot be returned for credit or used for the
manufacture products for other customers (subject to the
generic competition restriction), plus shipping costs; or
(ii) pay for such reasonable raw and in-process materials to
be manufactured into API in accordance with the Agreement.
Hovione shall inform Xxxxx of the quantities of raw and
in-process that Hovione is maintaining in its inventory on a
periodic basis (but no less than quarterly). In no event
shall Allos be responsible for raw or in-process materials
that exceed the amounts that would be required to meet more
than API forecasts for six months following the date of
termination.
Indemnification, intellectual property and other applicable
obligations shall survive termination and expiration of the
Agreement.
INSURANCE: Hovione is not required to carry any product liability
insurance, but shall carry such other standard insurance as
mutually acceptable to the parties.
INDEMNIFICATION: Allos will indemnify, defend and hold Hovione (and their
employees, officers and directors) harmless from (i) product
liability claims arising from the testing, sale or use of
the API or the product manufactured with it, and (ii)
infringement claims arising from breach of Allos warranty.
Allos obligations shall not include such claims to the
extent that they arise from the (i) breach by any Hovione
indemnitee of its obligations under the Agreement, or (ii)
any negligent or otherwise wrongful act or omission of any
Hovione indemnitee.
Hovione will indemnify, defend and hold Allos (and its
employees, officer and directors) harmless from (i) product
liability claims arising from the manufacture of the API to
the extent caused by Hovione's breach of any obligation
under the Agreement, and (ii) infringement claims arising
from breach of Hovione warranty. Hovione obligations shall
not include such claims to the extent that they arise from
the (i) breach by any Allos indemnitee of its obligations
under the Agreement, or (ii) any negligent or otherwise
wrongful act or omission of any Allos indemnitee.
In the event that it is ruled by arbitration or in a court
of law that Hovione was negligent in observing cGMP's or
that it manufactured product in a manner that conflicts with
that described in Hovione's filings at FDA or the terms of
the Agreement, it shall contribute to the costs associated
with a recall or with similar damages. However, in no case
shall Hovione's total aggregate liability under the
Agreement for any recall ever cause it to pay recall costs
and similar damages in a total which exceeds the amount of
receipts due from Allos in the 12 months periods immediately
before the first notification of the issue that led to the
liability/recall and the delivery of the batches involved in
such recall.
Confidential Term Sheet: Ver.02 Page 10 March 25, 1999
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WARRANTIES: Standard legal, financial, corporate, capability and
conflict, Force Majeure, intellectual property and other
warranties, including regulatory (including Generic Drug
Enforcement Act) and legal compliance, as mutually
acceptable to the parties.
Allos and Hovione shall each warrant that to the best of its
knowledge and belief the manufacture, import, and sale of
[ * ] will not infringe any third party patents or other
proprietary rights.
Hovione shall warrant that it is not using in the
manufacture of [ * ] any process or materials covered by any
patent owned or licensed to it without Allos' consent.
ASSIGNMENT: Assignment of the Agreement is permitted subject to a
written agreement by the other party.
MISCELLANEOUS: Standard legal and other provisions as mutually acceptable
to the parties. The Agreement and all disputes relating to
it shall be interpreted under New York law and enforceable
against all of the parties in the courts of New York. The UN
Convention on the Sale of Goods shall not apply. Parties
shall submit any disputes, not resolved by meeting between
senior management, to binding arbitration held in New York
or other any location acceptable to the parties.
ACKNOWLEDGED AND AGREED
ALLOS THERAPEUTICS, INC. HOVIONE INTER LIMITED
By: /s/ XXXXXXX X. XXXXXXX By: /s/ XXX XXXXXX
------------------------------------ ----------------------------
Xxxxxxx X. Xxxxxxx, Ph.D., MD Xxx Xxxxxx
President & Chief Executive Officer Chief Executive Officer
Date: 3/25/99 Date: 3/25/99
Confidential Term Sheet: Ver. 02 Page 11 March 25, 1999
