EXHIBIT 10.1
Portions of this Exhibit have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
MANUFACTURING AGREEMENT
between:
GILEAD SCIENCES, INC.,
a Delaware corporation;
and
OSI PHARMACEUTICALS, INC.,
a Delaware corporation
Dated as of December 21, 2001
TABLE OF CONTENTS
PAGE
ARTICLE 1 CERTAIN DEFINITIONS........................................................ 2
ARTICLE 2 GOVERNANCE................................................................. 7
2.1 General........................................................................ 7
2.2 Development Teams.............................................................. 7
ARTICLE 3 API MATTERS................................................................ 9
3.1 Current Inventories............................................................ 9
3.2 Identification of Manufacturer................................................. 10
3.3 API Technology Transfer........................................................ 10
3.4 Continuing Manufacture by Gilead............................................... 11
3.5 Provision of APIs for Manufacture.............................................. 12
3.6 Mechanics...................................................................... 12
ARTICLE 4 SCALE-UP; OTHER DEVELOPMENT................................................ 12
4.1 Scale-Up and Process Development............................................... 12
4.2 Selection of Alternative Formulations.......................................... 13
4.3 Certain Royalty Obligations.................................................... 13
4.4 Other CMC Activities........................................................... 14
4.5 Performance Under Work Plan and Budgets........................................ 14
4.6 Confidentiality of CMC Activities.............................................. 14
4.7 Reverse Engineering............................................................ 14
4.8 GS7836......................................................................... 15
ARTICLE 5 PLANNING; FORECASTS; ORDERS; CAPACITY...................................... 15
5.1 Clinical Supply................................................................ 15
5.2 Prelaunch Planning............................................................. 16
5.3 Commercial Planning Forecasts.................................................. 17
5.4 Commercial Production Forecasts................................................ 18
5.5 Commercial Purchase Orders..................................................... 19
5.6 Delivery....................................................................... 19
ARTICLE 6 MANUFACTURE; TESTING; QUALITY ASSURANCE AND LABELING RESPONSIBILITIES...... 20
6.1 Raw Material Specifications.................................................... 20
6.2 Production and Manufacturing Standards......................................... 20
6.3 cGMP Compliance and QA Audits.................................................. 20
6.4 Change in Manufacturing Process Proposed by Gilead............................. 21
6.5 Changes to Specifications...................................................... 21
6.6 Quality Control Samples and Methods............................................ 22
6.7 Records........................................................................ 23
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.8 Lot Failure.................................................................... 23
6.9 Rework or Reprocess............................................................ 23
6.10 Packaging and Labeling Responsibilities........................................ 23
6.11 Import Permits................................................................. 23
6.12 Testing and Release............................................................ 24
ARTICLE 7 DELIVERY; ACCEPTANCE AND REJECTION......................................... 24
7.1 Shipping....................................................................... 24
7.2 Shipments and Carrier.......................................................... 24
7.3 QC Samples; Documentation...................................................... 24
7.4 Shipping Insurance and Risk of Loss............................................ 25
7.5 Out-of-Specification Product................................................... 25
ARTICLE 8 REGULATORY ISSUES.......................................................... 27
8.1 Existing Filings............................................................... 27
8.2 Rights of Reference to DMFs.................................................... 28
8.3 Regulatory Filings Currently Being Compiled.................................... 29
8.4 Additional Regulatory Approval Applications.................................... 29
8.5 Regulatory Activities.......................................................... 30
8.6 Compliance With Law............................................................ 30
8.7 Records........................................................................ 31
8.8 Governmental Inquiries......................................................... 31
8.9 Stability Studies.............................................................. 32
8.10 Technical Agreement............................................................ 32
ARTICLE 9 PRICE, INVOICING AND COSTS................................................. 32
9.1 Costs of Clinical Supply....................................................... 32
9.2 Price for Commercial Supply.................................................... 33
9.3 Pricing Discussion............................................................. 34
9.4 Product Invoices............................................................... 35
9.5 Failure to Order Minimum....................................................... 35
9.6 Development Costs.............................................................. 35
9.7 Cost of Recalls, Product Withdrawals or Field Corrections...................... 36
9.8 Third-Party Royalties.......................................................... 36
9.9 Currency....................................................................... 36
9.10 Late Payments.................................................................. 36
9.11 Taxes.......................................................................... 36
9.12 Financial Audits............................................................... 37
ARTICLE 10 MANUFACTURING RIGHTS....................................................... 37
10.1 License to Gilead.............................................................. 37
10.2 Second Source for Liposomal Products........................................... 37
10.3 Use of Product Source.......................................................... 38
10.4 Selection of Product Source.................................................... 38
-ii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.5 Technology Transfer............................................................ 39
10.6 Maintenance of Process Confidentiality......................................... 39
10.7 License to Product Source...................................................... 40
10.8 Inventoried Supply; Forecast Failure........................................... 40
10.9 Supply Failure................................................................. 41
10.10 Special Meeting After Supply Failure........................................... 42
10.11 Use of Product Source after Supply Failure..................................... 42
10.12 Elective Transfer of Manufacture by Gilead..................................... 43
10.13 Continued Supply in Interim Period............................................. 43
10.14 Loss of Second Source.......................................................... 44
10.15 GS7836......................................................................... 44
ARTICLE 11 INTELLECTUAL PROPERTY...................................................... 45
11.1 Ownership of Program Inventions................................................ 45
11.2 Confidentiality of Liposomal Inventions........................................ 45
11.3 License........................................................................ 45
11.4 No License; Covenant........................................................... 46
ARTICLE 12 COVENANTS.................................................................. 46
12.1 Mutual Covenants............................................................... 46
12.2 Gilead Covenants............................................................... 46
ARTICLE 13 INDEMNIFICATION AND INSURANCE.............................................. 47
13.1 OSI Indemnification............................................................ 47
13.2 Gilead Indemnification......................................................... 47
13.3 Procedure...................................................................... 47
13.4 Insurance...................................................................... 48
13.5 Limitation of Liability........................................................ 48
ARTICLE 14 CONFIDENTIALITY............................................................ 49
14.1 Treatment of Confidential Information.......................................... 49
14.2 Authorized Disclosure.......................................................... 49
14.3 Publicity...................................................................... 50
14.4 Return of Confidential Information............................................. 50
ARTICLE 15 TERM AND TERMINATION....................................................... 50
15.1 Term........................................................................... 50
15.2 Termination for Breach......................................................... 50
15.3 Effect of Termination.......................................................... 51
15.4 Survival....................................................................... 51
15.5 Excluded Remedies.............................................................. 52
15.6 Additional Termination Rights.................................................. 52
ARTICLE 16 DISPUTE RESOLUTION......................................................... 52
-iii-
TABLE OF CONTENTS
(CONTINUED)
PAGE
16.1 Disputes....................................................................... 52
16.2 Governing Law; Judicial Resolution............................................. 53
16.3 Patent and Trademark Dispute Resolution........................................ 53
16.4 Industry Expert Panel Resolution of Certain Issues............................. 53
16.5 Excluded Remedies.............................................................. 54
ARTICLE 17 MISCELLANEOUS.............................................................. 54
17.1 No Representations............................................................. 54
17.2 Knowledge...................................................................... 54
17.3 Governing Law.................................................................. 55
17.4 Venue and Jurisdiction......................................................... 55
17.5 Notices........................................................................ 55
17.6 Assignment..................................................................... 56
17.7 Parties in Interest............................................................ 56
17.8 Severability................................................................... 57
17.9 Entire Agreement............................................................... 57
17.10 Order of Precedence............................................................ 57
17.11 Waiver......................................................................... 57
17.12 Amendments..................................................................... 57
17.13 Counterparts................................................................... 58
17.14 Interpretation of Agreement.................................................... 58
17.15 Maintenance of Records......................................................... 58
17.16 Performance by Affiliates...................................................... 58
17.17 Force Majeure.................................................................. 59
17.18 Further Assurances; Covenant to Cooperate...................................... 59
-iv-
MANUFACTURING AGREEMENT
This Manufacturing Agreement (the "Manufacturing Agreement") is entered
into effective as of December 21, 2001 (the "Closing Date") between OSI
PHARMACEUTICALS, INC., a Delaware corporation with its principal offices at 00
Xxxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx, 00000 ("OSI"), and GILEAD SCIENCES,
INC., a Delaware corporation with its principal offices at 000 Xxxxxxxx Xxxxx,
Xxxxxx Xxxx, Xxxxxxxxxx, 00000 ("Gilead"). OSI and Gilead are sometimes referred
to herein individually as a "Party" and collectively as the "Parties", and
references to "OSI" and "Gilead" shall include their respective Affiliates (as
defined below).
RECITALS
OSI and Gilead are parties to the Asset Purchase Agreement (as defined
below), which provides for the purchase by OSI of certain assets from Gilead,
and for certain related transactions.
Pursuant to the Asset Purchase Agreement and the Ancillary Agreements
(as defined in the Asset Purchase Agreement), Gilead is, among other things,
transferring, or granting certain rights in, the Products (as defined below, and
which are, as of the Closing Date, in or expected soon to enter clinical trials)
to OSI on the terms set forth in the Asset Purchase Agreement and the Ancillary
Agreements.
Gilead currently manufactures the Liposomal Products (as defined
below), at least in part, using trade-secret and other proprietary technologies
of Gilead not transferred to OSI pursuant to the Asset Purchase Agreement, and
manufactures the remaining Product in a non-liposomal formulation, in each case
at Gilead's manufacturing facilities in San Dimas, California, on a clinical
scale.
OSI desires to have the right to obtain supply of the Products from
Gilead, on a clinical and, ultimately, on a commercial scale for each Product,
and wishes to have the right to require Gilead to scale up to commercial scale
the manufacturing process for each of the Products.
Gilead and OSI may wish to develop alternative formulations of the
Liposomal Products under certain circumstances in connection with the scale-up
to commercial scale of the manufacturing processes therefor.
While Gilead is willing, on the terms and conditions set forth herein,
to continue to perform those aspects of manufacturing Products that involve the
application of Gilead's proprietary technologies, the Parties wish for Gilead to
transition responsibility for the manufacture of API (as defined below) for the
Products to OSI or another entity.
The Parties wish to provide for the logistics of their activities with
respect to those Regulatory Approval Applications and Regulatory Approvals that
relate to the Products.
AGREEMENT
The Parties, intending to be legally bound, agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
Capitalized terms used but not defined herein shall have the meanings
given to such terms in the Asset Purchase Agreement. As used herein, the
following initially capitalized terms shall have the following meanings:
1.1 "AFFILIATE" shall mean any Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, a Party, where "control", as used in this Section 1.1,
means (a) direct or indirect possession of at least fifty percent (50%) of the
outstanding voting securities of a corporation or a comparable ownership in any
other type of legal entity or (b) that a legal entity or group of legal entities
otherwise has the unilateral ability to direct the management of the entity,
whether by contract or otherwise.
1.2 "ALTERNATIVE FORMULATION" shall have the meaning given in Section
4.2.
1.3 "ANTICIPATED LAUNCH DATE" shall have the meaning given in Section
5.2.
1.4 "API" shall mean, (i) with respect to GS7904L, the thymidylate
synthase inhibitor GW1843; (ii) with respect to GS7836, the compound referred to
by Gilead as 4'-thio-ara-C; and (iii) with respect to NX211, lurtotecan.
1.5 "API SOURCE" shall have the meaning given in Section 3.2.
1.6 "ASSET PURCHASE AGREEMENT" shall mean that certain Asset Purchase
Agreement between the Parties dated November 26, 2001.
1.7 "BINDING AMOUNT" shall have the meaning given in Section
5.4(b)(ii).
1.8 "CERTIFICATE OF ANALYSIS" shall mean, with respect to an ingredient
or filled and finished product, an appropriately signed certificate of analysis
stating the identity, strength, quality and purity of such ingredient or filled
and finished product.
1.9 "CMC" shall mean the Chemistry, Manufacturing and Controls portion
of an IND or NDA.
1.10 "CMC ACTIVITIES" shall mean activities for manufacturing process
development, and the development of liposomal formulations of Liposomal
Products, including without limitation manufacturing processes, method and
process development, analytical methods associated therewith, scale-up, and
stability studies of the sort typically included in a CMC.
1.11 "CMC INFORMATION" shall mean data and information regarding the
manufacture and/or characterization of any Liposomal Product (or Alternative
Formulation) using the API for
-2-
such Liposomal Product that Gilead regards as confidential or a trade secret and
that would not be disclosed in the Certificate of Analysis for such Liposomal
Product.
1.12 "CMC ISSUE" shall mean any issue requiring knowledge of CMC
Information for informed resolution.
1.13 "COMMERCIAL LAUNCH" shall mean the first commercial sale of a
Product to a Third Party.
1.14 "COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect to a
manufacturing obligation, the level of efforts required to carry out such
obligation in a sustained manner consistent with the efforts a similarly
situated biopharmaceutical company would devote to a product of similar market
potential, marketed by the manufacturer, based on conditions then prevailing.
1.15 "CONFIDENTIAL INFORMATION" shall mean all Information, and other
information and materials, received by either Party from the other Party
pursuant to this Manufacturing Agreement, other than that portion of such
information or materials that:
(a) is publicly disclosed by the disclosing Party, either
before or after it becomes known to the receiving Party;
(b) was known to the receiving Party, without obligation to
keep it confidential, prior to when it was received from the disclosing Party,
as shown by written records predating such receipt;
(c) is subsequently disclosed to the receiving Party by a
Third Party lawfully in possession thereof without obligation to keep it
confidential;
(d) has been publicly disclosed other than by the disclosing
Party and without breach of an obligation of confidentiality with respect
thereto; or
(e) has been independently developed by the receiving Party
without the aid, application or use of Confidential Information, as demonstrated
by competent written proof contemporaneous with such development.
Gilead's Confidential Information shall be deemed to include
any information contained in a DMF for a Liposomal Product and all CMC
Information, whether or not disclosed by Gilead to OSI and notwithstanding the
fact that Gilead shall not be required hereunder to disclose either of the
foregoing to OSI.
1.16 "CONTROL" shall mean possession of the ability to grant a license
or sublicense as provided for herein without violating the terms of any
agreement or other arrangement with any Third Party.
1.17 "DELIVERY DATE" shall mean the delivery date requested by OSI in a
Purchase Order with respect to a given quantity of a Product.
-3-
1.18 "DELIVERY FORECAST" shall mean, with respect to a particular time
period, the quantity of a Product for which OSI forecasts it will request
delivery during such time period.
1.19 **
1.20 "DMF" shall mean a Type 2 Drug Master File or a filing with a
Regulatory Authority outside the United States serving a purpose equivalent to
that of a Type 2 Drug Master File in the United States, such that manufacturing
information may be filed by a manufacturer in such country in a manner that
remains confidential from the holder of the remaining portions of the Regulatory
Approval Application or Regulatory Approval for the same pharmaceutical, as
applicable.
1.21 "EXISTING FILINGS" shall have the meaning given in Section 8.1(b).
1.22 "FCA" shall mean "Free Carrier," as provided for in the Incoterms
2000 promulgated by the International Chamber of Commerce.
1.23 "FDA" shall mean the United States Food and Drug Administration,
or any successor thereto.
1.24 "FTE" shall mean an annualized, full-time equivalent employee or
consultant of Gilead.
1.25 "FULLY BURDENED COSTS" shall have the meaning given in Section
9.2(a).
1.26 "GOOD MANUFACTURING PRACTICES," "GMP" and "cGMP" shall mean the
respective good manufacturing practices required by relevant Regulatory
Authorities for the manufacture and testing of Products in effect at a
particular time.
1.27 "GAAP" shall mean generally accepted accounting principles in the
United States.
1.28 "GS7904L" shall mean the liposomal formulation of the thymidylate
synthase inhibitor GW1843 that is the subject of Clinical Trial Exemption CTX
#16807/008/A in the United Kingdom, or such Alternative Formulation of such
compound as OSI may select as set forth in Article 4.
1.29 "GS7836" shall mean the formulation of the compound referred to by
Gilead as 4'-thio-ara-C that is the subject of Canadian IND Control #072975.
1.30 "IND" shall mean an Investigational New Drug application.
1.31 "INDUSTRY EXPERT" shall have the meaning given in Section 16.4.
1.32 "INFORMATION" shall mean techniques and data specifically relating
to the process development, manufacture or characterization of any Product,
including, but not limited to,
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-4-
inventions, practices, methods, knowledge, know-how, skill, experience, test
data (including pharmacological, toxicological and clinical test data,
analytical and quality control data), regulatory submissions, correspondence and
communications.
1.33 "INVENTIONS" shall mean inventions, discoveries, trade secrets and
other know-how, information (including without limitation Information) or
developments, together with all intellectual property rights therein (including
without limitation Patents claiming any such inventions).
1.34 "LABELING AND PACKAGING SPECIFICATIONS" shall mean such
specifications for labeling and packaging of each Product for shipment to OSI as
the Development Team for such Product may agree. The Development Team may agree
to multiple Labeling and Packaging Specifications for a particular Product for
different countries in which OSI will sell such Product.
1.35 "LIPOSOMAL INVENTIONS" shall have the meaning given in Section
11.1(b).
1.36 "LIPOSOMAL PRODUCT" shall mean NX211 or GS7904L.
1.37 "LOT" shall mean a single production run of a Product.
1.38 "MANUFACTURING DEFECT" shall mean, with respect to a specimen of a
Product, a failure of that specimen to conform to the Specification for such
Product. With respect to a specimen of a Product manufactured using API supplied
by OSI to Gilead hereunder, Manufacturing Defects shall exclude any such failure
to conform to the relevant specification that results from a failure of the API
to conform to the relevant specifications therefor at the time of delivery to
Gilead.
1.39 "NDA" shall mean a New Drug Application for Regulatory Approval
filed in the United States.
1.40 "NX211" shall mean that liposomal formulation of lurtotecan that
is the subject of IND #58,163, or such Alternative Formulation of lurtotecan as
the Parties may develop as set forth in Article 4.
1.41 "PATENT" shall mean (i) unexpired letters patent (including
inventor's certificates) that have not been held invalid or unenforceable by a
court of competent jurisdiction from which no appeal can be taken or has been
taken within the required time period, including without limitation any
substitution, extension, registration, confirmation, reissue, re-examination,
renewal or any like filing thereof, and (ii) pending applications for letters
patent, including without limitation any provisional, converted provisional,
continued prosecution application, continuation, divisional or
continuation-in-part thereof.
1.42 "PERIOD COST" shall have the meaning given in Section 5.3(c).
1.43 "PLANNING FORECAST" shall have the meaning given in Section
5.3(a).
1.44 "PRODUCT" shall mean any of NX211, GS7904L, or GS7836.
-5-
1.45 "PRODUCT SOURCE" shall mean a second source manufacturer to which
manufacture of a Liposomal Product is transferred or to be transferred as set
forth in Article 10. In no event shall Gilead be deemed a Product Source
hereunder.
1.46 "PROGRAM INVENTIONS" shall mean Inventions that are made,
conceived, reduced to practice, developed, or otherwise generated in whole or in
part by either Party or by the Parties jointly in the course of performance
under this Manufacturing Agreement.
1.47 "PURCHASE ORDER" shall mean a purchase order from OSI to Gilead
hereunder for a quantity of any Product.
1.48 "QA" shall mean quality assurance.
1.49 "QC" shall mean quality control.
1.50 "REGULATORY APPROVAL" shall mean any approvals (including
supplements, amendments, pre- and post-approvals and pricing approvals),
licenses, registrations or authorizations of any national, supra-national,
regional, state or local regulatory agency, department, bureau, commission,
council or other governmental entity, necessary for the manufacture,
distribution, use or sale of a Product in a regulatory jurisdiction.
1.51 "REGULATORY APPROVAL APPLICATION" shall mean an application for
Regulatory Approval or to conduct a clinical trial of a Product in a regulatory
jurisdiction.
1.52 "REGULATORY AUTHORITY" shall mean the FDA or any foreign
counterpart thereof in a country in which OSI is clinically developing any
Product or marketing any Product.
1.53 "REGULATORY REQUIREMENTS" shall mean, with respect to a particular
Product, the regulatory requirements applicable to the manufacture, use,
advertising, promotion or sale of such Product in any regulatory jurisdiction.
1.54 "REQUIRED" shall have the meaning given in Section 6.5.
1.55 "SINGLE CONFIDANT" shall mean one (1) OSI representative who shall
be permitted to be present to observe any discussions between Gilead and the FDA
that are specific to Products, provided that such representative has first
entered into a confidentiality agreement with Gilead in accordance with Section
8.8. Gilead shall notify OSI in advance of any such meeting at which Gilead
reasonably believes that it may disclose CMC Information in the course of any
such discussion.
1.56 "SIX-MONTH SUPPLY" shall mean, with respect to the inventory of a
Liposomal Product in OSI's possession or control at a given time, a quantity of
such Liposomal Product equal to the amount that OSI has forecasted pursuant to
Section 5.4(a) to have delivered to it hereunder in the six (6) months calendar
months following the date that is six (6) months after the date upon which the
Six-month Supply is determined, in the most recent Product Forecast covering
such time period.
-6-
1.57 "SPECIFICATIONS" shall mean, with respect to each Product in a
given regulatory jurisdiction, the specifications for such Product in such
regulatory jurisdiction set forth in Appendix A, as it may hereafter be amended
from time to time pursuant to Section 6.5. Appendix A contains multiple sets of
Specifications, one for each Product.
1.58 "SUPPLY FAILURE" shall have the meaning given in Section 10.9.
1.59 "TERM" shall mean the term of this Manufacturing Agreement, as
determined in accordance with Article 15.
1.60 "THIRD PARTY" shall mean an entity other than Gilead, OSI, or an
Affiliate of either of them.
1.61 "TRANSFER PRICE" shall have the meaning given in Section 9.2.
1.62 "TRANSFERRED PRODUCT RIGHTS" shall mean those rights under Patents
and Information relating to the Products transferred or granted to OSI pursuant
to the Asset Purchase Agreement and pursuant to the Ancillary Agreements
themselves delivered pursuant to the Asset Purchase Agreement.
1.63 "WORK PLAN AND BUDGET" shall have the meaning given in Section
4.1.
ARTICLE 2
GOVERNANCE
2.1 GENERAL.
Due to the long-term nature of the supply arrangements contemplated
hereunder, and to the ongoing development of certain of the Products and the
manufacturing processes therefor, the Parties wish to facilitate regular and
efficient communication between themselves regarding their activities and issues
relating to the manufacture and supply of Products hereunder. To such end, for
each Product, the Parties will establish a Development Team in accordance with
this Article 2 to oversee and coordinate the Parties activities hereunder with
respect to such Product.
2.2 DEVELOPMENT TEAMS.
(a) FORMATION. Within thirty (30) days after the Closing Date,
OSI and Gilead shall establish a Development Team for each Product.
(b) MEMBERSHIP. OSI and Gilead each shall designate two (2)
representatives with appropriate expertise to serve as members of each
Development Team. Each Party shall select one (1) person appointed by it to each
Development Team to serve as co-chair of such Development Team. Either Party may
designate substitutes for its Development Team representatives to participate if
one or more of such Party's designated representatives is unable to be present
at a meeting. A Party may replace its representatives
-7-
serving on a Development Team from time to time by written notice to the other
Party specifying the prior representative(s) to be replaced and the
replacement(s) therefor. Each Development Team will have the power to form
working groups with appropriate representation from the Parties and appropriate
Third Parties bound by obligations of confidentiality and non-use of information
no less stringent than those set forth in Article 14. The co-chairpersons of
each Development Team shall be responsible for calling meetings, preparing and
circulating an agenda in advance of each meeting, and preparing and issuing
minutes of each meeting within thirty (30) days thereafter.
(c) MEETINGS. Each Development Team shall hold meetings at such times
as it elects to do so, but in no event shall such meetings be held less
frequently than once every three (3) months. The Development Team shall meet
alternately at (i) OSI's facilities in Melville, New York or Boulder, Colorado,
and (ii) Gilead's facilities in San Dimas, California, or at such locations as
the Parties may otherwise agree. With the consent of the representatives of each
Party serving on a Development Team, other representatives of each Party or of
Third Parties involved in the manufacture, development or commercialization of
the Products may attend meetings of such Development Team as nonvoting
participants. Meetings of the Development Team may be held by audio or video
teleconference with the consent of each Party, provided that at least two (2)
meetings per year shall be held in person. Each Party shall be responsible for
all of its own expenses of participating in the Development Teams. Meetings of a
Development Team shall be effective only if at least one (1) Development Team
member representing each Party is present or participating. The co-chairpersons
within each Development Team will alternate responsibility for preparing minutes
of such Development Team's meetings, which minutes will not be finalized until
the co-chairperson thereof that did not prepare such minutes reviews and
confirms the accuracy of such minutes in writing.
(d) DECISION-MAKING. Each Development Team shall operate by consensus.
With respect to matters to be discussed by the Development Team, the
representatives of each Party shall present a unified position on behalf of such
Party. In the absence of consensus of Development Team members with respect to
any matter before the Development Team, such matter shall be deemed not to have
been approved by the Development Team. Notwithstanding the foregoing, if it is
unable to reach consensus as to (i) a matter directly relating to API
manufacture by OSI or a Third Party after completion of technology transfer
hereunder relating thereto, or (ii) Labeling and Packaging Specifications, the
Development Team shall adopt OSI's position on such issue; provided that OSI's
position is consistent with Gilead's capabilities, GMP and other applicable
laws, rules, regulations and requirements of Regulatory Authorities.
(e) SPECIFIC RESPONSIBILITIES. In addition to its overall
responsibility for overseeing the Parties' activities with respect to the
Product under this Manufacturing Agreement, the Development Team shall in
particular:
(i) Establish Additional Support Plans and Budgets (as defined
in Section 3.3) in accordance with Section 3.3;
-8-
(ii) Decide on API supply procedures to be used by the Parties
in accordance with Section 3.6;
(iii) Establish Work Plans and Budgets as provided in this
Manufacturing Agreement;
(iv) Discuss any Proposed Specification Changes in accordance
with Section 6.5;
(v) Determine Labeling and Packaging Specifications;
(vi) Oversee and coordinate regulatory activities in
accordance with Article 8; and
(vii) Engage in such other activities as are specifically set
forth for the Development Teams elsewhere in this Manufacturing Agreement.
(f) LIMITED AUTHORITY. The Development Team shall have only those
powers set forth for it herein, and (without limiting the generality of the
foregoing) shall not have any power to amend, modify or waive compliance with
this Manufacturing Agreement.
(g) MEETING AGENDAS. Each Party will disclose to the other Party its
final agenda items along with appropriate related Information at least five (5)
business days in advance of each meeting of the Development Team.
ARTICLE 3
API MATTERS
3.1 CURRENT INVENTORIES.
Ownership of the current (as of the Closing Date) inventories of API
for each Product (the "API Inventories") is transferring from Gilead to OSI
pursuant to the Asset Purchase Agreement. However, physical possession of the
API Inventories has remained with Gilead. At OSI's request, Gilead shall
transfer the API Inventories or a portion thereof to OSI or a Third Party.
Gilead shall use the API Inventories to manufacture the Products in accordance
with this Manufacturing Agreement. To the extent requested by OSI, throughout
the Term with respect to each Product, Gilead shall maintain inventories of the
API for such Product in accordance with its inventory practices for its own
products, subject to OSI providing sufficient quantities of the relevant APIs
for Gilead to do so once Gilead is, pursuant to Section 3.4, no longer required
to manufacture such API. For clarity, Gilead's projected costs to maintain API
inventories for finished Product manufacture (i) for clinical supply shall be
included in the applicable Work Plans and Budgets covering clinical supply
responsibilities, and (ii) for commercial supply shall be included in any
calculation of Gilead's projected Fully Burdened Cost to manufacture the
relevant Product pursuant to Section 9.2(a). Title and risk of loss
-9-
relating to all such API inventories shall remain with OSI notwithstanding
Gilead's physical possession of such inventories.
3.2 IDENTIFICATION OF MANUFACTURER.
As soon as is reasonably practicable after the Closing Date,
and in any event no later than one hundred twenty (120) days after such date,
OSI shall identify to Gilead the entity to which OSI wishes for Gilead to
transfer the manufacturing process for the API of each Product, whether this be
OSI, an OSI Affiliate or a Third Party (such entity chosen by OSI for a
particular Product, the "API Source" therefor). Notwithstanding the foregoing,
within forty-five (45) days after the Closing Date, (i) with respect to GS7836,
OSI shall make every reasonable effort to identify the API Source therefor, and
(ii) with respect to NX211, shall notify Gilead in writing whether OSI intends
to engage either of Gilead's current contract manufacturers for the NX211 API as
OSI's API Source therefor. OSI shall specify one (1) API Source per Product, and
Gilead shall only be required to perform technology transfer as set forth below
to one API Source per API for a Product.
3.3 API TECHNOLOGY TRANSFER.
Once an API Source has been identified for a particular API
and in consultation with the relevant Development Team, Gilead shall perform
technology transfer activities to enable such API Source to manufacture API per
Gilead's current process for such manufacture, as well as all process
development currently underway and QA or QC technology currently used by Gilead
for such API. Pursuant to the Asset Purchase Agreement, Gilead has assigned to
OSI the Specified Know-How (as defined in the Asset Purchase Agreement) and has
executed and delivered Ancillary Documents pursuant to which certain patents and
other intellectual property rights relating to the manufacture of APIs were
assigned, licensed and/or sublicensed to OSI. OSI shall grant an appropriate
license or sublicense to each API Source as required to permit the API Source to
manufacture the relevant API. Gilead's technology transfer activities in
accordance with this Section 3.3 shall be at **. Gilead shall not be
required to devote more than ** total (i.e. the equivalent of ** over the course
of a year, which shall be provided by the efforts of a great number of Gilead
people over a shorter period of time, consistent with the following sentence) to
technology transfers relating to the manufacturing processes and analytical
release testing for the APIs in accordance with this Section 3.3, with any
additional FTE time agreed by the Parties being at the expense of OSI pursuant
to a Work Plan and Budget. The Parties shall use their commercially reasonable
efforts to complete such technology transfer within six (6) months after OSI
identifies each API Source, and all such activities will be complete within
twelve (12) months after the Closing Date; provided, however, that if OSI
reasonably requires additional technology transfer assistance with respect to
any API after twelve (12) months after the Closing Date but prior to eighteen
(18) months after the Closing Date (the "Additional Support Period"), Gilead
shall provide reasonable amounts of such assistance to OSI on a consulting basis
pursuant to a written plan and budget approved by the applicable Development
Team (an "Additional
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-10-
Support Plan and Budget") at **. Any Additional Support Plan and Budget shall be
treated as a Work Plan and Budget for all purposes under this Manufacturing
Agreement other than with respect to the rate at which Gilead shall charge OSI
for any time of Gilead people devoted to performing under an Additional Support
Plan and Budget, which rate is as stated in the foregoing sentence. Gilead shall
not be required to provide any additional technology transfer support services
after the expiration of the Additional Support Period.
3.4 CONTINUING MANUFACTURE BY GILEAD.
(a) GS7836. If OSI, despite prioritizing and using
commercially reasonable efforts to establish itself or a Third Party as the API
Source for GS7836 such that it or such Third Party is capable of manufacturing
** of such API in a manner compliant with GMP, reasonably believes on February
1, 2002 that it will be unable to so establish an API Source prior to March 31,
2002 by the continued application of such efforts, it shall so notify Gilead and
Gilead shall manufacture ** of approximately ** of such API pursuant to a Work
Plan and Budget agreed by the applicable Development Team.
(b) GS7904L. As the API Inventory of the API for GS7904L is
currently projected to be sufficient to meet the needs of the clinical program
for such Product for up to nine (9) months after the Closing Date, the Parties
anticipate that technology transfer to an API Source for such API should be
completed prior to the time OSI needs ** of such API to be produced to
accommodate its requirements for clinical supply of finished GS7904L. Therefore,
the Parties do not currently anticipate it will be necessary for Gilead to
manufacture any further batches of the API for GS7904L, and Gilead shall not be
required to manufacture any additional quantities of such API hereunder unless
the Parties otherwise agree in writing. However, if despite the application of
OSI's commercially reasonable efforts to establish an API Source for such API
reasonably in advance of the time ** required by OSI has not yet established an
API Source therefor, Gilead shall manufacture ** of such API prior to twelve
(12) months after the Closing Date pursuant to a Work Plan and Budget agreed by
the Development Team.
(c) NX211. Gilead has in place relationships with contract
manufacturers for the manufacture of the API for NX211, and shall continue to
have manufactured such API by such contract manufacturers, and to test and
release quantities of such API provided by such contract manufacturers, for a
period extending until no later than twelve (12) months after the Closing Date,
or such sooner time as technology transfer relating to such API is completed.
Gilead will attempt to facilitate OSI's entering into relationships with
Gilead's existing suppliers for supply of such API. To the extent OSI pursues
such a relationship with either such supplier, then, given that each such
supplier is already familiar with the manufacturing process for such API, the
Parties' technology transfer responsibilities pursuant to Section 3.3 with
respect to such API shall be focused on the transfer of analytical methods for
its testing and release.
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-11-
3.5 PROVISION OF APIS FOR MANUFACTURE.
Once the activities required by Sections 3.3 and 3.4 are
complete, Gilead shall have no further responsibility for the manufacture of,
process development for, or QA or QC of the Product APIs. Thereafter, OSI shall
be responsible to procure and supply to Gilead quantities of API sufficient for
the manufacture of each Product by Gilead for supply to OSI hereunder.
3.6 MECHANICS.
The Development Team for each Product shall agree to the
specific procedures the Parties will follow to coordinate the supply by OSI to
Gilead of quantities of API for each Product and ensure timely supply to Gilead
of sufficient quantities of API to timely manufacture and supply finished
Products to OSI hereunder.
ARTICLE 4
SCALE-UP; OTHER DEVELOPMENT
4.1 SCALE-UP AND PROCESS DEVELOPMENT.
Gilead currently manufactures the Products at a clinical
scale. Gilead is willing to perform the process development in order to scale-up
to commercial scale the manufacturing process for each Product, and any
validation or analytical development relating thereto as further specified
herein, and has certain such activities underway as of the Closing Date. Within
ninety (90) days after the Closing Date, the Development Team for each Product
shall meet to begin developing a mutually agreed work plan including an events
timeline and an FTE budget for the activities it describes (a "Work Plan and
Budget") for the scale-up to commercial scale of the manufacturing process for
the relevant Product in its current (as of the Closing Date) formulation. The
Development Teams shall work in good faith to develop such Work Plans and
Budgets, and Gilead shall agree to devote up to ** per Product per
year to such activities. Gilead's budgets for ongoing process development
activities that it plans to conduct in the ninety (90) day interim period before
the Development Teams meet to set such Work Plans and Budgets are set forth in
Appendix D. Because the Parties do not wish to interrupt such ongoing
activities, such budgets shall be treated, for purposes of Section 9.6, as Work
Plans and Budgets covering time periods prior to the time the Development Teams
are able to meet and set Work Plans and Budgets for further development
activities as described under this Section 4.1.
4.2 SELECTION OF ALTERNATIVE FORMULATIONS.
Gilead has available, as of the Closing Date, alternative
liposomal formulations of the APIs for the Liposomal Products (each, an
"Alternative Formulation") and in some cases preclinical data regarding the
Alternative Formulations (the "Alternative Formulation
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-12-
Data"). The Alternative Formulation Data shall exclude any CMC Information
regarding any Alternative Formulation. If it is not economically feasible to
manufacture a Product at commercial scale using the current (as of the Closing
Date) liposomal formulation for such Product, as reasonably determined by the
Development Team for such Liposomal Product, then OSI shall have the right to
review the Alternative Formulation Data for the Alternative Formulations for
such Liposomal Product to determine whether OSI wishes to develop and scale-up
to commercial scale an Alternative Formulation in lieu of such Liposomal Product
as currently formulated. The Development Team shall review the relevant
Alternative Formulation Data, as well as other information relevant to OSI's
decision whether it wishes to proceed with an Alternative Formulation. If OSI
decides to proceed with an Alternative Formulation, then the Development Team
shall establish a Work Plan and Budget for the development and scale-up of the
manufacturing process for such Alternative Formulation. Gilead shall agree to
devote up to ** per Product for which OSI selects an Alternative Formulation per
year to such activities. For clarity and without limiting the definition set
forth in Section 1.15, the Alternative Formulation Data shall be deemed to be
the Confidential Information of Gilead, and OSI shall not use the Alternative
Formulation Data for any purpose other than the development of the relevant
Product hereunder.
4.3 CERTAIN ROYALTY OBLIGATIONS.
If Gilead reasonably believes that any change in the
manufacturing process for a Liposomal Product developed pursuant to Section 4.1,
or the selection of an Alternative Formulation for a Product pursuant to Section
4.2, would make the relevant Liposomal Product subject to a royalty payment
obligation on sale of such Liposomal Product to OSI hereunder pursuant to the
**, then Gilead shall (i) consider whether such change in process or Alternative
Formulation is desirable for the Product in a manner consistent with the way
Gilead would consider such issue for one of its own products, (ii) notify OSI
whether such a royalty obligation would be triggered by making such change in
process or selecting such Alternative Formulation, and (iii) make a
recommendation to OSI whether Gilead advises adopting such change in process or
Alternative Formulation for reasons relating to manufacturing efficiency,
quality of Product or other technical reasons. OSI shall promptly thereafter
advise Gilead in writing whether OSI wishes to proceed with such change in
process or Alternative Formulation.
4.4 OTHER CMC ACTIVITIES.
The Development Team for each Product may from time to time
discuss other development activities relating to the formulation and
manufacturing process for each Product and may agree to Work Plans and Budgets
to govern any such additional activities.
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-13-
4.5 PERFORMANCE UNDER WORK PLAN AND BUDGETS.
Gilead shall devote the FTEs called for in each Work Plan and
Budget agreed by a Development Team to performing the activities set forth
therein in a professional manner, and shall seek in so doing to meet the
timelines set forth in such Work Plan and Budget. Gilead may devote **
called for under any Work Plan and Budget (whether established pursuant to this
Article 4 or in accordance with the other provisions of this Manufacturing
Agreement) without approval from the relevant Development Team or OSI. The
Parties recognize that the nature of the CMC Activities is such that timing and
achievement of particular events is inherently uncertain, and Gilead shall be
deemed to be in compliance with a Work Plan and Budget so long as Gilead commits
the resources set forth therein to performing the tasks set forth therein.
Gilead shall submit quarterly reports of its activities under the Work Plans and
Budgets established hereunder at a level of detail to be determined by the
Development Teams, which level shall, in any event, be consistent with the level
of detail Gilead uses for its internal accounting purposes and with Section 4.6.
OSI may engage a Third Party reasonably acceptable to Gilead and bound in
writing to Gilead by obligations of confidentiality and non-use equivalent in
scope to those set forth in Article 14 to verify Gilead's devotion of the FTE
and other resources called for under any Work Plan and Budget at any time within
two (2) years after the time period to which such Work Plan and Budget relates.
4.6 CONFIDENTIALITY OF CMC ACTIVITIES.
The Parties recognize that CMC Activities involve the
application of technology of Gilead protected by Gilead as trade secret
information. The Parties intend that Gilead shall not be required to disclose
its CMC Information to OSI notwithstanding anything else to the contrary in this
Manufacturing Agreement.
4.7 REVERSE ENGINEERING.
Except as permitted pursuant to Article 10 with respect to the
establishment of a Product Source in accordance with such Article, OSI shall not
develop or reproduce (or attempt to do either) the process for manufacturing any
finished Liposomal Product using API, or otherwise deduce the CMC Information
for any Liposomal Product, and shall not engage a Third Party to do any of the
foregoing.
4.8 GS7836.
The Parties recognize that the manufacture and formulation of
finished GS7836 does not involve the application of Gilead's proprietary
liposomal technologies. Therefore, OSI may elect to have a Third Party, rather
than Gilead, perform the development activities described in this Article 4 with
respect to GS7836. If OSI elects to have a Third Party perform such activities,
then the Parties will not enter into Work Plans and Budgets for the same
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-14-
activities hereunder. OSI's right to transfer responsibility for manufacturing
GS7836 (as opposed to process development) is set forth in Section 10.15.
ARTICLE 5
PLANNING; FORECASTS; ORDERS; CAPACITY
5.1 CLINICAL SUPPLY.
(a) DEVELOPMENT PLANS. OSI shall share with the Development
Team for each Product plans for the clinical development of such Product in
sufficient detail to convey OSI's estimated requirements for such Product prior
to its Commercial Launch. OSI shall regularly update such plans as OSI revises
its clinical programs for Products. Such plans will be used by the Development
Team for planning purposes to establish Work Plans and Budgets for the clinical
supply of the relevant Product each year.
(b) FORECASTS, PURCHASE AND SUPPLY. As part of the Work Plans
and Budgets for clinical supply, each Development Team shall monthly establish
rolling, ** forecasts of quantities of the relevant Product for supply to OSI
for use in clinical trials. Such forecasts shall be stated in a number of Lots
of the relevant Product, with each such Lot being of the batch size set forth
for such Product in Appendix B (or such other batch size for such Product as the
relevant Development Team may subsequently agree). The first ** of each such
forecast shall constitute firm orders, and OSI shall place a Purchase Order with
Gilead for the amounts forecasted in the first ** of each such rolling forecast
in accordance with the relevant Work Plan and Budget. (For clarity, this means
that on an ongoing basis when the Development Team makes a monthly update to the
rolling forecast for the applicable Product, OSI shall place a Purchase Order
for month ** of the updated forecast, the first ** already being covered by
previous OSI Purchase Orders).
(c) CLINICAL BATCHES. The Parties recognize and agree that,
due to the early stage in development of manufacturing processes for products
still in preclinical development or in clinical trials, batch failures (meaning
a nonconformity of a batch of a particular product to the specifications
therefor at any stage in the manufacturing process) may occur in Gilead's
manufacture of Products for supply to OSI as clinical supplies hereunder, and
that such batch failures are an inherent risk associated with products in this
stage of development. If such a batch failure occurs, Gilead shall schedule a
new manufacturing run to replace the failed batch as soon as is reasonably
practicable and shall not be in breach of this Manufacturing Agreement if it
fails to meet the original Delivery Date for the shipment affected by the failed
batch. Gilead's Development Costs associated with manufacturing any failed batch
shall be paid to Gilead by OSI in the same manner as all other Development Costs
(as provided in Section 9.6). After any clinical batch failure, Gilead shall, in
consultation with the applicable Development Team, schedule a new production run
to replace the failed batch as soon as is reasonably practicable. For ** per
year per Product, the Development Team for such Product
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-15-
shall not be required to amend the Work Plan and Budget then in effect to
specifically allow a production run to manufacture quantities of the Product
required to replace the failed **, and Gilead's Development Costs to manufacture
** of such Product to replace the failed ** shall be deemed to have been
included in the applicable Work Plan and Budget and paid to Gilead by OSI in
accordance with Section 9.6 in addition to any amounts due to Gilead for
production of the failed **. If there is more than ** of a Product in a calendar
year, then the applicable Development Team shall meet to revise the applicable
Work Plan and Budget to accommodate additional production runs as desired by the
Parties, and Gilead shall not be required to supply quantities of the relevant
Product that were to come from the batch that failed unless the Development Team
so amends the applicable Work Plan and Budget.
5.2 PRELAUNCH PLANNING.
In order to facilitate the orderly and efficient commencement
of the commercial supply of each Product hereunder in relation to the timing of
OSI's Commercial Launches of Products, OSI will communicate and consult with
Gilead regarding OSI's plans for the timing for Commercial Launch of each
Product. No later than ** prior to the anticipated date of Commercial Launch
provided in OSI's development and launch plan for each Product (each, an
"Anticipated Launch Date"), OSI shall submit to Gilead an initial Delivery
Forecast for such Product for the time period beginning on the Anticipated
Launch Date for such Product and ending on the ** anniversary of such date, on a
monthly basis (the "Initial Forecast" for such Product), which Delivery Forecast
shall be based on OSI's good faith estimate of the quantities of such Product of
which it would need to receive delivery during such time period. No later than
** prior to the Anticipated Launch Date for such Product, OSI shall submit to
Gilead OSI's revised Delivery Forecast covering the period covered by the
Initial Forecast and through the end of the calendar year (the "Updated
Forecast"). The Updated Forecast shall be treated as a Production Forecast for
the ** thereof. Any remaining months of an Updated Forecast shall be for
informational purposes, and OSI shall include its good faith projection of its
requirements for such months of an Updated Forecast.
5.3 COMMERCIAL PLANNING FORECASTS.
(a) On or before August 1 of each year beginning in the year
of Commercial Launch for each Product, OSI shall provide to Gilead a separate
Delivery Forecast for each Product on a calendar quarterly (or, where reasonably
possible, monthly) basis for the ** period beginning on January 1 of the next
calendar year (each, a "Planning Forecast"). ** The aggregate Delivery Forecast
for a particular Product for the first calendar year of a Planning Forecast may
not vary by more than ** from the Delivery Forecast for such Product for such
calendar year in the previous Planning Forecast for such Product. Delivery
Forecasts for a particular Product for the second calendar year of a Planning
Forecast may not vary by more than ** from the Delivery Forecast for such
Product for such calendar year in the previous Planning Forecast for such
Product, in each case unless otherwise agreed in writing by Gilead.
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-16-
(b) Gilead will use each Planning Forecast for facilities,
personnel and budget-planning purposes. If, for **, the sum of OSI's Purchase
Orders requesting delivery hereunder in a particular calendar year for all
Products taken together exceeds the aggregate quantities of Products set forth
in OSI's Planning Forecast for such calendar year delivered on or before the
August 1 preceding such calendar year by ** or more, then the Parties will
discuss in good faith plans for Gilead to arrange for additional capacity for
the manufacture of Products hereunder at **. Unless the Parties agree in writing
to so expand capacity for the manufacture of Products for supply to OSI, Gilead
shall not be required to supply to OSI aggregate quantities of Products in
excess of such ** limit.
(c) If OSI places Purchase Orders (pursuant to Section 5.5)
for less of a particular Product in any calendar year than is set forth in the
aggregate quantity forecasted for such calendar year in the final Planning
Forecast therefor (i.e. the Planning Forecast for such Product provided no later
than August 31 of the preceding calendar year) (such aggregate quantity, the
"Minimum" for such calendar year), then Gilead shall use reasonable efforts to
re-allocate the unutilized portion of any capacity and any other resources
allocated to production of such Product for OSI and to cancel any cancelable
obligations related thereto. OSI shall promptly reimburse Gilead for the costs
of any such resources (but excluding capacity) that are not re-allocated or
obligations that are not canceled, in each case by application of such efforts.
As relates to the costs associated with OSI ordering less than the Minimum, if
the amount of a particular Product actually ordered by OSI for delivery is less
than ** of the Minimum for such Product for such year, then OSI shall bear a
"Period Cost" charge equal to those of Gilead's indirect and/or overhead costs
associated with manufacturing such Product for OSI that are under-absorbed as a
result of OSI ordering less than had been projected at the time the Transfer
Price was set.
(d) If OSI orders amounts of a given Product in a calendar
year in excess of the Delivery Forecast therefor in the final Planning Forecast
for such calendar year (i.e. the Planning Forecast for such Product provided no
later than August 31 of the preceding calendar year), then Gilead **.
5.4 COMMERCIAL PRODUCTION FORECASTS.
(a) No later than the first business day of each calendar
month (beginning, for each Product, within ** after the Updated Forecast is due
for such Product), OSI shall provide Gilead with written notice of its Delivery
Forecast for each Product on a monthly basis for the ** period beginning with
the ** after such calendar month ("Production Forecast"). ** Production
Forecasts will be stated in numbers of vials of each Product, and each monthly
forecast shall be expressed in multiples of a standard production batch size (or
Lot) notified OSI by Gilead in writing from time to time and set forth or
updated at the times of such notices on Appendix B. Gilead will use Production
Forecasts to plan for actual manufacturing runs of Products.
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-17-
(b) Delivery Forecasts for a particular Product for each of **
of a Production Forecast may not vary by more than ** from the Delivery Forecast
for such Product for such ** when it was ** of a Production Forecast. Delivery
Forecasts for a particular Product for each of ** of each Production Forecast
may not vary by more than ** from the Delivery Forecast for such Product
included in the Production Forecast when such month when it was ** of the
Production Forecast. All monthly Delivery Forecasts in a Production Forecast
shall be subject to the requirements of Section 5.3(a) for total annual (based
upon calendar years) Product orders by OSI.
(i) The first ** of each Production Forecast will
constitute a minimum firm order and will be accompanied by a Purchase Order as
set forth in Section 5.5. The remaining ** of each Production Forecast will
constitute a non-binding forecast, subject to the limits of Section 5.4(a) and
this Section 5.4(b).
(ii) Gilead shall not be obligated to supply in a
calendar month a quantity of a Product that is more than ** of the Delivery
Forecast for such month in the final Production Forecast therefor made in
compliance with this Section 5.4(b) (i.e. the Production Forecast due ** prior
to the start of such calendar month), but if requested by OSI shall use
reasonable efforts to supply any amounts of a Product in excess of ** of such
final Production Forecast. Gilead shall notify OSI in writing promptly after
receiving a Purchase Order from OSI whether it is able to fill and accepts the
obligation to fill such Purchase Order to the extent exceeding such ** limit
(any quantities requested in a Purchase Order that are in excess of such limit,
the "Requested Additional Amount" for that Purchase Order). Any Requested
Additional Amount that Gilead accepts (in whole or in part) pursuant to this
Section 5.4(b) within ** business days after the date of such Purchase Order
therefor shall be binding upon Gilead and OSI (together with the automatically
binding amounts ordered falling within the ** limit, the "Binding Amount" for
such Purchase Order). If Gilead fails to respond within ** business days after
the date of a Purchase Order that requests delivery of a Requested Additional
Amount that Gilead accepts the obligation to fill all or a portion of the
Requested Additional Amount, then the Binding Amount for such Purchase Order
shall be the amount that is binding upon the Parties pursuant to such ** limit.
5.5 COMMERCIAL PURCHASE ORDERS.
With each Production Forecast, OSI will provide Gilead with a
Purchase Order for Products for the first ** of such Production Forecast that
states the specific dates on which Gilead should deliver the specific quantities
of Products thus ordered. Gilead will use commercially reasonable efforts to
fulfill such Purchase Order according to its terms. Any Purchase Orders for
Product submitted by or on behalf of OSI shall reference this Manufacturing
Agreement and shall be governed exclusively by the terms and conditions of this
Manufacturing Agreement. Any term or condition in any Purchase Order,
confirmation or other document furnished by OSI or Gilead with respect to
Product orders or deliveries that is
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-18-
in any way inconsistent with the terms or conditions of this Manufacturing
Agreement is hereby expressly rejected.
5.6 DELIVERY.
Gilead will supply Product, pursuant to OSI Purchase Orders,
within ** after the delivery date specified in the applicable Purchase
Order for such shipment, in an amount within ** more or less of the Binding
Amount therefor, due to reasonable batch yield variations; provided, however,
that if a deviation occurs with respect to any batch of Product, the Development
Team shall discuss how to address the deviation and set a new delivery for
Gilead to deliver the affected shipment consistent with addressing such deviance
in the manner and on the timeline agreed by the Development Team. Gilead shall
deliver the affected shipment by the delivery date agreed in such an event by
the Development Team. If any deviations remain unresolved for a period of **
days or more, then Gilead shall provide quantities of the relevant Product from
an alternative batch of such Product to fill any affected shipments as soon as
reasonably practicable.
ARTICLE 6
MANUFACTURE; TESTING; QUALITY ASSURANCE AND LABELING RESPONSIBILITIES
6.1 RAW MATERIAL SPECIFICATIONS.
Gilead shall use raw materials in the manufacture of Products
that conform to the applicable Specifications for the relevant Product. Gilead
shall verify such conformance in accordance with the testing standards and
procedures specified therein.
6.2 PRODUCTION AND MANUFACTURING STANDARDS.
Gilead shall manufacture, test, store and ship each Product
supplied to OSI hereunder in a manner that (i) assures that such Product meets
the Specifications for such Product upon delivery to OSI or its carrier FCA
Gilead's San Dimas facility; (ii) is consistent with Section 12.2 and any
Regulatory Approval Application or Regulatory Approval for the Product; and
(iii) is in accordance with any other procedures and documents subsequently
prepared and agreed to by the Parties in writing in accordance with the terms
hereof.
6.3 cGMP COMPLIANCE AND QA AUDITS.
Upon written request to Gilead and at reasonable intervals
(but in any event no more frequently than once per calendar year), OSI shall
have the right to have an Industry Expert (either one that is mutually agreed by
the Parties or a single Industry Expert that would be the third Industry Expert
if a panel were being established pursuant to Section 16.4) visit Gilead's
manufacturing facilities during normal business hours to observe and inspect
their
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-19-
manufacturing operations and the facilities and procedures used in the
manufacture and storage of API and Products to be supplied to OSI hereunder, and
to assess their compliance with cGMP, QA standards and other requirements under
this Manufacturing Agreement; provided, however, that notwithstanding anything
to the contrary in this Section 6.3, OSI's rights pursuant to this Section 6.3
with respect to manufacturing facilities used to manufacture each Product shall
specifically exclude the right to observe the following trade secret-related
steps in the manufacture of any Liposomal Product using its API: (i) manufacture
of intermediates; and (ii) production of bulk Liposomal Product.
6.4 CHANGE IN MANUFACTURING PROCESS PROPOSED BY GILEAD.
Following manufacture of the Lots of each Product data
regarding which will be included in the DMF filed with the FDA and used to
determine such Product's shelf life in accordance with the NDA in the United
States, Gilead shall not make any change in the materials, equipment, process or
procedures used to manufacture such Product for supply to OSI hereunder that (i)
is not explicitly permitted pursuant to the applicable Specifications, and (ii)
would constitute a material change under cGMP without OSI's prior written
consent, such consent not to be unreasonably withheld. If OSI agrees to allow
any such change requiring OSI's approval to be implemented, then the Parties
shall revise the relevant Specifications accordingly, if necessary. Gilead shall
not change the manufacturing process for any Product in a manner that would
require a filing with a Regulatory Authority without OSI's prior written
consent, other than pursuant to a Work Plan and Budget in accordance with
Article 4.
6.5 CHANGES TO SPECIFICATIONS.
(a) The Parties may revise the Specifications for any Product
upon mutual written consent (such consent not to be unreasonably withheld),
except that, as further described below in this Section 6.5, neither Party may
withhold its consent to Required (as defined below) changes to the
Specifications. Any changes to the Specifications that are agreed upon or
required pursuant to this Section 6.5 shall be effective as of the date mutually
agreed upon in writing by the Parties, and all references to the relevant
Specifications shall thereafter be deemed to refer to the Specifications as so
modified.
(b) If either Party (the "Proposing Party") desires to change
any Specifications it shall notify the other Party (the "Recipient") in writing
of the proposed change (a "Proposed Specification Change"), and the Development
Team shall review and discuss such Proposed Specification Change. As soon as
reasonably practicable after receiving any such notification, but in any event
within thirty (30) days after such receipt, the Recipient shall respond in
writing to the Proposing Party whether it agrees to effect the Proposed
Specification Change. Any Proposed Specification Change that is required by a
Regulatory Authority or law or regulation of any jurisdiction in which OSI is
developing and/or marketing the Product affected by the Proposed Specification
Change shall be referred to herein as a "Required" change. The Parties shall
make each Proposed Specification Change to a set of Specifications that is
Required.
-20-
(c) For each Proposed Specification Change, Gilead shall
indicate for informational purposes whether the implementation of such change is
expected to result in material additional capital costs or other expenses of
manufacturing the Product governed by such Specifications over those which
Gilead is then incurring to manufacture or have such Product or API manufactured
("Additional Costs"). For Proposed Specification Changes that are not Required,
promptly after Gilead's notice of any Additional Costs, OSI shall indicate in
writing whether it continues to wish to implement such Proposed Specification
Change. Neither Party shall have any obligation to implement any Proposed
Specification Changes unless such Proposed Specification Changes are Required or
the Parties (via their participation in the Development Teams) have agreed in
writing nonetheless to implement such Proposed Specification Changes (each, an
"Implemented Change").
(d) For Additional Costs associated with Implemented Changes,
the Parties shall adjust the Transfer Price to reflect such Additional Costs as
part of Gilead's Fully Burdened Costs to manufacture the affected Product as of
the date the Implemented Change goes into effect, as set forth in Section
9.2(f).
6.6 QUALITY CONTROL SAMPLES AND METHODS.
(a) Gilead shall retain samples of bulk drug and finally
formulated Product for each Lot of Product for at least a period of one (1) year
after the expiration date of Product from such Lot. The sample size shall be
twice the size necessary to conduct quality control testing. Upon OSI's written
request, Gilead shall provide OSI with up to one-half (1/2) the original amount
of the retained samples.
(b) In order to facilitate the prompt and efficient generation
and exchange between the Parties of quality control data pertaining to Products
to be supplied hereunder to OSI, Gilead will, at OSI's request, send to OSI test
samples selected according to a sampling plan agreed between Gilead and OSI,
before Gilead has finished all of its testing for a particular Lot.
(c) To the extent requested by OSI, Gilead shall, pursuant to
a Work Plan and Budget agreed by the applicable Development Team, perform
technology transfer activities to transfer to an independent, Third Party
laboratory the ability to conduct Gilead's validated QC methods for testing the
Products for their conformity to the applicable Specifications. Gilead shall
grant such Third Party a license under Patents and Information Controlled by
Gilead, to perform such activities; provided that such Third Party shall enter
into a written agreement with Gilead providing (i) for obligations of
confidentiality and non-use of confidential information disclosed by Gilead to
such independent laboratory (which shall specifically include information as to
the validated methods taught the Third Party by Gilead) that are no less
stringent than those set forth in Article 14 and that are perpetual (to reflect
the fact that information disclosed to the Third Party will include trade secret
information relating to liposomal technology methods), and (ii) for the grant by
such Third Party to Gilead of a non-exclusive, perpetual license under all
Liposomal Inventions conceived, reduced to practice or otherwise made by such
Third Party in the course of its receipt of such technology transfer
-21-
or practice of such QC methods of Gilead, to practice such Liposomal Inventions
in connection with its supply of Products hereunder to OSI, and to develop,
make, analyze, use, sell, offer for sale and import products other than Products
(such license, the "Grantback"). Such Third Party's agreement with Gilead shall
indicate that the Third Party is not permitted to modify the QC methods
disclosed to it by Gilead, and that the Grantback is intended not as permission
to so modify such methods, but rather to protect the value of Gilead's
trade-secret technologies and provide to Gilead freedom to operate in relation
to such technologies.
6.7 RECORDS.
Gilead shall itself maintain complete and adequate records
pertaining to each stage of the manufacture, fill and finish of Products for
supply pursuant to this Manufacturing Agreement and the methods and facilities
used therefor all in accordance with the applicable regulations of relevant
Regulatory Authorities. Gilead shall perform any additional testing desired by
OSI beyond that called for in the applicable Specification at OSI's request and
expense.
6.8 LOT FAILURE.
Gilead agrees to notify OSI within five (5) business days
after either (i) the discovery of any Lot failure, or deviation from or variance
in manufacturing procedures or standard operating procedures that can reasonably
be expected to result in a Lot failure, or (ii) its first knowledge of any
confirmed failure of any Lot of Product to meet standards found in the relevant
Product's regulatory filings or in the Specifications, and in each case that is
reasonably likely to result in Gilead's inability to meet OSI's requested
delivery dates for supply of any Product hereunder.
6.9 REWORK OR REPROCESS.
Gilead shall conduct any rework or reprocessing activities
with respect to Products or components thereof for supply to OSI by utilizing
rework or reprocessing procedures, if any, that are both referenced in the
applicable Specifications and permitted pursuant to the Regulatory Approval
Applications or Regulatory Approvals, as applicable, for such Products. Gilead
shall document all rework and reprocessing activities under this Manufacturing
Agreement.
6.10 PACKAGING AND LABELING RESPONSIBILITIES.
The Parties expect that Gilead will supply Products in filled
and finished form, packaged and finally labeled as required for sale, in
accordance with the Labeling and Packaging Specifications to be agreed by the
Development Teams. The Development Teams may revise the Labeling and Packaging
Specifications for their respective Products, once established by mutual written
consent; provided that OSI shall not withhold its consent to any such change
that is required for Gilead to perform its responsibilities pursuant to Section
12.2.
-22-
6.11 IMPORT PERMITS.
OSI shall be responsible for obtaining any necessary import
permits for Products.
6.12 TESTING AND RELEASE.
Gilead shall be responsible for all testing and release of
Products hereunder at its San Dimas facility, except as provided in the rest of
this Section 6.12. For quantities of Products supplied OSI for use of sale in
countries of the European Union (the "EU"), Gilead shall have the right to
conduct such portion of the testing and release thereof at its facilities within
the EU as is required to be conducted within the EU for such quantities to be
used and sold in Europe consistent with European law. Gilead currently has
testing and release facilities in Dublin, Ireland and may conduct such testing
and release at such Irish facilities, or at such other of its facilities within
any country of the EU as it may prefer. For any country other than the United
States and those of the EU, which other country requires testing and release of
pharmaceuticals to occur within itself in order be sold or used clinically
within such country, Gilead shall have the option to conduct the testing and
release of quantities of Product bound for such country at a facility of its
choosing and reasonably acceptable to OSI within such country.
ARTICLE 7
DELIVERY; ACCEPTANCE AND REJECTION
7.1 SHIPPING.
Gilead shall ship Products with completed and appropriately
signed Certificates of Analysis relating thereto to OSI or OSI's designee
identified by OSI in the Purchase Order for such Products.
7.2 SHIPMENTS AND CARRIER.
Each shipment of Products will be delivered FCA Gilead's
manufacturing and/or release facility (whichever later houses the shipment), to
the common carrier specified by OSI in the applicable Purchase Order. OSI shall
reimburse to Gilead the full cost of any freight, postage, shipping
transportation and insurance charges associated with each shipment of Product as
described below in Section 9.4. Gilead shall number each shipment with a vendor
lot number that allows the Parties to trace raw materials and/or components used
to manufacture such shipment of Product.
7.3 QC SAMPLES; DOCUMENTATION.
OSI shall supply Gilead with sufficient quantities of API from
each lot of API supplied by OSI to Gilead hereunder, and from time to time also
with sufficient amounts of reference standards of API and its intermediates and
degradation products, for Gilead to
-23-
perform appropriate QC testing relating to Products to be supplied hereunder.
Gilead shall provide a Certificate of Analysis with each quantity of Product
supplied OSI hereunder certifying that such quantity has been properly tested
and released.
7.4 SHIPPING INSURANCE AND RISK OF LOSS.
Except as provided herein with respect to Products that are
non-conforming at the time of delivery FCA to the common carrier designated
pursuant to this Manufacturing Agreement, title and risk of loss as to all
materials shipped by Gilead pursuant to this Manufacturing Agreement shall pass
to OSI when OSI, or OSI's designated carrier, takes possession of Product,
consistent with shipment FCA, at the facility from which the shipments are
delivered to the carrier. OSI shall arrange for insurance for each shipment of
Product in the amounts and manner it desires and shall bear the costs of such
insurance. OSI or the carrier for each shipment of Product shall be responsible
for clearing such shipment through customs in the country of manufacture and in
the country of destination, at OSI's sole expense.
7.5 OUT-OF-SPECIFICATION PRODUCT.
(a) On a Product-by-Product basis, OSI may reject any shipment
of Product that is (a) not in conformance with the Specifications for that
Product, (b) adulterated or misbranded within the meaning of the United States
Federal Food, Drug and Cosmetic Act, (c) not prepared in compliance with cGMP or
other applicable laws or regulations, or (d) not packaged and shipped in
accordance with the requirements of this Manufacturing Agreement, by written
notice to Gilead within ** after OSI's (or its designee's) receipt of such
shipment; provided, however, that if OSI will not be able to obtain data
permitting it to determine whether it accepts or rejects a particular shipment
within ** after its receipt thereof despite devoting commercially reasonable
efforts to obtaining such data, OSI shall so notify Gilead as promptly as is
reasonable practicable after the date OSI receives such shipment, and in any
event no later than ** after such date of receipt by OSI, in which case the
Development Team shall promptly discuss whether a ** extension of the deadline
for OSI to notify Gilead if OSI rejects the shipment is appropriate. The
Development Team shall provide its decision as to such matter prior to ** after
such date of receipt by OSI. For clarity, the Parties intend that a ** extension
may be appropriate in situations where a delay in OSI's receipt of a particular
shipment causes a delay in OSI's ability to have a Third Party analyze such
shipment, but that under the majority of circumstances, ** after delivery shall
be a sufficient period for OSI to notify Gilead of a rejection. Any such notice
of rejection shall be accompanied by (i) a report of analysis from the shipment
analyzed, (ii) a product sample from the rejected shipment of Product to be used
by Gilead in assessing whether Gilead agrees that such rejection was proper, and
(iii) a copy of all records pertaining to the test methods employed and results
thereof, and data generated with respect to the status (including temperature
measurements) of such Product at all times from and after delivery of such
Product to the common carrier specified under this Manufacturing Agreement. If
no such notice of rejection of non-
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-24-
conforming Product is received by Gilead in accordance with the procedure and
time-frame described herein, OSI shall be deemed to have accepted such delivery
of Product.
(b) If OSI provides a notice of rejection of non-conforming
Product pursuant to Section 7.5(a), the Parties shall cooperate in good faith to
determine whether such rejection is appropriate and Gilead shall use its
Commercially Reasonable Efforts to promptly provide OSI with quantities of
Product to replace the quantities initially rejected by OSI. (The manner in
which the Parties will bear the costs of the rejected quantities is as provided
below in this Section 7.5(b) and Section 7.5(c)). Gilead shall have a period of
** to determine whether it believes that such shipment of Product has been
reasonably rejected and to notify OSI in writing of its determination. If Gilead
disagrees with OSI's determination that such shipment of Product has been
reasonably rejected, Gilead shall provide OSI with Gilead's report of analysis
for the sample analyzed. In the event of such a disagreement, a sample from such
shipment of Product shall be submitted to a mutually acceptable third party
independent laboratory for determination of whether such Product has been
reasonably rejected in accordance with Section 7.5(a). Such laboratory's
determination shall be final, determinative and binding upon the Parties so long
as the testing relied upon by such laboratory to make such determination has
been performed in accordance with Gilead's validated methods for the relevant
Product. The fees and expenses of such laboratory testing shall be borne
entirely by the Party against whom such findings are made. If such laboratory
determines that such Product has not been reasonably rejected, then such Product
shall automatically be deemed to have been accepted by OSI, and OSI will pay the
Transfer Price in accordance with Section 9.2 for both the quantities of Product
initially rejected by OSI and any replacement quantities provided by Gilead
pursuant to this Section 7.5(b).
(c) If either (i) Gilead agrees with a determination by OSI
that either a shipment of Product has been reasonably rejected, or (ii) a
mutually acceptable Third-Party independent laboratory to which a dispute with
respect to such determination has been submitted pursuant to Section 7.5
determines that a shipment of Product has been reasonably rejected, Gilead
shall, at OSI's election, either use its Commercially Reasonable Efforts to
replace, at Gilead's expense, such Product within sixty (60) days after the
original delivery date of the rejected or defective Product, to the extent
Gilead has not already made such replacement pursuant to Section 7.5(b), or
reimburse or credit amounts actually paid by OSI to Gilead therefor. Final
disposition (i.e. storage or destruction) of properly rejected or defective
Product shall be the responsibility and at the expense of Gilead.
(d) Notwithstanding anything express or implied to the
contrary in the foregoing provisions of Section 7.5, in no event shall Gilead be
liable for any non-conforming Product to the extent the non-conformity is caused
by any circumstance, action or omission following the time that Gilead has
delivered such Product to the common carrier as specified under this
Manufacturing Agreement for delivery to OSI or its designee, and OSI shall be
deemed to have accepted any quantities of Product that are defective solely due
to such a cause.
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-25-
ARTICLE 8
REGULATORY ISSUES
8.1 EXISTING FILINGS.
(a) GOALS. To the full extent consistent with the goal of
protecting the confidentiality of Gilead's CMC Information contained in
currently (as of the Closing Date) existing Regulatory Approval Applications for
the Liposomal Products, the Parties intend that Gilead shall transfer
sponsorship and ownership of all such Regulatory Approval Applications to OSI.
This Section 8.1 sets forth the procedures the Parties shall follow to achieve
such goal.
(b) INTERIM RIGHTS OF REFERENCE AND PROCEDURES FOR EXISTING
FILINGS. Gilead hereby grants OSI a right of reference to each of the Regulatory
Approval Applications set forth on Appendix C (the "Existing Filings"), which
have been filed prior to the Closing Date. OSI shall have no right to access or
inspect, and shall not seek to access or inspect, any such Regulatory Approval
Application for a Liposomal Product until and unless Gilead has segregated any
CMC Information contained therein into a DMF for the relevant Product in
accordance with Section 8.1(d)(i). Gilead shall not be required to take any
action with respect to any Existing Filing that would result in the disclosure
to OSI of any CMC Information contained in such Existing Filing. No later than
thirty (30) days after the Closing Date, Gilead shall notify the FDA and other
applicable Regulatory Authorities of, and as soon as is reasonably practicable
thereafter take all actions reasonably necessary to effect or evidence, the
grant of such rights to OSI.
(c) DMF FILING. Promptly after the Closing Date, Gilead shall
compile and file a DMF relating to the liposomal formulation aspects of
manufacturing Liposomal Products covered by each of the Existing Filings, and
shall file each such DMF with the FDA or other relevant Regulatory Authorities
as soon as is reasonably practicable thereafter (subject, in the case of filings
that must be made with Regulatory Authorities other than the FDA, to Section
8.4). Because the Canadian Existing Filing for GS7836 contains no information
relating to liposomal formulation techniques, Gilead will not file a DMF in
relation to such Existing Filing unless the Parties otherwise agree in writing.
(d) TRANSFER OF REMAINDER OF FILING.
(i) With respect to each Existing Filing for a
Liposomal Product in a country where it is possible to (i) file a DMF and (ii)
delete the information contained therein from the Existing Filing, after Gilead
has achieved both of the foregoing, then Gilead shall take all actions, and
deliver such documents, as are reasonably necessary to transfer sponsorship of
and title in the remaining portion of such Existing Filing to OSI. With respect
to the Canadian Existing Filing for GS7836, Gilead shall transfer the entire
filing to OSI and shall take all actions, and deliver such documents, as are
reasonably necessary to transfer sponsorship of and title in such Existing
Filing to OSI.
-26-
(ii) With respect to Existing Filings for Liposomal
Products in countries other than those described in Section 8.1(d)(i), Gilead
shall, as soon as is reasonably practicable after the Closing Date and pursuant
to Work Plans and Budgets and procedures agreed by the applicable Development
Team, disclose to OSI the information contained in such Existing Filing, but not
to be included in the DMF relating thereto that Gilead shall file in accordance
with Section 8.1(c). Gilead hereby grants to OSI Gilead's entire right, title
and interest in and to, and the attendant right to use, any information so
disclosed to OSI by Gilead in connection with OSI's filing of Regulatory
Approval Applications and Regulatory Approvals for, and other lawful purposes
with respect to, the relevant Products, subject to (i) Gilead's right to use
such information as may be required by law, rule, regulation or requirement of a
Regulatory Authority in connection with the Products, (ii) Gilead's rights to
use any such information that relates to general methods and know-how to the
extent that it does not primarily relate to any Product, for purposes unrelated
to the Products and (iii) any agreements Gilead may have entered into with a
Third Party prior to the date hereof relating to such information (such as, for
example, a Third Party having helped generate any clinical data contained in
such a filing). The Parties intend that OSI shall use such information to file a
new Regulatory Approval Application for the relevant Liposomal Product in each
such country. For clarity, OSI shall continue to enjoy the right of reference
set forth in Section 8.1(b) with respect to the Existing Filings in countries
where the Parties intend that OSI shall eventually file a new Regulatory
Approval Application omitting the information to be contained in the DMF
corresponding thereto to be filed by Gilead in accordance with this Section 8.1.
To the extent that any clinical trials covered by an Existing Filing are ongoing
(or have commenced) on or prior to the Closing Date, OSI shall be permitted to
continue to perform (or have a contract research organization continue to
perform) such clinical trials under the relevant Existing Filing. For all
clinical trials for Liposomal Products commenced after the Closing Date, OSI
shall conduct (or have conducted) such clinical trials under OSI's new
Regulatory Approval Application for the relevant Liposomal Product in the
relevant regulatory jurisdiction, regardless of whether such trials were
originally described in an Existing Filing.
8.2 RIGHTS OF REFERENCE TO DMFs.
Gilead hereby grants OSI a right of reference to each DMF that
Gilead shall file as required under this Article 8 with respect to the
manufacture of any Product. OSI shall have no right to access or inspect, and
shall not seek to access or inspect, any DMF filed by or on behalf of Gilead for
a Product. Promptly after filing any DMF for a Product hereunder, Gilead shall
notify the FDA and other applicable Regulatory Authorities of, and as soon as is
reasonably practicable thereafter take all actions reasonably necessary to
effect or evidence, the grant of such rights to OSI with respect to such DMF.
8.3 REGULATORY FILINGS CURRENTLY BEING COMPILED.
Gilead has been, prior to the Closing Date, in the process of
compiling INDs for each of GS7836 and GS7904L. In lieu of compiling such INDs in
their entireties, Gilead shall: (i) in consultation with the applicable
Development Teams and pursuant to Work Plans and Budgets established by such
Development Teams, prepare a separate DMF to correspond to the
-27-
IND for each such Product and file each such DMF as soon as reasonably
practicable; and (ii) disclose to OSI, as soon as is reasonably practicable and
pursuant to Work Plans and Budgets and procedures agreed by the relevant
Development Teams, all other information (a) not to be contained in the
applicable DMF, (b) in Gilead's possession as of the Closing Date, and (c) that
Gilead would have included in its own filing of the IND for each such Product
had it continued to compile the IND therefor. In addition, with respect to
GS7904L, Gilead shall disclose to OSI any information relating to the API for
such Product contained in such a DMF that does not constitute a trade secret of
Gilead (as determined in Gilead's reasonable discretion). With respect to
GS7836, Gilead shall disclose to OSI any manufacturing information that will be
contained in the DMF therefor. Gilead hereby grants OSI the right to use any
information disclosed by it to OSI pursuant to this Section 8.3 in connection
with OSI's filing Regulatory Approval Applications and Regulatory Approvals for
the relevant Products.
8.4 ADDITIONAL REGULATORY APPROVAL APPLICATIONS.
(a) In countries where it is possible to file a DMF and OSI
wishes to file a Regulatory Approval Application for a Liposomal Product, Gilead
shall file a DMF for such Liposomal Product pursuant to a Work Plan and Budget
agreed by the applicable Development Team, at OSI's expense. OSI shall file all
other Regulatory Approval Applications for such Product in such country.
(b) In countries where it is not possible to file a DMF and
OSI wishes to file a Regulatory Approval Application for a Liposomal Product,
the Parties shall make arrangements to protect the confidentiality of Gilead's
manufacturing information as set forth in this Section 8.4(b). In each such
country, the Parties shall engage a Third Party to serve as an agent of both
Parties for purposes of accessing Regulatory Approval Applications and
Regulatory Approvals in such country. The Third Party would have the right to
access such filings and receive and transmit communications relating thereto to
and from the Regulatory Authority in such country. The Third Party would be
bound to Gilead by written, perpetual obligations of confidentiality and non-use
of all CMC Information equivalent in scope to those set forth in Article 14, and
would serve to ensure that OSI could not access the contents of any Regulatory
Approval Applications or Regulatory Approvals to the extent containing CMC
Information, including without limitation by thoroughly redacting any such
information from any correspondence relating to or portions of such a filing
before sharing these with OSI. Any expenses associated with the services of such
a Third Party shall be borne by OSI. The applicable Development Team may agree
to alternative arrangements to protect the confidentiality of the CMC
Information in a manner acceptable to Gilead.
(c) With respect to GS7836, the applicable Development Team
shall determine whether manufacturing information shall be filed as a separate
DMF or as a CMC that is part of the main Regulatory Approval Application, and
establish Work Plans and Budgets for any Gilead activities conducted in
connection with such filings.
-28-
8.5 REGULATORY ACTIVITIES.
With respect to additional filings reasonably required by OSI
for its Regulatory Approval Applications and/or Regulatory Approvals for the
Products (including without limitation any updates to a DMF for a Product
associated with the preparation of NDAs for the Products) and any
record-keeping, audits, inspections and audits required by Regulatory
Authorities relating to the manufacture of Products by Gilead hereunder, Gilead
shall reasonably cooperate with OSI to provide such support as otherwise
consistent with this Manufacturing Agreement pursuant to Work Plans and Budgets
established by the relevant Development Teams.
8.6 COMPLIANCE WITH LAW.
(a) Gilead shall be responsible to comply with all applicable
laws and Regulatory Requirements of the Regulatory Authorities of countries in
which OSI is clinically testing or marketing Products, and any other national,
supra-national (e.g. the European Commission or the Council of the European
Union), state or local regulatory agency, department, bureau, commission,
council or other governmental entity relevant anywhere in the countries in which
OSI is clinically developing or marketing the Products, regarding the
manufacture, shipment, storage, use, and handling of the Products supplied
hereunder, and disposal of hazardous waste products relating to Gilead's
responsibilities hereunder. Gilead shall give OSI notice, as soon as reasonably
practicable, of any impending inspections, both announced and unannounced, by a
governmental agency of any facility used for or processes involved in the
manufacture of a Product to be supplied to OSI hereunder. OSI shall keep Gilead
informed on a prompt and ongoing basis of the standards imposed by Regulatory
Authorities, laws and Regulatory Requirements relevant to the manufacture of
Products hereunder (and any changes to such standards) by regular reports to the
Development Teams. The Development Teams shall discuss and decide the best
courses of action in light of such standards. Any changes to the Specification
for a Product shall be made in accordance with the procedure set forth in
Section 6.5. The increased costs of any mid-year changes in manufacturing
processes, testing and release or other procedures performed hereunder by Gilead
in relation to the manufacture of Products in order to comply with such
standards shall be borne by OSI in accordance with Sections 6.5 and 9.2(f).
(b) OSI shall be responsible for its failure to comply with
all applicable laws and Regulatory Requirements regarding OSI's testing for
release of any Product. OSI shall give Gilead notice, as soon as reasonably
practicable, of any impending inspections in relation to any Product, both
announced and unannounced, by a governmental agency of any facility used for or
processes involved in the testing for release of a Product by OSI.
8.7 RECORDS.
Specifically, but without limitation, Gilead shall maintain
all records reasonably necessary to support and verify its compliance with this
Manufacturing Agreement, the Specifications, laws and all applicable Regulatory
Requirements, including all records relating to the manufacture, stability and
quality control of all Products. Gilead shall maintain all such
-29-
records for a period of not less than three (3) years from the expiration date
of each Lot of Product to which such records pertain, or such longer period as
may be required by law, rule or regulation.
8.8 GOVERNMENTAL INQUIRIES.
(a) Gilead shall notify OSI of any issues or other information
of which Gilead becomes aware which may affect the regulatory status of any
Product, and each Party shall notify the other Party of any issues or other
information of which the notifying Party becomes aware which may affect the
ability of Gilead to supply Product in accordance with OSI's forecasted
requirements. Each Party agrees to notify the other Party by the close of the
first full business day at its Facility (as defined in the next sentence) after
the day of the notifying Party's first notice of any inquiries, notifications,
or inspection activity by any governmental agency in regard to any Product (such
period of time after notice or receipt of a given time, "Regulatory Notice
Period"). ("Facility" for purposes of this Section 8.8 shall mean a Party's
facility at which it receives notice of the relevant inquiry, notification or
inspection activity by any governmental agency in regard to any Product.) Each
Party shall use commercially reasonable efforts to furnish to the other Party
(i) within the Regulatory Notice Period, any report or correspondence issued by
the governmental authority in connection with such a visit or inquiry, and (ii)
not later than one (1) business day prior to the date to be provided to a
governmental authority, copies of any and all responses or explanations relating
to items set forth above, in each case purged only of trade secrets or other
confidential or proprietary information of Gilead.
(b) Gilead shall be required to allow an OSI representative to
observe any governmental visits to or inspections of Gilead's manufacturing
facility for the Products, which visits and inspections are specific to
Products; provided that the Parties would follow appropriate procedures to
prevent the OSI representative from gaining access to, the opportunity to
observe, or disclosure of any CMC Information, and Gilead would not have to
permit the OSI representative to be present to observe any discussion of CMC
Information ("Private Discussions"). Notwithstanding the foregoing, OSI may
choose a single OSI representative who may be present during all Private
Discussions hereunder and shall designate such person by written notice to
Gilead as the "Single Confidant," in accordance with the definition thereof. The
Single Confidant shall enter into a written agreement with Gilead providing for
obligations of confidentiality and non-use of confidential information no less
stringent than those contained in Article 14, but in light of the fact that
Gilead would be disclosing CMC Information to the Single Confidant, the term of
such obligations shall be perpetual. OSI shall guarantee the performance of the
Single Confidant under such person's contract with Gilead.
8.9 STABILITY STUDIES.
Gilead shall conduct or have conducted stability studies on
API and Products for at least one (1) Lot of each Product in filled and finished
form from each site where Gilead manufactures such Product, in each case at
least one (1) time per year following the first
-30-
Commercial Launch of a Product by OSI. OSI shall be solely responsible for
stability studies relating to API supplied to Gilead by OSI hereunder. Gilead
shall conduct or have conducted such appropriate stability studies in accordance
with the applicable Specifications, laws and Regulatory Requirements. Gilead
shall provide OSI with an annual report of all stability results Gilead has
obtained in such stability studies during the year preceding the report. If
either Party desires to revise the design or frequency of stability studies,
such Party shall so advise the Development Team, which shall be responsible to
determine the advisability of implementing such revision.
8.10 TECHNICAL AGREEMENT.
No later than ninety (90) days after the Closing Date, the
Parties shall prepare a "Technical Agreement" for NX211, and shall prepare a
Technical Agreement for each of GS7836 and GS7904L on a schedule to be
determined by the Development Teams for such Products. Each such Technical
Agreement shall set forth the responsibilities of the Parties with respect to
such Product in sufficient detail to satisfy the requirements of Article 12 of
Directive 91/356/EEC and any requirements of the FDA. The Parties shall make
each such Technical Agreement available for inspection by the Regulatory
Authorities as and to the extent they request. Each Technical Agreement shall
accurately reflect the Parties' respective responsibilities with respect to the
Product to which such Technical Agreement relates, and no Technical Agreement
shall alter or vary from the Parties' responsibilities with respect to the
Product to which it relates as embodied in this Manufacturing Agreement. Without
limitation, each Technical Agreement shall clearly set forth the notification
and other procedures the Parties shall follow in relation to any recall, product
withdrawal or field correction relating to a quantity of the relevant Product
supplied hereunder.
ARTICLE 9
PRICE, INVOICING AND COSTS
9.1 COSTS OF CLINICAL SUPPLY.
OSI shall pay to Gilead its Development Costs associated with
each Work Plan and Budget for the manufacture of quantities of a Product for
supply to OSI hereunder, in accordance with Section 9.6.
9.2 PRICE FOR COMMERCIAL SUPPLY.
OSI shall pay to Gilead a Transfer Price for each unit
supplied for commercial sale (or after the relevant Commercial Launch) of each
Product calculated in accordance with this Section 9.2.
(a) Annually, on or before August 31 of each year subsequent
to calendar year 2001 (beginning, with respect to each Product, in the year
prior to the Anticipated Launch Date for such Product), Gilead shall notify OSI
of its estimated "Transfer Price" for units of each Product for commercial
supply delivered by Gilead to OSI to apply for the following
-31-
calendar year, **. Such projection shall be based on Gilead's projected Fully
Burdened Cost to manufacture (including without limitation testing and release)
such Product in the upcoming calendar year. "Fully Burdened Cost" with respect
to a Product shall **.
(b) No later than October 31 of each calendar year after
calendar year 2001 with respect to any Product for which a Transfer Price for
commercial supply must be set to apply in the following year, Gilead shall
notify OSI in writing of the final Transfer Price in dollars that Gilead
proposes for units of each Product for commercial supply delivered in the
calendar year following the date of such notice. Gilead's notice as to the final
Transfer Prices it proposes shall include a statement of how Gilead has
calculated the dollar figures it proposes. Within thirty (30) days after
receiving such a notice from Gilead of any final Transfer Price, and with
respect to each Product, OSI shall respond in writing as to whether it (i)
accepts the Transfer Price proposed by Gilead for quantities of such Product to
be delivered in the following calendar year, or (ii) disputes that the Transfer
Price proposed by Gilead for such Product fairly reflects the appropriate
calculations in accordance with Section 9.2(a). Additionally within such time
frame, OSI may request in writing, and Gilead shall reasonably promptly provide,
any additional data reasonably required to calculate a Transfer Price.
(c) For each Product, if OSI does not dispute the Transfer
Price proposed by Gilead, then the figure proposed by Gilead shall be the
Transfer Price for such Product for all units of Product manufactured by or for
Gilead and/or its Affiliates and delivered to OSI in the calendar year following
the date of the Parties' notices pursuant to Section 9.2(b).
(d) If OSI disputes an amount proposed by Gilead to be the
Transfer Price for any Product, or as the Fully Burdened Cost therefor, then the
Development Team for such Product shall discuss the issues for a period of up to
twenty (20) days. If, after such discussions by the applicable Development Team,
the Parties continue to disagree on such issue, then the Parties shall submit
the issue to Gilead's independent auditor reasonably acceptable to OSI (the
"Independent Accounting Firm"). The Independent Accounting Firm, using personnel
other than those who perform regular accounting services for Gilead, shall
calculate the disputed value in accordance with the basis specified in Section
9.2(a) based on no more than fifty (50) pages of written documentation from each
Party. The Parties shall use their commercially reasonable efforts to cause the
Independent Accounting Firm to render its calculation of the disputed value to
the Parties within twenty (20) business days of the date the Parties submit such
calculation to the Independent Accounting Firm. As relates to the disputed
Transfer Price, neither Party shall initiate ex parte communications with the
Independent Accounting Firm, but either Party may respond ex parte to any
inquiry of the Independent Accounting Firm to the full extent requested by the
Independent Accounting Firm. The Parties shall bear equally the costs of
employing the Independent Accounting Firm for the purposes described in this
Section 9.2(d). The Independent Accounting Firm's calculation of the disputed
value shall be binding upon the Parties absent fraud.
--------------
** This portion has been redacted pursuant to a confidential treatment
request.
-32-
(e) If there is more than one Specification for a Product
(because OSI markets such Product in more than one country), then to the extent
that the Fully Burdened Costs associated with manufacturing such Product to each
of the different Specifications materially differ from one another, the Parties
shall determine a separate Transfer Price for commercial supply of such Product
manufactured to each Specification.
(f) For any Implemented Change to apply during any
calendar year after the time the Transfer Price for the affected Product for
such calendar year has been set, then prior to Gilead manufacturing such Product
in accordance with the Implemented Change, the Parties shall set a new Transfer
Price for such Product that takes into account any difference in Gilead's Fully
Burdened Cost to manufacture such Product in accordance with such Implemented
Change. The new Transfer Price shall be **. For clarity, to the extent that any
Implemented Change hereunder is part of a larger change at Gilead's
manufacturing facility that affects Gilead's manufacture of products other than
Products, then the total costs of the overall change shall be allocated (for
purposes of determining Fully Burdened Costs under this Manufacturing Agreement)
across all affected products in a consistent manner.
9.3 PRICING DISCUSSION.
At any time after twenty-four (24) months after the date of
actual Commercial Launch for any Product (at which time the Parties will have
greater experience with the manufacture of such Product at commercial scale and
OSI's demand for the Product), OSI may request to negotiate with Gilead in good
faith alternative pricing arrangements to replace those of Section 9.2 with
respect to such Product. In such event, the Parties shall negotiate in good
faith for a period of not less than three (3) months to seek to arrive at
alternative pricing arrangements for such Product in light of their greater
experience with it. If the Parties reach agreement, then they shall set forth
their agreement in writing with specificity as to revised pricing terms with
respect to such Product. If the Parties do not reach agreement, then the pricing
with respect to such Product shall remain as set forth in this Manufacturing
Agreement. Gilead shall not be required to agree to a revision to the pricing
terms set forth in this Manufacturing Agreement as of the date hereof.
Additionally, after the time referenced in the first sentence of this Section
9.3, if Gilead's Fully Burdened Costs to manufacture a particular Product
decrease substantially between years other than due to differences in the volume
of such Product ordered by OSI in the different years, then **, and the Parties
shall agree to such a mechanism within three (3) months after a written notice
from either Party that it wishes to commence such good faith negotiations.
9.4 PRODUCT INVOICES.
Gilead shall invoice OSI at the time of delivery of each
shipment of Products for commercial supply hereunder for the following amounts:
----------
** This portion has been redacted pursuant to a confidential treatment
request.
-33-
(a) For each Product, the applicable Transfer Price
multiplied by the number of units of such Product supplied as part of such
shipment; and
(b) The cost of any freight, postage, shipping,
transportation and insurance charges associated with the delivery of Products to
the extent actually incurred by Gilead.
OSI shall pay such amounts within thirty (30) days after the date of the
relevant invoice.
9.5 FAILURE TO ORDER MINIMUM.
Gilead shall invoice OSI within ninety (90) days after the
occurrence of an event under Section 5.3(c) giving rise to Gilead's right to be
reimbursed for Period Costs pursuant to such Section. OSI shall pay each such
invoice within thirty (30) days after the date thereof.
9.6 DEVELOPMENT COSTS.
(a) Gilead shall invoice OSI quarterly in advance for all
Development Costs budgeted pursuant to all Work Plans and Budgets hereunder for
the upcoming calendar quarter (including without limitation those called for in
Article 4, in Section 5.1, Article 8, or in Article 10). The amount of each such
invoice shall be payable within thirty (30) days after the invoice date.
Promptly after OSI's written request no earlier than thirty (30) days after the
end of any calendar quarter, Gilead shall provide OSI with a statement of
Development Costs for completed calendar quarters in the then-current calendar
year. To the extent Gilead's actual Development Costs in any calendar quarter
differ from the amount invoiced to and paid by OSI, the Parties shall reconcile
such difference within thirty (30) days after the end of the calendar year
containing such calendar quarter.
(b) Gilead shall invoice OSI for all amounts due to
Gilead pursuant to any Additional Support Plan and Budget (as defined in Section
3.3) in the same manner as Gilead invoices OSI for amounts due pursuant to Work
Plans and Budgets, and such amounts shall be payable on the same timeline and in
the same manner as is set forth with respect to Work Plans and Budgets as set
forth in Section 9.6(a).
9.7 COST OF RECALLS, PRODUCT WITHDRAWALS OR FIELD CORRECTIONS.
OSI shall have the right to control all recalls, product
withdrawals and field corrections for Products and shall bear all costs
associated therewith; provided, however, that Gilead shall bear the reasonable,
actual expenses of any such procedure with respect to a Product to the extent
required due to a Manufacturing Defect present at the time of delivery of the
affected quantity of Product FCA to OSI or its carrier, including without
limitation a credit to OSI for the Transfer Price paid to Gilead for quantities
of Product in which a Manufacturing Defect was present at the time of such
delivery FCA, provided in each case that OSI has brought such Manufacturing
Defect to Gilead's attention within the time period for rejection set forth in
Section 7.5. The notification and other procedures the Parties shall follow with
respect to the recall of any quantity of a Product supplied hereunder shall be
set forth in the Technical Agreements for each Product, as required by Section
8.10.
-34-
9.8 THIRD-PARTY ROYALTIES.
If Gilead is obligated to pay to any Third Party royalties in
respect of its sales of any Product hereunder to OSI, then **. The Parties
acknowledge that there are **.
9.9 CURRENCY.
All payments required hereunder shall be made in United States
dollars.
9.10 LATE PAYMENTS.
Any amounts owed but not paid by OSI when due under this
Manufacturing Agreement shall be subject to interest from and including the date
payment is due through and including the date upon which OSI has made a wire
transfer of immediately available funds into an account designated by Gilead at
an annual rate equal to the sum of ** of interest quoted in the Money Rates
section of the on-line edition of the Wall Street Journal (at
xxxx://xxx.xxxxxxxxxxx.xxx.xxx) calculated daily on the basis of a 365-day year,
or similar reputable data source, or, if lower, the highest rate permitted under
applicable law.
9.11 TAXES.
OSI shall pay all governmental charges, import and export
compliance fees, value added taxes, sales and consumption taxes, customs, duties
and other taxes imposed by any governmental taxing authority in connection with
the supply by Gilead of Products to OSI hereunder.
9.12 FINANCIAL AUDITS.
Gilead shall keep or cause to be kept records relating to its
Development Costs for each year for each Product, and other amounts due Gilead
pursuant to this Manufacturing Agreement, in a manner consistent with GAAP and
sufficient to allow an independent auditor to verify such amounts, for a period
of three (3) years after the time period to which such records relate. OSI shall
be entitled to have an independent auditor bound by written obligations of
confidentiality and non-use equivalent in scope to those set forth in Article 14
audit such records no more frequently than once per year. **.
ARTICLE 10
MANUFACTURING RIGHTS
10.1 LICENSE TO GILEAD.
OSI hereby grants Gilead a non-exclusive, royalty-free license
under all Transferred Product Rights (and other proprietary or intellectual
property rights OSI may
----------
** This portion has been redacted pursuant to a confidential treatment
request.
-35-
develop or acquire relating to the Products) as necessary and solely to
manufacture (i) the API for each Product during the time period set forth in
Section 3.4, and (ii) each Product, in both cases for supply to OSI hereunder.
10.2 SECOND SOURCE FOR LIPOSOMAL PRODUCTS.
The Parties intend that OSI shall have the right to qualify a
second source manufacturer for each Liposomal Product at OSI's expense and in
accordance with this Article 10. Recognizing that technology transfer of the
manufacturing process for each Liposomal Product to a second source will only be
effective if conducted at a time when such process has been fully scaled up and
validated at commercial scale, the Development Team for each Liposomal Product
shall discuss on an ongoing basis an appropriate time to conduct such technology
transfer relating to such Liposomal Product. The Development Team shall
determine when to commence technology transfer to a Product Source for each
Liposomal Product, and in any event shall agree to commence such technology
transfer no earlier than the completion of process validation at commercial
scale for the manufacturing process for such Liposomal Product. The Parties'
goal and intent is to identify a Product Source (in the manner set forth in
Section 10.4) for each Liposomal Product in advance of the time an NDA or NDA
equivalent outside the United States is filed for such Liposomal Product in
order that such Product Source may be named in such NDA (or equivalent) when it
is filed. The applicable Development Teams shall discuss on an ongoing basis as
the Liposomal Products proceed through development how best to achieve such
goals.
10.3 USE OF PRODUCT SOURCE.
OSI shall be entitled to have manufactured by a Product Source
(once established), and the Product Sources shall be entitled to manufacture,
quantities of the relevant Liposomal Products solely as follows:
(a) In quantities sufficient to and used solely for the
purpose of validating the Product Source in accordance with Section 10.5;
(b) In quantities needed to re-establish a ** under the
circumstances set forth and in accordance with Section 10.8(d); and
(c) If a Supply Failure occurs with respect to any
Liposomal Product, in quantities as set forth in Section 10.11.
10.4 SELECTION OF PRODUCT SOURCE.
(a) At a time consistent with the timeline set by the
Development Team for technology transfer of the manufacturing process for each
Liposomal Product, OSI shall identify the Third Party it desires to have
manufacture that Product for Gilead's approval, such approval not to be
unreasonably withheld. For clarity, it shall be reasonable for Gilead to
----------
** This portion has been redacted pursuant to a confidential treatment
request.
-36-
withhold its consent if the party that OSI proposes to be the Product Source
competes with Gilead in the field of proprietary liposomal formulation
technologies; provided that any disagreement between the Parties as to whether
to use a particular Third Party as a Product Source shall be resolved as set
forth in Section 10.4(c) in light of Section 10.4(b). In furtherance of the
Parties' ability to timely agree as to a Product Source, Gilead may from time to
time provide OSI with lists of Third Parties that Gilead views as its
competitors in the field of proprietary liposomal formulation technologies. OSI
may from time to time provide Gilead with a current list of Third Parties that
OSI views as acceptable Product Sources. The Parties may otherwise jointly
develop lists of Third Parties that would be acceptable to each Party to serve
as a Product Source. Such lists provided by either Party or developed by the
Parties shall be for informational purposes and shall not be binding upon either
Party.
(b) The Parties intend that OSI shall be entitled to
establish and maintain a Product Source, and that at the same time Gilead's
liposomal trade secrets shall be adequately protected. The Parties do not intend
that Gilead's right to reasonably approve the identity of the Product Source as
provided in Section 10.4(a) shall deprive OSI of its right to establish a
Product Source as set forth herein. Rather, the Parties intend that Gilead's
approval right shall be exercised by Gilead in a reasonable manner to ensure
that its liposomal trade secrets are protected from being taught to Gilead's
competitors in the field of liposomal products and liposomal manufacturing or
otherwise exposed to the risk of being unduly devalued due to the identity of
the Product Source, but not due to the mere fact that there is a Product Source
at all.
(c) If the Parties are unable to agree as to a Product
Source for any Liposomal Product, then they shall engage a panel of Industry
Experts in accordance with the procedures set forth in Section 16.4 to select an
appropriate Product Source from a list of Third Parties proposed by the Parties.
The Industry Experts shall be guided in their selection of a Product Source by
the statements of the Parties' intent as set forth in Section 10.4(b). The
Industry Experts shall give due consideration to the legitimate and reasonable
interests of each Party, and the lists provided by Gilead from time to time in
accordance with Section 10.4(a).
10.5 TECHNOLOGY TRANSFER.
Promptly after the Parties agree in writing as to a Product
Source for a particular Liposomal Product and such Product Source executes a
written agreement with Gilead consistent with Sections 10.6 and 10.7, Gilead
shall commence technology transfer of its manufacturing process for the relevant
Liposomal Product to such Product Source by written disclosure and permitting
representatives of the Product Source to observe Gilead's then-current process
to manufacture the relevant Liposomal Product pursuant to Work Plans and Budgets
to be agreed by the applicable Development Teams. OSI shall bear the expenses of
the Product Sources to receive and participate in such technology transfer. The
applicable Development Teams shall determine the procedures that the Parties
shall follow to achieve qualification and validation (once the process for the
manufacture for each Liposomal Product has been fully scaled up to and validated
at commercial scale by Gilead) of the Product Sources such that quantities of
the Liposomal Product respectively manufactured by each Product
-37-
Source may be sold commercially (or used in clinical trials) in accordance with
applicable laws and regulations, and to maintain such qualification, together
with associated Work Plans and Budgets to cover Gilead's participation in such
activities.
10.6 MAINTENANCE OF PROCESS CONFIDENTIALITY.
The Product Source to which Gilead transfers manufacture of
any Liposomal Product shall enter into and be bound by a written agreement with
Gilead providing for obligations to Gilead of confidentiality and non-use
equivalent in scope to those set forth in Article 14 and which shall be subject
to Section 10.14. Because Gilead would be disclosing valuable trade-secret
liposomal manufacturing or sterile freeze-drying information to the Product
Source, such obligation would be perpetual, notwithstanding the shorter time
period set forth in Article 14 with respect to OSI's confidentiality and non-use
obligations. In particular, the Product Source shall not be permitted to
disclose Information disclosed to it by Gilead to OSI, and OSI shall not be
permitted to access nor shall it seek to access Information from any Product
Source that it would not be entitled to require Gilead to disclose to OSI
pursuant to this Manufacturing Agreement.
10.7 LICENSE TO PRODUCT SOURCE.
Gilead hereby agrees to grant to each Product Source to which
a manufacturing process is transferred in accordance with this Article 10 a
non-exclusive license under all Patents and Information Controlled by Gilead as
of the date such Product Source is established, as necessary for the Product
Source to manufacture the relevant Product solely for supply to OSI to the
extent permitted pursuant to Section 10.3. To the extent that Gilead does not
Control rights under Patents and Information granted it pursuant to the
** (as defined in Section 4.3) and covering a Product Source's
manufacture or sale of the relevant Liposomal Product, then Gilead shall use
commercially reasonable efforts to obtain from the other parties to the **
consent to grant the Product Source a sublicense for the purpose of
manufacturing the relevant Product for supply to OSI, in advance of the time
such Product Source is expected to commence the manufacture of commercial
quantities of such Liposomal Product in a manner permitted hereunder; provided
that if Gilead is unable to obtain such consent, the Parties shall use their
commercially reasonable efforts to permit OSI to enjoy the benefit of having
such Product Source manufacture the relevant Liposomal Product for OSI without
the need for such a sublicense. Each Product Source shall, in its written
agreement with Gilead pursuant to Section 10.6, explicitly covenant (i) not to
exceed the scope of such license; and (ii) to use the subject matter claimed by
such Patents, and such Information, solely for the purpose of supplying Products
to OSI and for no other purpose. OSI shall use its best efforts to procure that
each Product Source shall, in its written agreement with Gilead, grant to Gilead
a non-exclusive, sublicenseable license, under all Liposomal Inventions
conceived or reduced to practice by such Product Source in the course of its
exercise of the license granted to it by Gilead ("Product Source Liposomal
Inventions"), to develop, make, use, sell, offer for sale and import products
other than Products (a "Product Source License"); provided, however,
----------
** This portion has been redacted pursuant to a confidential treatment
request.
-38-
that if despite OSI's application of such efforts, a Product Source does not
agree to grant such license, then such Product Source shall (in its written
agreement with Gilead): (i) agree not to disclose any of its Product Source
Liposomal Inventions to Gilead (and OSI shall not disclose any such Product
Source Liposomal Inventions to Gilead), and (ii) grant Gilead a license under
any such Liposomal Inventions actually disclosed by the Product Source (or OSI)
to Gilead, that is equivalent in scope to the Product Source License.
10.8 INVENTORIED SUPPLY; FORECAST FAILURE.
(a) The Parties recognize that, beginning prior to and
continuing through the ** after Commercial Launch of each Liposomal Product, OSI
will need to build up over time an inventory of such Liposomal Product. The
level that OSI will need to establish will be a **. Beginning in the year prior
to Commercial Launch of each Liposomal Product, the Parties shall discuss via
their participation in the Development Team how best to achieve OSI's
inventorying of a ** by no later than the first anniversary of the date of
Commercial Launch of such Liposomal Product. Gilead shall reasonably cooperate
with OSI to arrange to manufacture sufficient quantities of such Liposomal
Product.
(b) OSI will place its Initial Forecast and Updated
Forecast in good faith with the goal of making both such forecasts include at
least sufficient quantities of the relevant Liposomal Product to meet the market
demand that OSI wishes to meet therefor in the ** following Commercial Launch
and to enable OSI to inventory the ** that OSI shall build up during such **.
(c) At all times after OSI has first established a ** of
a given Liposomal Product, OSI shall maintain a ** of such Liposomal Product and
shall place its forecasts and orders hereunder in good faith with the intent of
obtaining sufficient supply from Gilead to meet OSI's requirements for sales of
such Liposomal Product while maintaining a **.
(d) If despite OSI's efforts in good faith pursuant to
Section 10.8(c), in fact, OSI sells to Third Parties in arms' length
transactions quantities of the relevant Liposomal Product sufficient that OSI,
at the end of any calendar quarter, does not have on hand a **, then OSI shall
include in its next Purchase Order with Gilead hereunder an order for a
sufficient quantity of such Liposomal Product to replenish the Six-month Supply,
and shall indicate in such Purchase Order what portion of the requested
quantities is required to replenish the **. Gilead's responsibilities to attempt
to fill amounts requested in a Purchase Order for delivery in any month beyond
the limits imposed by the applicable Purchase Order are as set forth in Section
5.4(b)(ii). To the extent that Gilead does not elect to fill the amounts beyond
such limits within the time period specified in such Section for Gilead to so
elect, then OSI shall be entitled to obtain such amounts from the relevant
Product Source; provided, however, that if OSI does elect to have any such
quantities filled by the Product Source more than one (1) time in a given
calendar year, then Gilead shall be entitled at any time thereafter by six (6)
months written notice to OSI elect to cease to manufacture entirely such
Liposomal
----------
** This portion has been redacted pursuant to a confidential treatment
request.
-39-
Product for OSI and terminate this Manufacturing Agreement with respect to such
Liposomal Product. In such event, Gilead shall continue to supply OSI with
quantities of such Liposomal Product already covered by Purchase Orders placed
in accordance with Section 5.5 prior to Gilead's notice that it elects to
terminate this Manufacturing Agreement with respect to such Liposomal Product.
10.9 SUPPLY FAILURE.
(a) Beginning ** prior to Commercial Launch of a given
Liposomal Product, if at any time Gilead fails to deliver to OSI or its designee
an amount of such Liposomal Product conforming to the applicable Specifications
and Regulatory Requirements and laws greater than or equal to ** of the
aggregate Binding Amounts of such Liposomal Product due in any two (2)
consecutive calendar quarters (other than by reason of a force majeure event in
accordance with Section 17.17), then a "Supply Failure" shall have occurred for
such Liposomal Product. In such event, OSI may notify Gilead in writing of such
Supply Failure, and request in such notice a special meeting of the Development
Team for the relevant Liposomal Product (a "Special Meeting"). Such Special
Meeting shall occur no later than sixty (60) days after the date of such written
notification by OSI. Gilead shall provide to OSI a written, remedial plan
detailing its plans to address any problems or issues contributing to the Supply
Failure (a "Remedial Supply Plan") at least five (5) business days in advance of
such Special Meeting.
(b) If the approved shelf life for any Liposomal Product
is less than **, then the Parties shall negotiate in good faith a reasonable
adjustment to the time period and/or percentage of Binding Amount set forth in
Section 10.9(a) with respect to such Liposomal Product.
(c) For purposes of calculating whether a Supply Failure
has occurred, no units of any Liposomal Product shall be deemed not to have been
delivered until the date that is specified in Section 5.6 for such unit, and in
the case of shipments affected by deviations, the date agreed by the Development
Team in accordance with its plan to address the deviations.
10.10 SPECIAL MEETING AFTER SUPPLY FAILURE.
At the Special Meeting, the Development Team will discuss the
Remedial Supply Plan, any problems or issues contributing to the Supply Failure
and whether the Remedial Supply Plan describes actions sufficient to ensure the
continuous supply of the relevant Liposomal Product to OSI from that point
forward. After such Special Meeting, if Gilead's Remedial Supply Plan is not so
sufficient, or the Parties do not agree to an alternate plan describing actions
that are so sufficient, then OSI may elect to have manufactured and supplied to
it such Liposomal Product at and by the Product Source therefor in a quantity in
accordance with Section 10.11; provided, that if the Parties disagree as to
whether Gilead's Remedial Supply Plan (as Gilead may update it in writing in
accordance with the Development Team's discussions within five (5) business days
after the date of the Special Meeting) is so sufficient, then the Parties shall
refer the issue of whether such plan is sufficient to ensure the
-40-
continuous supply of the relevant Product to OSI from that point forward to a
panel of Industry Experts for resolution pursuant to Section 16.4.
10.11 USE OF PRODUCT SOURCE AFTER SUPPLY FAILURE.
If OSI is entitled pursuant to Section 10.10 to obtain a
supply of Liposomal Product with respect to which a Supply Failure has occurred
from the Product Source therefor, then the Parties expect that OSI may wish to
obtain a portion of its requirements of the affected Liposomal Product from a
Product Source rather than from Gilead, and OSI shall be entitled to obtain an
unlimited proportion of its requirements from a Product Source; provided,
however, that if OSI purchases less than ** of the quantities of
Liposomal Product of which it takes delivery in any calendar quarter from
Gilead, then Gilead shall be entitled at any time thereafter by ** written
notice to OSI to elect to cease to manufacture entirely such Liposomal Product
for OSI and terminate this Manufacturing Agreement with respect to such
Liposomal Product. In such event, Gilead shall continue to supply OSI with
quantities of such Liposomal Product already covered by Purchase Orders placed
in accordance with Section 5.5 prior to Gilead's notice that it elects to
terminate this Manufacturing Agreement with respect to such Liposomal Product.
10.12 ELECTIVE TRANSFER OF MANUFACTURE BY GILEAD.
At any time after the fifth anniversary of the Closing Date,
Gilead may elect by three (3) months written notice to OSI to cease to
manufacture any Product; provided that a Product Source has been validated in
accordance with Section 10.5 or this Section 10.12 for such Product. If at the
time of Gilead's notice to OSI that Gilead elects to so cease manufacture, then
Gilead may require that OSI establish a Third Party reasonably acceptable to
each Party (or selected in accordance with Section 10.4) to be the Product
Source for such Product. In such event, technology transfer of the manufacturing
process for the relevant Product shall proceed mutatis mutandis as set forth in
Sections 10.5 for transfers to Product Sources as required by OSI, and the
provisions of Sections 10.6 and 10.7 shall apply.
10.13 CONTINUED SUPPLY IN INTERIM PERIOD.
If Gilead elects to transfer manufacture of a Product to a
Product Source that must be established in accordance with Section 10.12, then
Gilead shall continue to supply OSI with quantities of such Product until such
time as quantities of such Product produced by the Product Source can legally be
sold or used in clinical trials in the jurisdictions in which OSI sold such
Product or used such Product in clinical trials at the time of Gilead's election
to cease to manufacture such Product (the "Enablement Date"). Such continued
supply shall be on the financial terms set forth in Article 9; provided,
however, that if the term of such continued supply extends beyond the one (1)
year anniversary of the date of Gilead's notice pursuant to Section 10.12, then
the Transfer Price as calculated pursuant to Section 9.2 with
----------
** This portion has been redacted pursuant to a confidential treatment
request.
-41-
respect to the relevant Product shall be increased by ** of such Transfer Price
for units of such Product to be delivered between such anniversary and the next
anniversary of such date, and the Transfer Price calculated to apply in
subsequent years bounded by such anniversaries shall be increased by an
additional ** as of each subsequent such anniversary (i.e., the Transfer Price
calculated pursuant to Section 9.2 shall be increased by ** for Product in the
second such year, by ** for Product supplied in the third such year, by ** for
Product supplied in the fourth such year, etc.). After the Enablement Date,
Gilead shall have no further obligation to OSI to manufacture and supply such
Product to OSI.
10.14 LOSS OF SECOND SOURCE.
(a) If any Product Source, once established as permitted
under this Manufacturing Agreement, ceases the manufacture of the relevant
Product for any reason (a "Defunct Product Source"), then OSI shall have the
right to establish a new Product Source to replace the Defunct Product Source
(any Product Source replacing either a Defunct Product Source or--pursuant to
Section 10.14(b)--Gilead as the manufacturer of any Liposomal Product, a
"Replacement Product Source"). Such new Replacement Product Source shall be
selected and established in accordance with Sections 10.4 and 10.5,
respectively, and Sections 10.6 and 10.7 shall apply to such Replacement Product
Source and the Parties' activities in relation thereto. Sections 10.3, 10.8 and
10.11 shall apply to OSI's use of quantities of a Liposomal Product produced by
any Replacement Product Source established to replace a Defunct Product Source,
unless Gilead is replaced as a manufacturer in accordance with Section 10.14(b).
(b) If Gilead elects pursuant to Section 10.8, 10.11 or
10.12 to terminate this Manufacturing Agreement with respect to any Liposomal
Product, then OSI shall have the right to establish a Replacement Product Source
for such Liposomal Product. Such Replacement Product Source shall be selected in
accordance with Section 10.4. OSI shall require its then-existing Product Source
for such Liposomal Product to perform technology transfer to such Replacement
Product Source in accordance with Section 10.5 as if the then-current Product
Source were Gilead, and the applicable Development Team shall discuss any issues
arising in relation thereto. OSI shall solely bear all expenses of technology
transfer to a Replacement Product Source hereunder. Section 10.6 shall apply to
the Replacement Product Source that has received technology transfer to
manufacture a given Liposomal Product from the first Product Source therefor as
if such Replacement Product Source had received such transfer from Gilead.
Section 10.7 shall apply to each Replacement Product Source for a Liposomal
Product and the Parties' activities in relation thereto as it does for other
Product Sources.
10.15 GS7836.
The manufacture of finished GS7836 does not involve the
application of Gilead's proprietary liposomal technologies. Therefore, OSI shall
have the right, subject to
----------
** This portion has been redacted pursuant to a confidential treatment
request.
-42-
the reasonable notice procedures contained herein, to elect to obtain supply of
GS7836 from a manufacturer other than Gilead and terminate its supply
relationship with Gilead hereunder for GS7836. OSI may elect to do so at any
time by three (3) months written notice to Gilead, subject to Gilead's
obligation to fulfil any Product Orders at that time in effect and OSI's
obligation to purchase quantities ordered pursuant to such Purchase Orders, and
the provisions of Section 5.3(c) relating to orders required for any time period
for which a final Planning Forecast has already been provided. In such event,
technology transfer of the manufacturing process for GS7836 shall proceed as set
forth in Section 10.5 with respect to Liposomal Products, and Sections 10.6 and
10.7 shall apply mutatis mutandis to the Product Source for GS7836 as they apply
to the Product Sources for Liposomal Products; provided, however, that the
license to the GS7836 Product Source shall not be restricted by the limits of
Section 10.3, and to the extent that no CMC Information is disclosed to the
Product Source, the provisions relating to the protection of CMC Information and
the grantback under Product Source Liposomal Inventions shall not apply.
ARTICLE 11
INTELLECTUAL PROPERTY
11.1 OWNERSHIP OF PROGRAM INVENTIONS.
(a) OSI shall solely own all Program Inventions that (i)
have specific or general utility in or application to the use or composition of
any API or Product, and (ii) do not constitute Liposomal Inventions.
(b) Gilead shall solely own all Inventions that (i) have
specific or general utility in or application to the use, application or method
of manufacture or analysis of liposomal or lipid-based delivery or formulation
technology ("Liposomal Inventions"), and (ii) are Program Inventions.
(c) Ownership of all other Program Inventions other than
those set forth in Section 11.1(a) or 11.1(b) (Program Inventions not described
in such Sections, "Other Inventions") shall be owned by the inventing Party
(with inventorship being determined in accordance with United States patent
law), or if not invented with the meaning of such patent law, shall be owned
solely by a Party having solely generated such Other Invention, or jointly by
the Parties if they jointly generated such Other Invention.
(d) Each Party hereby assigns such of its right, title
and interest in and to the Program Inventions to the other Party as is necessary
to achieve the ownership set forth in this Section 11.1, and agrees to execute
and deliver all documents reasonably necessary to evidence or record such
assignment.
11.2 CONFIDENTIALITY OF LIPOSOMAL INVENTIONS.
Liposomal Inventions shall be the Confidential Information of
Gilead. Nothing herein shall be deemed to require Gilead to disclose any such
Liposomal Inventions to OSI.
-43-
11.3 LICENSE.
OSI hereby grants Gilead a non-exclusive, perpetual,
sublicenseable license under the Program Inventions owned by OSI pursuant to
Section 11.1(a) (i) to develop, make, use, sell, offer for sale and import
products other than the Products worldwide; and (ii) for so long as Gilead is a
supplier to OSI under this Manufacturing Agreement, to make Products for supply
to OSI hereunder.
11.4 NO LICENSE; COVENANT.
Other than as set forth in this Article 11, neither Party
grants the Party any rights in or under its interest in Program Inventions. OSI
covenants that it shall not practice any Program Invention that is a Liposomal
Invention.
ARTICLE 12
COVENANTS
12.1 MUTUAL COVENANTS.
Each Party covenants to the other Party that such Party shall
not enter into any agreement with any Third Party that is in conflict with the
rights granted to the other Party under this Agreement, and shall not take any
action that would in any way prevent it from granting the rights granted to the
other Party under this Agreement, or that would otherwise materially conflict
with or adversely affect the rights granted to the other Party under this
Agreement.
12.2 GILEAD COVENANTS.
Gilead covenants to OSI:
(a) that it shall manufacture each Product in accordance
with the Specifications therefor and other provisions of this Manufacturing
Agreement, and in accordance with all applicable Regulatory Requirements,
including without limitation QC and GMP;
(b) that, upon delivery of any quantity of a Product to
the common carrier designated pursuant to this Manufacturing Agreement, such
quantity of a Product will be free from Manufacturing Defects and shall
otherwise conform to the relevant Specifications;
(c) that it shall not supply to OSI hereunder any
quantity of Product that either (i) is defective in any way, (ii) is adulterated
or misbranded or unsuitable, (iii) has been misused, contaminated, tampered with
or otherwise altered or mishandled prior to the time of delivery FCA to OSI
hereunder; or (iv) has been stored and handled prior to delivery FCA to OSI
hereunder in a manner inconsistent with the relevant Specifications; and
-44-
(d) that it shall not use, during the Term, any employee
or consultant that has been debarred by the FDA or other Regulatory Authorities,
or, to the best of its knowledge, is the subject of debarment proceedings by the
FDA or Regulatory Authorities.
ARTICLE 13
INDEMNIFICATION AND INSURANCE
13.1 OSI INDEMNIFICATION.
OSI shall defend, hold harmless and indemnify (collectively,
"Indemnify") Gilead and its Affiliates, agents, directors, officers and
employees (together with Gilead, the "Gilead Indemnitees") from and against any
and all suits, claims, demands, liabilities, expenses and/or losses, including
without limitation reasonable attorney's fees (collectively, "Losses") resulting
from any Third-Party claim, demand, suit, action or proceeding (each, a
"Third-Party Claim") arising out of (i) OSI's material breach of this
Manufacturing Agreement; or (ii) the possession, storage, use, transport,
disposal, promotion, sale, offering for sale, importation or commercialization
of any Product by any OSI Indemnitee (as defined below) or OSI's licensee,
distributor or corporate partner for any Product; provided, however, that OSI's
obligation to Indemnify the Gilead Indemnitees pursuant to this Section 13.1
shall not apply to the extent of any Losses (i) for which Gilead is obligated to
Indemnify the OSI Indemnitees pursuant to Section 13.2, or (ii) attributable to
the negligence, recklessness or willful misconduct of Gilead.
13.2 GILEAD INDEMNIFICATION.
Gilead shall Indemnify OSI and its Affiliates, agents,
directors, officers and employees, (together with OSI, the "OSI Indemnitees")
against all Losses to the extent resulting from any Third-Party Claim arising
out of (i) Gilead's material breach of this Agreement, or (ii) the presence of a
Manufacturing Defect in a quantity of Product at the time of delivery FCA
hereunder; provided, however, that Gilead's obligation to Indemnify the OSI
Indemnitees pursuant to this Section 13.2 shall not apply to the extent of any
Losses (i) for which OSI is obligated to Indemnify the Gilead Indemnitees
pursuant to Section 13.1, or (ii) attributable to the negligence, recklessness
or willful misconduct of OSI.
13.3 PROCEDURE.
If either Party is seeking indemnification under Section 13.1
or 13.2, it shall inform the indemnifying Party of the Third-Party Claim giving
rise to the obligation to Indemnify pursuant to such Section as soon as
reasonably practicable after receiving notice of the claim. The indemnifying
Party shall have the right to assume the defense of any such Third-Party Claim
for which it is obligated to indemnify the indemnified Party under Section 13.1
or 13.2. The indemnified Party shall cooperate with the indemnifying Party (and
its insurer) as the indemnifying Party may reasonably request, and at the
indemnifying Party's sole cost and expense. The indemnified Party shall have the
right to participate, at its own expense and with counsel of its choice, in the
defense of any claim or suit that has been
-45-
assumed by the indemnifying Party. Neither Party shall have any obligation to
Indemnify the other Party in connection with any settlement made without the
indemnifying Party's written consent, provided that the indemnifying Party does
not unreasonably withhold or delay any such written consent. If the Parties
cannot agree as to the application of Sections 13.1 or 13.2 to any Third-Party
Claim, the Parties may conduct separate defenses of such claims, with each Party
retaining the right to claim indemnification from the other in accordance with
Section 13.1 or 13.2 upon resolution of the underlying claim.
13.4 INSURANCE.
Each Party shall procure and maintain insurance or
self-insurance, including without limitation product liability insurance in the
case of OSI, adequate to cover its obligations hereunder and pursuant to the
License Agreement between the Parties dated as of the Closing Date (which is an
Ancillary Agreement), and which are consistent with normal business practices of
prudent companies similarly situated at all times during which any Product is
being clinically tested with human subjects or commercially distributed or sold
by OSI. It is understood that such insurance shall not be construed to create a
limit of either Party's liability with respect to its indemnification
obligations under this Article 13. Each Party shall provide the other with
written evidence of such insurance (or financial information that describes the
amounts available under any self-insurance facility) upon request. Each Party
shall provide the other with written notice at least thirty (30) days prior to
the cancellation, non-renewal or material change in such insurance or
self-insurance which materially adversely affects the rights of the other Party
hereunder.
13.5 LIMITATION OF LIABILITY.
EXCEPT AS EXPRESSLY PROVIDED IN THIS MANUFACTURING AGREEMENT,
INCLUDING WITHOUT LIMITATION IN THIS ARTICLE 13, AND EXCEPT FOR INFRINGEMENT BY
EITHER PARTY OF THE OTHER PARTY'S INTELLECTUAL PROPERTY RIGHTS OR BREACH OF
CONFIDENTIALITY OBLIGATIONS, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR LOST
PROFITS OR FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, PUNITIVE OR
EXEMPLARY DAMAGES OF THE OTHER PARTY PURSUANT TO THIS MANUFACTURING AGREEMENT,
HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY. IT IS EXPRESSLY UNDERSTOOD THAT
THE OBLIGATION OF EITHER PARTY UNDER ARTICLE 13 OF THIS MANUFACTURING AGREEMENT
TO INDEMNIFY FOR AMOUNTS THAT THE OTHER PARTY ACTUALLY PAYS TO A THIRD PARTY
SHALL NOT BE LIMITED BY THIS SECTION 13.5.
ARTICLE 14
CONFIDENTIALITY
14.1 TREATMENT OF CONFIDENTIAL INFORMATION.
The Parties agree that during the Term, and for a period of
five (5) years after this Manufacturing Agreement expires or terminates, a Party
receiving Confidential Information of the other Party shall (i) maintain in
confidence such Confidential Information to
-46-
the same extent such Party maintains its own proprietary industrial information
of similar kind and value (but at a minimum each Party shall use commercially
reasonable efforts to maintain such Confidential Information in confidence);
(ii) not disclose such Confidential Information to any Third Party without prior
written consent of the disclosing Party, except for disclosures made in
confidence to any Third Party pursuant to a plan approved by a Development Team
or to its licensees or sublicensees for the Product to which the Confidential
Information relates who agree to be bound by obligations of non-disclosure and
non-use at least as stringent as those contained in this Article 14; and (iii)
not use such Confidential Information for any purpose except those purposes
permitted by this Manufacturing Agreement.
14.2 AUTHORIZED DISCLOSURE.
Notwithstanding any other provision of this Manufacturing
Agreement, each Party may disclose Confidential Information of the other Party:
(a) to the extent and to the persons and entities
required by an applicable governmental law, rule or regulation or court order;
provided, however, that the Party required to disclose Confidential Information
shall first have given prompt notice to the other Party hereto to enable it to
seek any available exemptions from or limitations on such disclosure requirement
and shall reasonably cooperate in such efforts by the other Party;
(b) to the extent and to the persons and entities
required by rules of the National Association of Securities Dealers or any other
securities exchange; or
(c) as necessary to file or prosecute patent
applications, prosecute or defend litigation or otherwise establish rights or
enforce obligations under this Manufacturing Agreement, but only to the extent
that any such disclosure is necessary. In particular, the Parties acknowledge
that OSI and/or Gilead may be obligated to file a copy of this Manufacturing
Agreement with the U.S. Securities and Exchange Commission with one of its
quarterly reports on Form 10-Q, annual reports on Form 10-K or current reports
on Form 8-K or with any registration statement filed with the U.S. Securities
and Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended. In the event of any such filing, the Parties agree to cooperate and
work together to request confidential treatment pursuant to, and in accordance
with, the rules and regulations of the SEC.
14.3 PUBLICITY.
The Parties agree that the joint public announcement of the
execution of this Manufacturing Agreement shall be substantially in the form of
the press release agreed and released by the Parties pursuant to the Asset
Purchase Agreement. Any other publication, news release or other public
announcement relating to this Manufacturing Agreement or to the performance
hereunder, shall first be reviewed and approved by both Parties, which approval
shall not be unreasonably withheld.
-47-
14.4 RETURN OF CONFIDENTIAL INFORMATION.
Promptly after the expiration or termination of this
Manufacturing Agreement for any reason with respect to any Product, the Parties
shall return to each other all tangible manifestations of each other's
Confidential Information relating to such Product (or if this Manufacturing
Agreement expires or terminates with respect to all Products for any reason, all
Confidential Information) at that time in the possession of either Party, or,
with the written permission of the other Party, destroy such items; provided
that each Party may retain one (1) tangible manifestation of the other Party's
Confidential Information in its legal department for archival purposes.
ARTICLE 15
TERM AND TERMINATION
15.1 TERM.
The term of this Manufacturing Agreement shall commence on the
Closing Date and shall, unless earlier terminated in accordance with this
Article 15 or otherwise mutually agreed in writing by the Parties, automatically
expire on a Product-by-Product basis with respect to each Product when Gilead
has fulfilled its technology transfer obligations in accordance with Article 10
for such Product, and is no longer required pursuant to such Article to supply
quantities of such Product to OSI.
15.2 TERMINATION FOR BREACH.
(a) Notice. If either Party believes that the other is in
material breach of this Manufacturing Agreement with respect to one or more
Products, then the Party holding such belief (the "Non-breaching Party") may
deliver notice of such breach to the other Party (the "Notified Party"). Supply
Failures shall not be deemed to be material breaches of this Manufacturing
Agreement, but instead shall be treated as set forth in Article 10. The Notified
Party shall have ninety (90) days to either cure such breach or, if cure cannot
be reasonably effected within such ninety (90) day period, to deliver to the
Non-breaching Party an objectively reasonable plan to cure such breach within a
timeframe that is reasonably prompt in light of the circumstances then
prevailing. Following delivery of such plan, the notified Party shall use
commercially reasonable efforts to carry out the plan and cure the breach.
Notwithstanding the foregoing, if the material breach is a failure to pay an
amount when due hereunder, then the cure period shall be thirty (30) days, and
the breaching Party shall not have the opportunity to present a plan to cure
such breach and cure such breach beyond such thirty (30) day cure period.
(b) Failure to Cure. If the Notified Party fails to cure
such breach as provided for in Section 15.2(a), the Non-breaching Party may
terminate this Manufacturing Agreement either in its entirety or with respect to
one or more Products upon written notice to the Notified Party.
-48-
(c) Disputes. If a Party gives notice of termination
under this Section 15.2 and the other Party disputes whether such termination is
proper, then the issue of whether this Manufacturing Agreement may properly be
terminated upon expiration of the notice period (unless such breach is cured as
provided in Section 15.2(b)) shall be resolved in accordance with Article 16. If
as a result of such dispute resolution process it is determined that the notice
of termination was proper, then such termination shall be deemed to have been
effective ninety (90) days following the date of the notice of termination;
provided, however, that if the breach is a failure to pay an amount when due
hereunder, and the reason for the non-payment is a good-faith dispute as to
whether the payment not made is due hereunder, then the Non-breaching Party
shall not be entitled to terminate this Manufacturing Agreement for reason of
such non-payment until fifteen (15) days after the dispute as to whether payment
was due is resolved in the Non-breaching Party's favor, if the Notified Party
has not by that time paid such amounts, together with any interest due pursuant
to Section 9.10 in relation to such amounts. If as a result of such dispute
resolution process it is determined that the notice of termination was improper,
then no termination shall have occurred and this Manufacturing Agreement shall
remain in effect.
15.3 EFFECT OF TERMINATION.
The expiration or termination of this Manufacturing Agreement
shall not relieve Gilead from its obligation to deliver any Product ordered
pursuant to a Purchase Order received and accepted by Gilead prior to the
effective date of such expiration or termination, nor shall expiration or
termination of this Manufacturing Agreement relieve OSI from accepting and, upon
acceptance, paying for any such Product. Expiration or termination of this
Manufacturing Agreement shall not relieve either Party of any liability having
accrued hereunder prior to the effective date of such expiration or termination.
15.4 SURVIVAL.
Sections 4.6, 8.7, 9.7, 9.10, 9.12, 10.6, 10.7 and 10.14 and
Articles 11, 13, 14, 15, 16, and 17 shall survive any expiration or termination
of this Manufacturing Agreement, subject to any later termination dates for
particular obligations that are set forth in such Sections and Articles.
15.5 EXCLUDED REMEDIES.
Rescission of the Asset Purchase Agreement or any Ancillary
Agreement (other than this Manufacturing Agreement), or a refund of
consideration paid to Gilead under any such agreement, are explicitly excluded
from available remedies under this Manufacturing Agreement, and shall not be
available under or awarded on the basis of this Manufacturing Agreement.
15.6 ADDITIONAL TERMINATION RIGHTS.
Gilead shall have the right to terminate this Manufacturing
Agreement with respect to particular Liposomal Products as set forth in Sections
10.8(d), 10.11 and 10.12.
-49-
ARTICLE 16
DISPUTE RESOLUTION
16.1 DISPUTES.
The Parties recognize that disputes as to certain matters may
from time to time arise during the term of this Manufacturing Agreement which
relate to either Party's rights and/or obligations hereunder. It is the
objective of the Parties to establish procedures to facilitate the resolution of
disputes arising under this Manufacturing Agreement in an expedient manner by
mutual cooperation and without resort to litigation. To accomplish this
objective, the Parties agree to follow the procedures set forth in this Section
16.1 if and when a dispute arises under this Manufacturing Agreement. All
disputes arising under this Manufacturing Agreement shall be discussed first by
the applicable Development Team or Development Teams for the Product or Products
to which the dispute relates. If the Development Team or Development Teams are
unable to resolve any dispute within thirty (30) days after such dispute is
submitted to it, either Party may, by written notice to the other Party, have
such dispute referred to a senior executive officer of each Party for attempted
resolution by good faith negotiations within thirty (30) days after such notice
is received. (If the dispute arose among Development Team members, then the
referral to the Parties' senior executive officers may occur immediately.)
If the designated officers are not able to resolve such
dispute within such thirty (30) day period, either Party may at any time
thereafter pursue any legal or equitable remedy available to it; provided,
however, that at the written request of either Party, any CMC Issue as to which
the Parties have been unable to resolve their dispute within such time period
shall be referred to a panel of Industry Experts for resolution pursuant to
Section 16.4.
16.2 GOVERNING LAW; JUDICIAL RESOLUTION.
Resolution of all disputes arising out of or related to this
Manufacturing Agreement or the performance, enforcement, breach or termination
of this Manufacturing Agreement and any remedies relating thereto, shall be
resolved consistent with Sections 17.3 and 17.4.
16.3 PATENT AND TRADEMARK DISPUTE RESOLUTION.
Any dispute, controversy or claim relating to the scope,
validity, enforceability or infringement of any patent rights covering the
manufacture, use or sale of any Product or of any trademark rights relating to
any Product shall be submitted to a court of competent jurisdiction in the
territory in which such patent or trademark rights were granted or arose.
16.4 INDUSTRY EXPERT PANEL RESOLUTION OF CERTAIN ISSUES.
(a) GENERAL. Within thirty (30) days after a Party
proposes to submit a CMC Issue, or an issue designated to be resolved by a panel
of Industry Experts, for resolution
-50-
by a panel of industry experts (as is specifically permitted pursuant to Section
16.1), each Party shall appoint one (1) individual having at least ten (10)
years of significant management level experience in the pharmaceutical
manufacturing industry (each, an "Industry Expert"). Neither of such two (2)
Industry Experts appointed by the Parties may be affiliated directly or
indirectly with either Party or with either Party's Affiliates, sublicensees or
business partners, and neither of such two (2) Industry Experts may have any
direct or indirect interest of any kind in the resolution of the issue to be
submitted by the Parties for resolution. Within ten (10) days after expiration
of such thirty (30) day period, the two (2) Industry Experts chosen by the
Parties shall select a third Industry Expert to join the panel and determine the
issue(s) presented by the Parties. Such third (3rd) Industry Expert must meet
all of the eligibility criteria set forth above in this Section 16.4 that are
applicable to the other two (2) Industry Experts. Each Party shall submit
written materials to the other Party and to the Industry Experts relating to the
matters in issue within sixty (60) days after the selection of the third (3rd)
Industry Expert, up to a maximum number of pages specified by the Industry
Experts. Each Party shall then have fifteen (15) days to submit a written
rebuttal to the other Party's materials to the other Party and to the Industry
Experts, up to a maximum number of pages specified by the Industry Experts. The
panel of Industry Experts shall decide each issue presented to them within
ninety (90) days after they receive all such written materials from each Party.
The panel shall have the discretion to interview the Parties' officers and
employees to obtain further information relating to the matters in issue and to
hear oral argument. Each Party shall cooperate with the panel and facilitate its
efforts. The panel's determination shall be dispositive of all issues presented
to it and such determination shall be given retroactive effect. Until such
determination is delivered to the Parties, the Parties shall continue to perform
their obligations under this Manufacturing Agreement in good faith and make any
applicable payments accordingly. The Parties shall bear all expenses incurred
pursuant to this Section 16.4 equally.
(b) ADDITIONAL PROCEDURAL PROTECTIONS. Any proceedings
before an Industry Expert (or panel thereof) shall be deemed to be the
Confidential Information of both Parties; provided, however, that the decision
of any Industry Expert shall be enforceable by either Party in a court of
competent jurisdiction consistent with Sections 17.3 and 17.4. Neither Party
shall initiate any ex parte communication with any Industry Expert; provided,
however that the Industry Experts would conduct any discussions or interviews
during which CMC Information would be disclosed solely in the presence of Gilead
and/or its counsel present, and solely to the extent reasonably necessary to
protect such CMC Information from being disclosed to OSI and its counsel. The
Industry Experts shall issue their decision in writing and set forth the basis
of their decision in writing. The Industry Experts shall make their decision by
majority vote. Each Party shall have the right to have counsel present during
all of its interactions with any Industry Expert. There shall be a written
transcript of all proceedings involving the Industry Experts; provided that OSI
shall only be able to access redacted copies of any CMC Information contained in
such transcripts. The Industry Experts shall designate a prevailing Party and
shall award the costs of the Industry Expert proceedings to such Party.
-51-
16.5 EXCLUDED REMEDIES.
Certain remedies shall be excluded under this Manufacturing
Agreement, as set forth in Section 15.5.
ARTICLE 17
MISCELLANEOUS
17.1 NO REPRESENTATIONS.
The Parties acknowledge that, except as expressly set forth in
Sections 2 and 3 of the Asset Purchase Agreement and in the other Ancillary
Agreements, neither Party has made or is making any representations or
warranties whatsoever to the other, implied or otherwise.
17.2 KNOWLEDGE.
Neither Party shall be deemed to have breached any
representation or warranty that is made to such Party's "knowledge" unless an
officer of such Party with the rank of Vice President or above has actual
knowledge, as of the date of this Manufacturing Agreement, that such
representation or warranty is materially inaccurate.
17.3 GOVERNING LAW.
This Manufacturing Agreement will be construed in accordance
with, and governed in all respects by, the laws of the State of Colorado
(without giving effect to principles of conflicts of law), subject to Section
16.3.
17.4 VENUE AND JURISDICTION.
If any legal proceeding or other legal action relating to this
Manufacturing Agreement is brought or otherwise initiated, the venue therefor
will be in the State of Colorado, which will be deemed to be a convenient forum.
Each Party hereby expressly and irrevocably consents and submits to the
jurisdiction of the state and federal courts in the State of Colorado.
17.5 NOTICES.
Any notice or other communication required or permitted to be
delivered to either Party under this Manufacturing Agreement must be in writing
and will be deemed properly delivered, given and received when delivered (by
hand, by registered mail, by courier or express delivery service or by
facsimile) to the address or facsimile telephone number set forth beneath the
name of such Party below (or to such other address or facsimile telephone number
as such Party shall have specified in a written notice given to the other
Party):
-52-
if to OSI:
OSI Pharmaceuticals, Inc.
00 Xxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxx, General Counsel
Facsimile: (000) 000-0000
with a copy to:
Xxxxx Xxxxx Xxxx Xxxxxx Xxxxxxx & Xxxxx, PC
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Facsimile: (000) 000-0000
if to Gilead:
Gilead Sciences, Inc.
000 Xxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: Vice President, Manufacturing
With a copy to:
Gilead Sciences, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxx, XX 00000
Attention: Vice President and General Counsel
Facsimile: (000) 000-0000
17.6 ASSIGNMENT.
(a) EITHER PARTY. Except as set forth in Sections 17.6(b)
or (c), neither Party may assign or transfer this Manufacturing Agreement or any
rights or obligations hereunder without the prior written consent of the other,
except that a Party may make such an assignment without the other Party's
consent to Affiliates or to a successor to substantially all of the business of
such Party to which this Manufacturing Agreement relates, whether in a merger,
sale of stock, sale of assets or other transaction.
(b) GILEAD. Gilead may assign this Manufacturing
Agreement with or without OSI's consent to any acquirer of the manufacturing
facilities used to manufacture Products hereunder, and substantially all of
Gilead's business conducted therein.
-53-
(c) OSI. OSI may assign this Manufacturing Agreement with
respect to any Product, to its licensee or bona fide corporate partner for such
Product.
(d) SUCCESSORS. Any permitted successor or assignee of
rights and/or obligations hereunder shall, in a writing to the other Party,
expressly assume performance of such rights and/or obligations. Any permitted
assignment shall be binding on the successors of the assigning Party. Any
assignment or attempted assignment by either Party in violation of the terms of
this Section 17.6 shall be null and void and of no legal effect.
17.7 PARTIES IN INTEREST.
Nothing in this Manufacturing Agreement is intended to provide
any rights or remedies to any employee of either Party or to any Affiliate or
Third Party.
17.8 SEVERABILITY.
In the event that any provision of this Manufacturing
Agreement, or the application of such provision to any Person (as defined in the
Asset Purchase Agreement) or set of circumstances, shall be determined to be
invalid, unlawful, void or unenforceable to any extent, the remainder of this
Agreement, and the application of such provision to Persons or circumstances
other than those as to which it is determined to be invalid, unlawful, void or
unenforceable, will not be affected and will continue to be valid and
enforceable to the fullest extent permitted by law.
17.9 ENTIRE AGREEMENT.
This Manufacturing Agreement, along with the Asset Purchase
Agreement, the Confidentiality Agreements, the Assumption Agreement, and the
other Ancillary Agreements set forth the entire understanding of the Parties and
supersede all other agreements and understandings between the Parties relating
to the subject matter hereof and thereof.
17.10 ORDER OF PRECEDENCE.
If any information that is Confidential Information under this
Manufacturing Agreement was also subject to the Confidentiality Agreements,
then, from and after the Effective Date, such information will be governed
solely by this Manufacturing Agreement and will no longer be subject to the
Confidentiality Agreements. If any information that is Confidential Information
under this Manufacturing Agreement is believed by either of the Parties to be
Confidential Information under any other Ancillary Agreement, then the Parties'
rights and obligations with respect to such information shall be governed by
this Manufacturing Agreement.
17.11 WAIVER.
No failure on the part of either Party to exercise any power,
right, privilege or remedy under this Manufacturing Agreement, and no delay on
the part of either Party in
-54-
exercising any power, right, privilege or remedy under this Manufacturing
Agreement, will operate as a waiver thereof; and no single or partial exercise
of any such power, right, privilege or remedy will preclude any other or further
exercise thereof or of any other power, right, privilege or remedy.
17.12 AMENDMENTS.
This Manufacturing Agreement may not be amended, modified,
altered or supplemented except by means of a written instrument executed on
behalf of both Parties.
17.13 COUNTERPARTS.
This Manufacturing Agreement may be executed in several
counterparts, each of which will constitute an original and all of which, when
taken together, will constitute one agreement.
17.14 INTERPRETATION OF AGREEMENT.
(a) Each Party acknowledges that it has participated in
the drafting of this Manufacturing Agreement, and any applicable rule of
construction to the effect that ambiguities are to be resolved against the
drafting party will not be applied in connection with the construction or
interpretation of this Manufacturing Agreement.
(b) Whenever required by the context hereof, the singular
number will include the plural, and vice versa; the masculine gender will
include the feminine and neuter genders; and the neuter gender will include the
masculine and feminine genders.
(c) As used in this Manufacturing Agreement, the words
"include" and "including," and variations thereof, will not be deemed to be
terms of limitation, and will be deemed to be followed by the words "without
limitation."
(d) Unless the context otherwise requires, references in
this Manufacturing Agreement to "Sections" and "Appendices" are intended to
refer to Sections of and Appendices to this Manufacturing Agreement.
(e) The table of contents of this Manufacturing Agreement
and the bold-faced headings contained in this Agreement are for convenience of
reference only, will not be deemed to be a part of this Manufacturing Agreement
and will not be referred to in connection with the construction or
interpretation of this Manufacturing Agreement.
17.15 MAINTENANCE OF RECORDS.
Each Party shall keep and maintain all records required by law
or regulation with respect to Products and shall make copies of such records
available to the other Party upon request.
-55-
17.16 PERFORMANCE BY AFFILIATES.
Each of Gilead and OSI acknowledge that obligations under this
Manufacturing Agreement may be performed by Affiliates of Gilead and OSI. Each
of Gilead and OSI guarantee performance of this Manufacturing Agreement by its
Affiliates. Wherever in this Manufacturing Agreement the Parties delegate
responsibility to Affiliates or local operating entities, the Parties agree that
such entities may not make decisions inconsistent with this Manufacturing
Agreement, amend the terms of this Manufacturing Agreement or act contrary to
its terms in any way.
17.17 FORCE MAJEURE.
Both Parties shall be excused from the performance of their
obligations under this Manufacturing Agreement to the extent that such
performance is prevented by force majeure and the nonperforming Party promptly
provides notice of the prevention to the other Party. Such excuse shall be
continued so long as the condition constituting force majeure continues and the
nonperforming Party uses reasonable efforts to remove the condition. For
purposes of this Manufacturing Agreement, force majeure shall include conditions
beyond the control of the Parties, including without limitation, an act of God,
a terrorist act, voluntary or involuntary compliance with any regulation, law or
order of any government, war, civil commotion, labor strike or lock-out,
epidemic, failure or default of public utilities or common carriers, destruction
of production facilities or materials by fire, earthquake, storm or like
catastrophe; provided, however, the payment of invoices due and owing hereunder
shall not be delayed by the payor because of a force majeure affecting the
payor.
17.18 FURTHER ASSURANCES; COVENANT TO COOPERATE.
Each of the Parties shall, at any time during the first year
of the Term and to the extent requested by the other Party, execute and deliver
any and all documents and instruments, and take any other actions, in each case
that are reasonably necessary to consummate and make effective the transactions
contemplated in this Manufacturing Agreement. Notwithstanding anything express
or implied to the contrary in the foregoing sentence, neither Party shall be
required, by the operation of such sentence, to execute and deliver any
document, or to take any action, that this Manufacturing Agreement explicitly
states is not required, or to take or continue any action in excess of a limit
explicitly stated in this Manufacturing Agreement.
-56-
The Parties have caused this Manufacturing Agreement to be executed as
of December 21, 2001.
GILEAD SCIENCES, INC.
By: /s/ Xxxx X. Xxxxx.
------------------------------
OSI PHARMACEUTICALS, INC.
By: /s/ Xxxxxxxx Xxxxxx
------------------------------
APPENDIX A
SPECIFICATIONS
**
----------
** This portion has been redacted pursuant to a confidential treatment
request.
APPENDIX B
**
----------
** This portion has been redacted pursuant to a confidential treatment
request.
APPENDIX C
**
----------
** This portion has been redacted pursuant to a confidential treatment
request.
APPENDIX D
**
----------
** This portion has been redacted pursuant to a confidential treatment
request.
