Exhibit 10.29
AMENDED AND RESTATED SUPPLY
AGREEMENT
AMENDED AND
RESTATED SUPPLY AGREEMENT dated as of December 3, 2004, by and
between DISCOVERY LABORATORIES, INC. (“ Seller
”) and LABORATORIOS DEL DR. ESTEVE, S.A., a company organized
and existing under the laws of Spain (“ Buyer
”).
WHEREAS, Seller
and Buyer are parties to a Amended and Restated Sublicense and
Collaboration Agreement (the “ Revised Collaboration
Agreement ”) dated as of the date hereof pursuant to
which Buyer and Seller have agreed to collaborate in a product
development, commercialization and marketing effort for the
Licensed Products (such term and other capitalized terms used and
not otherwise defined herein having the meanings assigned to them
in the Revised Collaboration Agreement); and
WHEREAS, Buyer
hereby agrees to purchase one hundred percent (100%) of its
requirements of Licensed Products from Seller, and Seller hereby
agrees to supply one hundred percent (100%) of Buyer’s
requirements of Licensed Products, pursuant to the terms and
conditions of this Agreement.
NOW, THEREFORE,
in consideration of the foregoing premises and the mutual promises
and covenants set forth below, Seller and Buyer mutually agree as
follows:
ARTICLE
I
DEFINITIONS
As used in this
Agreement, the following terms shall have the following
meanings:
“ Current Good Manufacturing
Practices” or “cGMP ” shall mean (i) with
respect to the United States, the good manufacturing practices
required by the FDA and set forth in the Federal Food, Drugs and
Cosmetics Act or FDA regulations, policies or guidelines in effect
at a particular time for the manufacture, testing and quality
control of pharmaceutical materials and (ii) with respect to any
other country of the Licensed Territory, the standards for the
manufacture and testing of pharmaceutical materials that are
imposed by any regulatory authority having jurisdiction.
“ Cost of Goods ” means the
costs incurred (including, without limitation, costs incurred with
respect to Unrelated Third parties) for the Manufacture of Licensed
Product (including, for the avoidance of doubt, the Manufacture of
any device and related apparatus for administration thereof) for
the Licensed Territory, all direct costs, and a reasonable
fully-absorbed allocation of indirect and overhead expenses
directly attributable to the Manufacture of the Licensed Product
for the Licensed Territory. Direct costs shall include, without
limitation, raw materials, equipment and labor and costs of plant
operations, and plant support services. Indirect and overhead
expenses shall include, without limitation, indirect charges
incurred by or on behalf of Seller in connection with Manufacturing
process improvements, spoilage, waste, storage, manufacturing scale
up, Manufacturing site qualification, RA, QA and QC (including
testing), supply chain management, capital equipment, customs
duties or excise taxes, costs for plant operations and support
services (including utilities, maintenance, engineering, designing,
redesigning, safety, human resources, finance, and plant
management) and similar activities to the extent reasonably
allocated to the Licensed Product in the Licensed Territory
including depreciation and amortization of capitalized costs of any
of the foregoing; provided, that the royalties, if any, payable by
Seller to its licensor(s) shall be deemed to not be a component of
Cost of Goods. All components of Cost of Goods shall be allocated
on a basis consistent with United States GAAP and consistent with
the cost accounting policy applied by Seller to other products that
it produces and, if it does not Manufacture any other products,
consistent with the industry standard. The parties will endeavor in
good faith to establish a “standard cost” per unit for
purposes of ongoing cost accounting and invoicing purposes, which
“standard cost” shall be reviewed and updated
periodically as appropriate. The parties shall reconcile the
standard cost charges against the standard cost per unit actually
paid by Buyer and appropriate credit or payment shall be made to
effect such reconciliation as directed by the Steering Committee
not less than annually.
“ Facility ” means an Owned
Facility or a Contract Facility (in each case as defined in Section
3.1).
“ First Commercial Sale ”
shall mean the first commercial sale by Buyer, its Affiliates or
sublicensees of any Licensed Product following final EMEA or other
regulatory approval required to market such Licensed Product
commercially in the Licensed Territory for use in
humans.
“ Licensed Product Purchase Price
” shall mean, on a Licensed Product-by-Licensed Product
basis, the sum of (i) Cost of Goods together with any markup as set
forth in Section 2.2; and (ii) appropriate insurance, freight
charges and, where applicable, custom duties.
“ Manufacture ” or “
Manufacturing ” shall mean manufacturing, filling,
processing, testing, engineering, designing, redesigning,
packaging, storing, quality control, quality assurance, releasing,
disposing, handling, shipping, and all other activities undertaken
or required to be undertaken in order to manufacture and supply
Licensed Product in its final packaging (including, without
limitation, package inserts and components reasonably necessary for
sale of the finished Licensed Product to the ultimate consumer) and
related devices and apparatus for administration
thereof.
“ Net Sales ” shall mean that
sum determined by deducting from the gross amount billed for
Licensed Products by the Buyer or any of its Affiliates or
sublicensees in an arms length transaction to customers, that are
Unrelated Third Parties of the Buyer or of any of its
sublicensees;
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transportation
charges or allowances, including freight pickup allowances, and
packaging cost, if any;
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trade, quantity
or cash discounts, services allowances and independent
broker’s or agent’s commissions, if any, allowed or
paid;
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credits or
allowances for the Licensed Products, if any, given or made on
account of price, adjustments, returns, bad debts, off-invoice
promotional discounts, rebates, chargebacks, any and all federal,
state or local, government rebates or discounts whether in
existence now or enacted at any time during the term of this
Agreement, volume reimbursements, the gross amount billed and
collected for rejected Licensed Products or Licensed Products
subject to recall or destruction (voluntarily made or requested or
made by an appropriate government agency,
sub-division or department); and
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any tax, excise
or other governmental charge upon or measured by the production,
sale, transportation, delivery or use of the Licensed
Product;
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in each case
determined in accordance with generally accepted accounting
practices.
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“ Specifications ” shall mean
the Licensed Product specifications contained in the registration
dossier of the Licensed Product as approved by the EMEA and the
other regulatory authorities having jurisdiction in the Licensed
Territory, as the same may be amended from time to time in
accordance with applicable regulatory procedures.
“ Transfer Price ” shall mean
as defined in Section 2.2.
“ Unrelated Third Parties ”
shall mean Persons other than Buyer and Seller and Affiliates and
sublicensees of Buyer and Seller or any other related Persons and
shall include hospital formularies and other similar critical and
therapeutic care providers who typically purchase and administer
products and therapies such as the Licensed Products.
ARTICLE
II
PURCHASE AND SALE OF
PRODUCTS
Section 2.1. Purchase and Sale; Delivery; Acceptance or
Rejection . (a) Seller
agrees to sell to Buyer such quantities of Licensed Products,
manufactured in conformity with cGMP and meeting the
Specifications, as Buyer may order in accordance with the terms and
conditions of this Agreement. Subject to the provisions of Section
7.2 hereof, so long as this Agreement shall remain in effect, Buyer
agrees, for itself and its Affiliates and sublicensees, to satisfy
solely through the purchase of Licensed Products from Seller under
this Agreement one hundred percent (100%) of Buyer’s and its
Affiliates’ and sublicensees’ requirements for Licensed
Products.
(b) Purchase orders issued by Buyer to Seller with
respect to purchases of Licensed Products shall be subject to, and
governed exclusively by, the terms of this Agreement. Buyer agrees
not to issue to Seller any purchase order containing terms
different from those set forth herein and further agrees that no
shipment of Licensed Product by Seller in accordance with a
nonconforming purchase order shall be deemed to be acceptance of
any terms of such purchase order conflicting with the terms of this
Agreement except to the extent such conflicting terms are initialed
by Seller with the words “change accepted” written
thereon by Seller. Except as aforesaid, this Agreement shall
override all other conflicting terms of purchase and/or sale
contained in any purchase and/or sale document generated by Seller
or Buyer.
(c) Subject to paragraphs (d) and (e) below, all
Licensed Product sold to Buyer hereunder shall be delivered FCA
Seller’s Facility or distribution warehouse (Incoterms 2000).
Seller shall assist Buyer in arranging transportation in the manner
specified by Buyer, in accordance with applicable regulatory
requirements, to any destinations specified in writing from time to
time by Buyer.
(d) Buyer shall bear all costs and expenses
relating to transportation and delivery to Buyer’s designated
distribution sites in the Licensed Territory (including without
limitation all freight charges, customs, duties, taxes, insurance
premiums and all expenses relating to validation of
temperature-controlled shipment conditions), regardless of whether
Seller delivers the Licensed Products to Buyer from Seller’s
Facility or distribution site/ warehouse whether in Europe or the
United States; provided , however , that in the event
that Seller transports Licensed Products from its United States
Facility and/ or its United States distribution site/ warehouse to
a European distribution site/ warehouse or Facility, if any, then
delivers such Licensed Products to Buyer’s designated
distribution sites in the Licensed Territory, the Steering
Committee shall promptly meet to establish in good faith a system
whereby Buyer does not bear any such costs in excess of those that
would have been incurred if Seller had delivered such Licensed
Products directly from its United States Facility or distribution
site/ warehouse to Buyer’s designated distribution sites in
the Licensed Territory.
(e) Seller shall maintain a cGMP quality control
program, as required by governmental regulations in the Licensed
Territory, with respect to the Manufacture of Licensed Products.
Seller will perform appropriate testing programs, and provide Buyer
with documentation arising from such testing programs, as may be
agreed to by the parties or required by any applicable regulatory
authority. Finished Licensed Product testing for release in the
Licensed Territory or required by the EMEA for Licensed Product
received by Buyer shall be performed by Seller at its designated
approved testing site and paid for by Seller for Licensed Product
shipped to Buyer. Seller shall provide Buyer with each Licensed
Product shipment with the corresponding certificate of analysis
conducted in a country of the European Union, certifying that each
delivery of Licensed Product was produced and tested in compliance
with (i) the Specifications, (ii) cGMP requirements and (iii) all
applicable regulatory documents. The parties will discuss in good
faith the possibility that the quality control for Licensed Product
in the European Union (“EU-QC”) shall be conducted by
Buyer for an agreed upon fee to be paid by Seller. Should,
ultimately, Buyer not be the agreed upon party to conduct EU-QC,
Seller shall use its best commercial efforts to provide that
certain equipment acquired, as of the date hereof, by Buyer for the
purposes of conducting such EU-QC shall be purchased by such agreed
upon Unrelated Third Party that shall conduct the EU-QC.
(f) Buyer may reject any portion of any shipment of
Licensed Product which does not conform with the Specifications. In
order to reject a shipment, Buyer must (i) give notice to Seller of
Buyer’s intent to reject the shipment within thirty (30) days
of receipt together with a detailed written indication of the
reasons for such possible rejection, and (ii) as promptly as
reasonably possible thereafter, but in any event within an
additional thirty (30) days, provide Seller with notice of final
rejection and the full basis therefor. After notice of intent to
reject is given, Buyer shall cooperate with Seller in determining
whether rejection is necessary or justified. If such notices of
intent to reject and final rejection are not timely received, Buyer
shall be deemed to have accepted such delivery of Licensed Product
and to have waived all claims for non-conformity with the
Specifications, damage, defect or shortage, other than claims for
latent defects not capable of discovery by Buyer upon physical
examination. In the event of latent defects not capable of
discovery by Buyer upon physical examination, Buyer shall inform
Seller within fifteen (15) days of discovering any such defect.
Buyer shall be entitled to an offset of the Licensed Product
Purchase Price (reduced, however, by any customs or other charges
related thereto that are recoverable or avoidable by Buyer) of
properly rejected Licensed Products at the time they are ultimately
rejected, provided that if Seller disputes the rejection, refund
shall be made, if at all, at the time the dispute is finally
resolved. Seller shall notify Buyer as promptly as reasonably
possible (but in any event no later than thirty (30) days after
receipt of Buyer’s final rejection notice) whether it accepts
Buyer’s basis for any rejection. In the event Seller disputes
Buyer’s rejection, the parties will select a mutually
agreeable independent third party laboratory which shall determine
whether the rejected Licensed Products meet the applicable
Specifications and shall confirm or dissent from Buyer’s
rejection of Licensed Products. If the parties are unable to agree
on a laboratory firm within thirty (30) days after receipt of
Buyer’s final rejection notice, the laboratory shall be
appointed by computer generation of a random number, with an even
number signifying Seller’s right to designate the laboratory
and an odd number designating Buyer’s right to designate the
laboratory. If the independent tester confirms Buyer’s
rejection, Seller will pay the fees of the tester, and if the
tester dissents from Buyer’s rejection, Buyer will pay the
fees.
(g) Whether or not Seller accepts Buyer’s
basis for rejection, promptly on receipt of a notice of rejection,
Seller shall use its commercially reasonable efforts, at
Buyer’s request, to provide replacement Licensed Product,
which shall be purchased by Buyer as provided in this Agreement as
soon as reasonably practicable.
(h) Unless Seller requests the return to it of a
rejected batch within sixty (60) days of receipt of Buyer’s
final notice of rejection, Buyer shall, at Seller’s cost,
destroy such batch promptly and provide Seller with certification
of such destruction. Buyer shall, upon receipt of Seller’s
request for return, promptly dispatch said batch to Seller, at
Seller’s cost.
(i) No change to the Specifications shall be
effective unless the same shall be required or permitted by any
regulatory agency having jurisdiction over (i) any country in the
Licensed Territory, (ii) Buyer or (iii) the Licensed Products (and
if not required, shall be agreed to in writing by Buyer and
Seller). Seller shall give Buyer advance notice of any change to
the Specifications required by a regulatory agency.
2.2 Transfer Pricing . Buyer shall purchase Licensed Products from
Seller at a “Transfer Price” that is determined on a
Licensed Product-by-Licensed Product basis and otherwise as
follows:
(a) With respect to Surfaxin ® for
RDS and/ or BPD , the
Transfer Price to be paid by Buyer to Seller will be the sum of the
following:
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(i)
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[***] % of Seller’s Cost of Goods for the
subject Licensed Product supplied for the Licensed
Territory;
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(ii)
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Seller’s
royalty obligations due with respect to the subject Licensed
Product sold by Buyer in the Territory; and,
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(iii)
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X% of Net Sales
of the subject Licensed Product in the Territory (to be determined
on a country-by-country basis).
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Provided, however, that the Transfer
Price determined in accordance with this Section 2.2(a) shall be
equal to [***] % of Net Sales of the subject
Licensed Product in the Territory (to be determined on a
country-by-country basis).
(b) With respect to the Licensed Product for the
treatment of ARDS , the
Transfer Price to be paid by Buyer to Seller will be the sum of the
following:
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(i)
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[***] % of Seller’s Cost of Goods for the
subject Licensed Product supplied for the Licensed
Territory;
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(ii)
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[***] % of Seller’s royalty obligations due with
respect to the subject Licensed Product sold by Buyer in the
Territory; and,
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(iii)
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X% of Net Sales
of the subject Licensed Product in the Territory (to be determined
on a country-by-country basis).
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Provided, however, that the
percentage to be determined pursuant to Section 2.2(b)(iii), above,
shall be mutually determined in good faith by
Information marked by [***]
has been omitted pursuant to a request for confidential treatment.
The omitted portion has been separately filed with the Securities
and Exchange Commission.
the parties (X) within 6 months of
the date of completion of a Phase 3 clinical trial for the subject
Licensed Product (defined as the date when all substantive data
shall be available to the parties) and (Y) based upon a methodology
that is intended to ensure that both Buyer and Seller achieve
reasonable profits with respect to the Licensed Product;
provided , however , that in no case shall the
Transfer Price be lower than [***] % or higher
than [***] % of Net Sales of the subject Licensed
Product in the Territory (to be determined on a country-by-country
basis).
(c) With respect to all other Licensed
Products , the Transfer
Price (determined on a Licensed Product-by-Licensed Product basis)
to be paid by Buyer to Seller will be the sum of the following
(provided, however, that this Section 2.2(c) shall specifically
exclude any New Products, as such term is defined in Section 2.5 of
the Revised Collaboration Agreement):
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(i)
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[***] % of Seller’s Cost of Goods for the
subject Licensed Product supplied for the Licensed
Territory;
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(ii)
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[***] % of Seller’s royalty obligations due with
respect to the subject Licensed Product sold by Buyer in the
Territory; and,
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(iii)
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X% of Net Sales
of the subject Licensed Product in the Territory (to be determined
on a country-by-country basis).
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Provided, however, that the
percentage to be determined pursuant to Section 2.2(c)(iii), above,
shall be mutually determined in good faith by the parties (X)
within 6 months of the date of completion of a Phase 3 clinical
trial for the subject Licensed Product (defined as the date when
all substantive data shall be available to the parties) and (Y)
based upon a methodology that is intended to ensure that both Buyer
and Seller achieve reasonable profits with respect to the Licensed
Product; provided , however , that the parties
acknowledge that it is their mutual intent that the target Transfer
Price determined pursuant to this Section 2.2(c) shall be
[***] % and, further, that in no case shall the
Transfer Price be lower than [***] % or higher
than [***] % of Net Sales of the subject Licensed
Product in the Territory (to be determined on a country-by-country
basis).
For the
avoidance of doubt, the parties hereby acknowledge and agree that
the Transfer Price for each Licensed Product determined in
accordance with this Section 2.2 shall be determined by the parties
in good faith and shall be based upon a mutually agreeable
methodology that is intended to ensure that both Buyer and Seller
achieve reasonable profits with respect to sales
thereof.
Information marked by [***]
has been omitted pursuant to a request for confidential treatment.
The omitted portion has been separately filed with the Securities
and Exchange Commission.
2.3 Reports, Reconciliation and Audit, Transfer
Price Payments.
(a) Seller shall invoice Buyer on the date of each
shipment of Licensed Products delivered by Seller to Buyer, its
Affiliates or sublicensees at the Licensed Product Purchase Price.
Buyer shall pay Seller’s invoices no later than thirty (30)
days following the date of the applicable invoice by electronic
funds transfer in immediately available funds to such bank
account(s) as Seller shall designate. Notification as to the date
and amount of any such electronic funds transfer shall be provided
to Seller at least two (2) Business Days prior to such
transfer.
(b) Reports. Buyer, within 30 days after the first
day of January, April, July, and October of each contract year,
shall deliver to Seller a true and accurate report giving such
particulars on a monthly basis of each of the Licensed Products:
(i) shipped and invoiced by Seller to Buyer; (ii) invoiced by Buyer
and its Affiliates and sublicensees to Unrelated Third Parties;
(iii) the gross sales of such Licensed Products (disclosing the
quantity of each of the Licensed Products) and the calculation of
Net Sales thereon; (iv) the calculation, in accordance with Section
2.2 of this Agreement, of the Transfer Prices thereon, in each case
during the preceding 3 months under this Agreement (each a
“Contract Quarter”) as are pertinent to perform an
accounting of amounts due under this Agreement and (v) the
difference between the Transfer Price and the Licensed Product
Purchase Price invoiced by Seller in the Contract Quarter (the
“Balance”). The reports referred to herein (each a
“Report”) shall be separately delineated not only with
respect to the Licensed Products but also with respect to the
different countries of the Licensed Territory and shall be in a
standard format agreed by Buyer and Seller prior to the first
Report delivery. Transfer Price amounts owed by Buyer to Seller
shall be calculated on a product-by-product and country-by-country
basis taking into account, in each instance, the ave
