Back to top

AMENDMENT NO. 5 TO THE RESTATED DEVELOPMENT AND COMMERCIALIZATION COLLABORATION AGREEMENT

Collaboration Agreement

AMENDMENT NO. 5 TO THE RESTATED DEVELOPMENT AND COMMERCIALIZATION COLLABORATION AGREEMENT | Document Parties: Bristol-Myers Squibb Company | Otsuka Pharmaceutical Co, Ltd You are currently viewing:
This Collaboration Agreement involves

Bristol-Myers Squibb Company | Otsuka Pharmaceutical Co, Ltd

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: AMENDMENT NO. 5 TO THE RESTATED DEVELOPMENT AND COMMERCIALIZATION COLLABORATION AGREEMENT
Date: 8/17/2009
Industry: Major Drugs     Sector: Healthcare

AMENDMENT NO. 5 TO THE RESTATED DEVELOPMENT AND COMMERCIALIZATION COLLABORATION AGREEMENT, Parties: bristol-myers squibb company , otsuka pharmaceutical co  ltd
50 of the Top 250 law firms use our Products every day

Exhibit 10.14

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

AMENDMENT NO. 5

TO THE

RESTATED DEVELOPMENT AND COMMERCIALIZATION

COLLABORATION AGREEMENT

THIS AMENDMENT NO. 5 (“ Amendment ”) to that certain Restated Development and Commercialization Collaboration Agreement dated October 23, 2001 (“ Restated Agreement ”), effective as of April 4, 2009 (“ Amendment Effective Date ”), is by and between Otsuka Pharmaceutical Co., Ltd. (“ Otsuka ”), a corporation organized and existing under the laws of Japan, having a principal place of business at Shinagawa Grand Central Tower, 2-16-4 Konan, Minato-Ku, Tokyo, 108-8242 Japan, and Bristol-Myers Squibb Company (“ BMS ”), a corporation organized and existing under the laws of Delaware, having a principal place of business at Route 206 and Province Line Road, Princeton, New Jersey, 08540, USA.

RECITALS

WHEREAS, Otsuka and BMS have previously entered into the Restated Agreement and an Amendment No. 1 (dated March 28, 2003), an Amendment No. 2 (dated June 5, 2003), an Amendment No. 3 (dated September 25, 2006) and an Amendment No. 4 (dated October 31, 2007), to the Restated Agreement (all such amendments, the “ Prior Amendments ”);

WHEREAS, Otsuka and BMS now desire to further amend and supplement certain terms and conditions of the Restated Agreement (as previously amended) as hereinafter specified;

WHEREAS, Otsuka and BMS desire that all other terms and conditions of the Restated Agreement (as previously amended) remain in full force and effect except to the extent amended by this Amendment;

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Otsuka and BMS agree as follows:

1. Capitalized terms in this Amendment shall have the same meaning as those in the Restated Agreement, unless specifically defined otherwise in this Amendment. All Section references are in regard to the Restated Agreement. References to the term “Agreement” in the Restated Agreement shall be deemed to include the Prior Amendments and this Amendment.

2. Except as expressly modified herein, the Restated Agreement shall remain in full force and effect in accordance with its terms, as previously amended. To the extent that there are any inconsistencies between this Amendment and the Restated Agreement, as previously amended, the terms of this Amendment shall supersede the Restated Agreement.

3. Extension of BMS’ Rights and Obligations . In accordance with Section 12.1 of the Restated Agreement, BMS’ rights under the Restated Agreement in the United States would (but for this Amendment) expire on the tenth calendar anniversary of the date of First Commercial Sale of Product in the United States, which is November 19, 2012. The Parties hereby agree in this Amendment, on the terms and conditions set forth herein, to amend Section 12.1 of the Restated Agreement, as it relates to the term of the Restated

 

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


Agreement in the United States, to extend BMS’ rights and obligations (which rights and obligations BMS may exercise or perform by or through one or more of its Affiliates) under the Restated Agreement to develop and Commercialize Product in the United States and to manufacture Product for sale in the United States until April 20, 2015, subject to earlier termination in accordance with Paragraph 10 or Paragraph 12 of this Amendment or Section 12 of the Restated Agreement. The “U.S. Abilify Extension Term,” as used in this Amendment, means the period commencing on January 1, 2010, and ending April 20, 2015; provided that such period may terminate sooner in accordance with Paragraph 10 or Paragraph 12 of this Amendment; provided further , that if the Restated Agreement terminates early in accordance with the provisions of Section 12 of the Restated Agreement, such period shall also terminate upon the date of termination of the Restated Agreement.

4. Up-Front Extension Payment . In consideration of Otsuka’s agreement in this Amendment to extend the term of BMS’ rights to develop, Commercialize, and manufacture Product for the United States during the U.S. Abilify Extension Term, BMS (itself or through one or more Affiliate(s) of BMS) shall pay, in the aggregate, an up-front payment of Four Hundred Million U.S. Dollars (U.S. $400,000,000) to Otsuka within five (5) Business Days subsequent to the Amendment Effective Date of this Amendment. If one or more of BMS’ Affiliate(s) shall make such payment to Otsuka, BMS shall so notify Otsuka on or about the Amendment Effective Date and shall identify the Affiliate(s) that shall be making such payment. Such amount is non-refundable and non-creditable against any other payments due from BMS to Otsuka.

5. Modifications to Otsuka’s and BMS’ Shares of Product Net Sales in the U.S. During the U.S. Abilify Extension Term .

(a) Background . Under the terms of the Restated Agreement (as amended) prior to this Amendment, the basic allocation of Net Sales of Product in the United States is sixty-five percent (65%) to BMS and thirty-five percent (35%) to Otsuka, allocated as follows:

(i) as provided in Section 5.9.1(a), Otsuka or an Otsuka Affiliate receives [*] of Net Sales in the United States;

(ii) as provided in Section 5.11.2(a)(3), Otsuka or an Otsuka Affiliate pays BMS or a BMS Affiliate [*] of Net Sales in the United States for finished and packaged Product sold to Otsuka’s Affiliates for sale in the United States (under the BMS-OAPI Product Supply Agreement); and

(iii) as provided in Section 5.11.2(a)(1), BMS and its Affiliates pay Otsuka [*] for Compound sold by Otsuka to BMS or BMS’ Affiliates (under the Otsuka-BMS Compound Supply Agreement) for formulation into Product sold in the United States.

The result of these transactions is a split of Net Sales in the United States of sixty-five percent (65%) to BMS and thirty-five percent (35%) to Otsuka.

(iv) In addition to the foregoing 65/35 split, and in accordance with Section 5.9.2(b) of the Restated Agreement, BMS, through one of its Affiliates, pays Otsuka a royalty equal to an additional [*] on all Net Sales in the United

 

2

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


States attributable to or arising from the sale of any and all Product made by BMS or its Affiliates.

(b) Modified Allocation of Net Sales in the United States between Otsuka and BMS During the U.S. Abilify Extension Term . The Parties hereby agree in this Amendment that, effective January 1, 2010, the apportionment of Net Sales in the United States between Otsuka and BMS shall change as follows:

(i) in calendar year 2010, fifty-eight percent (58%) of Net Sales in the United States shall be allocated to BMS (instead of sixty-five percent (65%)) and forty-two percent (42%) of Net Sales in the United States shall be allocated to Otsuka (instead of thirty-five percent (35%));

(ii) in calendar year 2011, fifty-three and one half percent (53.5%) of Net Sales in the United States shall be allocated to BMS and forty-six and one half percent (46.5%) of Net Sales in the United States shall be allocated to Otsuka;

(iii) in calendar year 2012, fifty-one and one half percent (51.5%) of Net Sales in the United States shall be allocated to BMS and forty-eight and one half percent (48.5%) of Net Sales in the United States shall be allocated to Otsuka; and

(iv) in calendar years 2013 and 2014 and that portion of calendar year 2015 that extends through the end of the U.S. Abilify Extension Term (April 20, 2015), Net Sales in the United States shall be allocated between Otsuka and BMS according to the following tiering structure, the amount of Net Sales and the allocation thereof between BMS and Otsuka being determined on a calendar year-by-calendar year basis:

 

2013-2015 Annual Net Sales Tiers

  

% of Net Sales
in Tier to BMS

 

 

% of Net Sales
in Tier to Otsuka

 

$0 – $2,700,000,000

  

50

 

50

$2,700,000,001 – $3,200,000,000

  

20

 

80

$3,200,000,001 – $3,700,000,000

  

7

 

93

$3,700,000,001 – $4,000,000,000

  

2

 

98

$4,000,000,001 – $4,200,000,000

  

1

 

99

In excess of $4,200,000,000

  

20

 

80

(v) For the avoidance of doubt, and as required by Section 5.9.2(b) of the Restated Agreement, BMS shall continue during the U.S. Abilify Extension Term to pay Otsuka the [*] royalty on all Net Sales in the United States attributable to or arising from the sale of any and all Product made by BMS or its Affiliates, which amount shall be in addition to Otsuka’s share of Net Sales as provided above. The Parties agree to effect promptly an amendment to the Restated Agreement and/or the applicable manufacturing agreement(s) between Otsuka (or its applicable Affiliate) and BMS (or its applicable Affiliate) relating to BMS’ manufacturing of Product in standard tablet (swallowable) form for Otsuka for sale in the United States to provide that Otsuka does not

 

3

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


have the right to terminate such manufacturing rights during the U.S. Abilify Extension Term except in the case of: material breach by BMS; or (as provided in Section 12.4(b) and Section 8.4 of the Restated Agreement) [*]; or the Commercialization by BMS (or any of its Affiliates, licensees or sublicensees) of a U.S. Competitive Product (as defined in Paragraph 11(c) below) in violation of Paragraph 11 of this Amendment; or the early termination of this Amendment or the Restated Agreement in accordance with Paragraph 3 above.

6. Modified Payment Procedures and Purchase Prices in the United States . Section 5.9.3 of the Restated Agreement and Appendix G to the Restated Agreement (which appendix is incorporated into the Restated Agreement as Exhibit 1 to Amendment No. 1) set forth principles and procedures agreed upon by the Parties for collecting, depositing and disbursing Product sales proceeds. Such procedures remain in effect, subject to modification from time to time by mutual written agreement of the Parties consistent with the agreed principles stated in Section 5.9.3. In addition, the Parties shall discuss and amend the purchase prices for Compound and Product set forth in Section 5.11.2(a) by mutual written agreement as they mutually deem appropriate in light of the changed allocations between them of Net Sales in the United States specified above in Paragraph 5 of this Amendment.

7. Commercial Operations in the United States . BMS and Otsuka hereby agree that, commencing January 1, 2010, and for the remainder of the U.S. Abilify Extension Term, the Parties’ specific performance and payment obligations with respect to the advertising, marketing, promotion, sales, distribution of, and provision of medical education for, Product in the United States (“ Commercial Operations ”) shall be as set forth in subparagraphs (a) through (i) of this Paragraph 7.

(a) Definitions . For purposes of this Amendment, the following terms shall have the definitions set forth below:

(i) “Operational Expenses” means the following costs and expenses solely to the extent specifically and directly attributable to conducting Commercial Operations with respect to Product in the U.S. during the U.S. Abilify Extension Term: (i) Commercial Costs; (ii) Distribution Costs; (iii) Medical Education Activities Costs; and (iv) Indirect Costs. For clarity, Operational Expenses shall not include, for example (but without limitation), (1) expenses related to supply, manufacturing, pharmacovigilance, post-marketing surveillance, or Product recall or (2) any allocation of overhead or general and administrative costs. For clarity, each party will bear its own general and administrative expenses, except to the extent that such expenses are included in the FTE Rate for MRs and/or MSLs. In addition, any particular cost or expense meeting any of the criteria set forth above to be included in “Operational Expenses” shall be counted only once in calculating total Operational Expenses for a particular period, notwithstanding that such cost or expense meets or falls within more than one of such criteria.

(ii) “Commercial Costs” means the direct costs that are specifically identifiable to the following sales, marketing and education activities of the Parties relating to Product in the U.S.: (a) activities directed to the advertising and marketing of such Product; (b) launch meetings; (c) costs of advertising, public relations and medical education agencies;

(d) promotional programs and “lunch and learn” meetings; (e) speaker programs, including

 

4

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


the training of such speakers; (f) development, publication and dissemination of publications relating to such Product; (g) developing, obtaining and providing training packages of such Product, promotional literature, promotional materials and other selling materials; (h) developing and performing market research; (i) developing information and data specifically intended for national accounts, managed care organizations and group purchasing organizations, including reimbursement programs; (j) administration, operation and maintenance of the sales representatives (“ Medical Representatives ” or “ MRs ”) that promote Product in the United States, district and regional sales management, home office personnel who support the sales force, all as included in the FTE Rate; (k) conducting Phase IV Clinical Trials on Product in the U.S.; (l) conducting advisory board meetings or other consultant programs, the purpose of which is to obtain advice and feedback related to the development or commercialization of such Product in the U.S.; and (m) other ancillary services directly related to the foregoing (to the extent not otherwise falling within subparagraphs 7(a)(ii)(a) through (l) above).

(iii) “Distribution Costs” means, with respect to a Product sold in the United States during the U.S. Abilify Extension Term, all direct internal costs and out of pocket costs incurred by BMS or its Affiliates in connection with the following activities involved in distribution of such Product to a Third Party: (i) handling and transportation to fulfill orders (excluding such costs, if any, treated as a deduction in the definition of Net Sales); (ii) customer services, including order entry, billing and adjustments, inquiry and credit and collection; and (iii) direct cost of storage and distribution of the Product.

(iv) “Medical Education Activities Costs” means the direct costs incurred in conducting the following activities designed to ensure or improve appropriate medical use of, conduct medical education of, or further research regarding, a Product sold in the U.S.: (a) maintaining MSLs (as defined below); and (b) development, publication and dissemination of publications relating to such Product in the U.S., as well as medical information services provided in response to inquiries communicated via sales representatives or received by letter, phone call or email.

(v) “Phase IV Clinical Trial” means a product support clinical trial of Product conducted in the United States during the U.S. Abilify Extension Term. A Phase IV Clinical Trial may include epidemiological studies, modeling and pharmacoeconomic studies, and investigator-sponsored clinical trials studying Product that otherwise fit the foregoing definition.

(vi) “FTE Rate” is as defined on Exhibit 2 .

(vii) “Indirect Costs” is as defined on Exhibit 2 .

(b) Baseline Commercial Plan . BMS and Otsuka have agreed on baseline annual performance obligations to be fulfilled by the Parties (or their respective Affiliates) with respect to Commercial Operations in the United States commencing January 1, 2010, including the annual number of Medical Representatives and Medical Science Liaisons (“ MSLs ”) and annual detailing requirements, and on baseline annual expenses to be incurred by the Parties (or their respective Affiliates) for Commercial Operations in the United States commencing January 1, 2010. Such baseline annual performance obligations and baseline annual operating expenses are set forth in a

 

5

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


written plan mutually agreed by the Parties (the “ Baseline Commercial Plan ”), which plan is attached as Exhibit 1 to this Amendment and is hereby incorporated into the Restated Agreement as Appendix H thereto.

(c) Annual Commercial Plan . At least three (3) months prior to January 1 of each calendar year during the U.S. Abilify Extension Term, commencing prior to calendar year 2010, the JCC (or an Operational Team designated by the JCC) shall consider, modify as it deems appropriate, and approve by mutual agreement a written plan setting forth the Commercial Operations performance obligations and operating expenses for the upcoming calendar year in the United States (the “ Annual Commercial Plan ”). It is understood by the Parties that BMS will continue to perform all Commercial Operations activities, except that Otsuka shall deploy MRs and MSLs (together with BMS, as set forth herein), and shall perform any other Commercial Operations activities agreed by the JCC (in which case the allocation between the Parties of responsibility for performing a particular item or activity will be set forth in the Annual Commercial Plan). The Annual Commercial Plan shall specify the aggregate number of MRs and MSLs to be deployed by the Parties in the United States and the total minimum detailing requirements to be fulfilled by the Parties in the United States for the upcoming calendar year (the “ Annual Resource Commitment ”) and shall include a detailed budget for the operating expenses to be incurred by the Parties (in the aggregate, and also broken down to specific budgets for the individual categories of Commercial Operations covered by the Annual Commercial Plan) in connection with Commercial Operations in the United States for the upcoming calendar year (the “ Annual Commercial Expense Budget ”). For clarity, each Annual Commercial Plan (and any amendment or modification to any Annual Commercial Plan or any part thereof), including the allocation of responsibilities between the Parties with respect to Commercial Operations activities, must be approved by mutual agreement of the JCC (with neither Party having a tie-breaking vote with regard to approval of any Annual Commercial Plan). If the JCC is unable to agree upon and approve the Annual Commercial Plan for any calendar year during the U.S. Abilify Extension Term, then the Baseline Commercial Plan attached as Exhibit 1 to this Amendment shall govern the Parties’ obligations and the total expense budget with respect to Commercial Operations in the United States for such year, and the aggregate number of MRs and MSLs to be deployed by the Parties in the United States and the total detailing requirements to be fulfilled by the Parties in the United States set forth in the Baseline Commercial Plan shall be deemed to be the Annual Resource Commitment for such calendar year, and the aggregate expense budget set forth in the Baseline Commercial Plan shall be deemed to be the Annual Commercial Expense Budget for such year. From time to time during any such calendar year, the JCC may agree to modify or amend the Annual Resource Commitment and/or the Commercial Expense Budget for such year. Notwithstanding Section 5.1.2 of the Restated Agreement (as amended by this Amendment), neither the BMS Chair nor the Otsuka Chair of the JCC shall have the tie-breaking vote with respect to establishing any Annual Commercial Plan or modifying any Annual Resource Commitment or Commercial Expense Budget, which must be mutually agreed to by Otsuka’s Chair and BMS’ Chair on the JCC. For the avoidance of doubt, the JCC shall continue to have final authority and responsibility for development of the Marketing Plans in accordance with Section 5.2 of the Restated Agreement, and each Annual Commercial Plan and the Baseline Commercial Plan shall form part of the Marketing Plans for the United States; provided that, in the event of any inconsistency between the terms of any Marketing Plan and the terms of the Baseline Commercial Plan or any Annual Commercial Plan, the terms of the Baseline Commercial Plan or Annual Commercial Plan (as the case may be) shall govern.

 

6

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


(d) Otsuka Promotional Efforts . Without limiting its right under Paragraph 7(g) to contribute additional resources (at its expense), Otsuka (or its Affiliate) shall have the right during the period commencing January 1, 2010, and ending June 30, 2014, to deploy [*] MRs and [*]MSLs in the United States in each such year, with the FTE Rates and Indirect Costs (as provided in Exhibit 2 to this Amendment) associated with such MRs and MSLs being allocable between the Parties as Operational Expenses.

At the time the JCC considers the Annual Commercial Plan for each calendar year during the U.S. Abilify Extension Term, and in any event at least six (6) months prior to January 1 of each year during the U.S. Abilify Extension Term, Otsuka shall determine in its discretion, and shall inform BMS of, the number of MRs and MSLs (up to the maximum numbers set forth above in this subparagraph (d)) that Otsuka (or its Affiliate) shall deploy during the upcoming calendar year. The actual number of MRs and MSLs and details that Otsuka commits to deploy in a particular calendar year during the U.S. Abilify Extension Term is referred to in this Amendment as Otsuka’s “ Required Resource Commitment ” for such year. In each calendar year during the U.S. Abilify Extension Term, Otsuka shall fulfill its Required Resource Commitment for such year, and BMS shall fulfill the balance of the Annual Resource Commitment for such year, which shall be the difference between such Annual Resource Commitment and Otsuka’s Required Resource Commitment for the year (such remainder being BMS’ “ Required Resource Commitment ” for such year). Each Party’s Required Resource Commitment for each calendar year during the U.S. Abilify Extension Term shall be set forth in the Annual Commercial Plan for such calendar year.

As provided in greater detail in Exhibit 3 to this Amendment, each Party’s MRs shall be assigned an equitable share of valuable, productive accounts and an equitable share of responsibility for opinion leaders, large accounts and other more desirable accounts and prescribers.

The JCC shall consult in good faith regarding, and shall mutually determine (with neither Party having a tie-breaking vote), a reasonable plan and budget, with a duration of no more than ninety (90) days (the “[*] Plan ”), for the [*] pursuant to this subparagraph (d). The [*] Plan shall also plan for [*]. In making [*] during such transition, the Parties acknowledge that such transition will involve disruption of [*] with respect to Product, but they shall work cooperatively to minimize such disruption and to achieve an efficient and cost-effective transition, and in manner consistent with the ultimate achievement of the above-described equitable allocation of responsibility. The [*] Plan shall be deemed to be an amendment to the applicable Annual Commercial Plan, including the associated Annual Commercial Expense Budget. The Parties acknowledge that such agreed transition arrangements may result in the inclusion in such Annual Commercial Plan and Annual Commercial Expense Budget, and the charging by either or both Parties of, Operational Expenses for [*] with respect to the Product, during the limited period of such transition, than would otherwise have been the case had Otsuka not exercised its right to deploy MRs pursuant to this subparagraph (d).

(e) Co-Promotion Agreement . In furtherance of the terms and conditions set forth in this Paragraph 7, the Parties shall enter into a co-promotion agreement (the “Co-Promotion Agreement” ) to be negotiated in good faith by the Parties and entered into within one hundred

 

7

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


twenty (120) days subsequent to the Amendment Effective Date. The Co-Promotion Agreement will include the specific terms set forth in Exhibit 3 to this Amendment, along with additional commercially reasonable terms and conditions customary in the industry for an agreement of this type. In the event of any inconsistency between the terms of this Amendment and the terms of the Co-Promotion Agreement, the terms of this Amendment shall prevail (unless the Co-Promotion Agreement specifically states otherwise).

(f) Allocation and Payment of Operational Expenses .

(i) Each Annual Commercial Expense Budget shall itemize the Operational Expenses to be incurred by the Parties in the applicable calendar year, in a detailed manner with respect to each different category of Commercial Operations, including (without limitation) costs of Product-related sales and promotional literature, materials and supplies, costs of advertisements and press materials, costs of educational symposia, conferences and programs, and the cumulative cost of both Parties’ direct expenses for MRs and MSLs (on an FTE basis) budgeted to be incurred in fulfilling each Party’s Required Resource Commitment in the calendar year.

(ii) It is understood and agreed by the Parties that (A) all costs associated with the Parties’ MRs and MSLs are included in the FTE Rates and Indirect Costs set forth on Exhibit 2 , and (B) costs associated with Otsuka’s employees other than MRs and MSLs shall be included in Commercial Operational Expenses only if and to the extent such other Otsuka employees will be performing Commercial Operation activities as provided in any Annual Commercial Plan or as otherwise agreed by the JCC. For clarity, each Party shall bear its own costs of recruiting, relocation and severance relating to MRs and MSLs, and such costs shall not be included in the FTE Rate for MRs or MSLs or Commercial Operational Expenses.

(iii) Each Party shall provide bonuses and/or other incentive compensation to its MRs so as to encourage appropriate maximization of Product sales.

(iv) During each calendar year commencing January 1, 2010, and ending December 31, 2012, Otsuka shall pay thirty percent (30%) and BMS shall pay seventy percent (70%) of the total annual Operational Expenses incurred by the Parties in the United States during the applicable year up to, but not exceeding (except as approved by the JCC, with neither Party having the tie-breaking vote), the total amount set forth in the Annual Commercial Expense Budget for the applicable calendar year (as such budget may be amended by the Sales Force Transition Plan described in subparagraph (d) above), regardless of whether Otsuka’s Required Resource Commitment in a given calendar year is greater or less than thirty percent (30%) of the Annual Resource Commitment in such year.

(v) During each calendar year commencing January 1, 2013, and ending on the expiration or termination of the U.S. Abilify Extension Term, Otsuka and BMS shall each pay fifty percent (50%) of the total annual Operational Expenses incurred by the Parties in the United States for the applicable calendar year up to, but not exceeding (except as approved by the JCC, with neither Party having the tie-breaking vote), the total amount set forth in the Annual Commercial Expense Budget during the applicable calendar year (as such budget may be amended by the Sales Force Transition Plan described in subparagraph (d) above), regardless of whether Otsuka’s Required Resource Commitment in a given calendar

 

8

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


year is greater or less than fifty percent (50%) of the Annual Resource Commitment in such year.

(g) Additional Expenses . Either Party may, in its discretion, contribute more than its Required Resource Commitment in any calendar year (i.e., either BMS or Otsuka may deploy

more MRs and/or may increase its detailing of Product over and above the obligations set forth in the Annual Commercial Plan (or Baseline Commercial Plan, as the case may be)), and either Party may invest in or conduct additional Commercialization activities that are not included in the applicable Annual Commercial Plan and thus incur associated Operational Expenses in excess of the applicable Annual Commercial Expense Budget (as set forth in subparagraph (c) above) (“ Additional Expenses ”), provided that the JCC reviews and approves such activities and associated Additional Expenses in order to facilitate appropriate coordination of sales calls and consistency with the overall marketing effort of the then-current Marketing Plan (such approval not to be unreasonably withheld or delayed). Additional Expenses incurred by a Party in a calendar year shall be borne one hundred percent (100%) by such Party.

(h) Cost Overruns or Reallocations . If a Party anticipates that, in conducting Commercial Operations activities in the United States, it shall incur Operational Expenses that are in excess of [*] over the amount budgeted for a particular category in the Annual Commercial Expense Budget (i.e., the Patient, Payor, or Professional category), or where a shift in expenses from one such category to another would result in a reallocation between such categories of over [*] in the applicable Annual Commercial Expense Budget, then such Party shall inform the other Party of such anticipated cost overrun or reallocation as soon as possible, and the JCC will meet and discuss the causes of such overrun or reallocation and whether to modify the Annual Commercial Expense Budget to address such possible overrun or reallocation, including the re-allocation of certain expenses in such Annual Commercial Expense Budget from other activities to the activity that is the subject of any such excess, but in any case, with the goal of keeping the aggregate Annual Commercial Expense Budget unchanged (unless the Parties otherwise agree).

(i) Payment of Operational Expenses . Following the Amendment Effective Date, the Parties shall discuss and agree upon reasonable procedures for paying, reimbursing and/or reconciling the Operational Expenses to be incurred and paid by each Party according to the above subparagraphs of this Paragraph 7, which procedures are intended to ensure that each Party will incur and bear its appropriate allocation (as set forth in subparagraph (f) above) of the Annual Commercial Expense Budget for the particular calendar year. Such procedures shall be subject to modification from time to time by mutual written agreement of Otsuka and BMS, as needed or appropriate to ensure accurate and efficient sharing of the Operational Expenses incurred in accordance with the terms of this Paragraph 7.

(j) Amendment of Restated Agreement . The following provisions of the Restated Agreement are hereby amended to the extent necessary to give effect to subparagraphs (a) through (i) above and Exhibit 3: Section 5.2 (Marketing Plans); Section 5.3.1(d) (references to BMS’ sole cost); Section 5.3.2(b) (references to BMS’ obligations, at its sole cost, to prepare advertising and promotional materials and implement marketing and promotional activities and strategies); Section 5.3.3(a) (second sentence); Section 5.3.4 (first paragraph and subsections (a), (b), (e) – (g) as such subsections pertain to reimbursement of Otsuka’s direct expenses incurred in the United States); Section 5.3.5 (Sales Team Assignments) (the sixth, seventh, eighth and ninth

 

9

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


sentences); Section 5.3.8 (Exchange of Marketing Information); and Section 5.6 (first sentence). Except as so amended, each Party’s respective rights and obligations under the Restated Agreement (as amended) regarding Commercialization of Product in the United States and throughout the Territory remain in full force and effect.

(k) Records and Audits . Each Party shall keep (and cause its Affiliates to keep) complete and accurate books, records and accounts reflecting all Operational Expenses incurred by such Party in the U.S., as are required to determine, in a manner consistent with GAAP and this Agreement, the sums or credits due under this Paragraph 7 of this Amendment. All such books, records and accounts shall be retained by such Party until the later of (a) three (3) years after the end of the period to which such books, records and accounts pertain and (b) the expiration of the applicable tax statute of limitations (or any extensions thereof), or for such longer period as may be required by applicable law. Each Party shall have the right to have an independent certified public accountant, reasonably acceptable to the audited Party, to have access during normal business hours, and upon reasonable prior written notice, to examine only those books, records and accounts of the audited Party (and its Affiliates) as may be reasonably necessary to determine, with respect to any calendar year ending not more than three (3) years prior to such Party’s request, the correctness or completeness of any report, payment or reconciliation made under this Paragraph 7 with respect to the incurrence, payment and allocation of Operational Expenses in the United States The foregoing right of review may be exercised only once per year and only once with respect to each such periodic report and payment. Results of any such examination shall be: (a) limited to information relating to Product in the United States; (b) made available to both Parties; and (c) subject to Section 10.1 of the Restated Agreement (Confidentiality). The Party requesting the audit shall bear the full cost of the performance of any such audit, unless such audit discloses a variance to the detriment of the auditing Party of more than five percent (5%) from the amount of the original report, reconciliation or payment calculation, in which case the audited Party shall bear the full cost of the performance of such audit. The results of such audit shall be final, absent manifest error.

8. JCC Decision Making . BMS and Otsuka agree that, commencing January 1, 2013, and for the remainder of the U.S. Abilify Extension Term, Otsuka shall designate one of its JCC members to be Chair of the JCC, BMS shall designate one of its JCC members to be Co-Chair of the JCC and, in the event of a tie vote on the JCC regarding a matter relating to Commercialization of Product in the United States, and other matters within the authority of the JCC for activities in the U.S., the vote of the Chair designated by Otsuka shall prevail; provided , that (a) neither Party shall have final decision-making authority (but the Parties shall act by mutual agreement) with respect to matters relating to pricing or discounting of Product or key messaging to key customer groups ( i.e., physicians, payors and patients), and (b) neither the Otsuka Chair, the JCC nor any Marketing Plan approved by the JCC may impose additional expenses or obligations on BMS or its Affiliates beyond those specified in the Baseline Commercial Plan without the prior written consent of BMS. Section 5.1.2 of the Restated Agreement and any other provisions in the Restated Agreement that refer to the tie-breaking authority of BMS (such as Section 5.1.4(k)) are hereby amended to the extent necessary to give effect to this Paragraph 8.

9. Co-Promotion in Canada and the Nordic Countries .

(a) Co-Promotion in Canada . Otsuka shall have the right, from time to time, to elect to provide [*] of the total number of MRs in Canada (without requiring BMS’ consent, except in the one instance described below); provided that: (i) any such election by

 

10

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


Otsuka to co-promote in Canada shall be made no later than thirty (30) days subsequent to a determination by the JCC to increase the number of MRs deployed in Canada, with the first such instance being the determination by the JCC to deploy a total of [*] MRs in Canada; however, notwithstanding the foregoing, if, the first time subsequent to initial launch of Product in Canada, the JCC decides to increase the number of MRs in Canada to a total of less than [*] MRs, then, with BMS’ consent, Otsuka shall have the right to deploy all or part of such incremental number of MRs; (ii) in no case shall the number of Otsuka’s MRs deployed as a result of such election exceed (A) [*] of the total number of MRs the JCC determines to deploy in Canada or (B) [*] of MRs in Canada that is made by the JCC in connection with such determination; (iii) such Otsuka MRs shall be deployed in a manner consistent with a commercialization plan for Canada determined by the JCC and consistent with subparagraph (c) below; and (iv) costs associated with such MRs shall be borne by BMS and paid to Otsuka at an FTE rate agreed by the JFC, which shall be determined by reference to (and shall in no event be less than) the BMS FTE rate for BMS MRs in Canada (which rate shall cover all direct costs of such MRs, including allocation of costs of management and related functions for operating the MR sales force that are not otherwise provided by BMS). As an example, if BMS had [*] MRs in Canada and the JCC decided to add [*] more MRs (for a total of [*] MRs) in Canada, Otsuka would have the right at such time to provide [*] of the additional [*] MRs to be deployed in Canada at such time ([*]), and BMS would provide the balance.

(b) Co-Promotion in Nordic Countries . Otsuka shall have the right to provide [*] MRs, on a country-by-country basis, that are included in any commercial plan for Finland, Norway, Sweden and/or Denmark (collectively, the “Nordic Countries” ), upon twelve (12) months advance written notice to BMS (on a country-by-country basis); provided that (i) such MRs shall be deployed in a manner consistent with the commercialization plan for the applicable Nordic Country determined by the JCC and consistent with subparagraph (c) below, and (ii) the cost of any such MRs shall be borne by Otsuka.

(c) Co-Promotion Agreements for Canada and the Nordic Countries . In furtherance of the terms and conditions set forth in subparagraphs (a) and (b) above, the Parties or their respective Affiliates shall enter into co-promotion agreements covering the co-promotion activities contemplated by such subparagraphs, such agreements to be negotiated in good faith by the Parties and entered into (i) in the case of Canada, within one hundred twenty (120) days subsequent to the Amendment Effective Date and/or (ii) with respect to any given Nordic Countries, no later than hundred twenty (120) days subsequent to Otsuka’s election to co-promote in such Nordic Country, which agreements shall include provisions to implement the terms generally as set forth in this Paragraph 9 and applicable provisions in Exhibit 3 to this Amendment (including, without limitation, those pertaining to equitable assignment of the Parties’ sales forces and the training of Otsuka’s MRs), along with additional commercially reasonable terms and conditions customary in the industry for agreements of this type.

10. Termination for Generic Entry in the United States .

(a) Definitions:

(i) “Generic Sales” means that there are sales of Generic Product to customers (including distributors, retailers, managed care entities, government entities or patients in the United States for FDA-approved use in the Field.

 

11

* CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTION HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION


(ii) “Generic Product” means a pharmaceutical product [*] that is sold by a Third Party in the United States pursuant to either (A) [*], or (B) [*].

(iii) “Date of Generic Sales” means the date that Generic Sales first commence in the United States.

(iv) “Generics Termination” is as defined in Paragraph 10(b) below.

(b) BMS Right of Termination. If there are ongoing Generic Sales during the U.S. Abilify Extension Term, and such Generic Sales have not been caused to cease by issuance of a temporary restraining order or preliminary injunction (or other similar order), or have not otherwise discontinued, within [*] subsequent to the Date of Generic Sales (unless Otsuka agrees to a shorter period), then, on written notice delivered to Otsuka no later than [*] after the date that is the end of the foregoing [*] period (or such shorter period if Otsuka has agreed), BMS may terminate its rights in the United States under this Amendment during the U.S. Abilify Extension Term (“ Generics Termination ”), such termination to be effective upon Otsuka’s receipt of such notice.

(c) Consequences of Generics Termination . Upon Generics Termination, the following shall occur:

(i) Paragraphs 3, 5(b), 6, 7, 11, 12, 13 and 16 of this Amendment will automatically terminate on the effective date of the Generics Termination (except that such termination shall not release a Party from any liability or obligation that already has accrued under such Paragraphs prior to such termination), and the


 
SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)


Try our advanced search >>
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates
Email:
This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more