Exhibit 10.8
Execution
Copy
COLLABORATION
AGREEMENT
This COLLABORATION AGREEMENT is
entered into as of November 9, 2005 (the “ Effective
Date ”), by and between PAIN THERAPEUTICS, INC., a
Delaware corporation having an address of 416 Browning Way, South
San Francisco, California 94080 (“ PTI ”), and
KING PHARMACEUTICALS, INC., a Tennessee corporation having an
address of 501 Fifth Avenue, Bristol, Tennessee 37620 (“
King ”). Each of King and PTI is sometimes referred to
individually herein as a “ Party ” and
collectively as the “ Parties .”
WHEREAS, PTI owns or controls
certain technology and intellectual property rights relating to the
preparation of tamper-resistant opioid formulations;
WHEREAS, King is engaged in the
development and marketing of human therapeutics;
WHEREAS, King is entering into this
Agreement based on, among other things, PTI’s specialized
skill, knowledge, and expertise with respect to the technology and
intellectual property relating to the preparation of
tamper-resistant opioid formulations; and
WHEREAS, the Parties desire to enter
into a collaboration for the purpose of Developing Remoxy and other
Products and to give King the right to Market and manufacture
Products, in each case, derived from PTI technology and
intellectual property;
NOW, THEREFORE, in consideration of
the mutual covenants contained herein, and for other good and
valuable consideration the receipt and sufficiency of which are
acknowledged by the Parties, the Parties hereto, intending to be
legally bound, agree as follows.
1. DEFINITIONS
Capitalized words and phrases used
in this Agreement have the meanings ascribed to such terms in
Annex A attached hereto.
2. ADMINISTRATION OF THE
COLLABORATION
2.1 Establishment and Function
of JOC . PTI and King shall establish the JOC within thirty
(30) days of the Closing Date, which shall have the
responsibilities set forth in this Agreement, including
Section 2.2. Each Party shall appoint, in its sole discretion,
three members to the JOC (which members shall be employees of such
Party), with those members designated primarily to represent such
Party with respect to clinical/regulatory, sales/marketing/finance
and manufacturing matters. King and PTI each shall designate a
co-chairman (each a “ Co-Chairman ” and together
the “ Co-Chairmen ”). Upon the approval of both
Co-Chairmen (or the remaining Co-Chairman in the event of a
substitution in that position), which approval shall not be
unreasonably withheld, each Party may substitute individuals, on a
permanent or temporary basis, for any of its previously designated
representatives to the JOC, by giving written notice thereof to the
other Party. PTI and King shall each bear all out-of-pocket
expenses of their respective JOC members related to their
participation on the JOC and attendance at JOC meetings.
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2.2 JOC
Responsibilities . The JOC shall administer and monitor all
matters with respect to the Collaboration, including the following
matters:
2.2.1 oversight of the Development
Plans and Manufacturing/CMC Plans, including all related strategy
and objectives, timelines and activities thereunder, and changes
with respect thereto on a quarterly basis; such oversight will
confer to each Party, through its JOC representative, an ongoing
right of Consultation;
2.2.2 review and approval of all
budgets to support the Program Plans;
2.2.3 review of the management and
allocation of resources of the Collaboration;
2.2.4 review of all Patent Rights
and Technology used in connection with Product;
2.2.5 review and approval (prior to
execution by either Party) of (a) all Third Party licenses
(including all amendments thereto), and (b) all subcontracts,
sublicenses, and other agreements (including all amendments
thereto) that are required or to be entered into in connection with
the Development Program and that either (i) require payments
by a Party to a Third Party of greater than [***] U.S. dollars
($[***]) over the life of the contract or (ii) are otherwise
material, or reasonably likely to become material, to the
Collaboration, such review in each case to include a determination,
with respect to each such subcontract, sublicense, license, or
agreement, regarding whether it is appropriate to require the
inclusion of the protections set forth in Section 3.8 hereof;
and
2.2.6 performance of such other
functions as appropriate to further the purposes of this Agreement
and the Collaboration as determined from time to time by the
Parties.
2.3 Dispute Resolution
.
2.3.1 In the event that the JOC
shall not be able, within 10 days, to reach a decision or take an
action on any matter, then such unresolved matter shall first be
referred for resolution to the Chief Executive Officer of each
Party for attempted resolution by good faith negotiation. Such good
faith negotiation may include the appointment by either Party, at
its own expense, of an unaffiliated Consultant, who shall be an
expert chosen based on such person’s experience and expertise
in the particular type of issue that is unresolved to advise such
officers on the matter.
2.3.2 If such officers are unable to
resolve the matter within 10 days, then, except as provided in
Section 3.4.6 or 3.9, and subject to
Section 3.3.2:
(a) the following matters shall be
finally decided by PTI: (i) all matters related to the
Development Plan in the U.S. Territory until immediately prior to
the Phase II Meeting with respect to a Product (subject to
Section 3.4.3); and (ii) all CMC matters relating to the
Manufacturing/CMC Plan through the Regulatory Approval of an NDA
for a Product;
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(b) the following matters shall be
finally decided by King: (i) all matters related to the
Development Plan in the U.S. Territory after the Regulatory
Approval of an NDA for a Product; (ii) all matters relating to
the Development Plan in the ROW; (iii) all CMC matters
relating to the Manufacturing/CMC Plan after the Regulatory
Approval of an NDA for a Product; (iv) all non-CMC matters
relating to the Manufacturing/CMC Plan that impact commercial
supply ( i.e. , matters relating to choice of secondary
packaging, secondary labeling, logistics, and the like); and
(v) all matters relating to the Yearly Brand Plan;
and
(c) notwithstanding the foregoing
provisions of this Section 2.3.2, neither Party shall have
final decision-making authority with respect to the following:
(i) all matters related to the Development Plan in the U.S.
Territory during the period immediately prior to the Phase II
Meeting until the Regulatory Approval of an NDA for a Product
(subject to Section 3.4.3) and (ii) all other matters not
otherwise described in Sections 2.3.2(a) and (b) above,
including, subject to the parameters set forth in Sections 3.3.2
and 3.7, final decisions with respect to budgets and spending funds
in excess of approved budgets (or in excess of [***] percent
([***]%) of the [***] under the budget of a Development Plan,
as provided in Section 3.7.2).
2.3.3 Disputes not subject to the
final decision-making authority of either Party, as described in
Section 2.3.2(c) above, will be resolved by binding
arbitration in accordance with the rules of the American
Arbitration Association (the “ AAA ”), unless
another non-profit professional dispute resolution organization
knowledgeable with respect to drug development is agreed to by the
Parties within five (5) days, and the provisions of this
Section 2.3.3.
(a) The Party desiring to initiate
an arbitration proceeding will send a written notice to the other
Party requesting the commencement of the arbitration proceeding and
specifying the issue to be resolved. Following such notice, the JOC
will work in good faith to select one neutral arbitrator, who will
be an expert with respect to drug development and the
pharmaceuticals industry so as to better understand the legal,
business, and scientific issues addressed in the arbitral
proceeding. In the event that, within 10 business days of such
notice, the JOC is unable to agree upon an arbitrator, who is
available to participate in the arbitration proceeding, then, each
Party will designate one neutral arbitrator within 15 days
thereafter. Within an additional 15 days thereafter, the first two
arbitrators will designate a third. Each arbitrator will be a
neutral arbitrator, who is an expert in drug development and the
pharmaceuticals industry. If either Party fails to choose an
arbitrator within the foregoing time period, the AAA (or equivalent
organization) will choose an arbitrator on behalf of that Party.
Disputes about arbitration procedure will be resolved by the
arbitrators or, failing agreement, by the AAA (or equivalent
organization) in San Francisco, California. Unless otherwise agreed
by the Parties, the arbitration proceedings will be conducted in
San Francisco, California.
(b) Within 5 days of the selection
of the final arbitrator, the Parties will deliver to the
arbitrators a joint letter (i) stating each of the issues that
is the subject of the dispute, (ii) setting forth each
Party’s final position with respect to each such issue, and
(iii) directing the arbitrators to resolve the dispute by
selecting the final position of one of the Parties; provided that,
if the Parties cannot agree on a joint letter, each Party will
submit a letter setting forth its position on each issue, and the
failure of any Party to submit such a joint letter will not prevent
the arbitration from proceeding. In addition, each Party may submit
with the joint letter
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supporting documentation for such Party’s
final position or a request that the arbitrators permit the Parties
to undertake limited discovery. In resolving the dispute, the
arbitrators will have no authority to make a decision on any issue
other than by selecting the final position of one of the
Parties.
(c) An arbitration decision will be
rendered in writing within 30 days of the submission of the letter
described above, which award will be final and binding on the
Parties and will be deemed enforceable in any court having
concurrent jurisdiction of the subject matter hereof and the
Parties. In selecting the final position of one of the Parties, the
arbitrators will have the authority to grant specific performance
and allocate costs between the Parties (excluding attorneys’
fees, which each Party must bear itself); provided that the
arbitrators will have no authority to award punitive damages or any
damages in excess of the limitations contained in this
Agreement.
2.4 Committees . The
JOC shall have the right and power to appoint and delegate its
responsibilities to committees, and the composition and eligibility
requirements for the same shall be agreed upon by the members of
the JOC. Except as otherwise mandated by the JOC, each committee
established by the JOC shall be governed by the rules and
guidelines applicable to the JOC set forth in this
Agreement.
2.5 Meetings
.
2.5.1 Schedule of
Meetings . The JOC shall establish a schedule of times for
meetings, taking into account the planning needs of the Development
Program and the need of the JOC to consult and render decisions. In
no event shall the JOC meet less frequently than quarterly.
Meetings shall alternate between the respective offices of the
Parties in (i) Princeton, New Jersey or Cary, North Carolina
and (ii) San Francisco, California, or another mutually agreed
upon location; provided, however, that the Parties may mutually
agree to meet by teleconference or video conference or may act by a
written memorandum executed by the members of the JOC.
2.5.2 Quorum; Voting;
Decisions . At each JOC meeting, the attendance of at least
one member representing each Party shall constitute a quorum. All
decisions of the JOC shall be made by unanimous vote.
Representatives of each Party or of its Affiliates who are not
members of the JOC may attend JOC meetings or committee meetings as
non-voting observers at the invitation of either Party with the
prior approval of the other Party, which approval shall not be
unreasonably withheld.
2.5.3 Agenda and
Minutes . An agenda for each JOC meeting shall be
circulated no less than three days prior to the meeting, to the
extent practicable. The JOC shall keep accurate minutes of its
deliberations that record all proposed decisions and all actions
recommended or taken. Drafts of the minutes shall be delivered to
the members of the JOC within a reasonable time, not to exceed 10
days after the meeting. The responsibility for the preparation and
circulation of the draft minutes shall alternate between the
Parties. Draft minutes then shall be edited by the Co-Chairmen and
shall be issued in final form within a reasonable time not to
exceed 14 days after the meeting.
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3. DEVELOPMENT PROGRAM
3.1 Development of
Products .
3.1.1 Initial Product
Designations . The Parties shall Develop no less than four
(4) Products under the Collaboration. The Parties agree that
the first such Product shall be Remoxy, the second such Product
shall be a product within the Field containing [***] as its opioid
API, and the third such Product shall be a product within the Field
containing [***] as its opioid API. The fourth Product, and all
additional Products, shall be selected as set forth in
Section 3.1.2 below.
3.1.2 Designation of
Additional Products . In Consultation with PTI and review
by the JOC and in accordance with the strategies of the Program
Plans, King shall have the right to designate which products within
the Field, in addition to the three (3) Products listed in
Section 3.1.1 above, shall be selected for Development and
Marketing under the Development Program. Upon King’s
designation of a product within the Field for inclusion in the
Development Program, PTI shall inform Durect of such selection, and
provided that such product is a product that may be developed under
the DLA, PTI shall exercise its rights under Section 2.1 of
the DLA to designate such product a “Licensed Product,”
and the Parties shall thereafter promptly generate the Program
Plans for such Product, all as further described in this Article
3.
3.1.3 Minimum Development and
Marketing Obligations .
(a) King shall ensure that it is
Marketing or funding the Development of a minimum of at least
[***] different Products under the Collaboration at all times;
provided that beginning on [***], such minimum number of different
Products shall increase to [***]. In order to satisfy the foregoing
requirement that King is Marketing or funding the Development of at
least [***] different Products under the Collaboration by
[***], King further agrees that it will designate a [***] Product
to be Developed and Marketed hereunder no later than [***]. King
further agrees that in the event King (i) does not designate a
[***] Product by [***] or (ii) notifies PTI of its intention
to terminate Development and Marketing of a Product pursuant to
Section 3.1.4, is required pursuant to Section 3.1.4 to
designate a replacement Product, and fails to select such a
replacement Product within the applicable time frame specified
thereunder (and such failure would result in a default of
King’s obligations under this Section 3.1.3), PTI will
be entitled to designate such Product on King’s behalf. For
purposes of this Section 3.1.3, King shall be deemed to be
“funding the Development” of a Product if King has
(A) designated such Product for inclusion within the
Collaboration pursuant to Section 3.1.2, (B) has used
commercially reasonable efforts to have the JOC promptly approve a
Development Plan and Manufacturing/CMC Plan for such Product, and
(C) is meeting its material funding obligations under all
existing Program Plans.
(b) Subject to King’s
satisfaction of its funding obligations pursuant to
Section 3.1.3(a) above, PTI shall ensure that it is
Developing, together with the Products King is Marketing, a minimum
of at least [***] different Products under the Collaboration
at all times; provided that beginning on [***], such minimum number
of different Products shall increase to [***].
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3.1.4 Product
Termination . King shall have the right to terminate
Development and Marketing of a Product (the “ Terminated
Product ”) hereunder by providing written notice to PTI
[***] days prior to the effective date of such termination
and, if necessary to comply with its obligations for maintaining a
minimum number of Products, as provided in Section 3.1.3(a)
above, designating a replacement Product in such notice, which
shall be treated as a Product designation in accordance with
Section 3.1.2 above, and the provisions of
Section 9.2.2(a) shall apply to such Terminated Product in all
respects. If a replacement Product is required to be designated,
such notice of termination for such Terminated Product shall not be
effective until a replacement Product has been selected and a
Development Plan for such replacement Product has been approved by
the JOC.
3.2 Durect License
Agreement . Notwithstanding anything herein to the
contrary, King acknowledges and agrees that PTI is subject to
certain obligations under the Durect License Agreement as set forth
in Section 2.4 of the License Agreement.
3.3 Program Plans .
Disputes relating to the matters set forth in this Section 3.3
will be governed by Section 2.3.2.
3.3.1 Generally . In
consultation with the JOC and in accordance with the strategy and
objectives of the Program Plans, each Party shall be primarily
responsible for those tasks assigned it as set forth in each
Program Plan and such obligations set forth in this Agreement. The
Parties will take such actions necessary to define, generate, and
approve the Program Plans for each Product following the Effective
Date. The Parties shall ensure that the Program Plans, including
all timelines set forth therein, are consistent with each other,
accurately reflect the objectives of the Development Program, and
meet all of PTI’s obligations to Durect under the DLA. Each
Program Plan shall be in writing and shall set forth objectives and
tasks to be performed by each of the Parties for the period covered
by the Program Plan as agreed by such Party and as specifically set
forth in this Agreement. Any Program Plan may be amended at any
time in accordance with the same procedures applicable to the
adoption thereof. Although not specifically a part of a Program
Plan, all issues and activities relating to Patent Rights and
Technology used in connection with a Product shall be subject to
review of the JOC.
3.3.2 Program Plan
Budgets .
(a) Each Program Plan shall set
forth an annual budget with respect to all material tasks required
to be conducted by the Parties pursuant to such Program Plan. Each
Party shall use commercially reasonable efforts to complete all
tasks assigned to it pursuant to the Program Plans in accordance
with the funding allocated to such tasks in the budget. All
overruns and additional expenditures will be governed by
Section 3.7.
(b) PTI will provide the JOC with
updated budgets for each Development Plan and Manufacturing/CMC
Plan on a [***], which updated budgets shall specify the funding
which PTI projects to be required during the following [***] to
perform its obligations under such Development Plans and
Manufacturing/CMC Plans. Each
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such budget will be subject to review and
approval of the JOC (such approval not to be unreasonably
withheld); provided that it is understood that such budgets may
include expenses for Third Party services extending beyond the
[***] period covered by such budget if incurring such expenses is
contractually required in obtaining such services.
(c) Notwithstanding anything to the
contrary herein, the Parties agree that the Collaboration Costs
budgeted for PTI’s activities under the Development Plan(s)
and Manufacturing/CMC Plan(s) with respect to Remoxy between the
[***] shall be at least [***]. The Parties further agree that
King’s financial commitment with respect to Products other
than Remoxy shall be commensurate with the foregoing commitment to
Remoxy, taking into account such factors as the stage of
development and potential market of such Products relative to the
stage of development and potential market of Remoxy and the
regulatory strategy with respect to the Product; provided that the
total Collaboration Costs budgeted for PTI’s activities under
the Development Plans and Manufacturing/CMC Plans for all Products
shall not exceed [***] a year in any of the first [***] Years
following the inception of this Agreement, or a cumulative total of
one hundred million U.S. dollars ($100,000,000). Notwithstanding
the foregoing, the Parties agree that the JOC may (but the
arbitrators may not) waive the preceding spending limits if, in its
reasonable judgment, such increases in spending are warranted. For
purposes of calculating the foregoing annual and cumulative
spending limits, as well as the foregoing minimum financial
commitment with respect to Remoxy, Collaboration Costs as used in
this section shall exclude (i) any [***], (ii) costs of
[***], including costs incurred in [***], (iii) all costs and
expenses related to [***], and (iv) costs incurred in
connection with [***], it being understood that the [***]. The
Parties further agree that with respect to Products subsequent to
Remoxy, prompt Development and Regulatory Approval shall mean the
speediest Development Plan needed to reach Development and
Regulatory Approval of any dosage form of such Products in the U.S.
Territory, consistent with patients’ safety and all
applicable regulatory rules and regulations. If the Program Plans
need to be amended to maintain these annual and cumulative limits,
King will propose those amendments it believes are required,
subject to review and approval of PTI, which approval shall not be
unreasonably withheld.
3.4 Development Plans
.
3.4.1 PTI, in Consultation with
King, will prepare, and provide the JOC with a copy of, a
Development Plan for each Product, which will include pre-clinical,
clinical, and regulatory timelines and an annual budget, including
a general overview of the expected schedule of meetings,
discussions, and correspondence with Regulatory Authorities and the
expected Regulatory Filings to be completed and maintained by the
Collaboration. The Development Plan will be subject to review and
approval of the JOC, including ongoing review as provided in
Section 2.2.1, which approval not to be unreasonably withheld;
provided that the
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JOC shall not withhold its approval or otherwise
object to the budget in such Development Plan on any grounds that
are inconsistent with the criteria and objectives set forth in
Section 3.3.2(c) above.
3.4.2 Subject to Sections 3.4.5 and
3.4.6 below, the provisions of this Section 3.4.2 will apply
to all matters relating to the Development Plan in the U.S.
Territory. Until the Completion of Phase II for a Product (but
immediately prior to the Phase II Meeting), PTI, in Consultation
with King, will have sole control and responsibility for execution
of all matters described in the Development Plan with respect to a
Product. Following the Completion of Phase II for a Product but
prior to the Regulatory Approval of an NDA for such Product, King
and PTI will assume joint control and responsibility, through the
JOC, for all matters described in the Development Plan with respect
to such Product; provided that PTI, in Consultation with King, will
continue to be responsible for execution of matters under such
plan. Following such Regulatory Approval, King, in Consultation
with PTI, will have sole control and responsibility for execution
of all matters described in the Development Plan with respect to
such Product. In addition, each Party will be given the opportunity
to review and comment on draft and final development plans and all
associated protocols, reports, and Regulatory Filings on an ongoing
basis. Draft documents will be provided to a Party in electronic or
written form in advance of finalization or submission to Regulatory
Authorities.
3.4.3 In the event the FDA, during
the Phase II Meeting for a Product, determines that the Development
of such Product may not proceed to Phase III, or the Parties
otherwise agree that additional Development should be performed
before proceeding to Phase III, King and PTI will jointly develop a
revised Development Plan for such Product, and PTI will then
reassume sole control and responsibility for execution of such
Development Plan until Completion of Phase II for a Product
(immediately prior to the Phase II Meeting), as provided
herein.
3.4.4 King, in Consultation with
PTI, will have sole control and responsibility for execution of all
Product Development and associated regulatory matters described in
the Development Plan with respect to a Product in the ROW. King, or
its Affiliates or Sublicensees, shall be responsible for all
clinical and regulatory expenses incurred in seeking Regulatory
Approval in markets in the ROW.
3.4.5 Upon the FDA’s approval
of an NDA for a Product in the U.S. Territory, PTI, in Consultation
with King, shall continue to have sole control and responsibility
for the execution of any post-approval commitments mandated by the
FDA with respect to such Product and the first Regulatory Approval
thereof, and King, in Consultation with PTI, shall assume sole
control and responsibility for execution of further Product
Development of the Product.
3.4.6 In the event an NDA for Remoxy
has not been accepted for filing by the FDA within
[***] months of the Effective Date, King may elect to assume
sole control and responsibility for execution of all matters under
the Development Plan (and all CMC matters under the
Manufacturing/CMC Plans) with respect to Remoxy in the U.S.
Territory by providing PTI with written notice thereof. In such
event, notwithstanding the provisions of Section 2.3.2, PTI
will not have final decision-making authority with respect to
matters related to Remoxy under the Development Plan, but King will
have the final decision-making authority with respect
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to all such matters. Both Parties agree that
such transfer of control and responsibility from PTI to King
described in this Section 3.4.6 shall in no way diminish
PTI’s or Durect’s right to receive royalties or
milestones, as provided in the License Agreement. King agrees to
use commercially reasonable efforts to diligently proceed with
execution of the Development Plan in good faith and consistent with
PTI’s obligations under the DLA and this Agreement and shall
use commercially reasonable efforts and diligence in Developing and
seeking Regulatory Approval of Remoxy in the U.S. Territory in
accordance with its business, legal, medical, and scientific
judgment and in undertaking investigations and actions required to
obtain appropriate Regulatory Approvals necessary to market Remoxy
in the U.S. Territory and to meet its obligations hereunder. In
addition, following such transfer of control and responsibility,
King will provide PTI with such plans, budgets, data, and other
information as PTI had been obligated to provide to King prior to
the assumption of control by King under this
Section 3.4.6.
3.4.7 Upon transfer of control and
responsibility of a Product, the Parties will cooperate with each
other in effecting a Tech Transfer of such matters to King with
respect to such Product.
3.4.8 PTI shall use commercially
reasonable efforts to complete all tasks assigned to it pursuant to
the Development Plans in accordance with the budget; provided,
however, that PTI may spend the funds allocated to such task plus
an additional [***]% of such funds, which additional expenditures
shall be paid by King. If the actual costs under a particular
Development Plan will likely exceed [***]% of the funds allocated
to such task, the provisions of Section 3.7 shall
govern.
3.4.9 During the period in which the
Parties share joint control of matters under the Development Plan,
both Parties agree that only PTI may initiate or respond to FDA
communications (including e-mail) regarding a Product; provided,
however, that PTI shall keep King informed regarding all important
communications, whether written or oral, between PTI and the FDA
and shall provide King with an opportunity to review and comment on
all important written correspondence (including all e-mail
correspondence) and participate in all planned meetings and
telephone calls, between PTI and the FDA.
3.4.10 All INDs and NDAs for a
Product in the U.S. Territory will be owned and maintained in the
name of PTI; provided that, upon Regulatory Approval of a Product,
ownership and maintenance of INDs and NDAs for such Product will be
transferred to King. In connection with such transfer to King, PTI
will transfer all underlying clinical data and regulatory filings
in an electronic format, to the extent available, agreed upon by
the Parties. PTI shall transfer the NDA for each approved Product
to King within [***] days of the receipt of Regulatory
Approval of such Product. PTI further agrees to transfer the
applicable INDs, clinical data, and other regulatory filings within
[***] days of the Regulatory Approval of the Product to which
they relate. All INDs and NDAs for a Product in the ROW will be
owned and maintained by King. PTI hereby grants King access to, and
right of reference to, any INDs and NDAs for Products in the
Territory owned and maintained in the name of PTI to the extent
necessary for King to perform its obligations hereunder or conduct
Product Development in the Territory. King hereby grants PTI access
to, and right of reference to, any INDs and NDAs for Products in
the Territory owned and maintained in the name of King to the
extent necessary for PTI (a) to perform its obligations
hereunder, (b) to develop products
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that are within the Field (including Products)
outside the Territory, (c) to develop [***] pursuant to the
terms of this Agreement and the License Agreement, (d) to
develop products outside the Field, including [***], or (e) as
otherwise reasonably requested by PTI. For purposes of clarity, the
rights granted by King to PTI in the preceding sentence shall
include the right to permit Third Parties to access or reference
such Regulatory Filings, so long as such Third Parties have agreed
to confidentiality obligations that are at least as stringent as
those set forth herein; provided that PTI agrees that it will not
provide such rights of access or reference to Third Parties who are
not engaged in a research, development, manufacturing, or marketing
relationship with PTI.
3.4.11 PTI will use commercially
reasonable efforts and diligence in Developing and seeking
Regulatory Approval of each Product in the U.S. Territory in
accordance with its business, legal, medical, and scientific
judgment and in undertaking investigations and actions required to
obtain appropriate Regulatory Approvals necessary to market
Products in the U.S. Territory and to meet its obligations
hereunder.
3.4.12 Subject to Section 2.1.4
of the License Agreement, following the acceptance for review by a
Regulatory Authority in the U.S. Territory of an NDA for a Product,
King will use commercially reasonable efforts and diligence in
conducting Product Development and seeking Regulatory Approval of
such Product in the Major Market Countries in the ROW in accordance
with its business, legal, medical, and scientific judgment and in
undertaking investigations and actions required to obtain
appropriate Regulatory Approvals necessary to market such Product
in the Major Market Countries and to meet its obligations
hereunder. In exercising its business, legal, medical, and
scientific judgment, King may take the following factors, among
other things, into consideration: [***]; provided that the level of
efforts and diligence used by King in conducting Product
Development and seeking Regulatory Approval of Products in the ROW
shall at all times be at least a level of efforts sufficient to
ensure that PTI’s obligations to Durect under the DLA are
satisfied. Notwithstanding anything herein or in the License
Agreement to the contrary, in the event PTI obtains Regulatory
Approval for a [***] in any country in the Territory, including a
Major Market Country, before King obtains in such country
Regulatory Approval for the Product that contains the same opioid
agonist as its API as such [***], King shall not be obligated to
conduct Product Development, seek Regulatory Approval, or Market
such Product in such country.
3.5 Manufacturing/CMC
Plans .
3.5.1 King and PTI will jointly
prepare each Manufacturing/CMC Plan and provide a copy to the JOC
for its review and approval. Notwithstanding the foregoing, the
Parties agree that PTI shall be solely responsible for preparing a
Manufacturing/CMC Plan for
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Remoxy, it being understood that King will be
given an opportunity to review and offer recommendations regarding
such plan during its preparation, which recommendations PTI will
consider in good faith.
3.5.2 PTI, in Consultation with
King, will have control and responsibility for execution and
implementation of all CMC development of a Product throughout the
Territory until the first Regulatory Approval for such Product in
the applicable country, including responsibility for provision of
CTM, CMC information for such Product in Regulatory Filings, and
pre-market validation of such Product. Notwithstanding the
foregoing, PTI, in Consultation with King, will continue to have
control and responsibility for execution and implementation of all
CMC development after the first Regulatory Approval of a Product
for all changes in formulation, including changes in dosage
strength, requiring a further pre-market clearance by the FDA or
other Regulatory Authority. Such changes in formulation may include
line extension developments or reformulations that are, in
PTI’s reasonable judgment, within the scope of the DLA. For
purposes of clarity, with respect to novel Product formulations,
PTI and Durect shall be responsible for determining the qualitative
and quantitative composition of each novel formulation with respect
to excipients and API and setting technical and regulatory
specifications for each such excipient and API used in creating
such novel formulation. King shall have the right to select the
manufacturer of such excipients and API prior to the manufacture of
Phase III CTM, so long as the excipients supplied by King’s
selected manufacturer comply with the technical and regulatory
specifications set by PTI and Durect. King shall have the right to
negotiate and enter into supply agreements for API and excipients
and to be the assignee with respect to agreements that may be in
place for such Product excipients and API as of the Effective Date,
in each case to the extent permitted under such supply agreements,
and in compliance with the DLA and Section 2.1.3 of the
License Agreement.
3.5.3 Except as provided in
Section 3.5.2 above, King, in Consultation with PTI, will have
control and responsibility for execution and implementation of
post-approval support of each Product immediately upon the
Regulatory Approval of an NDA for such Product, including logistics
planning relating to such Product. To the extent PTI is obligated
to purchase any excipients, additives, solvents, API, bulk form of
Product, or other ingredients or materials from Durect pursuant to
the terms of the DLA and which ingredients or materials, under the
terms of the DLA, would be required to be used by King in its
manufacture of Products, PTI shall sell to King such ingredients or
materials so purchased by PTI at PTI’s actual cost, without
any mark-up. In connection with the transfer of control and
responsibility, upon filing of an NDA for a Product, the Parties
will cooperate with each other to develop a plan for the completion
of the Tech Transfer of such matters; and, with respect to all
information, files, and documentation available as of the date of
such NDA filing, within sixty (60) days from the acceptance by
a Regulatory Authority of the NDA filing for a Product, the Parties
will complete the Tech Transfer of such matters, including
transferring files necessary for chemistry and manufacturing, to
King with respect to such Product. Thereafter, the Parties will
continue to perform Tech Transfer in a timely manner with respect
to all other information, files, and documentation relating to such
matters, including permitting King to witness pre-market validation
and manufacture and quality operations. PTI agrees to assist, as
requested by King, in post-approval support (including providing
technical assistance, troubleshooting, and provision of
post-marketing clinical supplies) to maximize the market
opportunity for the Products and to assure uninterrupted
supply.
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3.5.4 In Consultation with King, PTI
may enter into such agreements covering the clinical supply and
manufacture of Products as are reasonably necessary to accomplish
the objectives and purposes of the Development Program; and King
agrees to abide by the terms of any such agreements which King has
approved or which has been unanimously approved by the JOC pursuant
to its oversight and approval functions set forth in
Section 2.2.5. King may enter into such agreements covering
the commercial supply and manufacture of component materials and
API following the Completion of Phase II as are reasonably
necessary to accomplish the objectives and purposes of the
Development Program. King may at any time enter into an agreement
covering manufacture of commercial Product.
3.5.5 The Parties agree that
PTI’s existing plan for manufacturing and quality operations
with respect to Remoxy will continue to be followed by the
Collaboration, with a commercial supply agreement being entered
into with Mallinckrodt-Hobart as the primary manufacturer. King
acknowledges that PTI’s current understanding with
Mallinckrodt-Hobart contemplates a term for such supply agreement
of at least [***] of commercial launch in the United States. PTI,
in Consultation with King, may continue negotiating an agreement
with Mallinckrodt-Hobart; provided that any such agreement will
include a provision that the agreement [***]; and provided further
that [***]. The Mallinckrodt-Hobart supply agreement, with respect
to Remoxy, will be assigned by PTI to King at a time mutually
agreed to by the Parties, but no later than upon FDA approval of an
NDA for Remoxy. Except with King’s consent, not to be
unreasonably withheld, the Mallinckrodt-Hobart supply agreement
will have provisions such that the supply of Remoxy is independent
of the supply of any other products covered by the agreement
(including provisions so that a breach by PTI of its obligations
with respect to the other products will not affect the supply of
Remoxy) and permit the assignment of the supply agreement with
respect to Remoxy independent of any other products, it being
understood that King shall not withhold its consent to PTI’s
entering into the Mallinckrodt-Hobart supply agreement if PTI
agrees to indemnify King and hold King harmless with respect to
damages which King may incur as a result of
Mallinckrodt-Hobart’s cross-termination of the supply
agreement with respect to Remoxy as a result of a PTI’s
breach of its obligations thereunder with respect to a product
other than Remoxy. PTI will use commercially reasonable efforts to
have provisions of the type described in the preceding sentence
included in the Mallinckrodt-Hobart supply agreement.
3.5.6 Except with respect to Remoxy,
which is addressed by Section 3.5.5 above, King will have
control and responsibility for the commercial supply of Products in
the Territory. Except as provided for Remoxy in Sections 3.5.1,
3.5.2, and 3.5.5 above, King may, in its sole discretion, decide to
include its own manufacturing facility as a primary manufacturing
site in the initial Regulatory Filings for any Products. Upon
PTI’s request and with King’s consent (such consent not
to be unreasonably withheld), King agrees to enter into an
agreement
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with respect to King’s commercial supply
of Products to PTI or its licensee in Australia and New Zealand,
the terms of such agreement to be negotiated in good faith. In the
event that King agrees to supply Product to PTI and PTI agrees to
purchase Product from King for commercial supply in Australia and
New Zealand, then such Product will be sold by King to PTI
[***].
3.5.7 Upon PTI’s written
request, a second manufacturing site will be qualified for each
Product at such time as any of the following shall occur:
(a) such [***], or (b) there is an [***], or
(c) [***]. With respect to Remoxy, such qualification will be
obtained on a post-approval basis and may include, at King’s
discretion, a King facility or other contract manufacturer. With
respect to all other Products, if the primary site for such Product
is a King manufacturing site, PTI may require that the second
manufacturing site not be a King manufacturing site.
3.5.8 In connection with the
Manufacturing/CMC Plans, each Party
(a) will, upon written request of
the other Party, provide the other with the following documents to
the extent that such documents being requested are available and in
the possession or control of the Party to whom the request is made:
for each Product, pharmaceutics development report and history,
copies of CMC section submitted as part of any Regulatory Filings,
and minutes from any meeting or correspondence with any Regulatory
Authority regarding pharmaceutics development or CMC;
and
(b) will allow the other Party to
examine and copy, at the site where such records are normally
stored and at a time that is mutually acceptable to the Parties,
the following: (i) CMC development protocols and reports,
(ii) for each batch of API and each batch of Product produced
as CTM, batch records, analytical monograph (tests and
specifications), certificate of analysis for Good Manufacturing
Practices release, a table containing initial release and stability
testing results (which table will be updated each time a stability
pull point is analyzed), copies of any out of specification or
laboratory investigation report events, and report of any failed
batches and any corrective action; and (iii) for each batch of
Product produced as CTM, packaging and labeling batch
records.
The Manufacturing/CMC Plans will include a list
and brief description of protocols to be developed thereunder. The
reports described in clause (a) above and the protocols in the
Manufacturing/CMC Plans that King notifies PTI that King would like
to review will be developed in Consultation with the other Party
and will be made available to the other Party in draft form with
sufficient time for such Party to review and comment on the
foregoing, as well as being provided to the other Party in final
form when such materials are completed. In addition, each Party
will make available to the other Party such additional
documentation reasonably related to such other Party’s
performance of its obligations hereunder that is in the possession
or control of the Party to whom the request is made as such
documentation is reasonably requested by the other
Party.
3.6 Yearly Brand Plans
. King will prepare each Yearly Brand Plan for each Product and
provide a copy to the JOC for its review and comment. King, in
Consultation with PTI, will
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have control and responsibility for Marketing
each Product and for all matters under the Yearly Brand Plan,
including determining the packaging, trade dress, and labeling (to
the extent not dictated by any applicable Regulatory Approval) for
the distribution and sale of Product. Subject to Section 2.1.4
of the License Agreement, King shall use commercially reasonable
efforts and diligence to Market the Product commensurate with
industry standards; provided that in no event shall such level of
efforts and diligence be less than King uses in marketing its own
products of similar market potential and at a similar stage in
development as the applicable Product, taking into account the
competitiveness of the marketplace, the proprietary position of the
Product, and the efforts and resources available to a company
having a comparable market capitalization and taking into account
then-current market conditions. King will spend at least [***] on
Marketing for Remoxy in the U.S. Territory (excluding expenses
related to a sales force) between the Closing Date and the date of
Regulatory Approval of Remoxy by the FDA; provided that King will
be entitled to suspend such spending in the event the JOC decides
to cease pursuing Regulatory Approval of Remoxy in the U.S.
Territory, such suspension to only remain in effect until such time
as the JOC elects to resume pursuing Regulatory Approval of Remoxy
in the U.S. Territory; provided further that King may propose
changes in spending levels, with respect to which changes PTI will
not unreasonably withhold its consent, in the event of (a) the
FDA not accepting the NDA covering Remoxy for filing (or refusal to
file), (b) a determination by the FDA that such NDA is not
approvable, or (c) a failure by the FDA to approve such NDA
within eighteen (18) months of the date of the FDA’s
acceptance of an NDA for Remoxy.
3.7 Collaboration Costs,
Overruns, and Additional Expenditures .
3.7.1 Subject to the terms and
conditions of this Agreement, including Section 3.3.2,
(a) all Collaboration Costs incurred by either Party on and
after the Closing Date shall be paid by King; and (b) all
Collaboration Costs incurred by either Party on or after the
Effective Date but prior to the Closing Date will be paid by King,
with such payment not to be paid prior to the Closing Date, so long
as this Agreement is not terminated prior to Closing and such
Collaboration Costs comply with the terms and conditions of this
Agreement, as it will be in effect as of the Closing Date. Except
as otherwise provided herein, PTI shall be entitled to
reimbursement for the Collaboration Costs incurred by it in
connection with the Collaboration; provided that all such
Collaboration Costs must be included in the budget governing the
activities for which such costs were incurred, subject to the
provisions of this Section 3.7. All payments made by King
hereunder shall be treated for all purposes, including all tax and
accounting purposes, as the expenses of King and any applicable
deductions shall be wholly allocable to King.
3.7.2 The Parties understand and
agree that a Product may generate new data or may be the subject of
new regulatory guidance at any time for any reason during a
Calendar Year and that such changes may require substantial
revisions to the clinical development activities associated with a
Product or may cause PTI, in Consultation with King, or Durect to
re-work a Product. In the event either Party anticipates or becomes
aware that the actual costs of any given task assigned to it may or
will likely exceed the funds allocated to such task in the
applicable Program Plan budget, such Party shall promptly notify
the JOC in writing. If the actual aggregate costs of conducting a
particular Program Plan will likely exceed the aggregate annual
funds budgeted for such Program Plan under the applicable Program
Plan budget (or in the case of work conducted under a Development
Plan, if the actual aggregate costs of conducting a
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particular Development Plan will likely exceed
[***] of the aggregate annual funds budgeted for such Development
Plan under the applicable Development Plan budget), the JOC shall
work in good faith for up to thirty (30) days to approve a
budget amendment that provides for the continued prompt clinical
Development and Regulatory Approval of a Product. Such amendment
may include increasing the budget, readjusting the budget to
allocate additional funds to such task, revising the scope of such
task to permit satisfactory completion at the then-budgeted funding
level, or all three. In the event no decision is reached, the
matter shall be subject to the arbitration provisions of
Section 2.3.3 hereof. For purposes of clarity, neither Party
shall be obligated to perform any additional services in connection
with such task if the JOC does not approve increasing the budget to
pay for such additional services.
3.7.3 Notwithstanding the foregoing,
either Party may, in its discretion, spend additional amounts above
and beyond those allocated in the applicable budget (“
Discretionary Funding ”) on any task assigned to such
Party pursuant to the Program Plans or on any other task the JOC
has approved. In such event, the Party wishing to expend
Discretionary Funding shall first inform the second Party of such
first Party’s intent to do so. If the second Party consents
to the Discretionary Funding being deemed a Collaboration Cost,
which consent shall not be unreasonably withheld, the Discretionary
Funding shall constitute a Collaboration Cost. If the second Party
does not consent, then the Discretionary Funding shall not
constitute a Collaboration Cost, but shall be borne solely by the
Party undertaking the Discretionary Funding.
3.7.4 Except to the extent this
Agreement expressly provides for payments that do not require JOC
approval, and except to the extent the JOC has approved any payment
hereunder, neither Party shall (a) be obligated to incur any
costs or expend any funds that have not been approved by such Party
or (b) have the authority to cause the other Party to incur
any costs or expend any funds that have not been approved by such
other Party.
3.8 Third Party Licenses and
Collaborations . Subject to the review and the approval of
the JOC as provided in Section 2.2.5, King may enter into such
other Third Party licenses and collaboration agreements as are
reasonably necessary to accomplish the objectives and purposes of
the Development Program; and subject to the review and the approval
of the JOC as provided in Section 2.2.5, PTI may enter into
such Third Party licenses and collaborations agreements as are
reasonably necessary to accomplish the objectives and purposes of
the Collaboration. Except with the other Party’s consent, not
to be unreasonably withheld, each such agreement shall (a) if
only one Party is a party to the agreement, name the other Party as
a third party beneficiary to such agreement, (b) include an
assignment of all right, title, and interest in and to all work
product and all inventions arising from the performance of such
agreement, and all intellectual property rights attaching thereto
to the contracting Party, and (c) bind the relevant Third
Party by obligations of confidentiality and non-use with respect to
all such work product, inventions, and intellectual property rights
that are at least as stringent as those set forth herein. In order
to ensure the ability of a Party (the “ Non-Defaulting
Party ”) to proceed with the Development Program
notwithstanding certain conduct of the other Party (the “
Defaulting Party ”) or the termination of this
Agreement by the Non-Defaulting Party pursuant to
Section 9.2.3, the JOC may require the inclusion, in those
subcontracts, licenses, and other agreements (including
manufacturing and supply agreements) entered into in connection
with the Development Program (“ Third Party Agreements
”) that are or are likely to become material to the conduct
of the Development Program, of (i) an enforceable provision
granting to the Non-Defaulting
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Party hereto the same rights, benefits, and
obligations as those granted to the Defaulting Party under that
Third Party Agreement (whether by automatic assignment, a direct
agreement, or otherwise), contingent upon a Default by the
Defaulting Party of that Third Party Agreement or the termination
of this Agreement by the Non-Defaulting Party pursuant to
Section 9.2.3, and (ii) the applicable
Third-Party’s unconditional consent to such
provision.
3.9 Failure to Perform
.
3.9.1 General . In the
event that a Party does not perform a task or tasks assigned to it
under a Program Plan, including due to a dispute as to the budget
or scope of such task, or otherwise fails to perform its
Development or Marketing obligations hereunder, including meeting
timelines and budgets set forth in the Program Plans, PTI and King
will negotiate in good faith with respect to remedying such
failures. In the event such negotiations do not result in a
resolution of such issues satisfactory to both Parties within
thirty (30) days of the initiation of such negotiations, the
matter shall be submitted to arbitration as set forth in
Section 2.3.3.
3.9.2 Remedy . In the
event the arbitrators determine that the failure to perform was
intentional or willful (but not as a result of a failure to perform
because of a disagreement about budget matters or regulatory
strategy, which disagreement prevents the Parties from continuing
to perform their obligations), the arbitrators may grant the
non-breaching Party the right, but not the obligation, to perform
the task or tasks of the breaching Party. In addition, in the event
of any breach, including a failure to use commercially reasonable
efforts to perform a Party’s obligations, the arbitrators may
award the non-breaching Party monetary damages.
3.9.3 No Waiver . In
the event a Party is granted a right to perform the other
Party’s task, a Party’s election to perform such task
will not be deemed a waiver with respect to such electing
Party’s ability to exercise any other rights hereunder,
including any rights under Section 9.2.2 or 9.2.3.
4. INFORMATION EXCHANGE
4.1 Records
.
4.1.1 Record Keeping .
Each of PTI and King shall maintain records in sufficient detail
and in accordance with Good Laboratory Practice, Good Clinical
Practice, and Good Manufacturing Practice, and as will properly
reflect and document, in a manner appropriate for purposes of
supporting the filing of potential patent applications and
Regulatory Filings, all work done and results achieved in the
performance of the Development Program (including all data in the
form required under any Applicable Law); provided, however, that
prior to King’s election to assume control and responsibility
of execution of all matters under the Development Plan with respect
to a particular Product, PTI shall be responsible for maintaining
master files in accordance with Good Clinical Practices, Good
Laboratory Practices, and Good Manufacturing Practices, to the
extent applicable; provided, further, that upon such election by
King, PTI shall transfer such records to King with respect to such
Product. Subject to Section 6.4.3 hereof, PTI and King each
hereby grants the other the right to inspect and copy such records
to the extent reasonably required for the performance of its
obligations or exercise of its rights under this Agreement, and
neither Party shall use such records or information except to the
extent otherwise permitted by this Agreement.
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4.1.2 Reports . Each
Party shall keep the JOC reasonably informed about the status of
the Development Program, including furnishing the JOC with copies
of all material reports that relate to the Development Program. In
particular, without limitation, each Party shall (a) provide
periodic reports in reasonable detail to the JOC, at least each
Calendar Quarter and as requested from time to time by the JOC;
(b) provide the other Party with access to all Technology and
information employed in or arising out of the Development Program
solely for the purpose of conducting their respective roles
hereunder; (c) provide the other Party with the information
and reports described in Section 3.5.8 at least each Calendar
Quarter and as requested from time to time by the other Party; and
(d) provide the other Party with information concerning the
Development Program as such other Party shall reasonably request.
For purposes hereof, “information” will include data,
results, reports, records, and similar information.
4.2 Updates; Adverse Event
Information .
4.2.1 Adverse Event
Reports . In addition to the reports described in
Section 4.1.2 above, each Party shall provide the JOC with all
adverse event information and product complaint information
required by such Party to be disclosed to any Regulatory Authority
in connection with the Development, Marketing, or sale of any
Product, within time frames consistent with reporting obligations
under Applicable Law.
4.2.2 Confidential
Information . Except as otherwise required in connection
with disclosures to Regulatory Authorities required by Applicable
Law, all reports, updates, adverse event, or product complaint and
other information provided by a Party under this Agreement
(including under this Section 4.2) shall be considered
Confidential Information of both Parties, regardless of who
provided the same, and shall be subject to the terms of Article
8.
4.3 Sales Report .
Starting immediately following the First Commercial Sale of a
Product and for the Term of this Agreement, King, at its own
expense, shall provide PTI with such U.S. sales reports that King
has obtained for itself from a third party vendor of King’s
choice (such as IMS or NDC). Such report shall be provided to PTI
on a timely basis in electronic form, if available, each Calendar
Quarter and shall include no less than the following data (provided
that King has obtained or can obtain such data without undue
burden): (a) Product sales by territory, by prescriber, and by
strength, (b) Product sales by hospital, clinic, or mail-order
services, independent pharmacies, chains, mass merchandisers, and
food stores, (c) a comparison of actual Product sales versus
King’s forecast sales, (d) wholesale volume reports,
(e) top 250 hospital report, and (f) a summary of managed
care accounts by volume of Product. In addition, starting
immediately following the First Commercial Sale of a Product and
for eighteen (18) months thereafter, King, at its own expense,
shall (i) provide PTI with a weekly Product sales report in
electronic form and (ii) provide telephonic (or in-person)
access to King’s national sales manager for purposes of
holding an accurate discussion of a Product’s commercial
sales trends, general market trends, and the like. PTI agrees that
all information, data, and reports provided by King to PTI
hereunder shall be considered Confidential Information of King,
subject to the requirements of Article 8.
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5. CERTAIN OTHER
PROVISIONS
5.1 Product Liability
Costs. The Parties understand and agree that, because of
the nature of the collaborative effort set forth in this Agreement,
should any Third Party claims be asserted against either Party or
both Parties or any of their Affiliates, agents, or representatives
that are in the nature of product liability claims (“
Claims ”), the Parties will cooperate through the JOC
to ensure that such claims are defended and settled or compromised
in a manner that best protects the interests of the Parties. In
addition, the Parties will procure and maintain product liability
insurance with first-class carriers in coverages and amounts and
with deductibles not less than those determined by the JOC;
provided that:
(a) PTI shall obtain such insurance
for a Product for Claims arising prior to the Completion of Phase
II, at PTI’s sole cost, which coverage shall continue until
the earlier of (i) the initiation of Phase III for such
Product and (ii) five years after the Completion of Phase II
for such Product;
(b) If Phase III for a Product is
initiated, PTI shall obtain such insurance for such Product for
Claims arising following Completion of Phase II but prior to the
First Commercial Sale of such Product, at PTI’s and
King’s joint and equal cost, which coverage shall continue
until the earlier of (i) the First Commercial Sale of such
Product and (ii) five years after the first to occur of
(A) the completion of Phase III, (B) the decision of the
JOC not to proceed with the commercial sale of such Product, and
(C) the termination of this Agreement in its entirety pursuant
to Article 9 or with respect to such Product pursuant to
Section 9.2.2(a), unless PTI or any of its Affiliates or its
sublicensee continues to Develop the Product following such
termination, in which case clause (d) below will
apply;
(c) As of the First Commercial Sale
of a Product, King shall, at its sole cost, have obtained such
insurance for a Product for Claims arising following the First
Commercial Sale of such Product, such insurance to be in an
appropriate level (at a minimum of $[***]) exclusive of
self-insured amounts and shall be in amounts maintained by King for
other products of King of similar market potential and at a similar
stage in development as the applicable Product, taking into account
any particular risks related to such Product, which coverage shall
continue until the earlier of (i) the termination of this
Agreement in its entirety pursuant to Article 9 or with respect to
such Product pursuant to Section 9.2.2(a), so long as PTI or
any of its Affiliates or its sublicensee continues to sell the
Product following such termination, and (ii) five years after
the last commercial sale of the Product pursuant to this Agreement;
and
(d) PTI shall, at its sole cost,
obtain such insurance for a Product for Claims arising following
the termination of this Agreement in its entirety or with respect
to such Product, so long as PTI or any of its Affiliates or its
sublicensee continues to Develop or sell the Product following such
termination, such insurance to be in an appropriate level (at a
minimum of $[***] in the case of Marketed Products) exclusive of
self-insured amounts and shall be in amounts maintained by PTI for
other products of PTI of similar market potential and at a similar
stage in development as the applicable Product, taking into account
any particular risks related to such Product, which coverage shall
continue until five years after (i) termination of the
Development of such Product if PTI elects not to sell such Product
commercially or (ii) the last commercial sale of the Product,
as applicable.
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The costs incurred to obtain the insurance
described in this Section 5.1 shall not be deemed
Collaboration Costs. The insurance described in this
Section 5.1 shall name each Party as a co-insured.
5.2 Product Packaging
. The Parties agree that packaging and package inserts for each
finished Product sold to consumers will include King’s and
PTI’s names and logos prominently displayed, subject to the
approval of the applicable Regulatory Authorities. PTI agrees that
it shall not use, and it will prohibit its Affiliates or
sublicensees from using, trademarks, trade dress (including product
intaglio), packaging, or marketing material with respect to the
Marketing of products in the Field in Australia and New Zealand
that is confusingly similar with the Product Trademarks and any
Product trademarks, trade dress, packaging, or marketing material
in the Territory, except with respect to the use of PTI’s
name or logo. For clarity, PTI has the right to develop and market
for use in Australia and New Zealand the identical formula,
including colorants and inks, and container-closure system, as is
developed and marketed for each Product in the Territory; provided,
however, that all secondary packaging components must be
different.
5.3 Mutual Financial
Reporting . Each Party covenants to provide the other Party
written notice at such time as (a) such Party enters the
“zone of insolvency,” as defined in Applicable Law,
including interpretations in applicable case law, (b) such
Party’s liabilities exceed its assets, (c) such Party is
unable to pay its debts as they become due, (d) there is an
occurrence of a Default by such Party with respect to any of its
debt or payment obligations or any agreement material to the
Development Program, or (e) such Party suspends, closes, or
otherwise ceases to operate a majority of its business relating to
this Agreement and the License Agreement. In addition, within 15
days of a written request of either Party (such request not to be
made more than four times during any Calendar Year), the other
Party covenants to provide the requesting Party with its most
recent audited financial reports. Each Party will treat all notices
and financial reports (and the information contained therein) as
Confidential Information of the other Party, subject to the terms
of Article 8.
6. CLOSING; PAYMENTS
6.1 Closing
.
6.1.1 Covenants Pending
Closing .
(a) Reasonable Efforts .
Subject to the terms and conditions of this Agreement, each of the
Parties agrees to use all reasonable efforts to do, or cause to be
done, all things necessary and appropriate to satisfy all
conditions of and to consummate the transactions contemplated by
this Agreement, including the satisfaction of the applicable
conditions set forth in Section 6.1.3 below.
(b) Filings . The Parties
shall cooperate with one another in the preparation, execution, and
filing of all documents that are required or permitted to be filed
on or before the Closing, including filings pursuant to the HSR Act
and will promptly file the same after the Effective Date. The
related filing fees shall be borne by King, and the costs and
expenses incurred by each Party shall be paid by such
Party.
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6.1.2 Closing . As
promptly as practicable after the Effective Date and after the
satisfaction by each Party or, if permissible, waiver of the
conditions set forth in Sections 6.1.3(a) and (b), the Parties
hereto shall cause the Closing to occur on the Closing Date. The
Closing shall be held at the offices of Jones Day, 222 East 41st
Street, New York, New York 10017, or such other place as the
Parties shall agree, for the purpose of confirming the satisfaction
or waiver, as the case may be, of the conditions set forth in
Sections 6.1.3(a) and (b). If the Closing Date has not occurred
prior to February 9, 2006, either Party may terminate this
Agreement upon written notice to the other Party; provided,
however, that, as of such date, the Party terminating this
Agreement is not in default under this Agreement.
6.1.3 Conditions to
Closing .
(a) The obligation of PTI to close
shall be subject to the satisfaction on or before the Closing Date
of the following conditions, any or all of which may be waived in
whole or in part by PTI:
(i) the expiration or termination of
all applicable waiting periods under the HSR Act, unless a joint
determination is made by PTI and King (by certification from PTI
and King to each other) that notification under the HSR Act is not
required;
(ii) the representations and
warranties made by King in Article 10 shall be true and correct in
all material respects as of the Effective Date and as of the
Closing Date with the same force and effect as if they had been
made as of the Closing Date, and King shall have performed all
obligations and conditions herein required to be performed or
observed by it on or prior to Closing;
(iii) the provision by King to PTI
of an officer’s certificate certifying that (i) and
(ii) above are true and correct as of the Closing
Date;
(iv) the provision by King to PTI of
an opinion of counsel, in form reasonably satisfactory to PTI, that
the execution of this Agreement and the License Agreement and the
transactions contemplated hereby and thereby are duly authorized by
all corporate action on the part of King;
(v) the payment to PTI of the
Program Fee by King;
(vi) the execution by King and
delivery to PTI of the License Agreement; and
(vii) any agreement entered into by
PTI with Mallinckrodt-Hobart pursuant to Section 3.5.5 shall
be in form and substance satisfactory to King.
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(b) The obligation of King to close
shall be subject to the satisfaction on or before the Closing Date
of the following conditions any or all of which may be waived in
whole or in part by King:
(i) the expiration or termination of
all applicable waiting periods under the HSR Act, unless a joint
determination is made by PTI and King (by certification from PTI
and King to each other) that notification under the HSR Act is not
required;
(ii) the representations and
warranties made by PTI in Article 10 shall be true and correct in
all material respects as of the Effective Date and as of the
Closing Date with the same force and effect as if they had been
made as of the Closing Date, and PTI shall have performed all
obligations and conditions herein required to be performed or
observed by it on or prior to Closing;
(iii) the provision by PTI to King
of an officer’s certificate certifying that (i) and
(ii) above are true and correct as of the Closing
Date;
(iv) the provision by PTI to King of
an opinion of counsel, in form reasonably satisfactory to King,
that the execution of this Agreement and the License Agreement and
the transactions contemplated hereby and thereby are duly
authorized by all corporate action on the part of PTI;
(v) the execution by Durect and PTI
of an agreement, in the form attached hereto as Exhibit B ,
granting Durect’s consent to the transactions contemplated by
this Agreement and the License Agreement; and
(vi) the execution by PTI and
delivery to King of the License Agreement.
6.2 Program Fee .
Simultaneous with the Closing, King shall pay to PTI a one-time
collaboration fee in the amount of one hundred fifty million U.S.
dollars ($150,000,000) (the “ Program Fee ”).
The Program Fee shall be paid by King in U.S. dollars by wire to an
account designated by PTI.
6.3 Milestone Payments
.
6.3.1 Development
Milestones . King will make the following payments to PTI
within ten (10) days after the determination of the first
achievement of each of the milestones set forth below. For purposes
of clarity, it is understood and agreed that the following
milestone payments shall (a) be non-refundable and
non-creditable and (b) only be payable once with respect to
each Product, such that that a payment will be due only once for
(i) each Product with a given active opioid, but will not be
payable with respect to line extensions, new indications, new
dosages, or new Regulatory Filings that subsequently may be filed
for a Product that contains the same active opioid, and
(ii) the first filing of an IN
