LICENSE AND COLLABORATION AGREEMENT BETWEEN ALKERMES, INC. AND CEPHALON, INC.Collaboration Agreement |
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EXHIBIT 10.5(a)
WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED BY AN ASTERISK *), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
LICENSE AND COLLABORATION AGREEMENT
BETWEEN
ALKERMES, INC.
AND
CEPHALON, INC.
TABLE OF CONTENTS
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WHENEVER CONFIDENTIAL INFORMATION IS OMITTED HEREIN (SUCH OMISSIONS ARE DENOTED BY AN ASTERISK *), SUCH CONFIDENTIAL INFORMATION HAS BEEN SUBMITTED SEPARATELY TO THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
LICENSE AND COLLABORATION AGREEMENT
This License and Collaboration Agreement (the “ Agreement ”) is entered into effective as of June 23, 2005 (the “ Effective Date ”) by and between Alkermes, Inc., a Pennsylvania corporation with its principal office at 88 Sidney Street, Cambridge, Massachusetts 02139 (“ Alkermes ”), and Cephalon, Inc., a Delaware corporation with its principal office at 41 Moores Road, Frazer, Pennsylvania 19355 (“ Cephalon ”).
RECITALS:
WHEREAS, Alkermes is developing an injectable sustained-release microsphere form of the pharmaceutical compound naltrexone for the treatment and/or prevention of alcohol abuse/dependence or other indications approved for development pursuant to this Agreement; and
WHEREAS, Cephalon and Alkermes wish to collaborate in the development of the Products (as defined herein) for use and sale in the Field (as defined herein) in the Territory (as defined herein); and
WHEREAS, Cephalon has experience and expertise in the commercialization of pharmaceutical products and will promote, market and sell the Products in the Field in the Territory; and
WHEREAS, Alkermes will manufacture and supply to Cephalon the Medisorb Product (as defined herein) pursuant to the terms of a Supply Agreement (as defined herein); and
WHEREAS, the Parties intend through these various arrangements, subject to budget constraints and other limitations set forth herein, to maximize the profitability of the Products in the Field in the Territory; and
WHEREAS, Cephalon and Alkermes therefore agree to undertake the foregoing, all under the terms and conditions set forth in this Agreement and for the consideration set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
DEFINITIONS
1.1 “Act” shall mean the United States Food, Drug and Cosmetic Act, as
amended from time to time, and the regulations promulgated thereunder including the guidelines and guidance issued by the FDA.
1.2 “Additional Product Trademark” shall have the meaning set forth in Section 7.9.
1.3 “Affiliate” with respect to any Party, shall mean any entity that controls, is controlled by, or is under common control with such Party, but only for so long as such control shall continue. For these purposes, “control” shall refer to: (i) the possession, directly or indirectly, of the power to direct the management or policies of an entity, whether through ownership of voting securities, by contract or otherwise, or (ii) the ownership, directly or indirectly, of at least fifty percent (50%) of the voting securities or other ownership interest of an entity.
1.4 “Alkermes Know-How” shall mean any Know-How, including any Collaboration Technology (other than Joint Know-How), that is Controlled by Alkermes or its Affiliates on the Effective Date or thereafter during the Term and that is necessary or directly related to the use, sale, offer for sale or import of the Products in the Field in the Territory , but shall not include Know-How covering only the Manufacture of a Product.
1.5 “Alkermes Manufacturing Know-How” shall mean any Know-How that is Controlled by Alkermes or its Affiliates on the Effective Date or thereafter during the Term and that is necessary or directly related to the Manufacture of the Products in the Territory or the Manufacture of the Products in the ROW Territory for use, sale, offer for sale or import in the Territory.
1.6 “Alkermes Manufacturing Patents” shall mean shall mean any Patent Rights that are Controlled by Alkermes or its Affiliates on the Effective Date or thereafter during the Term and that are necessary or directly related to the Manufacture of the Products in the Territory or the Manufacture of the Products in the ROW Territory for use, sale, offer for sale or import in the Territory, including those patents and patent applications listed on Exhibit B .
1.7 “Alkermes Patents” shall mean (i) the Patent Rights Controlled by Alkermes or its Affiliates on the Effective Date that are necessary or directly related to the use, sale, offer for sale or import of the Products in the Field in the Territory, including those patents and patent applications listed on Exhibit A , and (ii) any Patent Rights, including any patents or patent applications that claim Collaboration Technology (other than Joint Patents), that are Controlled by Alkermes or its Affiliates after the Effective Date and that are necessary or directly related to the use, sale, offer for sale or import of the Products in the Field in the Territory , but shall not include Patent Rights covering only the Manufacture of a Product.
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1 . 8 “Business Day” shall mean a day on which banking institutions in New York, New York are open for business.
1.9 “Call” shall mean a face-to-face meeting in an individual, hospital or group setting between a Sales Representative and one or more Target Prescribers.
1.10 “Cephalon Commercialization Costs” shall have the meaning set forth in Section 4.1.2.
1.11 “Cephalon Know-How” shall mean any Know-How, including any Collaboration Technology (other than Joint Know-How), that is Controlled by Cephalon or its Affiliates on the Effective Date or thereafter during the Term and that is necessary or directly related to the Manufacture, use, sale, offer for sale or import of the Products in the Field in the Territory.
1.12 “Cephalon Patents” shall mean any Patent Rights, including any patent or patent applications that claim Collaboration Technology (other than Joint Patents), that are Controlled by Cephalon or its Affiliates on the Effective Date or thereafter during the Term and that are necessary or directly related to the Manufacture, use, sale, offer for sale or import of the Products in the Field in the Territory.
1.13 “Clinical Studies” means human studies designed to measure the safety and/or efficacy of a Product. Clinical Studies include Phase I clinical trials, Phase II clinical trials, Phase III clinical trials, and Phase IV clinical trials other than Post Marketing Clinical Trials.
1.14 “Clinical Supplies” shall mean supplies of the Products, Placebo and diluent to be used for the conduct of pre-clinical studies and/or Clinical Studies of a Product in the Field pursuant to a Development Plan.
1.15 “Code” shall mean the Code on Interactions with Healthcare Professionals promulgated by the Pharmaceutical Research and Manufacturers of America (PhRMA) and the American Medical Association (AMA) Guidelines on Gifts to Physicians from Industry, as either of the foregoing may be amended from time to time.
1.16 “Collaboration Technology” shall mean any Know-How developed, made or conceived by or on behalf of a Party pursuant to a Development Plan or Commercialization Plan that relates to a Product or Naltrexone or the Manufacture or use in the Field of a Product or Naltrexone.
1.17 “Commercial Supplies” shall mean supplies of the Products (i) for commercial sale by Cephalon and its Affiliates in the Field in the Territory pursuant to this Agreement or (ii) for compassionate use, use in investigator-sponsored Clinical
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Studies or Post Marketing Clinical Trials in the Field in the Territory pursuant to this Agreement.
1.18 “Commercialization” (including variations such as “Commercialize” and the like) shall mean the performance of any and all activities directed to promoting, marketing, importing, exporting, distributing, selling or offering to sell (including pre-marketing), sampling, Post Marketing Clinical Trials and post-marketing drug surveillance of the Products in the Field in the Territory.
1.19 “Commercialization Costs ” shall mean direct costs incurred ( i.e. , paid or accrued) after the Effective Date by or on behalf of either Party in accordance with GAAP applied on a consistent basis to the extent attributable to fulfilling such Party’s responsibilities under the Commercialization Plan in accordance therewith and with this Agreement, all as calculated in accordance with Section 9.7. Commercialization Costs shall also comprise the costs of Commercialization performed by Cephalon’s or its Affiliates’ or Alkermes’ or its Affiliates’ FTEs at the Commercialization FTE Rate or the Treatment System Specialist FTE Rate, as applicable, and performance of the Parties’ Sales Representative FTEs at the Sales Representative FTE Rate. Such direct costs shall include: (i) costs of internal marketing, scientific, medical, technical or managerial personnel engaged in such efforts, which costs shall be documented;
(ii) costs of Post Marketing Clinical Trials for a Product included within the Commercialization Plan, as well as the Fully Burdened Manufacturing Cost of Commercial Supplies for such trials, any shipping and storage costs relating to such supplies;
(iii) costs of marketing, advertising, sampling and promoting the Products in the Field in the Territory, including by way of example educational expenses, speakers’ programs and symposia, and marketing meetings, but solely to the extent reasonably allocable to the Products and excluding the costs of activities that promote a Party’s business as a whole;
(iv) costs of customer services, such as call centers, and services related to case management, patient reimbursement, technical complaints and medical and patient inquiries;
(v) costs of developing sales force training materials and conducting sales force training sessions;
(vi) costs of primary and secondary market research for the Territory and collection of data about sales to hospitals and other end users;
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(vii) costs of developing, producing and distributing Promotional Materials for the Territory, including copyright registrations therefor;
(viii) costs of contracting with managed care organizations, hospital systems, group purchasing organizations, physician networks, pharmacies and any other private or government healthcare provider or reimbursement entity, in each case solely with respect to the Products, or if not solely, as allocated among a Party’s products on a fair and equitable basis;
(ix) costs of communications and meetings with the FDA , exchange of information, assistance, medical inquiries, and post-market surveillance in connection with Products sold in the Territory, following the receipt of Regulatory Approval therefor;
(x) costs of developing and carrying out the Medical Activity Plan for the Products, including costs for developing, producing and distributing medical information, developing and implementing continuing medical education programs, field-based medical affairs personnel and safety monitoring;
(xi) costs incurred in connection with receiving, investigating, recording, reviewing, communicating, and exchanging adverse events and other reportable information as provided in a safety data exchange agreement between the Parties to the extent relating to the Commercialization of the Products;
(xii) costs and expenses of prosecuting, maintaining and defending the Vivitrex Trademark and the Additional Product Trademark in the Territory pursuant to Section 7.9 and trademark enforcement costs pursuant to Section 7.10;
(xiii) Sales Representative FTE costs;
(xiv) Treatment System Specialist FTE costs; and
(xv) Distribution Costs.
1.20 “Commercialization FTE Rate” shall mean initially an amount equal to [**] per FTE per year; on January 1, 2006, and annually thereafter, such amount shall be adjusted to reflect any increase, since the prior adjustment (or the initial rate, as applicable), in the Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers, Northeast Urban, based on the most recent monthly index available as of the adjustment date.
1.21 “Commercialization Plan” shall mean the marketing and sales plan intended to encourage sales of the Products in the Field in the Territory, as prepared and updated at least annually by the CT.
1.22 “Commercially Reasonable Efforts” shall mean [**].
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1.23 “[**]” shall have the meaning set forth in Section 9.11.
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1.24 “Confidential Information” shall have the meaning set forth in Section 8.1.
1.25 “Controlled” shall mean with respect to Patent Rights or Know-How that the applicable Party or its Affiliates, in whole or in part, owns or has a license to such patents or know-how and has the ability to grant a license or a sublicense, as applicable, or to otherwise disclose proprietary or trade secret information, to such other Party, without paying any consideration to any Third Party and without either violating the terms of any agreement or other arrangement with any Third Party existing and in effect at the time such Party would be required hereunder to grant the other Party such license or sublicense or misappropriating the proprietary or trade secret information of a Third Party.
1.26 “CT” shall mean a commercialization team established pursuant to Section 4.2.
1.27 “Detail” or “Detailing” shall mean, with respect to the Products, the activity undertaken by a Sales Representative during a Call in which one or more Product benefits are verbally presented to one or more Target Prescribers, but shall exclude discussions at conventions, marketing meetings or seminars, and all forms of communication not involving face-to-face contact by a Sales Representative and a Target Prescriber. A Detail does not include a reminder or sample drop.
1.28 “Development” (including variations such as “Develop” and “Developing” ) shall mean the performance of any and all activities relating to obtaining Regulatory Approval of a Product in the Field in the Territory and to supporting and expanding such Regulatory Approval, including activities relating to developing the ability to Manufacture and to continue to Manufacture the Product. Development activities include the performance by the Parties, their Affiliates or Third Parties of pre-clinical studies, pharmacokinetic studies, toxicology studies, formulation, test method development and stability testing, manufacturing process development, manufacturing technical support, validation and scale-up (including bulk compound production), manufacturing Clinical Supplies, quality assurance and quality control for formulations of a Product, Clinical Studies (including post-marketing Clinical Studies to obtain or support Regulatory Approval), and regulatory affairs including regulatory legal services.
1.29 “Development Costs” shall mean the direct costs incurred ( i.e., paid or accrued) after the Effective Date by or on behalf of either Party in accordance with GAAP applied on a consistent basis to the extent attributable to fulfilling such Party’s responsibilities under the Development Plan in accordance therewith and with this Agreement, all as calculated in accordance with Section 9.7. Development costs shall also comprise costs of Development performed by Cephalon’s or its Affiliates’ or Alkermes’ or its Affiliates’ FTEs at the Development FTE Rate. Such direct costs shall include:
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(i) costs of internal scientific, medical, technical or managerial personnel engaged in such efforts, which costs shall be documented;
(ii) costs of research or development, including costs of studies on the toxicological, pharmacokinetic, metabolic or clinical aspects of a Product conducted internally or by individual investigators or consultants, necessary or desirable for the purpose of obtaining Regulatory Approval and for conducting post-marketing activities to support such Regulatory Approval;
(iii) Fully Burdened Manufacturing Costs of Clinical Supplies and any shipping and storage costs relating to such supplies;
(iv) costs of manufacturing process development, validations, scale-up, quality assurance and quality control for formulations of a Product pursued by the Parties under any Development Plan, but excluding costs relating to the [**] Manufacturing process scale-up, validation of the [**] Manufacturing process or the Regulatory Approval of the [**] Manufacturing process that are required to obtain Regulatory Approval for the Medisorb Product for the Initial Indication (which costs shall be borne solely by Alkermes);
(v) costs of preparing and reviewing data or information for the purpose of submitting to the FDA an NDA for a Product in the Field;
(vi) costs of communications and meetings with the FDA, exchange of information and assistance until Regulatory Approval for the Product has been obtained; and
(vii) costs incurred in connection with receiving, investigating, recording, reviewing, communicating, and exchanging adverse events and other reportable information as provided in a safety data exchange agreement between the Parties to the extent relating to the Development of a Product in the Field in the Territory.
1.30 “Development FTE Rate” shall mean initially an amount equal to [**] per FTE per year; on January 1, 2006, and annually thereafter, such amount shall be adjusted to reflect any increase, since the prior adjustment (or the initial rate, as applicable), in the Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers, Northeast Urban, based on the most recent monthly index available as of the adjustment date.
1.31 “Development Plan” shall mean a plan for the Development of a Product for one or more indications in the Field in the Territory, as prepared and updated at least annually by the DT.
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1.32 “Distributable Loss” and “Distributable Profit” shall mean the amount equal to Net Sales for the Products in the Field in the Territory in the applicable reporting period less the Shared Expenses, which shall be a Distributable Loss if negative and a Distributable Profit if zero (0) or positive.
1.33 “Distribution Costs ” shall mean costs incurred ( i.e. , paid and accrued) after the Effective Date by or on behalf of a Party to the extent attributable to the distribution of Commercial Supplies, including (i) distributor customer services, (ii) order entry, (iii) billing, (iv) warehousing, (v) freight and transportation for delivery of the Products to the end user and (vi) credit and collection services.
1.34 “DT” shall mean a development team established pursuant to Section 3.1.
1.35 “Effective Date” shall mean the date first written above.
1.36 “FDA” shall mean the United States Food and Drug Administration or any successor agency.
1.37 “Field” shall mean the treatment, prevention or diagnosis of any human disease, disorder or condition, including the treatment and/or prevention of alcohol abuse/dependence.
1.38 “Filing Party” shall have the meaning set forth in Section 7.4.
1.39 “Finished Product” shall mean a finished, packaged, labeled final dosage unit of a Product plus diluent and syringes.
1.40 “First Commercial Sale” shall mean the first commercial sale of a Finished Product in the Field in the Territory after Regulatory Approval has been obtained in the Territory for such Finished Product.
1.41 “FTE” shall mean [**].
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1.42 “Fully Burdened Manufacturing Cost” shall mean the costs incurred (i.e., paid or accrued) by a Party, its Affiliates or agents in the Manufacture of a Product, Placebo or diluent, as applicable, which shall be [**]. Fully Burdened Manufacturing Cost shall exclude [**] that are required to obtain Regulatory Approval for the Medisorb Product for the Initial Indication (which costs shall be borne solely by Alkermes). In addition, for the avoidance of doubt, any Manufacturing development costs that are included in Shared Expenses as Development Costs shall not be included as part of the Fully Burdened Manufacturing Cost.
1.43 “GAAP” shall mean United States Generally Accepted Accounting Principles.
1.44 “Generic Product” shall mean [**].
1.45 “Government Authority” shall mean any court, tribunal, agency, department, legislative body, commission or other instrumentality of any federal, state, county, city or other political subdivision in the Territory.
1.46 “Initial Indication” shall mean the alcohol abuse/dependence indication.
1.47 “Initial Indication Development Costs” shall mean those Development Costs that are necessary to obtain Regulatory Approval for the Medisorb Product for the Initial Indication at the manufacturing scale and in the presentation form contained in NDA number 21-897 filed with the FDA by Alkermes on March 31, 2005; provided, however , that such costs shall only include the cost of one Phase III clinical trial (including the Fully Burdened Manufacturing Costs of Clinical Supplies for such trial) in addition to the Phase III clinical trial the data from which is included in such NDA and such costs shall not include any costs incurred after the receipt of such Regulatory Approval for the Medisorb Product, including any costs incurred to support or expand such Regulatory Approval.
1.48 “IND” shall mean an Investigational New Drug Application for a Product or a [**] filed with the FDA pursuant to 21 C.F.R. Part 312.
1.49 “[**]” shall mean [**].
1.50 “Joint Know-How” shall mean any Collaboration Technology developed, made or conceived jointly by or on behalf of Cephalon or its Affiliates and by or on behalf of Alkermes or its Affiliates.
1.51 “Joint Patents” shall mean any patent applications (including provisional patent applications) claiming discoveries or inventions that are conceived and reduced to practice jointly by or on behalf of Cephalon or its Affiliates and by or on behalf of Alkermes or its Affiliates and that claim Collaboration Technology, and all Patent Rights
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related to such patent applications.
1.52 “JSC” shall mean that joint steering committee established pursuant to Section 2.1.
1.53 “Know-How” shall mean all proprietary data, technical information, know-how, inventions, discoveries, trade secrets, processes, techniques, compositions, material, methods, formulas or improvements, whether patentable or not.
1.54 “Laws” or “Law” shall mean all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the binding effect of law of any applicable Government Authority, including the Act.
1.55 “Manufacturing” (including variations such as “Manufacture” ) shall mean the performance of any and all activities directed to producing, manufacturing, processing, filling, finishing, packaging, labeling, quality control, quality assurance, testing and release, shipping and warehousing of the Products, Finished Products, Placebo, or diluent as applicable.
1.56 “Marketing Plan” shall mean that portion of the Commercialization Plan described in Section 4.3.
1.57 “Medical Activity Plan” shall mean that portion of the Commercialization Plan described in Section 4.3.
1.58 “Medisorb Product” shall mean a Product utilizing Alkermes’ Medisorb® sustained-release technology as described in NDA number 21-897 filed with the FDA by Alkermes on March 31, 2005.
1.59 “Medisorb Trademark” shall mean the mark MEDISORB, and the applications for registration of such mark listed on Exhibit C .
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1.60 “Minimum Sales Representatives” shall have the meaning set forth in Section 4.11.1.
1.61 “Naltrexone” shall mean [**].
1.62 “Net Sales” shall mean, as to each calendar month, the gross amount invoiced by Cephalon and its Affiliates to Third Parties for the sale of Finished Products in the Territory, less accruals estimated, credits taken, and actual payments (to the extent not previously accrued) made for: (i) credits, fees paid to wholesalers, retroactive price reductions, rebates (including Medicaid, managed care and similar types of government rebates or rebates to other health care providers and payers), refunds, charge backs, and adjustments actually granted; (ii) trade, quantity and cash discounts actually allowed or given; (iii) sales, excise, value-added and similar taxes assessed on the sale of the Finished Products (other than income taxes of Cephalon and its Affiliates), and import and customs duties; and (iv) shipping and insurance charges, postage, and freight out (to the extent not separately paid by the Third-Party customer). Each of such deductions shall only be applicable to the extent it is determined in accordance with GAAP as consistently applied by Cephalon and its Affiliates for pharmaceutical products other than a Finished Product.
[**].
The sale of a Finished Product by and among Cephalon and its Affiliates intended for subsequent resale is not a sale to a Third Party and shall be excluded from Net Sales calculations. Cephalon and its Affiliates shall not sell or otherwise transfer Finished Product other than in an arm’s length transaction exclusively for money except in accordance with normal industry practice: (i) for charitable purposes; (ii) for pre-clinical studies, Clinical Studies and Post Marketing Clinical Trials; (iii) for regulatory purposes and (iv) as promotional samples.
1.63 “ New Drug Application” or “NDA” shall mean an application for Regulatory Approval required for commercial marketing or sale of a Product as a pharmaceutical product in the Territory.
1.64 “New Indication” shall mean any indication for a Product in the Field other than the Initial Indication.
1.65 “Party” shall mean Cephalon or Alkermes and, when used in the plural, shall mean both Cephalon and Alkermes.
1.66 “Patent Costs” means the (i) fees and expenses paid to outside legal counsel and experts, or the cost of Alkermes’ or its Affiliates’ or Cephalon’s or its Affiliates’ FTEs at the Development FTE Rate, incurred in connection with the preparation, filing, prosecution and maintenance of Patent Rights after the Effective
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Date, including costs of patent interference, reexamination, reissue, revocation, opposition and appeal proceedings, and (ii) cost to litigate the enforcement and defense of such Patent Rights, in all cases as explicitly included in Patent Costs pursuant to Article 7 hereof.
1.67 “Patent Rights ” shall mean any and all of the following: (i) patent applications (including provisional patent applications) and patents (including the inventor’s certificates); and (ii) any substitution, extension (including patent term extensions and supplementary protection certificates), registration, confirmation, reissue, continuation, divisional, continuation-in-part, reexamination, renewal, patent of addition or the like thereof or thereto. 1.68 “Placebo” shall mean an inactive substitute for a Product.
1.69 “Post Marketing Clinical Trial” shall mean a clinical trial of a Product in human patients (including investigator initiated trials) that is conducted for a purpose other than to obtain or support Regulatory Approval.1.70 “PRC” shall have the meaning set forth in Section 4.10.2.
1.71 “Primary Position Detail” shall mean a Detail in which key Product attributes are verbally presented in the first position, consistent with the terms of this Agreement, where the Product is given primary emphasis (i.e., an emphasis that is more important than the emphasis given to any other product presented), and where no more than [**] products are presented.
1.72 “Product” shall mean any sustained-release, time-release or other extended-release formulation or dosage form of a pharmaceutical product containing Naltrexone.
1.73 “Product Liability Claim” shall mean any claim, action or demand by a Third Party relating to death or bodily injury caused or allegedly caused by the use of a Product.
1.74 “Promotional Materials” shall mean all written, printed, audio, video or graphic advertising, promotional, educational and communication materials (other than the Product label) for marketing, advertising and promotion of the Products for use by the Parties’ sales forces in accordance with the terms of the applicable Commercialization Plan.
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1.75 “Regulatory Approval” shall mean any approvals of the FDA necessary for the manufacture, marketing or sale of a Product in the Territory.
1.76 “ROW Territory” shall mean all countries in the world, other than the Territory.
1.77 “Sales Representative” shall mean an individual whose primary responsibility is to engage in Detailing and other promotional efforts with respect to the Products.
1.78 “Sales Representative FTE” shall mean [**].
1.79 “Sales Representative FTE Rate” shall mean initially an amount equal to [**] per Sales Representative FTE per year; on January 1, 2006, and annually thereafter, such amount shall be adjusted to reflect any increase, since the prior adjustment (or the initial rate, as applicable), in the Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers, Northeast Urban, based on the most recent monthly index available as of the adjustment date.
1.80 “Secondary Position Detail” shall mean a Detail in which key Product attributes are verbally presented in the second position, consistent with the terms of this Agreement, where the Product is given significant but not primary emphasis (i.e., an emphasis that is at least or more important than the emphasis given to any product presented other than the product that is presented in the Primary Position Detail), and where no more than three (3) products are presented.
1.81 “Shared Expenses” shall mean Development Costs, but not including the Initial Indication Development Costs; the Fully Burdened Manufacturing Cost of Commercial Supplies (excluding such costs relating to Post Marketing Clinical Trials that are included in Commercialization Costs); the Commercialization Costs, but not including Cephalon Commercialization Costs; Patent Costs; all amounts paid by Cephalon in connection with a Third Party license that are identified as Shared Expenses pursuant to Section 7.7; and Product Liability Claim-related costs not covered by either Party’s indemnification obligations set forth in Article 11.
1.82 “ST” shall mean a supply team established pursuant to the Supply Agreement.
1.83 “Standards” shall mean the Accreditation Council for Continuing Medical Education (ACCME) Standards for Commercial Support of Continuing Medical Education, as they may be amended from time to time.
1.84 “Supply Agreement” shall mean the Supply Agreement between the Parties for the manufacture and supply to Cephalon of the Products, Finished Products,
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Placebo and/or diluent.
1.85 “Target Prescriber” shall mean a practitioner with authority to prescribe the Products or issue hospital orders for the Products, or with substantial influence over the prescription of the Products or issuance of hospital orders for the Products, in the Field in the Territory as identified in the Commercialization Plan.
1.86 “Term” shall have the meaning set forth in Section 13.1.
1.87 “Third Party” shall mean any entity other than the Parties or their respective Affiliates.
1.88 “Territory” shall mean the United States of America, its territories and possessions, including the Commonwealth of Puerto Rico.
1.89 “Treatment System Specialists” shall have the meaning set forth in Section 4.11.2.
1.90 “Treatment System Specialist FTE” shall mean [**].
1.91 “Treatment System Specialist FTE Rate” shall mean initially an amount equal to [**] per Treatment System Specialist FTE per year; on January 1, 2006, and annually thereafter, such amount shall be adjusted to reflect any increase, since the prior adjustment (or the initial rate, as applicable), in the Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers, Northeast Urban, based on the most recent monthly index available as of the adjustment date.
1.92 “[**]” shall have the meaning set forth in Section 4.1.2.
1.93 “Valid Claim” shall mean a claim of an issued or granted and unexpired patent, including an Alkermes Patent or Joint Patent, which has not lapsed, been revoked or abandoned or held permanently unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, reexamination, disclaimer or otherwise.
1.94 “Vivitrex Trademark” shall mean the mark VIVITREX, and the applications for registration of such mark listed on Exhibit C.
Where words and phrases are used herein in the singular, such usage is intended to include the plural forms where appropriate to the context, and vice versa. The words “ including ”, “ includes ” and “ such as ” are used in their non-limiting sense and have the same meaning as “including without limitation” and “including but not limited
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to”. References to Articles, Sections, subsections, and clauses are to the same with all their subparts as they appear in this Agreement. “ Herein ” means anywhere in this Agreement. “ Hereunder ” and “ hereto ” means under or pursuant to any provision of this Agreement.
MANAGEMENT OF THE COLLABORATION
2.1.1 Establishment of the JSC. Within fifteen (15) days of the Effective Date, the Parties shall establish a joint steering committee (the “ JSC ”), which shall have overall responsibility for the collaboration between the Parties, including overseeing the Development and Manufacturing of the Products in the Field for the Territory, and the Commercialization of the Products in the Field in the Territory, as contemplated by this Agreement. The JSC will comprise [**] representatives of each Party, who shall be appointed (and may be replaced at any time) by such Party on notice to the other Party in accordance with this Agreement. Such representatives shall include individuals within the senior management of each Party. To conduct the activities described in Section 2.1.2 below, the JSC will meet at least [**] each calendar quarter for the first [**] years following the Effective Date, and thereafter at least [**] each calendar year, or more frequently if agreed by the JSC. The representatives from each Party shall collectively have one vote in decisions, with decisions made by unanimous vote.
2.1.2 JSC Responsibilities. The JSC shall perform the following functions:
(i) review, coordinate and, in its discretion, approve the strategies for the Development, Commercialization and Manufacture of the Products in the Field in the Territory, and provide direction to the DT, CT and ST as provided herein;
(ii) approve the scope of the DT’s, CT’s and ST’s decision-making authority;
(iii) except as otherwise provided herein, review and, in its discretion, approve by [**] of each calendar year the Development Plan for the subsequent calendar year (including the Development Plan annual budget and the division of responsibilities between the Parties under such plan);
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(iv) review and, in its discretion, approve substantive amendments to the Development Plan (including the Development Plan annual budget);
(v) review and, in its discretion, approve the multiyear long-range plan for Development of the Products in the Field in the Territory (including the budget for Development Costs) formulated by the DT;
(vi) review and, in its discretion, approve recommendations for further Development of the Products, including Development of the Products for a New Indication;
(vii) review and, in its discretion, approve by [**] of each calendar year the Commercialization Plan for the subsequent calendar year (including the Commercialization Plan annual budget);
(viii) review and, in its discretion, approve substantive amendments to the Commercialization Plan (including the Commercialization Plan annual budget);
(ix) review and, in its discretion, approve the multiyear long-range plan for Commercialization of the Products in the Field in the Territory (including the budget for Commercialization Costs) formulated by the CT;
(x) review and, in its discretion, make a commercially reasonable determination whether the budget for Patent Costs prepared by the Patent Committee pursuant to Section 7.3 should be approved, and if appropriate, approve the budget in accordance with such determination;
(xi) serve as the first forum for the settlement of disputes or disagreements that are unresolved by the DT, CT or ST, unless otherwise indicated in this Agreement; and
(xii) perform such other functions as appropriate to further the purposes of this Agreement as determined by the Parties.
2.1.3 JSC Chairperson; Procedures. For a [**]-year period commencing on the Effective Date, an Alkermes representative to the JSC shall serve as the chairperson of the JSC. For each subsequent [**]-year period, representatives of the Parties shall alternate as the chairperson of the JSC. The chairperson shall establish the timing and agenda for all JSC meetings and shall send notice of such meetings, including the agenda therefor, to all JSC members; provided, however , either Party may request that specific items be included in the agenda and may request that additional meetings be scheduled as needed. The location of regularly scheduled JSC
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meetings shall alternate between the offices of the Parties, unless otherwise agreed. Meetings may be held telephonically or by videoconference. A quorum of at least [**] JSC members appointed by each Party shall be present at or shall otherwise participate in each JSC meeting. The Party hosting any JSC meeting shall appoint one person (who need not be a member of the JSC) to attend the meeting and record the minutes of the meeting in writing. Such minutes shall be circulated to the Parties promptly following the meeting for review, comment and approval. Any modifications to any Development Plan or Commercialization Plan (including the work, budget, and timeline therefor) approved at a JSC meeting shall be considered approved and shall constitute a valid, binding amendment to such Development Plan or Commercialization Plan, as applicable, upon JSC review and approval of the meeting minutes related thereto.
2.1.4 JSC Decision Making. As a general principle, the JSC will operate by consensus with each Party collectively having one vote. In the event that the JSC members do not reach consensus with respect to a matter that is within the purview of the JSC within [**] days after they have met and attempted to reach such consensus, such matter shall be resolved by the Parties under the terms of Article 12 below; provided, however, that to the extent any matters are required by Law or by safety concerns with respect to a Product to be resolved within a shorter period of time, the periods set forth in this Section 2.1.4 and in Article 12 shall be shortened as appropriate to permit the resolution of such matters within the required period.
2.2 Modifications to Agreement after Sharing of Distributable Loss and Distributable Profit Converts to a Royalty-Based Arrangement. The Parties intend that in those instances where the sharing of Distributable Loss and Distributable Profit hereunder is eliminated in favor of a royalty-based arrangement, the DT and the CT will cease operations, the Parties’ operational Development and Commercialization obligations and all related collaboration governance provisions (including the provisions of Section 12.2 relating to the resolution of disputes outside of the arbitration provisions of Section 12.3) shall terminate, and Cephalon shall be obligated only to use Commercially Reasonable Efforts to Commercialize the Products in the Field in the Territory. Notwithstanding the foregoing, the Parties’ mutual obligations to cooperate with one another to enable one another to comply with applicable Laws shall continue, including Alkermes’ right to require that Cephalon not implement decisions that adversely affect, in any material respect, the obligation of Alkermes, as the holder of the Regulatory Approval for a Product, to comply with applicable Law. Cephalon shall have the right to make all decisions regarding Development and Commercialization, subject to the preceding sentence and to Cephalon’s royalty and other surviving financial obligations and related reporting obligations to Alkermes hereunder. Section 9.11 shall also no longer apply. In addition, each Party shall have the right to prosecute, defend and enforce Patent Rights owned or controlled by it, each Party shall be responsible for the payment of any Patent Costs it incurs, each Party shall have the right to retain all associated recovery in connection with a patent enforcement or defense action, and Cephalon shall be responsible for the costs and expenses incurred in connection with
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the prosecution, maintenance, defense and enforcement of the Vivitrex Trademark and the Additional Product Trademark.
DEVELOPMENT
3.1.1 Establishment of Development Team. The JSC shall establish a development team (the “ DT ”) no later than [**] days after the Effective Date to coordinate and implement all activities for the Development of the Products in the Field in the Territory, within the budgets approved by the JSC. One representative from each Party shall be designated as that Party’s team leader to act as the primary DT contact for that Party. The DT shall consist of an equal number of representatives of each Party as are reasonably necessary to accomplish the goals of the DT hereunder. Such representatives will include individuals with expertise and responsibilities in the areas of pre-clinical and clinical development, manufacturing process development, quality control, quality assurance, regulatory affairs and product development, as applicable to the stage of Development of a Product. Either Party may replace any or all of its representatives at any time upon notice to the other Party.
3.1.2 Development Team Responsibilities. The DT shall be responsible for:
(i) developing an overall strategy for the Development of the Products in the Field in the Territory for review and approval by the JSC;
(ii) formulating the Development Plans (including the allocation of Development activities between the Parties) and associated annual budgets and any substantive amendments thereto for review and approval by the JSC, which Development Plans will include the plans for Manufacture development and associated annual budgets and any substantive amendments thereto received by the DT from the ST;
(iii) formulating the multiyear long-range plan for Development of the Products in the Field in the Territory (including the budget for Development Costs) for review and approval by the JSC;
(iv) implementing in coordination with the ST, as appropriate, all activities pursuant to the Development Plans approved by the JSC;
(v) making recommendations for further Development of the Products, including Development of the Products for a New Indication;
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(vi) in consultation with intellectual property representatives of each Party, developing a strategy, and implementing methods for compliance, to protect trade secrets, know-how and other confidential material, data and information developed, made or conceived by the Parties pursuant to a Development Plan;
(vii) in consultation with the CT, developing and co-ordinating a communications and publication strategy for the Products in the Territory;
(vii) generating forecasts of supply requirements for the Product and Placebo pursuant to the Development Plans and delivering this forecast to the CT;
(ix) exchanging information and facilitating cooperation and coordination between the Parties as they exercise their respective rights and meet their respective obligations under the Development Plans and this Agreement;
(x) providing status updates to the JSC regarding Development activities in the Territory; and
(xi) performing such other functions as appropriate to further the purposes of this Agreement as determined by the Parties.
In addition, the DT may designate subteams as appropriate to facilitate coordination and cooperation in key areas. The Development Plan for the Medisorb Product for the Initial Indication for calendar years 2005 and 2006 and the accompanying budget are attached hereto as Exhibit D . This Development Plan shall be deemed to have been reviewed and approved by the JSC. The DT will prepare final Development Plans and associated budgets for each subsequent calendar year by [**] of the then-current calendar year. The JSC shall review and, if appropriate, approve such Development Plans and budgets by [**] of the then-current calendar year. In addition, a [**]-year long-range plan for Development of the Products in the Field in the Territory (including the budget for Development Costs) shall be established on a yearly basis under the direction of the DT and submitted to the JSC by [**] of each calendar year during any year that the Parties are operating under a Development Plan.
3.1.3 Development Team Procedures. The Alkermes team leader shall serve as the chairperson of the DT. The chairperson shall establish the timing and agenda for all DT meetings and shall send notice of such meetings, including the agenda therefor, to all DT members; provided, however , either Party may request that specific items be included in the agenda and may request that additional meetings be scheduled as needed. The DT will meet at least [**] each calendar month, or as agreed by the DT, for the first [**] years following the Effective Date, and at least [**] each calendar quarter, or as agreed by the DT, thereafter. The location of regularly scheduled DT meetings shall alternate between the offices of the Parties, unless
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otherwise agreed. Meetings may be held telephonically or by videoconference. A quorum of at least half the DT members appointed by each Party shall be present at or shall otherwise participate in each DT meeting. The Party hosting any DT meeting shall appoint one person (who need not be a member of the DT) to attend the meeting and record the minutes of the meeting in writing. Such minutes shall be circulated to the Parties promptly following the meeting for review, comment and approval.
3.1.4 Development Team Decision Making. As a general principle, the DT will operate by consensus, with each Party collectively having one vote. In the event that the DT members do not reach consensus with respect to a matter that is within the purview of the DT within [**] days after they have met and attempted to reach such consensus, such matter shall be presented to the JSC for resolution; provided, however, that to the extent any matters are required by Law or by safety concerns with respect to a Product to be resolved within a shorter period of time, the periods set forth in this Section 3.1.4 shall be shortened as appropriate to permit the resolution of such matters within the required period.
3.2 Accounting and Financial Reporting for DT and CT. Each Party will appoint a representative with expertise in the areas of accounting, cost allocation, budgeting and financial reporting no later than [**] days after the Effective Date. Such financial representatives shall work under the direction of the JSC and provide services to and consult with the DT and CT in order to address the financial, budgetary and accounting issues which arise in connection with any Development Plan or Commercialization Plan. The financial representatives from Cephalon and Alkermes shall develop systems to track their respective Sales Representatives’ Primary Position Details and Secondary Position Details and any factors used to allocate less than full time Sales Representative FTEs, Treatment System Specialist FTEs or other FTEs hereunder. Within [**] days of the end of each calendar quarter the financial representatives shall review the actual Development Costs or Commercialization Costs, as applicable, incurred during the prior calendar quarter as charged by Alkermes and Cephalon, respectively, and prepare a report to the DT or CT, as applicable, comparing these costs to the comparable Development Plan budget or Commercialization Plan budget, as applicable, specifically noting the extent, if any, to which the Development Costs or Commercialization Costs exceed the comparable budgeted amounts. Each financial representative may be replaced at any time by the represented Party by providing notice thereof to the other Party. The financial representatives will meet at least once each calendar quarter, or as they or the DT or CT may agree. The financial representatives shall agree upon the timing and agenda for all regular meetings. The location of regularly scheduled meetings shall alternate between the offices of the Parties, unless otherwise agreed. Meetings may be held telephonically or by videoconference. One of the financial representatives shall record the minutes of the meeting in writing. Such minutes shall be circulated to the other financial representative promptly following the meeting for review, comment and approval. Following their approval, the minutes shall be provided to each Party’s DT and CT team leaders.
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3.3 Development Efforts. Each Party shall use its Commercially Reasonable Efforts to perform its respective tasks and obligations in conducting all work assigned to it in any Development Plan. The Parties agree that Alkermes shall be primarily responsible for conducting Development hereunder; provided, however , that in allocating responsibility for Development the DT shall also consider the infrastructure and expertise of each Party and may elect to allocate specific Development tasks and obligations to a Party to exploit such infrastructure and expertise. Each Party shall also cooperate with and provide commercially reasonable support to the other Party in connection with such other Party’s conduct of such work pursuant to any Development Plan. If any tasks, obligations or support that a Party is required to perform or provide hereunder will be performed or provided by any Affiliate or agent of such Party, such Party shall not be relieved of its responsibilities hereunder.
3.4 Development Responsibilities.
3.4.1 Further Development of Products in the Territory. If either Party wishes to further Develop the Products for use in the Field in the Territory, including any improvements to the Products or Development of the Products for New Indications, such Party shall notify the DT, and the DT shall determine whether it wishes to recommend such further Development of the Products pursuant to a Development Plan, and accompanying budget, to the JSC for approval. The Development Plan shall allocate responsibility for the conduct of such activities between the Parties. If the DT makes such recommendation or, at either Party’s request, even if the DT does not make such recommendation, the JSC shall consider such further Development of the Products. If such further Development is approved by the JSC or pursuant to the dispute resolution procedure set forth in Article 12, the Parties shall perform such Development. Notwithstanding the foregoing, such further Development shall not be undertaken if either Party notifies the JSC of its good faith determination [**].
3.4.2 Data Transfer and Cooperation.
(i) Regulatory Submissions. Promptly after the Effective Date, Alkermes shall provide Cephalon reasonable access at Alkermes’ offices at Cephalon’s request to any portion of the NDA submission made by Alkermes on March 31, 2005 for the Medisorb Product for the Initial Indication, including any information referenced or otherwise incorporated therein. All such information shall be deemed to be Confidential Information of Alkermes subject to the terms and conditions set forth in Article 8.
(ii) Alkermes Data . Subject to Section 3.4.2(i), Alkermes shall provide Cephalon at Cephalon’s request with reasonable access to all relevant materials, data and regulatory information in Alkermes’ or its Affiliates’ possession related to any pre-clinical studies, Clinical Studies and Post Marketing Clinical Trials of any Product in the Field conducted or sponsored by Alkermes (including investigator sponsored trials) pursuant to a Development Plan or a Commercialization Plan or
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otherwise conducted by or on behalf of Alkermes (and, in electronic or other form reasonably requested by Cephalon where practicable), including all clinical safety and efficacy data and all regulatory data and information related to the use and sale of the Products in the Field. Such materials, data and information shall be delivered to Cephalon by Alkermes promptly after the relevant request by Cephalon in an orderly fashion and in a manner such that the value of the delivered information is preserved in all material respects. All such materials, data and information shall be deemed to be Confidential Information of Alkermes subject to the terms and conditions set forth in Article 8.
(iii) Cephalon Data. Cephalon shall provide Alkermes at Alkermes’ request with reasonable access to all relevant materials, data and regulatory information in Cephalon’s or its Affiliates’ possession related to any pre-clinical studies, Clinical Studies and Post Marketing Clinical Trials of a Product in the Field conducted or sponsored by Cephalon (including investigator sponsored trials and Post Marketing Clinical Trials) pursuant to a Development Plan or a Commercialization Plan or otherwise conducted by or on behalf of Cephalon (and, in electronic or other form reasonably requested by Alkermes where practicable), including all clinical safety and efficacy data and all regulatory data and information related to the use and sale of the Products in the Field. Such materials, data and information shall be delivered to Alkermes by Cephalon promptly after the relevant request by Alkermes in an orderly fashion and in a manner such that the value of the delivered information is preserved in all material respects. All such materials, data and information shall be deemed to be Confidential Information of Cephalon subject to the terms and conditions set forth in Article 8.
(iv) ROW Territory. Alkermes shall share with Cephalon relevant materials, data and regulatory information in Alkermes’ or its Affiliates’ possession and Control related to any pre-clinical studies, Clinical Studies and post marketing clinical trials of a Product in the Field resulting from its collaborations with respect to the Product for the ROW Territory to the extent such materials, data or regulatory information are necessary or useful for filing an IND or NDA or required to be disclosed by Law. In return Cephalon agrees that Alkermes may share with its collaborators with respect to the Product in the ROW Territory, subject to the provisions of Article 8, [**]or required to be disclosed by law.
3.4.3 Regulatory Filings. Alkermes shall be responsible for applying for and seeking Regulatory Approval for the Medisorb Product in the Territory for the Initial Indication, which applications and approvals shall be held by and in the name of Alkermes. Alkermes shall also be responsible for filing and maintaining all INDs and NDAs, and for seeking Regulatory Approval for other Products in the Territory, which applications and approvals shall be held by and in the name of Alkermes (except to the extent that Cephalon is required to file an IND in connection with Clinical Studies or Post Marketing Clinical Trials for which Cephalon has responsibility in accordance with this Agreement). Prior to submitting any IND or NDA within the Territory, the Parties,
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through the DT, shall consult and cooperate in preparing and reviewing such IND or NDA and its content and scope; provided, however, that in accordance with Section 12.2 Alkermes shall have final decision making authority with respect to any INDs, NDAs and Regulatory Approvals for a Product in the Territory.
3.4.4 Regulatory Meetings and Communications. Alkermes shall be primarily responsible for conducting meetings and discussions related to the Products with the FDA, provided, however , that Cephalon shall have the right to participate in such meetings and discussions. Alkermes shall give Cephalon reasonable advance notice of such activities to permit Cephalon to participate. If Alkermes has substantive written or oral communication with the FDA relating to the Products, Alkermes shall notify Cephalon and provide an advance copy to Cephalon of any such written communication to the FDA at least [**] Business Days, if reasonably possible to do so and otherwise as soon as practicable, prior to such communication’s intended occurrence and a copy to Cephalon of any such written communication from the FDA within [**] Business Days of such communication’s occurrence. Alkermes shall consider in good faith any comments provided by Cephalon regarding any planned communication to the FDA. In the event Cephalon receives any written or oral communication from the FDA relating to the Products, Cephalon shall notify Alkermes and provide a copy to Alkermes of any such written communication within [**] Business Days of such communication’s occurrence. Cephalon shall not respond to any such communication but shall permit Alkermes to respond on Cephalon’s behalf; provided, however, that Cephalon shall have the right to respond to FDA communication to the extent reasonably required to comply with applicable Laws.
3.4.5 Debarment Limitations. In the course of Development of the Products in the Territory, neither Party shall knowingly use any employee or consultant who is or has been debarred by the FDA or any other regulatory authority, or, to the best of such Party’s knowledge, who is or has been the subject of debarment proceedings by the FDA or any such regulatory authority. Each Party shall promptly notify the other Party of and provide such other Party with a copy of any correspondence or other reports that such Party receives from any Third Party with respect to any use of a debarred employee or consultant in connection with such Party’s performance of its obligations under this Agreement.
3.4.6 Compliance with Laws . Each Party shall conduct pre-clinical studies and Clinical Studies hereunder, and other Development of the Products in the Field in the Territory, in compliance with all applicable Laws.
3.5 Pharmacovigilence and Adverse Event Reporting. Within [**] days of the Effective Date, both Parties shall enter into a mutually acceptable safety data exchange agreement, setting forth guidelines and procedures for the receipt, investigation, recordation, review, communication, and exchange (as between the Parties) of adverse event reports, pregnancy reports, technical complaints and any
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other information concerning the safety of the Products. Such guidelines and procedures shall be in accordance with, and enable the Parties and their Affiliates to fulfill, reporting obligations to the FDA or any other regulatory authority. Furthermore, such guidelines and procedures shall be consistent with relevant International Committee on Harmonization (ICH) guidelines, except where said guidelines may conflict with reporting requirements of local regulatory authorities, in which case local reporting requirements shall prevail. The Parties shall maintain a common safety database for both clinical and post-marketing adverse event data for the Products, which database shall be managed by Alkermes. The Parties shall mutually agree within [**] days on the actions necessary to address any safety concerns with respect to the Products about which one Party provides notice to the other Party; provided, however , that if the Parties cannot reach agreement within such [**]-day period, the matter shall be referred to the JSC for immediate review. If the JSC cannot reach agreement about such matter within [**] days after referral by the Parties, then Alkermes shall have final say with respect to such matter. Notwithstanding the foregoing provision, such [**]-day periods shall be shortened if either Party provides notice to the other Party that more urgent action is required. The Parties’ costs incurred in connection with receiving, investigating, recording, reviewing, communicating, and exchanging adverse events and other reportable information as provided in such safety data exchange agreement shall be included as an element of Development Costs (to the extent relating to the Development of a Product) or Commercialization Costs (to the extent relating to the Commercialization of a Product), as applicable. The Parties’ costs incurred in connection with receiving, investigating, recording, reviewing, communicating, and exchanging adverse events and other reportable information as provided in such safety data exchange agreement prior to the receipt of Regulatory Approval for the Medisorb Product for the Initial Indication shall be included as an element of Initial Indication Development Costs.
3.6 Development Costs. All Initial Indication Development Costs shall be paid by Alkermes. All other Development Costs for activities conducted under a Development Plan hereunder shall be Shared Expenses and shall be subject to offset or credit against amounts due pursuant to Section 9.5 below
3.7 Development Plan Budget. Responsibility for any Development Plan budget shall rest with the DT, which shall develop budgets for Development, subject to final approval by the JSC. Budgets will be prepared annually as set forth in Section 3.1.2. Any dispute relating to the amount of a Development Plan budget shall be considered a Reserved Dispute subject to resolution pursuant to Section 12.2. Such budgets shall include Development FTE Rates for FTEs conducting Product Development activities. The financial representatives from Cephalon and Alkermes appointed pursuant to Section 3.2 will be responsible for identifying, analyzing and reporting to the DT all significant [**] between the budget and the actual costs incurred and all [**] between the budget and such costs. If any costs for a Development activity result in an increase [**] in the approved budget of more than [**]percent ([**]%) for a given calendar quarter, the DT shall forward to the JSC the report it received from the
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financial representatives, and the JSC shall review such costs and shall designate them as Development Costs if the JSC determines that incurring such costs was [**]. [**]. A [**]-year long-range plan for Development of the Products in the Field in the Territory (including the budget for Development Costs) shall be established on a yearly basis under the direction of the DT as set forth in Section 3.1.2 and shall be submitted to the JSC for final approval.
3.8 Limitation on Development Team Decision Making . Neither the DT nor the JSC shall, without the consent of Cephalon, have any authority to modify or reduce Alkermes’ obligation under this Agreement to use Commercially Reasonable Efforts to Develop the Product as provided herein. Notwithstanding anything to the contrary herein, Alkermes shall not have any right to resolve any Reserved Dispute in any manner that modifies or reduces Alkermes’ obligations under this Agreement or to amend any provision of this Agreement.
COMMERCIALIZATION
4.1 Commercialization Efforts.
4.1.1 Commercially Reasonable Efforts . Alkermes and Cephalon each agree to collaborate in the Commercialization of the Products in the Field in the Territory in accordance with the terms and conditions of this Agreement. The Parties agree that Cephalon shall be primarily responsible for conducting Commercialization hereunder; provided, however , that in allocating responsibility for Commercialization the CT shall also consider the infrastructure and expertise of each Party and may elect to allocate specific Commercialization tasks and obligations to a Party to exploit such infrastructure and expertise. Each Party shall use Commercially Reasonable Efforts to Commercialize the Products in the Field in the Territory. Each Party shall cooperate with and provide commercially reasonable support to the other Party in connection with such other Party’s performance of its tasks and obligations. If any tasks, obligations or support that a Party is required to perform or provide hereunder will be performed or provided by any Affiliate or agent of such Party, such Party shall not be relieved of its responsibilities hereunder.
4.1.2 Cephalon Commercialization Costs. In addition to the foregoing obligations, Cephalon shall be solely responsible for the payment, [**]. The Cephalon Commercialization Costs shall not be Shared Expenses. [**].
4.2.1 Establishment of Commercialization Team. The JSC shall establish the commercialization team (the “ CT ”) no later than [**] days after the
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Effective Date to coordinate and implement all activities for the marketing and sale of the Products in the Field in the Territory. One representative from each Party shall be designated as that Party’s team leader to act as the primary CT contact for that Party. The CT shall consist of an equal number of representatives of each Party as are reasonably necessary to accomplish the goals of the CT hereunder. The representatives of Cephalon and Alkermes to the CT will be individuals with expertise and responsibilities in the areas of medical affairs, strategic marketing and sales. Either Party may replace any or all of its representatives at any time upon notice to the other Party.
4.2.2 Commercialization Team Responsibilities. The CT shall be responsible for:
(i) developing an overall strategy for the Commercialization of the Products in the Field in the Territory for review and approval by the JSC;
(ii) formulating the Commercialization Plans (including the allocation of Commercialization activities between the Parties) and associated annual budgets and any substantive amendments thereto for review and approval by the JSC;
(iii) formulating a multiyear long-range plan for Commercialization of the Products in the Field in the Territory (including the budget for Commercialization Costs) for review and approval by the JSC;
(iv) implementing all activities pursuant to the Commercialization Plans approved by the JSC;
(v) in consultation with the DT, developing a communications and publication strategy for the Products in the Field in the Territory;
(vi) generating sales forecasts and measuring sales performance for the Product in the Territory;
(vii) in accordance with the terms and conditions set forth in the Supply Agreement, by the end of each calendar quarter, generating an [**] month rolling forecast for Product and Placebo requirements, incorporating any forecast received from the DT, and delivering this forecast to the ST;
(viii) coordinating with the DT with respect to regulatory issues and future Product Development activities to be undertaken pursuant to the Development Plan and with respect to Post Marketing Clinical Trials;
(ix) developing positioning and market strategies for the Products in the Territory;
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(x) formulating a life cycle plan for the Products in the Field in the Territory, including presentations, formulations, usage or dosage form;
(xi) formulating an overall pricing strategy for the Products in the Territory;
(xii) exchanging information and facilitating cooperation and coordination between the Parties as they exercise their respective rights and meet their respective obligations under the Commercialization Plans and this Agreement;
(xiii) providing status updates to the JSC regarding marketing and sales activities in the Territory; and
(xiv) performing such other functions as appropriate to further the purposes of this Agreement as determined by the Parties.
In addition, the CT may designate subteams as appropriate to facilitate coordination and cooperation in key areas. Within [**] days after the Effective Date, the CT shall formulate a Commercialization Plan and associated budget for the period from the Effective Date until the end of calendar year 2006 for approval by the JSC. Thereafter by [**] of each calendar year during the Term, the CT shall prepare a Commercialization Plan and associated annual budget for the following calendar year and present such plan and budget to the JSC for approval. The JSC shall review and, if appropriate, approve such Commercialization Plans and budgets by [**] of the then-current calendar year. In addition, by [**] of each calendar year during the Term, the CT shall prepare a [**]-year long-range plan for Commercialization of the Products in the Field in the Territory (including the budget for Commercialization Costs) and present such plan to the JSC for approval. Prior to presenting this long-range plan to the JSC for approval, the CT shall forward this long-range plan to the ST pursuant to the Supply Agreement, and the CT team leader, and if applicable the DT team leader, will discuss with the ST team leader this long-range plan as provided in the Supply Agreement.
4.2.3 Commercialization Team Procedures. The Cephalon team leader shall serve as the chairperson of the CT. The chairperson shall establish the timing and agenda for all CT meetings and shall send notice of such meetings, including the agenda therefor, to all CT members; provided, however , either Party may request that specific items be included in the agenda and may request that additional meetings be scheduled as needed. The CT will meet at least [**] each calendar quarter or as agreed by the CT. The location of regularly scheduled CT meetings shall alternate between the offices of the Parties, unless otherwise agreed. Meetings may be held telephonically or by videoconference. The Party hosting any CT meeting shall appoint one person (who need not be a member of the CT) to attend the meeting and record the minutes of the meeting in writing. Such minutes shall be circulated to the Parties promptly following the meeting for review, comment and approval.
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4.2.4 Commercialization Team Decision Making. As a general principle, the CT will operate by consensus, with each Party collectively having one vote. In the event that the CT members do not reach consensus with respect to a matter that is within the purview of the CT within [**] days after they have met and attempted to reach such consensus, such matter shall be presented to the JSC for resolution; provided, however, that to the extent any matters are required by Law or by safety concerns with respect to a Product to be resolved within a shorter period of time, the periods set forth in this Section 4.2.4 shall be shortened as appropriate to permit the resolution of such matters within the required period.
4.3 Contents of Commercialization Plan . The Commercialization Plan shall consist of a marketing plan (the “ Marketing Plan ”) and a medical activity plan (the “ Medical Activity Plan ”).
4.3.1 Marketing Plan . Each Marketing Plan shall contain at a minimum:
(i) plans for branding and positioning the Products;
(ii) promotional campaigns for the Products and messaging by audience;
(iii) competitive analysis of the Products;
(iv) plans and strategies for presentations of the Products at major meetings and conventions;
(v) market research plans for the Products;
(vi) distribution plans for the Products;
(vii) strategies for the Products with respect to managed care organizations, hospital systems, group purchasing organizations, physician networks, pharmacies and any other private or government healthcare providers or reimbursement entities;
(viii) pricing and reimbursement plans for the Products;
(ix) high-level sales plans and activities for the Products;
(x) concepts for development of appropriate sales training and Promotional Materials; and
(xi) sales forecasts for the Products by year for [**] years with market sensitivities incorporated.
4.3.2 Medical Activity Plan . Each Medical Activity Plan shall contain at
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a minimum:
(i) Post Marketing Clinical Trial plans;
(ii) market and key opinion leader development plans for the Products, including plans to support continuing medical education;
(iii) publication plans for the Products;
(iv) plans to ensure appropriate medical information responses with respect to the Products;
(v) safety monitoring plans for the Products; and
(vi) plans and expected activities for field based medical affairs personnel for the Products.
4.4 Compliance with Law. Each Party shall Commercialize the Products in the Field in the Territory in compliance with all applicable Laws, the Codes, the terms of this Agreement, and the then-current Commercialization Plan. Each Party shall promptly notify the other Party of and provide the other Party with a copy of any correspondence or other reports with respect to the Commercialization of the Products that such Party receives from the FDA or any other regulatory authority, or from the Pharmaceutical Research and Manufacturers of America (PhRMA) or the American Medical Association (AMA) relating to its compliance with applicable Law or the Codes. Each Party shall Commercialize the Products, including carrying out the Medical Activity Plan, in conformity with the practices and procedures relating to the education of the medical community set forth in the Standards. Each Party shall promptly notify the other Party of and provide the other Party with a copy of any correspondence or other reports with respect to the Commercialization of the Products that such Party receives from the Accreditation Council for Continuing Medical Education (ACCME) relating to its compliance with the Standards.
4.5 Corporate Name and Logo. To the extent not prohibited by Law and subject to Regulatory Approval, the Products (including labels, packaging and inserts) and all Promotional Materials for the same in the Territory will bear the company names and logos of both Alkermes and Cephalon with equal prominence (including equal sized type face), or if equal prominence is prohibited by Law, with such relative prominence as may otherwise be permitted by Law.
4.6 Sales and Distribution. [**]. Cephalon will book all sales of the Products in the Field in the Territory.
4.7 Commercialization Costs. Except for the Cephalon Commercialization Costs, all Commercialization Costs for activities conducted under a Commercialization
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Plan shall be Shared Expenses and shall be subject to offset or credit against amounts due pursuant to Section 9.5 below.
4.8 Commercialization Plan Budget . Responsibility for any Commercialization Plan budget shall rest with the CT, which shall develop budgets for Commercialization in the Field in the Territory, subject to final approval by the JSC. Budgets will be prepared annually as set forth in Section 4.2.2. Any disputes relating to the amount of a Commercialization Plan budget shall be considered a Reserved Dispute subject to resolution pursuant to Section 12.2. The budgets shall be divided between the Marketing Plan and the Medical Activity Plan. Such budgets shall include Sales Representative FTE Rates for the Sales Representatives FTEs, Treatment System Specialist FTE Rates for the Treatment System Specialists FTEs, and Commercialization FTE Rates for other FTEs conducting Product Commercialization activities. The financial representatives from Cephalon and Alkermes appointed pursuant to Section 3.2 will be responsible for identifying, analyzing and reporting to the CT all significant [**] between the budget and the applicable Commercialization Costs and all [**] between the budget and the Commercialization Costs. If any costs for a Commercialization activity result in an increase [**] in the approved budget for a calendar quarter of more than [**] percent ([**]%), the CT shall forward to the JSC the report it received from the financial representatives, and the JSC shall review such costs and shall designate them as Commercialization Costs if the JSC determines that incurring such costs was [**]. [**]. A [**]-year long-range plan for Commercialization of the Products in the Field in the Territory (including the budget for Commercialization Costs) shall be established on a yearly basis under the direction of the CT as set forth in Section 4.2.2 and shall be submitted to the JSC for final approval.
4.9 Product Label and Packaging. Pursuant to the terms and conditions of the Supply Agreement, Alkermes shall be responsible for ensuring that labels, inserts and packaging for the Products are in conformity with the applicable Regulatory Approvals and applicable Laws.
4.10.1 Promotional Materials Production . Cephalon shall be responsible for producing all Promotional Materials for the Territory. Cephalon shall own all right, title and interest in and to the Promotional Materials, including all copyrights thereto.
4.10.2 Approval of Promotional Materials. Within [**] days of the Effective Date, Cephalon shall establish a promotional review com | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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