AMENDED AND RESTATED PRODUCTS
DEVELOPMENT AGREEMENT
This Amended and
Restated Products Development Agreement (this “
Agreement ”) is made and dated as of December 29,
2006 (the “ Effective Date ”), and amended and
restated as of the 27 th day of August, 2008, by and between Cornerstone
Biopharma, Inc., a Nevada corporation (“ Cornerstone
”), and Neos Therapeutics, L.P., a Texas limited partnership
(“Neos”) (Cornerstone and Neos are sometimes referred
to herein individually as a “ Party ” and
collectively as the “Parties”).
Whereas,
Cornerstone desires to engage Neos to develop certain products
(collectively and as further defined below, “ Products
” and each individually a “ Product ”),
each in the form of an extended release liquid; and
Whereas,
Cornerstone and Neos desire that Cornerstone will prepare and
prosecute with the United States Food and Drug Administration
(“ FDA ”) a new drug application or other
appropriate regulatory submission (each, an “ NDA
”) and other necessary or desirable applications in
connection with Products that are successfully developed hereunder
and as provided below; and
Whereas,
Cornerstone and Neos will, with respect to each Product that is
subject of an approved NDA and subject to the other terms hereof,
enter into a separate Manufacturing Agreement related to the
manufacture of such Product in the form attached hereto as Exhibit
“A” at or around the time of such approval;
and
Whereas,
Cornerstone, in consideration of this Agreement and Neos’s
performance hereunder, has forgiven all principal and interests
amounts owed by Neos to Cornerstone under that certain Secured
Subordinated Promissory Note dated August 1, 2006, in the
principal amount of $500,000.00; and
Whereas,
Cornerstone and Neos desire to define the obligations between the
Parties as respects the development, regulatory application
submission process and manufacture of the Products.
WHEREAS,
Cornerstone and Neos previously entered into a Products Development
Agreement (the “Original Agreement”) on
December 29, 2006; and
WHEREAS, the
Parties wish to amend and restate the Original
Agreement;
Now, therefore, in
consideration of the premises and the representations, warranties,
covenants and agreements set forth hereby and other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
1.
Products — Generally . The Parties agree that Neos
will use its commercially reasonable efforts to develop the
following extended-release liquid Products to be sold by
doctor’s prescription only containing the following active
pharmaceutical ingredients in accordance with the terms hereof
using Neos’ patent-pending Dynamic Time Release Suspension
technology as provided herein, with each of the following Products
to be manufactured in a dosage to be agreed upon by the Parties and
with the same active ingredients as listed below or with active
ingredients that are suggested by Cornerstone and approved by
Neos:
a.
[***] (which Product shall not be the subject of an abbreviated new
drug application with FDA based on equivalence with or
comparability to the product sold under the proprietary name [***],
Application No. {***]) (sometimes referred to herein as the “
First Product ”);
a.
Development — Generally.
i.
Product Development Plans. The First Product Development
Plan (hereinafter defined) and any Subsequent Product Development
Plan (hereinafter defined) shall include the following: Neos shall
use its commercially reasonable efforts to develop (and validate a
method for the testing of) a commercially viable subject Product
(the “ Development ”) starting upon
Cornerstone’s request. Contingent upon the successful
completion of the Development, Neos will produce an exhibit batch
(each, the “ Exhibit Batch ”) of the
greater of a 1/10 scale of a batch of the Product or 200 liters of
the subject Product and place the Exhibit Batch on stability
(the “ Stability Work ”). Neos will use its
commercially reasonable efforts to complete adequate Stability Work
on the applicable Product. If adequate Stability Work is completed
successfully in accordance with Neos’ stability protocol,
Neos will manufacture a reasonable amount of the Product designated
by Cornerstone to be used in the Clinical Studies (defined below).
If the Clinical Studies are successfully completed for a Product,
Neos shall use its commercially reasonable efforts to validate its
process for manufacturing the Product (the “ Process
Validation Work ”), including the manufacture of any lots
reasonably necessary to complete the Process Validation
Work.
ii.
No Guarantee of Success; Repeated Steps; Additional Steps.
Cornerstone understands, that: (i) there is no guarantee that
Neos will be successful in the Development with respect to the
First Product or with respect to any other Product; (ii) while
Neos will use its commercially reasonable efforts to achieve the
Development with respect to the First Product or any other Product
in accordance with the applicable development plan, it may
be
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
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necessary or
desirable to repeat one or more of the steps contained in an
applicable development plan, and it may also be necessary or
desirable to be perform additional steps in order to prepare any
Product for Clinical Studies. Neos may repeat such steps or perform
such additional steps in its reasonable discretion with the prior
consent of Cornerstone, which consent may not be unreasonably
withheld. Neos understands that there is no guarantee that
Cornerstone will be successful in applying for an NDA or
commercializing the First Product or any other Product.
iii.
Termination of Development Obligations. Neos shall have no
obligation to develop any Product for Cornerstone beyond the
Exclusivity Period (defined below).
b.
Development of the First Product. Neos agrees to formulate
and complete stability testing and validation regarding the First
Product in accordance with the outline of actions, processes and
procedures as provided by a product development plan on the First
Product which the Parties agree to use their respective reasonable
efforts to complete within forty five (45) days from a request
from Cornerstone to begin drafting the plan (the “ First
Product Development Plan ”). Once completed, the First
Product Development Plan shall be attached hereto as
Appendix I. Neos agrees to use its commercially reasonable
diligent efforts to complete the milestones related to the
development of the First Product by the dates contained in such
Appendix.
c.
Consecutive Development. The Products will be developed
consecutively, not concurrently, so that no two Products are in
active development at the same time. However once the first
Clinical Study is successfully completed for a given Product, upon
Cornerstone’s request, the development of the next Product
shall commence.
i.
First Product Successfully Developed. If the First Product
is successfully developed in accordance with the First Product
Development Plan: (A) Cornerstone shall, in accordance with
the terms of Section 3 hereof, use its commercially reasonable
efforts to prepare and successfully prosecute, in
Cornerstone’s name, a NDA with FDA on the First Product; and
(B) Neos and Cornerstone shall each use their commercially
reasonable efforts to agree on a subsequent Product to be developed
by Neos hereunder.
ii.
First Product Not Successfully Developed. If the First
Product is not successfully developed in accordance with the First
Product Development Plan, Cornerstone may elect to go forward with
the development and/or application approval with respect to
Subsequent Products by providing Neos with prompt written notice
thereof, which notice must be delivered to Neos within sixty
(60) days after Neos’ notice to Cornerstone that the
First Product cannot reasonably be successfully developed in
accordance with the First Product Development Plan. In the event
that Cornerstone does not timely provide such notice, this
Agreement will terminate. In the event that Cornerstone timely
provides such notice, Neos and Cornerstone shall each use their
commercially reasonable efforts to agree on a subsequent Product to
be developed by Neos hereunder.
d.
Development of Subsequent Product(s). If the First Product
is successfully developed in accordance with the First Product
Development Plan or if Cornerstone provides notice to Neos in
accordance with Section 2.c.ii. hereof, Neos agrees to
formulate and
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complete
stability testing and validation regarding the subsequent Product
chosen by Cornerstone and Neos in accordance with the terms of
Section 2.b.i. hereof. Such work by Neos shall be performed in
accordance with a Subsequent Product Development Plan (hereinafter
defined) for such subsequent Product. As used herein, the term
“ Subsequent Product Development Plan ” shall
mean a plan for the development of a subsequent Product that is
agreed on by the Parties that is substantially in the form of the
First Product Development Plan, but that takes into account the
specific characteristics of the subject Product to be developed and
the issues and challenges associated with the development of such
subject Product. The Parties each agree to use their commercially
reasonable efforts to jointly develop and approve each Subsequent
Product Development Plan.
i.
Subsequent Product Successfully Developed. If a subsequent
Product is successfully developed after the Parties proceed with
development based on the successful completion of the first
Clinical Study, in accordance with the applicable Subsequent
Product Development Plan: (A) Cornerstone shall, in accordance with
the terms of Section 3. hereof, use its commercially
reasonable efforts to prepare and prosecute, in Cornerstone’s
name, a NDA with FDA on the subject subsequent Product; and
(B) Neos and Cornerstone shall each use their commercially
reasonable efforts to choose another subsequent Product to be
developed by Neos hereunder. Such chosen subsequent Product shall
be developed by Neos hereunder in accordance with a new Subsequent
Product Development Plan, which Subsequent Product Development Plan
shall be developed and approved as provided above in this
Section 2.c.
ii.
Subsequent Product Not Successfully Developed. If a
Subsequent Product is not successfully developed in accordance with
the applicable Subsequent Product Development Plan, Neos and
Cornerstone shall each use their commercially reasonable efforts to
choose a subsequent Product to be developed by Neos hereunder or,
if the Parties agree or if the Parties fail to agree on a
subsequent Product, there shall be no further development
obligations hereunder with respect to any subsequent
Product.
iii.
All Products. If the First Product is successfully developed
in accordance with the terms of the First Product Development Plan,
the processes described in Sections 2.d.i. and 2.d.ii. above
shall be repeated (as provided herein) until each subsequent
Product is the subject of a Subsequent Product Development
Plan.
e.
Exclusivity. During the License Term (as defined below),
each Party agrees that it will work exclusively with the other
Party in developing (or attempting to develop) the Products for
sale in the United States in accordance with the terms of this
Agreement until the earlier of the termination of this Agreement
unless earlier terminated (the “ Exclusivity Period
”). This obligation shall not restrict in any way
Cornerstone’s ability to engage third parties to assist
Cornerstone in performing its clinical development, regulatory or
commercial activities related to Products that are developed under
this Agreement. This obligation of exclusivity shall commence on
the Effective Date for and shall apply to the First Product and for
each of the other Products identified as provided by Section 1
and expire for any Product if and when the Parties determine not to
continue development of that Product under this
Agreement.
3.
Clinical Trials and Regulatory Filings . With respect to
each Product that is successfully developed beyond the first
Clinical Study, in accordance with its product
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development
plan, Cornerstone shall initiate the performance of Clinical
Studies (hereinafter defined) in connection with the First Product
with a clinical research organization (each, a “ CRO
”) that Cornerstone has contracted with to perform the
Clinical Studies and that has been jointly approved by the Parties
in their respective reasonable discretion. Each contract entered
into with a CRO for each Clinical Study under or in connection with
this Agreement shall be between Cornerstone and such CRO (and Neos
shall not be a party thereto), and each such contract shall require
the CRO to maintain such Clinical Studies, including the results
thereof, confidential. Further, with respect to the First Product,
Cornerstone shall, as soon as reasonably possible, enter into an
agreement with a CRO for the Clinical Studies for the First Product
and, as soon as the Process Validation Work is completed and the
first study successfully completed on the First Product, if ever,
authorize the Clinical Studies to begin in order that it is
completed as soon as reasonably possible. As used herein, the term
“ Clinical Studies ” shall mean, collectively
and individually, a study and studies in which a Product is tested
in humans in order to confirm that a Product substantially meets
its specifications or is otherwise acceptable to Cornerstone in its
reasonable discretion. Neos shall provide its reasonable assistance
to a CRO in connection with the Clinical Studies, including
providing samples manufactured by Neos necessary for such Clinical
Studies. Cornerstone recognizes and agrees that Clinical Studies
may have to be repeated in connection with any Product and/or
Regulatory Approvals (hereinafter defined), Cornerstone shall,
during the pendancy of the Clinical Studies on the First Product
(or any other Product, as applicable), begin assembling materials
for a NDA for the Product. Cornerstone shall, if Clinical Studies
show that the First Product (or another Product) meets its
specifications or is otherwise acceptable to Cornerstone in its
reasonable discretion, use its commercially reasonable efforts to
assemble to remainder of the materials and the application for such
NDA. Neos shall have the right to participate and consult in any
work relating to regulatory filings related to any Product at its
cost and Neos shall provide reasonable assistance to Cornerstone,
as provided in Section 6. hereof, in connection with the
chemistry, manufacturing and controls section of each regulatory
filing submitted in connection with a Product pursuant to the terms
hereof. If the Clinical Study shows that the First Product (or
another Product) meets its specifications and is otherwise
acceptable to Cornerstone in its reasonable discretion, then
Cornerstone shall move forward with the submission and prosecution
of the NDA, which Cornerstone shall use its reasonable efforts to
file and prosecute as soon as reasonably possible. Neos
acknowledges that the continued prosecution of an NDA and related
commercialization activities are subject to the continued
generation of favorable data necessary for the NDA related to the
Product as determined by Cornerstone in its reasonable discretion.
In connection with the foregoing, Cornerstone shall determine, in
its reasonable discretion, whether any Investigational New Drug
Application (“ IND ”), pre-IND meeting or other
regulatory submissions, approvals or requirements are reasonably
necessary (all of which, together with each NDA on a Product, and
the applications and submissions in connection with each of the
foregoing, are referred to herein collectively as “
Regulatory Approvals ”) and arrange for the completion
thereof, with the reasonable assistance of Neos. All Regulatory
Approvals shall be in the name of and owned by Cornerstone and
Cornerstone shall designate Neos as the manufacturer, and no other
person or entity, in each Regulatory Approval or any time
thereafter so long as Neos is able and is approved by the FDA to
manufacture in accordance with the terms of the relevant
Manufacturing Agreement the Product that is the subject of a
Regulatory Approval. Cornerstone agrees to use its commercially
reasonable diligent efforts to complete the milestones related to
Regulatory Approval of the First Product by the dates contained in
the First Product Development Plan.
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4.
Manufacturing Agreement . A reasonable time prior to the
approval of any NDA submitted on a Product under this Agreement,
Cornerstone and Neos will enter into a separate Manufacturing
Agreement related to the manufacture of such Product substantially
in a form mutually acceptable to the parties, which form the
parties agree to negotiate in good faith within forty five
(45) days from the submission date of the applicable NDA. The
Parties agree that they will schedule, in their commercially
reasonable discretion, the timing of the manufacture of the first
commercial lots of each Product that is the subject of a
Manufacturing Agreement in order to allow such Product to be
commercially sold as soon as reasonably possible after approval of
a NDA hereunder. If Neos is unwilling or unable, subject to the
terms of the applicable Manufacturing Agreement, to enter into or
perform all of its obligations under such a Manufacturing
Agreement, Cornerstone may elect to have Product made by a contract
manufacturer (the “ Contract Manufacturer ”)
during the term of such unwillingness or inability, as applicable,
pursuant to the license grant in Section 7.d. hereof. The
selection of the Contract Manufacturer shall be subject to the
approval of Neos, which shall not be unreasonably withheld as long
as the Contract Manufacturer meets reasonable commercial and
industry standards, does not have a conflict of interest in
connection with Neos’ technology and executes a
confidentiality and non-use agreement with Neos that is acceptable
to Neos. Cornerstone must make such election in writing (a “
Cornerstone Election ”). In the event that Cornerstone
makes such an election: (a) Neos shall, upon
Cornerstone’s request and at Cornerstone’s expense,
provide reasonable technology transfer assistance sufficient to
enable Cornerstone or its designee to manufacture the Product;
(b) Neos shall provide Cornerstone and Contract Manufacturer
with a license (as further described in Section 7.d. below) to
use all necessary Intellectual Property belonging to Neos as
reasonably necessary for Contract Manufacturer to manufacture the
Product; (c) Cornerstone shall pay Neos during the term of the
license a royalty of the higher of (x) [***] of its Net Sales
(defined below) of the Product if a patent has not issued covering
any material used in or process used for the production of such
Product; or (y) [***] of its Net Sales of the Product if a patent
has issued, has not been invalidated nor expired, and covers any
material used in or process used for the production of the Product;
and (d) Cornerstone covenants that all transfers of the
Product shall be in bona fide arm’s length transactions to
third parties (except that Cornerstone may distribute a reasonable
amount of samples of the Product solely to increase sales of the
Product in bona fide arm’s length transactions). As used in
this Agreement, the term “ Net Sales ” shall
mean the gross amount invoiced for any sale of any Product by
Cornerstone in a bona fide arm’s length transaction, less the
following allowable deductions to the extent specifically related
to the Product and actually taken or paid: (i) cash discounts
and/or quantity discounts allowed; credits and allowances for
returns, rejections and recalls; (ii) costs incurred for
freight, insurance and transportation; (iii) quantity and
other trade discounts, credits or allowances; (iv) sales and use
taxes and other similar taxes incurred and government mandated
rebates; and (v) reasonable accruals for estimated contract rebates
and bid rebates, all of which shall be determined in accordance
with United States generally accepted accounting practices (“
GAAP ”). In the event that Cornerstone provides a
Cornerstone Election as provided above, Cornerstone shall have no
further rights or remedies against Neos with respect to the Product
except to fulfill its obligations to Cornerstone set forth in this
Section 4.
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
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5.
Cornerstone Option on Products Outside of the United States
. To the extent that Neos desires, during the term of this
Agreement, to develop any Product for sale outside of the United
States by a third party, Neos must first offer such development to
Cornerstone by giving Cornerstone written notice of the general
business terms, including general financial terms, territory and
term of development, that Neos so intends or desires to pursue
(“ RFO Notice ”), so that Cornerstone may
consider such offer and negotiate a complete development agreement
in such territory outside of the United States. Cornerstone shall,
within a reasonable period of time, not to exceed thirty
(30) days after Cornerstone’s receipt of a RFO Notice,
inform Neos, that it does not wish to enter into such an agreement
in such territory, in which case Neos shall be free to enter into
any such agreements under terms that are not materially more
favorable to the third party than those contained in the RFO
Notice. Should Cornerstone notify Neos that is desires to enter
into an agreement containing the terms contained in the RFO Notice,
it must provide notice of such desire within a reasonable period of
time, not to exceed thirty (30) days after its receipt of the
RFO Notice, and within thirty (30) days after such notice, the
Parties shall undertake good faith negotiations to conclude a
development agreement. Neos shall not, during the term of this
Agreement, enter into an agreement with a third party related to a
territory outside of the United States for the development of any
Product on terms that are materially more favorable than those
contained in the RFO Notice. Neos shall include in any such
agreement with a third party express prohibitions on marketing or
selling any such product in the United States or its
territories.
6.
Payment for Development and Regulatory Work .
a.
Execution. Upon execution of this Agreement, all debt owing
from Neos to Cornerstone shall be forgiven, including, without
limitation, all amounts owing (including principal and interest)
under that certain Secured Subordinated Promissory Note dated
August 1, 2006, in the principal amount of $500,000.00 (and
Cornerstone’s liens in Neos’ property shall
contemporaneously terminate).
b.
Regular Payments. Neos, at its own expense, will develop the
First Product up to an including completion of the first Clinical
Study in humans, which shall be a pilot study, i.e., a clinical
study not suitable to support submission of an NDA in and of itself
without further Clinical Studies (with each of the costs referenced
in this sentence being collectively referred to as the “
Neos First Product Expenses ”). The Neos First Product
Expenses shall: (A) begin after the effective date of this
Agreement; (B) be approved by Cornerstone in advance, which
consent may not be unreasonably withheld or delayed; and
(C) shall be evidenced by reasonable documentation in
accordance with GAAP (as applicable). After Neos has discharged its
obligations under the first two sentences of this
Section 6.b., Cornerstone shall pay Neos, within thirty (30)
days after it receives an invoice from Neos in connection with its
development efforts hereunder, all direct, actual costs and
expenses incurred by Neos plus ten percent (10%) of those costs and
expenses, plus $150 per hour for time spent by scientific and other
appropriate-level personnel.
c.
Milestone Payments. Cornerstone shall provide the following
consideration and pay the following milestone payments to Neos
within ten (10) days of its
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receipt of
notice that any of the below events have occurred with respect to
the First Product and each subsequent Product (and if any of such
payment(s) is/are due, Cornerstone must have made the preceding
milestone payment(s)):
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[***]
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[***]
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For
clarification, each of the foregoing milestone payments shall be
due only once for each Product, including the First Product and
each subsequent Product.
7.
Intellectual Property .
a.
Neos Intellectual Property. Except as specifically provided
by Section 7.b. below, as between Neos and Cornerstone, all
intellectual property owned by Neos or developed by Neos during the
term of this Agreement, including, without limitation, all patents
and patent rights, trademarks and trademark rights, trade names and
trade name rights, service marks and service mark rights, service
names and service name rights, inventions, processes, formulae,
copyrights and copyright rights, trade dress, business and product
names, logos, slogans, trade secrets, industrial models, processes,
designs, methodologies, other proprietary information and related
documentation, technical information, manufacturing, engineering
and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and
copyrights (collectively, “ Intellectual Property
”) shall remain and be the sole and exclusive property of
Neos. Further, except as specifically provided by Section 7.b.
below, Neos shall be the sole owner of all Intellectual Property,
or any modifications or improvements thereto, developed under or in
connection with this Agreement, whether by Neos, Cornerstone or in
combination, Neos makes no representation or warranty with respect
to the validity of any patent, trademark, or copyright that may be
granted with respect to any of its Intellectual
Property.
b.
Cornerstone Intellectual Property. Cornerstone shall have
exclusive rights to: any brand name and trade mark(s) assigned by
Cornerstone to Products; trade dress specifically associated with
Products that is developed by Cornerstone; and data generated from
Clinical Studies and pre-Clinical Studies and post-Regulatory
Approval (but not the Intellectual Property of Neos included
therein), filings for Regulatory Approval (but not the Intellectual
Property of Neos included therein) and sales and marketing
information. Cornerstone shall not distribute, market or sell
Products under Neos’ proprietary trademarks, trade names,
service marks or use any of Neos’ copyrights, unless such
permission is obtained in advance in writing. Cornerstone will not
distribute, market or sell the Product under any proprietary
trademarks, trade names, service marks, or copyrights to which it
is not legally entitled. Intellectual Property
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
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independently
developed by Cornerstone, without exposure to or knowledge of
Neos’ Intellectual Property as established by
Cornerstone’s written records, during the term of this
Agreement shall remain the property of Cornerstone.
c.
Further Documentation. Both during the term of this
Agreement and at any time thereafter, the Parties agree to execute
any documents reasonably requested by the other Party to effect the
above provisions of this Article 7.
i.
Generally. As used herein, “ License
Term” shall begin on the Effective Date and, unless
earlier terminated as herein provided, shall end on the earlier of
(A) the expiration or termination of this Agreement, or
(B) December 31, 2026. Neos grants Cornerstone an
exclusive license to its Intellectual Prope
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