DEVELOPMENT, LICENSE AND SERVICES
AGREEMENT
([***]/METHSCOPOLAMINE PRODUCT)
This Development,
License and Services Agreement (including all Schedules hereto,
this “ Agreement ) is made and dated as of
March 19, 2008 (the “ Effective Date ”), by
and between Cornerstone BioPharma, Inc., a Delaware corporation
(“ Cornerstone ”), and Neos Therapeutics, L.P.,
a Texas limited partnership (“ Neos ” and
together with Cornerstone, the “ Parties
”).
WHEREAS ,
Neos is engaged in providing development and manufacturing services
to pharmaceutical companies and owns dynamic variable release
technologies that result in products that show controlled release
characteristics in vitro (the “ DVR Technology
”), which technologies are in part the subject of the pending
patent application[s] set forth in Schedule A hereto
(the “ DVR Patent Application[s] ”);
WHEREAS ,
Cornerstone is engaged in research, development, marketing and sale
of human pharmaceutical products, wishes to utilize the DVR
Technology to develop the Product (as defined below) for
Commercialization (as defined below) in the Territory (as defined
below), and wishes to engage Neos to perform the Development Work
(as defined below), including the production of quantities of GMP
Product for use as clinical material;
WHEREAS,
Neos has the capabilities and is willing to provide such
development activities and manufacturing services and to license
rights under the DVR Technology and the DVR Patent Applications in
the Territory to Cornerstone, subject to the terms and conditions
set forth herein;
NOW,
THEREFORE , in consideration of the premises and the mutual
covenants and agreements contained herein, the Parties hereto agree
as follows:
In addition to the
other terms defined elsewhere herein, the following terms and
phrases shall have the following meanings when used in this
Agreement.
“
Affiliate ” shall mean, with respect to any person,
any person that directly or indirectly through stock ownership or
through other arrangements either controls, or is controlled by or
is under common control with, such person. The direct or indirect
ownership of over 50% of the outstanding voting securities of an
entity, or the right to receive over 50% of the profits or earnings
of an entity, and such other relationships as in fact results in
actual control over the management of an entity, each shall be
deemed to constitute control.
“
Clinical Product ” means active and placebo batches of
Product produced for use in connection with Cornerstone’s
clinical trials of the Product.
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
“ CMC
” means the chemistry, manufacturing and controls section(s)
and data in the NDA.
“
Commercialization ” (or “ Commercialize
”) means developing, conducting preclinical or clinical
studies or trials, seeking regulatory approvals, manufacturing,
marketing, distributing, importing, offering for sale or selling
the Product.
“
Development Work ” means all the activities specified
to be performed by Neos under this Agreement including without
limitation work related to formulation of the Product, developing
and documenting the manufacturing process related to the Product,
preparing the CMC section of the NDA for the Product, and
manufacturing the Product for use in connection with the NDA
submission.
“ FDA
” means the United States Food and Drug Administration or any
successor entity thereto.
“ Force
Majeure ” has the meaning set forth in
Section 11.7.
“ GLP
” means the FDA’s current good laboratory practices, as
specified in Title 21, Code of Federal Regulations, Part 58,
and applicable FDA guidance documents, as the same shall be amended
from time to time.
“ GMP
” means the FDA’s current good manufacturing practices,
as specified in Title 21, Code of Federal Regulations,
Part 210, and applicable FDA guidance documents, as the same
shall be amended from time to time.
“ ICH
” means the International Conference on Harmonization of
Technical Requirements for Registration of Pharmaceuticals for
Human Use.
“ Joint
Invention ” has the meaning set forth in
Section 2.5(c).
“
Insolvency Event ” has the meaning set forth in
Section 10.2(d).
“
Know-How ” means any and all product specifications,
processes, product designs, plans, trade secrets, know-how, ideas,
concepts, manufacturing, engineering and other manuals and
drawings, standard operating procedures, flow diagrams, chemical,
pharmacological, toxicological, pharmaceutical, physical and
analytical, safety, quality assurance, quality control and clinical
data, technical information, data, research records, supplier lists
and similar data and information, and all other confidential or
proprietary technical and business information.
“
Laws ” means any and all federal, state, and local
laws, rules, regulations, orders and requirements applicable to the
Parties in performance of this Agreement including without
limitation the following: the Prescription Drug Marketing Act of
1987, the Federal Food, Drug and Cosmetic Act, and all regulations
and other guidance or requirements of the FDA or any equivalent
agency.
“
Manufacturing Site ” means Neos’ facilities
where the Product formulation and manufacturing process are
developed and the Product is manufactured, stored and
handled.
“
Materials ” has the meaning set forth in
Section 2.1(b).
2
“ NDA
” means, in respect of the Product, a New Drug Application
filed by Cornerstone with the FDA and all subsequent related
submissions thereto.
“ Neos
Intellectual Property ” means (i) the DVR Patent
Applications, (ii) the Neos Know-How related to the DVR
Technology, (iii) the general Know-How of Neos related to
manufacturing processes or procedures utilized by Neos, its
Affiliates or the Manufacturing Site in manufacturing
pharmaceutical products, (iv) any Neos Sole Inventions, and
(v) Neos’ rights in any Joint Inventions.
“ Net
Sales ” means the gross amounts invoiced by Cornerstone,
any of its Affiliates or any of its sublicensees for sales of
Product in the Territory to third parties, less the total of the
following deductions to the extent actually and reasonably allowed
or incurred in connection with such sales:
(a) reasonable
and customary trade, cash and quantity discounts off the invoiced
price;
(b) excise,
sales and other consumption taxes and custom duties to the extent
included in the invoice price;
(c) freight,
insurance and other transportation charges to the extent included
in the invoice price;
(d) amounts
repaid, credited or accrued, or allowances or adjustments made, by
reason of returns, rejections, or recalls, or because of
chargebacks, retroactive price reductions, or billing
errors;
(e) reasonable
and customary rebates and chargebacks to pharmacy benefit managers,
federal, state, or local governments (or their agencies or
purchasers), and managed health organizations (including without
limitation Medicaid rebates); and
(f) any
amounts actually written off or specifically identified as
uncollectible in accordance with GAAP;
solely to the
extent the above deductions are taken in accordance with GAAP
applicable to the particular selling entity.
Use of Product
for promotional, sampling or compassionate use purposes or for use
in clinical trials (but excluding post-approval clinical trials for
which compensation is received by the selling entity) shall not be
considered in determining Net Sales. In the case of any sale of
Product between a Party and its Affiliates or sublicensees for
resale, Net Sales shall be calculated as above only on the first
arm’s length sale thereafter to a third party.
“
Product ” means a [***]/Methscopolamine [***] capsule
that the Parties intend will [***]. If the Parties agree as a
result of the Development Work that the Product shall have a
different active pharmaceutical ingredient strength or other
release charactistics, “Product” shall
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
3
mean such other
combination pharmaceutical product for human use in the Territory
containing [***] and Methscopolamine as so agreed.
“
Registration Product ” means Product produced for use
in connection with Cornerstone’s submission of its NDA to the
FDA.
“ Sole
Invention ” has the meaning set forth in
Section 2.5(b).
“
Territory ” means the United States of America,
including the states, territories and possessions thereof, the
District of Columbia, and the Commonwealth of Puerto
Rico.
“ Valid
Claim ” means a claim of an issued and unexpired patent
or a good faith claim in a patent application, which claim has not
been held invalid, unpatentable or unenforceable by a court or
other government agency of competent jurisdiction from which no
appeal can be further taken, and has not been held or admitted to
be invalid, unpatentable or unenforceable through abandonment,
re-examination or disclaimer, opposition procedure, nullity suit or
otherwise, which claim covers the Product or its manufacture or
use.
FORMULATION AND MANUFACTURING
PROCESS DEVELOPMENT
(a) Neos
shall, at its expense, establish the Manufacturing Site as an FDA
certified and approved GMP facility by the date specified in the
Development Plan and promptly shall provide Cornerstone with a copy
of the written GMP facility approval it receives from the
FDA.
(b) Neos
shall use commercially reasonable efforts to perform the
Development Work by the date or dates specified in the plan of
action and milestones attached hereto as Schedule B (as
the same may be amended in writing by the Parties from time to
time, the “ Development Plan ”). Neos shall, at
its expense, provide all equipment necessary or advisable to
complete the Development Work. Neos also shall acquire raw
materials, components, active pharmaceutical ingredients or other
materials necessary or advisable to complete the Development Work
(“ Materials ”), which shall be acquired only
from approved suppliers where applicable, and Cornerstone shall
reimburse Neos for the costs of such items.
(c) Except
as set forth in this Agreement, Neos shall have no responsibility
for clinical or regulatory work associated with gaining FDA
approval of the NDA for the Product.
2.2
Formulation of Product and Development and Documentation of
Manufacturing Process .
(a) Neos
shall use commercially reasonable efforts to develop a formulation
of, and manufacturing process for, the Product and shall, in
consultation with Cornerstone’s development staff, prepare
and provide regulatory data and documentation and draft
CMC
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
4
respecting the
manufacture of the Product, all in compliance with applicable FDA
guidelines and any other applicable Laws. The project timeline for,
and the Parties’ respective responsibilities with respect to,
such manufacturing process development and documentation are
described in greater detail in the Development Plan. Neos shall
draft the CMC section of the NDA, and Cornerstone shall cooperate
with Neos to provide information reasonably requested by Neos in
support of Neos’ drafting of the CMC. Cornerstone shall
critically review and provide corrections to the CMC section in a
timely fashion. Neos shall use commercially reasonable efforts to
be prepared for any FDA pre-approval inspection of the
Manufacturing Site. Neos agrees that Cornerstone may reference Neos
as the manufacturer of the Product in Cornerstone’s NDA and
any other documentation required under any regulatory filings for
the Product, and Neos will provide Cornerstone with all required
documentation, including development and analytical reports to
support such filings.
(b) The
Parties understand and agree that the Development Work and the
manufacture of Product contemplated by this Agreement are: to
support Cornerstone’s product, clinical and regulatory
development plans respecting the Product; to support
Cornerstone’s obtaining clearance from the FDA for marketing
of the Product; and to establish facilities, manufacturing
processes and quality control/quality assurance procedures and
systems that will be found in compliance with GMP and other Laws in
the event of a related inspection by the FDA. Neos will comply with
all applicable GLP, GMP and other applicable U.S. regulations in
order for the Development Work and the supplied Product to meet all
applicable Laws for the conduct and completion of validation runs.
Without limiting the foregoing, Neos will implement and maintain
the policies and procedures and take the other actions set forth in
the Development Plan, and as may be requested by Cornerstone from
time to time. Neos will cooperate with Cornerstone to respond to
any FDA information requests relating to the CMC section that may
arise during the NDA submission, regulatory agency review and
approval processes and, upon Cornerstone’s reasonable
request, will provide other assistance related to obtaining NDA
approval.
(c) Cornerstone
will use commercially reasonable efforts to fulfill its
responsibilities described in greater detail in the Development
Plan to develop the Product. Cornerstone shall prepare the NDA
submission and diligently pursue NDA approval from the FDA. Upon
receipt of NDA approval, Cornerstone shall use commercially
reasonable efforts to fully Commercialize the Product in the
Territory.
2.3
Development Schedule . Neos shall provide sufficient
staffing for the Development Work and use commercially reasonable
efforts to perform and complete the Development Work, and the
various components thereof, according to the milestone schedule set
forth in the Development Plan, in order that the Product shall be
available for supply to Cornerstone in compliance with all
applicable Laws in connection with the NDA submission, it being
understood that Cornerstone has a strategic objective to complete
GMP manufacture of Clinical Product by August 2008. During the
Term, Neos shall provide monthly reports within ten (10) days
following the last day of each month regarding its progress in
relation to the milestones set forth in the Development Plan, such
reports to be in form and substance reasonably satisfactory to
Cornerstone. The Parties agree that time is of the essence in this
Agreement. Nevertheless, Cornerstone may abandon development of the
Product at any time in its sole discretion, subject to
Section 10.3(d).
5
2.4 Project
Coordination; Senior Executive Resolution . Cornerstone
appoints its Chief Medical Officer, Brian Dickson, and Neos
appoints its Vice President, Research and Development, Russ McMahen
to serve as their respective primary contact persons with regard to
the Development Work (the “ Project Managers ”).
The Project Managers will meet, by phone or in person, as necessary
(but not less than twice per month) to review, coordinate, and
discuss issues and progress regarding the Development Work. The
Project Managers shall to the extent practicable seek to operate by
consensus in coordinating and facilitating the activities of the
Parties under this Agreement. For the avoidance of doubt, the
Project Managers shall have no authority to amend or waive
compliance with the terms and conditions of this Agreement, to
resolve differences of opinion between the Parties regarding the
interpretation of this Agreement or to approve actions of the
Parties that are inconsistent with this Agreement. In the event
that a dispute of any kind arises pertaining in any manner to
activities of the Parties under this Agreement (a “
Dispute ”), prior to the initiation of any formal
legal action, the Dispute will be submitted to the Presidents of
Cornerstone and Neos. For all Disputes referred to the Presidents,
the Presidents shall use their good faith efforts to meet at least
two times in person and to resolve the Dispute within ten
(10) business days after such referral. If the Presidents are
unable to resolve the Dispute, the Parties agree to refer the
Dispute for non-binding mediation within ten (10) days of
either Party making a request to the other by notice hereunder. Any
such mediation will be conducted by the American Arbitration
Association in the State of New York. The Parties agree to share
the cost of any mediation equally .
2.5
Ownership of Intellectual Property and Regulatory Files in
Connection with Development Work .
(a)
Existing Inventions and Know-How . Ownership of existing
inventions and Know-How of either Party or future inventions and
Know-How of either Party made outside the scope of this Agreement
shall remain the sole property of such Party, subject to any
licenses granted in this Agreement.
(b)
Inventions and Know-How Developed Under this Agreement by a
Party. Any and all inventions (including all results and
Know-How), whether or not patentable, that is conceived, reduced to
practice, or otherwise developed within the scope of this Agreement
solely by a single Party’s officers, employees, contractors
and agents shall be owned solely by such Party along with all
related intellectual property rights (“ Sole
Inventions ”), subject to any licenses granted in this
Agreement.
(c)
Inventions and Know-How Developed Jointly Under this
Agreement. All other inventions (including all results and
Know-How), whether or not patentable, that is jointly conceived,
reduced to practice, or otherwise developed by officers, employees,
contractors and agents of both Parties under the scope of this
Agreement shall be owned jointly by the Parties along with all
related intellectual property rights (“ Joint
Inventions ”).
(d)
Joint Invention Rights. Patent applications on Joint
Inventions may be filed only if the Parties agree to file jointly
on them. If the Parties agree to file for and obtain patents on
Joint Inventions, all expenses incurred therein shall be shared
equally, except that the
6
employer of
each inventor, if applicable, will pay the inventor’s
compensation. If a patent is obtained on a Joint Invention, no
Party shall transfer its interest in such patent to a Third Party
unless both Parties agree to do so. Notwithstanding the foregoing,
the Parties shall be entitled to transfer their respective rights
to their respective Affiliates and successors in interest as set
forth in Section 11.3 hereof. Subject to the exclusivity
arrangements in Section 2.6, each Party is free to use and
sublicense Joint Inventions to third parties without any further
obligations or accounting to the other Party; provided, however,
that nothing in this Section 2.5(d) gives either Party any rights
with respect to intellectual property that is owned solely by the
other Party.
(e)
Assignments of Inventions . Each Party shall, and shall
cause its officers, employees, contractors and agents to,
(i) execute, all documents, including, without limitation,
assignments of inventions and discoveries and all related
intellectual property rights, and (ii) perform such acts as
may be necessary, useful or convenient to secure or enforce for the
other Party statutory protection including patent, trademark, trade
secret or copyright protection throughout the world for all
intellectual property assigned to it pursuant to this
Section 2.5.
(f)
Regulatory Files. Cornerstone shall own all regulatory files
with respect to the Product including without limitation regulatory
data and documentation prepared by Neos under Section 2.2
respecting the manufacture of the Product, including without
limitation the CMC section of any NDA filing with the FDA related
to the Product.
2.6
Exclusivity . Commencing upon the Effective Date, and
extending for a period ending on the later of (a) the fifth
(5 th
) anniversary of (a) initial
NDA submission, (b) the fifth (5 th )
anniversary of the expiration of the Term, or (c) the
expiration of termination of the Supply Agreement Term (as defined
in Section 5.2(a)), Neos agrees not to utilize or permit the
utilization of the Manufacturing Site, nor to perform services, nor
to permit the use of the Neos Intellectual Property, for or on
behalf of any third party in connection with or related to the
development, manufacture or Commercialization of any combination
pharmaceutical product for human use in the Territory containing
[***] and Methscopolamine (a “ Competing Product
”), without Cornerstone’s prior written consent. Neos
represents and warrants to Cornerstone that, as of the Effective
Date, Neos has not contracted with, is not collaborating with and
is not negotiating with any third party to perform services with
respect to any Competing Product.
3.1 Product
Manufacture for NDA and Clinical Trials .
(a) During
the Term, provided that the Product has been successfully developed
to Cornerstone’s reasonable satisfaction through the
Development Work, Neos agrees to manufacture and supply
Registration Product and Clinical Product that complies with Laws
and GMP and that conforms to the specifications set forth in the
Development Plan (the “ Specifications ”) in the
quantities, at the times and at the locations designated by
Cornerstone in the Development Plan. Neos shall notify Cornerstone
if there is any issue with time lines and
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
7
delivery of
Product under this Agreement. The Specifications may be amended
from time to time by written agreement of the Parties without the
necessity of amending this Agreement.
(b) Promptly
following each manufacturing run, Neos shall (i) test each
batch in accordance with the protocols specified in the Development
Plan (“ Quality Control Testing Protocols ”) and
as the same may be modified from time to time in accordance with
the last sentence of this Section 3.1(b), (ii) furnish
Cornerstone (attention: Chief Medical Officer) with a certificate
of analysis, test result sheets, Product reconciliation and yield
information, copies of label specimens, all investigations and
deviations, and test results (such test results due within three
business days of batch release) and other documents in form and
content satisfactory to Cornerstone, and (iii) retain all
relevant records pertaining thereto as may be required by GMP and
other applicable Law. The Quality Control Testing Protocols may be
modified in writing by Cornerstone with Neos’ written
consent, such consent not to be unreasonably withheld, and any
changes to the Quality Control Testing Protocols requested by Neos
shall be subject to the prior written approval of Cornerstone and
all such changes must comply with all applicable Laws.
(c) Neos
shall (i) validate using relevant ICH guidelines all
non-pharmacopeial analytical methods required for Product release
testing in accordance with the Specifications, (ii) furnish
Cornerstone (attention: Chief Medical Officer) with method
validation reports in form and content satisfactory to Cornerstone
and in compliance with FDA requirements, (iii) perform
suitability testing of all pharmacopoeial analytical methods
required for Product release testing in accordance with the
Specifications, and (iv) furnish Cornerstone (attention: Chief
Medical Officer) with method suitability reports in form and
content satisfactory to Cornerstone and in compliance with FDA
requirements.
(d) When
storing and handling raw materials, components, active
pharmaceutical ingredients, Product, or Product-derived wastes,
Neos shall comply with, and shall maintain all storage facilities
in compliance with, the Specifications, GMP, and applicable
Laws.
(e) Upon
Cornerstone’s request, Neos shall ship Product as directed by
Cornerstone F.O.B. the Facility. Freight and insurance shall be for
the account of Cornerstone, and the risk of loss, delay or damage
in transit shall be with Cornerstone from and after delivery to
Cornerstone’s designated carrier. Neos shall use commercially
reasonable efforts to assist Cornerstone in arranging any desired
insurance. Neos shall package the Product for shipment in
accordance with Cornerstone’s instructions and its SOPs or
customary practices therefor. In the event of any conflict between
Cornerstone’s packaging instructions and Neos’s SOPs or
customary practices, the Parties shall endeavor in good faith to
resolve such conflict as quickly as practicable. Neos shall include
the following for each shipment of the Product: (i) the
purchase order number; (ii) the lot and batch numbers;
(iii) the quantity of the Product; and (iv) the
certificate of analysis.
3.2 Failure
to Meet Specifications . Without limiting any rights or
remedies available to Cornerstone hereunder, in the event that
Product not meeting the Specifications or otherwise defective is
shipped by Neos, Neos and Cornerstone shall mutually determine in
good faith that Neos shall either (a) refund any Materials
costs related to the non-conforming Product for which it was
reimbursed by Cornerstone or (b) promptly replace such
non-conforming Product with conforming Product.
8
3.3 Right
to Audit . During the Term and for the two-year period
following the Term, Neos shall permit Cornerstone and its employees
or third party designees access, during reasonable business hours
and after reasonable notice, to the Manufacturing Site and to
manufacturing records for Product manufactured by Neos so that
Cornerstone may perform a quality assurance audit of such
facilities and related activities but no more than twice yearly. In
the event that Cornerstone observes a condition which causes it to
believe that the Manufacturing Site, the Product or its method of
development and production, tests, record keeping or other matters
is not in compliance with GLP, GMP or other Laws applicable to the
development and production of the Product and the conduct of the
validation process, the Project Managers shall meet to discuss the
concerns and any strategies to bring the facilities, procedures or
other matters into compliance.
3.4
Inspections . In the event the Manufacturing Site is
inspected by representatives of any federal, state or local
regulatory agency in connection with the regulatory approval
process or manufacture of Product, Neos shall notify Cornerstone in
writing within twenty-four (24) hours upon learning of such
inspection, and shall supply Cornerstone with copies of any
correspondence or portions of correspondence that relate to the
Product. Neos will make all reasonable efforts to cooperate with
such regulatory agency to accommodate the inspection and shall
provide Cornerstone with daily updates of any such inspections. In
the event Neos receives any regulatory letter or comments from any
federal, state or local regulatory agency in connection with its
manufacture of the Product including, but not limited to, receipt
of a Form 483 (Inspectional Observations) or a Warning Letter,
Neos shall provide Cornerstone with a copy thereof and a copy of
each response for Cornerstone review prior to submission of such
response and opportunity to comment where practicable.
3.5 Supply
of Product After NDA Approval . Following NDA approval of
the Product, provided that this Agreement has not been terminated
by Cornerstone pursuant to Sections 10.2(a) or 10.2(b), the
Parties will negotiate diligently and in good faith to enter into a
supply agreement for Neos to provide finished Product to
Cornerstone for sale to commercial customers. The Parties agree
that if they enter into a definitive supply agreement, which would
constitute their final binding agreement, the provisions set forth
in Schedule C attached hereto (the “ Supply
Terms ”) will, without material modification but with
such additional description and additional customary commercial
terms as the Parties agree to, be included in such definitive
supply agreement. The Supply Terms do not purport to include all of
the essential terms of the contemplated supply relationship and it
is the intention of the Parties that neither shall be obligated to
enter into the supply relationship unless the definitive supply
agreement is executed and delivered by the Parties and then only in
accordance with the terms of such definitive agreement.
4.1 Hourly
Fees . Cornerstone shall pay Neos One Hundred Fifty Dollars
($150) per hour for each hour of professional services rendered in
performing the Development Work that is reflected in the
Development Plan or that has been otherwise approved by Cornerstone
in writing in advance (“ Hourly Fees
”).
9
4.2 [***]
Payments for Development Work . In addition to the Hourly
Fees, Cornerstone shall pay Neos [***] payments [***] not to exceed
One Million Seven Hundred Fifty Thousand Dollars ($1,750,000) in
the aggregate for all such [***] Payments. Neos hereby acknowledges
[***]. Subsequent [***] Payments shall be [***]
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(a) Neos
will render monthly invoices within five business days after the
last day of each month of the Term for the Hourly Fees due in
respect of the total number of professional hours (including any
fraction thereof) performed during that month or Materials costs
for which Cornerstone is required to provide reimbursement to Neos
under Section 2.1(b), which invoice shall be submitted to
Cornerstone (attention: Chief Medical Officer) at the address set
forth in Section 11.2. If applicable, such monthly invoice may also
include a billing for any [***] Payment that is then due and
payable under Section 4.2.
(b) The
Hourly Fees, Materials reimbursements, and [***] Payments invoiced
under this Section 4.3, except for any amounts disputed in good
faith by Cornerstone, shall be payable by Cornerstone within thirty
(30) days of Cornerstone’s receipt of each invoice. If
any invoice is rejected by Cornerstone, in whole or in part, for
any reason, Cornerstone shall provide Neos with its reason(s) for
such rejection, in writing, within thirty (30) days of receipt
of the invoice. All payments provided for under the terms of this
Agreement shall be made by check or wire payable to
Neos.
4.4
Taxes . Neos shall pay and otherwise be responsible for
all applicable sales, goods, services, and transfer taxes in
connection with any payment made to Neos pursuant to this
Agreement. Any income or other tax that one Party is required to
withhold and pay on behalf of the other Party with respect to
amounts payable under this Agreement shall be deducted from and
offset against said amounts prior to payment to the other Party;
provided, however, that in each case such Party shall furnish the
other Party on whose behalf amounts were withheld, proper evidence
of the taxes paid on its behalf.
REPRESENTATIONS AND
WARRANTIES
5.1 Mutual
Representations and Warranties . Each of the Parties hereby
represents and warrants to the other Party as follows:
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
10
(a) This
Agreement has been duly authorized by all necessary corporate
action, has been duly executed and delivered, and is a legal and
valid obligation binding upon such Party and enforceable in
accordance with its terms. Such Party has the full power and
authority to enter into this Agreement and to carry out the
obligations contemplated hereby.
(b) Delivery
and performance of this Agreement by such Party does not conflict
with any agreement, instrument or understanding, oral or written,
to which it is a party or by which it is bound, nor violate any
Laws of any court, governmental body or administrative or other
agency having jurisdiction over it.
(c) All
of such Party’s officers, employees, contractors and agents
that perform any Development Work or work on Joint Inventions will
have entered into agreements with such Party that provide, among
other things, that if they become the inventor of a patentable
invention in the course of their work on behalf of such Party, they
will assign their rights with respect to such invention to such
Party or as otherwise directed by such Party.
5.2 Neos
Representations and Warranties . Neos hereby represents and
warrants to Cornerstone as follows:
(a) As
of the Effective Date, Neos has the right to license the Neos
Intellectual Property to Cornerstone for purposes of the
Development Work and the Commercialization of the Product in the
Territory and has no knowledge it is violating the intellectual
property rights or other rights of any third party. Neos owns all
right, title and interest in and to, or otherwise controls, the DVR
Technology and will continue to do so at all times throughout the
Term and the term of the supply agreement contemplated by
Section 3.5 (the “ Supply Agreement Term
”).
(b) Neos
has not, and during the Term and the Supply Agreement Term will
not, grant any right to any third party relating to the Neos
Intellectual Property in a manner, or pursue any other activity,
that would otherwise conflict with the rights granted to
Cornerstone hereunder.
(c) As
of the Effective Date, Neos has no actual knowledge that
(i) any third party is infringing any of the DVR Patent
Applications or misappropriating or using Neos Know-How related to
the DVR Technology, and (ii) the Neos Intellectual Property,
as applied to the Product, infringes any third party intellectual
property rights. Neos has not received any written communication
from a third party claiming that intellectual property rights owned
or controlled by such third party would be misappropriated or
infringed by the use of the DVR Technology.
(d) As
of the Effective Date, Neos has not been served with any
interference action or litigation with respect to the DVR Patent
Applications, and Neos has not received any written communication
that expressly threatens interference actions or other litigation
before any patent office, court, or any other governmental entity
in any jurisdiction in regard to the DVR Patent
Applications.
(e) As
of the time of release of Product to Cornerstone in accordance with
this Agreement, all Product released (i) will conform to the
applicable Specifications, and (ii) will have been
manufactured in material accordance with GMP (if applicable) and
all applicable Laws and in accordance with the applicable
certificates of analysis.
11
(f) Without
limiting the generality of the foregoing, Neos represents and
warrants that it has the right to provide to Cornerstone the
Product and information provided by Neos hereunder, and to grant
Cornerstone the right to use such Product and information for the
conduct of Cornerstone’s rights and obligations
hereunder.
(g) Neos
will not use, in any capacity associated with or related to the
manufacture of the Product, the services of any persons who have
been debarred under 21 U.S.C. § 335a(a) (or who become the
subject of new debarment proceedings commenced after the Effective
Date) or (b) or any comparable Law. Furthermore, neither Neos
nor, to the knowledge of Neos, any of its officers, employees, or
consultants has been convicted of an offense under (i) either
a federal or state law that is cited in 21 U.S.C. § 335(a) as
a ground for debarment, denial of approval, or suspension, or
(ii) any other Law cited in any comparable regulatory act as a
ground for debarment, denial of approval or suspension.
(h) As
of the date of this Agreement, Neos does not have all manufacturing
governmental consents necessary for the performance of its
obligations hereunder but is diligently pursuing all such consents.
Following Neos’ receipt of the FDA’s approval of the
Manufacturing Site as a GMP manufacturing facility, Neos will use
its commercially reasonable efforts to thereafter maintain
throughout the remainder of the Term all manufacturing Consents
necessary for the performance of its obligations
hereunder.
(i) Neos
will not sell the Product in the Territory during the Royalty Term
or the Supply Agreement Term except for sales to Cornerstone
permitted by this Agreement or the supply agreement contemplated by
Section 3.5.
(j) The
manufacture, packaging, processing, storage, disposal and other
handling of the Product by Neos until delivery to
Cornerstone’s designated carrier or freight forwarder at the
Manufacturing Site shall be in material accordance with and conform
to the Specifications, GMP, and applicable Laws. Product shall not
be adulterated or misbranded within the meaning of the Federal
Food, Drug and Cosmetic Act.
5.3
Cornerstone Representations and Warranties . Cornerstone
hereby represents and warrants to Neos as follows:
(a) Cornerstone
is the owner or has the lawful right to use or grant the right to
use any and all trademarks and trademark rights, trade names and
trade name rights, service marks and service mark rights, service
names and service name rights, brand names, copyrights and
copyright rights, trade dress, business and Product names, logos,
slogans, other proprietary information and related documentation,
and all pending applications for and registrations of trademarks,
service marks and copyrights that (i) it provides to Neos in
connection with the manufacture of the Product, or (ii) it
uses in connection with the marketing, sale or distribution of
Product.
(b) Cornerstone
will not make any claims in any packaging, labeling, advertising or
promotional material regarding the Product that it knows to be
false.
(c) As
of the date hereof, Cornerstone has not been served with any
interference action or litigation with respect to the Product and
Cornerstone has not received any written communication that
expressly threatens interference actions or other litigation before
any
12
patent office,
court, or any other governmental entity in any jurisdiction in
regard to the Product. Cornerstone represents and warrants that as
of the date of this Agreement it is not aware of any prior art or
other information that would render any claim under the DVR Patent
Applications invalid. Cornerstone represents and warrants that as
of the date of this Agreement it is not aware of any patent or any
other third party intellectual property right that would be
infringed by Cornerstone in fulfilling its obligations under this
Agreement.
(d) Cornerstone
will not use, in any capacity associated with or related to the
clinical development, FDA submission, sale, marketing or
distribution of the Product, the services of any persons who have
been debarred or who are currently under investigation for possible
debarment under 21 U.S.C. § 335a(a) or any comparable Law.
Furthermore, neither Cornerstone nor, to the knowledge of
Cornerstone, any of its officers, employees, or consultants has
been convicted of an offense under (i) either a federal or
state law that is cited in 21 U.S.C. § 335a as a ground for
debarment, denial of approval, or suspension, or (ii) any
other Law cited in any comparable regulatory act as a ground for
debarment, denial of approval or suspension.
CONFIDENTIALITY AND
NONDISCLOSURE
6.1
Confidentiality Obligation . Except as permitted below,
each of the Parties (the “ Receiving Party ”)
shall keep strictly confidential any information disclosed in
writing, orally, visually or in any other manner by the other Party
(the “ Disclosing Party ”) or otherwise made
available to the Receiving Party which the Disclosing Party
considers to be and treats as proprietary or confidential (“
Confidential Information ”). Confidential Information
shall not include information (a) which is or becomes
generally available to the public other than as a result of
disclosure thereof by the Receiving Party; (b) which is
lawfully received by the Receiving Party on a nonconfidential basis
from a third party that is not itself under any obligation of
confidentiality or nondisclosure to the Disclosing Party or any
other person with respect to such information; (c) which by
written evidence can be shown by the Receiving Party to have been
independently developed by or for the Receiving Party;
(d) which the Receiving Party establishes by competent proof
was in its possession at the time of disclosure by the Disclosing
Party and was not acquired, directly or indirectly from the
Disclosing Party; or (e) which is required to be disclosed by
applicable Laws.
6.2
Nondisclosure of Confidential Information . The
Receiving Party shall use Confidential Information solely for the
purposes of this Agreement and shall not disclose or disseminate
any Confidential Information to any third party at any time without
the Disclosing Party’s prior written consent, except for
disclosure to those of its directors, officers, employees, advisors
and agents whose duties reasonably require them to have access to
such Confidential Information, provided that such directors,
officers, employees, advisers and agents are required to maintain
the confidentiality of such Confidential Information to the same
extent as if they were Parties hereto. Upon reasonable request of
the Disclosing Party, the Receiving Party shall promptly surrender
and deliver to the Disclosing Party all Confidential Information of
the Disclosing Party.
13
6.3
Survival . The confidentiality and nondisclosure
obligations of this Article 6 shall survive the expiration or
termination of this Agreement and remain in effect for a period of
five (5) years following the expiration or termination of this
Agreement.
LICENSE OF NEOS INTELLECTUAL
PROPERTY
7.1 Neos
License to Cornerstone . Subject to the terms of this
Agreement, Neos hereby grants to Cornerstone, and Cornerstone
hereby accepts, a exclusive, irrevocable license, with right to
sublicense, under the Neos Intellectual Property (a) for
performance of Cornerstone’s rights and obligations under
this Agreement, and (b) to use, make, have made and otherwise
Commercialize the Product (as successfully developed under this
Agreement) in the Territory; provided, however, that Cornerstone
shall only have the right under this Section 7.1 to make or
have made such product by a third party manufacturer (i) if
Neos suffers an Insolvency Event, (ii) if following
Neos’ receipt of the FDA’s approval of the
Manufacturing Site as a GMP manufacturing facility, the FDA revokes
such approval, or (iii) Neos is unable to manufacture such
product for a period exceeding ninety (90) days due to Force
Majeure or other cause.
8.1 Royalty
Payments . As sole consideration for the license granted
under Section 7.2, Cornerstone shall pay to Neos royalties in
accordance with this Article 8 (“ Royalties
”) based on Net Sales of the Product in the
Territory:
(a)
[***] percent ([***]%) of Net Sales of Product sold during the
Royalty Term while the DVR Technology used in the Product is not
the subject of a Valid Claim in the Territory.
(b)
[***] percent ([***]%) of Net Sales of Product sold during the
Royalty Term while the DVR Technology used in the Product is the
subject of a Valid Claim in the Territory; or
The obligation
to pay Royalties under this Article 8 shall be imposed only
once (i) with respect to any sale of the same unit of the
Product, and (ii) with respect to a single unit of the
Product.
8.2 Royalty
Term . The Royalties set forth in Section 8.1 shall be
payable until the later of (i) such date as there no longer
exists a Valid Claim under a United States patent or
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
14
patent
application, or (ii) the [***] anniversary of the Effective
Date if no United States patent with a Valid Claim has been issued
with respect to any of the DVR Patent Applications by such date.
If, after the Royalty Term has ended pursuant to the preceding
sentence, but a United States patent with a Valid Claim is
thereafter issued with respect to any of the DVR Patent
Applications or other applications applicable to the Product, then
the Royalty Term shall recommence on the date such patent is
approved and Royalties shall again be payable based on Net Sales of
Product sold after the date such patent is approved.
8.3 Reports
and Payments . Cornerstone shall deliver to Neos, within
forty-five (45) days after the end of each calendar quarter, a
report setting forth for such calendar quarter the following
information for Product: (i) Net Sales of the Product by
Cornerstone, any of its Affiliates or any of its sublicensees; and
(ii) the Royalties due to Neos in respect of such Net Sales.
The total Royalties due in respect of Net Sales of Product during
such calendar quarter shall be remitted at the time such report is
made by check payable to Neos.
8.4
Maintenance of Records; Audit . For a period of two
(2) years from the end of the calendar quarter in which the
particular sale occurred, Cornerstone shall maintain, and shall
require its respective Affiliates and sublicensees to maintain,
complete and accurate books and records in connection with the sale
of Product by Cornerstone, its Affiliates and sublicensees, as
necessary to allow the accurate calculation consistent with GAAP of
the Royalties due to Neos, including any records required to
calculate any royalty adjustments hereunder. Once per calendar
year, Neos shall have the right to engage an independent accounting
firm reasonably acceptable to Cornerstone, which shall have the
right to examine in confidence the relevant records of Cornerstone
as may be reasonably necessary to determine or verify the amount of
the Royalties due hereunder. Such examination shall be conducted
during normal business hours, after at least fifteen
(15) Business Days prior written notice to Cornerstone and
shall take place at Cornerstone’s facility(ies) where such
records are maintained. Each such examination shall be limited to
pertinent books and records for any year ending not more than
twenty-four (24) months prior to the date of request; provided
that Neos shall not be permitted to audit the same period of time
more than once. Before permitting such independent accounting firm
to have access to such books and records, Cornerstone may require
such independent accounting firm and its personnel involved in such
audit, to sign a confidentiality agreement (in form and substance
reasonably acceptable to Cornerstone) as to any confidential
information which is to be provided to such accounting firm or to
which such accounting firm will have access, while conducting the
audit under this Section 8.4. The independent accounting firm
will prepare and provide to each Party a written report stating
whether the royalty reports submitted and Royalties paid are
correct or incorrect and the details concerning any discrepancies.
Such accounting firm may not reveal to Neos any information learned
in the course of such audit other than the amount of any such
discrepancies. Neos agrees to hold in strict confidence all
information disclosed to it by such accounting firm, except to the
extent necessary for Neos to enforce its rights under this
Agreement or to the extent disclosure is required by Law. In the
event there was an underpayment by Cornerstone of amounts owed
under this Agreement, Cornerstone shall promptly (but in no event
later than thirty (30) days after Cornerstone’s receipt
of the
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
15
independent
auditor’s report) make payment to Neos of any shortfall. In
the event that there was an overpayment by Cornerstone hereunder,
Neos shall promptly (but in no event later than thirty
(30) days after Neos’ receipt of the independent
auditor’s report) refund to Cornerstone or credit to future
royalties, at Cornerstone’s election, the excess amount. Neos
shall bear the full cost of such audit unless such audit discloses
an underreporting by Cornerstone of more than [***] percent
([***]%) of the aggregate amount of Royalties in any twelve
(12) month period, in which case, Cornerstone shall bear the
full cost of such audit.
8.5
Reductions . If either Party determines in its good
faith judgment that it is commercially necessary to obtain license
rights in the Territory from a third party (a “ Third
Party License ”) under patent rights owned or controlled
by such third party that claim or cover the Product or its
manufacture or use and are required to Commercialize the Product in
the Territory (“ Third Party Patent Rights ”),
then such Party shall notify the other Party and promptly
thereafter the Parties shall enter into discussions regarding the
appropriate terms and conditions of such Third Party License and
the Parties agree to negotiate in good faith their respective
shares of any license fees payable to such third party in respect
of such Third Party License. Following such discussions,
Cornerstone may enter into a Third Party License and may reduce the
Royalties owed to Neos by an amount not exceeding the amount the
Parties agreed should be Neos’ share of such Third Party
License fees.
INDEMNIFICATION AND LIMITATION OF
LIABILITY
9.1
Indemnification by Neos . Except as may be otherwise
provided herein, Neos shall defend, indemnify and hold harmless
Cornerstone, its directors, officers and employees (collectively
the “ Cornerstone Indemnitees ”) from and
against all Losses incurred in connection with any third party
suits, claims or causes of action arising out of or resulting from
(a) Neos’ breach of any representation, warranty,
covenant, or other obligation provided for in this Agreement;
(b) the manufacture, delivery, storage, handling and use of
the Product or any of its components by Neos; (c) any actual
or alleged infringement or misappropriation of any patent,
copyright, trade secret or any actual or alleged violation of any
other intellectual property rights arising from or in connection
with Neos’ performance of the Development Work; or
(d) the negligence, recklessness or willful misconduct of Neos
any of its directors, officers or employees; provided, however,
that Neos shall not be required to indemnify the Cornerstone
Indemnitees to the extent that any Losses arise out of or result
from: (i) the negligence, recklessness or willful misconduct
of any Cornerstone Indemnitee; or (ii) any breach by
Cornerstone of this Agreement.
9.2
Indemnification by Cornerstone . Except as may be
otherwise provided herein, Cornerstone shall defend, indemnify and
hold harmless Neos, its directors, officers and employees
(collectively the “ Neos Indemnitees ”) from and
against all Losses incurred in connection with any third party
suits, claims or causes of action arising out of or resulting from
(a) Cornerstone’s breach of any representation, warranty,
covenant, or other obligation provided
[***]
Confidential portions of the exhibit have been omitted and filed
separately with the Securities and Exchange Commission.
16
for in this
Agreement; or (b) the negligence, recklessness or willful
misconduct of Cornerstone and its directors, officers or employees;
provided, however, that Cornerstone shall not be required to
indemnify the Neos Indemnitees to the extent that any Losses arise
out of or result from: (i) the negligence, recklessness or
willful misconduct of any of the Neos Indemnitees, or (ii) any
breach by Neos of this Agreement.
9.3
Insurance . Neos will maintain in full force and effect
during the Term of this Agreement and for a period of three
(3) years thereafter, worker’s compensation and general
liability insurance coverage in amounts appropriate to the conduct
of its business and sufficient to cover its indemnification
obligations hereunder. Neos shall provide evidence of such
insurance to Cornerstone and ensure that Cornerstone will receive
no less than thirty (30) days notice of cancellation,
non-renewal or material change.
10.1
Effective Date and Expiration Date . The term of this
Agreement shall commence on the Effective Date and, unless
terminated sooner in accordance with Section 10.2, shall
expire upon the earlier of FDA approval of the NDA for the Product
or the fifth (5 th )
anniversary of the Effective Date (the “ Term
”).
10.2
Termination . This Agreement may be terminated as
follows:
(a) either
Party may terminate this Agreement upon sixty (60) days
written notice upon the material breach of any provision of this
Agreement by the other Party if the breach is not remedied prior to
the expiration of such sixty (60)-day notice period;
(b) Cornerstone
may terminate this Agreement upon ninety (90) days written
notice if Neos fails to achieve any milestones or quality targets
set forth in the Development Plan and such failure is not remedied
prior to the expiration of such ninety (90)-day notice
period,
(c) Cornerstone
immediately may terminate this Agreement if following Neos’
receipt of the FDA’s approval of the Manufacturing Site as a
GMP manufacturing facility, the FDA revokes such
approval;
(d) either
Party may terminate this Agreement upon thirty (30) days
written notice if the other Party is unable to perform its
obligations for a period of ninety (90) days due to a Force
Majeure event as described in Section 11.7;
(e) either
Party immediately may terminate this Agreement upon written notice
if the other Party shall: (i) file in any court pursuant to
any statute a petition for bankruptcy or insolvency, or for
reorganization in bankruptcy, or for an arrangement or for the
appointment of a receiver, trustee or administrator of such Party
or of its assets; (ii) be served with an involuntary petition
against it, filed in any insolvency proceeding, and such petition
shall not be dismissed within sixty (60) days after the filing
thereof; (iii) propose or be a party to any dissolution; or
(iv) make an assignment for the benefit of its creditors
(each, an “ Insolvency Event ”); and
17
(f) Cornerstone
may terminate this Agreement immediately by written notice to Neos
if the Product is unable to achieve a suitable pharmacokinetic
profile as determined by the bioavailability study in the
Development Plan or if it receives a Not Approvable Letter from the
FDA pursuant to 21 CFR §314.120 with respect to the NDA for
the Product.
10.3
Effects of Termination .
(a)
Accrued Rights; Delivery of Development Work Materials.
Termination or expiration of this Agreement for any reason shall
(a) be without prejudice to any rights that shall have accrued
to the benefit of either Party prior to the effective date of such
termination or expiration, including without limitation rights to
be paid any amounts owed to such Party hereunder as of such date,
and (b) not relieve either Party from obligations that are
expressly indicated to survive termination or expiration of this
Agreement under Section 10.3(b).
(i) If
FDA approval of the NDA for the Product is received and this
Agreement expires or is terminated, all rights granted and
obligations undertaken by the Parties hereunder shall terminate
immediately upon the event of any termination or expiration of this
Agreement, except for rights and obligations set forth in
Sections 2.5, 3.5, 10.3, 11.2, 11.7, 11.8, and 11.9, and in
Articles 4, 6, 7, 8, and 9, or rights or obligations in this
Agreement that by their express terms are intended to operate after
any termination or expiration of this Agreement.
(ii) If
FDA approval of the NDA for the Product is not received and this
Agreement expires or is terminated, all rights granted and
obligations undertaken by the Parties hereunder shall terminate
immediately upon the event of any termination or expiration of this
Agreement, except for rights and obligations set forth in
Sections 2.5, 10.3, 11.2, and 11.9, and in Articles 4, 6, and
9, or rights or obligations in this Agreement that by their express
terms are intended to operate after any termination or expiration
of this Agreement.
(iii) Should
Neos become a party to a bankruptcy proceeding and such proceeding
is not dismissed within sixty (60) days then, to the extent
pe
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