This Manufacturing Agreement involves
Title: API Manufacturing and Supply Agreement
Industry: Biotechnology and Drugs Sector: Healthcare
***Text Omitted and Filed Separately
CONFIDENTIAL TREATMENT REQUESTED
Under 17 C.F.R. §§ 200.80(b)(4) and 230.406
API Manufacturing and Supply Agreement
Optimer Pharmaceuticals, Inc.
May 18, 2010
API Manufacturing and Supply Agreement
This API Manufacturing and Supply Agreement ( Agreement ) is executed on May 18, 2010
Biocon Limited , a company incorporated under the laws of India, having its registered office at 20th K.M., Hosur Road, Electronics City P.O., Bangalore 560 100, India ( Biocon );
Optimer Pharmaceuticals, Inc., a company duly organized and existing under the laws of Delaware, having its principal offices at 10110 Sorrento Valley Rd., Suite C, San Diego, California 92121, U.S.A ( Optimer ).
The parties hereby agree as follows.
In this Agreement, unless the text expressly or the context necessarily requires otherwise, each of the terms set out in bold below and all grammatical variations thereof shall when capitalized in the manner shown below have the meaning correspondingly assigned to such terms.
1.1 [***] .
1.2 Active Pharmaceutical Ingredient (API) means any substance or mixture of substances intended to be used in the manufacture of a drug (medicinal) product and that, when used in the production of a drug, becomes an active ingredient of the drug product. Such substances are intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease or to affect the structure and function of the body.
1.3 Actual Annual Product Amount has the meaning given in section 6.5
1.4 Affiliate means with respect to a party, any Person, whether directly or indirectly, controlling, controlled by, or under common control with such party or Person, as applicable. For the purposes of this section 1.4 only, the term “control” means (i) direct or indirect ownership of more than fifty percent (50%) of the equity having the power to vote on or direct the affairs of such party or Person, as applicable, or (ii) the power to direct decisions of such party or Person, as applicable, including the power to direct management and policies of such party or Person, as applicable, whether by reason of ownership, by contract or otherwise.
1.5 Applicable Law means the applicable provisions of any national, state and/or local statute, law, rule, regulation, administrative code, ordinance, notification, decree, order, decision, injunction, award, judgment, permit or license, as the case may be, issued by a governmental, judicial or quasi-judicial authority with jurisdiction over a party, the subject matter of this Agreement or the Compound
or Product, including the applicable regulations of the FDA and all applicable current good manufacturing practices, including the cGMPs.
1.6 Approval Date means the date on which Optimer receives the first Marketing Authorization.
1.7 Availability Date has the meaning given in section 7.2.
1.8 Batch means the specific quantity of Product produced in a single cycle of a manufacturing process under the same conditions featuring identical properties.
1.9 Batch Record means a record of all materials, quantities, and process steps used to manufacture and test a Batch.
1.10 Binding Forecast has the meaning given in section 6.3.
1.11 Binding Order has the meaning given in section 7.3.
1.12 Biocon Indemnitee has the meaning given in section 12.1.
1.13 Biocon Inventions has the meaning given in section 14.7.
1.14 Biocon Release Documents has the meaning given in section 7.7.
1.15 Campus means Biocon’s manufacturing facility located at 20 th KM Hosur Road, Electronics City, Bangalore - 560 100, India for the manufacture of API.
1.16 Capacity Reservation Fee has the meaning given in section 6.5.
1.17 cGMPs mean the current good manufacturing practices and standards for the production of pharmaceutical intermediates and APIs applicable to both commercial and investigational quantities of compounds (as applicable), as set forth in: (a) Parts 210 and 211 of Title 21 of the U.S. Code of Federal Regulations (21 CFR 210 and 21 CFR 211); and (b) European Community Directive 2003/94/EC and the Rules Governing Medicinal Products in the European Union, Volume 4 (Medicinal Products for Human and Veterinary Use: Good Manufacturing Practice); in each case, as may be amended from time to time after the Effective Date, including any successor provisions thereto, and as interpreted by ICH Harmonised Tripartite Guideline, Good Manufacturing Practice Guide for Active Pharmaceutical Ingredients.
1.18 Commercially Reasonable and Diligent Efforts means those prompt efforts and the application or commitment of resources and expertise consistent with the exercise of prudent scientific and business judgment, as applied to other biopharmaceutical products of similar potential and market size by participants in the biopharmaceutical industry having similar resources to the party in question.
1.19 Compound means the molecule Fidaxomicin with the molecular structure set out in Schedule 1.19 .
1.20 Confidential Information means any information and data that a party ( Discloser ) may from time to time disclose, directly or indirectly, via written, graphic, verbal or electronic form or make available to the other party ( Recipient )
pursuant to this Agreement, and that are regarded by the Discloser as confidential or proprietary, including information and materials related to sales and product information, customer information, manufacturing processes and technology, formulations, information regarding applications and submissions made to any Regulatory Authority, product plans, product development efforts, marketing strategies, financial information and projections and other commercial data that is proprietary or of commercial value. Provided that for each Recipient, Confidential Information shall not include information that:
(a) at the time of disclosure, is known publicly or thereafter becomes known publicly through no fault of such Recipient or its agents;
(b) becomes available to such Recipient other than on a confidential basis from a third party who is lawfully in possession of such information and not subject to a contractual or fiduciary relationship to the Discloser with respect thereto;
(c) was developed by such Recipient independently of information obtained from the Discloser and such independent development can be properly demonstrated by the Recipient; or
(d) was already known to such Recipient before receipt from the Discloser, as shown by its prior written records.
1.21 Control means, with respect to any Intellectual Property Right, possession by a party of the ability (whether by ownership, license or otherwise) to grant access, a license or a sublicense to such Intellectual Property Right without violating the terms of any agreement or other arrangement with any third party as of the time such party would be first required under this Agreement to grant such access, license or sublicense.
1.22 Dedication Fee means a sum of [***] from the amount paid by Optimer to Biocon referenced in section 3.3 (which sum represents the fee paid by Optimer for Biocon to undertake the obligations under section 5 of this Agreement).
1.23 Discloser has the meaning given in section 1.20.
1.24 Drug Product means a dosage form of the Product in the final immediate packaging intended for marketing.
1.25 Effective Date means the date first set forth in this Agreement.
1.26 Elective Termination Notice has the meaning given in section 15.4.
1.27 EMA means the European Medicines Agency and any successor entity.
1.28 FDA means the United States Food and Drug Administration and any successor entity.
1.29 FDCA means the United States Food, Drug and Cosmetic Act and the regulations promulgated thereunder, as each may be amended from time to time.
1.30 Fee Date means the day in each calendar year which is the last day of the calendar quarter in which the Approval Date falls.
1.31 Force Majeure Event means any act or event that prevents a party (the Nonperforming Party ) in whole or in part, from performing its obligations under this Agreement, or satisfying any conditions to the other party’s obligations under this Agreement, is beyond the reasonable control of and not the fault of the Nonperforming Party and that the Nonperforming Party has been unable to avoid or overcome by the exercise of Commercially Reasonable and Diligent Efforts. It is clarified that a Force Majeure Event includes, where all of the preceding conditions are met, each of the following acts or events: shortages in the availability of raw materials required for the manufacture of Product, flood, lightning, earthquake, volcanic eruption, landslide, hurricane, cyclone, typhoon, tornado, drought, famine, plague, or other act of God, fire, explosion, war, riot, civil disturbance, act of public enemy, terrorist act, military action, epidemic, shipwreck, action of a court or public authority, or strike, work-to-rule action, go-slow or similar labor difficulty, each on an industry-wide, region-wide or nationwide basis, but does not include, any event where any of the above conditions are not met or any act or event caused by or attributable to economic hardship, changes in market conditions, insufficiency of funds, or strikes, work-to-rule actions, go-slows or similar labor difficulties that are not industry-wide, region-wide or nationwide.
1.32 High-Potency Product means products such as [***].
1.33 [***] Equipment means the [***] equipment used in the downstream purification of the Product at Park.
1.34 Initial Activities mean all activities to be performed by the parties pursuant to section 3 prior to the manufacture and supply of Product by Biocon to Optimer for the Territory.
1.35 Insolvency Proceeding means, with respect to a party, that such party (a) commences a voluntary case under applicable bankruptcy laws (as now or hereafter in effect), (b) files a petition seeking to take advantage of any other laws relating to bankruptcy, insolvency, or composition for adjustment of distressed or overdue debts, (c) consents to or fails to contest within 120 days using Commercially Reasonable and Diligent Efforts any petition filed against it in an involuntary case under such bankruptcy laws or other laws, (d) applies for or consents to, or fails to contest within 120 days using Commercially Reasonable and Diligent Efforts, the appointment of, or the taking of possession by, a receiver or liquidator of itself or of a substantial part of its property, (e) admits in writing its inability to pay its debts as they become due, (f) makes a general assignment for the benefit of creditors, or (g) takes any corporate action for the purpose of authorizing any of the foregoing.
1.36 Intellectual Property Right means any right, title or interest in or arising from any business secret, compilation, computer program, copyright, design, device, formula, invention, know-how, logo, manufacturing right, method, pattern, process, product, patent right, patent application, program, reverse know-how, technical data, technique, trademark, or trade secret or any part, revalidation or renewal thereof and all other information that derives independent economic value, actual or potential, from not being generally known.
1.37 Latent Defect means a defect that causes a Batch of Product to fail to conform to the Manufacturing Requirements or to the warranties provided by
Biocon hereunder, which defect is not discoverable upon reasonable physical inspection and testing upon receipt, but is discovered at a later time.
1.38 Litigation Expense means any court filing fee, court cost, arbitration fee or cost, witness fee, and any other reasonable fee or cost of investigating or asserting a claim for indemnification under this Agreement.
1.39 Loss means any liquidated or admitted liability, loss, claim, settlement payment, cost, expense, interest, award, judgment, damages, fine, fee, penalty or other charge, including reasonable attorney fees and disbursements and Litigation Expenses.
1.40 Manufacturing Requirement has the meaning given in section 7.7.
1.41 Marketing Authorization means a Regulatory Approval to market and sell a Drug Product in any country in the Territory.
1.42 Minimum Volume means a volume that is:
(a) [***] percent of Optimer’s actual quarterly Product requirement for the Territory if the installation, qualification and Validation conditions specified in clause (b) below have not been met due to a reason not attributable to Optimer or its Affiliates or a Force Majeure Event; or
(b) in the event Biocon achieves the installation and qualification (as required by this Agreement) of the [***] Equipment at Park, and the parties complete the Validation of all Product manufacturing processes at Park by the date specified in section 3.1(c), then solely for the first eight (8) calendar quarters following the Approval Date, [***] percent of Optimer’s actual quarterly Product requirement for the Territory. For purposes of clarification, if Minimum Volumes are determined by this clause (b) for the first eight (8) calendar quarters following the Approval Date, beginning with the 9 th calendar quarter following the Approval Date and through the term of this Agreement, Minimum Volumes shall be determined solely by clause (a) above.
1.43 NDA means one or more New Drug Application(s), or the equivalent thereof, to make and/or sell commercially Drug Products, filed with the FDA or with a Regulatory Authority in any jurisdiction outside of the United States and within the Territory, and all amendments and supplements thereto filed therewith.
1.44 Non-Binding Forecast has the meaning given in section 6.3.
1.45 Optimer Indemnitee has the meaning given in section 12.2.
1.46 Park means Biocon’s manufacturing facility located at Plot No. 2—4, Bommasandra-Jigani Link Road, Bommasandra Post, Bangalore - 560 099, India for the manufacture of API.
1.47 Permitted Products means any non-High-Potency Products such as [***] or like compounds that can be produced using the [***] Equipment without modification from the state used to produce the Product and without affecting any US or European Regulatory Approval for the manufacture of the Product using the [***] Equipment or any other condition specified by the FDA or EMA in connection with the manufacture of the Product using the [***] Equipment.
1.48 Person means any natural or juristic person, and includes any company or other body corporate, any trust, government agency, or government, as well as any firm or association or partnership of two or more Persons.
1.49 Product means the Compound in the form of finished bulk API.
1.50 Prohibited Products means any High-Potency Products that can be produced using the [***] Equipment and any non-High-Potency Products that are not Permitted Products.
1.51 Purchase Order has the meaning given in section 7.2.
1.52 Quality Agreement means that certain Quality Agreement, dated September 16, 2009, between the parties and related to the manufacture of Product.
1.53 Recall Action has the meaning given in section 8.5.
1.54 Recipient has the meaning given in section 1.20.
1.55 Reduction Notice has the meaning given in section 6.5.
1.56 Regulatory Approval means, in relation to a Drug Product or API for Drug Product, the registrations, authorizations and approvals of any Regulatory Authority that are required to be obtained prior to the marketing or sale of product in a jurisdiction in the Territory. Neither a tentative approval nor an approvable letter shall be considered a Regulatory Approval.
1.57 Regulatory Authority means, with respect to any country or group of countries, the governmental or regulatory agency or entity in such country or group of countries having the responsibility, jurisdiction, and authority to approve the manufacture, packaging, labeling, marketing or sale of a Drug Product within such country or group of countries or any successor body to any of them.
1.58 ROW means any country or market in the world that is not included in the Territory.
1.59 Rules has the meaning given in section 19.2.
1.60 Specifications mean the manufacturing, quality control and quality assurance procedures (including, without limitation, those set forth in the Quality Agreement), processes, instructions and any other attributes that the parties agree upon in connection with the manufacture of Product, as previously agreed to by the parties and set forth in document number [***] and as may be agreed upon by the parties after the Effective Date or as otherwise required by Applicable Law, Regulatory Authorities or Regulatory Approvals.
1.61 Territory means the United States of America and Canada.
1.62 Validated Facility means the Park, the Campus or another Biocon facility approved by Optimer, and all equipment contained at each such facility, in each case in respect of which Validation activities have been successfully completed for all processes connected with the manufacture, storage, handling and shipping of the Product.
1.63 Validation or Validated means establishing, in accordance with
Applicable Law or guidelines issued by the relevant Regulatory Authority (including in all cases those issued by the FDA and EMA), that the manufacturing and supply activities conducted by Biocon pursuant to this Agreement consistently produce Product in accordance with the Specifications.
1.64 Validation Batches has the meaning given in Section 10.2.
1.65 Work Plan means the work plan previously agreed to by the parties for the conduct of the Initial Activities regarding [***] and [***] set forth in section 3 and the additional work plan to be agreed to by the parties pursuant to section 3.4.
2. INTERPRETATION AND CONSTRUCTION
The following provisions shall apply to the interpretation and construction of this Agreement.
2.1 Captions in this Agreement are for convenience and identification only and shall not affect the interpretation or construction of this Agreement.
2.2 References to sections, clauses or schedules without further specification are references to sections, clauses and schedules of this Agreement.
2.3 Any reference to a statute or any provision of a statute includes a reference to that statute or provision and any rule, regulation, notification, circular, or direction made or issued pursuant to that statute or provision, as may be from time to time modified or re-enacted, whether prior to or after the date of this Agreement.
2.4 References to the singular include references to the plural and vice versa.
2.5 Words denoting one grammatical gender are intended to include references to all grammatical genders.
2.6 References to “include” or “including” shall mean “include without limitation” and “including without limitation” respectively.
3. INITIAL ACTIVITIES
3.1 Biocon shall use Commercially Reasonable and Diligent Efforts to:
(a) Successfully scale-up the fermentation process at Park to [***] capacity as demonstrated by a successful production of a minimum of [***] of Compound; and
(b) Procure in its name, install, qualify and validate the [***] Equipment at Park with a [***]. For purposes of clarification, Biocon shall own the [***] Equipment subject to its obligations and the restrictions set forth in this Agreement.
(c) Cause the [***] Equipment at Park to be commissioned and fully qualified by [***].
3.2 The parties shall cause the Validation of all Product manufacturing processes, including the [***] at Park and the [***], at Campus and/or the [***] at Park in such manner and sequence as shall be agreed by the parties in the Work Plan.
3.3 As compensation for Biocon’s efforts pursuant to this section 3, Optimer has paid Biocon an upfront sum of $2.5 million which includes the cost of the [***] Equipment at Park ($1.5 million) and a non-refundable Dedication Fee [***]. Biocon acknowledges the receipt of said $2.5 million from Optimer on June 30, 2009 in the amount of [***] and on October 1, 2009 in the amount of [***].
3.4 As promptly as practical after the Effective Date, the parties shall discuss in good faith and agree upon a work plan detailing their respective responsibilities and timing of the Initial Activities described in this section 3, which work plan shall be consistent with completing the Initial Activities as soon as practical and which, together with the work plan previously agreed to with respect to the [***] and [***] referred to in this section 3, shall constitute the Work Plan.
4. MANUFACTURE AND SUPPLY OF PRODUCT
4.1 Biocon shall manufacture the Product in accordance with the Manufacturing Requirements at Validated Facilities and supply such manufactured Product to Optimer or its designee(s) against payment of the price in accordance with section 9 and subject to the other terms of this Agreement.
4.2 Biocon shall obtain Optimer’s prior written approval before Biocon implements any change in the materials, equipment, process or procedures used to manufacture or test Product that would constitute a major change under cGMPs or that would otherwise require a filing with or notification to a Regulatory Authority.
4.3 Biocon shall use Commercially Reasonable and Diligent Efforts to continuously maintain a sufficient stock of raw materials required to manufacture the Product in quantities no less than those set forth in the applicable Non-Binding Forecast at any time; provided that such quantity does not exceed [***] of Product per calendar quarter. Biocon shall use and rotate all stock of such raw materials on a first-in, first-out basis or as otherwise required by cGMPs and other Applicable Laws. Biocon will use Commercially Reasonable and Diligent Efforts to obtain the most competitive price for any raw materials required in the manufacture of Product and shall ensure such materials are released for use, in accordance with Biocon’s quality system and requirements including the Manufacturing Requirements prior to manufacturing any Batch of Product. Biocon will review its stock levels of raw materials on a regular basis to maintain stock levels in accordance with this section 4.3. Biocon shall purchase all [***] raw materials and use [***] only in accordance with the [***] specifications most recently agreed to by the parties as set forth in [***], each as applicable to “fresh” or “recycled” [***] used at Park or Campus, or as otherwise required by applicable Regulatory Authorities or by Regulatory Approvals. Biocon shall keep Optimer reasonably informed with respect to any changes in [***] prices and shall reasonably cooperate with Optimer should Optimer desire to obtain long-term pricing of [***] supplies.
4.4 Optimer or its designee(s) shall use the Product obtained pursuant to this Agreement solely in the research, development or manufacture of Drug Product in the Territory or in any ROW country or market. For clarification, Optimer shall be permitted to sell or otherwise transfer Product to its commercial partners for such commercial partner’s research, development and commercialization activities related to Compound, Product and Drug Product or any salts, hydrates, solvates, polymorphs, metabolites, prodrugs or analogs thereof, provided that Biocon shall not be obligated to indemnify such commercial partners of Optimer.
5. CAPACITY AND DEDICATED FACILITIES
5.1 Subject to the other provisions of this Agreement, Biocon shall ensure that the annual manufacturing capacities for Product at Park together with the annual manufacturing capacities for Product at Campus are sufficient to manufacture at least [***] of Product annually. The foregoing sentence notwithstanding, Biocon’s obligation to ensure such manufacturing capacities shall not apply (i) until both Park and Campus are Validated Facilities (including Validation of the [***] at Park) or (ii) in the event Optimer has not successfully obtained a Marketing Authorization in the Territory by [***].
5.2 Any capacity enhancement beyond the quantities mentioned in section 5.1 or as adjusted from time to time will require a lead-time and will be negotiated under a separate agreement by the parties.
5.3 Subject to the provisions of section 6, during the term of this Agreement, Biocon shall cause the [***] Equipment to be dedicated solely to the manufacture and supply of Product under this Agreement and shall ensure that the [***] Equipment is not subject to any lien, pledge, security interest or other encumbrances that could reasonably be expected to materially impair Biocon’s ability to perform its obligations under this Agreement, without prior written approval from Optimer. The foregoing sentence notwithstanding, in the event Park is not successfully made a Validated Facility by [***] due to Optimer’s failure to perform its obligations under the Work Plan or in the event Optimer has not successfully obtained a Marketing Authorization in the Territory by the date specified in clause (ii) of section 5.1, Biocon shall be free to make other uses of the [***] Equipment which would not impair Biocon’s ability to later use the [***] Equipment for the manufacture of Product; provided, however , that if and when the Park becomes a Validated Facility, Biocon shall promptly cease such other uses and re-dedicate the [***] Equipment solely to the manufacture of Product, provided Optimer has also obtained a Marketing Authorization in the Territory at that time, and subject to the provisions of section 6.
6. MINIMUM VOLUMES AND FORECASTS
6.1 Subject to the terms and conditions of this Agreement and consistent with Section 7.2, for each calendar quarter following the Approval Date and during the Term, Optimer shall be required to purchase from Biocon the Minimum Volume of Product or the amount of Product set forth in the Binding Forecast for the applicable calendar quarter; provided that:
(a) in the event Biocon believes in good faith, due to a Force Majeure Event or otherwise, that it may be unable to supply either (i) the entire amount of Product specified in a Binding Forecast or (ii) [***] of the amount of Product set out in a Non-Binding Forecast for any calendar quarter, Biocon shall immediately notify Optimer of such fact as well as the amount of Product that Biocon, in good faith, can ensure that it will be able to supply in such calendar quarter, and, notwithstanding anything to the contrary in this Agreement, Optimer shall be entitled to obtain such shortfall from a third party(ies) and such amounts shall not count towards Optimer’s total Product requirements in the Territory for purposes of calculating Minimum Volumes during subsequent calendar quarters; and
(b) if, in two (2) consecutive calendar quarters, Biocon is unable to supply the amount of Product set forth in the applicable Binding Forecast and such quantities of Product requested from Biocon are no more than (i) [***] of Product over the 4 calendar quarters ending with the second consecutive calendar quarter in which such supply failure occurs, and (ii) [***] of Product per calendar quarter in which such supply failure occurs, then, notwithstanding anything to the contrary in this Agreement, (iii) Optimer shall be entitled to procure from a third party(ies) the difference between the amount of Product requested from Biocon during such two consecutive calendar quarters and the amount actually supplied to Optimer by Biocon during such calendar quarters, and such amounts shall not count towards Optimer’s total Product requirements in the Territory for purposes of calculating Minimum Volumes during subsequent calendar quarters, and (iv) beginning with the calendar quarter following the second consecutive calendar quarter in which Biocon’s supply failure occurs and continuing through the calendar quarter following the calendar quarter in which Biocon is able to demonstrate to Optimer’s reasonable satisfaction its ability to supply at least [***] of Product per quarter, Optimer shall only be obligated to purchase from Biocon the lesser of (A) its Minimum Volume or the amount of Product set forth in the relevant Binding Forecast for such quarters and (B) the average quarterly amount of product that Biocon was able to deliver during the two consecutive calendar quarters in which the supply failure occurred.
6.2 The provisions set forth in clauses (a) and (b) of section 6.1 shall be in addition to, and are without prejudice to, any other remedies which may be available to Optimer under this Agreement or otherwise as a result of Biocon’s inability to supply Product under this Agreement, subject to section 18.
6.3 Approximately six (6) months prior to the expected Approval Date, Optimer shall provide Biocon with a rolling forecast of its requirements of Product from Biocon for the calendar quarter immediately following the Approval Date which shall include, without limitation, any Validation Batches as set forth in section 10.2 (the Binding Forecast ) as well as a forecast for its estimated requirements of Product from Biocon for the calendar quarter next following (the Non-Binding Forecast ). Thereafter, during the term of this Agreement, one (1) calendar quarter prior to the beginning of each applicable calendar quarter, Optimer shall provide Biocon with a Binding Forecast for such quarter together with a Non-Binding Forecast for the subsequent quarter. Without prejudice to the foregoing, Schedule 6.3 contains Optimer’s non-binding, anticipated forecasts of the quantities of Product required pursuant to this Agreement (which forecasts are subject to
revision in accordance with this Agreement, are based on the assumption that the Approval Date occurs in [***] and shall not be deemed a Non-Binding or Binding Forecast). Optimer shall promptly notify Biocon if Optimer believes in good faith that the amount which will be specified in the next Binding Forecast will be more than [***] or less than [***] of the amount in the current Non-Binding Forecast for the same calendar quarter. If Optimer notifies Biocon that it believes the amount of Product in the next Binding Forecast will be more than [***] of the amount set forth in the current Non-Binding Forecast for the same calendar quarter, Biocon shall thereafter, subject to the capacity limitations in section 5.1, use Commercially Reasonable and Diligent Efforts to enable the supply of such greater amount of Product in such subsequent calendar quarter and shall promptly notify Optimer if it will be unable to supply such amount. For purposes of clarification, Biocon shall not be deemed to be in breach of this Agreement if it is unable to supply an amount of Product in a Binding Forecast which is greater than [***] of the amount set forth in the previous Non-Binding Forecast for the same calendar quarter.
6.4 Notwithstanding anything contained in section 5.3 or section 6.3, in the event the amount of Product set forth in Optimer’s Binding Forecast for any calendar quarter beginning with the fourth calendar quarter after the Approval Date, when combined with the amount of Product set forth in Binding Forecasts covering the preceeding three calendar quarters (and only if the provisions of section 6.1(b) were not in effect for any of such four calendar quarters), is below [***] of Product (representing [***] of the maximum amount of Product that can be manufactured in a calendar year at Campus and Park), Biocon shall be entitled to utilize the dedicated capacity at Park to produce Permitted Products in such calendar quarter, subject to the remainder of this section 6.4. Such production of Permitted Products shall only be undertaken with Optimer’s prior written approval, which shall not be unreasonably withheld provided Biocon demonstrates and certifies in writing to Optimer, including through relevant cleaning experimental data (via cleaning validation), that (a) cross-contamination with other Permitted Products will not affect the quality of the Product to be produced in accordance with the Specifications pursuant to this Agreement and (b) the use of the dedicated capacity at Park for the production of Permitted Products will not otherwise adversely affect Biocon’s ability to fully perform its future obligations under this Agreement.
In the event that Biocon is entitled to produce Permitted Products pursuant to the preceding paragraph and Biocon has not had an obligation or use to manufacture any Permitted Product which can be manufactured using the [***] Equipment for a period exceeding [***] prior to the beginning of the calendar quarter in which Biocon is so entitled to produce Permitted Products, Biocon shall be allowed to use the [***] Equipment in such calendar quarter for Prohibited Products, subject to all of the requirements set forth in the preceding paragraph with respect to the manufacture of Permitted Products.
6.5 For each Fee Date beginning with the later of (a) the first Fee Date following the third anniversary of the Approval Date and (b) the first Fee Date after Campus and Park are Validated Facilities capable of manufacturing at least [***] of Product per year and Biocon is obligated to reserve such capacity for Product pursuant to section 5.1, if both (c) Optimer has not submitted Purchase Orders providing for an aggregate of at least [***] of Product with Availability Dates within the four calendar quarter period ending on the applicable Fee Date and (d) during
such four calendar quarters, Biocon did not have an obligation or use to manufacture Permitted Products or Prohibited Products which can be manufactured using the [***] Equipment, then Optimer shall pay Biocon a fee (the Capacity Reservation Fee ) [***] Purchaser Orders with Availability Dates within the four calendar quarter period ending on the applicable Fee Date (the Actual Annual Product Amount ), [***]; provided, however , that if the Actual Annual Product Amount is less than [***], the Capacity Reservation Fee shall be [***]. If any Capacity Reservation Fee is due with respect to any Fee Date in a calendar year, such fee shall be paid within 30 days of such Fee Date.
At any time, Optimer may inform Biocon in writing that it is reducing the minimum annual Product capacity requirement set forth in the first sentence of Section 5.1 to an amount below [***] (a Reduction Notice ). After delivery of a Reduction Notice, Optimer shall remain liable to pay any Capacity Reservation Fees pursuant to the preceding paragraph that accrue on each of (a) the three Fee Dates after the date of such Reduction Notice, if such date is more than six months prior to the next Fee Date, or (b) the four Fee Dates after the date of such Reduction Notice, if such date is less than six months prior to the next Fee Date. The foregoing notwithstanding, in lieu of paying any Capacity Reservation Fees required by the preceding sentence after delivering a Reduction Notice, Optimer may pay to Biocon a lump sum payment of [***]. Following delivery of a Reduction Notice and after paying any Capacity Reservation Fees or lump sum payment required pursuant to the preceding two sentences following the deliver of a Reduction Notice, Optimer shall not be required to pay any further Capacity Reservation Fees pursuant to this Section 6.5. Upon the date that Optimer is released from further obligations to pay Capacity Reservation Fees due to the delivery of a Reduction Notice, Biocon’s obligations to reserve annual Product manufacturing capacity shall be reduced for the remainder of the term of this Agreement to the amount set forth in such Reduction Notice, provided that Biocon’s use of the [***] Equipment other than for the manufacture of Product shall be limited to the manufacture of Permitted Products (or, upon Optimer’s prior approval which shall not to be unreasonably withheld, Prohibited Products) and shall be subject to the demonstration and certification requirements set forth in clauses (a) and (b) of section 6.4.
6.6 If Optimer intends to enter into an agreement with a third party with respect to the commercial supply of [***] of Optimer’s Product requirements in [***], Optimer shall so notify Biocon, including the principal terms of such proposed agreement, and Biocon shall thereafter have a first right of refusal for a period of [***] from the date of such notice by Optimer to agree be the commercial supplier of [***] of Optimer’s [***] Product requirements on substantially the same terms set forth in Optimer’s notice, subject to the following:
(a) Such right of refusal shall include discussions on the quantities [***] to be supplied by Biocon in [***] and such product volumes shall be provided by Biocon [***];
(b) Such right of refusal shall not be construed as mandating any minimum volumes, including any [***];
(c) Nothing in this section 6.6 shall be construed as an obligation
on Optimer’s part to enter into any [***] agreement with Biocon, and Optimer shall remain free to accept or reject any terms for such an agreement proposed by Biocon, provided Optimer acts in good faith in rejecting such agreement proposed by Biocon; and
(d) In the event Optimer (or its Affiliate, as the case may be) and Biocon do not reach a definitive agreement [***] within said period of [***], Optimer shall have no further obligation to Biocon with respect to negotiating or entering into any agreement relating to [***] and shall be free to seek competitive bids from third party suppliers and enter into a definitive agreement with any third party for [***].
7. PURCHASE AND DELIVERY PROCEDURE
7.1 During the Term, Optimer agrees to buy from Biocon and Biocon agrees to sell and supply to Optimer, such quantities of the Product as may be set forth on purchase orders placed by Optimer in accordance with the provisions hereof; provided, however, that Biocon shall not be liable for any inability to supply Product or any shortfall in the supply of Product pursuant to this Agreement, if such inability or shortfall is due to Optimer requesting an amount of Product in the Binding Forecast for any calendar quarter which is greater than [***] of the amount previously set forth in the Non-Binding Forecast for the same quarter, subject to the provisions of section 6.3.
7.2 No less than three months prior to the date that a Binding Forecast is due from Optimer for any calendar quarter, Biocon shall provide to Optimer the [***] price per kg applicable to the manufacture of Batches to be supplied during such calendar quarter. Such [***] prices shall be based upon documented price quotations available to Biocon (which shall be provided to Optimer upon request) and shall account for any long-term pricing arrangement in place with respect to [***] supplies and existing supplies of [***] on-hand and available for the manufacture of Batches to be supplied during such calendar quarter. Subject to the provisions of section 6, Optimer shall submit written orders for the Product in substantially the form of its standard API purchase order ( Purchase Orders ) setting out the quantity of Product required, value per kg, total value of the Purchase Order, the date the quantity specified in the Purchase Order should be ready for delivery ex works ( Availability Date ), delivery address and instructions for shipping and packaging. The foregoing sentence notwithstanding, the Availability Date for the first Purchase Order shall not occur prior to six (6) months from the date of such Purchase Order and the Availability Date for any subsequent Purchase Order shall not occur prior to three (3) months from the date of such Purchase Order. In compliance with the first sentence of Section 6.1, during each calendar quarter following the Approval Date, Optimer shall submit Purchaser Orders which (a) collectively cover at least an amount of Product equal to the Minimum Volume for the subsequent calendar quarter or the amount of Product specified in the Binding Forecast relating to the subequent calendar quarter and (b) specify an Availability Date no later than the last day of the subsequent calendar quarter (subject to the limitations in the preceding sentence).
7.3 Biocon shall respond to Optimer within ten (10) working days after receipt of each Purchase Order of Product, either accepting or rejecting the
order. No order shall be binding upon Biocon unless accepted by Biocon in writing; provided that Biocon shall not reject any Purchase Order that is (a) substantially in the form set forth on Schedule 7.2 , (b) does not request an amount of Product that (i) is more than [***] per quarter, (ii) is more than [***] of the amount of Product set forth in the prior Non-Binding Forecast for the same calendar quarter, or (iii) when combined with amounts of Product delivered over the preceding 12 month period, would equal more than [***], and (c) is otherwise consistent with Biocon and Optimer’s obligations under this Agreement. Purchase Orders accepted in writing by Biocon shall be binding on both the parties ( Binding Orders ). Binding Orders may only be amended if agreed by both parties. In the event of any ambiguity, contradiction or discrepancy between a Binding Order or other documents of the parties and this Agreement, the provisions of this Agreement shall prevail.
7.4 Biocon shall notify Optimer immediately if Biocon determines that it will not be able to meet any of the terms of a Binding Order, including, but not limited to, quantity and Availability Date. In any event, Biocon shall provide such notice at least sixty (60) days prior to the Availability Date specified in the applicable Binding Order. In addition, Biocon will notify Optimer promptly of any supply constraints (e.g. materials, third party contracts, facilities or capacity) of which it becomes aware that may affect Biocon’s ability to supply the Product in accordance with this Agreement or any Binding Order. For purposes of clarification, Biocon’s compliance with these notice provisions shall in no way limit or prejudice any rights or remedies available to Optimer under this Agreement or otherwise arising out of Biocon’s inability to perform its obligations under a Binding Order or otherwise.
7.5 Biocon shall have the Product in each Binding Order available for shipment ex works, Bangalore (INCOTERMS 2000) on the Availability Date, or such other date as may be agreed by the parties. Biocon shall thereafter promptly prepare Product for shipment and arrange for shipment of Product to a location and by a date designated in writing by Optimer in the applicable Binding Order. Shipment terms are Ex Works, Bangalore (INCOTERMS 2000). All shipments must be accompanied by a packing slip which describes the articles, states the Purchase Order number and shows the shipment’s destination. Biocon agrees to promptly forward the original bill of lading or other shipping receipt for each shipment in accordance with Optimer’s instructions. In accordance with Optimer’s written instructions and at Optimer’s expense, Biocon will arrange for the shipment of Product by the carrier designated by Optimer and for appropriate shipping insurance, and Biocon shall (unless prohibited by Applicable Law) ship Product to the destinations designated by Optimer in containers reasonably sufficient for delivery of Product in accordance with the Specifications. Optimer shall be responsible for carriage, insurance and freight of the Product so delivered at its sole expense, and for compliance with all Applicable Law requirements to import the Product into the Territory. All taxes, duties, charges, imposts, levies and other tariffs payable on the purchase of the Product by and delivery of the Product to Optimer pursuant to this Agreement will be borne by and to the account of Optimer. Biocon shall provide to Optimer a prior written estimate of the costs for the shipment services and fees described in this section 7.5 and inform Optimer of any material changes to such costs and fees.
7.6 If Optimer or its Affiliate or designee is not ready to accept shipment of Product on the date set forth in the applicable Binding Order, then
Biocon shall, at cost to Optimer, store such Product in accordance with the Specifications and Quality Agreement, Biocon procedures, and in a manner consistent with customary practices for pharmaceutical products, until Optimer notifies Biocon that it, or its Affiliate or designee is ready to accept delivery. If Optimer requests Biocon to store the Product beyond thirty (30) days from the date set forth in the applicable Binding Order, Optim