Exhibit 10.20
Portions redacted
* Certain information on this page has been
omitted and filed separately with the
Securities and Exchange Commission.
Confidential treatment has been requested
with
respect to the omitted portions.
DEVELOPMENT AND MANUFACTURING AGREEMENT
THIS AGREEMENT is made as of October 31,
2003.
BETWEEN:
Dragon
Pharmaceutical, Inc., a corporation duly incorporated under the
laws
of the state of
Florida, USA,
having an office at
1900-1055 West Hastings
St., Vancouver,
British Colombia,
Canada, and duly licensed to do business
there.
("Dragon")
AND:
Polymun
Scientific
lmmunbiologische
Forschung GmbH, a corporation duly
incorporated
under the laws of the Republic of Austria having its principal
place of
business at Nussdorfer Laende 11, 1190 Vienna, Austria, and duly
licensed to do
business there.
("Polymun")
WHEREAS:
(A) Dragon does not presently have either the technical Know-How or
manufacturing capacity for manufacturing
therapeutic cytokines
for European and
international markets, and has commercial
interest in developing both technology
and capacity that will enable it to do
so.
(B) Polymun has both technical Know-How and manufacturing capacity for
development and manufacture of therapeutic
biopharmaceuticals.
NOW THEREFORE, in furtherance of and in
consideration
of the premises and
the
mutual covenants, terms and conditions contained herein and for other
good and
valuable consideration, the receipt and adequacy of which
are acknowledged, the
Parties hereby agree as follows:
PART 1
DEFINITIONS AND INTERPRETATION
Definitions
1.1 In this Agreement, except as
otherwise expressly provided or as the context
otherwise requires:
(a) "Additional
Taxes" has the meaning as set out in Section 3.2(b).
(b) "Affiliate(s)" means any entity that directly or
indirectly owns,
is
owned by or is
under common
ownership with, a Party to this Agreement,
where "Own" or
"Ownership" means direct or indirect possession of at least
fifty percent
(50%) of the outstanding voting securities of a corporation
or a comparable
ownership in any other type of entity,
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PROVIDED,
HOWEVER, that if the law of the jurisdiction in which such
entity
operates does
not allow fifty percent (50%) or greater ownership by a Party
to this
Agreement, such
ownership interest shall be the direct or indirect
ownership
by a Party of the
maximum amount
permitted by the law of such
jurisdiction of
outstanding voting securities of such entity.
(c) "Business Information" means any and all information belonging to
either Party
concerning the methods of manufacturing EPO, as well as steps
taken for its
subsequent commercialization.
(d) "CGMP" means
current good manufacturing practices as determined by and
promulgated as
guidance by the
International
Conference on
Harmonization
(ICH).
(e) "CHO" has
the meaning as set out in Section 2.1(a).
(f) "CMC" has
the meaning as set out in Section 2.3(a).
(g) "Commercial EPO Availability Date" means the date when Polymun
successfully
produces the * * * consistent batch of EPO at industrial scale
and under CGMP
conditions.
(h) "Commercially Reasonable Efforts" shall mean efforts and
resources
commonly used in
the pharmaceutical
industry, taking into consideration
safety and
efficacy, cost of
development,
availability of funds
to carry
out operations,
the relative
competitive positions
of parties as a result
of alternative products, proprietary positions) the likelihood of
regulatory
approval and all other relevant factors that go into making
reasonable,
informed business decisions.
(i)
"Confidential Information" has the meaning as set out in Section
5.1.
(j) "EPO" means
recombinant human erythropoietin, in bulk purified form.
(k) "Exclusive
License" has the meaning as set out in Section 2.1(b).
(1) "Exclusive Period" means the period from signing of this Agreement
until the end of
the first 3-year period subsequent to the Commercial EPO
Availability
Date, during which Dragon is granted the
Exclusive License
under Section
2.1.
(m) "Financial
Information" means any and all information concerning costs,
prices,
royalties,
payments and any other
commercial information relevant
in the context
of this Agreement.
(n) "FOB" has
the meaning as set out in Section 3.2(a).
(o)
"Improvement," as used in this Agreement, refers to an improvement
that
is new, useful
and unobvious over the subject matter of the first patent.
(p) "Know-How" shall mean any and all technical, scientific and other
Know-How and
information,
Trade Secrets,
knowledge,
technology,
means,
methods,
processes, practices, formulae, instructions, skills, techniques,
procedures,
experiences,
ideas, technical
assistance, designs,
drawings,
assembly
procedures, computer programs apparatuses, specifications, data,
results
and other material, including clinical data, patient data,
improvements
and/or Technical Information.
* * * CONFIDENTIAL MATERIAL
REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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(q) "Licensed
Cell Line" has the meaning as set out in Section 2.1(a).
(r) "Licensed
Intellectual Properly"
has the meaning as set out in Section
2.1 (b).
(s)
"Manufacturing Orders" has the meaning as set out in Section
3.4.
(t) "Market
Area" means all countries of the world excluding only * * *.
(u) "Master
Cell Bank" or "MCB"
means a collection of vials containing
copies of the
Licensed Cell Line.
(v)
"3-Month-Period" has the meaning as set out in Section 3.6.
(w) "Most
Favored Pricing" is the euro price per gram, subject to the
terms
and conditions
set forth in Annex C hereto and made a part hereof.
(x) "Net Sales"
means the invoice
price, net of sales tax discount and
rebate,
of EPO products made incorporating or developed by using the
Licensed
Intellectual
Property sold by Dragon or its Affiliates to any
party in the
Market Area.
A sale to an
Affiliate that is an end-user is
included
in the ambit of Net Sales. Notwithstanding anything to the
contrary,
no deduction against the invoice price shall be given for
commission,
stocking allowance or marketing and promotional expenses.
(y)
"Non-Competition List" has the meaning as set out in Section
5.11(a).
(z)
"Non-Exclusive License" has the meaning as set out in Section
2.3(a).
(aa)
"Non-Exclusive Period" means the four (4) year period after the
expiry
of the Exclusive
Period, during which Dragon is granted the
Non-Exclusive
License under
Section 2.1.
(bb)
"Non-Signers" has the meaning as set out in Section 5.8.
(cc) "Notice"
has the meaning as set out in Section 9.9.
(dd)
"Party" or
"Parties" refers to either Dragon or Polymun or both as
required by the
context.
(ee) "Prior
Agreement" has the meaning as set out in Section 5.9.
(ff) "Process"
has the meaning as set out in Section 8.3.
(gg) "Product
Specifications" means
the minimum passing specifications for
EPO in
bulk purified form as described in the European Pharmacopoeia
version 4.2, * *
*.
(hh) "Reasonable
Efforts," as used herein, means a lower standard than that
of Commercially
Reasonable Efforts, but it implies that Parties will try to
do what is
necessary to comply with the provisions of this Agreement
where
such a standard
is called for and in no way act in an unreasonable fashion.
(ii)
"Recipient(s)" has the meaning as set out in Section 5.2.
* * * CONFIDENTIAL MATERIAL
REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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(jj) "Royalty
Reporting Period" has
the meaning set out in Annex B Section
2.
(kk) "Scope of
Work" has the meaning set out in Section 7 .3(b).
(ll)
"Semi.Exclusive
License" has the meaning set out in Annex B Section 1
(a).
(mm) "Technical
Information"
means any and all
information
relevant for
CHO-technology
platform as used to manufacture EPO.
(nn) "Term" has
the meaning as set out in Section 7 .1.
(oo) "Trade
Secrets" means that secret compilation (the secrecy of which is
guarded by
Polymun) of
information that
Polymun has to develop a CHO cell
line suitably
transfected with the
human erythropoietin
gene and adapted
for use in cell
culture for the manufacture of EPO in industrial quantities
and enables the optimization of both cell culture and downstream
purification
processes for the
manufacture of EPO.
But for the grant of a
license to use
the Trade Secrets, it
would take an immense amount of time,
effort and money
for others to
innocently acquire
the information that
gives Polymun an
advantage over
competitors
who do not possess the
Trade
Secrets.
(pp)
"Transferred Technology" has the meaning as set out in Section
2.4(a).
(qq)
"Therapeutically
Equivalent
Recombinant Proteins"
means recombinant
proteins
having molecular structure, bio-activity, and method of
manufacture
significantly
similar to like innovator recombinant drug
products
currently under patent and marketed by other companies.
Interpretation
1.2 In this Agreement, except as
otherwise expressly provided or as the context
otherwise requires,
(a) "this
Agreement" means this agreement as from time to time
supplemented
or amended by one or more agreements entered into pursuant to the
applicable
provisions of this Agreement,
(b) a reference
to a "Part" is to a
Part of this
Agreement, and the
word
"Section"
followed by a number
or some combination of
numbers and letters
refers to the
section, paragraph, subparagraph, clause or subclause of this
Agreement so
designated,
(c) headings are
solely for convenience
of reference and are
not intended
to be
complete or accurate descriptions of content or to be guides to
interpretation
of this Agreement or any part of it)
(d) an
accounting
term not otherwise defined herein has the meaning
assigned to it,
and every calculation
to be made hereunder
is to be made,
in accordance
,with accounting
principles generally accepted in the United
States applied
on a consistent basis,
(e) a reference
to currency means European Union Euros,
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<PAGE>
(f) a reference
to a statute includes all regulations made thereunder, all
amendments to
the statute or
regulations in force
from time to time,
and
every statute or
regulation that
supplements or supersedes such statute or
regulations
unless otherwise indicated,
(g) a reference
to an entity includes any successor to that entity, whether
by merger, acquisition, or any other means by which the entity may be
succeeded by
another
(h) a word
importing the masculine gender includes the feminine and
neuter,
a word in the
singular includes the
plural, a word
importing a
corporate
entity includes
an individual, and vice versa, and
(i) a reference
to "approval",
"authorization" or
"consent" means written
approval,
authorization or consent.
PART 2
SCOPE OF WORK
2.1 Development of EPO Cell Line and
downstream process by Polymun and Dragon
(a) Subject to the terms of this Agreement, Polymun undertakes the
development of a
Chinese Hamster Ovary (CHO) cell line suitably transfected
with the human
erythropoietin gene
and adapted for use in cell culture for
the manufacture
of EPO in industrial quantities (the "Licensed Cell Line").
This
Licensed Cell Line shall be developed in compliance with ICH
guidelines
for cell substrate
safety. This Licensed Cell Line as well
as
associated
manufacturing
processes
shall be clearly and distinctly
different
from any previous
cell line developed by Polymun for any
other
client,
and in that respect it
is not subject to any claim of ownership by
any third party
in connection
with making,
using, selling, offering to
sell, importing
and/or exporting EPO.
(b) Polymun
hereby grants to Dragon an exclusive, royalty bearing license,
to the
Licensed Cell Line, Know-How, Technical Information and Trade
Secrets
associated
with the cell culture and downstream purification
processes for
EPO (the "Licensed
Intellectual
Property")
to make, use,
sell, offer to
sell, import and/or export EPO in the Market Area during the
Exclusive period
("Exclusive License").
At the expiration of the Exclusive
Period
Polymun hereby grants Dragon a non-exclusive license for the
Non-Exclusive
period subject to the terms and conditions set forth
hereinafter
to the Licensed Intellectual Property (the "Non-Exclusive
License").
During the
Non-Exclusive Period, Polymun grants Dragon the Most
Favored
Pricing and Polymun agrees to abide by the non-competition
provisions set
forth in Sections 5.10, 5.11 and 5.12.
(c) Polymun
will develop and
optimize both cell culture and downstream
purification
processes for the
manufacture of EPO. Polymun shall integrate
selected
technical staff from
Dragon or its Affiliates into the process of
optimizing and
finalizing the downstream purification process and establish
a manufacturing
technology in a
bioreactor scale of up
to * * * in volume
that
shall
be satisfactory to fulfil the following technical
specifications:
(i) Manufacture
not less than * * *
EPO per litre of raw supernatant
using Polymun's
proprietary
low cost serum-free cultivation &
production medium.
* * * CONFIDENTIAL MATERIAL
REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
5
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(ii) Apply a downstream processing procedure for purification of
raw
supernatant leading
to a yield of not less
than * * */litre of
bulk
purified EPO meeting or surpassing Product Specifications.
(iii) Transfer
to Dragon not less than * * * of bulk
purified EPO
manufactured during the pilot manufacture process.
(d) Dragon will
pay Polymun for development work milestones has undertaken
according to the
schedule set forth in Annex A, within thirty (30) days of
having been
informed by Polymun
that the milestone has been met and Dragon
has informed
Polymun in writing
that the milestone is acceptable, and
acknowledges
that it satisfies the criteria stated in the Agreement. Dragon
shall have the
right to audit records
and inspect the work
and determine
completion
to its satisfaction prior to its acceptance of the milestone
being met.
Payment will be by wire transfer to accounts specified by
Polymun.
(e) Upon
Polymun's receipt of all the milestone payment as per Annex A,
Dragon may use
the Licensed Cell Line for manufacturing directly executed
by Dragon and its Affiliates using its own cell culture media and
processes.
Polymun will also make
available any and all Licensed Cell Line
development
documentation
needed for regulatory
filings to any regulatory
body to which
Dragon may apply for registration of EPO.
2.2 Polymun to manufacture EPO for
Dragon
(a) During the
Term of this
Agreement, Polymun
shall manufacture EPO
for
Dragon
in Polymun's Austrian-certified facilities in accordance with
Section 2 of
this Agreement.
Polymun will
manufacture the BPO
under CGMP
conditions
and bear the costs of
batch releases,
tests and assays to be
undertaken in
accordance with the Product Specifications.
For and in
consideration of
Dragon entering into this Agreement) Dragon's
price per gram
is in accordance with
the terms and conditions set forth in
Annex C.
(b) During the
Term of this
Agreement, Polymun
shall reserve and Dragon
shall purchase
CGMP manufacturing
capacity to manufacture a minimum of * *
* grams
and a maximum of * * * grams of bulk purified EPO per year in
ccordance with the Product
Specifications in the Agreement.
(c) During the
Exclusive Period of the Term of this Agreement, Dragon shall
have the
exclusive right to be supplied by Polymun, in the Market Area
with
EPO which
will be used by Dragon
in accordance
with the rights granted
hercunder
in the Market
Area. Dragon agrees that it will purchase the
minimum
quantities
of EPO manufactured by Polymun for Dragon during
the
Exclusive Period
and Non Exclusive Period as follows:
- * * * of
EPO for the first twelve (12)-month after the Commercial
EPO Availability Date,
- * * *
of EPO for the second twelve (12)-month after the
Commercial EPO Availability Date,
- * * * of
EPO for the third twelve (12) month after the Commercial
EPO Availability Date.
* *
* CONFIDENTIAL MATERIAL REDACTED AND SEPARATELY FILED WITH THE
COMMISSION.
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<PAGE>
- * * *
grams of EPO for
each year of the Non-exclusive Period
until its expiry.
(d) During the
Non-Exclusive Period of the Term of this Agreement, Polymun
is free to sell
and market its EPO to
any customers
in the Market
Area,
other
than * * * subject
to the terms and
conditions
set forth herein,
including
but not limited to, the Most Favored Pricing and the
non-competition
clause in Section 5 of this Agreement.
2.3 Polymun to provide documentation
and technical advice to Dragon
(a) Polymun will
provide Dragon with
all necessary
documentation
in its
custody
and control required by regulatory authorities in a chemical
manufacturing
controls (CMC)
documentation
for the registration of the
Licensed Cell
Line and the associated EPO. No obligation is established
to
provide data
with respect to toxicology, experiences in human application
or any other
data beyond the ICH-specifications. In the event that this
documentation
contains information proprietary to Polymun, such information
shall be
transmitted at Dragon's request to relevant regulatory
authorities
for submission as a "closed
part" of a submission
for registration and
approval.
Costs for provision of this documentation are to be borne by
Polymun.
(b) Polymun,
by virtue of its prior
experience
of developing drugs and
biological
products from recombinant proteins, will provide advisory
assistance
to Dragon during the time Polymun is developing the EPO
manufactured at
its own facilities. Such advisory assistance shall apply to
issues of
outsourcing of tests and assays for protein characterization and
preclinical
studies. Polymun will provide this advice at no cost to Dragon,
PROVIDED,
HOWEVER, it will do so on a basis whereby
Polymun's qualified
expert staff
members do not encounter disruption of their normal duties.
2.4 Transfer of Technology from
Polymun to Dragon
(a) Subject to
the conditions
set forth in Annex B,
Dragon, in its sole
discretion, can
pay Polymun, as specified in Annex B, to transfer to Dragon
the Polymun-developed cell culture and downstream processes for the
manufacture
of EPO with the
Licensed Cell Line for manufacture in any
facility
designated by Dragon ("Transferred Technology"). Polymun agrees
to
render
any and all assistance necessary in the localization of the
Transferred
Technology
in the Dragon-designated facility, PROVIDED,
HOWEVER,
Dragon pays Polymun's fees and expenses for rendering the
aforesaid
assistance,
should
Polymun's
fees
and expenses exceed
(euro)200,000
(TWO HUNDRED THOUSAND EUROS) in the case of Dragon's exercise
rights described
in Annex B:1.(a) or (euro)50,000 (FIFTY THOUSAND EUROS) in
the case of
Dragon's exercise of rights described in Annex B:1.(b). Polymun
shall
advise Dragon of the amount of these fees in writing within a
reasonable
time after
Polymun's fees and/or
expenses exceed the amounts
enumerated
above and Dragon shall
remit payment to
Polymun within
thirty
(30) days.
(b) Limitation
on Dragon's usage of Polymun technology and its products
(i) If Dragon obtains the Transferred Technology in accordance
with
Section 2.4(a),
immediately preceding this section, it is agreed that
Dragon will not make, use, offer to sell, sell, import and/or export
the Transferred
Technology in, to, or from * * *. With this exception
Dragon's rights pertaining to the Transferred Technology apply in the
remainder of the Market Area.
* * * CONFIDENTIAL MATERIAL
REDACTED AND SEPARATELY FILED WITH THE COMMISSION.
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2.5 Both parties to share unilaterally
developed information
(a) Polymun will, under the
provisions set forth in Section 2.1 through 2.4
disclose
to Dragon all
improvements
and/or developments to the process
applicable
to the Licensed Cell Line, cell culture and downstream
purification
process for manufacturing and/or producing EPO. The results of
such technology
Improvements
will be immediately
disclosed to Dragon
and
made
available for its use at no cost,
however, these will be owned by
Polymun and its
Affiliates and Dragon
agrees that it will not transfer any
such
Improvements and/or developments to any third parties.
(b) Dragon
acknowledges Polymun's
intent to sell certain amounts of EPO in
* * * and will
support this effort by providing any data concerning
preclinical and
clinical development
of the EPO into a therapeutic drug to
* * * regulatory
authorities
via Polymun.
Subject to this
Section 2.5(b)
this information
otherwise remains Dragon's exclusive property.
2.6 Option of First Information
(a) Polymun hereby grants to Dragon an option to obtain information
pertinent to the
making, using, offering to sell, selling, importing and/or
exporting and
subsequent
commercialization of
additional
Therapeutically
Equivalent
Recombinant Proteins,
subject to obligations of confidentiality
imposed
upon Polymun by third parties, if any. Such subsequent
commercialization
shall be the
subject of a separate development and
manufacturing
agreement.
2.7 Nothing in this Agreement confers on Dragon any additional interest,
license, or right in respect of either the
Licensed Cell Line or the Licensed
Intellectual Property, other than as set out in Sections
2.1 through 2.6,
and
Annexes A-C.
PART 3
PRICING, ORDERS AND PAYMENT
Price of EPO Manufactured by Polymun for
Dragon
3.1 Polymun will sell the manufactured EPO to Dragon at the prices set
out in
Annex C, such prices to be in effect for
the entire seven (7)-year period of the
agreement.
3.2 (a) Prices are FOB (* * *
International Airport) exclusive of sales tax and
import duties, or any other taxes and
duties now existing or hereinafter imposed
by national authorities or those of any
political subdivision
thereof upon the
sale of EPO by Polymun to Dragon, which are to be paid by Dragon,
along with
costs of transportation and insurance to
cover the risk of loss.
3.2 (b) Prices as set forth in Annex C are
also exclusive
of customs fees,
excise and sales taxes in the importing country, and other taxes in the
importing country in the nature of a sales
tax, now existing or hereinafter
imposed by national authorities or those of any
political subdivision
thereof
upon the sale of EPO by Polymun
to Dragon.
In the event any such
fee or tax is
imposed on, or assessed against, Polymun as
a result of the sale and delivery of
EPO hereunder, (the "Additional Taxes"),
Polymun shall
separately itemize such
Additional Taxes on the applicable
invoices and Dragon
shall pay the Additional
Taxes within thirty (30) days after
receiving such invoices from Polymun.
* * * CONFIDENTIAL MATERIAL REDACTED AND
SEPARATELY FILED WITH THE COMMISSION.
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<PAGE>
3.3 Notwithstanding any change in the EPO pricing set
out in Annex C, no price
change will effect the price of any EPO for
which a Manufacturing
Order, as
defined in Section 3.4 hereinafter, has
been issued and accepted.
Manufacturing Orders
3.4 Dragon will prepare Manufacturing Orders for all EPO and each such
order
will specify the quantity of EPO and any other
information
that either Party
considers necessary ("Manufacturing Orders"). Such Manufacturing
Orders cannot
be amended without the consent of
Dragon.
3.5 Polymun will acknowledge receipt
of all Manufacturing Orders by a facsimile
sent within five business days after receipt of the Manufacturing Order from
Dragon.
Delivery Times
3.6 Polymun will start the production of EPO within a 3-month period of
receiving a Manufacturing Order from Dragon
(the "3-Month-Period"). Thereafter,
depending upon Polymun's available capacity, it will at minimum fulfil
Manufacturing Orders received from Dragon up to the first * * * within six
(6)-months from the 3-Month-Period and within 12-months for any additional
amount over * * *, not to exceed * * *. If
Polymun is able to deliver the EPO in
a shorter period of time than specified in
the Manufacturing
Order, PROVIDED,
the Manufacturing Order takes the foregoing
time periods into consideration, it
will notify Dragon of such earlier delivery
date.
3.7 Notwithstanding Section 3.6, if Polymun for any reason canno meet the
delivery times in a Manufacturing Order, it will notify Dragon of
the expected
delivery date when it confirms the
Manufacturing Order
pursuant to Section 3.5.
Upon receipt of Polymun's notice of the
expected delivery
date, Dragon may,
on
notice delivered to Polymun within five business days of Dragon's receipt of
Polymun's confirmation of the Manufacturing
Order, withdraw the Manufacturing
Order. If the Manufacturing Order is not withdrawn, the delivery times in
Section 3.6 will be deemed to be amended to the time set out in Polymun's
confirmation of the Manufacturing
Order.
Payment
3.8 Dragon will make full payment for
EPO shipped to it by Polymun on or before
sixty (60) days after the date of shipment
provided that Dragon has received
from Polymun the following documents:
(a) Polymun's
detailed invoice;
(b) customs'
invoice;
(c) air way
