MANUFACTURING AND SUPPLY AGREEMENT

Exhibit 10.3

MANUFACTURING AND SUPPLY AGREEMENT

BETWEEN

SEATTLE GENETICS, INC.

AND

ORGANICHEM CORPORATION

MANUFACTURING AND SUPPLY AGREEMENT

THIS AGREEMENT is made and entered into as of the 4th day of May, 2005 (the “ Effective Date ”), by and between Seattle Genetics, Inc., a Delaware corporation (“ SGI ”), having its principal place of business at 21823 30 ^th Drive S.E., Bothell, WA 98021, and Organichem Corporation, a Delaware corporation (“ Supplier ”), having its principal place of business at 33 Riverside Avenue, Rensselaer, NY 12144.

RECITALS

WHEREAS, Supplier is in the business of manufacturing and testing pharmaceutical products;

WHEREAS, SGI is conducting preclinical development and potentially may conduct clinical trials, and requires manufacture of auristatin drug-linkers such as vcMMAE, vcMMAF and mcMMAF (collectively, “ Products ”) to support such pre-clinical development and potential clinical trials;

WHEREAS, SGI wishes to purchase Products from Supplier for preclinical development and potential clinical trials;

WHEREAS, Supplier is willing to supply SGI with Products; and

WHEREAS, the parties contemplate that Supplier may continue to supply SGI with commercial quantities of Products in the event marketing approval is obtained, in which case the parties shall negotiate appropriate amendments to this Agreement and/or a new commercial supply agreement;

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below, SGI and Supplier mutually agree as follows:

1.1 Purchase and Supply Agreement . During the term of this Agreement, SGI agrees to buy, and Supplier agrees to sell, such quantities of Products at such prices as may be set forth on Project Plans placed by SGI in accordance with the provisions of Section 1.2 and accepted by Supplier, which shall be attached hereto in sequential order as Exhibit A-1 , Exhibit A-2 and so on (“ Project Plans ”).

1.2 Ordering . Any Project Plans submitted by SGI shall reference this Agreement and shall be governed exclusively by the terms contained herein. Any term or condition in any order, confirmation or other document furnished by SGI or Supplier which is in any way inconsistent with these terms and conditions is hereby expressly rejected.

1.3 Cancellations . SGI may cancel any Project Plan by providing Supplier [***]. In the event that SGI cancels any Project Plan, SGI shall [***] (a) the [*** ], (b) other [***] up to the time of receipt of such notice and (c) any [***] as may be required under this Agreement.

1.4 Product Specification: Testing . Products supplied hereunder will conform to the specifications set forth in the relevant Project Plan (as amended from time to time by written agreement between the parties) (the “ Product Specifications ”), and such conformance will be verified in accordance with the testing standards and procedures specified therein. Supplier will test each batch of Product and supply SGI with a certificate of analysis (“ Certificate of Analysis ”) confirming that such batch meets all applicable Product Specifications. SGI may then retest such batch of Product as more fully set forth in Sections 4.2 and 4.5 to confirm that it meets all applicable Product Specifications. The parties acknowledge that the Product Specifications and testing procedures set forth in a Project Plan may need to be refined and modified as the parties gain experience with the manufacture, testing and use of a Product. Accordingly, the parties agree to negotiate in good faith to modify Project Plans from time to time as the parties’ experience with the manufacture, testing and use of a Product warrants; and Supplier further agrees that it will facilitate changes to Project Plans that are necessary or appropriate in light of regulatory requirements of the United States Food and Drug Administration, or its successor agency (the “ FDA ”) or other regulatory agencies.

1.5 Raw Material Specifications . Raw materials used in the manufacture of Products will conform to any raw material specifications set forth in each Project Plan (as amended from time to time by written agreement between the parties) and such conformance will be verified in accordance with the testing standards and procedures specified therein. The parties acknowledge that the raw material specifications and testing procedure set forth in a Project Plan may need to be refined and modified as the parties gain experience with the manufacture, testing and use of a Product. Accordingly, the parties agree to negotiate in good faith to modify Project Plans from time to time as the parties gain experience with the manufacture, testing and use of a Product, and Supplier further agrees that it will use commercially reasonable efforts to facilitate changes to Project Plans that are necessary or appropriate in light of FDA or other regulatory requirements. Supplier shall [*** ].

1.6 Commercial Quantities: Binding Orders and Forecasts . The parties recognize that the potential market for Products will depend on a variety of factors and that SGI is not presently able to provide forecasts of its future orders. Accordingly, each party [***] .

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2.1 Technology Transfer; Inventions .

(a) SGI possesses confidential and proprietary technical information not in the public domain that is necessary to the process of manufacturing Products (the “ SGI Information ”) and that is the subject of various patents, patent applications and know-how owned or controlled by SGI (“the “ SGI Intellectual Property ”, and collectively with the SGI Information, the “ SGI Technology ”). Prior to or following the Effective Date, SGI shall provide the SGI Information to Supplier. SGI hereby grants Supplier a non-exclusive, non-transferable right under the SGI Intellectual Property to use the SGI Information solely for the purpose of manufacturing Products pursuant to the terms of this Agreement. Supplier (a) acknowledges that SGI and/or its licensors retain all ownership rights in and to the SGI Technology and (b) [***] . Supplier agrees to treat all of the SGI Technology as “Confidential Information” pursuant to Section 7 hereof.

(b) The parties recognize that in the course of work under this Agreement, either party may jointly or independently make or otherwise acquire rights to inventions (including without limitation processes and methods) or know-how useful in the manufacture of Products (“ Product Inventions ”). The parties agree that all Product Inventions shall [*** ]; provided , however , that [*** ]. [***] agrees to take any actions and execute any documents, [*** ], reasonably requested by [*** ].

2.2 Manufacture of Products . For all Products intended for use in humans, Supplier will manufacture Products in accordance with current Good Manufacturing Practices as promulgated under the U.S. Federal Food, Drug and Cosmetic Act (“ FDCA ”) at 21 C.F.R., Chapters 210, 211, 600 and 610, as well as any other applicable regulations, policies or guidelines, as then in effect, of the FDA and other United States, governmental or regulatory agencies with jurisdiction over the manufacture, use or sale of Products (collectively, “ cGMP ”). In accordance with cGMP and during the term of this Agreement, Supplier shall (i) take all steps necessary to ensure that any Products that may be produced by it pursuant to this Agreement shall be compliant with FDA guidelines and Supplier’s policies pertaining to cross-contamination from any manufacturing activities and (ii) be responsible for cleaning and changeover procedures prior to manufacturing any Products for SGI. Both parties shall promptly notify each other of any new instructions or specifications required by cGMP, and shall confer with each other with respect to the best means to comply with such requirements and [***] . Upon request and at mutually agreeable times, Supplier will permit representatives of SGI to observe such manufacture and to have access to any relevant records in connection with such manufacture as more fully provided in Section 2.4 below provided that such observation does not interfere with Supplier’s operations and that representatives comply with all applicable policies of Supplier pertaining to visitors to its facilities. Upon SGI’s written request, Supplier shall [***] , for the purposes of assuring product quality and compliance with agreed-upon manufacturing procedures.

2.3 FDA and Regulatory Support . Supplier shall provide SGI, [***] . Supplier further agrees to use its best efforts to assist SGI, [*** ], in obtaining FDA approval of any

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Investigational New Drug application (“ IND ”) or New Drug Application (“ NDA ”) or other applicable regulatory filings with respect to product candidates utilizing or incorporating Products, as well as approvals from any other government or agency which may be required for the conduct of clinical trials or marketing of product candidates utilizing or incorporating Products in any other country. Supplier specifically agrees to cooperate with any inspection by the FDA or other regulatory agency, including but not limited to any inspection of Supplier’s facilities used in the manufacture of or records relating to Products prior to approval of any IND or NDA.

2.4 cGMP Compliance and QA Audits . Upon reasonable prior written request to Supplier, SGI shall have the right to have representatives visit Supplier’s manufacturing facilities during normal business hours to review Supplier’s manufacturing operations for the purpose of assessing its compliance with cGMP and applicable quality assurance standards and to discuss any related issues with Supplier’s manufacturing and management personnel.

2.5 Change in Manufacturing Process . Supplier shall obtain SGI’s prior written approval, which approval shall not be unreasonably withheld, before it implements any change in the materials, equipment, process or procedures used to manufacture Products that would constitute a significant deviation under cGMP as described in the Quality Understanding Document. Supplier shall disclose all proposed changes in such manufacturing materials, equipment, process or procedure to SGI at a level sufficient to allow SGI to practice such changed manufacturing process.

2.6 Compliance with Laws . Supplier shall comply with all applicable present and future orders, regulations, requirements and laws of the United States and any other state, provincial and local authorities and agencies, including without limitation all laws and regulations of such territories applicable to the transportation, storage, use, handling and disposal of hazardous materials. Supplier represents and warrants to SGI that it has and will maintain during the term of this Agreement all government permits, including without limitation, health, safety and environmental permits, necessary for the conduct of the actions and procedures that it undertakes pursuant to this Agreement. SGI shall provide Supplier with written notice of any additional laws and regulatory requirements of countries other than the United States that relate to the manufacture of Products for such other countries. Supplier shall use reasonable commercial efforts to comply with such additional laws and requirements, and shall provide SGI with prompt written notice of whether Supplier is able to do so. [*** ].

2.7 Documentation . Supplier shall keep complete, accurate and authentic accounts, notes, data and records of the work performed under this Agreement. Each party shall maintain complete and adequate records pertaining to the methods and facilities used for the manufacture, processing, testing, packing, labeling, holding and distribution of Products in accordance with the Quality Understanding Document and any applicable regulations in the United States so that Products may be used in the production of a substance to be used in humans.

2.8 Rework . Supplier shall not rework any batch of Product without SGI’s prior written consent which consent shall not be unreasonably withheld.

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2.9 Samples . Supplier shall retain samples of all Products and isolated intermediates for the period of time and in quantities set forth in the Quality Understanding Document and any applicable Project Plans.

3.1 Price . The price of each batch of Product ordered by SGI shall be set forth on the Project Plan with respect to such batch submitted by SGI and accepted by Supplier in accordance with the provisions of Section 1.1.

3.2 Method of Payment . All payments due hereunder to Supplier shall be paid to Supplier in United States Dollars not later than [***] following the later of (i) the date of the [***] or (ii) [*** ].

4.1 Quality Understanding Document . As soon as practicable after execution of this Agreement, and in any event prior to initiating any cGMP manufacturing of a Product, the parties will develop and agree upon a Quality Understanding Document, the format and content of which is to be agreed upon in writing by the parties, which will be attached to this Agreement as Exhibit B (the “ Quality Understanding Document ”). In the event that any requirements of the Quality Understanding Document result in a change in the scope of any Project Plan already in place, the Parties shall discuss and agree upon any change in the pricing of such Project Plan.

4.2 Quality Control Sample . Prior to the delivery of any batch of Product, Supplier shall provide SGI with: (i) a quality control sample of such batch for the purpose of confirming that such batch meets the Product Specifications; (ii) [***] (iii) a Certificate of Analysis. The size of the quality control sample for each batch of Product shall be specified in the relevant Project Plan. No delivery of Product shall be made until SGI accepts or is deemed to have accepted the quality control sample and associated documentation in accordance with the provisions of Section 4.5.

4.3 Shipping . Supplier will package and ship Products in accordance with each Project Plan to the designated destinations identified by SGI. All Products produced hereunder shall be shipped to SGI [*** ]. SGI shall be responsible for [***] and [***] associated with the shipment of Products.

4.4 Late Shipment . Supplier agrees [***] to ship Products, contingent on availability and/or receipt of raw materials, hereunder on the scheduled shipment dates as set forth in the relevant Project Plans.

4.5 Acceptance and Rejection .

(a) SGI may reject any quality control sample or batch delivery which does not conform with the Product Specifications or applicable documentation and process requirements. Any such notice of rejection shall be in writing and shall indicate the reasons for such rejection.