Exhibit 10.2
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT
WERE OMITTED AND REPLACED WITH "***". A COMPLETE
VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE
SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN
APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 24B-2 OF
THE EXCHANGE ACT OF 1934.
CO-PROMOTION
AGREEMENT
This Co-Promotion Agreement (this “
Agreement ”) is entered into this 24
th day
of July, 2006 by and between Depomed, Inc., a California
corporation (“ Depomed ”), and Esprit Pharma,
Inc., a Delaware corporation (“ Esprit ”).
BACKGROUND
A.
Esprit has exclusive marketing rights to the extended release
ciprofloxacin hydrochloride phar maceutical product known as
ProQuin ®
XR, which product is the subject of NDA #021744 (as such NDA
may be amended or supplemented subsequent to the Effective Date)
(the “ Product ”).
B.
Esprit and Depomed desire to enhance the marketing of the Product
in the Territory (as hereinafter defined) by enlisting the support
and participation of Depomed and the Depomed Sales Force (as
defined below) in the Product marketing effort.
AGREEMENT
Now, therefore, in consideration of the
foregoing and the mutual promises herein contained, Esprit and
Depomed hereby agree as follows:
1.
Definitions
1.1.
“ Affiliate ” means a corporation or business
entity that, directly or indirectly, is controlled by, controls, or
is under common control with any entity. For this purpose,
“control” means the direct or indirect ownership of
more than fifty percent of the voting or income interest in such
corporation or business entity, or such other relationship as, in
fact, constitutes actual control.
1.2.
“ Call ” means an in-person, face-to-face sales
presentation of the Product made by a sales representative, which
presentation is for the purpose of promoting the sale of the
Product.
1.3.
“ Depomed Net Sales ” means, for a particular
period, the amount calculated by multiplying (a) Net Sales for such
period by (b) the Depomed Percentage.
1.4.
“ Depomed Percentage ” means, for a particular
period, the percentage determined by dividing (a) the total number
of Units of prescriptions for Product written during such period by
Prescribers on the Depomed Physician List (not including any
Prescriber who is an Excluded Depomed Physician as of the end of
any calendar month included within such period), by (b) the total
number of Units of prescriptions for Product written during such
period, in each case based on Prescriber Data for the applicable
period.
1.5.
“ Depomed Physician List ” means the list of
Prescribers to whom, pursuant to the terms of this Agreement, the
Depomed Sales Force conducts Calls, as such list may be amended
from time to time either (i) by mutual agreement of Esprit and
Depomed, or (ii) otherwise in accordance with this Agreement.
Notwithstanding the foregoing, the Depomed Physician List will not
include urologists, ob/gyns or Prescribers on the Esprit Target
Physician List, and will not include more than 40,000
Prescribers.
1.6.
“ Early
Termination Detail Amount ” is an amount equal to
***.
1.7.
“ Early
Termination Fee ” is an amount equal to ***.
1.8.
“ Effective Date ” means the date first set
forth above.
1.9.
“ Esprit Target Physician List ” means those
Prescribers identified by Esprit with whom the Esprit Sales Force
conducts Calls, which includes all ob/gyns, urologists and certain
high prescribing primary care physicians, as such list may modified
from time to time upon timely notice to Depomed.
Notwithstanding the foregoing, the Esprit Target Physician List
will not include any Prescribers on the Depomed Physician
List.
1.10.
“ Excluded Depomed Physicians ” means any
Prescriber on the Depomed Physician List who, following the
Promotion Commencement Date ***.
1.11.
“ FDA ” means the United States Food and Drug
Administration.
1.12.
“ First Position Detail Call ” means a Call in
which a full Product presentation is made, during which key
Product attributes are verbally presented, the Product is the first
Product presented and (c) on which the most time is spent during
the Call. No more than one presentation in any Call shall be
considered a First Position Detail Call.
1.13.
“ Fiscal Quarter ” means the three-month periods
ending on March 31, June 30, September 30 and December 31 of each
year, except for the first “Fiscal Quarter” hereof,
which shall begin on the Promotion Commencement Date and end on the
earliest to occur of the dates set forth in this sentence.
These periods (other than the first “Fiscal Quarter”
referred to above) correspond to the quarters in the Esprit fiscal
year, which ends on December 31 of each year.
1.14.
“ License Agreement ” means that certain
Exclusive Marketing and Supply Agreement, dated as of July 21,
2005, by and between Depomed and Esprit as amended by Amendment
No.1 thereto of even date herewith.
1.15.
“ Marketing Plan ” means a plan for the
marketing and detailing of the Product in the Territory to
Prescribers, and may include provisions related to promotional
strategies, detailing plans, pricing, advertising plans and budgets
for promotional and advertising activities.
1.16.
“ NDA ” means a New Drug Application filed with
the FDA.
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1.17.
“ Net Sales ” means the actual gross amount
invoiced on sales of the Product in the Territory by Esprit, its
Affiliates, sublicensees and assigns to independent, unrelated
third parties during a calendar year in bona fide arms length
transactions, less the following deductions allowed and taken by
third parties and not otherwise recovered by or reimbursed to
Esprit, its Affiliates, sublicensees or assigns: (a) freight,
insurance and other transportation charges to the extent added
to the sales price and set forth separately as such on the
total amount invoiced; (b) any sales, use, value-added, excise
taxes and/or duties or allowances on the selling price of the
Product which fall due and are paid as a consequence of such sale;
(c) chargebacks, trade, quantity and cash discounts and
rebates actually allowed and taken to the extent customary in the
trade, including, without limitation, governmental rebates; (d)
allowances or credits, including but not limited to, allowances or
credits to customers on account of rejection, defects or
returns of the Product or because of a retroactive price reduction,
and such other
deductions (including without limitation shortage deductions)
actually taken by customers that are customary in the trade; and (e) bad debt.
Net Sales shall not include a sale or transfer to an Affiliate,
sublicensee and assign or if done for clinical, regulatory or
governmental purposes where no consideration is received but the
resale by such Affiliate, sublicensee, or assign shall be
considered a sale of the Product.
1.18.
“ Prescribers ” means physicians and other
health care practitioners who are permitted by law to prescribe
Product in the Territory.
1.19.
“ Prescriber Data ” means data provided by a
third party which measures prescriptions written for Product (by
individual Prescriber) in the Territory during a specified time
period, from a source mutually agreed in writing by the
parties.
1.20.
“ Promotion Commencement Date ” means the first
date upon which the Product is promoted within the Territory by the
Depomed Sales Force in the Territory to Prescribers.
1.21.
“ Proprietary Information ” means any and all
scientific, clinical, regulatory, marketing, financial and
commercial information or data, whether communicated in writing,
orally or by any other means, which is owned and under the
protection of one party and is provided by that party to the other
party in connection with this Agreement.
1.22.
“ Sales Force ” means the sales representatives
employed by or on behalf of Depomed or Esprit, as the case may be,
for the detailing of the Product in the Territory to
Prescribers. A party’s Sales Force includes, without
limitation, any sales representatives engaged by the party during
through an arrangement with a contract sales organization or other
third party (in the case of Depomed, engaged in accordance with
Section 2.5).
1.23.
“ Second Position
Detail Call ” means any Call other than a First Position
Detail Call.
1.24.
“ Supply Agreement ” means that certain Supply
Agreement, dated as of July 21, 2005, by and between Depomed and
Esprit.
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1.25.
“ Term ” of this Agreement means the period of
time defined in Section 13.1 of this Agreement.
1.26.
“ Territory ” means the United States of
America.
1.27.
“ Unit ” means a single tablet of the
Product.
2.
Grants And Obligations
2.1.
Grant of Co-Promotion
Right .
Pursuant to its rights under the License Agreement, Esprit hereby
grants to Depomed, during the Term of this Agreement, the
non-exclusive right to promote and detail the Product in the
Territory to Prescribers jointly with Esprit, subject to the terms
and conditions of this Agreement.
2.2.
Limitation on Marketing
Diligence . Subject to the provisions of this
Agreement, including those related to termination and compensation
and those related to the Prescribers on whom Depomed is entitled to
call, Depomed shall have no specific minimum marketing diligence
obligations with respect to the Product with regard to minimum
Calls or minimum First Position Details or Second Position
Details.
2.3.
Proprietary Interest in
the Product . Nothing contained in this Agreement
shall be deemed to grant Depomed, either expressly or by
implication, a license or other right or interest in any patent,
trademark or other similar property of Esprit or its affiliates
except as may be necessary for Depomed to promote and detail the
Product pursuant to this Agreement; provided, however, that except
for the grant by Esprit to Depomed of the license to market the
Product in the Territory in the License Agreement, nothing in this
Agreement shall supersede or modify the provisions of the License
Agreement relating to intellectual property matters.
2.4.
Establishment of
Depomed Physician List . At Depomed’s option, it may, but
is not obligated to, have the Depomed Sales Force promote and
detail the Product directly to Prescribers who are not on the
Esprit Target Physician List. Depomed will inform Esprit at
least forty-five (45) days in advance of the commencement of Calls
by the Depomed Sales Force and provide Esprit with the Depomed
Physician List. During such fifteen (15) day period following
its receipt of the Depomed Physician List, Esprit will be entitled
to review the Depomed Physician List and confirm that such list
does not contain any Prescribers who are, as of the end of the most
recently completed month, on the Esprit Target Physician
List. Following creation of the initial Depomed Physician
List, from time to time but not more than three (3) times per
calendar year, Depomed may have the Depomed Sales Force promote and
detail the Product to Prescribers on the Esprit Target Physician
List, but such Prescribers will not be added to the Depomed
Physician List for purposes of calculating promotion fees payable
to Depomed hereunder.
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2.5.
Depomed Sales
Force .
Depomed shall be entitled to perform Calls through its own sales
force, or through a contract sales organization engaged by Depomed
to perform Calls on Depomed’s behalf. Depomed’s
engagement of any third party, other than members of
Depomed’s sales force or a contract sales organization, to
perform Calls on Depomed’s behalf shall be subject to
Esprit’s prior written consent, which shall not be
unreasonably withheld, delayed or conditioned. Prior to
engaging any such third party to perform Calls on its behalf,
Depomed shall identify such third party in writing to Esprit (such
communication, a “ Sales Force Notice ”), and
Esprit shall approve or reject in writing Depomed’s
engagement of such third party within fifteen (15) business days
after receipt from Depomed of the Sales Force Notice.
Esprit’s failure to respond in writing to a Sales Force
Notice within such fifteen (15) business day period shall be deemed
to be an approval of Depomed’s engagement of the third party
identified in the Sales Force Notice.
3.
Marketing Committee
3.1.
Coordinators . Esprit and Depomed shall each appoint
an authorized representative (“ Coordinator ”)
between whom communications will be directed. Each party will
notify the other as to the name of the individual so
appointed. The Coordinators shall meet periodically in person
or by video or telephone conference, but not less frequently than
monthly through 2006 and thereafter on a quarterly basis, to
monitor the call plan of the Depomed Sales Force and the Esprit
Sales Force to ensure coordination between the parties’
respective call plans. Each party may replace its Coordinator
at any time, upon written notice to the other party.
3.2.
Marketing
Committee . If requested by Esprit, Depomed’s
Coordinator shall appoint a qualified representative of Depomed
with expertise in the marketing of specialty pharmaceutical
products to any marketing or commercialization committee
established by Esprit for the purpose of coordinating and/or
directing the marketing effort with respect to the Product (such
committee, the “ Marketing Committee ”). The Marketing Committee
may perform such coordination and oversight functions as determined
by Esprit. Such functions may include, among others:
(i) meeting from time to time, at mutually agreeable times and
locations, to discuss and coordinate the promotion and detailing of
the Product in the Territory and the strategies and programs that
should be developed to maximize Net Sales of the Product; and (ii)
coordinating marketing activities with respect to the
Product. Esprit will have the final responsibility for
developing promotional materials with respect to the Product in the
Territory. The parties acknowledge that Depomed’s
participation on the Marketing Committee is not expected to require
more than ten (10) working days annually of the time of the Depomed
representative appointed to the Marketing Committee.
3.3.
Expenses . Each party shall bear its own costs
associated with its participation in the Marketing Committee,
including but not limited to the costs of travel and expenses
directly associated with participation in the Marketing
Committee.
3.4.
Dispute Resolution . Esprit shall have the right to
resolve any disagreement among the members of the Marketing
Committee in its sole and absolute discretion.
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4.
Product Promotion
4.1.
Depomed Physician
List .
Depomed shall be
primarily responsible for, and shall bear all costs and expenses
associated with, the detailing of the Product in the Territory to
the Prescribers on the Depomed Physician List. Depomed will
not compensate Esprit for services performed by the Esprit Sales
Force or for other costs of promotion incurred by
Esprit.
4.2.
Promotional
Materials . Esprit shall create and develop sales
and promotional materials relating to the Product. Depomed
will not, without Esprit’s prior review and approval, publish
or distribute any sales or promotional material with respect to the
Product developed or created by or on behalf of Depomed.
Esprit shall provide Depomed with copies of promotional materials
relating to the Product at ***% of Esprit’s out-of-pocket
cost for such materials.
4.3.
Adverse Reaction Reports . During the Term of this
Agreement, each party shall promptly notify the other party of all
information required to be reported to the FDA coming into its
possession concerning side effects, injury, toxicity or sensitivity
reaction including unexpected increased incidence and severity
thereof associated with commercial or clinical uses, studies,
investigations or tests with the Product (animal or human),
throughout the world, whether or not determined to be attributable
to the Product (“ Adverse Reaction Reports
”). In the case of Adverse Reaction Reports within the
scope of 21 CFR 314.80(c)(iii), Depomed shall transmit such adverse
reaction reports so that they are received by Esprit within three
(3) business days after receipt by Depomed, or such earlier
reporting period as may be required by law. Esprit shall
transmit adverse reaction reports to Depomed on a periodic basis,
but no less often than once every six (6) months; provided,
however, that Esprit shall promptly notify Depomed of any Adverse
Reaction Report requiring the cessation or substantial alteration
of detailing activities by the Depomed Sales Force. All such
communications shall be held in the strictest confidence by Depomed
and shall be subject to the terms of Article 11 hereof.
4.4.
Regulatory
Compliance . Depomed’s detailing and
promotional activities with respect to the Product shall be
conducted (a) only in a manner which is consistent with FDA and all
other applicable regulatory approvals or requirements which are
then in effect with respect to the Product and (b) in compliance
with all applicable
laws, restrictions and regulations of the FDA, the Department of
Commerce and any other United States, state, local, or applicable
agency or authority. Depomed shall (a) limit its claims of
efficacy and safety for the Product to those that are consistent
with approved promotional materials and FDA-approved prescribing
information for the Product in the Territory, (b) not add, delete
or modify claims of efficacy and safety in the marketing of the
Product under this Agreement from those claims of efficacy and
safety that are consistent with the FDA-approved prescribing
information and applicable law and (c) detail and promote the
Product in adherence to applicable laws and in compliance with the
then current Pharmaceutical Research and Manufacturers of America
Code on Interactions with Healthcare Professionals.
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4.5.
Samples
. Esprit will
provide Depomed with samples (such as starter or trial kits) of
Product for distribution to health care personnel and the trade in
connection with Depomed’s promotion of the Product hereunder
at ***% Esprit’s out-of-pocket cost for such samples;
provided, however, that
during the term of the Supply Agreement, Depomed may obtain samples
directly from its contract manufacturer (provided that Depomed shall supply
Esprit’s requirements of samples pursuant to the terms of the
Supply Agreement prior to supplying its own sample
requirements). With respect to Depomed’s purchase of
samples through either of the foregoing options, Depomed shall only
order full lots of samples. Depomed shall maintain records
concerning its trial kit or sample distribution as required by the
Prescription Drug Marketing Act of 1987 (the “
Act
”) and relevant
state laws. Depomed shall take such steps as necessary to
ensure that its representatives comply with all requirements of the
Act, including but not limited to obtaining requests and receipts
signed by licensed prescribers for all trial kits or samples
delivered. If requested by Esprit, Depomed shall provide to
Esprit copies of such records as the manufacturer is required by
the Act to retain. Otherwise, Esprit shall have access to
such records in accordance with Section 12.1 of this
Agreement. Depomed shall indemnify Esprit and hold Esprit
harmless from any liability that Esprit may incur, whether civil,
criminal or otherwise, by reason of a violation of the Act by
Depomed or by any member of the Depomed Sales Force.
4.6.
Trademarks
. This Agreement
shall not confer upon Depomed any interest in any trademark or
trade name associated with the Product in the Territory, including
those used in promotional materials.
4.7.
Ownership of
Promotional Materials . Esprit shall own all copyrights to all
advertising, promotional and training materials as well as all
other written materials, audiotapes, videotapes, or other
copyrightable materials that are created by or on behalf of Esprit
during the Term of this Agreement in connection with the marketing
of the Product. Depomed shall use commercially reasonable
efforts consistent with accepted business practices to obtain such
assignments from the authors and creators of such materials as may
be necessary to vest ownership of the copyright in Esprit.
Esprit shall, and does hereby, grant to Depomed a royalty-free
license to use and reproduce such materials solely in conjunction
with its performance of services pursuant to this Agreement, which
license shall not be assignable or transferable by
Depomed.
4.8.
Prescriber
Data .
Depomed shall reimburse Esprit quarterly for the portion of
Esprit’s out-of-pocket costs incurred in procuring the Prescriber Data
that is equal to the cost of such Prescriber Data multiplied by the
Depomed Percentage for the applicable Fiscal Quarter. Esprit
shall make all Prescriber Data available to Depomed promptly, but
in no event more than twenty-one (21) days following,
Esprit’s receipt thereof.
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5.
Detailing Effort; Depomed Physician List
5.1.
Reports
. Following the
Promotion Commencement Date, within thirty (30) days following the
end of each calendar month during the Term, Depomed shall provide
Esprit with a status report, which report will summarize
Depomed’s detailing
efforts pursuant to this Agreement for such prior month and on a
rolling 12 month basis, including: (a) the number of
Calls made, including detail as to the Prescribers who received
Calls, dates of Calls and the relative emphasis of the Calls (i.e.,
First Position Detail Call or Second Position Detail Call); (b)
information pertaining to the Depomed Sales Force, including the
number of sales representatives and the number of days in the field
per sales representative; (c) a list of Prescribers on the Depomed
Physician List who, as of the date such report, are Excluded
Depomed Physicians. Depomed warrants and represents that it
maintains records of Calls made by its Sales Force and that these
records accurately represent the number of Calls made and the
relative emphasis given to each Product during a Call. Esprit
shall be entitled to audit the source data and documents used to
compile such reports pursuant to the provisions of Section 12.1 of
this Agreement.
5.2.
Modification of Depomed
Physician List . Esprit may, in its sole discretion,
remove from the Depomed Physician List any Prescriber identified as
an Excluded Depomed Physician in the most recent report received by
Esprit pursuant to
Section 5.1, or who otherwise qualifies as an Excluded Depomed
Physician.
5.3.
Esprit Reports . Within thirty (30) days following the
end of each calendar month during the Term, Esprit shall provide
Depomed with a status report, which report will summarize, on a
monthly and rolling three and 12 month basis, including:
(a) the number of Calls made, including detail as to the
Prescribers who received Calls, dates of Calls and the relative
emphasis of the Calls (i.e., First Position Detail Call or Second
Position Detail Call); (b) information pertaining to the Esprit
Sales Force, including the number of sales representatives and the
number of days in the field per sales representative; and (c) a
list of all Prescribers on the Esprit Target Physician List (which
list shall specifically identify those Prescribers who are Esprit
Provisional Prescribers). Esprit warrants and represents that
it maintains records of Calls made by its Sales Force and that
these records accurately represent the number of Calls made and the
relative emphasis given to each Product during a Call.
Depomed shall be entitled to audit the source data and documents
used to compile such reports pursuant to the provisions of Section
12.1 of this Agreement.
6.
Compensation
6.1.
Compensation
. During the Term,
for each Fiscal Quarter of the Term in which Depomed conducts
detailing and promotional activities pursuant to this Agreement,
Esprit shall pay Depomed compensation at a rate equal to eighteen
(18) percent of the amount of Depomed Net Sales in such Fiscal
Quarter. Compensatio
