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Exhibit 10.2
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
CONFIDENTIAL
CO-PROMOTION AND MARKETING SERVICES AGREEMENT
by and between
CRITICAL THERAPEUTICS, INC.
and
DEY, L.P.
MARCH 13, 2007
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THIS CO-PROMOTION AND MARKETING SERVICES AGREEMENT (the "Agreement"
or
"Definitive Agreement") is made as of March 13, 2007 ("Effective
Date") by and
between CRITICAL THERAPEUTICS, INC., a corporation organized and
existing under
the laws of the State of Delaware and having its principal offices
at 60
Westview Street, Lexington, MA 02421 ("CRTX" ) and DEY, L.P., a
limited
partnership organized and existing under the laws of the State of
Delaware and
having its principal offices 2751 Napa Valley Corporate Drive,
Napa, CA 94558
("DEY").
WITNESSETH
WHEREAS, the Parties desire that DEY engage in the Promotion (as
hereinafter
defined) of the Products (as hereinafter defined) in the Territory
(as
hereinafter defined) in the Field (as hereinafter defined) for a
certain period
of time and to coordinate DEY's activities with those of CRTX,
subject to the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing statements and
the mutual
agreements and covenants herein contained, and for other good and
valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the
Parties agree as follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
Unless specifically set forth to the contrary herein, the following
terms, where
used in the singular or plural, shall have the respective meanings
set forth
below:
1.1 "Act" means the United States Food, Drug, and Cosmetic Act of
1938, as
amended, and the rules and regulations promulgated thereunder, or
any successor
act, as the same shall be in effect from time to time.
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1.2 "Above Baseline Quarterly NSMR" means the amount by which
Quarterly NSMR
exceeds the Quarterly NSMR Baseline.
1.3 "Additional Zileuton Products" means any CRTX products with
Zileuton as one
of the active pharmaceutical ingredients in the Territory for the
treatment of
asthma and, subject to FDA approval, other respiratory conditions
but shall not
mean or include (i) the Products or (ii) any product in the
Excluded Field.
1.4 "Adverse Event(s)" or "AE(s)" means adverse drug experiences,
as defined by
21 CFR Section 314.80, relating to a Product.
1.5 "Affiliate" means (i) any corporation, association or other
entity of which
more than fifty percent (50%) of the voting securities or other
ownership
interests representing the voting equity, the voting stock or
general
partnership interest are owned, controlled or held, directly or
indirectly, by a
Party; or (ii) any corporation. association or other entity which,
directly or
indirectly, owns, controls or holds more than fifty percent (50%)
of the voting
securities or other ownership interests representing the voting
equity, the
voting stock or, if applicable, the general partnership interest,
or the right
to of a Party.
1.6 "Applicable Laws" means all applicable federal, state and local
laws,
statutes, rules, regulations and ordinances.
1.7 "Quarterly NSMR" shall mean Net Sales in any Calendar Quarter
less the
royalty payments related to the Products paid or to be paid to
CRTX's licensors
related to such Net Sales. The schedule for such royalty payments
is shown in
Schedule 7.2(i). "Quarterly NSMR Baseline" shall mean U.S. $1.95
million.
1.8 "Business Day" means any day that is not a Saturday or a Sunday
or a day on
which the NASDAQ Global Market is closed.
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1.9 "Calendar Quarter" means each of the three month periods ending
March 31,
June 30, September 30 and December 31, provided that the first
Calendar Quarter
shall commence as of the Detail Commencement Date and end on June
30, 2007.
1.10 "Call" means an in person contact between a Sales
Representative of a Party
and a Detail Target during which a Detail is made to the Detail
Target.
1.11 "CFR" means the United States Code of Federal Regulations.
1.12 "Claims" means any suits, claims, actions, demands,
complaints, lawsuits or
other proceedings that are brought by any Third Party, including
without
limitation product liability claims and claims seeking to recover
for personal
injury or death, that is alleged to have been caused, in whole or
in part, by a
Product regardless of the legal theory alleged.
1.13 "Commercial Launch Date" means the date after FDA approval of
the NDA for
Zileuton XR when Zileuton XR has been produced and released by
CRTX, ready for
purchase by Third Party wholesalers and/or retailers in the
Territory.
1.14 "Commercial Milestone Date" means the date after FDA approval
of the NDA
for Zileuton XR when an aggregate of [**] Units of Zileuton XR has
been produced
and released by CRTX, ready for purchase by Third Party wholesalers
and/or
retailers in the Territory.
1.15 "Commercially Reasonable Efforts" means, with respect to the
efforts to be
expended by a Party with respect to any objective, such reasonable,
diligent,
good faith efforts to accomplish such objective as such Party would
normally use
to accomplish a similar objective under similar circumstances
exercising
reasonable business judgment for a product owned by it or to which
it has
rights, which product is of similar market potential, taking into
account
efficacy, safety, approved labeling, the competitiveness of
alternative products
in the marketplace and other relevant factors commonly considered
in similar
circumstances.
1.16 "CRTX Patents" shall mean those patents listed on Schedule
1.16.
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1.17 "CRTX Trademark(s)" means the ZYFLO(R) trademark and domain
names listed on
Schedule 1.17, together with all related common law trademark
rights of CRTX
related thereto.
1.18 "Current Good Manufacturing Practices" or "GMP" or "cGMP"
means the current
good manufacturing practice and standards as provided for (and as
amended or
updated from time to time) in applicable ICH Harmonized Tripartite
Guidelines
and as defined in Parts 210 and 211 of Title 21 of the CFR, as may
be amended
from time to time, or any successors thereto.
1.19 "Committee" means the Joint Commercial Committee described in
Section 3.1.
1.20 "Detail" means a Call during which relevant characteristics of
a Product
are described by the Sales Representative of a Party aimed at
encouraging the
appropriate use of a particular prescription pharmaceutical product
and using,
if necessary or desirable, the Promotional Materials. A sample drop
shall not be
considered a primary or secondary Detail. When used as a verb,
"Detail" shall
mean to engage in a Detail.
1.21 "Detail Commencement Date" means the date that CRTX receives
written notice
from DEY indicating that the first Call has been made by DEY'
Sales
Representatives under the terms of this Agreement, and which is
anticipated to
be May 1, 2007.
1.22 "Detail Targets" means all office-based physicians and other
health care
professionals in the Territory that significantly influence use
with respect to
any Product in the Territory and who the JCC agrees qualify as
potential targets
for the Products.
1.23 "DEY Trademarks" shall mean the trademarks listed on Schedule
1.23.
1.24 "Excluded Field" shall mean the research, diagnostics,
therapeutics and
services related to the following: (i) to humans aged seven (7)
years and under
for intravenous or buccal administration of Zileuton and (ii)
cardiovascular and
vascular devices, including, without limitation, stents.
1.25 "FDA" means the United States Food and Drug Administration and
any
successor agency having substantially the same functions.
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1.26 "Field" shall mean the use as a pharmaceutical product in
humans for asthma
or other respiratory indications for which CRTX has received FDA
approval,
except for the Excluded Field.
1.27 "Finished Product" means the formulation of any Product
described in the
specifications included in the NDA for such Product (the "Zileuton
IR or
Zileuton XR Specifications") and packaged and labeled and in a form
ready for
distribution in the Territory.
1.28 "Forecast(s)" has the meaning set forth in Section 3.
1.29 "GAAP" means U.S. generally accepted accounting
principles.
1.30 "Launch Period" shall mean the period from the Commercial
Launch Date of
Zileuton XR in the Territory through the end of December 31,
2008.
1.31 "Losses" means any and all damages, awards, deficiencies,
settlement
amounts, defaults, assessments, fines, dues, penalties (including
penalties
imposed by any governmental authority), costs, fees, liabilities,
obligations,
taxes, liens, losses, and expenses (including court costs, interest
and
reasonable fees of attorneys, accountants and other experts)
awarded or
otherwise paid or payable to Third Parties.
1.32 "NDA" means a new drug application (as defined in the Act and
applicable
regulations promulgated thereunder, as amended from time to time)
filed with the
FDA, including any supplements or amendments thereto which may be
filed.
1.33 "Net Sales" shall mean the total gross sales of the Products
in the
Territory determined in accordance with GAAP and CRTX's revenue
recognition
policies less Standard Deductions (as defined below). Sales or
other transfers
between CRTX and its Affiliates and/or sublicensees in the
Territory shall be
excluded from the computation of Net Sales and no payments will be
payable on
such sales or transfers except where such Affiliates or
sublicensees are end
users in the Territory, but Net Sales shall include the subsequent
sales to
Third Parties in the Territory by such Affiliates or sublicensees
in the
Territory. "Standard Deductions" shall mean the total of the
following
deductions actually allowed or taken and not in
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excess of industry standard amounts and determined in accordance
with GAAP and
CRTX's revenue recognition policies:
(a)
credits or allowances
actually granted for damaged or spoiled Product,
returns, recalls or rejections of Product, and retroactive
price
reductions;
(b)
normal and customary
trade, cash and quantity discounts, allowances
and credits actually allowed;
(c)
sales, value added,
excise or similar taxes paid or allowed, or other
governmental charges imposed upon the importation, use or sale
of
Product in the Territory;
(d)
legally allowed
chargebacks, rebates, fees or similar payments
actually granted to customers, including, but not limited to,
managed
health care organizations, wholesalers, distributors, buying
groups,
retailers, health care insurance carriers, pharmacy benefit
management
companies, health maintenance organizations, or other institutions
or
health care organizations or to federal, state/provincial, local
and
other governments, their agencies and purchasers and
reimbursers;
(e)
credit card processing
charges and fees, freight, postage, shipping
and insurance charges relating to delivery of the Products; and
(f)
launch discounts,
stocking fees and other discounts extended to
wholesalers.
1.34 "Party" means DEY or CRTX. "Parties" means DEY and CRTX.
1.35 "Patent Office" means the United States Patent and Trademark
Office.
1.36 "PDMA" means the United States Prescription Drug Marketing Act
of 1987, as
amended, or any successor act thereto, and the regulations
promulgated
thereunder from time to time.
1.37 "Post-Launch Period" shall mean the period from January 1,
2009 until
December 31, 2010.
1.38 "Post-Exclusivity Period" shall mean the period from January
1, 2011 until
December 31, 2013.
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1.39 "Pre-Launch Period" shall mean the periods between the Detail
Commencement
Date and the start of the Launch Period.
1.40 "Product" or "Products" means individually or collectively, as
applicable,
Zileuton IR and/or Zileuton XR, but shall not mean or include any
(i)
injectable, topical, buccal, nasal or inhaled or intra-rectal
formulation of
Zileuton or (iii) any form of zileuton other than the racemic form
of Zileuton
described in the sNDA for Zileuton IR and the NDA for Zileuton XR.
Products
shall not mean or include such alternative forms of Zileuton as
salts,
enantiomers, polymorphs, metabolites or prodrugs of Zileuton.
1.41 "Product Label(ing)" shall have the same meaning as defined in
the Act and
regulations as interpreted by the FDA.
1.42 "Product Quality Complaint" shall mean any legitimate
complaint (as
reasonably determined by the Party receiving such complaint) by a
Third Party
that (a) questions the purity, identity, potency or quality of the
Product, its
packaging, or labeling, or (b) claims that the Product or its
labeling is
mistaken for, or applied to, another article or any
bacteriological
contamination, or (c) claims a significant chemical, physical, or
other change
or deterioration exists in the distributed drug product, or (d)
claims a failure
of one or more distributed batches of Product to meet the
specifications
thereof.
1.43 "Promotion" means those activities normally undertaken by a
pharmaceutical
company to implement promotion plans and strategies aimed at
encouraging the
appropriate use of a particular prescription pharmaceutical product
under a
common trademark, up to the point of offering Product for sale.
When used as a
verb, "Promote" shall mean to engage in such activities.
1.44 "Promotional Materials" means all written, printed or graphic
material
provided by CRTX and intended for use by a Party's Sales
Representatives during
a Call, or marketing sponsored speaker programs including, but not
limited to,
visual aids, file cards, premium items, clinical
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studies, reprints, drug information updates and any other
promotional support
items or advertising that CRTX, following consultation with the
Committee, deems
necessary or appropriate in connection with the Promotion of
Product.
Promotional Materials shall include only those materials describing
FDA-approved
indicated uses, safety, effectiveness, contraindications, side
effects, warnings
and other relevant characteristics of a Product that meet the
regulations as
outlined in the CFR. Promotional Materials shall not include any
Product
packaging or Product labeling or Sample labeling.
1.45 "Promotion Budget" means the budgets setting forth Promotion
Expenses
relating to the Promotion of Products.
1.46 "Promotion Expenses" means all actual out-of-pocket expenses
incurred
(i.e., paid or accrued) to a Third Party by or on behalf of CRTX
and/or DEY in
connection with selling, marketing and Promotion of a Product in
the Territory,
including the following, but excluding expenses for Product
Samples, sales
forces, and salaries for employees performing marketing
functions:
(a)
marketing,
advertising, Promoting, and educational expenses, including
speakers' programs, medical education programs and symposia,
relationships with opinion leaders and professional societies,
public
relations and market research;
(b)
training and
communications materials and detail and visual aids;
(c)
implementing marketing
programs;
(d)
Third Party market
data, such as data from IMS or Wolters Kluwer
Health; and,
(e)
preparation, storage
and distribution of Promotional Materials;
provided, however, that Promotion Expenses shall specifically
exclude
salaries and other internal overhead and/or compensation paid
to
either Party's employees, including their respective sales
forces.
1.47 "Promotion Plan" means a plan established by the Committee,
relating to the
Promotion of a Product.
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1.48 "Proprietary Information" means any and all scientific,
clinical,
regulatory, sales, marketing, financial and commercial information
or data,
customer-related materials, know-how, concepts, ideas, trade
secrets, expertise,
and all of the foregoing regardless of 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.
1.49 "Sales Representative" means a qualified salesperson meeting
the
requirements set forth in this Agreement, including, but not
limited to Section
4.2 and 4.6 of this Agreement, employed by a Party.
1.50 "Samples" means Products provided primarily to Targeted
Prescribers for no
consideration as part of the marketing, advertising and promotion
of the
Products.
1.51 "SEC" means the United States Securities and Exchange
Commission and any
successor agency having substantially the same functions.
1.52 "Term" shall have the meaning set forth in Section 12.1.
1.53 "Territory" means the United States of America (including the
District of
Columbia) and all of its territories and possessions now or at any
time during
the Term(s).
1.54 "Third Party(ies)" means a person or entity who or which is
neither a Party
nor an Affiliate of a Party to this Agreement.
1.55 "Unit" means one trade bottle of one hundred twenty (120)
tablets of a
Product.
1.56 "Zileuton" means the [**] compound
[**]-1-(1-benzo[b]thien-2-ylethyl)-1-hydroxyurea.
1.57 "Zileuton XR" means the extended-release tablet formulation of
Zileuton as
described in CRTX's NDA filed thereon. Zileuton XR also is
concurrently referred
to herein as the "Product."
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1.58 "Zileuton IR" means the immediate-release tablet formulation
of Zileuton
marketed as ZYFLO(R) (zileuton tablets) as described in the
supplemental NDA
relating thereto filed by CRTX. Zileuton IR also is concurrently
referred to
herein as the "Product."
1.59 "Year" means each consecutive twelve-month period starting
January 1 and
ending December 31, provided that the first Year of the Term shall
start on the
Detail Commencement Date and end on December 31, 2007.
Where words and phrases are used herein in the singular, such usage
is intended
to include the plural forms where appropriate to the context, and
vice versa.
The words "including", "includes" and "such as" are used in their
non-limiting
sense and have the same meaning as "including without limitation"
and "including
but not limited to". References to Articles, Sections, subsections,
and clauses
are to the same with all their subparts as they appear in this
Agreement.
"Herein" means anywhere in this Agreement. "Hereunder" and "hereto"
means under
or pursuant to any provision of this Agreement.
ARTICLE 2
GRANT OF RIGHTS
2.1 CRTX Grant of Co-Promotion Right. Subject to the terms and
conditions of
this Agreement, CRTX hereby grants to DEY, in the Territory in the
Field and
during the Term, the non-transferable, exclusive right and license
or sublicense
(as applicable) under the CRTX Trademarks and the CRTX Patents to
Promote and
Detail Zileuton IR and Zileuton XR, as applicable, together with
CRTX and its
Affiliates. Notwithstanding anything to contrary in this Section
2.1, CRTX
reserves the right to Promote and Detail the Products with its
sales force in
the Territory during Term; provided, however, CRTX shall not have
the right to
grant or license under the CRTX Trademarks and CRTX Patents to any
Third Party
the right to Promote and Detail the Products in the Territory
during the Term of
this Agreement. All use by DEY of the CRTX Trademarks shall be
under the control
of CRTX and subject to CRTX quality standards.
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2.2 CRTX Grant of Exclusive Option to Negotiate Additional
Collaboration Rights.
Subject to the terms and conditions of this Agreement, CRTX hereby
grants to DEY
the exclusive right to negotiate in accordance with this Section
2.2 with CRTX
Territory on Additional Zileuton Products in the Territory. By
September 1, 2007
with respect to the injectable formulation of Zileuton, and by
December 31, 2007
for the remaining Additional Zileuton Products, DEY and CRTX shall
enter into
the discussion of potential Additional Zileuton Products to
determine whether
the Parties wish to collaborate on the development and
commercialization of any
Additional Zileuton Product in the Territory. Until such time, CRTX
shall not
engage in any discussions with any Third Party regarding the
development and
commercialization of Additional Zileuton Products in the Territory
without DEY's
prior written consent. If the Parties reach agreement on the
development and
commercialization of any Additional Zileuton Products in the
Territory, a
separate agreement will reflect the terms agreed upon ("CRTX
Development
Agreement"). The CRTX Development Agreement will include
co-promotion terms for
any approved Additional Zileuton Product in the Territory resulting
from the
co-development. If the Parties decide not to collaborate on the
development and
commercialization of any Additional Zileuton Products in the
Territory, or fail
to enter into a CRTX Development Agreement by September 1, 2007
with respect to
the injectable formulation of Zileuton, and by December 31, 2007
for the
remaining Additional Zileuton Products, CRTX shall have the right
to enter into
discussions and agreements with Third Parties with respect to the
development
and commercialization of Additional Zileuton Products on or after
September 2,
2007 with respect to the injectable formulation of Zileuton and on
or after
January 1, 2008 for the remaining Additional Zileuton Products.
2.3 DEY Grant of Co-Promotion Rights. As of the date hereof, the
Parties shall
enter into a binding letter agreement regarding the promotion by
CRTX of DEY's
[**], the subject of DEY'S NDA #[**].
2.4 Access to Information. Subject to the terms and conditions of
this
Agreement, each Party shall cooperate in good faith to provide
access to and
reasonable assistance with its Proprietary Information and other
significant
information of which it becomes aware that may be legally disclosed
and that it
reasonably believes may be required for the other to perform its
obligations,
hereunder.
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ARTICLE 3
GOVERNANCE
3.1 Joint Commercial Committee.
(1) On or within thirty (30) days after the Effective Date, the
Parties shall
establish and appoint members to the Joint Commercial Committee
("JCC" or
"Committee"), which shall consist of two (2) members from each
Party who shall
meet in-person, by telephone or by video-conference at least
quarterly to review
the overall progress as well as the Commercial Plans (as defined
below). The JCC
will have various responsibilities and all decisions and
recommendations by the
Committee shall be by unanimous agreement of the respective
representatives of
DEY and CRTX, and, in the event of a tie, the matter shall be
referred for
resolution by the Chief Executive Officer of each Party. If the
Chief Executive
Officers from the Parties cannot resolve a given dispute within
thirty (30)
days, the parties shall submit the dispute to mediation pursuant to
Section 13.6
of this Agreement.
(2) The JCC shall be responsible for all of the following:
a)
Reviewing and
approving the detailed strategic marketing, promotion,
branding, sample strategy, managed care strategies and plans,
sales
plans, and annual sales goals for the Products each to the
extent
allowed by Applicable Laws ("Commercial Plans"). CRTX will develop
the
initial 2007 pre-launch and launch Commercial Plans, which will
be
reviewed, adjusted and approved by the JCC. Throughout the Term,
CRTX
will be responsible for creating and implementing the marketing
programs.
b)
Reviewing and
approving the annual Commercial Plans for the Products.
c)
Reviewing
strategic sales and marketing issues. and sales incentive
plans for the Products.
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d)
Adjusting each
Party's Detail responsibilities if Zileuton XR Net
Sales for the previous four (4) consecutive Calendar Quarters is
less
than [**] percent ([**]%) of the annualized Net Sales as of the
Launch
Period.
e)
Reviewing and
approving the targeting and frequency commitment for
Details by the respective sales forces on a Calendar Quarter
basis.
(3) The initial members of the JCC are set forth on Schedule 3.1.
Either Party
may replace any or all of its members on the JCC at any time upon
written notice
to the other. A Party may designate a substitute to temporarily
attend and
perform the functions of such Party's designated representative at
any meeting
of the Committee.
(4) The Committee will be used as the forum during the Term for the
Parties to
discuss Product Promotion strategy, including pre-launch, launch,
post-launch
and ongoing Promotional activities. In particular, subject to the
foregoing and
the other terms and conditions of this Agreement, the Committee
shall perform
the following functions:
(a)
Discuss and advise
CRTX in connection with the development of
Promotion Plans and Promotion Budgets (including allocation of
Promotion Expenses within the Promotion Budget on a quarterly
basis
for training, Promotional Materials, visual aids and other
Promotional
activities intended to support the Promotion and Detailing of
such
Product) for the Products, and any material amendments or
modifications to any Promotion Plan or Promotion Budget,
provided,
however, that the Promotion Budget for the Products shall be not
less
than (i) US $3.0 million for 2007, as allocated to the categories
set
forth on the initial Promotion Budget for the Products; and (ii)
US
$[**] for each Year thereafter until the end of the Post-Launch
Period;
(b)
Discuss the actual
results of the Promotion of the Products in the
Territory as compared to the Promotion Plan;
(c)
Discuss the state of
the markets for the Products in the Territory and
opportunities and issues concerning the Promotion of the Products
in
the Territory, including consideration of marketing, promotional
and
managed care strategy, marketing research plans, labeling,
Product
positioning and Product
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profile issues, to determine the kind of marketing and selling
efforts
that are appropriate;
(d)
Discuss the commercial
terms and conditions with respect to the sale
and distribution of the Products;
(e)
Review data and
reports assembled by CRTX from time to time with
respect to the
Promotion of the Products in the Territory;
(f)
Review Promotional
Materials and promotional activities to be used by
the Parties in the Promotion of the Products, including the
quantity,
method of distribution of, and guidelines for the use of
Promotional
Materials or educational materials and literature related to
the
Products;
(g)
Collaborate to develop
annual and quarterly forecasts (each, a
"Forecast") for sales of the Products; and
(h)
Have such other
responsibilities and address any other matters
delegated to the Committee under this Agreement or as may be
mutually
agreed upon in writing by the Parties from time to time.
(5) Primary Contact. DEY and CRTX each shall appoint a person (a
"Primary
Contact") to be the primary contact between the Parties with
respect to the
Promotion Plan and to coordinate related correspondence between the
Parties.
Each Party's initial Primary Contact is set forth on Schedule 3.1.
Each Party
shall notify the other in writing as soon as practicable upon
changing its
initial Primary Contact appointment.
(6) Meetings. The Committee shall hold meetings as frequently as
reasonably
requested during the Term by one of the Parties upon not less than
three (3)
business days notice to each member of the Committee; provided,
however, that
(a) the agenda may be submitted by either Party, and (b) the
Committee shall
meet on at least a monthly basis during the period commencing on
the Effective
Date and expiring at the end of the first Year of the Term (with
the first
meeting to be held not later than thirty (30) days after the
Effective Date) and
thereafter on at least a quarterly basis through the end of the
Term, unless the
Parties agree otherwise. Meetings may be held in person, by
telephone, or by
video conference call and, except as set forth herein, the location
of each
meeting shall alternate between the Parties' selected locations in
California or
Massachusetts or such other location as may be mutually agreed upon
by the
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Parties. On advance written notice to the other Party, additional
participants
may be invited by any representative to attend meetings where
appropriate and to
address any matters that are within the responsibilities and
functions of the
Committee. Each Party shall be responsible for all travel and
related costs and
expenses for its members and other representatives to participate
or attend
committee meetings. Any Proprietary Information disclosed in any
meeting of the
Committee by a Party shall remain Proprietary Information of such
Party and
shall be treated as confidential.
(7) Minutes of Committee Meetings. Draft minutes of each Committee
meeting shall
be prepared and distributed by an individual designated by the
Committee at
least ten (10) Business Days prior to the date of the next
scheduled meeting of
the Committee and shall be approved as the first order of business
at the
immediately succeeding meeting of the JCC. Such minutes shall
include only key
discussion points and decisions made and provide a list of any
identified issues
yet to be resolved.
ARTICLE 4
PROMOTION AND MARKETING ACTIVITIES / PARTY OBLIGATIONS / IP /
TRAINING
4.1 General. Each Party will diligently Promote the Products in the
Territory
during the Term, subject to the terms and conditions of this
Agreement and in
accordance with its business, legal, medical and scientific
judgment and all
Applicable Laws.
4.2 Sales Forces. During the Term, each Party will provide a
professional,
appropriately-trained sales force to support its obligations under
this
Agreement. The sales force of each Party shall remain under the
direct and
exclusive authority, supervision and control of that Party at all
times during
the Term. For purposes of this Agreement, all members of DEY's
sales force
performing Details on the Product shall be employees of DEY. CRTX
shall not be
involved in the interviewing, selection or hiring or the management
or
supervision of DEY's sales force. DEY shall use Commercially
Reasonable Efforts
to ensure that the qualifications of its Sales Representatives meet
or exceed
the minimum criteria (including, without limitation, with respect
to education
and sales experience) required by DEY as of the date hereof with
respect to its
Sales Representatives detailing products other than the Products.
For purposes
of this
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Agreement, all members of CRTX's sales force shall be employees of
CRTX. DEY
shall not be involved in the interviewing, selection or hiring or
the management
or supervision of CRTX's sales force.
4.3 DEY Obligations:
(1) During the Pre-Launch Period, DEY shall perform Details on at
least [**]
Detail Targets on an average of [**] times per month to Detail
Zileuton IR in
the second position.
(2) During the Launch Period, DEY shall deliver [**] Details per
full calendar
month to Detail Targets for Zileuton XR in the second position.
[**] percent
([**]%) of the Details shall be delivered to Detail Targets who are
respiratory
specialists (i.e., allergists and pulmonologists) at a frequency of
[**] per
month.
(3) During the Post-Launch Period, DEY shall deliver [**] Details
per month to
Detail Targets for Zileuton XR in the second position. [**] percent
([**]%) of
the Details shall be delivered to Detail Targets who are
respiratory specialists
(i.e., allergists and pulmonologists)
(4) During the Post-Exclusivity Period, DEY shall deliver [**]
Details per month
to Detail Targets for Zileuton XR in at least the tertiary or
reminder position.
[**] percent ([**]%) of the Details shall be delivered to Detail
Targets who are
respiratory specialists (i.e., allergists and pulmonologists);
provided,
however, DEY shall have the option not to do so for the remainder
of the initial
Term (i) if the JCC estimates that annual Zileuton XR total Net
Sales will be
less than US $[**], or (2) if the total Net Sales in the prior four
(4) Calendar
Quarters were less than US $[**]. DEY shall exercise this option by
providing a
written notice to CRTX one month before terminating its Detailing
efforts.
(5) For Details described in Subsections 4.4 (1) through (4), DEY
shall provide
Details to Detail Targets who the JCC agrees qualify as potential
targets for
the Products. The JCC also will determine an optimal level of
Detail frequency
for all targeted physicians.
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(6) In Years 2008 through 2010, DEY will contribute fifty percent
(50%) of the
documented total Zileuton XR Promotion Expenses that are developed
and approved
by the JCC. DEY'S contribution to the annual Zileuton XR Promotion
Expenses
shall be a minimum of US $3.0 million per Year and, upon
achievement of that
minimum, no more than [**] percent ([**]%) of the Net Sales for the
Year. During
the Term of the Agreement, DEY also is responsible for salaries for
its own
employees performing marketing functions, which shall be separate
from and in
addition to the required Zileuton XR Promotion Expenses. Sales
Representative
expenses and Sample expenses shall also be separate from and in
addition to the
required Zileuton XR Promotion Expenses.
(7) DEY shall acquire from CRTX supplies of Zileuton IR Samples
for
Committee-approved sampling activities by DEY sales force at [**]
percent
([**]%) of the actual cost of such Zileuton IR Samples to CRTX,
except for the
calendar year 2007, during which CRTX will provide such Zileuton IR
Samples free
of charge to DEY.
(8) DEY shall acquire from CRTX the Zileuton XR Sample supplies for
the sampling
activities by DEY sales force at CRTX's [**] in all periods during
the Term.
(9) DEY'S incentive compensation plan for its Sales Representatives
detailing
the Products shall reflect secondary position or tertiary position
of the
Products with the goal of ensuring quality secondary or tertiary
product
Details. Compensation shall align with such plan.
(10) DEY shall provide the support of its managed care group to
negotiate
contracts and otherwise engage in activities with payors to ensure
favorable
managed care access. This support will begin on the April 1, 2007
and will
continue throughout the year ended December 31, 2007. As part of
such support,
the managed care group will provide CRTX with advice and logistical
support
regarding managed care strategy, provide regular status and
progress reports,
details regarding current, past and future managed care
presentations regarding
the Products, provide contact information and copies of actual and
template
contracts and presentations as reasonably requested by CRTX. For
subsequent
Years, CRTX will have the option to have DEY continue this effort
on a Calendar
Quarter basis, but will provide DEY with three (3) months
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prior written notice if it wishes DEY to stop such efforts, and DEY
will assist
with transition of such managed care efforts to CRTX.
(11) DEY shall not, directly or indirectly, manufacture, Detail,
sell, market or
promote any product (except for Products during the Term of the
Agreement)
containing Zileuton as one of the active pharmaceutical ingredients
in the
Territory during the Term. If this Agreement expires or terminates
for any
reason, DEY shall not, directly or indirectly, manufacture, Detail,
sell, market
or promote any product containing Zileuton as one of the active
pharmaceutical
ingredients for sale in the Territory until the later of (i) one
year after such
expiration or termination or (ii) March 15, 2012 (the
"Post-Termination
Non-Compete Period"); provided, however, if a Third Party AB-rated
generic
product to Zileuton XR enters the Territory during this
Post-Termination
Non-Compete Period, DEY will (i) have the exclusive right to be
CRTX's exclusive
Authorized generic authorized generic co-promotion partner on terms
to be
mutually-agreeable to the Parties and (ii) DEY will no longer be
held to the
Post-Termination Non-Compete Period. Notwithstanding the foregoing,
if this
Agreement is terminated by DEY pursuant to Section 12.2(2), by DEY
pursuant to
Section 12.2(4), or by DEY pursuant to Section 12.2(6), the
Post-Termination
Non-Compete Period in this Section 4.3(11) shall be void; provided,
however, the
DEY and CRTX shall continue to abide by the provisions of Section 9
of this
Agreement after such termination.
(12) DEY shall use Commercially Reasonable Efforts to initiate its
Promotions of
Products with its existing sales force no later than May 1,
2007.
4.4 CRTX Obligations:
(1) During the Pre-Launch Period, CRTX shall deliver at least [**]
Details per
month in the first position for Zileuton IR.
(2) During the Launch Period and the Post-Launch Period, CRTX shall
deliver at
least [**] Details per full calendar month in the first position
for Zileuton
XR.
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<PAGE>
(3) During the Post-Exclusivity Period, CRTX shall deliver at least
[**] Details
per month in at least tertiary position; provided, however, CRTX
shall have the
option not to do so for the remainder of the initial Term (i) if
the JCC
estimates that annual Zileuton XR total Net Sales will be less than
US $[**], or
(2) if the total Net Sales in the prior four (4) Calendar Quarters
were less
than US $[**]. CRTX shall exercise this option by providing a
written notice to
DEY one month before terminating its Detailing efforts.
(4) CRTX is responsible for all Promotion Expenses for the Products
in Year
2007, which shall be a minimum of US $3.0 million. In Years 2008
through 2010,
CRTX will contribute fifty percent (50%) of the Zileuton XR
Promotion Expenses,
which are developed and approved by the JCC. CRTX contribution to
the Zileuton
XR Promotion Expenses shall be at least US $3.0 million per Year,
and upon
achievement of that minimum, no more than [**] percent ([**]%) of
the Net Sales
for the Products for the Year. During the term of the Agreement,
CRTX is also
responsible for salaries for its own employees performing marketing
functions,
which shall be separate from and in addition to Product Promotion
Expenses (and
also includes detail aids, promotional items, market research).
CRTX Sales Force
expenses and Sample expenses shall also be separate from and in
addition to
Product Promotion Expenses.
(5) CRTX'S incentive compensation plan for its Sales
Representatives detailing
the Products shall reflect primary, secondary or tertiary position
of the
Products with the goal of ensuring quality primary, secondary or
tertiary
product Details. Compensation shall align with such plan.
(7) CRTX shall conduct, control, and fund Phase III/IV clinical
trials for
Zileuton XR at its discretion. The aggregate total cost of the
trials for 2007
and 2008 shall be a minimum of US $[**].
(8) CRTX, at its sole expense, will be responsible for obtaining
and maintaining
all applicable regulatory approvals for Products and approving and
submitting
all Promotional Materials in Territory, all as according to
Applicable Laws.
(9) CRTX will also be solely responsible for the following:
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<PAGE>
a)
Setting the
pricing of the Products covered under this Agreement and
approving Standard Deductions to wholesalers, managed care
organizations or Federal, state or local government programs
(e.g.,
Medicare or Medicaid) related to the Products;
b)
Maintaining its
exclusive rights to the Products in the Territory,
other than those granted to DEY herein;
c)
Using
Commercially Reasonable Efforts to supply and distribute GMP
compliant Products in accordance with each Product's respective
specifications;
d)
Using
Commercially Reasonable Efforts to supply and ship to DEY at
DEY'S facility in Allen, TX sufficient quantities of
GMP-compliant
commercial Zileuton IR Samples for DEY's sampling program, as
approved
by the Committee, which Zileuton IR Samples shall be provided [**]
to
DEY during calendar year 2007 and at [**] percent ([**]%) of
the
actual cost to CRTX for Zileuton IR Samples provided to DEY
after
calendar year 2007 and for which Zileuton IR Samples; provided,
CRTX
shall pay for all shipping charges of such Zileuton IR Samples;
and
e)
Using
Commercially Reasonable Efforts to supply and ship to DEY at
DEY'S facility in Allen, TX sufficient quantities of
GMP-compliant
commercial Zileuton XR Samples for DEY's sampling program,
which
Zileuton XR Samples shall be provided at CRTX's [**]; provided,
CRTX
shall pay for all shipping charges of such Zileuton XR Samples.
(10) CRTX shall use Commercially Reasonable Efforts to provide DEY
with final
draft Promotional Materials updated as agreed by the Parties and
training
materials for the performance and supervision of Calls by no later
than April 6,
2007, which the Parties agree is necessary in order for DEY to meet
the Detail
Commencement Date. Such Promotional Materials shall be provided
without cost to
DEY, and the cost shall be part of the Annual Promotion Budget.
CRTX shall be
solely responsible for the preparation, content and method of
distribution of
the Promotional Materials to one location designated by DEY. DEY's
Sales
Representatives shall use only the Promotional Materials provided
by CRTX in
conducting Calls hereunder and shall not develop, create, or use
any other
promotional material or literature, or any other materials of any
kind in
connection with the Detailing of the Products. CRTX will coordinate
with DEY to
replenish supplies of Promotional Material to one location
designated by DEY
when depleted on a timely basis. CRTX shall advise DEY promptly of
any
inaccuracy or
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<PAGE>
incompleteness of the Promotional Materials or labeling. Upon such
notice, DEY
will advise its representatives to cease the use of all of the
Promotional
Materials or labeling (or any portion thereof) so identified by
CRTX and will
either destroy or return such Promotional Materials or labeling to
CRTX, at
CRTX's instruction and expense, and CRTX shall furnish DEY with
corrected or
complete Promotional Materials or labeling as soon as practicable
thereafter.
CRTX shall be responsible for all interactions with the FDA
regarding approval
and /or submission of all Promotional Materials.
(11) CRTX shall use Commercially Reasonable Efforts to provide all
necessary
support to DEY to enable DEY to begin Promoting the Products by the
Detail
Commencement Date.
4.5 Intellectual Property. Each of CRTX and DEY shall retain their
respective
intellectual property rights, including without limitation, all
patents
(including CRTX Patents) and patent applications, copyrights and
trademarks
(including CRTX Trademarks), owned by such Party as of the
Effective Date or
otherwise arising during the Term and relating to such Party's
respective
existing programs and materials in all formats (print, video,
audio, digital,
computer, etc.) regarding sales training, patient education and
disease
management programs owned or controlled by such Party at the time
such materials
are shared with the other Party, as well as any modifications of
such programs
each may develop in the future which are not specific to the
Products. Except as
otherwise prohibited by Applicable Laws and as otherwise set forth
herein, all
Promotional Materials used during the Term, including journal
advertising and
sales aids (excluding packaging and FDA approved Product labeling)
may display
the names and logos of CRTX and DEY. Except as otherwise prohibited
by
Applicable Laws, and to the extent reasonably practicable, all
Promotional
Materials will indicate that the applicable Product is manufactured
and sold by
CRTX, promoted by DEY and CRTX, and that the CRTX Trademarks are
owned by CRTX
and that the DEY Trademarks are owned by DEY. Notwithstanding the
foregoing, the
Parties acknowledge and agree that, to the extent CRTX has existing
stock of
Promotional Materials, CRTX shall be permitted to utilize such
stock and to
provide such stock to DEY for use in connection with its
promotional efforts
prior to the development and distribution of new Promotional
Materials
displaying the names and logos of both CRTX and DEY. During the
Term, all
applicable logos, subject to compliance with Applicable Laws, shall
be
prominently displayed in accordance with each Party's
specifications and be of
similar size to
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<PAGE>
each other on all such materials. Each Party hereby consents to
such use of its
name and logo, provided that the other Party adheres to the agreed
upon format
and language and, provided further, that neither Party will acquire
any
ownership rights in the other Party's name or logo, or any rights
to use the
other Party's name or logo beyond those set forth in this Section
4.5. After
expiration of the Term or after the termination of this Agreement,
neither Party
will include any of the other Party's names or logos on any
Promotional
Materials, except as required by Applicable Laws. If either party's
corporate
name or logo should change from what it is at Effective Date of
this Agreement,
such Party shall be responsible and reimburse the other party for
all additional
expenses in connection with procuring additional stock of Promotion
Materials as
a result of such name or logo change.
4.6 Training.
(1) Each Party shall have the responsibility for training its sales
force with
respect to the Promotion of the Products in the Territory, and each
Party will
be solely responsible for all costs associated with training its
respective
sales force. During the Term, CRTX shall provide DEY with such
assistance as is
reasonably requested by DEY and as mutually agreed to in connection
with the
training programs to help ensure that the training of DEY'S sales
force will be
consistent with the training provided to CRTX's sales force
regarding the
Products in the Territory.
(2) During the Term, CRTX shall provide DEY with sufficient
quantities of
training materials relating to the Products in order to meet the
Projected
Detail Commencement Date, including an up-to-date programmed
learning unit for
"at home" study. Such materials shall be provided to DEY free of
charge for
distribution to the DEY sales force, and all costs associated with
the
preparation and distribution of training materials shall be deemed
Promotion
Expense and the cost counted toward the Annual Promotion
Budget.
(3) All expenses during the Term that are incurred by either Party
and
associated with any launch meeting or any training meetings for the
Products for
such Party's sales force shall be the responsibility of the Party
incurring such
cost. Promptly after the Effective Date, CRTX and
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<PAGE>
DEY shall agree on a mutually convenient schedule that will enable
the training
of the DEY sales force in sufficient time to meet the Projected
Detail
Commencement Date.
(4) In addition to the training referred to above, during the Term,
each Party
shall conduct separate training programs for their respective sales
force with
respect to the Medicare and Medicaid Anti-Kickback Statute, as set
forth at 42
U.S.C. Section 1320(a)-7b(b) and the acts prohibited thereunder,
PDMA
regulations, and all other applicable guidances relating to
promotion of
Product, including, without imitation, the PhRMA Code on
Interactions with
Healthcare Professionals. Upon completion of such additional
training, each
sales force member shall be required to sign a certificate
acknowledging their
receipt of such training and certifying and acknowledging their
understanding of
the conduct of the training.
4.7 Other Marketing and Promotion Services.
(1) CRTX shall provide such other Promotional activities, as
applicable, which
are an integral part of the implementation of Promotion plans to
support the
activities normally undertaken by a professional sales
representative of a
pharmaceutical company comparable in size to DEY