This Promotion Agreement involves
Title: FFIS CO-PROMOTION AGREEMENT
Governing Law: New York Date: 8/9/2007
Industry: Biotechnology and Drugs Sector: Healthcare
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
FFIS CO-PROMOTION AGREEMENT
by and between
CRITICAL THERAPEUTICS, INC.
JUNE 25, 2007
THIS FFIS CO-PROMOTION AGREEMENT (the "Agreement" or "FFIS Agreement") is made
as of June 25, 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 at 2751
Napa Valley Corporate Drive, Napa, CA 94558 ("DEY").
WHEREAS, the Parties desire that CRTX engages in the Promotion (as hereinafter
defined) of the Product (as hereinafter defined) in the Territory (as
hereinafter defined) in the Field (as hereinafter defined) for a certain period
of time and the Parties also desire to coordinate CRTX's activities regarding
the Product with those of DEY, all of which shall be subject to the terms and
conditions of this Agreement;
WHEREAS, the Parties have previously entered in to that certain Co-Promotion and
Marketing Services Agreement regarding Zileuton products, effective March 13,
2007 (the "Zileuton Co-Promotion Agreement"), as well as that certain Binding
Letter Agreement by and between Dey, L.P. and Critical Therapeutics, Inc.
effective March 13, 2007, as amended (the "Binding Letter Agreement"), which
Binding Letter Agreement is superseded by this Agreement,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:
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
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.
1.2 "Adverse Event(s)" means adverse drug experiences, as defined by 21 CFR
312.32 or 314.80, relating to a Product. "Serious Adverse Event(s)" means a
serious Adverse Event, as defined by 21 CFR 312.32 or 314.80, relating to a
Product. For purposes of Section 6 of this Agreement, the use of the phrase
"Adverse Event" is intended to include Serious Adverse Event(s).
1.3 "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.
1.4 "Alliance Manager" shall have the meaning set forth in Section 3.1.
1.5 "Annual Retail Baseline Units" or "ARBU" means, for each Year, the number of
Retail Units of Product forecasted to be sold by DEY through retail sales
channels in such Year that are based solely on detailing by DEY's sales force
only (and no detailing by CRTX's sales force), as set forth in Schedule 1.5
1.6 "Applicable Laws" means all applicable federal, state and local laws,
statutes, rules, regulations and ordinances.
1.7 "Applicable Tier 1 Retail Units" shall have the meaning set forth in Section
1.8 "Applicable Tier 2 Retail Units" shall have the meaning set forth in Section
1.9 "Binding Letter Agreement" shall have the meaning set forth in the Recitals.
1.10 "Business Day" means any day that is not a Saturday or a Sunday or a day on
which the NASDAQ Global Market is closed.
1.11 "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 (i) December 31,
2007 if the Detail Commencement Date is on or after October 1, 2007 or (ii)
September 30, 2007 if the Detail Commencement Date is on or prior to September
1.12 "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.
1.13 "CFR" means the United States Code of Federal Regulations.
1.14 "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, alleged to have been caused, in whole or in part, by a Product
regardless of the legal theory alleged.
1.15 "Commercial Launch Date" means the date after full FDA approval of the NDA
for FFIS when FFIS has been produced and is released by DEY for purchase by
Third Party wholesalers and/or retailers in the Territory.
1.16 "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
1.17 "CRTX Indemnified Party" shall have the meaning set forth in Section 11.1.
1.18 "CRTX Trademark(s)" means the trademark and domain names listed on Schedule
1.14, together with all related common law trademark rights of CRTX related
1.19 "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.
1.20 "Detail" means a Call during which relevant characteristics of the Product
are described by the Sales Representative of a Party aimed at encouraging the
appropriate use of the 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
1.21 "Detail Commencement Date" means the later of the Commercial Launch Date,
or the date that DEY receives written notice from CRTX indicating that CRTX has
(a) completed its sales force expansion to the size of 40 or more Sales
Representatives and all of whom have completed the FFIS launch training as
contemplated by this Agreement, and (b) that the first Call has been made by
CRTX's Sales Representatives under the terms of this Agreement.
1.22 "Detail Targets" means all office-based physicians and other health care
professionals in the Territory selected by CRTX from the DEY FFIS Target
Universe. For purposes of this Agreement, the "DEY FFIS Target Universe" shall
mean the group of office-based physicians and other health care professionals in
the Territory that DEY uses internally for its Call plan for FFIS, which group
consists of allergists, pulmonologists, internal medicine physicians, and
primary care physicians (excluding pediatricians) who belong to the FFIS Market
Quintile [**] based upon third party data, such as Wolters Kluwer Health. DEY
shall retain the right to modify the DEY FFIS Target Universe from time to time;
provided, however, any such modification shall not affect a previously agreed to
CRTX [**] month Call plan. CRTX will notify DEY of the date of the next CRTX
Call plan period at least [**] days prior to the start date of the
period. DEY, within [**] days after receipt of such notice, will provide the DEY
FFIS Target Universe to a third party retained by CRTX and approved by DEY so
that the third party may use it to assist CRTX with its selection of Detail
Targets for the applicable Call plan. DEY and CRTX acknowledge and agree that
the DEY FFIS Target Universe for the [**] month period starting on the Detail
Commencement Date has been finalized by the parties.
For purposes of this Section, the "FFIS Market Quintile" means the prescriber
quintile based upon the current definition of the FFIS Market used in DEY's Call
1.23 "DEY Indemnified Party" shall have the meaning set forth in Section 11.2.
1.24 "DEY Patents" shall mean those patents listed on Schedule 1.19 attached.
1.25 "DEY Trademarks" shall mean the trademarks listed on Schedule 1.20
1.26 "Effective Date" shall have the meaning set forth in the Preamble.
1.27 "FAPI" shall have the meaning set forth in Section 4.3(6).
1.28 "FDA" means the United States Food and Drug Administration and any
successor agency having substantially the same jurisdiction and functions.
1.29 "Field" shall mean the use of the Product as a pharmaceutical product in
humans for the treatment of chronic obstructive pulmonary disease ("COPD") or
other respiratory indications for which DEY has received formal FDA approval.
1.30 "Finished Product" means the formulation of the Product described in the
specifications included in the NDA for such Product (the "FFIS Specifications")
and packaged and labeled and in a form ready for distribution in the Territory.
1.31 "GAAP" means U.S. generally accepted accounting principles.
1.32 "Indemnified Party" shall have the meaning set forth in Section 11.3.
1.33 "Indemnifying Party" shall have the meaning set forth in Section 11.3.
1.34 "Independent Accountant" shall have the meaning set forth in Section
1.35 "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.
1.36 "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.
1.37 "Net Retail Average Selling Price" shall mean, for any applicable Calendar
Quarter, the average WAC Price per Retail Unit for such Calendar Quarter, less
Rebates and Discounts per Retail Unit for such Calendar Quarter. In the
determination of the Net Retail Average Selling Price, DEY will use Commercially
Reasonable Efforts to allocate the Rebates and Discounts relevant to Product
sales to the retail sales channels (and shall not allocate any Rebates or
Discounts relevant to Product sales to non-retail sales channels in such
1.38 "PDE" is the measure of Detail Calls, and shall mean primary detail
equivalents calculated as follows: one primary Call is 1.0 PDE and one secondary
Call is 0.4 PDE.
1.39 "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.
1.40 "Party" means DEY or CRTX. "Parties" means DEY and CRTX.
1.41 "Patent Office" means the United States Patent and Trademark Office.
1.42 "Product" or "FFIS" means Formoterol Fumarate Inhalation Solution
20mcg/2ml, which is
the subject of DEY's NDA No. 22-007.
1.43 "Product Label(ing)" shall have the same meaning as defined in the Act and
regulations as interpreted by the FDA.
1.44 "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
1.45 "Promotion" means, as regards to the Product, 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 a
product for sale. When used as a verb, "Promote" shall mean to engage in such
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 DEY in connection
with selling, marketing and Promotion of the Product in the Territory, including
the following (but excluding expenses for Samples purchased by CRTX hereunder,
Third Party market data, such as IMS or Wolters Kluwer Health data purchased by
CRTX, sales forces of CRTX, and salaries for employees of CRTX performing
(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) Third Party market data from IMS or Wolters Kluwer Health purchased by
(d) implementing marketing programs; 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 DEY relating to the Promotion
of the Product.
1.48 "Promotional Materials" means all written, printed or graphic (or in other
media formats) material provided by DEY 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
studies reprints, drug information updates and any other promotional support
items or advertising that DEY 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 also includes all sales training materials, however promotional
Materials shall not include any Product packaging or Product labeling or Sample
labeling, or Samples.
1.49 "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.
1.50 "Quarterly Retail Base Units" or "QRBU" means, for each Calendar Quarter of
such Year, the Retail Units of Product forecasted by DEY that are based on
detailing by DEY's sales force only and as set forth in Schedule 1.5 attached.
1.51 "Rebates and Discounts" means the following deductions to the extent
actually allowed or taken and not in excess of industry standard amounts and
determined in accordance with GAAP, DEY's revenue recognition policies, and
(a) credits or allowances actually granted for damaged or spoiled Product,
returns, recalls or rejections of Product, and retroactive price
(b) normal and customary trade, cash and quantity discounts, allowances
and credits, actually given or allowed, as applicable;
(c) sales, value added, excise or similar taxes actually 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 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 Product; and,
(f) launch discounts, stocking fees and other discounts actually extended
1.52 "Retail Unit" means one vial of Product. "Retail Units" means the vials of
Product sold in the retail channel for a given period of time, as reported in
the script data that DEY purchases from Wolters Kluwer Health or a similar Third
1.53 "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, and who is employed by a Party.
1.54 "Samples" means Product provided without charge to Detail Targets and in
with Applicable Laws.
1.55 "SEC" means the United States Securities and Exchange Commission and any
successor agency having substantially the same jurisdiction and functions.
1.56 "Term" shall have the meaning set forth in Section 12.1.
1.57 "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
1.58 "Third Party(ies)" means a person or entity who or which is neither a Party
nor an Affiliate of a Party to this Agreement.
1.59 "WAC Price" means DEY's invoice price per Retail Unit of FFIS to its
wholesalers, which is commonly known as the 'Wholesale Acquisition Cost' as may
also be published in First Data Bank or other Third Party price reporting
1.60 "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
Effective Date and end on December 31, 2007.
1.61 "Zileuton Co-Promotion Agreement" shall have the meaning set forth in the
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.
GRANT OF RIGHTS
2.1 DEY Grant of Co-Promotion Right. Subject to the terms and conditions of this
Agreement, DEY hereby grants to CRTX, in the Territory in the Field and during
the Term, the non-transferable, limited right and license or sublicense (as
applicable) under the DEY Trademarks and the DEY Patents to Promote and Detail
FFIS; provided, however, CRTX's exercise of such rights to Promote and Detail
the Product shall not occur before the Detail Commencement Date. Notwithstanding
anything to contrary in this Section 2.1, DEY reserves all other rights to the
DEY Patents and the DEY Trademarks, including, but not limited to, the right to
Promote and Detail the Product with its sales force in the Territory during the
Term. All use by CRTX of the DEY Trademarks and the DEY Patents shall be under
the control of DEY and subject to DEY quality standards and approvals.
2.2 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
3.1 Alliance Manager. DEY and CRTX each shall appoint a person (an "Alliance
Manager") to oversee compliance with this Agreement. The Alliance Managers shall
also be the primary contact between the Parties with respect to the reporting of
each Party's activities and performance. Each Party's initial Alliance Manager
is set forth on Schedule 3.1 attached hereto. Each Party shall notify the other
in writing as soon as practicable upon changing its Alliance Manager
PROMOTION AND MARKETING ACTIVITIES / PARTY OBLIGATIONS / IP/ TRAINING
4.1 General. Subject to the restrictions of Article 2.1, each Party will
diligently Promote the Product in the Territory during the Term and as of the
Detail Commencement Date, 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 and as of the Detail Commencement Date, for
DEY and CRTX, respectively, each Party will provide, at its own expense, 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 CRTX's sales force
performing Details on the Product 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. CRTX 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 CRTX as of the date hereof with
respect to its Sales Representatives detailing products other than the Product.
For purposes of this Agreement, all members of DEY's sales force 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 Representatives.
4.3 CRTX Obligations:
(1) During the Term and starting on the Detail Commencement Date, CRTX, at its
expense, shall deliver to Detail Targets at least [**] primary detail
equivalents ("PDEs") of Product Details in at least the secondary position per
full calendar month after the Detail Commencement Date. The frequency of CRTX's
Product Details per full calendar month will be determined by CRTX. A Call in
the tertiary position shall not count toward CRTX's PDE obligations unless the
parties agree otherwise in writing. CRTX will deliver Product Details to at
least [**] Detail Targets per Calendar Quarter.
(2) For all Product Details in Subsection 4.3 (1), only details to Detail
Targets (as defined in Section 1.22 of this Agreement) shall be counted towards
CRTX's PDE requirements.
(3) If and to the extent that CRTX decides to acquire Samples, CRTX, [**], may
acquire from DEY supplies of Samples for DEY-approved sampling activities by
CRTX's Sales Representatives at DEY's [**] of such Samples; provided, however,
CRTX shall have no minimum sampling obligations to meet and CRTX may elect not
to procure or provide Samples. CRTX has the option to perform Product sampling
during the Calls. CRTX also is responsible for the proper storage, handling, and
distribution of any Samples that CRTX orders from DEY. If CRTX notifies DEY that
CRTX intends to perform Product sampling, DEY shall assume costs of shipment of
Samples to one location designated by CRTX.
(4) CRTX, [**], shall acquire from DEY supplies of Promotional Materials for use
by CRTX at DEY's [**] of such Promotional Materials; provided, however, CRTX
shall have no obligation to use any particular Promotional Materials except
those core Promotional Materials mutually agreed to between the Parties.
(5) CRTX's incentive compensation plan for its Sales Representatives detailing
the Product shall reflect the secondary position of the Product, with the goal
of ensuring quality secondary product Details. The plan shall be determined by
CRTX, but CRTX shall consult with DEY and consider suggestions from DEY.
Compensation of such CRTX Sales Representatives shall align with such plan.
(6) During the Term, CRTX shall not, directly or indirectly, manufacture,
Detail, sell, market or promote in the Territory any product (except for Product
during the Term) containing formoterol, including but not limited to
arformoterol, and any salt, enantiomer, and/or derivative thereof ("FAPI") as
one of the active pharmaceutical ingredients if any approved indication of the
product is the same as any approved indication of the Product as of the date
upon which CRTX intends to begin to, directly or indirectly, manufacture,
Detail, sell, market or promote such product in the Territory (the "Limited
Product"). If this Agreement expires or is terminated for any reason, CRTX shall
not, directly or indirectly, manufacture, Detail, sell, market or Promote
any Limited Product in the Territory until one (1) year after such expiration or
termination ("Post-Term Non-Compete Period"); provided, however, this Post-Term
Non-Compete Period shall not apply and shall be void in the event CRTX signs a
definitive agreement to be acquired by or merged with a Third Party that
markets, manufacturers, sells, details or promotes a Limited Product in the
Territory (the "Transaction"); and, instead, the following provision shall apply
(the "Post-Term Non-Promote Period"): CRTX agrees that until the date that is
180 days after the date of the expiration or termination of this Agreement or
the date that is 180 days after the closing date of the Transaction, whichever
occurs sooner, CRTX shall not allow any CRTX Covered Sales Representative (as
defined below) to Detail, market or promote any Limited Product in the Territory
to any office-based physician or other office-based health care professional.
For purposes of this Section 4.3(6), a "CRTX Covered Sales Representatives"
shall mean a Sales Representative employed by CRTX (or by its acquirer or by a
subsidiary of its acquirer) who, within [**] before the date of the expiration
or termination of this Agreement or the closing date of the Transaction,
whichever occurs sooner, either (i) has been trained on the Product or (ii) has
detailed the Product. The Post-Term Non-Promote Period shall not require CRTX or
CRTX's acquirer to take any particular actions with any Sales Representative who
does not satisfy the CRTX Covered Sales Representative definition. This Section
4.3(6) also shall apply with respect to any combination product containing both
FAPI and Zileuton as active ingredients. Notwithstanding the foregoing, if (i)
this Agreement is terminated by CRTX pursuant to a DEY breach under Section
12.2(2) or (ii) a Third Party AB-rated generic product to the Product enters the
Territory during this Post-Termination Non-Compete Period, both the
Post-Termination Non-Compete Period and the Post-Term Non-Promote Period in this
Section 4.3(6) shall be void; provided, however, DEY and CRTX shall continue to
abide by the provisions of Section 9 of this Agreement after such expiration or
4.4 DEY Obligations:
(1) DEY is responsible for all Promotion Expenses and the development and
implementation of Promotion Plans for the Product during the Term. During the
Term, DEY is also solely responsible for DEY's sales force expenses, cost of
Samples distributed by DEY's sales force and salaries for its own employees
performing marketing functions, all of which shall be separate from and in
addition to Promotion Expenses (and also includes detail aids,
promotional items, market research), and such shall be DEY's responsibility and
not CRTX's responsibility. CRTX's sales force expenses, printing cost of the
Promotional Materials used by CRTX, and the cost of Samples, if any, distributed
by CRTX's sales force shall also be separate from and in addition to the Product
Promotion Expenses and such be CRTX's responsibility and not DEY's
(2) DEY, at its sole expense, will be responsible for obtaining and maintaining
all applicable FDA regulatory approvals for the Product and for approving and
submitting to FDA all Promotional Materials to be used in the Territory, all as
according to Applicable Laws.
(3) DEY also will be solely responsible for the following:
a) Setting the pricing of the Product covered under this Agreement and
approving Rebates and Discounts to wholesalers, managed care
organizations, or Federal, state or local government programs (e.g.,
Medicare or Medicaid) related to the Product;
b) Developing and implementing managed care strategies;
c) Maintaining its exclusive rights to the Product in the Territory,
other than those granted to CRTX herein;
d) the management and costs of any future clinical research and trials
that DEY elects to conduct, if any, relating to the Product or any
changes in its labeling;
e) Using Commercially Reasonable Efforts to supply and distribute
GMP-compliant Product in accordance with the Product's respective
f) Using Commercially Reasonable Efforts to supply and ship only to a
single site designated by CRTX sufficient quantities of GMP-compliant
commercial Samples for CRTX's sampling program, as approved by DEY,
which Samples shall be provided at DEY's [**] during the Term;
provided, DEY shall pay for all shipping charges of such Samples to
the site designated by CRTX.
(4) DEY shall use Commercially Reasonable Efforts to provide CRTX with
Promotional Materials and training materials for the performance and supervision
of Calls by a reasonable date prior to the Detail Commencement Date projected by
CRTX. In the case of training materials, a reasonable date shall be the later of
August 1, 2007, or within 15 days after CRTX notifies DEY in writing of the
projected Detail Commencement Date. In the case of Promotional Materials, a
reasonable date shall be the later of September 3, 2007, or within 30 days after
CRTX notifies DEY in writing of the projected Detail Commencement Date. The
Parties agree that timely delivery of such materials is necessary in order for
CRTX to meet the agreed upon Detail Commencement Date. Such Promotional
Materials shall be provided to CRTX by DEY at DEY's [**]. DEY shall be solely
responsible for the preparation, content and method of distribution of the
Promotional Materials to one location designated by CRTX. CRTX's Sales
Representatives shall use only the Promotional Materials provided by DEY 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 Product. When depleted by CRTX, DEY will
coordinate with CRTX to replenish on a timely basis CRTX's supply of Promotional
Materials, which also shall be sent to one location designated by CRTX. DEY
shall notify CRTX promptly of any inaccuracy or incompleteness of the
Promotional Materials or labeling. Upon such notice, CRTX will advise its Sales
Representatives to cease the use of all of the Promotional Materials or labeling
(or any portion thereof) so identified by DEY and will either destroy or return
such Promotional Materials or labeling to DEY, at DEY's instruction and expense.
DEY shall furnish CRTX with corrected Promotional Materials or labeling as soon
as practicable thereafter (such corrected Promotional Materials to be provided
to CRTX at no cost to the extent of materials previously purchased are
unusable). DEY shall be responsible for all interactions with the FDA regarding
approval and /or submission of all Promotional Materials.
(5) DEY shall use Commercially Reasonable Efforts to provide support to CRTX to
enable CRTX to begin Promoting the Product by Commercial Launch Date.
4.5 Intellectual Property. Each of CRTX and DEY shall retain their respective
intellectual property rights, including without limitation, all patents
(including the DEY Patents) and patent applications, copyrights and trademarks
(including the DEY 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 Product. 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
DEY, 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 DEY may have existing stock of
Promotional Materials as of Detail Commencement Date, DEY shall be permitted to
utilize such stock and to provide such stock to CRTX 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 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.
(1) Each Party shall have the responsibility for training its Sales
Representatives with respect to the Promotion of the Product in the Territory,
and each Party will be solely responsible for all costs associated with training
its respective Sales Representatives. During the Term, DEY shall provide CRTX
with such assistance as is reasonably requested by CRTX, and as mutually agreed
to in connection with the training programs to help ensure that the training of
CRTX's Sales Representatives will be consistent with the training provided to
DEY's Sales Representatives regarding the sales of the Product in the Territory.
(2) During the Term, in order for CRTX to meet the projected Detail Commencement
Date, DEY shall provide sufficient quantities of training materials relating to
the Product, including an up-to-date programmed learning unit for "at home"
study. DEY shall supply such materials to one CRTX-designated location by later
of [**], or [**] days after its receipt of written notice of the projected
Detail Commencement Date from CRTX. DEY shall be responsible for the cost of
developing and CRTX shall be responsible for the cost of duplicating such
(3) All expenses during the Term that are incurred by either Party and
associated with any launch meeting or any training meetings for the Product for
such Party's sales force shall be the responsibility of the Party incurring such
cost. Promptly after the date that CRTX has confirmed the projected Detail
Commencement Date to DEY, CRTX and DEY shall agree on a mutually convenient
schedule that will enable the training of the CRTX 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 attendance at
4.7 Other Marketing and Promotion Services.
(1) DEY or its Third Party contractor shall provide reasonable order entry,
customer service, reimbursement management, medical affairs (including reports
for all Adverse Events as set forth herein at Article 6), medical or drug
information, warehousing, physical distribution, invoicing, credit and
collections (including maintaining and enforcing the credit policy applicable to
the Product) production forecasting and other related facilities and services
necessary or desirable for the manufacturing and supply, distribution,
marketing, Promotion and sales of the Product under this Agreement. Such
services shall include contract administration, including handling wholesaler
chargebacks, managed care contracts, federal and state government contracts,
rebate contracts, long-term care contracts, performance-based contracts, and
hospital purchasing contracts. DEY shall book all sales and be exclusively
responsible for accepting and filling purchase orders for Product and for
processing billing and returns with respect to the Product.
(2) DEY will provide CRTX with reasonable access (at DEY's expense for any
additional work that DEY may request) to all medical education and medical or
drug information regarding the Product and FAQs, with respect to the Promotion
of the Product.
(3) In addition to any other reports required by this Agreement, DEY shall
provide to CRTX at no cost to CRTX:
(i) on a monthly basis, within [**] days after the end of each month
beginning or ending during the Term, reports of (A) WAC Price; (B) Rebates
and Discounts; and (C) Net Retail Average Selling Price for the immediately
(ii) on a monthly basis, the number of Retail Units; after DEY has received
the data from Wolters Kluwer Health or a similar Third Party;
(iii) on a monthly basis, complete and accurate records of the actual
number of Sales Representatives in DEY's sales force who, at the end of
each calendar month, are actively Detailing the Product to office-based
physicians and other office-based health care professionals in the
(iv) such other reports as may be reasonably requested by CRTX in
connection with the performance of the Parties' obligations hereunder.
4.8 Covenants of the Parties.
(1) CRTX covenants that, during the Term, the CRTX sales force shall (i) limit
its claims of efficacy and safety for the Product to those that are consistent
with approved promotional claims and FDA-approved prescribing information for
the Product in the Territory; (ii) not add, delete or modify claims of efficacy
and safety in the Promotion of the Product from those claims of efficacy and
safety that are consistent with the FDA-approved prescribing information; (iii)
use the Promotional Materials in accordance with this Agreement and Applicable
Laws; (iv) Promote the Product in accordance with Applicable Laws; and, (v)
comply with the CRTX code of business conduct and Comprehensive Compliance
(2) DEY covenants that, during the Term, the DEY sales force shall (i) limit its
claims of efficacy and safety for the Product in the Territory to those that are
consistent with approved promotional claims and FDA-approved prescribing
information for the Product; (ii) not add, delete or modify claims of efficacy
and safety in the Promotion of the Product under this Agreement from those
claims of efficacy and safety that are consistent with the FDA-approved
prescribing information; (iii) use the Promotional Materials in accordance with
this Agreement and Applicable Laws; and (iv) Promote the Product in accordance
with Applicable Laws; and, (v) comply with the DEY Code of Conduct and
FINANCIAL TERMS / PAYMENTS / STATEMENTS
5.1 During the Term and after the Detail Commencement Date, DEY will pay CRTX on
a Calendar Quarter basis a Co-Promotion Fee, which shall be calculated and paid
(1) No Co-Promotion fee will be paid with respect to Retail Units sold in
any Calendar Quarter if the number of Retail Units of Product sold in
such Calendar Quarter is less than the QRBU for such Calendar Quarter.
(2) TIER 1: With respect to the number of Retail Units sold during each
Calendar Quarter in excess of the QRBU, but not more than [**] Retail
Units above the QRBU for such Calendar Quarter (the "Applicable Tier 1
Retail Units"), DEY shall pay to CRTX a Co-Promotion Fee for that
Calendar Quarter calculated according to the following formula:
(Applicable Tier 1 Retail Units) x (Net Retail Average Selling
Price for such Calendar Quarter) x [**]%.
(3) TIER 2: With respect to the number of Retail Units sold during each
Calendar Quarter in excess of those Retail Units that are subject to a
Co-Promotion fee under Section 5.1(2) above during such Calendar
Quarter (i.e., in excess of the QRBU for such Calendar Quarter, plus
[**]) (the "Applicable Tier 2 Retail Units"), DEY shall pay to CRTX a
Co-Promotion Fee for that Calendar Quarter calculated according to the
(Applicable Tier 2 Retail Units) x (Net Retail Average Selling
Price for such Calendar Quarter) x [**]%.
(4) In the event DEY materially increases or decreases the size of its
sales force for Sales Representatives who actively promote the Product
to office-based physicians and other office-based health care
professionals in the Territory, DEY shall provide CRTX with written
notice of such change. Promptly thereafter, the Parties will
renegotiate in good faith a mutually agreeable Tier 2 Co-Promotion
Fee. The renegotiated Tier 2 Co-Promotion Fee shall be based, among
other things, upon the expected effect that such increase or decrease
has on Retail Unit sales, and shall take effect [**] days from the
date of CRTX's receipt of such notice from DEY. For this purpose, a
material increase or decrease shall mean an increase or decrease of 40
Sales Representatives employed by DEY who actively Promote the Product
to office-based physicians and
other office-based healthcare professionals in the Territory, with the
number of such Sales Representatives at Commercial Launch Date as the
(5) For purposes of clarity, the calculation of number of Retail Units
sold for purposes of this Section 5.1 shall include all Retail Units
sold in such Calendar Quarter, regardless of whether such sales were
based on detailing by DEY's sales force, CRTX's sales force or any
(6) The Co-Promotion Fee will be paid quarterly within 30 days after the
receipt by DEY of the Retail Unit data for the applicable Calendar
(7) DEY and CRTX each acknowledge and agree that all payments under this
Agreement are and shall be separate and distinct from any other
arrangement between CRTX and DEY, including, but not limited to, the
Zileuton Co-Promotion Agreement. Neither party shall be allowed to any
right to offset any monies owed or owing pursuant to this Agreement
against any other payments or obligations owed or owing in connection
with any other agreement between the parties.
(8) For any calendar month in which CRTX does not deliver at least [**]
PDEs to Detail Targets as set forth in Section 4.3 (1), CRTX has the
right, but not the obligation, to perform a "make good" detailing
effort during the [**] days following the last day of such calendar
month (the "Make Good Period") (i.e., "make good" means that CRTX
shall perform within the Make Good Period additional Product Details
necessary to satisfy the requirement of [**] PDEs to Detail Targets
per month). If, for any such instance, CRTX does not perform such a
"make good" detailing effort during the Make Good Period, there will
be an adjustment to the Co-Promotion Fees described in Section 5 for
such prior Calendar Quarter as
mutually agreed to between the Parties. In addition, if CRTX fails
more than [**] times in any Calendar Year to deliver at least [**]
PDEs per calendar month to Detail Targets, regardless of whether a
"make good" effort is made, the Parties will negotiate in good faith
an adjustment to the Co-Promotion Fees and to the monthly PDE
requirement, all as mutually agreed to between the Parties. As regards
the documentation necessary to prove the "make good" effort, such
shall be received by DEY within [**] Business Days after the last day
of the Make Good Period. If DEY does not receive such information
within the ten day period, such shall void the "make good" effort and
shall result in an adjustment of the Co-Promotion Fees as described
above, but shall not be a breach of this Agreement.
5.2 Reports / Reconciliations / Records.
(1) CRTX will provide DEY actual Product Detail information monthly within [**]
days of the close of each month. CRTX shall keep complete and accurate records
of the actual Product Details made by its Sales Representatives (including,
without limitation, names and identification numbers of doctors, dates of
presentations, whether the call is a primary, secondary or tertiary product
presentation, and the number of Samples delivered per Detail, as well as the
number of Sales Representatives in CRTX's sales force Detailing the Product at
the end of each calendar month) and the other activities carried out pursuant to
this Agreement. For Sample distribution, the records shall include the number of
Samples dropped, the lot number of each sample, the Detail Target's name and
address and date of delivery made by each Sales Representative. CRTX shall make
such records available to DEY during CRTX's regular business hours upon
reasonable advance notice and no more than four (4) times during any Agreement
Year and shall provide DEY a report summarizing such matters within [**] days
after the end of each calendar month. The summary shall contain the details of
sample distribution records as detailed above. CRTX shall maintain such records
for [**] years following the period to which they relate. CRTX shall provide DEY
[**] months' prior written notice of its intention to destroy such records, and
DEY shall have the right to obtain such records from CRTX prior to the time of
CRTX's proposed destruction date at DEY's own expense. CRTX acknowledges and
agrees that DEY may from time to time (but no more often than once in any
Year) audit, or retain an independent third party audit service to audit, CRTX's
activities under this Agreement, including, but not limited to, Details and call
and Sample reporting. Such independent audit service shall keep confidential any
information obtained during such examination and shall rep