DEVELOPMENT AND SUPPLY AGREEMENT

Requirements Supplier Agreement

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SEATTLE GENETICS INC /WA | Abbott Laboratories

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Title: DEVELOPMENT AND SUPPLY AGREEMENT
Governing Law: Illinois Date: 5/10/2005
Industry: Biotechnology and Drugs Sector: Healthcare

Exhibit 10.1

SEATTLE GENETICS, INC.

DEVELOPMENT AND SUPPLY AGREEMENT

This Development and Supply Agreement (the “ Agreement ”) is entered into this 18th day of February, 2005 (“ Effective Date ”) by and between Abbott Laboratories, an Illinois corporation having a principal place of business at 100 Abbott Park Road, Abbott Park, Illinois 60064-3500 (“Abbott”), and Seattle Genetics, Inc. having a principal place of business at 21823 – 30th Drive Southeast in Bothell, Washington 98021 (“ Seattle Genetics ”).

WHEREAS, Seattle Genetics is the owner of certain technology and patent rights regarding compounds incorporating humanized S2C6 anti-CD40 monoclonal antibodies, which are used as drugs for cancer and other diseases;

WHEREAS, Seattle Genetics intends to file for approval with the United States Food and Drug Administration (and its foreign equivalents), Investigational New Drug Applications (INDs), New Drug Applications (NDAs) and/or Biologics License Applications (BLAs) (and their foreign equivalents), for certain formulations containing Bulk Drug Substance, as defined below;

WHEREAS, Seattle Genetics has certain process information relating to Bulk Drug Substance and desires to have Abbott evaluate such information and to scale-up and adapt the current manufacturing process for the preparation of Bulk Drug Substance at Abbott facilities;

WHEREAS, Abbott possesses process engineering capabilities and operates process development facilities, which include small scale bulk drug substance laboratories and pilot plants, as well as large scale facilities for the manufacture of clinical and commercial quantities of certain bulk drug substances;

WHEREAS, Abbott desires to evaluate Seattle Genetics’ process information and scale-up and adapt the current manufacturing process for the preparation of Bulk Drug Substance at Abbott facilities; and

WHEREAS, Abbott desires to manufacture for Seattle Genetics, developmental, clinical and commercial quantities of Bulk Drug Substance, and Seattle Genetics desires to purchase from Abbott such quantities, all subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the Parties hereto agree as follows:

1. Definitions

As used in this Agreement, the following words and phrases shall have the following meanings:

1.1 “Abbott Inventions” means any ideas, innovations or inventions related to manufacturing (whether or not patentable) developed by Abbott, Abbott’s Affiliates, Abbott and

Confidential treatment has been requested for portions of this exhibit. The copy filed herewith omits the information subject to the confidentiality request. Omissions are designated as [***]. A complete version of this exhibit has been filed separately with the Securities and Exchange Commission.


CONFIDENTIAL AGREEMENT		1

Third Parties, or Abbott’s Affiliates and Third Parties, prior to or during the Term, including, without limitation, Abbott Know-How and Abbott Patent Rights.

1.2 “Abbott Know-How” means all unique, confidential, proprietary non-patented technical data, drawings, and related documentation, including all improvements thereto, not included in Abbott Patent Rights, as defined below, that describe the process of manufacturing the Bulk Drug Substance as developed by Abbott for Seattle Genetics during the Project that is either (a) owned by Abbott, or Abbott’s Affiliates, or licensed to Abbott, with the right to sublicense, as of the Effective Date, (b) generated by Abbott without Seattle Genetics’ participation during the Term, or (c) acquired by Abbott (other than from or on behalf of Seattle Genetics) during the Term

1.3 “Abbott Patent Rights” means United States and foreign patents and patent applications, including divisions, continuations, continuations-in-part, additions, renewals, extensions, re-examinations and reissues of all such patents and patent applications, all as are owned by Abbott, or Abbott’s Affiliates, or licensed by Abbott, with the right to sublicense, and to which Seattle Genetics would need a license in order to practice the manufacturing and/or process development operations relating to the manufacture of Bulk Drug Substance as developed by Abbott for Seattle Genetics during the Project.

1.4 “Affiliate” of a Party hereto means any entity that controls, is controlled by, or is under common control with such Party. For purposes of this definition, a Party shall be deemed to control another entity if it owns or controls, directly or indirectly, at least fifty percent (50%) of the voting equity of the other entity (or other comparable ownership interest for an entity other than a corporation). For purposes of this Agreement, TAP Pharmaceutical Products, Inc. shall be excluded from the definition of Abbott’s Affiliates.

1.5 “Applicable Dollar Volume” means as such term is defined in Section 10.2.

1.6 “Batch Records” means the mutually agreed upon final batch production and control records for the Bulk Drug Substance prepared in accordance with 21 C.F.R. §211.188.

1.7 “BLA” means the Biologics License Application (or its foreign equivalent) filed with the FDA (or foreign Regulatory Authority), seeking authorization to market Product in the United States (or applicable foreign country within the Territory).

1.8 “Bulk Drug Pricing” means as such term is defined in Exhibit D.

1.9 “Bulk Drug Substance” means the bulk form of the humanized S2C6 anti-CD40 monoclonal antibody, as more fully described in Exhibit A, manufactured in accordance with this Agreement and meeting the Bulk Drug Substance Specifications.

1.10 “Bulk Drug Substance Specifications” means the written specifications for Bulk Drug Substance set forth in Exhibit B, as may be modified from time to time pursuant to Section 8.2.

1.11 “Bulk Drug Substance Storage Rate” means the rate of [***] per month per manufactured lot, provided that any fractional lots shall be considered a whole lot.

[***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.


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1.12 “cGMP” means the FDA’s current good manufacturing practices, as first published in the Federal Register and then specified in the Code of Federal Regulations and FDA’s guidance documents, applicable to the manufacture of Bulk Drug Substance and all successor regulations and guidance documents thereto, as well as the comparable practices, regulations and documents of any other comparable Regulatory Authorities, as in effect from time to time.

1.13 “CMC” means the Chemistry, Manufacturing and Controls section of the BLA.

1.14 “Calendar Quarter” means a three (3) month period commencing January 1, April 1, July 1 and October 1.

1.15 “Confidential Information” means all information, including, but not limited to, Seattle Genetics Inventions and Abbott Inventions disclosed pursuant this Agreement (before or after the Effective Date) in writing (or all information disclosed orally, visually and/or in another intangible form which is summarized in writing as to its general content within thirty (30) days after original disclosure and identified as being confidential, provided however, that all information disclosed orally, visually and/or in another intangible form by Abbott to Seattle Genetics during a site visit shall be considered “Confidential Information” of Abbott regardless of whether Abbott has summarized in writing as to its general content within thirty (30) days after original disclosure and identified as being confidential and all information disclosed orally, visually and/or in another intangible form by Seattle Genetics relating to the process for Bulk Drug Substance to Abbott shall be considered “Confidential Information” of Seattle Genetics regardless of whether Seattle Genetics has summarized in writing as to its general content within thirty (30) days after original disclosure and identified as being confidential), except any portion thereof that:

(a)

is already known to the recipient upon receipt, as evidenced by its written records;

(b)

is disclosed to the recipient without restriction after acceptance of this Agreement by a Third Party who has the right to make such disclosure; or

(c)

is independently developed by or for the recipient without reliance on the Confidential Information, as evidenced by its written records; or

(d)

is or becomes available to the general public without fault of the recipient.

1.16 “Contract Year” means [***]. A Contract Year shall end upon the termination of this Agreement regardless of the actual calendar date.

1.17 “Convicted Individual” or “Convicted Entity” means an individual or entity, as applicable, who has been convicted of a criminal offense that falls within the ambit of 42 U.S.C. §1320a – 7(a), but has not yet been excluded, debarred, suspended or otherwise declared ineligible.

1.18 “Debarred Entity” means a corporation, partnership or association that has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting in the


CONFIDENTIAL AGREEMENT		3

submission of any abbreviated drug application, or an employee, partner, shareholder, member, subsidiary or affiliate of a Debarred Entity.

1.19 “Debarred Individual” means an individual who has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity to a person that has an approved or pending drug product application, or an employer, employee or partner of a Debarred Individual.

1.20 “Dedicated Equipment” means as such term is defined in Section 8.11.

1.21 “Deficiency Notice” means as such term is defined in Section 9.8(a).

1.22 “EMEA” means the European Medicines Evaluation Agency, or any successor entity thereto having substantially the same functions.

1.23 “Excluded Individual” or “Excluded Entity” means (i) an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal health care programs such as Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of the U.S. Department of Health and Human Services, or (ii) is an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal procurement and non-procurement programs, including those produced by the U.S. General Services Administration (GSA).

1.24 “FDA” means the United States Food and Drug Administration, or any successor entity thereto having substantially the same functions.

1.25 “First Commercial Sale” means [***] by Seattle Genetics, its Affiliates, subsidiaries, licensees, sublicensees, contractors, or other designee to any Third Party for use or consumption of such Product in such country by the general public.

1.26 “Force Majeure Event” means as such term is defined in Article 19.

1.27 “Fully Burdened Manufacturing Cost” means the sum of the following costs to the extent reasonably and properly allocable to the manufacture of Bulk Drug Substance: the cost of [***]. Fully Burdened Manufacturing Cost shall be calculated in a manner consistent with Generally Accepted Accounting Principles consistently applied.

1.28 “ICH” means the International Convention on Harmonisation and any successor agreements and/or amendments thereto.

1.29 “Incurred Fees” means as such term is defined in Section 12.7(f).

1.30 “Initial Order Date” means as such term is defined in Section 9.3.

1.31 “Launch Date” means the date on which the First Commercial Sale of Product is made in the Territory by Seattle Genetics, its Affiliates, subsidiaries, licensees, sublicensees, contractors, or other designee.


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1.32 “Liability” means any liability, judgment, loss, damage, cost and other expense (including reasonable attorney’s fees).

1.33 “Maximum Quarterly Capacity” means [***] Bulk Drug Substance per Calendar Quarter of each Contract Year.

1.34 “Party” means either Abbott or Seattle Genetics individually; “Parties” means Abbott and Seattle Genetics together.

1.35 “Payment Schedule” means as such term is defined in Exhibit C, which Payment Schedule may be revised from time to time by mutual written agreement of the Parties.

1.36 “Product” means any pharmaceutical product containing Bulk Drug Substance as its active ingredient.

1.37 “Project” means a multi-stage (each a “ Stage ”) project to adapt and further develop Seattle Genetics’ current process for the manufacture of Bulk Drug Substance to Abbott’s manufacturing facility and develop such process to commercial scale so as to manufacture Bulk Drug Substance in compliance with this Agreement, as more fully described in the Project plan set forth in Exhibit C.

1.38 “Project Schedule” means the schedule for the work and Stages to be completed for the Project set forth in Exhibit C and as may be revised and modified over time as agreed to in writing by the Parties.

1.39 “Purchase Order” means any order instructions, including quantity of Bulk Drug Substance ordered, delivery date, and shipping instructions, submitted by Seattle Genetics for supply of Bulk Drug Substance, subject to Section 9.7. In the event of any terms of the Purchase Order conflict with or are inconsistent with the terms of this Agreement, the terms of this Agreement shall govern and control.

1.40 “Quality Agreement” means as such term is defined in Section 8.7.

1.41 “Reassignment Costs” means as such term is defined in Section 12.7(f).

1.42 “Regulatory Authority(ies)” means the FDA, the EMEA, the ICH, or any comparable national or territorial regulatory entity within the Territory having substantially the same functions.

1.43 “Regulatory Filings” means the governmental filings required to commence human clinical trials and to obtain approval to market Product in a given country within the Territory, including, but not limited to, Product registration(s) and marketing approval(s), as applicable, in each such country.

1.44 “Research and Development Fee” means as such term is defined in Section 5.1.

1.45 “[***]” means as such term is defined in Section 2.3.


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1.46 “[***]” means as such term is defined in Section 2.3.

1.47 “Response Notice” means as such term is defined in Section 9.8(b).

1.48 “Rolling Forecast” means as such term is defined in Section 9.4.

1.49 “Seattle Genetics Know-How” means all unique, confidential, proprietary non-patented technical data, drawings, documentation, analytical and regulatory information and other information, including all improvements thereto, not included in Seattle Genetics Patent Rights, as defined below, relating to the manufacture, use or sale of Bulk Drug Substance that is either (a) owned by Seattle Genetics (or Seattle Genetics’ Affiliates), or licensed to Seattle Genetics, with the right to sublicense, as of the Effective Date, (b) generated by Seattle Genetics without Abbott’s participation during the Term, or (c) acquired by Seattle Genetics (other than from or on behalf of Abbott) during the Term.

1.50 “Seattle Genetics Patent Rights” means the United States (listed on Exhibit G) and foreign patents and patent applications, including divisions, continuations, continuations-in-part, additions, renewals, extensions, re-examinations and reissues of all such patents and patent applications, all as are owned by Seattle Genetics (or Seattle Genetics’ Affiliates), or licensed to Seattle Genetics, with the right to sublicense, claiming Bulk Drug Substance, or to which Abbott would need a license or sublicense in order to make Bulk Drug Substance.

1.51 “Second Source” means as such term is defined in Section 7.1.

1.52 “Stage” means as such term is defined in Section 1.37.

1.53 “Term” means as such term is defined in Section 12.1.

1.54 “Territory” means the world.

1.55 “Third Party” or Third Parties” means any person(s) or entity(ies), as applicable, other than the Parties, their Affiliates, or the Parties and Affiliates employees and agents.


CONFIDENTIAL AGREEMENT		6

2. Bulk Drug Substance Development Project

2.1 The Project . Following the Effective Date and according to technical reports and the project plan set forth in Exhibit C, Abbott shall undertake the Project. The Project shall consist of research and development activities described on Exhibit C. Abbott shall perform its research and development activities hereunder pursuant to the terms of this Agreement and the Project; provided, however, Seattle Genetics understands that, because the Project involves research from which the results are inherently uncertain, Abbott does not make [***] of any kind that the Project will result in a commercially-viable process. Nevertheless, Abbott shall conduct the Project diligently and in accordance with generally accepted standards of good scientific practice including, but not limited to, the creation and maintenance of properly witnessed complete and accurate laboratory notebooks made contemporaneous with the activities reflected therein.

2.2 Project Stages . At the completion of each Stage, except in the event that this Agreement is otherwise terminated as permitted herein, the Parties shall mutually agree whether to (i) proceed with the Project; (ii) conduct further development work under the then current Stage in addition to those activities described in the Project for the then current Stage; or (iii) terminate this Agreement. In the event that the Parties cannot agree on (i), (ii) or (iii) above, the Parties shall organize representatives with technical and executive decision making authority to meet in good faith and attempt to mutually agree on (i), (ii) or (iii). If the Parties are unable to reach agreement at any Stage within ninety (90) days of initiating discussions, then either Party shall [***].

2.3 Manufacturing Facility [***] . Abbott shall [***] for the [***] (as set forth in the Exhibit C hereto) [***] and Seattle Genetics agrees to pay for [***], on the date [***] to the initiation of the [***] (payment currently estimated to occur on [***]) based on the then current Project Schedule, as may be revised by the Parties (the “[***]”). The [***] shall be [***] for the [***] (the “[***]”) in accordance with the then current Project Schedule. Beginning on or around [***], Abbott shall initiate the manufacture of [***] cGMP [***] of Bulk Drug Substance meeting the Specifications. Once any such [***] occurs, and the [***] in the [***] has passed, Abbott shall begin to [***] Seattle Genetics [***] according to the Payment Schedule. In the event that Seattle Genetics does not utilize the [***] to [***] the Project obligations, the [***] Seattle Genetics shall [***] to Abbott shall be [***], to equal [***] of the [***] Abbott pursuant to this Section 2.3. Notwithstanding the foregoing, if Abbott is able to [***] for the [***], Abbott shall [***] Seattle Genetics with a reasonable [***] (as elected by Seattle Genetics) in an [***] to be determined in good faith by Abbott.

3. Abbott’s Research and Development Activities

3.1 Abbott’s Activities . One of the objectives of the Project shall be for Abbott to develop and manufacture Bulk Drug Substance and to support Seattle Genetics’ Regulatory Filings as appropriate, however, Seattle Genetics shall be responsible for the preparation and filing of Regulatory Filings, and all communications with Regulatory Authorities, with respect to the Bulk Drug Substance. Abbott shall conduct and perform its obligations on the Project plan set forth in Exhibit C as may be amended from time to time by mutual agreement of the Parties to achieve such objectives, including, but not limited to, the following:


CONFIDENTIAL AGREEMENT		7

Sourcing raw materials resins, disposable process components, reagents and testing supplies for use in manufacturing Bulk Drug Substance, provided that Seattle Genetics is responsible for the cost of such raw materials;

Performing pilot scale evaluation of Seattle Genetics’ manufacturing process;

Adapting Seattle Genetics’ manufacturing process to Abbott’s equipment and systems;

Developing optimized process parameters to manufacture Bulk Drug Substance in Abbott’s manufacturing facility;

Preparing suitable manufacturing process documentation, including instructions and manufacturing controls for inclusion in Regulatory Filings;

Provide the Bulk Drug Substance information directly to Seattle Genetics in support of Regulatory Filings, and assisting Seattle Genetics in responding to questions from Regulatory Authorities concerning the manufacture of Bulk Drug Substance;

Conducting material contact and cleaning validation studies, engineering and validation runs, process validation studies, and preparing process justification and validation summary reports, in a mutually agreed upon timely manner, to meet pre-approval and other appropriate inspection requirements of the Regulatory Authorities and to support approval of the manufacture of the Bulk Drug Substance in an Abbott manufacturing facility;

Permitting Seattle Genetics to conduct all necessary cGMP and quality assurance reviews of Abbott documentation, including review and receipt of copies of Batch Records;

Permitting Seattle Genetics to access Abbott’s manufacturing data relating to Bulk Drug Substance;

Providing Seattle Genetics with acceptable environmental impact statements, if required, for inclusion with Regulatory Filings;

Providing Seattle Genetics with appropriate pilot and commercial scale batch record manufacturing documentation for Regulatory Filings and other uses in accordance with the Quality Agreement;

Preparation for and administration of the pre-approval inspection (and any other necessary inspections) by the Regulatory Authorities; and

Subject to Section 2.1, manufacturing development supplies, clinical supplies and process validation batches of Bulk Drug Substance in accordance with current cGMPs and pursuant to protocols to which the Parties shall mutually agree in writing.


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4. Seattle Genetics’ Research and Development Activities

4.1 Seattle Genetics’ Activities . Seattle Genetics shall assist Abbott in completing the Project, including but not limited to Seattle Genetics’ responsibility for the following:

Providing Abbott with applicable analytical methods and reference materials qualified to Abbott’s standards (which standards shall reasonably comport with industry standards) for: (1) raw materials. (2) in-process sample testing and (3) the release of Bulk Drug Substance;

Providing Abbott with technical data on Bulk Drug Substance that includes, but is not limited to, the following: (i) material safety data sheets with environmental and safety information, and (ii) additional detailed data, if necessary, to define potential hazards and establish employee exposure levels;

Obtaining and providing Abbott with copies of Regulatory Filings as necessary for the pre-approval inspection; and

Maintaining a stability program for, and retaining samples of, the Bulk Drug Substance.

5. Payment for Abbott’s Development Efforts

5.1 Research and Development Fee . To reimburse Abbott for its participation in the Project in compliance with the activities described therein and in this Agreement, and in accordance with the Payment Schedule, Seattle Genetics shall pay Abbott a research and development fee (“ Research and Development Fee ”), which fee in the aggregate upon completion of the Project may be [***], but shall not [***], unless revisions occur in the Project scope in accordance with the terms of this Article 5. The maximum [***] of [***] the costs for the services to be performed [***] and the raw materials, resins, disposable process components, reagents and testing supplies which are currently [***]; provided , however , that if the costs of raw materials, resins, disposable process components, reagents and testing supplies [***], Seattle Genetics shall[***] for those excess costs and the Research and Development Fee shall be [***] by the [***] of those excess costs. The Parties understand and agree that the Research and Development Fee is comprised of, in part, on a [***], the [***] described in Section 2.3. The Research and Development Fee shall [***] to Abbott as outlined in the Payment Schedule. Any such modifications agreed upon by the Parties to the scope of the Project shall be incorporated into the Payment Schedule by a written agreement between Seattle Genetics and Abbott.

5.2 Changes in Project Scope . If changes occur in the Project or Bulk Drug Substance Specifications, or if technical difficulties require that Abbott perform either additional work or repeat work, and provided such work is unrelated to Abbott’s fault or negligence, in advance of incorporating such changes or performing any work associated therewith, Abbott shall consult with Seattle Genetics and thereafter provide Seattle Genetics with a new or revised written test protocol with cost estimates for such work. If Seattle Genetics approves such fee and protocols in writing, Abbott shall perform such


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work and Seattle Genetics shall pay Abbott’s fee for such work in the manner and at the time as agreed upon by the Parties in writing in conjunction with the approval of the work.

5.3 Additional Filing Costs . Seattle Genetics shall reimburse Abbott for Abbott’s reasonable out of pocket costs paid to any Third Party, which are subject in each case to written pre-approval by Seattle Genetics, associated with any filings with Regulatory Authorities including but not limited to the filing of a CMC or CMC amendment, in support of Seattle Genetics’ Regulatory Filings with respect to Bulk Drug Substance. Seattle Genetics also shall reimburse Abbott for those reasonable out of pocket costs paid to any Third Party, which are subject in each case to written pre-approval by Seattle Genetics, for any work requested by Seattle Genetics to produce and assemble documentation for Bulk Drug Substance registrations outside the United States. Seattle Genetics shall not be obligated to pay or reimburse Abbott any of its costs associated with its establishment license or otherwise relating to its qualification as a manufacturer of biological product for human use, except in the event that such costs are uniquely attributable to the manufacture of Bulk Drug Substance, in which event, Seattle Genetics shall be responsible for such costs.

6. Pilot Scale and Clinical Supplies

6.1 Pilot Scale Supplies . Subject to Section 2.1, as part of the development portion of the Project, Abbott shall manufacture and provide to Seattle Genetics product that results from up to (as determined by Seattle Genetics) [***] of Bulk Drug Substance. Apart from Section 2.1, and notwithstanding any other terms or conditions to the contrary contained herein, including, without limitation Section 13.2, Abbott makes no warranties, express or implied, with respect to Bulk Drug Substance produced for pilot scale supplies pursuant to this Section 6.1. All warranties, express or implied, including without limitation, the implied warranties of merchantability, fitness for a particular purpose and non-infringement, are hereby disclaimed by Abbott with respect to Bulk Drug Substance manufactured pursuant to this Section 6.1.

6.2 [***] Clinical Supplies . Subject to Section 2.1, as part of completing the Project, Abbott shall manufacture and provide to Seattle Genetics in [***] clinical supplies of Bulk Drug Substance supplies that result from [***] according to the mutually agreed final Batch Records and Bulk Drug Substance Specifications. Abbott warrants the [***] in accordance with Section 13.2. The Parties shall mutually agree on any alteration of the Project Schedule and Bulk Drug Substance amount.

6.3 Additional Clinical Supplies . If additional [***] clinical supply is desired by Seattle Genetics, approximately [***] in advance of the desired additional clinical supply Bulk Drug Substance start date, Seattle Genetics shall provide Abbott written notice of the same. The parties shall mutually agree on a date for supplying the additional clinical Bulk Drug Substance. Based on such mutually agreed upon date Seattle Genetics shall provide Abbott a non-revocable Purchase Order for its requirements of additional clinical Bulk Drug Substance to be supplied by Abbott. The price of Bulk Drug Substance purchased pursuant to this Section 6.3 shall be [***], excluding raw material costs, per batch, subject to Section 8.2. Abbott warrants the additional [***] in accordance with Section 13.2.

6.4 Revisions to Project Schedule . No revisions may be made to the pilot scale and


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clinical development schedule portion of the Project Schedule unless mutually agreed upon in writing by Seattle Genetics and Abbott. The Parties shall mutually agree to the revision in fees associated with such agreed upon adjustment to such schedule.

7. Manufacture and Commercial Supply of Bulk Drug Substance

7.1 Purchase and Sale of Commercial Bulk Drug Substance . During the Term, Abbott shall manufacture and deliver commercial Bulk Drug Substance, in accordance with the terms of this Agreement, for the benefit of Seattle Genetics or its designee. Seattle Genetics shall purchase, in accordance with the terms of this Agreement, its commercial Bulk Drug Substance requirements in the Territory up to the Maximum Quarterly Capacity from Abbott; provided that Abbott is able to supply commercial Bulk Drug Substance in accordance with Article 9; and provided further that Seattle Genetics shall have the right, in an effort to ensure a secure commercial supply of Bulk Drug Substance, to enter into a [***] with a company other than Abbott for the supply of up to [***] of Seattle Genetics’, its Affiliates, subsidiaries, licensees, sublicensees and contractors’ worldwide commercial supply requirements of Bulk Drug Substance (the “[***]”).

Seattle Genetics hereby agrees that Abbott will qualify as the [***] if Abbott:

(a)

can demonstrate its ability to supply [***] of Seattle Genetics’, its Affiliates, subsidiaries, licensees, sublicensees and contractors’ worldwide commercial supply requirements of Bulk Drug Substance for a projected period of [***] from a [***] facility more than [***] from the manufacturing site supplying any other portion of Seattle Genetics’ requirements of commercial Bulk Drug Substance; and

(b)

demonstrates that additional capacity is available at Abbott’s manufacturing site that is then supplying Bulk Drug Substance for a projected period of at [***]; and

(c)

the Parties mutually agree on a revised Bulk Drug Substance price, delivery dates and other applicable terms and conditions acceptable to both parties.

Abbott shall manufacture commercial Bulk Drug Substance in accordance with the Bulk Drug Substance Specifications. The Parties may alter from time to time the commercial Bulk Drug Substance Specifications by mutual written agreement without amending this Agreement in accordance with Section 8.2. In the event that Abbott intends to [***] at any time during the Term, then within [***]. Seattle Genetics shall have the option exercisable at any time during this Agreement, after the completion of [***], to either (i) terminate this Agreement with prior written notice to Abbott and in accordance with Section 12.2, provided however, that Seattle Genetics its Affiliates, subsidiaries, licensees, sublicensees and/or contractors, as applicable, [***]; or (ii) terminate this Agreement with prior written notice to Abbott and in accordance with Section 12.2 and [***].

7.2 Raw Materials and Components . Abbott shall source all raw materials and components necessary for the manufacture of the commercial Bulk Drug Substance. Such raw materials and components are included in the commercial price of the commercial Bulk Drug


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Substance as detailed in Exhibit D.

8. Manufacture of Bulk Drug Substance

8.1 Use of Third Parties . Abbott shall not utilize a Third Party to manufacture any portion of the Bulk Drug Substance without first obtaining Seattle Genetics’ written consent, which consent shall not be unreasonably withheld, conditioned or delayed. In the event that Abbott is authorized to utilize a Third Party in the manufacture of Bulk Drug Substance, such Third Party shall be approved by Abbott’s Quality Assurance department. Any such contract entered into by Abbott and a Third Party shall contain provisions substantially similar to those set forth in this Agreement pertaining to the audit of Abbott, that allow Seattle Genetics to audit such Third Party’s facilities. Abbott agrees that it shall remain liable for the performance of Abbott’s obligations hereunder in the event that Abbott is authorized to use a Third Party to perform certain of Abbott’s obligations on its behalf. It shall be deemed reasonable for Seattle Genetics to withhold consent to Abbott’s utilization of a Third Party to manufacture any portion of the Bulk Drug Substance in the event that such utilization would have a substantial likelihood of (a) impairing or jeopardizing any pending or actual regulatory approval for the manufacture of the Bulk Drug Substance, (b) adversely affecting the regulatory status of the Bulk Drug Substance or (c) materially delaying delivery schedules, increasing the pricing or adversely affecting the quality of the Bulk Drug Substance.

8.2 Modification of Bulk Drug Substance Specifications . Neither Party shall implement any modification, material or otherwise, to the Bulk Drug Substance Specifications without the other Party’s prior written approval, provided however that Abbott’s consent shall not be unreasonably withheld. Prior written approval of Seattle Genetics for the purposes of this Section 8.2 shall be the written approval of Seattle Genetics’ Senior Vice President of Development or Chief Executive Officer. Abbott shall submit to Seattle Genetics a revised price for either the current or future Stage of development during the Project or the Bulk Drug Substance that reflects such cost increase or decrease resulting from any of the following events: (i) the Bulk Drug Substance Specifications are modified by mutual written agreement, (ii) the Bulk Drug Substance Specifications must be modified by requirement of any Regulatory Authority, or (iii) a process change is required as part of the CMC or other applicable governmental application, and such modification or process change materially increases or decreases Abbott’s cost to manufacture Bulk Drug Substance. Abbott and Seattle Genetics shall mutually agree on the cost allocation of such change. In the event the Parties are unable to agree on such cost allocation, Abbott may refuse to implement the change in which event, Seattle Genetics may terminate this Agreement upon prior written notice and in accordance with Section 12.2 or Abbott may terminate this Agreement upon prior written notice and in accordance with Section 12.3. If such modification results in the requirement to reprocess and/or retest previously manufactured and otherwise acceptable Bulk Drug Substance, any additional costs incurred by Abbott in such reprocessing and/or retesting shall be paid within the [***] of the mutual written agreement of the Parties for Abbott to reprocess and/or retest the Bulk Drug Substance; or (ii) [***] after receipt of the final report of the results of the retest or reprocessing. The Parties hereby acknowledge that it is their joint objective to develop and implement a manufacturing process that is as efficient and cost effective as possible, and to continue to improve its efficiency, as may be permitted by Regulatory Authorities. During the Term, the Parties shall discuss and negotiate in good faith regarding the impact of


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implementation of a scale-up process and/or improved process, which may result in a cost reduction.

8.3 Modification of Bulk Drug Substance Process . Abbott shall not make any process changes with respect to the manufacture of the Bulk Drug Substance without prior written approval from Seattle Genetics’ Senior Vice President of Development or Chief Executive Officer. Abbott shall not make any facility changes with respect to the manufacture of the Bulk Drug Substance without providing Seattle Genetics with prior written notice. Prior to any such change in the manufacturing or facility change being made, Seattle Genetics shall be responsible for obtaining (a) all necessary approvals from Regulatory Authorities and (b) to the extent necessary and under terms to be agreed upon in writing by Seattle Genetics, and borne by Seattle Genetics exclusive of Abbott, licensure from Abbott or any Third Party in order to practice such process change for the manufacture of Bulk Drug Substance with respect to such modifications. Modifications to Abbott’s facilities and the cost thereof resulting from a change in law, rule, or regulation shall be the responsibility of Abbott, except to the extent that such costs are uniquely attributable to the manufacture of Bulk Drug Substance, in which case Seattle Genetics shall be responsible for such costs. Abbott shall be solely responsible for obtaining any necessary approvals from Regulatory Authorities for facility changes.

8.4 Bulk Drug Substance Title and Shipment . Any Bulk Drug Substance manufactured by Abbott pursuant to this Agreement shall be shipped [***] using validated shipping methods, which shall be part of the Bulk Drug Substance Specifications. [***]. Shipment shall be via a carrier designated by Seattle Genetics. Abbott shall not ship any Bulk Drug Substance that does not conform to the Bulk Drug Substance Specifications. Each shipment of Bulk Drug Substance shall be accompanied by documentation in accordance with Exhibits B (Bulk Drug Substance Specifications) and H (Quality Agreement).

8.5 Bulk Drug Substance Storage . Seattle Genetics shall pay Abbott for any Bulk Drug Substance storage costs at the Bulk Drug Substance Storage Rate (excepting retained samples) incurred by Abbott at Seattle Genetics’ request for storage after the period ending [***] after release of post Launch Date Bulk Drug Substance, provided that such Bulk Drug Substance was forecasted by Seattle Genetics according to Article 9.

8.6 Quality Control . Abbott shall apply its quality control procedures and in-plant quality control checks on the manufacture of Bulk Drug Substance for Seattle Genetics in the same manner as Abbott applies such procedures and checks to bulk drug substance of similar nature manufactured for sale by Abbott, which in all events will at least meet generally accepted standards of quality control in the manufacture of biologics in the pharmaceutical industry. In addition, Abbott will test and release Bulk Drug Substance to Seattle Genetics in accordance with the Bulk Drug Substance Specifications described in Exhibit B.

8.7 Quality Assurance . The Parties have approved a quality agreement (“Quality Agreement”) which is attached hereto as Exhibit H, outlining the responsibilities and key contacts for quality and compliance-related issues. Items contained in the Quality Agreement include, but are not limited to recalls, annual product reviews, returned goods, regulatory audits, compliance with cGMP and compliance with such other quality related concerns as are deemed appropriate by the Parties. In the event any terms of the Quality Agreement conflict with or are


CONFIDENTIAL AGREEMENT		13

inconsistent with the terms of this Agreement, the terms of the Quality Agreement shall govern and control with regards to terms related to quality assurance or control and otherwise the terms of this Agreement shall govern and control.

8.8 Audits . Seattle Genetics shall have the right, upon [***] prior written notice to Abbott and receipt of Abbott’s consent thereto, which consent shall not be unreasonably withheld, conditioned or delayed, to conduct during normal business hours a quality assurance audit and inspection of Abbott’s records and Bulk Drug Substance facilities relating to the manufacture of Bulk Drug Substance and to perform follow-up audits as reasonably necessary. Prior to Abbott commencing the production of the first batch of commercial Bulk Drug Substance as ordered by Seattle Genetics, such audits and inspections may be conducted from time to time on a reasonable basis. Once Abbott has commenced production of the first batch of commercial Bulk Drug Substance, such audits may only be conducted [***] each calendar year. The duration of such audits shall not exceed [***] and such audits shall be performed by no more than [***], unless Seattle Genetics reasonably believes that a longer audit or additional personnel are necessary and provides its reasonably adequate reasons for such belief to Abbott in writing. If Seattle Genetics wishes to perform audits more often than [***] per calendar year or over a period in excess of [***], Seattle Genetics shall pay Abbott [***] per additional audit day. Notwithstanding the foregoing, in the event that an audit is required by Seattle Genetics due to quality issues that arise, per the terms of Sections 8.9 and/or 9.8, Seattle Genetics shall be entitled to conduct one additional audit for each such occurrence [***]. If more than [***] perform the audit, Seattle Genetics shall pay Abbott [***]. In addition, Seattle Genetics or its licensees shall have the right at any time during the Term, upon [***] prior written notice to Abbott, to conduct any audits specifically mandated by any Regulatory Authority or to respond to specific questions from any such Regulatory Authority. Notwithstanding anything to the contrary contained in this Agreement, any audits conducted on Abbott’s property shall be subject to Abbott’s rules and regulations regarding, without limitation, security and confidentiality and shall be conducted in the presence of Abbott’s employees. In addition, Abbott shall promptly provide Seattle Genetics a written response to any such audit report received by Abbott.

Visits by Seattle Genetics to Abbott’s Bulk Drug Substance facilities may involve the transfer of Confidential Information, and any such Confidential Information shall be subject to the terms of Article 11 hereof. The results of such audits and inspections shall be considered Confidential Information under Article 11 and shall not be disclosed to Third Parties, including but not limited to any Regulatory Authority, unless required by law and upon prior written notice to Abbott. If Seattle Genetics utilizes auditors that are not employees of Seattle Genetics, each of such auditors shall execute a non-disclosure agreement with confidentiality terms at least as stringent as those set forth in Article 11.

Abbott shall be responsible for inspections of its manufacturing facilities by any Regulatory Authorities and shall promptly notify Seattle Genetics if such inspections are directly related to the manufacture of Seattle Genetics’ Bulk Drug Substance or if the results of a non-related inspection could materially impair Abbott’s ability to perform in accordance with this Agreement. With respect to inspections related to the manufacture of Bulk Drug Substance, Abbott shall (a) provide Seattle Genetics with copies of all documents, reports or communications received from or given to any Regulatory Authority associated therewith, (b) permit Seattle Genetics’ representatives to be present on site at such inspections, and to


CONFIDENTIAL AGREEMENT		14

participate, at Abbott’s reasonable discretion, as appropriate, based on questions or requests specific to Seattle Genetics and as permitted by Regulatory Authorities, in such inspections, and (c) allow Seattle Genetics to provide comments to Abbott, and Abbott shall draft any such correspondence to Regulatory Authorities in connection therewith.

Seattle Genetics shall promptly notify Abbott regarding any inspection on Seattle Genetics property related to the manufacture of Bulk Drug Substance.

8.9 Recalls . Product recalls and contacts with any Regulatory Authorities relating to the recall of Product shall be the responsibility and under the control of Seattle Genetics. In the event that Abbott has reason to believe that any Products should be recalled or withdrawn from distribution, it shall promptly inform Seattle Genetics in writing of such belief. Seattle Genetics shall notify the appropriate Regulatory Authorities of any recall and shall be responsible for coordinating all necessary activities regarding the action taken. Abbott and Seattle Genetics shall fully cooperate to complete the recall, and shall thereafter resolve any allocation of liability as may be appropriate in accordance with the terms of this Agreement. The costs and expenses of conducting any recall shall be treated as follows:

(a)

If any Product is recalled as a result of the supply by Abbott of Bulk Drug Substance that was not manufactured in compliance with the terms of this Agreement, then Abbott shall reimburse Seattle Genetics for all reasonabl

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