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Exhibit 10.1
CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY
CONFIDENTIAL TREATMENT
REQUESTED:INFORMATION FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED IS OMITTED AND NOTED
WITH "***" AN UNREDACTED VERSION OF THIS
DOCUMENT HAS BEEN SUBMITTED SEPARATELY TO
THE SECURITIES AND EXCHANGE
COMMISSION.
COMMERCIAL SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (this "Agreement")
effective as of February 15, 2005 (the
"Effective Date"), is entered into between
Halozyme, Inc., a California
corporation ("HALOZYME"), having a place of
business at 11588 Sorrento Valley
Road S17, San Diego, California 92121, and
Avid Bioservices, Inc., a Delaware
corporation ("AVID") having a place of
business at 14282 Franklin Avenue,
Tustin, California 92780.
WHEREAS, AVID has the expertise and the
manufacturing facility suitable for the
Production of protein as Bulk Drug
Substance, derived from mammalian cell
culture;
WHEREAS, HALOZYME wishes to have AVID
Produce Bulk Drug Substance and AVID
wishes to Produce Bulk Drug Substance for
HALOZYME;
NOW, THEREFORE, in consideration of the
foregoing premises and the mutual
covenants set forth below, the parties
hereby agree as follows:
1.
DEFINITIONS.
1.1 "Affiliate"
shall mean, with respect to a party hereto, any
entity that controls or is controlled by
such party, or is under common control
with such party. For purposes of this
definition, an entity 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
another entity (or other comparable
interest for an entity other than a
corporation).
1.2 "AVID SOPs"
shall mean AVID's Standard Operating Procedures.
Copies of only those AVID's Standard
Operating Procedures specifically written
for the production of Bulk Drug Substance
for HALOZYME shall be provided by AVID
to HALOZYME prior to the Effective Date.
AVID shall be responsible at all times
to cause the Bulk Drug Substance-specific
AVID SOPs to be consistent with the
Bulk Drug Substance Master Plan, provided
that each part of the Bulk Drug
Substance Master Plan is in its final
approved and signed form with no
outstanding changes.
1.3 "Batch"
shall mean a specific quantity of Bulk Drug Substance
comprising a batch size mutually agreed
upon in writing between HALOZYME and
AVID, and that (a) is intended to have
uniform character and quality within
specified limits, and (b) is produced
according to a single manufacturing order
during the same cycle of manufacture.
1.4 "Bulk Drug
Substance" or "BDS" shall mean recombinant human
PH20 hyaluronidase, to be Produced by AVID
in bulk form.
1.5 "Bulk Drug
Substance Invention" means any Invention relating
to the Bulk Drug Substance or its use made
in connection with the performance of
this Agreement.
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CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY
1.6 "Bulk Drug
Substance Master Plan" shall mean, collectively,
the following:
1.6.1 the Manufacturing Schedule (Exhibit A);
1.6.2 the Purchase Price (Exhibit B);
1.6.3 the Quality Agreement (Exhibit C);
1.6.4 the Specifications (Exhibit E); and
1.6.5 the Master Batch Record.
1.7 "Bulk Drug
Substance Requirements" shall mean (a) cGMP,
(b) the directions, processes, methods,
materials and other requirements set
forth in the Master Batch Records and
Avid's SOP's, and (c) the Specifications.
1.8 "Certificate
of Analysis" or "COA" means the certificate to be
issued by AVID for each Batch of Bulk Drug
Substance delivered hereunder in
compliance with cGMP stating the
specifications, the testing completed and
results, the analytical methods used, and
the testing results.
1.9
"Certificate of
Compliance" , part of the COA, means the
certificate to be issued by AVID stating
that the product was manufactured and
tested in compliance to applicable cGMPs
guidelines, internal policies and
procedures.
1.10 "cGMP" shall mean
the current Good Manufacturing Practices
required by the FDA or other Regulatory
Authorities as defined in Section 1.20
and set forth in the FD&C Act or FDA
Regulations (including without limitation
21 CFR Parts 210, 211 and 600), policies or
guidelines, effective as of the date
of the Production of a Batch, for the
Production and testing of pharmaceutical
materials as applied solely to Bulk Drug
Substance.
1.11 "Confidential
Information" shall mean, with respect to a
party, all information (and all tangible
and intangible embodiments thereof)
that is disclosed by such party to the
other party and is marked, identified as
or otherwise acknowledged to be
confidential at the time of disclosure to the
other party. Notwithstanding the foregoing,
Confidential Information of a party
shall not include information that the
other party can establish by written
documentation (a) to have been publicly
known prior to disclosure of such
information by the disclosing party to the
receiving party; (b) to have become
publicly known, without the fault of the
receiving party, subsequent to
disclosure of such information by the
disclosing party to the receiving party;
(c) to have been received by the receiving
party at any time from a source,
other than the disclosing party, rightfully
having possession of and the right
to disclose such information; (d) to have
been otherwise known by the receiving
party prior to disclosure of such
information by the disclosing party to the
receiving party; or (e) to have been
independently developed by employees or
agents on behalf of the receiving party
without access to or use of
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CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY
such information disclosed by the
disclosing party to the receiving party (each,
a "Confidentiality Exception").
1.12 "Development"
shall mean studies conducted by AVID under this
Agreement to develop a process to Produce
Bulk Drug Substance in accordance with
the Specifications and cGMP, provided such
studies have been agreed to in
writing by the parties.
1.13 "EMEA" shall mean
the European Agency for the Evaluation of
Medicinal Products, or the European
Medicines Evaluation Agency.
1.14 "FDA" shall mean
the United States Food and Drug
Administration or any successor entity
thereto.
1.15 "FD&C Act"
shall mean the United States Federal Food, Drug and
Cosmetic Act, as may be amended from time
to time, and the rules and regulations
promulgated thereunder.
1.16 "IND" shall mean
an Investigational New Drug application for
Bulk Drug Substance, as defined in the
FD&C Act or FDA Regulations (21 CFR 314).
1.17
"Invention" shall mean
any invention, discovery, composition,
enhancement, technology, data or
information (whether or not patentable) made or
conceived by employees or others on behalf
of AVID, HALOZYME or both in the
performance of this Agreement.
1.18 "Labeling" shall
mean all labels and other written, printed,
or graphic matter upon: (i) Bulk Drug
Substance or any container, carton, or
wrapper utilized with Bulk Drug Substance
or (ii) any written material
accompanying Bulk Drug Substance,
including, without limitation, product inserts
that bear the trademarks or trade dress of
HALOZYME, or other matter designated
in the Specifications.
1.19 "Manufacturing
Schedule" shall mean the plan containing the
schedule of manufacturing needs and timing
for the delivery of each
manufacturing run of the Bulk Drug
Substance set forth on Exhibit A, as amended,
supplemented or restated from time to time
by mutual written agreement of the
parties.
1.20 "Master Batch
Record" shall have the meaning set forth in
Section 3.2.
1.21 "Master Cell
Bank" means the fully characterized cells
expanded and vialed into a series of
aliquots, and maintained in a state of
frozen suspension.
1.22 "Process
Invention(s)" means (a) any proprietary method or
process used in Producing the Bulk Drug
Substance that is owned or licensed to
AVID as of the Effective Date; and (b) any
Invention made solely by employees or
representatives of AVID that constitutes an
improvement or enhancement to any
proprietary method or process of AVID
used
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CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY
in Producing the Bulk Drug Substance,
provided that such Invention does not
incorporate, use or otherwise compete with
the Bulk Drug Substance.
1.23 "Production" or
"Produce" shall mean the cell culture and
purification, bulk filling, packaging,
inspection, labeling, and testing of Bulk
Drug Substance by AVID.
1.24 "Purchase Price"
shall mean the amount to be paid by HALOZYME
for services provided by AVID as set forth
in Exhibit B.
1.25 "Quality
Agreement" shall mean the Quality Agreement, in the
form attached as Exhibit C, entered into by
AVID and HALOZYME as of the
Effective Date, as amended, supplemented or
restated from time to time in
accordance with Section 2.3 or as the
parties otherwise mutually agree in
writing.
1.26
"Reference Standard"
means a highly characterized series of
aliquots of recombinant human PH20
hyaluronidase with a defined level of
activity.
1.27 "Regulatory
Authority (ies)" shall mean those agencies or
authorities responsible for regulation of
Bulk Drug Substance in the United
States per FDA regulations, in Europe per
EMEA regulations, and in Canada per
Health Services, Canada. If AVID needs to
comply with other agencies, it will be
addressed on a case-by-case basis as agreed
to in writing by both parties.
1.28 "Released
Executed Batch Record" shall mean the completed
batch record (in the form of the applicable
Master Batch Record) and associated
deviation reports, investigation reports,
and Certificates of Analysis (provided
in accordance with the Quality Agreement)
created for each Batch of Bulk Drug
Substance and approved as released to
HALOZYME under cGMP by AVID.
1.29 "Specifications"
shall mean the written specifications for the
Bulk Drug Substance, containing
manufacturing and testing requirements for Bulk
Drug Substance, as well as raw material,
packaging component, labeling, and
quality assurance specifications, which are
set forth on Exhibit E, as amended,
supplemented or restated from time to time
in accordance with Section 2.2.2.
1.30 "Working Cell
Bank" means a secondary population of cells that
originated from the Master Cell Bank that
is characterized and vialed into a
series of aliquots and maintained in a
state of frozen suspension.
2.
BULK DRUG
SUBSTANCE MASTER PLAN.
2.1 Bulk Drug
Substance Master Plan. Prior to the Effective Date,
the parties have mutually agreed upon each
of the exhibits attached to this
Agreement comprising the Bulk Drug
Substance Master Plan.
2.2 Amendment of
Bulk Drug Substance Master Plan.
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CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY
2.2.1 Except as otherwise set forth in Sections 2.2.2 and 2.3,
the Bulk Drug Substance Master Plan may be
amended from time to time, as the
parties experience with the Production,
testing and use of the Bulk Drug
Substance warrants, only upon mutual
written agreement of HALOZYME and AVID.
2.2.2 At the reasonable request of HALOZYME, the parties shall
negotiate in good faith modification(s) to
the Specifications (Exhibit E) to
address regulatory concerns raised by any
Regulatory Authority or raised by
HALOZYME.
2.2.3 In the event of any modification(s) to the
Specifications that result in an increase
or decrease in the costs to AVID, then
the parties shall negotiate in good faith
an adjustment to the Purchase Price to
reflect such increased or decreased cost.
Notwithstanding the foregoing, if
HALOZYME should decide to change the
Specifications with regard to the Bulk Drug
Substance, HALOZYME shall be liable for any
and all additional costs for
materials, including but not limited to,
raw materials, shipping materials or
other items previously purchased by AVID in
reasonable anticipation of use under
this Agreement which have become
unnecessary as a result of such change and
cannot be used by AVID with its
manufacturing efforts for its other customers
(collectively, the "Incurred Material
Costs"); provided, however, that AVID has
notified HALOZYME in writing of such
Incurred Material Costs prior to the date
of any amendment to the Specifications and
HALOZYME has agreed in writing to pay
to AVID such Incurred Material Costs.
2.2.4 In the event that any change contemplated under this
Section 2.2 that is requested by HALOZYME
has the effect of delaying a scheduled
manufacturing run, AVID shall use its
reasonable best efforts to accommodate
such run as soon as reasonably practicable.
The parties agree that AVID shall
not be liable to HALOZYME for any loss,
damages incurred by HALOZYME to the
extent resulting from such delay.
2.2.5 In the event that HALOZYME requests a change, whether
planned or unplanned that causes a delay to
a manufacturing run under the
Manufacturing Schedule, HALOZYME shall be
liable for any and all Incurred
Material Costs; provided, however, that
AVID has notified HALOZYME in writing of
such Incurred Material Costs prior to the
date of any amendment to the
Manufacturing Schedule and HALOZYME has
agreed in writing to pay to AVID such
Incurred Material Costs. An alteration to
the agreed upon Manufacturing Schedule
that is requested by HALOZYME and results
in HALOZYME losing a manufacturing
time slot will result in forfeiture of the
deposit for that manufacturing time
slot as identified and set forth in the
Purchase Price unless AVID, using its
reasonable best efforts, is able to fill
such manufacturing time slot with a
manufacturing project for one of its other
customers.
2.2.6 In the event that AVID requests a change, whether
planned or unplanned, that causes a delay
to a manufacturing run under the
Manufacturing Schedule, HALOZYME shall not
be liable for any and all Incurred
Material Costs and shall not lose its
deposit for any manufacturing slots
identified and set forth in the Purchase
Price. AVID shall, in good faith and
using commercially reasonable efforts,
limit any delay resulting from such
change to less than thirty (30) days;
provided, however, that if the change
requested by AVID results in a delay to the
manufacturing run under the
Manufacturing Schedule longer than sixty
(60) days
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in the aggregate, the parties shall
mutually agree upon a fair and equitable
reduction in the Purchase Price for the
applicable Bulk Drug Substance to
compensate HALOZYME for such delay,
provided that such delay was not caused by
HALOZYME.
2.3 Quality
Agreement. At the reasonable request of either party,
the parties shall negotiate in good faith
amendment(s) to the Quality Agreement
(Exhibit C) (a) to address matters specific
to the Production of Bulk Drug
Substance for sale and use outside the
United States, and (b) to address
regulatory concerns raised by a Regulatory
Authority or concerns relating to
regulatory compliance or quality raised by
a party.
2.4 Order of
Precedence. In the event that the terms of the Bulk
Drug Substance Master Plan or Quality
Agreement are inconsistent with the terms
of this Agreement, this Agreement shall
control, unless otherwise explicitly
agreed to in writing by the parties. The
Bulk Drug Substance Master Plan and
Quality Agreement shall be deemed to be
incorporated herein and by reference and
made a part of this Agreement.
2.5 Raw Materials and Testing.
HALOZYME authorizes AVID to procure
from qualified vendors in accordance with
the Bulk Drug Substance Master Plan
all necessary raw materials and supplies
required to meet the manufacturing
timeline per the Manufacturing Schedule.
HALOZYME shall provide AVID with at
least four (4) months advance written
notice if HALOZYME would like to delay the
purchase of the raw materials and supplies.
In addition, HALOZYME authorizes
AVID to ship out all necessary samples for
outside testing as soon as reasonable
practical in accordance with the Bulk Drug
Substance Requirements. In accordance
with the Bulk Drug Substance Master Plan,
HALOZYME shall pay AVID for all raw
materials, supplies, and outside testing
charges procured on behalf of HALOZYME
to manufacture the BDS. In the event the
raw materials and supplies are utilized
for other customers of AVID, HALOZYME shall
receive credit from AVID for the raw
materials and supplies utilized by other
customers of AVID.
In the event that a raw material is either not available
despite being ordered in advance adhering
to supplier's stated lead-time, or on
back order from a vendor, or received raw
materials do not meet Specifications,
and in each case such delay is out of the
reasonable control or foresight of the
parties, the Manufacturing Schedule shall
be delayed at no cost or liability to
either party; provided, however, that if
such delay is caused solely by AVID and
is longer than thirty (30) days in the
aggregate, the parties shall mutually
agree upon a fair and equitable reduction
in the Purchase Price for the
applicable Bulk Drug Substance to
compensate HALOZYME for such delay, provided
that such delay was not caused by HALOZYME.
HALOZYME and AVID will use their
reasonable best efforts to locate
alternative sources of the back ordered raw
material. If a vendor is located, said
vendor must be qualified prior to any
material being used in the manufacture of
the Bulk Drug Substance. AVID will
qualify vendor under the terms of this
Agreement. AVID shall provide HALOZYME
with the right to secure the next available
manufacturing time slot once the raw
material has been received and tested to
meet Specifications.
3.
VALIDATION
AND PRODUCTION OF BULK DRUG SUBSTANCE.
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3.1 Initiation
and Conduct. Upon execution of this Agreement,
pursuant to the terms and conditions of
this Agreement, (a) AVID, with input
from HALOZYME, shall conduct process
validation of Bulk Drug Substance as
mutually agreed (including without
limitation providing labor and testing for
such process validation), at an additional
fee to be mutually determined in
advance in good faith but in no event
greater than *** unless agreed upon in
writing, pursuant to the Manufacturing
Schedule and conduct Production of Bulk
Drug Substance pursuant to the Bulk Drug
Substance Master Plan, and (b) HALOZYME
shall pay AVID the Purchase Price in
accordance with Exhibit B, and AVID shall
Produce and deliver to HALOZYME, such
quantities of Bulk Drug Substances as set
forth in the Manufacturing Schedule.
3.2
Documentation. A master batch record and associated SOP's
detailing the processes and procedures for
manufacturing the Bulk Drug Substance
in conformance with the Specifications
shall be generated by AVID; provided,
however that they must be reviewed and
approved in writing by AVID and by
HALOZYME prior to Production (the "Master
Batch Record"). Any substantive change
(e.g., one that would require a change in
revision level per AVID Document
Control SOP) to the approved Master Batch
Record must be reviewed and approved
in writing by AVID and HALOZYME prior to
any change being implemented. It is the
responsibility of HALOZYME to ensure that
proper Regulatory Authorities approve
the suggested changes, if necessary. Each
Batch of Bulk Drug Substance shall be
Produced according to, and shall be
documented in, a production copy of the
Master Batch Record, known as an Executed
Batch Record. Each copy of the
Executed Batch Record for such Batch of
Bulk Drug Substance shall be assigned a
unique batch number by AVID. Any deviation
from the manufacturing process
specified in the Master Batch Record must
be documented in the copy of the
Master Batch Record for that Batch using a
deviation form. AVID shall provide
HALOZYME with one (1) copy of a Released
Executed Batch Record with a completed
Batch of Bulk Drug Substance as soon as
practical but no later than within two
(2) weeks following completion of such
batch. All AVID SOPs shall be made
available to HALOZYME for review at AVID's
facility. HALOZYME shall not be
allowed to copy or duplicate any AVID SOPs
without the prior written consent of
AVID. After the Effective Date, HALOZYME
will be permitted to review all
relevant general SOP's so long as they do
not compromise confidentiality of
other clients and all reviews must be
on-site only. In no event shall HALOZYME
be provided copies of these general SOP's
nor shall HALOZYME remove said
documents from AVID's facility.
3.3 Delivery
Terms. In accordance with the Bulk Drug Substance
Master Plan, AVID shall ship all Bulk Drug
Substance, at HALOZYME's expense, to
a location designated by HALOZYME, FCA
(Tustin, California, per Incoterms 2000),
by a common carrier designated by HALOZYME
in the shipping instructions to be
provided by HALOZYME (the "Shipping
Instructions"). AVID shall be responsible
for the loading of the Bulk Drug Substance
on departure and shall bear risk of
loss of such loading. HALOZYME shall
procure, at its expense, insurance covering
damage or loss of Bulk Drug Substance
during shipping. All Shipping Instructions
of HALOZYME shall be in writing and shall
include detailed packaging
instructions, the name and address of the
recipient and the shipping date.
HALOZYME shall be solely responsible for
its own shipping validation studies
prior to the shipment of any BDS and
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AVID shall not be responsible for the
in-transit BDS provided it complied with
the Shipping Instructions.
3.4 Payment for
Bulk Drug Substance and Development. HALOZYME
shall pay all amounts required to be paid
to AVID pursuant to this Agreement no
later than thirty (30) days from the date
of invoice in accordance with the
Purchase Price, unless otherwise described
herein.
3.4.1 Payment Schedule for BDS. With respect to each
manufacturing run of the Bulk Drug
Substance, the following payment schedule
shall apply:
(a) HALOZYME shall pay AVID a slot reservation deposit
(the "Slot Reservation Deposit") equal to
33% of the price of each Bulk Drug
Substance per the Purchase Price, which
amount is due no later than ninety (90)
days prior to the date the applicable batch
is scheduled to be manufactured per
the Manufacturing Schedule. In no event
shall AVID be required to reserve a
manufacturing slot for HALOZYME until
HALOZYME has paid its slot reservation
deposit.
(b) HALOZYME shall pay AVID a fee equal to 33% of the
price of each Bulk Drug Substance per the
Purchase Price, which amount is due
within thirty (30) days after purification
is complete and will be invoiced by
AVID on the date the applicable batch is
scheduled to be manufactured per the
Manufacturing Schedule.
(c) HALOZYME shall pay a completion fee equal to 34% of
the price of each Bulk Drug Substance per
the Purchase Price, which amount is
due within 30 days from HALOZYME's receipt
of the associated Released Executed
Batch Record and the COA, provided the BDS
met the Bulk Drug Substance
Requirements set forth in Section 5.1.
3.4.2 Cancellation Fee. Subject to 2.2.5, HALOZYME recognizes
that AVID will reserve certain
manufacturing capacity for HALOZYME to meet the
BDS requirements set forth in the
Manufacturing Schedule. In exchange for this
commitment, and as AVID's sole and
exclusive remedy for any cancellation of a
manufacturing run set forth in the
Manufacturing Schedule, HALOZYME hereby
agrees to pay AVID a cancellation fee
solely for the cancellation of
manufacturing runs of the BDS as more
particularly described in the Purchase
Price. The cancellation fee shall be
calculated by taking the product of (i) the
price for the manufacturing of the BDS per
the Purchase Price and (ii) the
applicable percentage based set forth below
based on the date of termination:
Cancellation greater than *** prior to start of ***
a manufacturing run per Manufacturing
Schedule
Cancellation less than *** prior to start of a *** of
applicable
Slot manufacturing run per Manufacturing Reservation Deposit
Schedule
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Notwithstanding the foregoing, if HALOZYME cancels a manufacturing
run
less than *** prior to the scheduled start
of the manufacturing run per the
Manufacturing Schedule, HALOZYME shall not
owe a cancellation fee if AVID is
able to fill such slot with another of its
customers. AVID shall use its best
efforts to attempt to fill a slot created
by any such cancellation. HALOZYME
shall notify AVID as soon as practical of
any planned or anticipated
manufacturing delays.
3.4.3 Monetary Default. If HALOZYME defaults on any payments
due, interest shall accrue on any amount
overdue at the rate of one percent (1%)
per month or the maximum rate allowed by
law, whichever is lower, and for so
long as such overdue amount is unpaid, AVID
shall be entitled to suspend any
additional services under this Agreement by
providing written notice to
HALOZYME. The parties agree that AVID shall
not be liable to HALOZYME for any
loss, damages incurred by HALOZYME to the
extent resulting from such delay.
3.5 Equipment.
During the term of this Agreement, upon the prior
written approval of HALOZYME in each case,
HALOZYME shall fund the purchase of
equipment necessary to Produce the Bulk
Drug Substance. All such equipment paid
for by HALOZYME shall be owned solely by
HALOZYME; provided, however, that such
equipment shall remain at AVID's facility
used for Production of Bulk Drug
Substance and shall be available for AVID's
use solely in connection with the
Production of Bulk Drug Substance for
HALOZYME. AVID shall not use such
equipment for any other purpose, shall not
transfer such equipment to any third
party or other location, shall not purport
to convey or grant to any third party
an interest in such equipment, and shall
take no action inconsistent with
HALOZYME's ownership of such equipment.
During the term of this Agreement, AVID
shall be responsible, at HALOZYME's
expense, for maintaining, servicing and
insuring (including by means of
self-insurance) such equipment to the same
extent and in the same manner as AVID
maintains, services and insures (including
by means of self-insurance) its own
equipment. AVID shall maintain appropriate
records regarding the use, maintenance and
service of such equipment as required
under cGMP. Upon termination of this
Agreement, AVID promptly shall deliver such
equipment to HALOZYME at such location as
HALOZYME reasonably requests at
HALOZYME's sole expense.
4.
PRODUCTION
OF PRODUCT.
4.1
Production.AVID shall Produce Bulk Drug Substance in
accordance with the Bulk Drug Substance
Requirements. HALOZYME shall have the
right, subject to AVID's standard
visitation policy, to access the AVID
facilities, review all applicable records
related the Production of Bulk Drug
Substance in accordance with the Quality
Agreement and AVID's standard
visitation policy. HALOZYME shall have the
right (a) to generally review the
Production of the Bulk Drug Substance, and
(b) to review all relevant
documentation; provided, however, that
HALOZYME shall not have the right to be
physically present during the manufacturing
of the Bulk Drug Substance (from
component preparation through final filling
and labeling) except as expressly
set forth in this Agreement. If HALOZYME
discovers variances in the
documentation from established standards
and methods of Production of Bulk
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Drug Substance, HALOZYME shall give written
notice thereof to AVID, and upon
receipt of any such notice, AVID promptly
shall take all appropriate remedial or
corrective action and give written notice
to HALOZYME describing in reasonable
detail such actions taken.
4.2 Audits.
HALOZYME shall have the right to audit AVID's
facilities in accordance with the Quality
Agreement. HALOZYME shall have the
additional right to audit AVID's facilities
to address significant Bulk Drug
Substance quality or safety problems (each
a "For Cause Audit") as discovered
through Bulk Drug Substance failures or
complaints related to AVID's Production
of the Bulk Drug Substance. Such audits
shall be scheduled at mutually agreeable
times upon reasonable advance written
notice to AVID, shall be at HALOZYME's
expense, and, other than For Cause Audits
which may be scheduled and conducted
as applicable, shall not occur more than
one (1) time per calendar year or
exceed 3 days in length, after successful
completion of a pre-approval
inspection audit, unless required by AVID's
compliance status or HALOZYME's
needs or obligations as a license holder.
In connection with performing such
audits, HALOZYME shall comply with all
reasonable rules and regulations
promulgated by AVID relating to
confidentiality, safety and security.
4.3 Testing. In
accordance with the Quality Agreement, AVID shall
test, or cause to be tested by third party
testing facilities audited by AVID,
and approved by HALOZYME, in accordance
with the Bulk Drug Substance
Requirements, each Batch of Bulk Drug
Substance produced pursuant to this
Agreement before delivery to HALOZYME. Any
third party testing facilities chosen
by HALOZYME and not previously audited by
AVID will be audited by AVID, at
HALOZYME expense. A Certificate of Analysis
and a Certificate of Compliance for
each Batch of Bulk Drug Substance delivered
to HALOZYME shall set forth the
items tested, specifications, and test
results in accordance with the Quality
Agreement. AVID shall send, or cause to be
sent, to HALOZYME such certificates
along with one (1) copy of the Released
Executed Master Batch Record two (2)
weeks after final QA review (in accordance
with the Quality Agreement) and
approval of the executed Master Batch
Record. As the drug license holder,
HALOZYME shall assume full responsibility
for final disposition of each lot of
Bulk Drug Substance. Prior to use of any
raw material or component in the
manufacture of Bulk Drug Substance,
HALOZYME shall review the information AVID
has on file regarding the vendor, part
number and any relevant testing data used
to qualify that raw material or component.
HALOZYME shall approve the use of any
such vendor in writing prior to the
initiation of any commercial manufacturing.
In the event a raw material or component is
determined at a later stage to
contain an adventitious agent or
contaminant liability will be determined
subsequent to an investigation to be
conducted by the parties.
4.4
Permits and
Licenses. HALOZYME shall have sole responsibility,
at its expense, for obtaining all permits
and licenses, including any licenses
specific (i.e., including, but not limited
to licenses for specific cell lines,
expression systems, purification and
specific media components, etc.) for
manufacture of the Bulk Drug Substance,
necessary or required for the sale,
marketing and commercialization of each
Bulk Drug Substance manufactured by AVID
hereunder. AVID shall be responsible, at
its expense, to obtain and maintain all
permits and licenses required for it to
carry out its regulatory and Production
obligations hereunder. AVID, at HALOZYME's
request and expense, shall cooperate
with HALOZYME by assisting in
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preparing and filing any necessary
documents to support HALOZYME's applications
for permits and licenses.
4.5 Regulatory
Requirements. Each party shall use its reasonable
best efforts to promptly notify the other
of new regulatory requirements of
which it becomes aware which are relevant
to the Production of a Bulk Drug
Substance under this Agreement and which
are required by the Regulatory
Authorities or other applicable laws or
governmental regulations, and shall
confer with each other with respect to the
best means to comply with such
requirements.
4.6 AVID's
Facility. AVID is responsible for cGMP compliance with
all Federal, State and local Regulatory
Authorities, laws and regulations
("Regulations") as they apply to AVID's
facility. AVID shall have no
responsibility for compliance with
Regulations as they relate specifically to
final filling, labeling development or
marketing. HALOZYME assumes
responsibility for all contact with the FDA
and other Regulatory Authorities
pertaining specifically to the Bulk Drug
Substance; provided, however, AVID
shall provide to HALOZYME all such
information as HALOZYME requires in
connection with such contacts with the FDA
and other regulatory bodies and AVID
agrees to otherwise fully cooperate with
HALOZYME in connection with such
matters.
4.7 Regulatory
Approvals. AVID shall provide product specific
information at HALOZYME's expense,
including documents and assistance for
HALOZYME in preparation of submissions to
Regulatory Authorities designated by
HALOZYME in support of HALOZYME's 510(k)s,
INDs, New Drug Applications (NDAs),
or similar applications required of US or
foreign governments and licenses.
4.8 Regulatory
Authority Inspections.
4.8.1 Interaction with Regulatory Authorities. All interaction
with Regulatory Authorities (both written
and oral) that directly affects Bulk
Drug Substance or the Production of Bulk
Drug Substance shall be conducted in
accordance with the provisions of this
Section 4. At HALOZYME's request, AVID
will authorize Regulatory Authorities to
review on HALOZYME's behalf
applications related to the Production of
the Bulk Drug Substance.
4.8.2 Bulk Drug Substance Pre-Approval Inspection. In the case
of the Bulk Drug Substance Pre-Approval
Inspection by the FDA or other
Regulatory Authorities related to
HALOZYME's Bulk Drug Substances, the following
shall apply: (a) AVID immediately shall
inform HALOZYME of the notice of such
inspection; (b) AVID shall permit a
representative of HALOZYME to be present at
such inspection providing the HALOZYME
representative is a non-participant in
any such meeting, provided that information
of other clients of AVID is not
discussed; (c) AVID shall permit such
representative of HALOZYME to be present
as a non-participant in, each daily wrap up
session for such inspection and the
post-inspection wrap up session for such
inspection, provided that information
of other clients of AVID is not discussed;
(d) AVID promptly shall provide
HALOZYME with copies of all written
materials, including, without limitation,
copies of any Notice of Inspection (FDA
Form 482 or equivalent), other notice of
inspection, notice of violation, other
similar notice, or Inspectional
Observations (FDA Form 483 or equivalent)
received by AVID relating to such
inspection, and
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Establishment Inspection Report (EIR)
relating to such inspection (provided that
AVID shall have the right to redact such
documents to the extent necessary to
maintain other clients confidentiality, if
applicable), and (e) AVID shall
provide HALOZYME with advance copies of all
proposed responses to any such
inspections, notices or actions, shall
permit HALOZYME reasonable opportunity
(provided that such does not prejudice
AVID's ability to respond within 15
working days of its receipt of the Form 483
or equivalent) to review and comment
on each such response, shall consider
HALOZYME's comments thereon, and shall
provide HALOZYME with copies of each such
response as submitted. Notwithstanding
the foregoing, (i) nothing contained in
this Section 4.8.2 shall be deemed to
give HALOZYME the authority to deal
directly with the FDA in resolving any
matter arising out of the Pre-Approval
Inspection without the prior written
consent of AVID, and (ii) AVID shall use
its best efforts to promptly and
diligently correct the deviations and
observations identified in the Form 483 or
other regulatory inspection summary. AVID
shall implement such corrections at
AVID's expense. If AVID's failure to
resolve any deviations and observations
results in delays of HALOZYME's ability to
obtain product approval or bring
products to market, the parties shall
mutually agree upon a fair and equitable
reduction in the Purchase Price to
compensate HALOZYME for such failure. In no
event shall AVID be liable for any lost
profits to the extent due to a delay
caused by Regulatory Authorities.
4.8.3 Other Bulk Drug Substance Specific Inspections. In the
case of an inspection (other than the Bulk
Drug Substance Pre-Approval
Inspection) by a Regulatory Authority the
following shall apply: (a) AVID shall,
as soon as reasonably practicable, inform
HALOZYME by phone or e-mail to their
head of regulatory and quality of the
notice of such inspection; (b) AVID shall,
to the extent the inspection relates to the
Production of Bulk Drug Substance
provide HALOZYME with copies of all written
materials, including without
limitation copies of any Notice of
Inspection (FDA Form 482 or equivalent),
other notice of inspection, notice of
violation, other similar notice, or
Inspectional Observations (FDA Form 483 or
equivalent) received by AVID relating
to such inspection, and Establishment
Inspection Report (EIR) relating to such
inspection (provided that AVID shall have
the right to redact such documents to
the extent necessary to maintain other
clients confidentiality);and (e)AVID
shall provide HALOZYME with appropriately
redacted copies of all responses to
any such inspections, notices or actions as
finally submitted. Notwithstanding
the foregoing, AVID shall use its best
efforts to promptly and diligently
correct the deviations and observations
identified in the Form 483 or other
regulatory inspection summary. AVID shall
implement the corrections at AVID's
expense. If AVID's failure to resolve any
deviations and observations results in
delays of HALOZYME's ability to obtain
product approval or bring products to
market, the parties shall mutually agree
upon a fair and equitable reduction in
the Purchase Price to compensate HALOZYME
for such failure
4.8.4 Other Inspections. In the case of an inspection by a
Regulatory Authority of an AVID facility
that does not directly affect the
Production of Bulk Drug Substances, the
following shall apply: (a) AVID promptly
shall provide HALOZYME with copies of all
written materials (with confidential
information that does not directly affect
the Production of Bulk Drug Substances
redacted therefrom), including without
limitation copies of any Notice of
Inspection (FDA Form 482 or equivalent),
other notice of inspection, notice of
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violation, other similar notice, or
Inspectional Observations (FDA Form 483 or
equivalent) received by AVID relating to
such inspection, and Establishment
Inspection Report (EIR) relating to such
inspection (provided that AVID shall
have the right to redact such documents to
the extent necessary to maintain
other clients confidentiality); and (b)
AVID promptly shall provide HALOZYME
with copies of all responses to any such
inspections, notices or actions (with
confidential information that does not
directly affect the Production of Bulk
Drug Substances redacted therefrom).
4.9 Accelerated
Delivery. In the event of any adverse regulatory
action, including without limitation
receipt by AVID from the FDA or other
Regulatory Authorities of a warning letter,
injunction, restraining order,
notice of intent to do any of the
foregoing, or notice of intent to revoke or
suspend any of AVID's licenses that
directly affect Bulk Drug Substance or the
Production of Bulk Drug Substance made from
AVID's produced Bulk Drug Substance,
AVID shall deliver to HALOZYME or its
affiliates, within forty eight (48) hours
of a written request from HALOZYME and
after tender by HALOZYME of the
applicable Purchase Price, all Bulk Drug
Substance requested by HALOZYME in
AVID's possession; provided that AVID is
not prohibited from doing so per any
applicable law, regulation, court or agency
order, notice, or ruling.
5.
ACCEPTANCE
OF BULK DRUG SUBSTANCE.
5.1 Bulk Drug
Substance Conformity. With respect to each Batch, no
later than thirty (30) calendar days from
AVID'S delivery of the COA and
Released Executed Batch Record (provided by
HALOZYME) for such Batch, HALOZYME
shall either (a) accept the Batch and title
shall transfer to HALOZYME, or (b)
notify AVID in writing of the failure of
the Batch to meet the Bulk Drug
Substance Requirements. All risk of loss
for the Bulk Drug Substance shall pass
to HALOZYME at the close of business on the
30th calendar day following the
later of delivery of the COA and Released
Executed Batch Record for such Batch
unless HALOZYME has notified AVID of the
failure of the Batch to meet the Bulk
Drug Substance Requirements. It shall be
the responsibility of HALOZYME to
provide AVID the Shipping Instructions for
the Bulk Drug Substance and any
labeling requirements for the Bulk Drug
Substance. All reasonable costs and
expenses associated with HALOZYME's
packaging and shipping requests shall be
paid by HALOZYME. Notwithstanding the
foregoing, if HALOZYME accepts a Batch but
wishes to have AVID store the Bulk Drug
Substance under a bill and hold
arrangement beyond the thirty (30) day
period, HALOZYME shall provide AVID with
written notice to store the BDS and shall
pay AVID *** a month per Batch (not to
exceed six (6) months) and AVID shall store
such Batch in accordance with cGMP
at its facilities ("Bill and Hold
Arrangement"). Promptly following the end of
such six (6) month period, AVID shall, at
HALOZYME's expense, ship the remaining
BDS (if any) to such as address as HALOZYME
shall provide. Under the bill and
hold arrangement, HALOZYME shall provide to
AVID, prior to the close of the
thirtieth (30th) calendar day following the
later of delivery of the COA and
Released Executed Batch Record, a written
fixed schedule covering a period not
to exceed such six (6) month period for
delivery of the BDS. Other than AVID's
obligations relating to the storage and
delivery of the BDS, AVID shall not be
responsible for any additional performance
obligations with respect to the BDS
after the thirty (30) day period. HALOZYME
agrees that all
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risk of loss of the BDS shall transfer to
HALOZYME at the close of the thirtieth
(30th) calendar day following AVID'S
delivery of the COA and Released Executed
Batch Record for such Batch under any Bill
and Hold Arrangement. HALOZYME shall
pay all amounts required to be paid to AVID
pursuant to this Agreement no later
than thirty (30) days from the date of
invoice in accordance with the Purchase
Price.
5.1.1 If HALOZYME fails to notify AVID within the time period
specified in Section 5.1 that any Bulk Drug
Substance does not conform to the
Bulk Drug Substance Requirements, then
HALOZYME shall be deemed to have accepted
such Bulk Drug Substance and waived its
right to revoke acceptance.
5.1.2 If HALOZYME believes any Bulk Drug Substance does not
conform to the Bulk Drug Substance
Requirements, it shall give written notice to
AVID specifying the manner in which such
Bulk Drug Substance fails to meet the
Bulk Drug Substance Requirements.
Guidelines for resolving any disputed claims
regarding conformity of Bulk Drug Substance
are set forth in Section 5.1.3.
5.1.3 If there is any dispute concerning whether the Bulk Drug
Substance complies with the Bulk Drug
Substance Requirements or whether any such
failure is due (in whole or in part) to
acts or omissions of HALOZYME after
delivery of the Bulk Drug Substance, the
parties first shall refer such matter
to the head of Quality Department of each
company for amicable settlement. In
the event that the head of each Quality
Department does not settle such dispute
within ten (10) business days (or such
later time as the parties may agree in
writing) after one party referred the
matter to the other company's Quality
Department, a sample of the Bulk Drug
Substance retained by AVID and a sample of
the Bulk Drug Substance delivered to
HALOZYME shall be exchanged between the
parties for a counter-check. If such
counter-check does not resolve the dispute,
a sample of the Bulk Drug Substance
retained by AVID and a sample of the Bulk
Drug Substance delivered to HALOZYME shall
be submitted to an independent,
qualified third party laboratory that is
mutually acceptable and selected by the
parties promptly in good faith. Such
laboratory shall determine whether the Bulk
Drug Substance delivered to HALOZYME met
the Bulk Drug Substance Requirements at
the time of delivery by AVID, and such
laboratory's determinations shall be
final. In the event the Bulk Drug Substance
provided by AVID to the independent,
qualified third party laboratory meets the
Bulk Drug Substance Requirements,
HALOZYME shall immediately and without
delay pay AVID the Purchase Price. The
non-prevailing party shall bear the costs
of such laboratory or consultant,
except as set forth in Section 5.2.2.
5.2 Remedies for Non Conforming Bulk Drug Substance.
5.2.1 In the event AVID agrees that any Bulk Drug Substance is
non-conforming or the independent
laboratory determines that the shipment of
Bulk Drug Substance is non-conforming, AVID
shall use its best efforts to
replace such non-conforming Bulk Drug
Substance as soon as practical in the next
available manufacturing time slot from the
date of determination by the third
party of non-conformity or agreement by
AVID of such non-conformity.
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5.2.2 In the event AVID agrees, or the independent laboratory
or consultant determines, that Bulk Drug
Substance is non-conforming due in
whole or in part to the negligence or
willful misconduct of AVID, then to the
extent such nonconformity results from the
negligence or willful misconduct of
AVID, AVID shall be responsible for the
cost of Production and delivery of the
replacement Bulk Drug Substance, subject
to, and except as otherwise set forth
in, the provisions of Section 11.
6. BULK
DRUG SUBSTANCE RECALLS. Each party promptly shall notify the
other
if any Batch of Bulk Drug Substance is
alleged or proven to be the subject of a
recall, market withdrawal or correction.
HALOZYME shall be responsible for
coordinating any recall, market withdrawal
or field correction of Bulk Drug
Substance, and recall, market withdrawal or
correction shall be conducted in
accordance with the provisions of the
Quality Agreement. HALOZYME shall provide
AVID with a copy of all documents relating
to such recall, market withdrawal or
field correction. AVID shall cooperate with
HALOZYME (including providing
HALOZYME with all data, information and
documents requested by HALOZYME) in
connection with such recall, market
withdrawal or field correction, at
HALOZYME's expense. Unless such recall is
caused solely by the negligence,
omission or willful misconduct of AVID or
solely by AVID's breach of its
warranties or obligations under this
Agreement, HALOZYME shall be responsible
for all of the costs and expenses of such
recall, market withdrawal or field
correction. In the event a recall, market
withdrawal or field correction is
necessary because of AVID's breach of this
Agreement or its negligence, omission
or willful misconduct, AVID will bear all
reasonable costs associated with such
recall, market withdrawal or field
correction (including but not limited to
costs associated with receiving and
administering the recalled Drug Substance
and notification of the recall to those
persons whom HALOZYME deems
appropriate).
7. CHANGES
IN PRODUCTION. AVID shall inform HALOZYME within fifteen (15)
calendar days of the result of any
development that directly affects the
Production of the Bulk Drug Substance or
changes to Bulk Drug Substance-specific
AVID SOPs. AVID shall give written notice
to HALOZYME of any such changes, and
HALOZYME and AVID will review such
development or changes in accordance with the
Quality Agreement. AVID shall assure that
all such changes to the Bulk Drug
Substance-specific AVID SOPs are consistent
with the Bulk Drug Substance Master
Plan unless the parties otherwise expressly
agree in writing. AVID shall only
make changes to the Bulk Drug Substance
Master Plan that are in accordance with
Section 2.2.
8.
CONFIDENTIALITY.
8.1 Confidential Information. Subject in each case to Section
9.3.3,
during the term of this Agreement, and for
a period of five (5) years following
the expiration or earlier termination
hereof, each party shall maintain in
confidence all Confidential Information
disclosed by the other party (including
all Confidential Information disclosed
prior to the term of this Agreement
pursuant to a written confidentiality
agreement between the parties), and shall
not use, grant the use of or disclose to
any third party the Confidential
Information of the other
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party other than as expressly permitted
hereby. Each party shall notify the
other promptly upon discovery of any
unauthorized use or disclosure of the other
party's Confidential Information.
8.2 Terms of this Agreement. Except as otherwise provided
herein,
during the term of this Agreement and for a
period of five (5) years thereafter,
neither party shall disclose any terms or
conditions of this Agreement to any
third party without the prior consent of
the other party. Notwithstanding the
foregoing, prior to execution of this
Agreement, the parties have agreed in
writing upon the substance of information
that can be used to describe the terms
of this transaction, and each party may
disclose such information, as modified
by mutual agreement from time to time,
without the other party's consent.
8.3 Limitations on Disclosure. Each party shall limit the
disclosure
of the Confidential Information of the
other party and the terms of this
Agreement on a need-to-know basis to those
directors, officers, employees,
consultants, legal and financial advisors,
clinical investigators, contractors,
(sub)licensees, distributors or permitted
assignees, to the extent such
disclosure is reasonably necessary in
connection with such party's activities as
expressly authorized by this Agreement. To
the extent that disclosure is
authorized by this Agreement, prior to
disclosure, each party hereto shall
obtain agreement of any such Person to hold
in confidence and not make use of
the Confidential Information for any
purpose other than those permitted by this
Agreement.
8.4 Permitted Disclosures. The confidentiality obligations
contained
in this Section 8 shall not apply to the
extent that such disclosure is
reasonably necessary in the following
instances: (a) complying with an
applicable law, regulation of a
governmental agency (including any regulatory or
governmental body or securities exchange)
or order of a court of competent
jurisdiction, or responding to a subpoena,
request for production of documents
or other lawful court process, (b)
obtaining approval to test or market the Bulk
Drug Substance, (c) filing or prosecuting
patents owned by the receiving party,
(d) prosecuting or defending litigation,
and (e) disclosure to investment
bankers, investors, and potential
investors, each of whom prior to disclosure
must be bound by similar obligations of
confidentiality and non-use at least
equivalent in scope to those set forth in
this Section 8, provided in each case
that the disclosing party shall provide
written notice thereof to the other
party and reasonable opportunity to object
to such disclosure or to request
confidential treatment thereof, if
available. In the event such Agreement is
required to be disclosed under the laws of
the Securities and Exchange
Commission ("SEC"), both parties shall use
their reasonable best efforts, to the
extent allowable by the SEC, to redact the
financial terms before any submission
to the SEC to protect the confidentiality
of the financial terms contained
herein.
9.
INVENTIONS.
9.1 Existing Intellectual Property.
9.1.1 Except as the parties may otherwise expressly agree in
writing, each party shall continue to own
its existing patents, trademarks,
copyrights, trade secrets and other
intellectual property, without conferring
any interests therein on the other party.
Without limiting the generality of the
preceding sentence, HALOZYME shall retain
all right, title and
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interest arising under the United States
Patent Act, the United States Trademark
Act, the United States Copyright Act and
all other applicable laws, rules and
regulations in and to the HALOZYME Process
Technology (as defined in Section
9.1.2 below), Bulk Drug Substance, Labeling
and trademarks associated therewith
(collectively, "HALOZYME's Intellectual
Property"). Neither AVID nor any third
party shall acquire any right, title or
interest in HALOZYME's Intellectual
Property by virtue of this Agreement or
otherwise, except to the extent
expressly provided herein.
9.1.2 In the event that HALOZYME provides any process
technology to AVID for Development and/or
Production ("HALOZYME Process
Technology"), AVID acknowledges and agrees
that it shall not, without HALOZYME's
prior written consent, (i) use
