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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.
DEVELOPMENT AND SUPPLY AGREEMENT
THIS
DEVELOPMENT AND SUPPLY AGREEMENT (this "Agreement"), effective as
of
March 24, 2005 (the "Effective Date") is
entered into between BAXTER HEALTHCARE
CORPORATION with its principal place of
business at One Baxter Parkway,
Deerfield, Illinois 60015-4633 ("Baxter"),
and HALOZYME, INC. with its principal
place of business at 11588 Sorrento Valley
Road, Suite 17, San Diego, California
92121 ("Halozyme").
WHEREAS
Halozyme is the owner or exclusive licensee of certain patents,
formulations and know-how related to the
Product (as defined below);
WHEREAS
Baxter, or one or more of its affiliates has the expertise and
the
manufacturing facility suitable for the
Production (as defined below) of
Product;
WHEREAS,
Halozyme wishes to have Baxter Produce (as defined below)
Product
and Baxter wishes to Produce Product for
Halozyme for sale and distribution in
the Territory;
NOW,
THEREFORE, in consideration of the premises and the
undertakings,
terms, conditions and covenants set forth
below, the parties hereto 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 "API" shall
mean the bulk form of the active compound,
recombinant human PH20 hyaluronidase (i.e.
a truncated form of native human PH20
hyaluronidase consisting of residues
36-482, inclusive, of the native human PH20
hyaluronidase), to be supplied by Halozyme
to Baxter for use in Production of
Product.
1.3 "API Price"
shall mean the amount to be paid by Baxter
Anesthesia and Critical Care ("ACC") to
Halozyme for the API as set forth on
Exhibit A.
1.4 "API
Specifications" shall mean the specifications for the API
mutually agreed upon in writing by the
parties.
1.5 "Batch"
shall mean a specific quantity of Product comprising a
number of units mutually agreed upon
between Halozyme and Baxter, 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.
1.6 "Baxter
SOPs" shall mean Baxter's Standard Operating
Procedures. Copies of Baxter's Relevant
Product Specific Standard Operating
Procedures as per Quality
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Agreement (Section 5.2.2) have been
provided by Baxter to Halozyme
prior to the Effective Date. Baxter shall
be responsible at all times to cause
the Product-specific Baxter SOPs to be
consistent with the Product Master Plan.
1.7 "cGMP" shall
mean the principles detailed in the US Current
Good Manufacturing Practices (21 CFR 200,
211 and 600), the "Rules Governing
Medicinal Product in The European Community
- Volume IV Good Manufacturing
Practice for Medicinal Products," and/or
"Cooperative Manufacturing Arrangements
for Licensed Biologics" FDA-CBER.
1.8 "Components"
shall mean all components used by Baxter in
Production of Product under this
Agreement.
1.9
"Confidential Information" shall mean all information and data
that (a) is provided by one party to the
other party under this Agreement or the
Confidentiality Agreement signed by
Halozyme and Baxter on August 14, 2003 (as
amended, the "Confidentiality Agreement"),
and (b) if disclosed in writing or
other tangible medium is marked or
identified as confidential at the time of
disclosure to the recipient, or is
acknowledged at the time of disclosure to be
confidential, or otherwise should
reasonably be deemed to be confidential.
Notwithstanding the foregoing, Confidential
Information of a party shall not
include that portion of such information
and data which, and only to the extent,
the recipient can establish by written
documentation: (i) is known to the
recipient as evidenced by its written
records before receipt thereof from the
disclosing party, (ii) is disclosed to the
recipient free of confidentiality
obligations by a third person who has the
right to make such disclosure, (iii)
is or becomes part of the public domain
through no fault of the recipient, or
(iv) the recipient can reasonably establish
is independently developed by
persons on behalf of recipient without
access to or use of the information
disclosed by the disclosing party.
1.10 "Development
Plan" shall mean the plan for the development of
Product and attached as Exhibit B, as such
proposal may be amended, supplemented
or restated from time to time by mutual
written agreement of the parties.
1.11 "Exclusive
Distribution Agreement" shall mean the Exclusive
Distribution Agreement dated as of August
13, 2004 entered into between the
parties for the distribution by Baxter of
Product.
1.12 "FDA" shall mean
the United States Food and Drug
Administration or any successor entity
thereto or any applicable Regulatory
Authority as defined in the Product Master
Plan.
1.13 "FD&C Act"
shall mean the United States Federal Food, Drug and
Cosmetic Act, as may be amended from time
to time.
1.14 "IND" shall mean
an Investigational New Drug application for
Product, as defined in the FD&C Act or
FDA Regulations (21 CFR).
1.15 "Initial Drug"
shall mean up to 1500 USP units per vial of
recombinant human PH20 hyaluronidase as the
active pharmaceutical ingredient in
(i) a *** ml liquid
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injectable formulation in a ***mL *** vial
with a serum stopper and *** cap, and
(ii) a lyophilized formulation; in each
case for the DESI Review indication of
"enhancing the dispersion and absorption of
other injected drugs" (as described
in the Federal Register, Vol. 35, No. 185,
p. 14800 (Sept. 23, 1970)).
1.16 "Initial
Product(s)" shall mean up to 1500 USP units per vial
of recombinant human PH20 hyaluronidase as
the active pharmaceutical ingredient
in (i) any liquid injectable formulation,
and/or (ii) any lyophilized
formulation, which shall include the
Initial Drug, in each case for the DESI
Review indication of "enhancing the
dispersion and absorption of other injected
drugs" (cf. Federal Register, supra).
Initial Product(s) shall also encompass
any of the following improvements to the
Initial Drug: line extensions,
packaging, labeling, change of excipient,
minor alterations of the Initial Drug
itself (such as variations in the structure
of the active compound that do not
substantially alter its properties (i.e. as
would not require a new IND and/or a
Supplemental New Drug Application (NDA)),
and Initial Drug produced by newly
developed manufacturing methods.
1.17 "Labeling" shall
mean all labels and other written, printed,
or graphic matter upon: (i) Product or any
container, carton, or wrapper
utilized with Product or (ii) any written
material accompanying Product.
1.18 "Master Batch
Record" or "MBR" shall mean the formal set of
instructions for Production of Product, as
amended, supplemented or restated
from time to time by mutual written
agreement of the parties. The MBR will be
developed jointly by Halozyme and Baxter
and approved by both parties, prior to
Production of Product.
1.19 "Other Products"
shall mean products (other than the Initial
Product(s)) consisting of up to 1500 USP
units per vial of recombinant human
PH20 hyaluronidase as the active
pharmaceutical ingredient in (i) any liquid
injectable formulation, and/or (ii) any
lyophilized formulation in each case for
DESI review indications (cf. Federal
Register, supra) (a) "for hypodermoclysis",
and (b) "use as an adjunct in subcutaneous
urography for improving the
resorption of radiopaque agents"; and for
non-DESI Review indication (c) for use
as a viscoelastic antidote (e.g.,
Viscolase((TM)) ), in each case that the
parties mutually agree upon in writing in
accordance with Section 3.9. Without
redefining the foregoing, "Other Products"
expressly excludes the use of
recombinant human PH20 hyaluronidase in (i)
drugs with high-unit (i.e. greater
than 1500 USP unit) intravenous or other
doses, and (ii) co-formulated or
combination products with molecules not
owned or otherwise controlled by Baxter
(unless otherwise agreed to in writing by
the parties).
1.20 "Product(s)"
shall mean the Initial Drug and/or Initial
Product(s) other than the Initial Drug to
be Produced by Baxter in finished
dosage form under this Agreement.
1.21 "Production",
"Produce", or "Produced" shall mean the filling,
packaging, inspection, labeling, and
testing of Product by Baxter.
1.22 "Product Master
Plan" shall mean, collectively, the following:
-
the Quality Agreement (Exhibit C)
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-
the Product Specifications; incl. API, Final Product,
Components, Excipient (HSA) as in effect upon the
Agreement date (Exhibit D)
-
the Development Plan (Exhibit B)
-
Territories (as per Distribution Agreement)
-
the API Price (Exhibit A).
1.23 "Product
Specifications" shall mean those specifications and
testing to be performed for Product as set
forth in documents prepared by Baxter
and agreed to in writing by Halozyme in
accordance with Section 10 of the
Quality Agreement; provided, however, that
Baxter shall include in such
documents any changes required by the FDA.
All such Product Specifications shall
be attached to this Agreement as Exhibit D
as they exist as of the date of the
execution of this agreement.
1.24
"Quality Agreement"
shall mean the Quality Agreement, in the
form attached as Exhibit C, entered into by
Baxter and Halozyme as of the
Agreement Date, as amended, supplemented or
restated from time to time in
accordance with Section 2.4 or as the
parties otherwise mutually agree in
writing.
1.25 "Regulatory
Authority" shall mean those agencies or
authorities responsible for regulation of
Product as described within the
Product Master Plan.
1.26 "Regulatory Plan"
shall mean the plan agreed upon in writing
by the Steering Committee containing
regulatory services and support for the
development and maintenance of regulatory
submissions and supporting
documentation for Production of Product.
The Regulatory Plan will be created,
and may be amended, supplemented or
restated from time to time by written
agreement of the Steering Committee.
1.27 "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 Product and
approved as released to Halozyme under cGMP
by Baxter's quality assurance
department.
1.28 "Steering
Committee" shall mean the joint development and
production committee composed of
representatives of Baxter and Halozyme
described in Section 2.3 below.
1.29 "Territory" shall
have the meaning set forth in the Exclusive
Distribution Agreement.
2.
PRODUCT
MASTER PLAN.
2.1 Product
Master Plan. Prior to the Agreement Date, the parties
have mutually agreed upon each of the
exhibits attached to this Agreement
comprising the Product Master Plan.
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2.2 Amendment of
Product Master Plan.
2.2.1 Except as otherwise set forth in Sections 2.2.2 and 2.4,
the Product Master Plan may be amended from
time to time, as the parties
experience with the Production, testing and
use of the Product warrants, only
upon recommendation of the Steering
Committee and upon mutual written agreement
of Halozyme and Baxter.
2.2.2 At the reasonable request of Halozyme, the parties shall
negotiate in good faith modification(s) to
the Product Specifications to address
regulatory concerns raised by any
Regulatory Authority or reasonably raised by
Halozyme.
2.3 Steering
Committee.
2.3.1 Composition of the Steering Committee. The Steering
Committee shall have the oversight and
responsibility to review and propose
changes to the Product Master Plan, to
propose and plan clinical programs for
the Product, and to propose Other Products
in accordance with the terms and
conditions of this Agreement. The Steering
Committee shall be comprised of three
(3) named representatives of Baxter and
three (3) named representatives of
Halozyme. The Steering Committee shall be
represented from the following
functions: Research/Development,
Clinical/Regulatory, Commercial/Marketing or
one other function at each party's
discretion. Each party shall appoint its
respective representatives to the Steering
Committee from time to time, and may
substitute one or more of its
representatives, in its sole discretion, effective
upon notice to the other party of such
change but shall use commercially
reasonable efforts to maintain stability of
Steering Committee representation.
2.3.2 Meetings. The Steering Committee shall meet not less
than twice each calendar year, on such
dates and at such times and places as
agreed to by Baxter and Halozyme,
alternating between New Providence, NJ and San
Diego, California or such other locations
as the parties shall agree. At such
meetings, the Steering Committee shall
discuss the development under the
Development Plan and Production and set
priorities therefor, and shall discuss
any actual regulatory filings regarding the
Product together with any
anticipated regulatory filings with respect
to possible Product(s) (i.e. Initial
Product(s) other than the Initial Drug) and
any proposed Other Products.
2.3.3 Committee Actions. Any approval, determination or other
action agreed to by all of the members of
the Steering Committee present at the
relevant Steering Committee meeting shall
be the approval, determination or
other action of the Steering Committee;
provided, however, that at least one (1)
representative of each party is present at
such meeting, and that such approval,
determination or other action is documented
in a writing signed by a
representative of each party at such
meeting. The Steering Committee may also
act by unanimous written consent without a
meeting or between meetings.
2.3.4 Steering Committee Minutes and Reports. One
representative of each party shall be
designated to take minutes of each
Steering Committee meeting. Within fifteen
(15) days following each Steering
Committee meeting during the term of the
Agreement, the Steering Committee shall
prepare and provide to each party a
reasonably detailed written report which
shall summarize the outcome of the
meeting
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2.4 Quality
Agreement. The effectiveness of this Agreement is
conditioned upon the parties duly executing
and delivering the Quality Agreement
on or before the Agreement Date. At the
reasonable request of either party, the
parties shall negotiate in good faith
amendment(s) to the Quality Agreement (a)
to address matters specific to the
Production of Product for sale and use
outside the United States, and (b) to
address regulatory concerns raised by any
Regulatory Authority or reasonably raised
by either party.
2.5 No Amendment
of Agreement. In the event that the terms of the
Product 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 Product
Master Plan and Quality Agreement shall
be incorporated herein and by reference and
made a part of this Agreement.
3.
DEVELOPMENT AND PRODUCTION OF PRODUCT.
3.1 Initiation
and Conduct. Upon execution of this Agreement,
pursuant to the terms and conditions of
this Agreement, Baxter shall, in a
timely manner (a) conduct development of
Product pursuant to the Development
Plan and (b) conduct Production of Product
necessary for Halozyme to meet its
obligations under the Exclusive
Distribution Agreement and otherwise as
necessary to meet market demand.
3.2
Documentation. Each Batch of Product shall be Produced by
using a copy of the Master Batch Record.
Each copy of the Master Batch Record,
known as a "Batch Record" or, when
completed, an "Executed Batch Record," for
such Batch of Product shall be assigned a
unique batch number. Any deviation
from the manufacturing process specified in
the Master Batch Record must be
documented in the copy of the Executed
Batch Record for that Batch. Baxter shall
provide Halozyme with required supporting
development and Production
documentation in a form reasonably suitable
for Halozyme's submission to the
FDA.
3.3 API.
3.3.1 Halozyme shall develop and transfer to Baxter in a
timely manner all (i) API necessary for
Baxter to meet its obligations in this
Agreement and (ii) analytical methods and
API Specifications, excipients and
final dosage form applicable to the
Production of Product. Halozyme will be
responsible for the manufacture or contract
manufacture of the API meeting cGMP,
in compliance with the API Specifications
and in a manner suitable for use in
the final dosage form of the Product. The
manufacturing site of the API must
allow Baxter to audit the site as per the
Quality Agreement on a periodic basis
to be no more than once per year. In the
event any material or API to be
supplied by Halozyme is imported into the
United States for delivery to Baxter,
then Halozyme shall be the importer of
record and such material or API shall be
delivered DDP (Incoterms 2000).
3.3.2 Baxter shall only use the API to Produce Product under
this Agreement, which Product shall only be
sold by Baxter under and in
accordance with the Exclusive Distribution
Agreement.
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3.3.3 Halozyme shall sell to Baxter the API at a transfer
price equal to its "API Price" as defined
in Exhibit A. Within thirty (30) days
following the receipt of API, unless Baxter
properly determines in accordance
with the foregoing that such API does not
conform to the API Specifications,
Baxter shall pay to Halozyme the applicable
API Price. If the API does not
conform to the API Specifications, Baxter
shall promptly return such API, at
Halozyme's cost, and shall not be obligated
to pay to Halozyme the API Price
therefor. Shipping shall be FOB
destination.
3.4 Delivery
Delays. Each party shall use its commercially
reasonable efforts to ensure a steady
supply of the API and Product (as
applicable) or to resolve any associated
supply issues with their respective
contractors.
3.5 Material
Safety Data Sheet. Halozyme shall provide Baxter a
Material Safety Data Sheet for API
delivered to Baxter. Baxter shall immediately
notify Halozyme of any unusual health or
environmental occurrence relating to
Product, including, but not limited to any
claim or complaint by any employee of
Baxter or any of its Affiliates or third
party that the operations of Baxter
pursuant to this Agreement have resulted in
any adverse health or safety effect
on an employee or third party. Baxter
agrees to advise Halozyme immediately of
any safety or toxicity problems of which it
becomes aware regarding the Product.
3.6 Vendor and
Supplier Audit and Certification. Halozyme shall be
solely responsible for certifying and
auditing all Product-related vendors and
suppliers of API. All vendors and suppliers
of API shall be subject to
Halozyme's prior written approval.
3.7 Foreign
Corrupt Practices Act. Baxter acknowledges that it is
not the agent of Halozyme and represents
and warrants that it has not, and
covenants that it will not, pay anything of
value to any government employee in
connection with the resale of the
Product.
3.8 Storage of
API and Product.
3.8.1 Baxter shall provide, at its expense, appropriate
storage for API and Product in one or more
secure, insured and bonded warehouses
with appropriate climate-control for API
and Products in a manner consistent
with operating procedures that Baxter uses
for its own products and consistent
with storage conditions as provided in the
Quality Agreement, Section 5.11. Such
API and Product shall be segregated from
Baxter's other products per established
GMP procedures. Following final release of
Product by Halozyme, if the Exclusive
Distribution Agreement is then in effect,
Product shall be transferred to Baxter
pursuant to the Exclusive Distribution
Agreement
3.8.2 Upon termination of the Exclusive Distribution
Agreement, (a) all Product that has not yet
been transferred to Baxter pursuant
to Section 3.8.1 and all API and Components
that are then in Production shall
continue in development to become Product
and, at Halozyme's option, all such
Product shall be (i) transferred to
Halozyme at Baxter's reasonably incurred
costs for such Product or (ii) transferred
to Baxter solely for distribution
under the terms and conditions of the
Exclusive Distribution Agreement that
govern distribution of remaining Product
following termination, and (b) all API
that has not yet been put into development
of Product shall be returned to
Halozyme at an amount equal to the API
Price actually paid by
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Baxter for such API (if any) and reasonable
shipping costs therefor. If
termination of the Exclusive Distribution
Agreement is due to serious adverse
events, Baxter shall have the right to
discontinue all manufacturing under this
Agreement for so long as such adverse
events continue.
3.9 Other
Products.
3.9.1 The Steering Committee shall engage in good faith
discussions and attempt to reach mutual
agreement on the development and
production of Initial Product(s) other than
the Initial Drug. Following the date
the Steering Committee unanimously agrees
on the applicable terms and conditions
for such development and production, the
parties shall enter into a supply
agreement substantially on the terms and
conditions contained in this Agreement
with respect to such Initial Product(s)
other than the Initial Drug.
3.9.2 With regard to potential Other Products, Halozyme hereby
grants to Baxter a first right of refusal
(exercisable for six months from the
date of written notice of such potential
Other Product to Baxter) to include any
such product within the scope of the Other
Product definition and subject to
Section 3.9 of this Agreement. If during
such six (6) month period, with respect
to such a product, Baxter notifies Halozyme
in writing that it is exercising
such right of first refusal and electing to
treat such product as an Other
Product pursuant to the terms of this
Agreement and the Exclusive Distribution
Agreement, then such product shall be an
Other Product in accordance with this
Agreement and with the Exclusive
Distribution Agreement. If Baxter does not
provide such written notice and agree to
treat such potential Other Product as
an Other Product Agreement pursuant to the
terms of this Agreement and the
Exclusive Distribution Agreement during the
applicable six (6) month period,
then such product shall not be an Other
Product and Baxter shall have no rights
under such Agreements with respect to such
product.
3.9.3 Notwithstanding anything to the contrary herein, any
supply agreement between the parties
regarding the development and production of
any Other Product shall provide (a) which
party shall be responsible for the
costs associated with the development,
production, clinical trials, and
regulatory approval of such Other Product;
provided, however, that Baxter and
Halozyme shall have the right to recoup
such costs from gross sales of such
Other Product under, and in accordance
with, the terms and conditions set forth
in the Exclusive Distribution Agreement,
and (b) the parties shall equally share
all gross profits realized from the sales
of such Other Product. Notwithstanding
the foregoing, if the Steering Committee
agrees in writing in advance, either
party may from time-to-time be responsible
for some such development,
production, clinical trials, regulatory
approval and marketing costs for the
development of new channels of distribution
that require substantial additional
investment provided that such funding is
reimbursed by the other party (subject
to such party's right to recoup such
amounts under the Exclusive Distribution
Agreement) or is otherwise shared equally
on a quarterly basis by the parties
(in which case, such party shall not have
the right to recoup such amounts under
the Exclusive Distribution Agreement).
4.
DEVELOPMENT FUNDING.
4.1 Initial
Drug. Halozyme shall be responsible for those costs
(the "Initial Costs") incurred by Baxter or
Halozyme in order to Produce the
registration stability and
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validation Batches of the Initial Drug as
set forth in the Development Plan
including costs resulting from: (a)
developing final dosage solution formulation
and process for the Initial Drug, (b)
regulatory filings, filing of a DMF or
preparing an equivalent CMC section, (c)
costs for API drug substance (excluding
development of the API) and Components for
such Initial Drug, (d) costs of
capital equipment Baxter acquires solely,
and to the extent necessary, to
Produce the first submission Batches of the
Initial Drug, and (e) direct salary
and headcount costs directly related to
producing such Initial Drug and testing
to the extent not attributable to other
projects; provided, however, that (i)
such costs shall not include any general
corporate overhead or headcount, such
as legal, business development or finance
services, (ii) such costs shall not
include submission batches required to
support a site change supplement to
Baxter's manufacturing facilities for
commercial product which shall be paid by
Baxter, and (iii) Halozyme shall only be
responsible for funding the Initial
Costs up to an aggregate of *** and any
excess amounts requiring Baxter ACC
investment must be approved and shall be
included under Production Costs (as
defined in Section 4.2 below). The
foregoing costs shall be calculated in
accordance with U.S. Generally Accepted
Accounting Principles ("GAAP") and
Baxter's standard accounting practices,
consistently applied. Baxter shall
invoice Halozyme at the end of each
calendar quarter in which Baxter incurred
Initial Costs and Halozyme shall pay such
invoiced amounts within sixty (60)
days following the receipt of such
invoice.
4.2 Shared
Costs. Other than the Initial Costs to be borne by
Halozyme in accordance with Section 4.1,
the parties shall bear the Production
Costs and Other Costs (as each is defined
below), calculated on a fully-burdened
basis, as follows:
4.2.1 Baxter shall be responsible for (a) equipment acquired
for Production or Product, (b) costs for
the API, (c) changes to Product
Specifications or equipment or facility due
to regulatory requirements, (d)
insurance procured solely for such
Production, (e) taxes owing for such
Production, and (f) direct salary and
headcount costs directly related to such
Production to the extent not attributable
to other projects but specifically
excluding general corporate overhead or
headcount, such as legal, business
development or finance services (clauses
(a) - (f), collectively, the
"Production Costs").
4.2.2 The parties shall be responsible for, and shall (a)
equally share any post approval clinical,
regulatory or DMF costs for the
Product (Initial Drug), (b) development
costs related to Other Products will be
decided pursuant to section 3.9 hereof, (c)
clinical, regulatory or DMF costs
for approval of Other Products, as approved
from time to time by the Steering
Committee will be decided pursuant to
section 3.9 hereof (clauses (a) - (c)
collectively, the "Other Costs"). Unless
otherwise agreed to by the Steering
Committee, thirty (30) days following the
end of each calendar quarter during
the term of the Agreement, each party shall
provide to the other an accounting
of the amount of Other Costs incurred by
such party during such calendar
quarter, and the party that has incurred
less Other Costs shall within ten (10)
days thereafter make a payment to the other
party equal to one-half (1/2) of the
difference between the costs incurred by
the parties of the costs that are
shared equally.
4.2.3 For the avoidance of doubt, Production Costs and Other
Costs shall not include any costs incurred
by Baxter that are included within
Initial Costs. The Production Costs and
Other Costs shall be calculated in
accordance with U.S. Generally Accepted
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Accounting Principles ("GAAP") and Baxter's
standard accounting practices,
consistently applied.
5.
TERM AND
TERMINATION.
5.1 Term. This
Agreement shall commence on the Agreement Date and
will continue, unless terminated pursuant
to this section, as long as the
Exclusive Distribution Agreement is in
effect. Upon the expiration or
termination of the Exclusive Distribution
Agreement, this Agreement shall
immediately terminate.
5.2 Termination
for Breach. Either party may terminate this
Agreement upon the breach of any provision
of this Agreement by the other party
if such breach is not cured by the
breaching party within thirty (30) calendar
days for monetary defaults, and thirty (30)
calendar days for non-monetary
defaults (or such additional time
reasonably necessary to cure such non-monetary
default provided the breaching party has
commenced a cure within the thirty (30)
day period and is diligently pursuing
completion of such cure) after receipt by
the breaching party of written notice of
such default. In the event that the
Production or sale of Product is enjoined
due to the alleged infringement by
either party of the proprietary rights of a
third party such occurrence shall
not be deemed a breach of this Agreement by
Halozyme or Baxter
5.3 Termination
for Bankruptcy. To the extent authorized under
applicable law, this Agreement may be
terminated immediately by either party by
giving the other party written notice
thereof in the event such other party
makes a general assignment for the benefit
of its creditors, or proceedings of a
case are commenced in any court of
competent jurisdiction by or against such
party seeking (a) such party's
reorganization, liquidation, dissolution,
arrangement or winding up, or the
composition or readjustment of its debts, (b)
the appointment of a receiver or trustee
for or over such party's property, or
(c) similar relief in respect of such party
under any law relating to
bankruptcy, insolvency, reorganization,
winding up or composition or adjustment
of debt, and, in each case of clauses (a) -
(c) above, such proceedings shall
continue undismissed, or an order with
respect to the foregoing shall be entered
and continue unstated, for a period of more
than one hundred eighty (180) days.
5.4 Termination
for Failure to Obtain FDA Approval. Baxter shall
have the right to terminate this Agreement
by giving 30 days advance written
notice to Halozyme in the event that FDA
approval for the Initial Drug in the
Territory is not obtained by Halozyme by
the year ***.
5.5 Additional
Rights and Remedies. Subject to Section 14.1,
termination under this Section 5 shall be
in addition to the other rights and
remedies of the terminating party.
Termination of this Agreement for any reason
shall not relieve any party of any
obligations accruing prior to such
termination.
5.6 Survival.
Termination, expiration, cancellation or abandonment
of this Agreement through any means or for
any reason, except as set forth in
Section 5.1, shall be without prejudice to
the rights and remedies of either
party with respect to any antecedent breach
of any of the provisions of this
Agreement. The provisions of Sections 5, 8,
11, 12, 13, 14, 15, 16 and 17 hereof
shall survive expiration or termination of
this Agreement.
*** Confidential material redacted
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5.7 Files and
Records. Within sixty (60) days following the
expiration or termination of this
Agreement, Baxter shall make available to
Halozyme copies of all manufacturing and
process development documents and
records relating to Product, shall store
the originals or electronic copies of
such documents and records according to
cGMPs in a safe and secure facility for
at least two (2) years after the expiration
date of the last Batch Produced by
Baxter under this Agreement, and shall
permit the FDA or other Regulatory
Authorities access to such documents and
records to the extent requested
thereby. For a period of twelve (12) months
following expiration or termination
of this Agreement, Baxter shall make
available to Halozyme for review, from the
DMF or other related regulatory filings,
any non-confidential information
contained therein that is reasonably
related to Product that may be used by
Halozyme to support any investigational
studies or commercial marketing of
Product.
6.
PRODUCTION
OF PRODUCT AND OTHER PRODUCTS.
6.1 Production.
Baxter or one or more of its Affiliates, shall
Produce Product in accordance with the
Product Requirements and cGMP's
applicable to each Territory. Subject to
compliance with reasonable rules and
regulations of Baxter relating to
confidentiality, safety and security, Halozyme
shall have the right to access the Baxter
facilities directly affecting the
Production of Product, and all applicable
records related thereto, to oversee
Production of Product in accordance with
the Quality Agreement and Baxter's
standard visitation policy. Halozyme shall
have the right to monitor each
Production run of Product (from Component
preparation through final labeling and
assembly) in accordance with the Quality
Agreement. Halozyme shall have the
right to render technical advice and
direction to Baxter regarding Production of
Product pursuant to their involvement in
the generation of the Master Batch
Record or direct communication with the
Project Manager or Technical Service
Representative. Baxter promptly shall
implement all reasonable advice and
direction provided that such advice and
direction is not inconsistent with the
Product Master Plan, Baxter SOPs, and
cGMPs. If Halozyme observes or discovers
variances from established standards and
methods of Production of Product,
Halozyme shall give written notice thereof
to Baxter, and upon receipt of any
such notice, Baxter promptly shall take all
appropriate remedial or corrective
action and give written notice to Halozyme
describing in reasonable detail such
actions taken. If Baxter disagrees with any
such advice and direction, the
parties shall discuss in good faith an
appropriate resolution.
6.2 Audits. Baxter will allow
representatives from Halozyme to
have access to their manufacturing,
warehousing, laboratory premises, records,
regulatory filings (e.g.,) and
communications (e.g., FDA483s and Establishment
Inspection Reports) for audit purposes
listed below in Sections 6.2.1 through
6.2.3; provided, however, Baxter has the
obligation to protect the confidential
information of its clients.
6.2.1 Baxter will permit Halozyme to conduct one preparatory
audit of cGMP manufacture of the Product
for pre-approval inspection for
Product. Follow-up to this audit will be
considered part of the first audit.
Subsequent, new audits will be subject to
Baxter's customary charges.
6.2.2 Baxter will permit Halozyme to conduct audits to address
significant Product quality or safety
problems as discovered through Product
failures or complaints related to Baxter's
manufacturing of the Product.
*** Confidential material redacted
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CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY
6.2.3 Baxter will permit Halozyme to perform one standard cGMP
compliance audits per year.
6.2.4 Subject to the execution of a confidential disclosure
agreement among Baxter, Halozyme and
Halozyme's licensee(s), Baxter will permit
access by Halozyme's licensees to Baxter's
premises for audit purposes,
consistent with the limitations listed in
Sections 6.2.1 through 6.2.3. Halozyme
will accompany the licensees during each
audit, provided the audit is directly
related to Halozyme's Product.
6.3 Audit
Closeout. An exit meeting will be held with
representatives from Baxter and Halozyme to
discuss significant audit
observations. Halozyme will provide a
written report of all observations within
30 days to Baxter. Within 30 days of the
audit report receipt, Baxter will
provide a written response to all findings
that details corrective action to be
implemented. Baxter will follow up to
ensure that all corrective actions are
implemented
6.4 Testing. In
accordance with the Quality Agreement, Baxter
shall test, or cause to be tested by third
party testing facilities audited by
Baxter, in accordance with the Product
Requirements, each Batch of Product
Produced pursuant to this Agreement before
any release or distribution pursuant
to the Exclusive Distribution Agreement. A
certificate of analysis for each
Batch of Product shall set forth the items
tested by Baxter, Product
Specifications, and test results in
accordance with the Quality Agreement.
Baxter shall send, or cause to be sent,
such certificates along with one (1)
copy of the entire Released Executed Batch
Record to Halozyme prior to selling
any Product from such Batch and within
thirty (30) days following the completion
of such Batch. As required by the FDA,
Halozyme shall assume responsibility for
final release of each lot of Product prior
to distribution of the applicable
lot.
6.5 Permits and
Licenses.
6.5.1 Subject to the terms and conditions of this Agreement,
Halozyme shall have sole responsibility for
obtaining all permits and licenses
necessary or required for the sale,
marketing and commercialization of each
product produced by Baxter hereunder.
Baxter shall be responsible to obtain and
maintain all permits and licenses required
for it to carry out its regulatory
and Production obligations hereunder.
Baxter shall cooperate with Halozyme by
assisting in preparing and filing any
necessary documents to support Halozyme's
applications for permits and licenses.
6.5.2 Notwithstanding anything to the contrary in this
Agreement, the parties acknowledge and
agree that nothing in this Agreement
gives Halozyme any rights to reference the
new drug application (NDA) 6-343 for
Wydase.
6.6 Regulatory
Requirements. Each party promptly shall notify the
other of new regulatory requirements of
which it becomes aware which are
relevant to the Production of a Product
under this Agreement and which are
required by the FDA, any other applicable
Regulatory Authority or other
applicable laws or governmental
regulations, and shall confer with each other
with respect to the best means to comply
with such requirements. Notwithstanding
anything to the contrary in this Agreement,
each party shall be responsible for
its compliance with all regulatory
requirements of the United States and all
foreign countries that are applicable
*** Confidential material redacted
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CONFIDENTIAL TREATMENT REQUESTED--REDACTED COPY
to such party's facilities and each party's
activities in Production, whether or
not a party is aware of such requirements
and has failed to give notice to the
other party.
6.7 Regulatory
Approvals/Clinical Trials. In accordance with the
Product Master Plan, Halozyme shall pursue
regulatory approval of marketing
licenses for Products Produced by Baxter
for Halozyme hereunder. The parties
shall equally share the costs of the
filings including any user fees for final
dosage. Halozyme will advise Baxter of
document requirements in support of NDA
and similar applications required of
foreign governments and agencies including
amendments, license applications,
supplements and maintenance of such. Baxter
will provide documents and assist Halozyme
in preparation of submissions to
Regulatory Authorities (both U.S. and
foreign) designated by Halozyme in support
of Halozyme's NDAs, similar applications
required of foreign governments and
licenses. Ownership of appropriate
regulatory licenses will be agreed upon by
both parties, on a country by country
basis. Halozyme will be responsible for
all contacts with the FDA and all adverse
event reporting and complaint
handling. Halozyme will be responsible for
conducting and funding all FDA
mandated pre-phase IV clinical trials for
safety and efficacy for the DESI
indications for the first Product developed
under this Agreement. The cost of
any phase IV clinical trials agreed to by
the Steering Committee for such
Product for the US market will be shared
equally by the parties. The parties
will agree on the responsibilities for
Other Products as set forth in Section
3.9.
6.8 Regulatory
Authority Inspections.
6.8.1 Interaction with Regulatory Authorities. All interaction
with Regulatory Authorities (both written
and oral) that directly affects
Product or the Production of Product shall
be conducted in accordance with the
provisions of this Section 6. At Halozyme's
request, Baxter will authorize
Regulatory Authorities to review on
Halozyme's behalf applications related to
the Production of Products.
6.8.2 Product Pre-Approval Inspection. In the case of a
Product Pre-Approval Inspection by the FDA
related to the Products, the
following shall apply: (a) Baxter
immediately shall inform Halozyme of the
notice of such inspection; (b) Baxter shall
permit a representative of Halozyme
to be present at the Baxter facility that
is the subject of such inspection (not
to be present at the inspection or to
participate, except to be available on an
as-needed basis as requested by Baxter);
(c) Baxter shall apprise such
representative of Halozyme regarding each
daily wrap up session for such
inspection and the post-inspection wrap up
session for such inspection; (d)
Baxter promptly shall provide Halozyme with
copies of all written materials,
including without limitation copies of any
Notice of Inspection (FDA Form 482),
other notice of inspection, notice of
violation, other similar notice, or
Inspectional Observations (FDA Form 483,
its foreign equivalent and
Establishment Inspection Reports) received
by Baxter relating to such
inspection, and (e) Baxter shall provide
Halozyme with advance copies of all
proposed responses to any such inspections,
notices or actions, shall permit
Halozyme reasonable opportunity to review
and comment within 3 to 5 business
days on each such response, shall
reasonably consider Halozyme's reasonable
comments thereon, and shall provide
Halozyme with copies of each such response
as submitted. Baxter shall retain final
authority for the content of the
responses to the regulatory authority
*** Confidential material redacted
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6.8.3 Other Product Specific Inspections. In the case of an
inspection (other than the Product
Pre-Approval Inspection) by a Regulatory
Authority that directly affects the
Production of Products, the following shall
apply: (a) Baxter immediately shall inform
Halozyme of the notice of such
inspection; (b) Baxter shall permit a
representative of Halozyme to be present
at the Baxter facility that is the subject
of such inspection (not to be present
at the inspection or to participate, except
to be available on an as-needed
basis as requested by Baxter); (c) Baxter
shall apprise such representative of
Halozyme regarding each daily wrap up
session for such inspection and the
post-inspection wrap up session for such
inspection; (d) Baxter promptly shall
provide Halozyme with copies of all written
materials, including without
limitation copies of any Notice of
Inspection (FDA Form 482), other notice of
inspection, notice of violation, other
similar notice, or Inspectional
Observations (FDA Form 483, its foreign
equivalent and Establishment Inspection
Reports) received by Baxter relating to
such inspection, and (e) Baxter shall
provide Halozyme with advance copies of all
proposed responses that directly
affect Production of Product to any such
inspections, notices or actions, shall
permit Halozyme reasonable opportunity to
review and comment on each such
response, shall reasonably consider
Halozyme's reasonable comments thereon, and
shall provide Halozyme with copies of each
such response as submitted.
6.8.4 Other Inspections. The parties' respective rights and
obligations with respect to any inspections
relating to the Product, other than
those described above, shall be as set
forth in the Quality Agreement.
6.9 Labeling. Labeling development shall be conducted in
accordance
with Baxter's standard procedures and as
mutually agreed upon by the parties per
the requirements located in Exhibit E.
7.
ACCEPTANCE
OF PRODUCT.
7.1 Product
Conformity. Within the later of forty-five (45)
calendar days following the date of
Halozyme's receipt of Product samples or
fifteen (15) calendar days following the
date of Halozyme's receipt of the
applicable entire Released Executed Batch
Record(s) and related documentation in
accordance with the Product Master Plan,
Halozyme shall have the right to
determine whether Product conforms to cGMP,
to all other applicable United
States laws and regulations and all
applicable foreign laws and regulations, to
the applicable Product Specifications, and
to the Quality Agreement
(collectively the "Product Requirements").
Notwithstanding the foregoing, if
Halozyme has conducted at least one test of
the applicable Batch and in good
faith has requested in writing, within the
time period specified in this Section
7.1, additional time to perform additional
testing, then such period shall be
extended as reasonably necessary for
Halozyme, or Baxter (if requested by
Halozyme), to perform such additional
testing.
7.1.1 If (a) any Product conforms to the Product Requirements,
or (b) Halozyme fails to notify Baxter
within the time period specified in
Section 7.1 that any Product does not
conform to the Product Requirements, then
Halozyme shall be deemed to have accepted
such Product and waived its right to
revoke acceptance.
*** Confidential material redacted
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7.1.2 If Halozyme believes any Product does not conform to the
Product Requirements, it shall give written
notice to Baxter specifying the
manner in which such Product fails to meet
the Product Requirements. Guidelines
for resolving any disputed claims regarding
conformity of Product are set forth
in Section 7.1.3.
7.1.3 If the parties dispute whether any Product is conforming
or non-conforming, the samples of Product
will be submitted to a mutually
acceptable laboratory or consultant for
resolution, whose determination of
conformity or non-conformity, and the cause
thereof of non-conformity, shall be
binding upon the parties. The
non-prevailing party shall bear the costs of such
laboratory or consultant.
7.2 Remedy for Non Conforming
Product. In the event Baxter agrees
that any Product is non-conforming or the
laboratory determines that the
shipment of Product is non-conforming,
Baxter shall destroy all non-conforming
Product and shall at its option (i)
schedule to run a new Batch to replace such
non-conforming Product within the later of
(a) sixty (60) calendar days from the
date of determination by the third party of
non-conformity, or (b) (60) days
from the receipt of the non-conforming drug
substance and agreement by Baxter of
such non-conformity, or (ii) refund the
cost of the non-conforming batch. Any
costs incurred by Baxter to run a new Batch
pursuant to this Section 7.2 shall
not be Production Costs or Other Costs.
7.3 Non
Conforming API. If Product is rejected by Halozyme, and
such Product's failure to meet the Product
Requirements is the result of
non-conforming API and the cause of such
non-conformity is demonstrated not to
be a result of the negligence, omission or
willful misconduct of Baxter the
rejection will be deemed not to be a breach
of Baxter's warranties or
obligations under this Agreement. In the
event of non-conforming API, Halozyme
shall be responsible for costs reasonably
incurred by Baxter for the rejected
Product.
8.
PRODUCT
RECALLS.
8.1 Product
Recalls. Each party promptly shall notify the other if
any Batch of Product 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 Product, and such recall,
market withdrawal or correction shall be
conducted in accordance with the
provisions of the Quality Agreement. Baxter
will provide Halozyme with access to
and copies of all consignees and
distribution records for the Product and will
cooperate with Halozyme in the execution of
the recall action. Halozyme shall
provide Baxter with a copy of all documents
relating to such recall, market
withdrawal or field correction. Baxter
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 Baxter or
solely by Baxter's breach of its
warranties or obligations under this
Agreement, Halozyme and Baxter shall
equally share all of the costs and expenses
of such recall, market withdrawal or
field correction; provided, however, that
if a recall, market withdrawal or
field correction is necessary because both
(i) the Product does not conform to
the Product Specifications, and (ii) such
non-conformity is solely due to the
negligence, omission or willful misconduct
of Baxter, or solely by Baxter's
breach of its warranties or obligations
under this
*** Confidential material redacted
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Agreement, Baxter 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 Product and
notification of the recall to those persons
whom Halozyme deems appropriate) and
such costs shall not be included within
Production Costs or Other Costs. If such
recall is due solely to the API not
conforming to the API Specifications or
caused solely by the negligence, omission
or willful misconduct of Halozyme, or
solely by Halozyme's breach of its
warranties or obligations under this
Agreement, Halozyme shall bear all costs of
such recall, market withdrawal or
field correction (including but not limited
to costs associated with receiving
and administering the recalled Product and
notification of the recall to those
persons whom Halozyme deems
appropriate).
8.2 Entire
Liability of Baxter. This Section 8 sets forth the
entire liability of Baxter in the event of
a recall, market withdrawal, or field
correction.
9.
FORCE
MAJEURE EVENTS. Any delay in the performance of any of the
duties or obligations of either party
hereto (except the payment of money), to
the extent caused by an event outside the
affected party's reasonable control,
shall not be considered a breach of this
Agreement, and unless provided to the
contrary herein, the time required for
performance shall be extended for a
period equal to the period of such delay.
Such events shall include without
limitation, acts of God; acts of public
enemies; insurrections; riots;
injunctions; embargoes; labor disputes,
including strikes, lockouts, job
actions, or boycotts; fires; explosions;
floods;
