Exhibit 10.46
Confidential treatment has been
requested for portions of this exhibit. The copy filed herewith
omits the information subject to the confidentiality request.
Omissions are designated as ***. A complete version of this exhibit
has been filed separately with the Securities and Exchange
Commission.
SUCROSE ACETATE ISOBUTYRATE
PHARMACEUTICAL GRADE
SUPPLY AGREEMENT
between
EASTMAN CHEMICAL
COMPANY
and
DURECT CORPORATION
List of Attachments
Schedule 1A – SAIB Food Grade
Sales Specifications
Schedule 1B – SAIB
Pharmaceutical Grade Sales Specifications
Schedule 2 – Confidential
Disclosure Agreement (Eastman Form for Audits)
Schedule 3A – SAIB Food Grade
Pricing
Schedule 3B – SAIB
Pharmaceutical Grade Pricing
Schedule 4 – Confidential
Disclosure Agreement (Durect and Eastman)
SUCROSE ACETATE ISOBUTYRATE
PHARMACEUTICAL GRADE SUPPLY AGREEMENT
This Supply Agreement is made as of
the 30th day of December, 2005 (Effective Date), by and
between:
Seller
Eastman Chemical Company, a Delaware
corporation with a place of business at 200 South Wilcox Drive,
Kingsport, TN 37662-5280 (“Eastman”); and
Buyer
Durect Corporation, a company
organized and existing under the laws of Delaware with a place of
business at 10260 Bubb Road - Bldg. A, Cupertino, CA 95014
(“Durect”)
Background
0.1 Durect desires to use a compound
which is known as sucrose acetate isobutyrate (“SAIB”)
as a pharmaceutical excipient for drug formulations.
0.2 Eastman currently produces
sucrose acetate isobutyrate food grade which is manufactured under
food current Good Manufacturing Practices. Ultimately Durect
desires a supply of sucrose acetate isobutyrate pharmaceutical
grade which would be manufactured under [* * *].
0.3 Subject to the terms and
conditions hereof, the parties agree that Eastman will manufacture
and supply SAIB-FG and subsequently SAIB-PG to Durect for use and
sale. The Eastman manufacturing site designated for manufacture of
these materials is [* * *].
Article 1
Definitions
1.1 “Specifications”
shall be exclusively defined in Schedules 1A and 1B which include
the sales specifications for SAIB, or which are subsequently
amended pursuant to Article 4.3(a) hereof or by written agreement
of the parties.
1.2 “Affiliate” or
“Affiliates” shall be understood to mean any
corporation or other legal entity controlling, controlled by or
under common control of an organization, through
*** Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect
to the omitted portions.
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stock ownership or other equity interest, direct
or indirect. For the purposes of this definition, control means
ownership or the power to direct the voting activities of more than
fifty percent (50%) of the voting stock of, or similar
ownership in or to, an organization.
1.3 [* * *]
1.4 “DMF” shall mean a
Type IV drug master file filed with the FDA which includes the
information relating to the manufacture of SAIB-PG.
1.5 “Product(s)” shall
either collectively or individually mean SAIB-FG or
SAIB-PG.
1.6 SAIB-FG shall mean sucrose
acetate isobutyrate food grade as set forth in Schedule
1A.
1.7 SAIB-PG shall mean sucrose
acetate isobutyrate pharmaceutical grade as set forth in Schedule
1B.
Article 2
Process change and cost
recovery
2.1 Product Qualification .
Eastman will validate the process to produce SAIB [* * *] and file
a DMF with the U.S. Food and Drug Administration
(“FDA”) (as further defined below) on or about [* * *]
after the Effective Date of this Agreement provided that payments
as outlined in Section 2.4, Cost Recovery have been completed
as outlined in Section 2.4. This timeline shall be extended if
[* * *]. In the case of [* * *]. Prior to [* * *]. Commencing from
the time of [* * *]. Furthermore, third parties which have a
contractual relationship with Durect for use of Product
(“Durect Licensees”) shall also be allowed to [* * *]
provided that in Durect’s contract with such Durect Licensee,
such Durect Licensee provides to Durect acknowledgements,
representations, warranties and indemnities no less stringent than
provided by Durect to Eastman under Article 7 herein and such
Durect Licensee shall be subject to terms relating to the
disclosure and use of confidential information no less stringent
than applicable to Durect in Article 9 herein.
2.2 Drug Master File .
Eastman will allow Durect and Durect Licensees the right to
reference the DMF [* * *].
*** Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect
to the omitted portions.
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Subject to an acceptable agreement between
parties in regard to specific countries, timing and cost [* * *].
[* * *]
Upon request, Eastman will [* * *].
Eastman shall retain the right to [* * *]
2.3 [* * *]
2.4 Cost recovery . Eastman
will invest capital estimated at [* * *] (“Estimated Capital
Amount”) and will provide technical resources estimated at [*
* *] (“Estimated Technical Resource Amount”) for
process validation and DMF submission.
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Durect shall
pay the Estimated Capital Amount. This payment will be due within
[* * *] of complete execution of this Agreement. Eastman will not
initiate the capital purchase process unless and until the above
referenced payment has been received. [* * *] Durect will have the
right to conduct an audit through a third party auditor that is
acceptable to Eastman which has executed an acceptable
confidentiality agreement with Eastman solely to verify the Actual
Capital Amount. The cost of such audit shall be at Durect’s
expense, unless the audit identifies an overcharge of more than [*
* *], in which event, the cost of such audit shall be borne by
Eastman.
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Payment of the
Estimated Technical Resource Amount, less [* * *]. Eastman will
invoice Durect for this amount which would be due within [* * *] of
the invoice date. Failure of Durect to pay any correct invoice
within the appropriate time period shall entitle Eastman to [* *
*].
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[* * *] In the event that Durect
exercises its rights under this paragraph, Eastman would provide
Durect with [* * *].
*** Certain information on this page has been
omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect
to the omitted portions.
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Article 3
Term and
Exclusivity
3.1 Term . The term of this
Agreement shall commence on the date written on the first page, and
unless terminated in accordance with the terms of this Agreement,
shall expire upon [* * *] (“Initial Term”). Durect
shall notify Eastman when
[* * *]. [* * *]
3.2 Renewals . The Agreement
may be renewed for successive [* * *] terms. At least [* * *] prior
to the end of the Initial Term or [* * *] prior to the end of a
Renewal Term, Durect may, by notice hereunder, elect to request
that the Term be renewed for a [* * *] (“Renewal
Term”). Provided that [* * *] , this Agreement shall be
extended for a Renewal Term.
[* * *]
3.3 [* * *]
Article 4
Quality Control and
Testing
4.1 Acceptance and Return
.
a) [* * *]
b) [* * *]
c) [* * *]
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omitted and filed separately with the Securities and Exchange
Commission. Confidential treatment has been requested with respect
to the omitted portions.
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d) [* * *]
4.2 [* * *]
4.3 Inspections
(a) Inspections and Audits by
Durect. Eastman shall allow Durect up to [* * *] audit per [* * *]
which shall be shall be limited to [* * *] . The length of the [* *
*] audit shall not exceed [* * *] . The limit of [* * *] audit [* *
*] may be increased if an audit is needed for cause, as agreed by
both parties and such agreement shall not be unreasonably withheld.
Durect, and not customers of Durect, would complete these audits.
Durect shall give an advance notice of at least [* * *] prior to
performing a [* * *] audit. Durect will conduct the audit in a
fashion that would not be disruptive to manufacturing processes.
Furthermore, the right of Durect to conduct any such inspections of
Product(s) shall be conditioned upon Durect’s agreement to
abide by all health, safety and security requirements and other
reasonable requests and limitations applicable to visitors to
Eastman’s facilities. [* * *]
Auditors from Durect shall execute a
confidentiality agreement, which form is attached as Schedule 2. [*
* *]
Confidential treatment has been requested for
portions of this exhibit. The copy filed herewith omits the
information subject to the confidentiality request. Omissions are
designated as ***. A complete version of this exhibit has been
filed separately with the Securities and Exchange
Commission.
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Following such audits, Durect will
submit a report to Eastman with any findings. If any items are
identified as requiring follow-up action, then Eastman shall
respond to Durect in writing within [* * *] of the receipt of the
report. [* * *]
Furthermore, before [* * *]; at the
time of [* * *]; and just prior to the [* * *], Durect will perform
an audit to review the [* * *] in place for SAIB PG. The parties
shall form a joint team to address and agree upon [* * *]. This
team shall be formed and hold its first meeting within
[* * *] after the Effective Date of this Agreement. [* *
*]
(b) [* * *]
(c) [* * *]
4.4 [* * *].
Article 5
Forecasts and
Ordering
5.1 Forecasting . Durect will
provide a rolling [* * *] forecast at the beginning of each [* *
*]. If [* * *], the [* * *] of such forecast shall represent a firm
commitment to purchase the
Confidential treatment has been requested for
portions of this exhibit. The copy filed herewith omits the
information subject to the confidentiality request. Omissions are
designated as ***. A complete version of this exhibit has been
filed separately with the Securities and Exchange
Commission.
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amounts forecasted within the period forecasted,
and [* * *], Durect agrees to [* * *]. Any applicable [* * *]. If
[* * *] of such forecast shall represent a firm commitment to
purchase the amounts forecasted.
5.2 Purchase Orders and
Confirmation . Durect shall give Eastman a firm order of its
requirements for Product(s) at least [* * *] prior to the required
delivery date. Each firm order shall specify the quantity of
Product(s) ordered and the required delivery date. Eastman will
confirm its ability to meet the quantity and delivery date within
[* * *]. This Agreement sets forth the terms and conditions
applicable to purchase orders issued during the term of this
Agreement. This Agreement supersedes in its entirety all of the
pre-printed purchase order terms and conditions appearing on
Durect’s purchase order forms.
5.3 Shipment . As confirmed
in Section 5.2, Eastman shall deliver to Durect Product(s) in
the quantities and by the delivery date set forth in the purchase
orders referred to in Section 5.2. All Product(s) sold to
Durect hereunder shall be shipped, at Durect’s election, to
either: (i) [* * *]; or (ii) [* * *]. All SAIB shipped to
Durect hereunder shall be shipped as [* * *].
5.4 Purchase Quantities . In
addition to purchases of Product(s), during the Initial Term,
Durect agrees to [* * *]
Durect further agrees to purchase [*
* *] of its requirements, which are estimated not to exceed [* *
*], from Eastman during the term of the Agreement. Durect’s
failure to purchase [* * *] of their requirements shall represent a
material breach of this Agreement. [* * *] quantities beyond [* *
*] would require additiona
