Exhibit 10.6
SUPPLY AGREEMENT
This Supply Agreement (this "Agreement") dated as of this 2nd day
of Aug,
2002 (the "Effective Date") is entered into by and between
Orthovita, Inc., a
Pennsylvania corporation having a principal place of business at 45
Great Valley
Parkway, Malvern, PA 19355 ("Orthovita"), and BioMimetic
Pharmaceuticals, Inc.,
a Delaware corporation having a principal place of business at 1616
Westgate
Circle, Brentwood, TN 37027 ("BMPT") (each, individually, a "Party"
and,
collectively, the "Parties").
WHEREAS, Orthovita shall manufacture and supply Compound (as
defined below)
to BMPI; and
WHEREAS, BMPI shall purchase its requirements of Compound from
Orthovita
for purposes of conducting investigational testing and
manufacturing of the
Product.
NOW, THEREFORE, in consideration of the mutual promises, covenants
and
agreements hereinafter set forth, the sufficiency of which is
hereby
acknowledged and intending to be legally bound, the Parties to this
Agreement
mutually agree as follows:
1. Definitions. For purposes of this Agreement, the initially
capitalized terms
in this Agreement, whether used in the singular or plural, shall
have the
following meanings:
1.1 "Affiliate" of either Party means any corporation, firm,
partnership,
organization or entity, whether de jure or de facto, which such
Party directly
or indirectly controls, is controlled by or is under common control
with. For
the purpose of this definition, the term "control" means direct or
indirect
ownership of at least 50% of the outstanding equity voting stock
(or such lesser
percentage which is the maximum allowed to be owned by a foreign
corporation in
a particular jurisdiction) of a Party or other entity.
1.2 "Business Day" means any day on which banking institutions in
New York,
NY are open for business.
1.3 "cGMP" means current Good Manufacturing Practices to include
the
Quality System Regulation (QSR's) in the United States existing on
the Effective
Date, as promulgated by the FDA.
1.4 "Compound" means the compound beta-TriCalcium Phosphate, as
further
described in Exhibit A; provided, however, that "Compound" shall
not include any
similar formulation of beta-TriCalcium Phosphate not included
within the
description contained in Exhibit A.
1.5 "Compound Price" shall have the meaning set forth in Section
4.1.
1.6 "Confidential Information" shall have the meaning set forth in
Section
6.1.
1.7 "Control" or "Controlled" means with respect to any material,
item of
information, method, data or other know-how or intellectual
property right, the
possession
(whether by ownership or license, other than pursuant to this
Agreement) by a
Party of the ability to grant to the other Party access and/or a
license, as
provided herein, to such material, item of information, method,
data or other
know-how or intellectual property right without violating the terms
of any
agreement or other arrangement with any third party existing before
or after the
Effective Date.
1.8 "Defective Compound" means Compound that does not meet the
Specifications.
1.9 "Disclosing Party" shall have the meaning set forth in Section
6.1.
1.10 "FDA" means the U.S. Food and Drug Administration and its
European
Union counterpart, and any successor agencies thereto.
1.11 "FDA Act" means the Federal Food, Drug and Cosmetic Act of the
United
States, as amended from time to time.
1.12 "Field" means the dental, periodontal, oral and
cranio-maxillofacial
bone grafting market.
1.13 "Firm Order" means an Initial Firm Order or a Subsequent Firm
Order.
1.14 "HIPAA" means the Health Insurance Portability and
Accountability Act
of 1996 (and the regulations promulgated thereunder).
1.15 "IDE" shall mean the process of obtaining an investigational
device
exemption, as required in accordance with the FDA Act and 21 CFR
Part 812.
1.16 "Indemnified Party" shall have the meaning set forth in
Section 10.3.
1.17 "Indemnifying Party" shall have the meaning set forth in
Section
10.3.
1.18 "Initial Firm Order" shall have the meaning set forth in
Section
2.2.1.
1.19 "Initial Term" shall have the meaning set forth in Section
11.1.
1.20 "Invoice" shall have the meaning set forth in Section 3.3.
1.21 "LIBOR" shall have the meaning set forth in Section 4.5.
1.22 "PDGF" means platelet derived growth factor described in
Exhibit B.
1.23 "Product" means a product containing a combination of Compound
and
PDGF, as described in Exhibit F, as such exhibit may be amended by
the Parties
from time to time; provided, however, that "Product" shall not
include any
combination of PDGF with any other compounds.
1.24 "Receiving Party" shall have the meaning set forth in Section
6.1.
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1.25 "Renewal Term" shall have the meaning set forth in Section
11.1.
1.26 "Representatives" shall have the meaning set forth in Section
6.2.
1.27 "Rolling Forecast" shall have the meaning set forth in Section
2.3.
1.28 "Specifications" means the specifications for Compound
attached hereto
as Exhibit E.
1.29 "Subsequent Firm Order" shall have the meaning set forth in
Section
2.2.1.
1.30 "Term" shall have the meaning set forth in Section 11.1.
1.32 "Vitoss" shall have the meaning set forth in Section 5.5.2.
2. Supply of Compound.
2.1 General. During the Term, Orthovita shall be the sole and
exclusive
supplier of Compound to BMPI and BMPI shall purchase all of its
requirements for
Compound only from Orthovita. All Compound shall be produced in
accordance with
cGMP and supplied in bulk packaging. BMPI shall only use Compound
to make
Product. BMPI shall not sell Compound except as part of Product.
BMPI shall not
promote, market, distribute or use Product outside the Field. BMPI
shall not,
and shall use its best efforts to not permit any other person, to,
promote,
market, distribute or use Product for off label use or seek
labeling that
describes, names or lists any use outside of the Field. Under no
circumstances
shall BMPI package Product in a manner that will encourage
Product's use outside
the Field. BMPI and Orthovita shall promptly give notice to the
other should
either become aware of any other person promoting, marketing,
distributing or
using Product for off label use or seeking labeling that describes,
names or
lists any use outside of the Field or attempting to promote,
market, distribute
or use Product for off label use or seek labeling that describes,
names or lists
any use outside of the Field. BMPI shall cooperate fully with
Orthovita in any
efforts to stop any other person from continuing to promote,
market, distribute
or use Product for off label use or seek labeling that describes,
names or lists
any use outside of the Field, as well as to prevent any other
person from
promoting, marketing, distributing or using Product for off label
use or seeking
labeling that describes, names or lists any use outside of the
Field.
2.2 Firm Orders.
2.2.1 Firm Orders. BMPI shall provide Orthovita with an initial
firm
order (the "Initial Firm Order") of Compound for one calendar month
on the first
calendar day of the month 90 days preceding the anticipated date of
the initial
order delivery. On the first calendar day of each calendar month
thereafter,
BMPI shall provide Orthovita with a firm order (each, a "Subsequent
Firm Order")
of Compound for the first calendar month not covered by a previous
Firm Order.
Hence, each Subsequent Firm Order shall have an order lead time of
at least 90
days. [For example, by April 1st BMPI shall place a Firm Order for
July. By May
1st, BMPI shall place a Firm Order for August.] In addition, in
each Subsequent
Firm Order, BMPI shall
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order at least 90% of the quantity of Compound set out for the
applicable
calendar month in the immediately preceding Rolling Forecast.
2.2.2 Minimum Order Requirements. BMPI shall order the minimum
quantities of Compound set forth in Exhibit C. If BMPI does not
order such
amounts within the specified time periods, BMPI shall pay for such
amounts, as
if it had ordered such amounts, within 30 calendar days after such
period.
2.3 Rolling Forecasts. On the first day of each calendar month
beginning
with the Initial Firm Order, BMPI shall provide Orthovita with a
non-binding
estimate (each, a "Rolling Forecast") of the quantities of Compound
that BMPI
reasonably believes it will require from Orthovita during the
fourth through
twelfth calendar months of the one-year period commencing on the
date such
Rolling Forecast is given to Orthovita. [For example, on April 1,
BMPI shall
provide Orthovita with a Rolling Forecast for August 1 through
March 31 of the
following year. On May 1, BMPI shall provide Orthovita with a
Rolling Forecast
for September 1 through April 30 of the following year.] Orthovita
shall consign
to BMPI at Orthovita's distribution facility a quantity of Compound
equal to
that required by the Rolling Forecast (the "Consigned Compound").
Orthovita
shall arrange for BMPI to be billed directly each month for all
carrying costs
incurred on a per lot basis during the prior month in maintaining
such Consigned
Compound for the benefit of BMPI.
2.4 Acceptance of Firm Orders. Orthovita shall accept each Firm
Order
placed by BMPI, to the extent that such Firm Order is no greater
than 130% of
the amount forecast in the fifth month of the Rolling Forecast
provided to
Orthovita one month earlier. Insofar as such Firm Orders exceed
130% of amount
forecast in the fifth month of the previous month's Rolling
Forecast, Orthovita,
if requested by BMPI, shall use commercially reasonable efforts to
fill such
excess subject to available capacity. If Orthovita is aware or
anticipates that
it will be unable to meet any Firm Order, either in whole or in
part, Orthovita
shall promptly inform BMPI of such inability. If such inability is
partial,
Orthovita shall fulfill Firm Orders with such quantities of
Compound as are
available for supply to BMPI hereunder. Amounts of Compound
delivered by
Orthovita to BMPI in fulfillment of a Firm Order that was
previously only
partially filled will be shipped with the next two Firm Orders
shipped by
Orthovita.
2.5 Addressee of Rolling Forecasts and Firm Orders. All Rolling
Forecasts
and Firm Orders shall be sent by BMPI to the person at the address
identified on
Exhibit D as such exhibit may be amended from time to time by
Orthovita.
2.6 Additional or Different Terms. Any Firm Orders, Rolling
Forecasts or
related purchase orders, purchase order releases, confirmations,
acceptances,
advices and similar documents submitted by BMPI in conducting the
activities
contemplated under this Agreement are for administrative purposes
only and shall
not add to or modify the provisions of this Agreement. To the
extent there are
any conflicts or inconsistencies between this Agreement and any
such document,
the provisions of this Agreement shall control as to a particular
order unless
otherwise agreed to in writing by the Parties.
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3. Shipping, Delivery and Inspection.
3.1 Shipping and Delivery Dates. At the time BMPI places a Firm
Order, BMPI
will provide Orthovita with shipping and delivery dates consistent
with the
Rolling Forecast. To the extent that such shipping and delivery
dates are
consistent with such Rolling Forecast and the 90- day minimum order
lead-time,
Orthovita shall acknowledge such shipping and delivery dates in its
order
confirmations, whereupon such shipping and delivery dates shall
become binding.
Delivery by Orthovita shall be considered to be "on time" if the
Compound is
received by BMPI within five calendar days of the scheduled
delivery date. If
Orthovita delivers between 90% and 110% of the amount of Compound
specified in a
Firm Order, Orthovita shall be deemed to have satisfied the Firm
Order.
3.2 Terms of Delivery. All shipments of Compound shall be on a
first-to-expire, first out basis Ex Works (Incoterms 2000)
Orthovita's
distribution facility. Title and risk of loss or damage to any
Compound sold by
Orthovita to BMPI hereunder shall pass to BMPI upon delivery by
Orthovita to the
Ex Works point. BMPI shall use its best efforts to designate a
carrier in each
Firm Order; provided, however, that if BMPI fails to designate a
carrier in a
Firm Order, Orthovita may select a carrier for the account and risk
of BMPI. If
the carrier selected by BMPI is unavailable, Orthovita shall ship
the Compound
by a mutually agreed upon method. All shipments shall be made at
the expense of
BMPI.
3.3 Accompanying Documentation. With each shipment of Compound,
Orthovita
shall provide BMPI with (a) commercially appropriate shipping
documentation,
including, without limitation, bills of lading and any additional
documentation
reasonably requested by BMPI, (b) a certificate of analysis
attached as Exhibit
I that shall record conformance of the shipment with the
Specifications and cGMP
and (c) an invoice for the amount of Compound delivered in such
shipment
(each, an "Invoice") attached as Exhibit G. Containers shipped with
Compound
shall be properly marked and include Tare Weight.
3.4 Inspection.
3.4.1 Prior to receipt of the Initial Firm Order, BMPI or its
designated third party may perform analyses, at its expense, of
three separate
lots of Compound to test conformance with specifications shown in
Exhibit E.
From time to time thereafter, but no less than annually, such
analyses of
Compound for delivery may be conducted by BMPI at its sole expense.
BMPI may
perform periodic quality system audits of Orthovita. BMPI shall
reimburse
Orthovita for its reasonable audit administration costs. The dates
and duration
of audits shall be mutually agreed upon in advance. The scope of
any such audits
shall be restricted to an assessment of Orthovita's general
standard operating
procedures and procedures related to testing outlined in the
Certificate of
Analysis. Audits of other Orthovita proprietary design
documentation, equipment,
processes, procedures, and data are prohibited.
3.4.2 Within 20 business days after BMPI's receipt of a shipment of
Compound, BMPI shall inspect (or have inspected) such shipment for
Defective
Compound. BMPI shall promptly, and in no event more than five
calendar days of
discovery of such Defective Compound, notify Orthovita thereof. If
BMPI does not
notify Orthovita of any Defective
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Compound within 25 business days after BMPI's receipt of a shipment
of
Compound, BMPI shall be deemed to have accepted such shipment.
3.4.3 If BMPI notifies Orthovita that it received Defective
Compound,
Orthovita may request that BMPI submit a sample of the allegedly
Defective
Compound to a mutually agreeable independent testing laboratory to
verify
whether such Compound is in compliance with the Specifications. The
findings of
such independent laboratory shall be binding upon the Parties. The
fees and
expenses charged by such laboratory shall be paid by the Party in
error.
3.4.4 Subject to acknowledgement of Defective Compound by Orthovita
or
confirmation of Defective Compound by an independent laboratory,
which ever
occurs first, but in no event more than 30 business days following
receipt of
BMPI's notice, Orthovita shall provide to BMPI replacement Compound
in a
quantity equal to the Defective Compound. Where Orthovita is unable
to replace
the full amount of Defective Compound in the specified time, it
shall not
constitute a breach of this Agreement. No less than 50% of
Defective Compound
shall be delivered to BMPI 30 days following Orthovita's receipt of
notice from
BMPI. The remaining 50% of replacement Compound will be delivered
to BMPI within
60 days of notice. Orthovita shall be solely responsible for all
out of pocket
costs associated with the return of such Defective Compound to
Orthovita. When
Orthovita replaces the Defective Compound with Compound it no
charge to BMPI in
addition to the amounts BMPI already paid or payable to Orthovita
for such
Compound, BMPI shall have no other remedies with respect to such
Defective
Compound (except as set forth in Section 10).
3.4.5 Except to the extent BMPI provided notice to Orthovita in
accordance with this Section 3.4.1, all Compound delivered to BMPI
shall be
deemed to be in conformance with the Specifications 25 Business
Days after
BMPI's receipt thereof (including, without limitation, for the
purposes of
Section 10). In addition, if any Compound fails to meet the
Specifications as a
result of a cause occurring after receipt of the Compound by BMPI,
including,
without limitation, storage or handling not conforming with
Orthovita's written
storage and handling instructions as specified in Exhibit H, such
Compound shall
be deemed to be in conformance with the Specifications (including,
without
limitation, for the purposes of Section 10).
4. Payment Obligations.
4.1 Calculation of Compound Price. The price of Compound (the
"Compound Price") shall be as described in Exhibit C hereto.
4.2 Payment of Compound Price. Within 30 days after issuance of an
Invoice
to BMPI, BMPI or its permitted designee shall pay Orthovita an
amount equal to
the Compound Price times the number of units of Compound actually
received by
BMPI or its permitted designee.
4.3 Changes in Regulatory Requirement. If, during the Term, there
are any
changes in cGMP or any other law, rule or regulation affecting the
manufacture
and sale of Compound used in Product that result in an increase in
the cost to
manufacture Compound for Product (an "Increasing Change"), such
increased
pro-rata stare costs shall be passed on to BMPI in the
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form of an increase to the Compound Price. Orthovita shall provide
BMPI with
fifteen (15) days advance written notice of any such Increasing
Change prior to
passing such costs on to BMPI. Such pro-rata share cost increases
shall be
proportional to the weight of the initial product used to produce
the Compound
in comparison to the combined weight of the initial product used to
produce the
Compound, Vitoss, and any other compound created from the initial
product. For
example, if the total weight of the initial product is 100 grams,
and 80 grams
of the initial product are used to produce Vitoss, 10 grams of the
initial
product are used to produce a separate compound, and 10 grams of
the initial
product are used to produce the Compound, then BMPI shall be
responsible for 10
grams/(80 grams + 10 grams + 10 grams) or 10% of any increased
costs due to an
Increasing Change. BMPI shall have the right to verify increases to
Compound
Price through an independent third party auditor acceptable to both
Parties.
Prior to the effectiveness of any such law, rule or regulation,
Orthovita shall
provide BMPI with written notice of any such law, rule or
regulation that, to
its knowledge, is proposed, as well as any material updates to such
proposal.
However, failure by Orthovita to provide written notice of any such
law, rule or
regulation prior to its effectiveness shall not impair the ability
of Orthovita
to pass on the increased pro-rata share of such costs.
4.4 Payment Terms. All payments to be made hereunder shall be
payable in
United States dollars.
4.5 Late Payments. Any payments due under this Section 4 that are
not made
on or before the date specified under the provisions of this
Agreement shall
bear interest, to the extent permitted by law, at an annual rate of
three
percentage points above the 30-day London InterBank Offering Rate
("LIBOR") as
reported in The Financial Times (or any other publication agreed to
by the
Parties) on the date such payment is due, with interest calculated
based on the
number of days such payment is delinquent.
5. Regulatory Obligations.
5.1 Compliance with Laws. Except as provided in Section 5.5. BMPI
shall
obtain, at its sole expense, all permits, licenses, and other
approvals and
shall file all reports, applications, notifications, manifests, and
the like
required by regulatory authorities as necessary for BMPI to (a)
conduct
pre-clinical and clinical studies on the Product, and (b) market
and sell the
Product. Such regulatory requirements shall include, without
limitation, all
requirements of FDA and other country-specific requirements,
including, without
limitation, to country-specific registration requirements for
importation,
testing, and sale of the Product, waste management or emissions, or
the testing,
packaging, labeling, storage, sale or distribution of the Product.
5.1.1 Orthovita shall notify BMPI promptly of all recalls or market
withdrawals of Vitoss products for any reason, except for those
recalls or
market withdrawal caused by product mislabeling or packaging. Such
notification
shall be no more than 48 hours after such action has been
initiated. In such
case, Orthovita shall reimburse BMPI any and all costs associated
with
withdrawal of Product, subject to the limitations of Section 9.2.2,
as result of
withdrawal of Orthovita's Vitoss.
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5.2 Pre-Clinical and Clinical Studies.
5.2.1 Orthovita shall have the right to review and recommend
modifications to all testing protocols for the pre-clinical studies
and the
clinical studies prior to commencement of each individual study.
Orthovita
shall request changes or modification to pre-clinical protocols
within 10
business days of receipt. Following initial review and
recommendation, Orthovita
shall have the right to request changes in or modifications to
protocols that
have not been completed within 10 business days after Orthovita's
receipt of
such protocol. All requested changes shall be in writing and shall
be signed by
authorized representatives of Orthovita and BMPI.
5.2.2 Jeffrey Hollinger, Ph.D., having a principal place of
business
at the Bone Tissue Engineering Center, 125D Smith Hall, 5000 Forbes
Avenue,
Pittsburgh, PA 15213-3890, shall direct the pharmacokinetic study
portion of
the pre-clinical studies. Orthovita and BMPI shall agree on the
Principal
Investigator for the remainder of the pre-clinical studies.
5.2.3 BMPI shall promptly provide Orthovita with a copy of all
Compound binding information and characterization of the release
kinetics data
resulting from the pre-clinical studies.
5.3 ISO. Orthovita shall provide to BMPI appropriate documentation
of its
International Standards Organization ("ISO") certification and FDA
registration
and shall notify BMPI of any discontinuance of such certification
or
registration. If FDA or other governmental and/or licensing
accreditation or
certification organization requires an audit of Orthovita,
Orthovita, as
supplier of raw materials to BMPI, shall comply with FDA's
requirements at
BMPI's cost. A mutually agreeable third party shall be permitted to
audit the
Orthovita facility, at reasonable times during normal business
hours and subject
to the terms and conditions typical in the industry, at the cost of
BMPI.
5.4 Cooperation in Identification of Vendor for Packaging and
Sterilization. To assist, BMPI in the packing and sterilization of
Product,
Orthovita shall provide to BMPI information that identifies
potential vendors
historically used by Orthovita for packaging of Compound.
Notwithstanding the
foregoing, Orthovita shall not be responsible for the packaging or
sterilization
of Compound.
5.5 Cooperation in Obtaining Regulatory Approval.
5.5.1 To assist BMPI solely in conducting the activities in the
Field
as set forth in this Agreement, Orthovita shall furnish BMPI and/or
BMPI's
designees with certain documentation in Orthovita's possession,
including
Orthovita's filings with the FDA and its European Union counterpart
relating to
Compound, as required by FDA to submit applications for regulatory
approvals of
Product and/or to assist BMPI in its communications with the
regulatory
authorities relating to Product.
5.5.2 Orthovita shall permit BMPI to cross-reference Orthovita's
filings made to the FDA and its European Union counterpart with
respect to its
"Vitoss" product (which product has the same chemistry as Compound,
but is of a
different particle size) ("Vitoss") for
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the sole purpose of assisting BMPI in its communications with the
FDA and its
European Union counterpart. Additionally, Orthovita shall use
reasonable efforts
to provide BMPI with any additional information on Vitoss or
Compound in
Orthovita's possession as required by the FDA and its European
Union
counterpart.
5.5.3 As a courtesy only, Orthovita shall supply BMPI with a copy
of
the package insert and a summary of the safety and efficacy data
for Vitoss on
an "AS-IS" basis. BMPI SHALL NOT R
