SUPPLY AGREEMENT

Exhibit 10.8

 

SUPPLY AGREEMENT

 

 

between

 

PIERRE FABRE MEDICAMENT S.A.

 

 

and

 

 

NOVACEA, Inc.

 

 

Dated

 

 

July 19, 2005

TABLE OF CONTENTS

 

 

ii

 

iii

SCHEDULES

 

 

iv

SUPPLY AGREEMENT

 

THIS SUPPLY AGREEMENT (the “Agreement”) is executed on July 19, 2005 (the “Effective Date”) by and between P IERRE F ABRE M EDICAMENT S.A., a corporation organized under the laws of France with headquarters at 45, place Abel-Gance, 92100 B OULOGNE , F RANCE (“P IERRE F ABRE ”), and N OVACEA , I NC . a Delaware corporation with a principal place of business at 601 Gateway Boulevard, Suite 800, S OUTH S AN F RANCISCO , C ALIFORNIA 94080, U.S.A. (“N OVACEA ”).

 

WHEREAS , concurrently with the execution of this Agreement, P IERRE F ABRE and N OVACEA are entering into a Patent and Know-How License Agreement and Trademark License Agreement with respect to the development, marketing and sale of a Vinca Alkaloïd derivative known as “V INORELBINE ” (INN) formulated in softgel capsules and already registered, marketed and sold by P IERRE F ABRE or its Affiliates in various countries;

 

WHEREAS , N OVACEA is granted the exclusive right under said Patent and Know-How License Agreement, to develop and commercialize Finished Product in the N OVACEA Territory; and

 

WHEREAS , N OVACEA desires to purchase from P IERRE F ABRE , and P IERRE F ABRE desires to supply N OVACEA with all of N OVACEA ’ S needs and requirements for Finished Product pursuant to the terms and conditions set forth in this Agreement.

 

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

 

ARTICLE 1 – DEFINITIONS

 

For purposes of this Agreement, the capitalized terms not defined herein shall have the meanings set forth in Schedule 1 attached hereto and incorporated herein by reference.

 

ARTICLE 2 – PURCHASE AND SUPPLY-GENERAL OBLIGATIONS

 

2.1. Basic Obligations .

 

Except as expressly provided herein, N OVACEA hereby agrees to purchase its total requirements of Placebo, Clinical Product and Finished Product from P IERRE F ABRE , and P IERRE F ABRE agrees to supply N OVACEA or have N OVACEA supplied, with its total needs and requirements of Placebo, Clinical Product and Finished Product for development and commercial purposes in all countries of the N OVACEA Territory, all in conformity with the terms and conditions of this Agreement.

 

2.2. Use of Placebo, Clinical Product and Finished Product Supplied .

 

2.2.1. Placebo, Clinical Product and Finished Product supplied by P IERRE F ABRE to N OVACEA hereunder will be exclusively used by N OVACEA for purposes authorized in the Patent and Know-How License Agreement.

2.2.2. For the duration of this Agreement, P IERRE F ABRE will not knowingly sell Placebo, Clinical Product or Finished Product to any Third Party for use or resale in the N OVACEA Territory.

 

2.3. P IERRE F ABRE ’ S Warranties .

 

2.3.1. General. P IERRE F ABRE warrants and represents that Clinical Product, Finished Product and Placebo supplied by P IERRE F ABRE hereunder:

 

(a)

shall be manufactured and packaged in compliance with all Legal Requirements and cGMPs, and

 

(b)

at the time of delivery to N OVACEA : (i) shall meet the applicable Specifications, (ii) shall be packaged and labeled in accordance with the applicable Specifications, (iii) shall have been manufactured in accordance with the Quality Agreements to be agreed between the Parties as provided in Section 2.5.1 hereof, (iv) shall be owned by P IERRE F ABRE or an Affiliate of P IERRE F ABRE , and (v) shall be free from all liens and encumbrances of any kind. Nothing herein shall be deemed to affect any other representation, warranty or guaranty of P IERRE F ABRE relating to the Placebo, Clinical Product or Finished Product.

 

2.3.2. Softgel Capsules. P IERRE F ABRE represents and warrants to NOVACEA and agrees that:

 

(a)

P IERRE F ABRE is a Party to the CAH Agreement;

 

(b)

P IERRE F ABRE has the right, authority and legal capacity to enter into this Agreement and perform its obligations hereunder, and the performance of its obligations hereunder does not violate the terms of the CAH Agreement;

 

(c)

P IERRE F ABRE will, throughout the term of the CAH Agreement, perform in all material respects its obligations under the CAH Agreement;

 

(d)

P IERRE F ABRE will take no action or fail to take any action which will cause it to be in breach of any provision of the CAH Agreement;

 

(e)

in all events P IERRE F ABRE will manage its relationship with CAH to maximize the assurance of supply of the Placebo, Clinical Product and Finished Product under this Agreement;

 

(f)

CAH is aware that N OVACEA is a licensee of P IERRE F ABRE for the Finished Product and has not objected, and to P IERRE F ABRE ’ S knowledge has no contractual basis to object, to the grant of rights made to N OVACEA hereunder; and

 

(g)

Except as provided in Section 9.8 of the CAH Agreement, N OVACEA is not and will not be a third party beneficiary of the CAH Agreement.

 

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2.4. Continuing Guarantee .

 

P IERRE F ABRE guarantees that Placebo, Clinical Product and Finished Product supplied to N OVACEA hereunder will not, at the time of delivery to N OVACEA ’ S designated agent at Charles de Gaulle Airport, Roissy (France), be adulterated or misbranded within the meaning of the United States Federal Food, Drug and Cosmetic Act (the “Act”); and other applicable Legal Requirements, or constitute an article which may not, under the provisions of Section 505 of said Act, be introduced into interstate commerce. This guarantee shall be a continuing guarantee and shall be binding upon P IERRE F ABRE with respect to all Placebo, Clinical Product and Finished Product shipped or delivered by P IERRE F ABRE to N OVACEA pursuant to this Agreement.

 

2.5. Quality Assurance Rights and Obligations; Inspections .

 

2.5.1. Quality Agreements. The Parties shall set forth certain specific terms related to the manufacture and supply of (i) Placebo and Clinical Product and (ii) Finished Product in accordance with N OVACEA and P IERRE F ABRE ’ S standard formats in two Quality Agreements to be agreed in good faith within one hundred twenty (120) days after the Effective Date and attached as Schedule 2.5.1(a) and Schedule 2.5.1(b) hereto. Such Quality Agreement may be amended from time to time upon mutual agreement of the Parties. In the event of a conflict between the terms of this Agreement and the terms of any such Quality Agreements, this Agreement shall control.

 

2.5.2. Quality Audits. No more than once in any twelve (12) month period, N OVACEA may send up to three (3) authorized representatives to conduct audits required for pre-approval inspections and quality assurance audits of P IERRE F ABRE ’ S manufacturing and testing facilities and procedures and CAH’s manufacturing and testing facilities and procedures used in the performance of P IERRE F ABRE ’ S supply obligations hereunder. Such audits shall be conducted during normal business hours and, as to audits and inspections of P IERRE F ABRE facilities, upon at least ten (10) days’ prior written notice to P IERRE F ABRE , provided that there is no conflict with any inspection by a Regulatory Authority. In addition, P IERRE F ABRE shall enforce its rights under Section 9.8 of the CAH Agreement so that N OVACEA may participate directly in inspections and audits of CAH’s facilities. N OVACEA ’ S audit and inspection rights under this Section shall not extend to any portions of the P IERRE F ABRE or CAH facilities, documents, records or other information which do not relate to the Compound, Placebo, Clinical Product or Finished Product.

 

2.5.3. Audit Rights under Special Circumstances. The limitation on the frequency of N OVACEA audits provided in Section 2.5.2, above, shall not apply to any audit: (i) required for pre-approval inspections, (ii) conducted in reasonable response to a serious Adverse Event (as defined in Schedule 13 to the Patent and Know-How License Agreement) or a significant deviation that is unexpected and is reasonably believed to be associated with the Finished Product or the facility where Placebo, Compound, Clinical Product or Finished Product is manufactured, or (iii) conducted in connection with an inspection by the FDA or other Regulatory Authority of the N OVACEA Territory.

 

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2.5.4. Governmental Inspections. If it is reasonably related to N OVACEA ’ S efforts to obtain or maintain Approval of, or governmental authorization to test, Licensed Product in any country of the N OVACEA Territory, P IERRE F ABRE will permit or obtain permission for officials of the applicable Regulatory Authority to inspect the facilities where the Placebo, Clinical Product, Finished Product or Compound is manufactured (including, without limitation, the CAH facilities) and will take such action as such Regulatory Authorities may require. P IERRE F ABRE shall notify N OVACEA immediately upon receipt of notice by P IERRE F ABRE of any proposed inspection by Regulatory Authorities from any country in the N OVACEA Territory in relation to the Placebo, Clinical Product, Finished Product or Compound and/or the manufacturing facilities where the Placebo, Clinical Product, Finished Product or Compound are manufactured. P IERRE F ABRE shall promptly inform N OVACEA of any governmental reports provided to P IERRE F ABRE in connection with any inspection by any Regulatory Authority from any jurisdiction in the world to the extent that such reports relate to: (i) the Placebo, Clinical Product, Compound or Finished Product; (ii) the portion of P IERRE F ABRE or CAH facilities used in the production of Placebo, Clinical Product Finished Product or Compound; or (iii) the ability of P IERRE F ABRE or CAH to continue manufacturing the Placebo, Clinical Product, Finished Product or Compound. P IERRE F ABRE shall not be required to disclose information relating to any Third Party (other than CAH in accordance with the CAH Agreement) or such Third Party’s products.

 

2.6. Drug Master File; Cross Reference Rights .

 

P IERRE F ABRE has established Drug Master Files (collectively, “DMFs”) with the FDA and the HC relating to the manufacture of Compound. P IERRE F ABRE shall provide letters of authorization to the FDA and the RC, and take such other action as N OVACEA may reasonably request, to allow N OVACEA or its permitted sub-licensee to refer to P IERRE F ABRE ’ S DMFs, in connection with any submissions or filings which N OVACEA or its permitted sub-licensee make with respect to the Finished Product. Likewise, if CAH establishes and files DMFs with the FDA and/or the HC, P IERRE F ABRE shall cause CAH to provide letters of authorization to the FDA and/or the HC to allow N OVACEA or its permitted sub-licensee to refer to such DMFs. P IERRE F ABRE agrees to inform N OVACEA of all regulatory submissions, amendments, and other filings made with respect to the Compound and/or Finished Product on a timely basis following any such submission.

 

2.7. Recalls and Complaints .

 

2.7.1. N OVACEA shall promptly notify P IERRE F ABRE if any Placebo, Clinical Product or Finished Product supplied to N OVACEA pursuant to this Agreement is the subject of a possible or actual recall or market withdrawal in the N OVACEA Territory, and P IERRE F ABRE shall promptly notify N OVACEA of any possible or actual recall in the P IERRE F ABRE Territory with respect to Finished Product, other than recalls known to be based solely upon problems related to packaging, labeling or other causes unrelated to product safety, efficacy or manufacturing. As between the Parties, N OVACEA shall be solely responsible for all decisions, activities and communications with respect to any such recall or market withdrawal in the N OVACEA Territory, including, without limitation, the decision as to whether a recall or market withdrawal should be initiated in the N OVACEA Territory. If such recall or market withdrawal shall have been the result of P IERRE F ABRE ’ S breach of any of its obligations or representations and warranties set forth in this Agreement, then in such a case P IERRE F ABRE shall: (i) upon N OVACEA ’ S substantiation of costs, bear the direct cost of such recall or market withdrawal, and (ii) negotiate

 

4

in good faith with N OVACEA to adjust N OVACEA ’ S forecasts and pending Firm Orders for Placebo, Clinical Product, Finished Product to reflect the anticipated consequences of the recall or market withdrawal.

 

2.7.2. P IERRE F ABRE shall cooperate with N OVACEA in responding to customer complaints received by N OVACEA with respect to Finished Product and provide N OVACEA with such information as N OVACEA shall reasonably request in writing within ten (10) business days of receipt by P IERRE F ABRE of such written request. At least once every Quarter, P IERRE F ABRE shall notify N OVACEA of any material customer complaints with respect to the Finished Product, excluding pricing complaints with respect to the P IERRE F ABRE Territory, that it has received.

 

2.8. Consents and Drug Application .

 

2.8.1. Manufacturing Consents. P IERRE F ABRE shall be responsible for timely making all legally required filings relating to its registration as manufacturer of the Compound, Placebo, Clinical Product and Finished Product for N OVACEA and shall be responsible for ensuring that all other filings and registrations required of all Third Parties participating in the manufacturing process are timely made and maintained in compliance with all applicable Legal Requirements.

 

2.8.2. Finished Product Consents. N OVACEA shall, at its expense, obtain and maintain any consents which may from time to time be required by any Regulatory Authority with respect to ownership of the Approvals including those approvals relating to the marketing, distribution, clinical investigation, import or export of the Placebo, Clinical Product and Finished Product in the N OVACEA Territory. N OVACEA shall be responsible for responding to all requests for information related to such consents made by, and making all legally required filings relating to such consents with, any Regulatory Authority having jurisdiction to make such requests or require such filings. In the event any consent held by N OVACEA relating directly to the Placebo, Clinical Product or Finished Product is hereafter suspended or revoked, N OVACEA shall promptly notify P IERRE F ABRE of the event and shall promptly inform P IERRE F ABRE of the impact on N OVACEA ’ S purchases of the affected Placebo, Clinical Product or Finished Product and N OVACEA ’ S general intentions with respect thereto.

 

2.8.3. Drug Application Documentation. N OVACEA shall maintain all Approvals with respect to the Finished Product in the Territory. On a timely basis, N OVACEA shall provide P IERRE F ABRE with all information regarding Approvals or portions thereof.

 

2.8.4. P IERRE F ABRE ’ S Obligation to Assist. P IERRE F ABRE shall provide to N OVACEA mutually agreed levels of information, assistance and cooperation in connection with all legally required filings with respect to the Finished Product.

 

ARTICLE 3 – DEVELOPMENT SUPPLIES – FORECAST – ORDER AND DELIVERY PROCEDURES – PRICE

 

3.1. Forecasts .

 

For initial planning purposes only, within thirty (30) days following the Effective Date, N OVACEA will provide P IERRE F ABRE with a good faith forecast of Placebo and Clinical Product to be supplied pursuant to this Agreement for development purposes in the N OVACEA Territory

 

5

for each of the following eight (8) Quarters. Thereafter, beginning with the first Quarter of 2006, N OVACEA will update its forecasted requirements of Placebo and Clinical Product for development purposes in the N OVACEA Territory at the beginning of each Quarter until such time as N OVACEA notifies P IERRE F ABRE that it no longer requires Placebo and/or Clinical Product for development purposes. The amounts on each forecast provided pursuant to this Section shall not be binding upon either Party in any way.

 

3.2. Firm Orders .

 

N OVACEA shall provide P IERRE F ABRE with at least [*] prior written notice of all quantities of Placebo and Clinical Product required by N OVACEA for development purposes, and shall reflect such quantities in firm purchase orders (“Firm Orders”). Amounts to be delivered within [*] shall constitute and be treated as Firm Orders hereunder. Additional terms and conditions applicable to the supply of Placebo and Clinical Product for development purposes will be described in the Quality Agreement to be agreed between the Parties pursuant to Section 2.5.1 hereof and attached hereto as Schedule 2.5.1(a) .

 

3.3. Purchase Price .

 

(a)

All quantities of Placebo to be supplied by P IERRE F ABRE for development purposes shall be invoiced to N OVACEA : (i) on a FCA Charles de Gaulle Airport, Roissy (France) basis (Incoterms 2000), (ii) at a price of [*] € per batch of [*] mg capsules or [*] mg capsules.

 

(b)

All quantities of Clinical Product to be supplied by P IERRE F ABRE for development purposes shall be invoiced to N OVACEA : (i) on a FCA Charles de Gaulle Airport, Roissy (France) basis (Incoterms 2000), (ii) at a price of [*] Euros (€ [*]) per milligram of Compound (expressed as base), such price to be subject to an annual [*] (the “Annual Variation”), effective as of January 1, of each year after the Effective Date, based on the INSEE Index over the preceding twelve (12) months (the “Annual Index Adjustment”), the base INSEE Index being that of December 2004 = 111.3                      .

 

(c)

Payment of P IERRE F ABRE ’ S invoices for supplies of Placebo and Clinical Product pursuant to this Article 3, shall be made by N OVACEA , in Euros, by transfer to a bank account designated by P IERRE F ABRE , within sixty (60) days of the date of each invoice. In the event N OVACEA fails to pay any amount within sixty (60) days of the due date, P IERRE F ABRE may charge a monthly late payment fee equal to [*] percent ([*]%)] of the unpaid balance.

 

[*]	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 4 – COMMERCIAL SUPPLIES FORECAST – ORDER AND DELIVERY PROCEDURES – QUALITY CONTROL – CLAIMS – SAFETY STOCK – STABILITY STUDIES

 

4.1. Forecasts and Orders .

 

4.1.1. Format of Forecasts and Orders. Each forecast (“Forecast”) and purchase order (“Firm Order”) required pursuant to this Agreement shall be (i) separately established for each country in the N OVACEA Territory, and (ii) expressed in 20 mg or 30 mg capsules, on the form attached hereto as Schedule 4.1 .

 

4.1.2. Forecasts. Except as provided in Section 4.2, below, relating to the Launch Period for the USA (as defined in Section 4.2.1 hereof), and the Launch Period for Canada (as defined in Section 4.2.2 hereof), on or before December 15, and June 15, of each calendar year (the “Forecasting Date”), N OVACEA will provide P IERRE F ABRE with Forecasts detailing its requirements of Finished Product for each country in the N OVACEA Territory, in the format described above.

 

4.1.3. Six Month Forecasting. Each forecast made pursuant to Section 4.1.2, above, will be denominated in total grams of Compound (expressed as base) for each dosage form of Finished Product, and shall be divided into Commercial Half Year periods, each being referred to as a “Six Month Forecast.” The “First Six Month Forecast” refers to the Commercial Half Year commencing six months following the first day of the first calendar month following the Forecasting Date ( i.e. , on January 1 or July 1). The “Second Six Month Supply Agreement Forecast” refers to the Commercial Half Year following the Commercial Half Year covered by the First Six Month Forecast and the “Third Six Month Forecast” refers to the Commercial Half Year following the Commercial Half Year covered by the Second Six Month Forecast etc.... Each First Six Month Forecast will be divided into calendar monthly increments and each Second Six Month Forecast, Third Six Month Forecast etc... will be divided into quarterly increments.

 

4.1.4. Permitted Variances for Forecasts. All N OVACEA Forecasts shall represent a good faith estimate of N OVACEA ’ S projected requirements for the periods specified but shall be non-binding on the Parties; provided, however, that the First Six Month Forecast shall not vary by more than twenty-five percent (25%) from the Six Month Forecast previously made by N OVACEA for the same Commercial Half Year ( i.e. , when such Commercial Half Year was reflected in a Second Six Month Forecast).

 

4.1.5. Firm Orders. On or before June 15 and December 15 of each calendar year following the Forecasting Date, N OVACEA shall provide P IERRE F ABRE with a written Firm Order for the following Commercial Half Year, and the delivery date in such Commercial Half Year, which in all circumstances shall allow P IERRE F ABRE at least six (6) months lead time to deliver such Firm Order.

 

4.1.6. Permitted Variances for Firm Orders. Firm Orders placed during a specific Commercial Half Year (for delivery during the following Commercial Half Year) as provided in Section 4.1.5, shall not vary by more than fifteen percent (15%) from the First Six Month Forecast most recently provided by N OVACEA with respect to such Commercial Half Year.

 

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4.1.7. Permitted Variances Apply at Country Level. The permitted variances described above in Sections 4.1.4 and 4.1.6 shall be measured separately for each country in the N OVACEA Territory.

 

4.1.8. Launch Period for the USA and Canada. During the Launch Period for the USA (as defined in Section 4.2.1 hereof), and the Launch Period for Canada (as defined in Section 4.2.2 hereof), the provisions of Section 4.2 hereof will apply in lieu of the provisions of this Section 4.1.

 

4.2. Launch Period for the USA and Canada .

 

4.2.1. Launch Period for the USA.

 

(a)

Definition . The period beginning eighteen (18) months prior to N OVACEA ’ S estimated Date of Launch for the Licensed Product in the USA and ending twelve (12) months after the actual Date of Launch shall be considered the “Launch Period for the USA” during which time provisions of this Section 4.2.1 shall be in force with respect to Finished Product ordered by N OVACEA for commercial use.

 

(b)

Launch Forecast for the USA . Not less than eighteen (18) months prior to N OVACEA ’ S estimated Date of Launch for the Licensed Product in the USA, N OVACEA shall provide P IERRE F ABRE with a forecast of its expected requirements for each dosage form of Finished Product for commercial use, for the Launch Period for the USA. Such forecast shall be in the format set forth in Section 4.1.1 and shall be divided into five (5) Commercial Half Year) periods as set forth in Section 4.1.3 (each, a “Six Month Launch Forecast”). Then, during the first week of each calendar month following the first Six Month Launch Forecast and up to the calendar month in which the Date of Launch occurs, N OVACEA shall provide P IERRE F ABRE with a Firm Order for the following sixth (6 th ) calendar month delineating the amount of each dosage of the Finished Product for commercial use and the delivery date, allowing P IERRE F ABRE at least six (6) months lead time to deliver such Firm Order.

 

(c)

Permitted Variance Percentages . For the Launch Period for the USA, all permitted variances for Six Month Launch Forecasts and Firm Orders will be as set forth in Sections 4.1.4 and 4.1.6, above.

 

4.2.2. Launch Period for Canada.

 

(a)

Definition . The period beginning six (6) months prior to N OVACEA ’ S estimated Date of Launch for the Licensed Product in Canada and ending twelve (12) months after the actual Date of Launch in Canada shall be considered the “Launch Period for Canada” during which time provisions of this Section 4.2.2 shall be in force.

 

(b)

Launch Forecast . Not less than six (6) months prior to N OVACEA ’ S estimated Date of Launch for the Licensed Product in Canada, N OVACEA shall provide P IERRE F ABRE with a forecast of its expected requirements for each dosage form

 

8

of the Licensed Product for commercial use, for the Launch Period for Canada. Such forecast shall be in the format set forth in Section 4.1.1 and shall be divided into three (3) Commercial Half Year periods as set forth in Section 4.1.3 (each, a “Six Month Launch Forecast”). Then, during the first week of each month following the delivery of a first Six Month Launch Forecast and up to the month in which the Date of Launch occurs, N OVACEA shall provide P IERRE F ABRE with a Firm Order for the following sixth (6 ^th ) calendar month delineating the amount of each dosage of the Finished Product and the delivery date, allowing P IERRE F ABRE at least six (6) months lead time to deliver such Firm Order.

 

(c)

Permitted Variance Percentages . For the Launch Period for Canada, all permitted variance percentages for Six Month Launch Forecasts and Firm Orders will be as set forth in Sections 4.1.4 and 4.1.6, above.

 

4.3. Delivery Obligations .

 

Subject to N OVACEA ’ S compliance with the forecast and order procedures set forth in Sections 4.1 and 4.2, above, P IERRE F ABRE guarantees to supply N OVACEA with quantities of Finished Product so ordered within the applicable delivery dates set forth in N OVACEA ’ S Firm Orders and with a remaining shelf life of twenty four (24) months at time of delivery to N OVACEA ’ S designated agent at Charles de Gaulle Airport, Roissy (France).

 

4.4. Quality Control; Change in Specifications .

 

(a)

P IERRE F ABRE shall conduct quality control testing of Finished Product prior to shipment in accordance with the applicable Approvals, Legal Requirements and the Quality Agreement. P IERRE F ABRE shall retain or shall have retained records and reference samples of each batch of Compound, recipients, packaging components and Finished Products in bulk as may be required by Legal Requirements and P IERRE F ABRE shall provide N OVACEA with reasonable access during quality review of such records. If N OVACEA conducts or uses a Third Party to conduct quality control testing of any Finished Product after delivery thereof to N OVACEA , N OVACEA shall use the sante analytical methodology as used by P IERRE F ABRE . Upon written request from N OVACEA , P IERRE F ABRE shall provide a reasonably detailed description of the analytical methodology and reference standards used by P IERRE F ABRE for quality control testing of the Finished Product and will provide any reasonable assistance and P IERRE F ABRE proprietary materials or supplies reasonably requested by N OVACEA to enable it to perform the analytical validation and to compare the results. N OVACEA shall retain samples of the Finished Product for each country of the N OVACEA Territory, as may be required by cGMP and Regulatory Authorities.

 

(b)

N OVACEA may, at any time, request that P IERRE F ABRE change the Specifications with respect to any Finished Product manufactured for use or sale in the N OVACEA Territory, giving P IERRE F ABRE [*] (or such shorter period as required by any Regulatory Authority or mutually agreed by the Parties) to implement such

 

[*]	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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requested change. P IERRE F ABRE will, within thirty (30) days following P IERRE F ABRE ’s receipt of such request, evaluate the proposed change and notify N OVACEA if P IERRE F ABRE approves the proposed change, such approval not to be unreasonably withheld or delayed. With its notice of approval, P IERRE F ABRE will advise N OVACEA of the impact of such change on the manufacturing and analytical processes, the manufacturing cost and delivery time. If P IERRE F ABRE reasonably concludes that the proposed change will result in an overall increase in the cost of producing the Finished Product, it shall so advise N OVACEA , providing N OVACEA with reasonable documentation of such increased costs. Upon N OVACEA ’ S request, the Parties will discuss same in good faith and, if N OVACEA still wishes to proceed, N OVACEA shall agree to compensate P IERRE F ABRE for such cost increase in a mutually acceptable manner. If N OVACEA proposes to change any such Specification and if such change would necessitate any regulatory filing in or outside the N OVACEA Territory, P IERRE F ABRE will solicit N OVACEA ’ S input regarding such proposed change and any such change shall be implemented pursuant to a change control program agreed to by the Parties at such time. Additionally, at the sole expense of N OVACEA , P IERRE F ABRE shall assist with all analytical or experimental work to be performed in connection with making such change, and N OVACEA shall be responsible, at N OVACEA ’ expense (unless the change is made due to a change in applicable Legal Requirements or a request of a Regulatory Authority that is not within either Party’s control, in which case each Party will bear any costs reasonably allocable to its territory), for filing all changes proposed by N OVACEA and for seeking approval of any such change by each applicable Regulatory Authority in the N OVACEA Territory and N OVACEA shall reimburse P IERRE F ABRE for its costs for filing all changes proposed by N OVACEA and for seeking approval of any such change by each applicable Regulatory Authority outside the N OVACEA Territory. P IERRE F ABRE shall implement any such change in an orderly fashion and will not implement any such change without first obtaining all necessary regulatory approvals.

 

(c)

If P IERRE F ABRE proposes any change to the Specifications that relate to Finished Product manufactured for use or sale in the N OVACEA Territory, such change will require N OVACEA ’ S prior written approval (not to be unreasonable withheld or delayed). Such request shall be made upon not less than [*]’ prior written notice to N OVACEA of the requested effective date of such proposed change (or such shorter period as required by any Regulatory Authority or mutually agreed by the Parties). P IERRE F ABRE will solicit N OVACEA input regarding any regulatory filing in any country in the N OVACEA Territory affected by such proposed change and any such change shall be implemented pursuant to a change control program agreed to by the Parties at such time. P IERRE F ABRE shall bear all costs incurred by it to implement such change to the Specifications, the manufacturing process, or any such other change. Additionally, at the sole expense of P IERRE F ABRE ,

 

[*]	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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P IERRE F ABRE shall assist with all analytical or experimental work to be performed in connection with making such change, and N OVACEA shall be responsible, at P IERRE F ABRE ’ S expense (unless the change is made due to a change in applicable Legal Requirements or a request of a Regulatory Authority that is not within either Party’s control, in which case each Party will bear any costs reasonably allocable to its territory), for filing all changes proposed by P IERRE F ABRE and for seeking approval of any such change by each applicable Regulatory Authority in the N OVACEA Territory. P IERRE F ABRE shall implement any such change in an orderly fashion and will not implement any such change without first obtaining all necessary regulatory approvals.

 

(d)

With respect to any regulatory filings and Approvals made or sought by either Party under this Section 4.4, each Party shall provide reasonable cooperation to the other Party in connection therewith. If a change proposed to be made to the Specifications or the manufacture of a Finished Product under this Section 4.4 requires prior approval by any applicable Regulatory Authority before implementation, such change will not be implemented in respect of such Finished Product until such change has been so approved.

 

4.5. Claims .

 

4.5.1. Notice of Failure to Conform. N OVACEA shall proceed with analytical control of Finished Product and shall notify P IERRE F ABRE of any failure of Finished Product to conform to the applicable Specifications or to be manufactured in accordance with applicable Legal Requirements of the N OVACEA Territory, indicating the batch number and the defect, within forty-five (45) days of receipt of Finished Product from P IERRE F ABRE . If N OVACEA fails to notify P IERRE F ABRE within such time period, such Finished Product shall be deemed to have been accepted by N OVACEA provided, however, that P IERRE F ABRE shall continue to be liable for any latent defect in such Finished Product.

 

4.5.2. Investigation by P IERRE F ABRE . Promptly upon receipt of notice from N OVACEA pursuant to subsection 4.5.1 above, P IERRE F ABRE shall, at its expense, conduct an investigation into such failure of such Finished Product to conform to the Specifications or to be manufactured in accordance with cGMPs and applicable Legal Requirements, and shall promptly notify N OVACEA of its findings. Upon mutual agreement of the Parties, N OVACEA shall perform such tests as are reasonably necessary to determine if such non-conformity occurred while the Finished Product was at N OVACEA ’ S designated facilities.

 

4.5.3. Right of Return by N OVACEA . In the event that the Parties, acting in good faith, are unable to agree whether Finished Product conforms to the Specifications or has been manufactured in compliance with cGMPs and all Legal Requirements of the N OVACEA Territory, such Finished Product shall not be deemed to have been “rejected” by N OVACEA , but N OVACEA shall nevertheless have the right to return the contested Finished Product to P IERRE F ABRE and P IERRE F ABRE shall replace such Finished Product within the shortest possible time, and in no event more than ninety (90) days after the date on which such Finished Product was returned by N OVACEA . In the event that it is ultimately determined or agreed by the Parties that such Finished Product conformed to the Specifications and was manufactured in compliance with cGMPs and all Legal Requirements of the N OVACEA Territory, such replacement (including the

 

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cost of shipping such Finished Product back to P IERRE F ABRE shall be at N OVACEA ’ S expense. In the event that it is ultimately determined or agreed by the Parties that such Finished Product did not conform to the Specifications or was not manufactured in compliance with cGMPs and or Legal Requirements of the N OVACEA Territory, such replacement (including the cost of shipping such Finished Product back to P IERRE F ABRE shall be at P IERRE F ABRE ’ S expense.

 

4.6. Title; Risk of Loss .

 

For all deliveries of Finished Product hereunder, title to and risk of loss of all Finished Product shall remain with P IERRE F ABRE until delivery to N OVACEA ’ S designated agent at Charles de Gaulle Airport, Roissy (France).

 

4.7. Safety Stock .

 

4.7.1. Starting with the Effective Date, P IERRE F ABRE shall maintain sufficient inventory of Compound to meet N OVACEA ’ S requirements of Finished Product, such inventory to represent at least [*] calculated from time to time based on the monthly average (in milligrams of Compound expressed as base) of N OVACEA ’ S Firm Orders and Forecasts for the next twelve (12) month period most recently communicated by N OVACEA pursuant to Article 3 and 4 hereof.

 

4.7.2. No later than the Date of Launch of the Licensed Product in the first country of the N OVACEA Territory, N OVACEA shall constitute and thereafter maintain at least [*] inventory of Finished Product based on its monthly average of amounts set forth in its then-most recent Forecast for the next twelve (12) month period.

 

4.8. Stability Program and Additional Testing .

 

4.8.1. Stability Program. Prior to the Effective Date, P IERRE F ABRE has conducted and, thereafter, P IERRE F ABRE will continue to conduct, a stability program relating to the Placebo, Clinical Product and Finished Product according to a stability protocol meeting ICH requirements and supporting thirty (30) month dating for the Finished Product (the “Stability Program”), at P IERRE F ABRE ’s expense.

 

4.8.2. Additional Testing. If any additional test is reasonably required by N OVACEA or if any method is reasonably required by N OVACEA other than an internal P IERRE F ABRE test or method for release and/or stability program, then upon N OVACEA ’ S request, P IERRE F ABRE shall conduct such additional test or method according to a mutually agreed protocol meeting N OVACEA ’s requirements. The cost of any such additional test or method shall be borne by N OVACEA .

 

ARTICLE 5 – COMMERCIAL SUPPLIES – PRICE

 

5.1. Formula Price – General .

 

[*]	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 Sections 5.2 through 5.4, below, during the Royalty Term, the purchase price of each milligram of Compound (expressed as base, on an FCA Charles de Gaulle Airport, Roissy, France, basis) contained in the Finished Product to be purchased by N OVACEA from P IERRE F ABRE (the “Formula Price”) during each Commercial Year, shall be an amount in Dollars calculated by dividing A by B where:

 

A  =

the amount determined by multiplying the Net Sales tiers for such Commercial Year by the applicable percentages set forth in the table below:

 

 

For illustration purposes only, for the first $[*] million of Net Sales, the [*]% factor is used, and for the first $[*] million of Net Sales thereafter, the [*]% factor is used. Accordingly, if Net Sales for a Commercial Year are $[*] million, then “A” would equal $[*]; and if Net Sales for a Commercial Year are $[*], then “A” would equal $[*].

 

B  =

the total number of milligrams of Compound (expressed as base) contained in the Licensed Product sold during that Commercial Year in the N OVACEA Territory, said number of milligrams being as indicated on the label of such Licensed Product.

 

5.2. Generic Competition and Competing Products .

 

The Parties acknowledge that the sale by N OVACEA of Licensed Product during the Royalty Term may be affected by competition from Third Parties that, for whatever reason, have chosen to compete notwithstanding the P IERRE F ABRE Patents in which case, subject to Sections 5.3 and 5.4 below, the following provisions shall apply.

 

5.2.1. In the event that there are lawful sales of a Generic Product in any Quarter during the Royalty Term, the applicable percentage for the calculation of the Formula Price during such Quarter shall be multiplied by W in the formula W = X × (Y-Z), in which “W” is the applicable percentage, “X” is the applicable percentage set forth above in Section 5.1 1, “Y” is 100% and “Z” is the number of percentage points of Market Share (calculated as provided in Section 11.3.1 (d) of the Patent and Know-How License Agreement), rounded to the nearest whole percentage point, captured by such Generic Product during such Quarter; provided, however, that the applicable percentage of Net Sales payable to P IERRE F ABRE shall not be less than [*] percent ([*]%).

 

[*]	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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5.2.2. With respect to sales of a Competing Product other than lawful sales of a Generic Product, when such Competing Product takes a Market Share in [*]% for any Quarter in the N OVACEA Territory, the applicable percentage of total Net Sales payable to P IERRE F ABRE shall be reduced from [*] percent ([*]%), [*] percent ([*]%) and [*] percent ([*]%) for the three Net Sales Tiers referred to in Section 5.1 to [*] percent ([*]%), [*] percent ([*]%) and [*] percent ([*]%) respectively for such Quarter.

 

5.3. Application of Formula Price .

 

The provisions of Sections 5.1 and 5.2 shall be specifically implemented as provided in this Section 5.3.

 

5.3.1. Tentative Formula Price. With respect to each Commercial Year, one tentative Formula Price per milligram of Compound (expressed as base) shall be set in Dollars for the N OVACEA Territory (the “Tentative Formula Price”). In October of each Commercial Year, N OVACEA will notify P IERRE F ABRE in writing of the initial Tentative Formula Price for the following Commercial Year for the N OVACEA Territory. In November of each Commercial Year, N OVACEA will notify P IERRE F ABRE of the final Tentative Formula Price for the following Commercial Year. Notification of the final Tentative Formula Price will include information reasonably sufficient to enable P IERRE F ABRE to understand how the final Tentative Formula Price was calculated, including information regarding gross sales, Net Sales, expected price increases and reductions to gross sales in the N OVACEA Territory. The Tentative Formula Price so tentatively set shall be applied to all quantities of Finished Product purchased by N OVACEA from P IERRE F ABRE during the Commercial Year in question for the N OVACEA Territory. The Tentative Formula Price established pursuant to this Section 5.3.1 shall be calculated on the basis of estimated units of Finished Product to be sold by N OVACEA during the Commercial Year in question in the N OVACEA Territory, and shall be based upon and consistent with the Forecasts delivered pursuant to Section 4.1; and the Final Formula Price established pursuant to Section 5.3.2 below shall be calculated on the basis of Net Sales of Finished Product made by N OVACEA during such Commercial Year.

 

5.3.2. Final Formula Price and Adjustments. Within sixty (60) days after the close of each Commercial Year, the final Formula Price per milligram of Compound (expressed as base) for the N OVACEA Territory shall be established on the basis of the Net Sales actually accruing from the sale of Finished Product in the N OVACEA Territory and the total quantity of Compound (in milligrams, expressed as base), contained in each dosage form of Finished Product sold by N OVACEA during such Commercial Year in the N OVACEA Territory (the “Final Formula Price”). In any case, the Final Formula Price shall prevail. Any difference between the Tentative Formula Price and Final Formula Price per milligram of Compound (expressed as base) (the “Price Differential”) will be settled as follows: (i) if such Price Differential is in favor of P IERRE F ABRE ( i.e., the Final Formula Price exceeds the Tentative Formula Price ), then such Price Differential will be applied to the total number of milligrams of Compound (expressed as base) contained in the units shipped by P IERRE F ABRE to N OVACEA during such Commercial Year and

 

[*]	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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the adjustment in value shall be paid by N OVACEA to P IERRE F ABRE within thirty (30) days after receipt of an invoice from P IERRE F ABRE ; and (ii) if such Price Differential is in favor of N OVACEA ( i.e. , the Tentative Formula Price exceeds the Final Formula Price) then such Price Differential will be applied to the total number of milligrams of Compound (expressed as base) contained in the units shipped by P IERRE F ABRE to N OVACEA during such Commercial Year and the adjustment in value shall be credited against royalty payments accrued for the same Commercial Year under Section 11.3 of the Patent and Know-How License Agreement.

 

5.3.3. Timing of Purchase. Finished Product purchased by N OVACEA prior to the initial Commercial Year shall be deemed to have been purchased as of the first day of the initial Commercial Year but P IERRE F ABRE shall invoice N OVACEA for such Finished Product at the Tentative Formula Price established for such Commercial Year pursuant to Section 5.3.1 above.

 

5.3.4. Packaging Specifications. The Finished Product to be supplied by P IERRE F ABRE hereunder shall be packaged according to Packaging Specifications which, at the Effective Date, are identical to those approved in the EU. Should such Packaging Specifications have to be modified, subject to FDA or HC requirements, then N OVACEA shall so inform P IERRE F ABRE , whereupon, P IERRE F ABRE will have thirty (30) day to inform N OVACEA whether it can supply the Finished Product according to FDA or HC requirements and the incremental costs therefore, such costs to be documented and fully borne by N OVACEA .

 

However, in case P IERRE F ABRE elects not to supply the Finished Product according to FDA or HC requirements, then the Parties will make Diligent Efforts to identify a third party manufacturer to provide secondary packaging services to N OVACEA , with P IERRE F ABRE supplying softgel capsules to such third party manufacturer in primary packaging ( i.e. , blister pack), without any decrease of the Formula Price determined as per Section 5.3.2 hereof.

 

5.4. Bottom Price .

 

5.4.1. Calculation of Bottom Price. Notwithstanding any other provision of this Agreement, or of any Related Agreements between the Parties hereto, the Tentative Formula Price and Final Formula Price for Finished Product set forth in Sections 5.3.1 and 5.3.2 hereof shall in no event be lower than the Bottom Price. As used herein, subject to Section 5.4.3, “Bottom Price” in respect of Finished Product shall mean an absolute value of [*] Euros (€ [*]) per milligram of Compound (expressed as base) subject to Annual Variation, effective as of January 1, of each year after the Effective Date, according to the Annual Index Adjustment pursuant to Section 3.3(b).

 

5.4.2. Application of Bottom Price for Launch of Licensed Product. Upon N OVACEA ’ S issuance of its initial Firm Order for Licensed Product pursuant to Article 4, N OVACEA shall notify P IERRE F ABRE of its best estimate of the Formula Price of Licensed Product for the initial Commercial Year. Within sixty (60) days after such notice, P IERRE F ABRE will either confirm that it will supply the Finished Product at the Formula Price applicable thereto or notify N OVACEA that it will supply Finished Product at the Bottom Price, and give notice of the Bottom Price, because such Formula Price is lower than Bottom Price.

 

[*]	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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5.4.3. Application of Bottom Price – General. If at any time the P IERRE F ABRE Formula Price is lower than the Bottom Price, the Parties, directly or through the JCC, shall consult to discuss the commercial viability of continued supply by P IERRE F ABRE . N OVACEA shall continue to purchase Finished Product from P IERRE F ABRE at the Bottom Price so lon