SUPPLY AGREEMENT

EXHIBIT 10.158

CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION

Manufacturing and Supply Agreement

 

 

WHEREAS, Schering and Indevus have entered into the License Agreement (hereinafter defined) regarding the development and commercialization of Product (hereinafter defined) in the Field (hereinafter defined) in the US by Indevus; and

WHEREAS, upon request of Indevus and subject to the terms of the License Agreement (hereafter defined), Schering has initiated the development of a [*] ); and

WHEREAS, it is set forth in the License Agreement that the Parties will enter into good faith negotiations about an agreement for the Manufacturing (hereinafter defined) and supply of Finished Product as soon as practicable after signing of the License Agreement consistent with the terms of Article 6 of the License Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Article 1

Definitions

The following terms, when capitalized, shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined), when used in this Agreement:

1.1 “ [*] ” shall mean a Product [*] as generally described in Schedule 1.1 .

 

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1.2 “ [*] ” shall mean a Product [*] as generally described in Schedule 1.2 .

1.3 “ Act ” shall mean the United States Food, Drug, and Cosmetic Act of 1938, as amended, and the rules and regulations promulgated thereunder, or any successor act, as the same shall be in effect from time to time.

1.4 “ Affiliate ” shall mean, with respect to a Party, any person, corporation, firm, joint venture or other entity which, directly or indirectly, through one or more intermediates, controls, is controlled by or is under common control with such Party. As used in this definition, “control” means possession of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of the outstanding voting securities or by contract or otherwise.

1.5 “ Agreement ” shall mean this Manufacturing and Supply Agreement, including any exhibits, schedules or attachments attached to this Agreement and any amendments to any of the foregoing.

1.6 “ [*] ” shall mean a Product [*] as generally described in Schedule 1.6 .

1.7 “ Audit Disagreement ” shall have the meaning set forth in Section 9.3.

1.8 “ Batch ” shall mean a specific quantity of Clinical Supplies or Finished Product that is produced according to a single manufacturing order during the same cycle of Manufacture.

1.9 “ Business Day ” shall mean any day that is not a Saturday, a Sunday, a day on which the New York Stock Exchange is closed, or other day on which banks are required or authorized by law to be closed in Berlin, Germany.

1.10 “ CBE ” shall mean “Change Being Effected” as defined in the Act.

1.11 “ CFR ” shall mean the US Code of Federal Regulations.

1.12 “ Change of Control ” shall mean that (i) a majority of the outstanding voting securities of a Party becomes owned by one or more individuals or entities that did not own a majority of the voting securities of such Party as of the Effective Date; or (ii) the possession of the power to direct or cause the direction of the management and policies of a Party, whether through ownership of the outstanding voting securities or by contract or otherwise becomes vested in one or more individuals or entities that did not possess such power as of the Effective Date.

1.13 “ Clinical Development ” shall mean the conduct of studies of Product in humans to assess the dosing, safety and/or efficacy of Product.

 

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1.14 “ Clinical Supplies ” shall mean supplies of Product and, if applicable, placebo, to be used for the conduct of Development in the Territory.

1.15 “ Commercial Forecast ” shall have the meaning set forth in Section 4.1.

1.16 “ Commercialization ” and “ Commercialize ” shall refer to all activities relating to the pre-marketing, marketing, distribution, import, sale and offer for sale of a Product, and the process of Commercialization, respectively.

1.17 “ Commercially Reasonable Efforts ” shall mean the level of endeavor which a company in the prescription pharmaceutical industry comparable in size to Indevus or Schering, as applicable, and active in development and commercialization of pharmaceutical compositions would ordinarily expend to accomplish an important objective.

1.18 “ Confidential Information ” shall have the meaning set forth in Section 15.1.

1.19 “ Contract Quarter ” shall mean any period of three (3) consecutive calendar months commencing with the first day of any January, April, July, or October.

1.20 “ Contract Year ” shall mean the period commencing on the Effective Date and ending on December 31, 2006, and each subsequent twelve (12) month period thereafter during the Agreement Term and any renewal term hereof.

1.21 “ Current Good Manufacturing Practices ” or the letters “ GMP ” or “ cGMP ” means current good manufacturing practice and standards as provided for (and as amended from time to time) in (i) the Current Good Manufacturing Practice Regulations of CFR Title 21, including those regulations set forth in 21 CFR Parts 210 and 211, (ii) European Community Directive 2003/94/EC (Principles and guidelines of good manufacturing practice in respect of medicinal products for human use and investigational medicinal products for human use), and (iii) applicable ICH Harmonised Tripartite Guidelines, and subject to any arrangements, additions or clarifications agreed in writing from time to time between the Parties in the Quality Assurance Agreement.

1.22 “ Development” or “Develop ” shall mean all activities, or the performance thereof, relating to Pre-clinical Development and Clinical Development as are customary for a company in the pharmaceutical industry as part of the process of obtaining Regulatory Approval.

1.23 “ Documentation ” shall mean all required shipping documentation, including bills of lading, and such certificates of analysis and conformance and other appropriate and required documentation identifying the applicable Batch numbers, indicating conformance of the shipment with the Specifications, the Quality Assurance Agreement and all applicable Regulatory Standards.

 

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1.24 “ DMF ” shall mean a Drug Master File as defined in 21 CFR §314.420, including all supplements and amendments thereto.

1.25 “ Effective Date ” shall mean the date when this Agreement has been executed by authorized representatives of both Parties.

1.26 “ FDA ” shall mean the US Food and Drug Administration of the Department of Health and Human Services, or any successor agency with responsibility for regulating the development, manufacture and sale of human pharmaceutical products in the US.

1.27 “ Field ” shall mean any use of a pharmaceutical composition to restore testosterone concentrations to physiological levels (i) to treat hypogonadism in men or (ii) to treat any other urological or endocrinological indication in men; for the avoidance of doubt, [*] shall not be considered an “indication” within the meaning of this definition.

1.28 “ Final Packaging ” shall mean the labeling and packaging (as defined in the Act) of Finished Product, including product carton, package inserts, labels and associated components accompanying and necessary for use or sale of the Clinical Supplies or Finished Product in the Territory, as applicable.

1.29 “ Finished Product ” shall mean [*] , provided that Regulatory Approval has been granted or marketing authorization is being sought for such Product by Indevus pursuant to a NDA, in either case, Packaged and labeled in a final form ready for commercial sale and distribution in the Territory.

1.30 “ Firm Order ” shall have the meaning set forth in Section 4.2.

1.31 “ First Commercial Sale ” shall mean the date Indevus or an Affiliate or Sublicensee of Indevus first sells, or otherwise disposes of, commercially, a Finished Product pursuant to a Regulatory Approval in the Territory.

1.32 “ GAAP ” shall mean US generally accepted accounting principles.

1.33 “ Improvements ” shall mean any and all developments, improvements or enhancements relating to Product including, without limitation, in the manufacture, formulation, preparation, presentation, means of delivery or administration, dosage, indication, use or methods of use or packaging.

1.34 “ IND ” shall mean an Investigational New Drug application filed with FDA pursuant to 21 CFR 312.1 et seq. , as such regulations may be amended from time to time, the filing of which was or is necessary to commence clinical testing of Product in the Territory.

1.35 “ Initial Payment ” shall have the meaning set forth in Section 8.2.2.

1.36“ License Agreement ” shall mean the License Agreement by and between the Parties dated as of July 28, 2005.

 

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1.37 “ Launch Period ” shall mean the period commencing on the First Commercial Sale and expiring on December 31 of the Year immediately following the Year in which the First Commercial Sale occurred.

1.38 “ Long-acting Testosterone Product ” shall mean any pharmaceutical composition formulated in [*] , in each case other than Product introduced in the Territory by Indevus or any Affiliate or Sublicensee of Indevus.

1.39 “ Manufacture ” or “ Manufacturing ” shall mean all operations required to manufacture or have manufactured for supply to Indevus Clinical Supplies and Finished Product hereunder including, but not limited to the manufacture, preparation and processing of drug substance and drug product, filling and finishing of Finished Product, and Final Packaging, testing, releasing, handling, storage and Packing of Finished Product, or any step thereof, as the case may be.

1.40 “ NDA ” shall mean a New Drug Application as defined in the Act filed with the FDA, for marketing authorization of Products in the US, including any supplements or amendments thereto.

1.41 “ Net Sales ” shall mean with respect to any Product, the gross amount invoiced by Indevus or its Affiliates or Sublicensee from sales of Product in the Territory, commencing upon the date of First Commercial Sale, less deductions for: (a) transportation charges (freight, shipping and distribution), including insurance actually paid for distribution of Product; (b) sales, value-added and excise taxes, and other taxes, duties or surcharges paid or allowed by a selling party and any other governmental charges imposed upon the sale or use of Product; (c) any other fees paid to distributors, consignees or agents in connection with the sale of Product; (d) allowances or credits to customers, not in excess of the selling price of Product, on account of governmental requirements, rejection, outdating or return of Product; (e) rebates or premiums granted or allowed to customers in connection with the sale of Product; (f) trade, quantity, or cash discounts, chargebacks or retroactive price reductions granted in connection with the sale of Product; and (g) write offs for bad debts. Net Sales shall be determined at the time such Net Sales are recognized as revenue in accordance with GAAP by Indevus and all accounting terms used shall be interpreted in accordance with GAAP.

For the purpose of calculating Indevus’ Net Sales, the Parties recognize that (i) Indevus' customers may include parties in the chain of commerce who enter into agreements with Indevus as to price even though legal title to Product does not pass directly from Indevus to such customers, and even though payment for such Product is not made by such customers to Indevus, and (ii) in such cases, chargebacks paid by Indevus to or through a Third Party (such as a wholesaler) can be deducted by Indevus from gross revenues in order to calculate Indevus' Net Sales. Sales between Indevus and Affiliates or Sublicensees shall be excluded from the computation of Net Sales, except where such entities are end users in which case Net Sales shall include Net Sales to such entities; provided, however, if such entities are using such Products solely for research or clinical testing purposes, indigent or other public support programs, then such sales between Indevus and Affiliates shall be excluded from the computation of Net Sales.

 

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1.42 “ Notional Net Sales Price ” or “ Notional NSP ” shall mean, solely for the purposes of Section 8.2 and 8.3, an estimate of the Net Sales price of Product in the Territory at the time of determination, which shall be determined in accordance with Section 8.2.1.

1.43 “ Outside US Change Request ” shall have the meaning set forth in Section 11.1.

1.44 “ Pack ”, “ Packed ”, or “ Packing ” shall mean the operations which comprise the packing and packaging of Clinical Supplies and Finished Product, as the case may be, solely for the purpose of shipping such articles in accordance with the Act and pursuant to this Agreement.

1.45 “ Pre-clinical Development ” shall mean all activities relating to the planning and execution of non-human studies conducted in in vitro or in relevant in vivo animal models directed towards obtaining Regulatory Approval of Product in the Territory. This includes pre-clinical testing, pharmacokinetics, toxicology, documentary and medical writing directly related to Pre-clinical Development activities, and related regulatory affairs.

1.46 “ Product ” shall mean the pharmaceutical composition containing the Substance in a [*] .

1.47 ” Product Competition ” shall be present commencing as of the first calendar quarter (the “Triggering Quarter”) in which (a)  [*] have a market share in the Territory of [*] or greater of the [*] in such calendar quarter of (i)  [*] ; and (ii) such [*] , and (b) the [*] in the Territory has decreased by [*] or greater [*] ; provided, however, that Product Competition shall not be deemed to be present for any calendar quarter after the Triggering Quarter if in such calendar quarter Long-acting Testosterone Products do not have a market share in the Territory of [*] or greater of the [*] of (i)  [*] and (ii)  [*] .

1.48 “ Quality Assurance Agreement ” shall mean the quality assurance agreement between the Parties in which the responsibilities concerning quality control and quality assurance of Substance and Finished Product are set forth and which is attached as Exhibit 1.48 , as same may be amended from time to time by mutual agreement of the Parties.

1.49“ Regulatory Authority ” shall mean any court, tribunal, arbitrator, agency, commission, official or other instrumentality of any national, state, county, city or other political subdivision, that performs a function for such political subdivision similar to the function performed by the FDA for the US with regard to the approval, licensing, registration or authorization to test, manufacture, promote, market, distribute, use, store, import, transport or sell a product in the defined territory or political subdivisions, or with respect to the approval of pricing or reimbursement for such product.

 

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1.50 “ Regulatory Approval ” shall mean any approvals, product and/or establishment licenses, registrations or authorizations of any Regulatory Authority necessary for marketing Product in the Field in the Territory.

1.51 “ Regulatory Standards ” shall mean (i) obtaining and maintaining any and all permits, licenses, filings and certifications required by the FDA or other Regulatory Authorities, and compliance with the cGMPs of the FDA or other Regulatory Authorities, applicable to any Manufacturing or Schering Facilities, and (ii) any laws, rules, regulations and standards of any Regulatory Authority, whether within or outside the Territory, that apply to any Manufacturing or Schering Facilities.

1.52 “ Schering Facilities ” [*] .

1.53 “ SEC ” shall mean the US Securities and Exchange Commission or any successor agency.

1.54 “ SKU ” (Stock Keeping Unit) means a stocking unit comprised of one (1) box containing one (1) unit of Finished Product or as otherwise agreed to by the Parties.

1.55 “ Specifications ” shall mean those specifications that are, as of the Effective Date, set forth in the IND and attached to the Quality Assurance Agreement, as such specifications may be amended and set forth in the NDA. The specifications shall be deemed amended effective upon the date such amended specifications are set forth in the NDA and the amended specifications shall be appended to the Quality Assurance Agreement; provided, however that a failure or delay in effecting any such amendment to this Section 1.55 shall not affect the revised meaning of this Section 1.55 as of the effective date of the amended specifications.

1.56 “ Steering Committee ” shall mean the committee established by the Parties pursuant to Section 5.1 of the License Agreement.

1.57 “ Subcontractor ” shall have the meaning set forth in Section 2.8.

1.58 “ Sublicensee ” shall mean a Third Party to whom Indevus has granted a license or sublicense to develop, import, use, sell, offer for sale or otherwise exploit Product in the Territory.

1.59 “ Substance ” shall mean testosterone undecanoate (TU).

1.60 “ Superseded Finished Product ” shall have the meaning set forth in Section 4.1.2.

1.61 “ Supply Price ” shall have the meaning set forth in Section 8.1.

1.62 “ Supply Team ” shall have the meaning set forth in Section 7.1.

1.63“ Territory ” shall mean the US.

 

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1.64 “ Third Party ” shall mean any entity other than Schering or Indevus and their respective Affiliates.

1.65 “ US ” shall mean the United States of America, including the District of Columbia, and its territories, possessions, and commonwealths, including, without limitation, the Commonwealth of Puerto Rico.

1.66 “ US Change Request ” shall have the meaning set forth in Section 11.2.

1.67 “ [*]

1.68 “ Year ” shall mean a calendar year.

Defined terms used herein that are not defined in this Article 1 but are defined in the License Agreement shall have the meanings ascribed to such terms in the License Agreement. Where words and phrases are used herein in the singular, such usage is intended to include the plural forms where appropriate to the context, and vice versa. The words “ including ”, “ includes ” and “ such as ” are used in their non-limiting sense and have the same meaning as “including without limitation” and “including but not limited to”. References to Articles, Sections, subsections, and clauses are to the same with all their subparts as they appear in this Agreement.

Article 2

Manufacture and Supply

2.1 General Scope . During the term of this Agreement, and subject to the terms and conditions set forth in this Agreement, Schering shall Manufacture and supply or cause to have Manufactured and supplied by an Affiliate or a Third Party (subject to Section 2.8) to Indevus or Indevus’ designee all of Indevus’ requirements of Clinical Supplies and Finished Product for Clinical Development and Commercialization, respectively, of Product in the Field in the Territory, and Indevus shall purchase from Schering, all of Indevus’ requirements of Clinical Supplies and Finished Product for Clinical Development and Commercialization, respectively, of Product in the Field in the Territory.

The following scenarios have to be distinguished:

 

(i)	In case the FDA only grants Regulatory Approval for the [*] as Finished Product, Schering will only supply Finished Product in the form of the [*] .

 

(ii)	In case the FDA only grants Regulatory Approval for the [*] as Finished Product, Schering will only supply Finished Product in the form of the [*] .

 

(iii)

In case the FDA only grants Regulatory Approval for the [*] as Finished Product, Schering will only supply Finished Product in the form of the [*] .

 

(iv)	In case the FDA grants Regulatory Approval for the [*] as Finished Product, Schering will only supply Finished Product in the form of the [*] .

 

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(v)

In case the FDA grants Regulatory Approval for [*] as Finished Product and the FDA approved prescribing information specifies a distinction between [*] , Schering will supply Finished Product in the form of the [*] , as requested by Indevus from time to time in accordance with the terms of this Agreement.

 

(vi)

In case the FDA grants Regulatory Approval for [*] as Finished Product but the FDA approved prescribing information does not specify a distinction between [*] , then Schering will supply Finished Product in the form of the [*] and, subject to the following sentence, the [*] as requested by Indevus from time to time in accordance with the terms of this Agreement. In the event Indevus requests that Schering supply the [*] under the circumstances provided by this subsection (vi), such supply will be subject to a minimum purchase obligation of Indevus of the [*] corresponding to Finished Product from a [*] litre production campaign per Year and an agreement of the Parties on the payment mechanism with respect to the supply of such [*] following good faith negotiations.

2.2 Supply of Others . During the term of this Agreement, neither Schering nor any of its Affiliates shall supply or otherwise make available Product for use in the Field in the Territory for or on behalf of (or authorize or permit any Third Party to make Product for or on behalf of) any person or entity other than Indevus, Indevus’ Affiliates and Sublicensees, provided that this Section 2.2 shall not prohibit Schering from supplying Product for use in the Territory as set forth in Section 2.5(ii) of the License Agreement.

2.3 DMF . With respect to the DMFs for Substance and Product, Section 3.5 of the License Agreement is hereby incorporated by reference, as if stated in its entirety, herein. Schering shall keep current any such DMFs.

2.4 Analytical Technology Transfer . Schering shall, on one instance only, provide copies or grant access to all necessary documentation and support to enable successful transfer of analytical test methods to Indevus and/or its designees.

2.5 Effect of [*] . As contemplated by Section 6.5 of the License Agreement, in the event of [*] , Schering shall have the right to terminate this Agreement on not less than [*] prior written notice to Indevus and provided that Schering has to enable the technology transfer of the manufacturing process (including any required license to intellectual property and know-how) to an alternate manufacturer of Finished Product designated by Indevus, in accordance with Section 2.6. In the event of such termination of this Agreement, commencing as of the effective date of such termination through the expiration of the [*] (as defined in the License Agreement), in consideration of such technology transfer and any such required license, Indevus shall pay Schering, at Indevus’ discretion, either (i) reimbursement of the reasonable costs incurred by Schering for the technology transfer plus a royalty equal to [*] of Net Sales or (ii) a royalty equal to [*] of Net Sales. In the event of any inconsistency between the terms of this Section 2.5 and Section 6.5 of the License Agreement, the terms of this Section 2.5 shall control.

 

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2.6 Technology Transfer Obligations . In addition to the obligations set forth in Section 2.4, Schering shall, on one instance only, pursuant to Schering’s obligations to enable the technology transfer as set forth in Sections 2.4, 2.5 or 4.5, as applicable:

2.6.1 provide copies or grant access to Indevus and/or its designees, including analytical laboratories and the alternate manufacturer (at Indevus’ request) with the then most current version of all materials, documents describing intellectual property and know-how, regulatory filings, reagents, expertise, equipment, data, and other information necessary to Manufacture the Product;

2.6.2 provide to Indevus and/or its designees, including analytical laboratories and the alternate manufacturer (at Indevus’ request) copies or grant access to the relevant documentation constituting the required material support, including specifications as to materials to be used and control methods;

2.6.3 assist Indevus and/or its designees, including analytical laboratories and the alternate manufacturer (at Indevus’ request) with the working up and use of the technology and with the training of the alternate manufacturer’s personnel to the extent reasonably necessary in the Manufacture of Product by the alternate manufacturer and/or analytical laboratory up to an effort equivalent of three (3) man months. In this regard, Schering will receive Indevus’ and/or the alternate manufacturer’s and/or analytical laboratory’s staff, as applicable, in its premises for certain periods, the term of which will be agreed by the Parties; and

2.6.4 comply with such other obligations and responsibilities as are necessary to fully enable Indevus or such alternate manufacturer to undertake the Manufacturing and Packaging of Finished Product in accordance with the Specifications.

2.7 Quality Assurance Agreement . The responsibilities of the Parties concerning the quality of Product shall be set forth in the Quality Assurance Agreement. In the event the Quality Assurance Agreement contains material provisions that substantially differ from applicable Regulatory Standards, the Regulatory Standards shall control. Indevus shall inform Schering about all material revisions to the applicable Regulatory Standards applicable to Product in the Territory.

2.8 Subcontractors . The identity and function of each person or entity to whom Schering subcontracts or otherwise delegates all or any portion of its obligations hereunder, whether Affiliates of Schering or Third Parties (collectively, “Subcontractors”) shall be provided to the Supply Team. Schering shall be entitled to appoint a Subcontractor for the full or partial Manufacturing and Packing of Clinical Supplies and Finished Product without

 

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Indevus’ prior written consent only in those instances where Indevus would not be required to notify the FDA of the respective subcontracting. Any Subcontracting which requires notification of the FDA shall be subject to Indevus’ prior written consent; such consent not to be withheld unreasonably. In any event, (i) Schering shall maintain an oversight program whereby Schering measures and evaluates each Subcontractor’s performance of any Manufacturing activities; (ii) Schering may subcontract Manufacturing only to a Subcontractor who, based on Schering’s good faith business judgment and observations, is not subject to any conditions that might reasonably be expected to impede approval of such Subcontractor’s site by the FDA, provided, however, that if such site is the subject of any unresolved Section 483 comments by the FDA that might reasonably affect Manufacture, then such determination shall be subject to review by the Supply Team, or such Subcontracting will be effective only after a successful pre-approval inspection of the Subcontractor’s site by the FDA; and (iii) any Subcontractor who fails a pre-approval inspection by the FDA with respect to Product shall be prohibited from performing any Manufacturing hereunder unless and until all problems and issues identified by the FDA have been corrected to the satisfaction of the Supply Team. Schering will inform the Supply Team about such inspections and corrections. Notwithstanding the Supply Team’s review or approval of any document or activity, Schering shall be and remain responsible for the performance of any Subcontractor.

Article 3

Product Supply for Clinical Development

3.1 Clinical Supplies . Indevus has received from Schering [*] units of Clinical Supplies. Indevus will provide to Schering its requirements for any additional units of Clinical Supplies at least six (6) months prior to anticipated delivery setting forth the quantity, amount of placebo (if any), the Final Packaging and the delivery time. The details of delivery will be discussed and agreed upon by the Parties separately.

3.2 Costs of Clinical Supplies . Schering shall bear the costs for Manufacture of Clinical Supplies delivered to Indevus up to an amount of [*] units. In the event Indevus requires Clinical Supplies in excess of [*] units in total such additional Clinical Supplies shall be supplied to Indevus at the Notional Net Sales Price, provided that if such additional Clinical Supplies are provided prior to the Launch Period, then the price for such Clinical Supplies shall be determined by the Supply Team.

Article 4

Forecasting and Ordering for Commercialization

4.1 Commercial Forecasts.

4.1.1 Forecasts . Within five (5) Business Days after the Effective Date and thereafter within the first five (5) Business Days of each Contract Quarter, Indevus will provide to Schering a rolling non-binding (except as set forth in Section 4.3) forecast for (a) prior to Regulatory Approval, six (6) consecutive Contract

 

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Quarters and (b) commencing with the first Commercial Forecast submitted after Regulatory Approval, eight (8) consecutive Calendar Quarters, (starting with the first complete Contract Quarter following the date of the forecast – Q1) of the estimated quantities of Finished Product in SKUs that Indevus intends to order (the “Commercial Forecast”) as follows:

 

•

With respect to the [*] as Finished Product, until Indevus notifies Schering that it no longer requires the [*] ;

 

•

with respect to the [*] as Finished Product, until Indevus notifies Schering that it no longer requires the [*] ;

 

•

with respect to the [*] as Finished Product, until Indevus notifies Schering that it no longer requires the [*] ;

 

•

with respect to [*] as Finished Product, specifying the number of [*] , until Indevus notifies Schering that it no longer requires [*] .

For the first two (2) Contract Quarters, the Commercial Forecast shall be made by month, and for the remaining Contract Quarters, the Commercial Forecast shall be made by Contract Quarter.

4.1.2 General. The Commercial Forecasts shall be sent by e-mail and facsimile to Schering’s supply manager. Except as otherwise specifically set forth herein, all Commercial Forecasts made hereunder shall be made to assist Schering in planning its production and shall not be Firm Orders or binding purchase orders, unless as set forth in Section 4.2. Each Commercial Forecast provided by Indevus shall supersede any previous Commercial Forecast. In the event Indevus notifies Schering, as provided under Sub-section 4.1.1, that Indevus no longer requires a particular Finished Product that had been specified in a previous Commercial Forecast (a “Superseded Finished Product”), any previous Commercial Forecasts with respect to such Superseded Finished Product shall be deemed void and of no further force and effect and shall be superseded by the first Commercial Forecast with respect to Finished Product provided after the date of such notification by Indevus, which thereafter shall constitute the Commercial Forecast; provided, however, that (a) in case a Commercial Forecast for the [*] constitutes a Firm Order, (b) Schering has already started activities to customize the [*] for Commercialization by Indevus in the Territory at the time of notification by Indevus, and (c) the respective [*] cannot be used by Schering outside the Territory, then such Firm Order with respect to the [*] shall remain in force.

4.2 Firm Orders . Subject to the provisions of Section 4.1.2 and to the extent consistent with the volume limitations set forth in Section 4.4, the [*] of each Commercial Forecast submitted after Regulatory Approval, as updated

 

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each Contract Quarter, shall be a non-cancelable, legally binding commitment on the part of Schering to supply, and on the part of Indevus to purchase, the quantity of Finished Product as set forth in the Commercial Forecast, each such [*] commitment being “Firm Orders”. The Parties acknowledge and agree that Indevus may use validation batches of the [*] , manufactured by Schering, to satisfy all or any portion of Indevus’ requirements for launch quantities of the [*] as Finished Product, subject to compliance with applicable laws and other provisions of this Agreement. The Supply Team will discuss the timing of the initiation of production of validation batches. Accordingly, with respect to Commercial Forecasts submitted by Indevus prior to Regulatory Approval, only the quantity, if any, of Finished Product forecasted for the first Contract Quarter of each Commercial Forecast that exceeds the quantity of validation batches supplied by Schering shall constitute a Firm Order. Subject to the foregoing sentence, the minimum size of a Firm Order (consisting of one delivery) shall be [*] of Finished Product or a Batch size, whichever is lower.

4.3 Purchase Orders . Indevus or its designee shall provide Schering with purchase orders containing the information as listed in Schedule 4.3 of its requirements for Finished Product, specifying the required delivery date in each purchase order. Schering shall acknowledge and provide Indevus with a written acceptance of each purchase order within five (5) Business Days following Schering’s receipt thereof. Schering will use Commercially Reasonable Efforts to comply with any demands for supply of Finished Product in excess of the amounts of Finished Product set forth in Firm Orders.

4.4 Variation of Commercial Forecast . With every quarterly update of a Commercial Forecast following Regulatory Approval, Indevus may increase or decrease:

4.4.1 the forecast of Finished Product for the third Contract Quarter (Q3) of the Commercial Forecast as that Contract Quarter rolls from Q3 to Q2 (becoming a Firm Order) by [*] during the Launch Period and [*] for the period thereafter, and

4.4.2 the forecast for the respective Contract Quarters [*] during the Launch Period and four through eight (8) for each Year thereafter [*] or ( [*] , as applicable) of the Commercial Forecast by [*] during the Launch Period and [*] for each Year thereafter of the forecast in the Commercial Forecast of the preceding Contract Quarter

4.4.3 Any variations beyond the limits set forth herein require the mutual agreement of the Parties. No variation limits set forth in this Section 4.3 shall apply to Commercial Forecasts submitted by Indevus prior to Regulatory Approval, provided that the forecast for launch quantities of Finished Product does not exceed the quantities of validation batches supplied by Schering.

 

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4.5 Inability to Supply.

4.5.1 Notice of Inability to Supply . Schering shall immediately notify Indevus in writing if and when Schering determines that it will be unable to supply Finished Product under the terms of this Agreement. For purposes of this Section 4.5, an “Inability to Supply” shall mean: Schering’s failure for any reason, including force majeure reasons or otherwise, to supply Indevus with quantities of Finished Product meeting the Specifications and applicable Regulatory Standards, at least equal to (i)  [*] of Finished Product quantities specified in two (2) consecutive Firm Orders or (ii)  [*] of Finished Product quantities specified in one (1) Firm Order, provided that in (i) and (ii) Schering has not cured the respective failure (if curable) within ninety (90) days and further provided that the right to cure (ii) shall not be applicable after such failure has occurred a second time in two (2) Contract Years;

4.5.2 Consequences of Inability to Supply . In the case of an Inability to Supply Schering shall remedy the Inability to Supply, fulfill purchase orders with such quantities of Finished Product as are available, and resume supplying acceptable Finished Product to Indevus as soon as is reasonably possible, and/or, upon Indevus' request, establish and fully cooperate with Indevus to secure adequate supplies of Finished Product from alternative sources, including locating qualified third party manufacturers and sources of materials, assuming liability for any excess manufacturing cost incurred by Indevus, and complying with the technology transfer obligations set forth in Section 2.6. In the event of any Inability to Supply, Indevus shall be relieved from its obligations under this Agreement to purchase any minimum quantities of Finished Product identified in any outstanding portions of Commercial Forecasts, Firm Orders or purchase orders or subject to the minimum purchase obligation set forth in Section 8.3 (or any corresponding obligations set forth in the License Agreement) and shall be relieved of any further minimum purchase obligations or obligations to provide Firm Orders unless and until such Inability to Supply is remedied. Except as set forth in Section 17.5, nothing in this Section 4.5 shall limit any contractual or other rights or remedies that may be available to Indevus on account of any Inability to Supply under this Agreement.

Article 5

Packaging and Delivery,

5.1 Final Packaging; Packing for Shipment. Indevus shall provide Schering with specifications for the FDA approved labeling, artwork, drawings and any additional Final Packaging which shall accompany Finished Product (and which shall be used by Schering solely for the Manufacture and supply to Indevus or Indevus’ designee of Finished Product pursuant to this Agreement) sufficient time in advance to enable Schering to Manufacture Finished Product in due time prior to the scheduled delivery to Indevus. Schering will establish, update as necessary and implement processes and procedures designed to

 

[*]	CONFIDENTIAL TREATMENT REQUESTED

 

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ensure that all Finished Product and Clinical Supplies are labeled and packaged in accordance with Indevus’ artwork and labeling Specifications and in accordance with Schering’s technical requirements and standards. Except with the prior written approval of Indevus, Schering shall not include any other packaging or inserts with, or affix any other labeling or artwork to, the Finished Product. Schering will provide shipment preparation and Packing of Clinical Supplies and Finished Product in accordance with Schering’s technical requirements, Schering’s standards and with the Quality Assurance Agreement, as applicable, with details to be discussed in the Supply Team. Indevus shall be responsible for ensuring that all packaging, labels and labeling including, but not limited to the package make-up, package inserts and other elements relating to packaging, labels and labeling as well as all promotional material complies with all laws and regulations applicable to such packaging, labels and labeling in the Territory. The Batch coding of Finished Product will be effected in accordance with the Batch labeling instructions defined by Schering.

5.2 Delivery to Indevus . Schering agrees to deliver Clinical Supplies and Finished Product [*] Schering Facility to a carrier designated by Indevus at the delivery dates set forth in the respective purchase order, provided that such delivery date is at least ninety (90) days and not greater than one hundred twenty (120) days from the date of such purchase order, subject to the provisions of this Section 5.2 and Section 5.6. In the event Indevus requests shipment or delivery that differs from this agreed upon schedule, Indevus will notify Schering in writing as soon as practicable, but in no event less than two (2) weeks in advance of the requested date of shipment by Schering and Schering will use Commercially Reasonable Efforts to comply with Indevus’ request. Schering will arrange for the delivery of Clinical Supplies or Finished Product in a manner consistent with good commercial practices, applicable Regulatory Standards, any agreed-upon shipping specifications and the Quality Assurance Agreement, as applicable.

Unless otherwise agreed to in advance, deliveries made against Firm Orders will not exceed the requested quantity of Finished Product by more than [*] nor be less than [*] ) of the requested quantity of Finished Product, provided that these percentages may be adjusted if required in order to cure cumulative over- or under- deliveries in the same Contract Year.

5.3 Delivery Times . Schering shall use Commercially Reasonable Efforts to meet the delivery dates pursuant to Section 5.2 above.

5.4 Title and Risk of Loss . Title and risk of loss with respect to Clinical Supplies and Finished Product furnished hereunder shall pass to Indevus upon delivery by Schering of such Clinical Supplies and Finished Product cleared according to Section 5.2.

5.5 Shelf Life . All Finished Product supplied to Indevus shall have the longest remaining shelf life reasonably possible.

5.6 Documentation; Release of Shipments . Schering will prepare and execute all reasonably necessary shipping documents, including a Packing

 

[*]	CONFIDENTIAL TREATMENT REQUESTED

 

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List, Certificate of Analysis, Certificate of Compliance and all other Documentation required by the Quality Assurance Agreement. Unless otherwise agreed in writing by the Parties, Schering shall not ship or invoice Indevus for Finished Product until at least ten (10) Business Days after Schering has provided Indevus with a Certificate of Analysis, a Certificate of Compliance and any other release Documentation required by the Quality Assurance Agreement.

Article 6

Regulatory Matters, Recalls and Pharmacovigilance

6.1 General Regulatory Matters . In addition to the specific requirements of this Article 6 and the Quality Assurance Agreement, Schering shall (i) be responsible for obtaining and maintaining in good order all site licenses and current registrations granted by the FDA and any other applicable Regulatory Authority for the Manufacture of the Clinical Supplies and Finished Product at the Schering Facility(ies) as contemplated hereunder and will make copies of such registrations and all related documents available to Indevus and its designee for inspection during audits upon Indevus’ reasonable request; and (ii) take all steps necessary to be obtain and maintain FDA approval as a manufacturer of Finished Product under Indevus’ NDA, and comply with regulations promulgated by the FDA and any other applicable Regulatory Authority in connection with Schering’s Manufacture of the Clinical Supplies and Finished Product hereunder. In addition, Sections 3.4 and 3.5 of the License Agreement are hereby incorporated by reference, as if stated in their entirety, herein.

6.2 Records . Schering will maintain complete and accurate records and Documentation of all validation data, stability testing data, batch records, quality control and testing relating to the Substance and the Finished Product and the Manufacture, Final Packaging, labeling, testing and shipment thereof. Records which include the information relating to the Manufacturing, Final Packaging and quality operation for each lot of Substance and Finished Product will be prepared by Schering at the time such operations occur. Schering will prepare, maintain and retain such records in compliance with cGMP’s and other applicable Regulatory Standards, the Specifications and the Quality Assurance Agreement, for annual report requirements, and for periods meeting all applicable regulations of the FDA and make such records and Documentation available to Indevus upon Indevus’ reasonable request and in accordance with the Quality Assurance Agreement. The records and Documentation shall be subject to audit and inspection under this Article 6 and the Quality Assurance Agreement.

6.3 Regulatory Communications and Inspections . Schering shall take all reasonable steps necessary for the Schering Facilities to obtain and maintain approval by the FDA as a manufacturer of Finished Product under Indevus’ NDA for Product. Schering will provide Indevus with reasonable advance notice of any related FDA inspections (or within five (5) Business Days after any unannounced contact, inspection or audit commences) and, at the conclusion of such inspections, provide Indevus in writing with the results and outcome of such inspection, an estimate of the timeline associated with

 

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correcting any deficiencies identified by such inspection, and copies of any observations by the FDA (such as 483 comments) that would in any event become publicly available, including pursuant to The Freedom of Information Act, 5 U.S.C. § 552, as amended, and the HHS Freedom of Information Regulations (45 CFR Part 5). Indevus shall provide such assistance in connection with such inspection as may be reasonably requested by Schering. Schering shall discuss with the Supply Team any comments related to and affecting Schering’s performance of any Manufacturing activities and shall be responsible for and shall take appropriate actions to correct in a timely manner any deficiencies identified by such inspection. Schering shall retain copies in accordance with Regulatory Standards, and will also inform Indevus in writing as to any written communications or correspondence between Schering and the FDA relating to Schering’s activities under this Agreement within five (5) Business Days after receiving or providing such communication or correspondence.

6.4 Recalls and Other Corrective Actions . The Parties shall advise each other as soon as reasonably practicable but whenever possible no later than forty-eight (48) hours in advance of any planned recall, market withdrawals, or other corrective action related to Product intended to be conducted by either Party or any of its Affiliates that implicates Product supplied by Schering to Indevus and shall keep each other informed with respect to the status of any such actions. Unless regulated otherwise herein, Indevus shall have responsibility for and shall make all decisions relating to conducting any recall, market withdrawals, or other corrective action related to Product in the Territory. The Parties shall consult with each other with respect thereto and Indevus shall consider in good faith any comments or suggestions of Schering, provided, however , that nothing herein shall prohibit Indevus, from initiating or conducting any recall or other corrective action mandated by the FDA or applicable law. At Indevus’ request, Schering shall provide reasonable assistance in conducting such recall, market withdrawal or other corrective action, including, without limitation, providing all pertinent records that Indevus may reasonably request to assist in effecting such action. Indevus shall bear any and all costs of any such recall, market withdrawal or other corrective action with respect to Product in the Territory, except that Schering shall bear any and all such costs if such recall, market withdrawal or other corrective action is attributable predominantly to the fault of Schering or results from a negligent or reckless act or omission or intentional misconduct on the part of Schering or its Affiliates or the failure of Substance or Product to be manufactured or shipped by Schering or its Affiliates in compliance with all applicable laws, rules and regulations, and the Specifications or any breach by Schering of applicable laws, rules or regulations, or the provisions of this Agreement.

6.5 Adverse Drug Experiences and Safety Reporting . With respect to adverse drug experiences and safety reporting, the parties have entered into a Pharmacovigilance Agreement effective as of August 1, 2006.

 

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Article 7

Supply Team and Escalation Procedure

7.1 Supply Team . Within thirty (30) days after the Effective Date, Schering and Indevus will establish a team consisting of four (4) members, two (2) representatives nominated by Schering and two (2) representatives by Indevus, which team shall discuss and supervise all issues in the Manufacturing and supply of Product (“Supply Team”). Unless otherwise agreed between the Parties, the Supply Team will meet quarterly (in person, telephonically or via videoconference). Either Party may replace any or all of its representatives in and/or invite other representatives of such Party to attend meetings of the Supply Team at any time upon written notice to the other Party. Regardless of the number of individuals attending any Supply Team meeting, Schering and Indevus shall have a single vote each.

7.2 Escalation Procedure . If any issues or disputes cannot be resolved within the Supply Team, these issues shall be referred to the Steering Committee for resolution. The Steering Committee shall decide on these issues. If an issue escalated by the Supply Team cannot be resolved by the Steering Committee, it shall be referred to Indevus’ CEO and Schering’s Head of Industrial Operations and Environment for resolution. If the issue can nevertheless not be resolved it shall be referred to dispute resolution pursuant to Section 17.11.

7.3 Limitation of Power . Notwithstanding the tasks of the Supply Team and the Steering Committee herein (and whether or not issues or disputes are able to be resolved through such process), each Party to this Agreement shall retain the rights, remedies, powers and discretion granted to it hereunder and its obligations hereunder, and neither the Supply Team nor the Steering Committee shall have the power to amend or modify this Agreement, which may be amended or modified only as provided in Section 17.1.

Article 8

Supply Price, Notional NSP, Payment Terms

8.1 Supply Price .

8.1.1 Subject to the provisions of this Section 8.1, the supply price for Finished Product shall be [*] (the “Supply Price”, respectively) which shall incorporate all fully-burdened costs and expenses incurred by Schering or its designees associated with the Manufacture, procurement, testing, Final Packaging, Packing, supply and delivery of Finished Product [*] Schering Facility to a carrier designated by Indevus.

8.1.2 Except as set forth in the following sentence, in the event Schering develops an Improvement pursuant to Section 6.8.2 of the License Agreement and Indevus Commercializes such