Exhibit 10.14
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CONFIDENTIAL PORTION HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION
AMENDMENT NO. 5
TO THE
RESTATED DEVELOPMENT AND
COMMERCIALIZATION
COLLABORATION
AGREEMENT
THIS AMENDMENT NO. 5 (“
Amendment ”) to that certain Restated Development and
Commercialization Collaboration Agreement dated October 23,
2001 (“ Restated Agreement ”), effective as of
April 4, 2009 (“ Amendment Effective Date
”), is by and between Otsuka Pharmaceutical Co., Ltd.
(“ Otsuka ”), a corporation organized and
existing under the laws of Japan, having a principal place of
business at Shinagawa Grand Central Tower, 2-16-4 Konan, Minato-Ku,
Tokyo, 108-8242 Japan, and Bristol-Myers Squibb Company (“
BMS ”), a corporation organized and existing under the
laws of Delaware, having a principal place of business at Route 206
and Province Line Road, Princeton, New Jersey, 08540,
USA.
RECITALS
WHEREAS, Otsuka and BMS have
previously entered into the Restated Agreement and an Amendment
No. 1 (dated March 28, 2003), an Amendment No. 2
(dated June 5, 2003), an Amendment No. 3 (dated
September 25, 2006) and an Amendment No. 4 (dated
October 31, 2007), to the Restated Agreement (all such
amendments, the “ Prior Amendments
”);
WHEREAS, Otsuka and BMS now desire
to further amend and supplement certain terms and conditions of the
Restated Agreement (as previously amended) as hereinafter
specified;
WHEREAS, Otsuka and BMS desire that
all other terms and conditions of the Restated Agreement (as
previously amended) remain in full force and effect except to the
extent amended by this Amendment;
NOW, THEREFORE, for good and
valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Otsuka and BMS agree as follows:
1. Capitalized terms in this
Amendment shall have the same meaning as those in the Restated
Agreement, unless specifically defined otherwise in this Amendment.
All Section references are in regard to the Restated Agreement.
References to the term “Agreement” in the Restated
Agreement shall be deemed to include the Prior Amendments and this
Amendment.
2. Except as expressly modified
herein, the Restated Agreement shall remain in full force and
effect in accordance with its terms, as previously amended. To the
extent that there are any inconsistencies between this Amendment
and the Restated Agreement, as previously amended, the terms of
this Amendment shall supersede the Restated Agreement.
3. Extension of BMS’ Rights
and Obligations . In accordance with Section 12.1 of the
Restated Agreement, BMS’ rights under the Restated Agreement
in the United States would (but for this Amendment) expire on the
tenth calendar anniversary of the date of First Commercial Sale of
Product in the United States, which is November 19, 2012. The
Parties hereby agree in this Amendment, on the terms and conditions
set forth herein, to amend Section 12.1 of the Restated
Agreement, as it relates to the term of the Restated
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Agreement in the United States, to extend
BMS’ rights and obligations (which rights and obligations BMS
may exercise or perform by or through one or more of its
Affiliates) under the Restated Agreement to develop and
Commercialize Product in the United States and to manufacture
Product for sale in the United States until April 20, 2015,
subject to earlier termination in accordance with Paragraph 10
or Paragraph 12 of this Amendment or Section 12 of the
Restated Agreement. The “U.S. Abilify Extension
Term,” as used in this Amendment, means the period
commencing on January 1, 2010, and ending April 20, 2015;
provided that such period may terminate sooner in accordance
with Paragraph 10 or Paragraph 12 of this Amendment; provided
further , that if the Restated Agreement terminates early in
accordance with the provisions of Section 12 of the Restated
Agreement, such period shall also terminate upon the date of
termination of the Restated Agreement.
4. Up-Front Extension Payment
. In consideration of Otsuka’s agreement in this Amendment to
extend the term of BMS’ rights to develop, Commercialize, and
manufacture Product for the United States during the U.S. Abilify
Extension Term, BMS (itself or through one or more Affiliate(s) of
BMS) shall pay, in the aggregate, an up-front payment of Four
Hundred Million U.S. Dollars (U.S. $400,000,000) to Otsuka within
five (5) Business Days subsequent to the Amendment Effective
Date of this Amendment. If one or more of BMS’ Affiliate(s)
shall make such payment to Otsuka, BMS shall so notify Otsuka on or
about the Amendment Effective Date and shall identify the
Affiliate(s) that shall be making such payment. Such amount is
non-refundable and non-creditable against any other payments due
from BMS to Otsuka.
5. Modifications to
Otsuka’s and BMS’ Shares of Product Net Sales in the
U.S. During the U.S. Abilify Extension Term .
(a) Background . Under the
terms of the Restated Agreement (as amended) prior to this
Amendment, the basic allocation of Net Sales of Product in the
United States is sixty-five percent (65%) to BMS and
thirty-five percent (35%) to Otsuka, allocated as
follows:
(i) as provided in
Section 5.9.1(a), Otsuka or an Otsuka Affiliate receives [*]
of Net Sales in the United States;
(ii) as provided in
Section 5.11.2(a)(3), Otsuka or an Otsuka Affiliate pays BMS
or a BMS Affiliate [*] of Net Sales in the United States for
finished and packaged Product sold to Otsuka’s Affiliates for
sale in the United States (under the BMS-OAPI Product Supply
Agreement); and
(iii) as provided in
Section 5.11.2(a)(1), BMS and its Affiliates pay Otsuka [*]
for Compound sold by Otsuka to BMS or BMS’ Affiliates (under
the Otsuka-BMS Compound Supply Agreement) for formulation into
Product sold in the United States.
The result of these transactions is
a split of Net Sales in the United States of sixty-five percent
(65%) to BMS and thirty-five percent (35%) to
Otsuka.
(iv) In addition to the foregoing
65/35 split, and in accordance with Section 5.9.2(b) of the
Restated Agreement, BMS, through one of its Affiliates, pays Otsuka
a royalty equal to an additional [*] on all Net Sales in the
United
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States attributable to or arising
from the sale of any and all Product made by BMS or its
Affiliates.
(b) Modified Allocation of Net
Sales in the United States between Otsuka and BMS During the U.S.
Abilify Extension Term . The Parties hereby agree in this
Amendment that, effective January 1, 2010, the apportionment
of Net Sales in the United States between Otsuka and BMS shall
change as follows:
(i) in calendar year 2010,
fifty-eight percent (58%) of Net Sales in the United States
shall be allocated to BMS (instead of sixty-five percent
(65%)) and forty-two percent (42%) of Net Sales in the
United States shall be allocated to Otsuka (instead of thirty-five
percent (35%));
(ii) in calendar year 2011,
fifty-three and one half percent (53.5%) of Net Sales in the
United States shall be allocated to BMS and forty-six and one half
percent (46.5%) of Net Sales in the United States shall be
allocated to Otsuka;
(iii) in calendar year 2012,
fifty-one and one half percent (51.5%) of Net Sales in the
United States shall be allocated to BMS and forty-eight and one
half percent (48.5%) of Net Sales in the United States shall
be allocated to Otsuka; and
(iv) in calendar years 2013 and 2014
and that portion of calendar year 2015 that extends through the end
of the U.S. Abilify Extension Term (April 20, 2015), Net Sales in
the United States shall be allocated between Otsuka and BMS
according to the following tiering structure, the amount of Net
Sales and the allocation thereof between BMS and Otsuka being
determined on a calendar year-by-calendar year basis:
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|
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|
|
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2013-2015 Annual Net Sales Tiers
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% of Net Sales
in Tier to BMS
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|
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% of Net Sales
in Tier to Otsuka
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|
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$0 – $2,700,000,000
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50
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%
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50
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%
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$2,700,000,001 –
$3,200,000,000
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20
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%
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80
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%
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$3,200,000,001 –
$3,700,000,000
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7
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%
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93
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%
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|
$3,700,000,001 –
$4,000,000,000
|
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2
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%
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|
98
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%
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$4,000,000,001 –
$4,200,000,000
|
|
1
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%
|
|
99
|
%
|
|
In excess of $4,200,000,000
|
|
20
|
%
|
|
80
|
%
|
(v) For the avoidance of doubt, and
as required by Section 5.9.2(b) of the Restated Agreement, BMS
shall continue during the U.S. Abilify Extension Term to pay Otsuka
the [*] royalty on all Net Sales in the United States attributable
to or arising from the sale of any and all Product made by BMS or
its Affiliates, which amount shall be in addition to Otsuka’s
share of Net Sales as provided above. The Parties agree to effect
promptly an amendment to the Restated Agreement and/or the
applicable manufacturing agreement(s) between Otsuka (or its
applicable Affiliate) and BMS (or its applicable Affiliate)
relating to BMS’ manufacturing of Product in standard tablet
(swallowable) form for Otsuka for sale in the United States to
provide that Otsuka does not
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have the right to terminate such
manufacturing rights during the U.S. Abilify Extension Term except
in the case of: material breach by BMS; or (as provided in
Section 12.4(b) and Section 8.4 of the Restated
Agreement) [*]; or the Commercialization by BMS (or any of its
Affiliates, licensees or sublicensees) of a U.S. Competitive
Product (as defined in Paragraph 11(c) below) in violation of
Paragraph 11 of this Amendment; or the early termination of this
Amendment or the Restated Agreement in accordance with Paragraph 3
above.
6. Modified Payment Procedures
and Purchase Prices in the United States . Section 5.9.3
of the Restated Agreement and Appendix G to the Restated
Agreement (which appendix is incorporated into the Restated
Agreement as Exhibit 1 to Amendment No. 1) set
forth principles and procedures agreed upon by the Parties for
collecting, depositing and disbursing Product sales proceeds. Such
procedures remain in effect, subject to modification from time to
time by mutual written agreement of the Parties consistent with the
agreed principles stated in Section 5.9.3. In addition, the
Parties shall discuss and amend the purchase prices for Compound
and Product set forth in Section 5.11.2(a) by mutual written
agreement as they mutually deem appropriate in light of the changed
allocations between them of Net Sales in the United States
specified above in Paragraph 5 of this Amendment.
7. Commercial Operations in the
United States . BMS and Otsuka hereby agree that, commencing
January 1, 2010, and for the remainder of the U.S. Abilify
Extension Term, the Parties’ specific performance and payment
obligations with respect to the advertising, marketing, promotion,
sales, distribution of, and provision of medical education for,
Product in the United States (“ Commercial Operations
”) shall be as set forth in subparagraphs (a) through
(i) of this Paragraph 7.
(a) Definitions . For
purposes of this Amendment, the following terms shall have the
definitions set forth below:
(i) “Operational
Expenses” means the following costs and expenses solely
to the extent specifically and directly attributable to conducting
Commercial Operations with respect to Product in the U.S. during
the U.S. Abilify Extension Term: (i) Commercial Costs;
(ii) Distribution Costs; (iii) Medical Education
Activities Costs; and (iv) Indirect Costs. For clarity,
Operational Expenses shall not include, for example (but without
limitation), (1) expenses related to supply, manufacturing,
pharmacovigilance, post-marketing surveillance, or Product recall
or (2) any allocation of overhead or general and
administrative costs. For clarity, each party will bear its own
general and administrative expenses, except to the extent that such
expenses are included in the FTE Rate for MRs and/or MSLs. In
addition, any particular cost or expense meeting any of the
criteria set forth above to be included in “Operational
Expenses” shall be counted only once in calculating total
Operational Expenses for a particular period, notwithstanding that
such cost or expense meets or falls within more than one of such
criteria.
(ii) “Commercial
Costs” means the direct costs that are specifically
identifiable to the following sales, marketing and education
activities of the Parties relating to Product in the U.S.:
(a) activities directed to the advertising and marketing of
such Product; (b) launch meetings; (c) costs of
advertising, public relations and medical education
agencies;
(d) promotional programs and
“lunch and learn” meetings; (e) speaker programs,
including
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the training of such speakers;
(f) development, publication and dissemination of publications
relating to such Product; (g) developing, obtaining and
providing training packages of such Product, promotional
literature, promotional materials and other selling materials;
(h) developing and performing market research;
(i) developing information and data specifically intended for
national accounts, managed care organizations and group purchasing
organizations, including reimbursement programs;
(j) administration, operation and maintenance of the sales
representatives (“ Medical Representatives ” or
“ MRs ”) that promote Product in the United
States, district and regional sales management, home office
personnel who support the sales force, all as included in the FTE
Rate; (k) conducting Phase IV Clinical Trials on Product in
the U.S.; (l) conducting advisory board meetings or other
consultant programs, the purpose of which is to obtain advice and
feedback related to the development or commercialization of such
Product in the U.S.; and (m) other ancillary services directly
related to the foregoing (to the extent not otherwise falling
within subparagraphs 7(a)(ii)(a) through
(l) above).
(iii) “Distribution
Costs” means, with respect to a Product sold in the
United States during the U.S. Abilify Extension Term, all direct
internal costs and out of pocket costs incurred by BMS or its
Affiliates in connection with the following activities involved in
distribution of such Product to a Third Party: (i) handling
and transportation to fulfill orders (excluding such costs, if any,
treated as a deduction in the definition of Net Sales);
(ii) customer services, including order entry, billing and
adjustments, inquiry and credit and collection; and
(iii) direct cost of storage and distribution of the
Product.
(iv) “Medical Education
Activities Costs” means the direct costs incurred in
conducting the following activities designed to ensure or improve
appropriate medical use of, conduct medical education of, or
further research regarding, a Product sold in the U.S.:
(a) maintaining MSLs (as defined below); and
(b) development, publication and dissemination of publications
relating to such Product in the U.S., as well as medical
information services provided in response to inquiries communicated
via sales representatives or received by letter, phone call or
email.
(v) “Phase IV Clinical
Trial” means a product support clinical trial of Product
conducted in the United States during the U.S. Abilify Extension
Term. A Phase IV Clinical Trial may include epidemiological
studies, modeling and pharmacoeconomic studies, and
investigator-sponsored clinical trials studying Product that
otherwise fit the foregoing definition.
(vi) “FTE Rate”
is as defined on Exhibit 2 .
(vii) “Indirect
Costs” is as defined on Exhibit 2 .
(b) Baseline Commercial Plan
. BMS and Otsuka have agreed on baseline annual performance
obligations to be fulfilled by the Parties (or their respective
Affiliates) with respect to Commercial Operations in the United
States commencing January 1, 2010, including the annual number
of Medical Representatives and Medical Science Liaisons (“
MSLs ”) and annual detailing requirements, and on
baseline annual expenses to be incurred by the Parties (or their
respective Affiliates) for Commercial Operations in the United
States commencing January 1, 2010. Such baseline annual
performance obligations and baseline annual operating expenses are
set forth in a
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written plan mutually agreed by the Parties (the
“ Baseline Commercial Plan ”), which plan is
attached as Exhibit 1 to this Amendment and is hereby
incorporated into the Restated Agreement as Appendix H
thereto.
(c) Annual Commercial Plan .
At least three (3) months prior to January 1 of each
calendar year during the U.S. Abilify Extension Term, commencing
prior to calendar year 2010, the JCC (or an Operational Team
designated by the JCC) shall consider, modify as it deems
appropriate, and approve by mutual agreement a written plan setting
forth the Commercial Operations performance obligations and
operating expenses for the upcoming calendar year in the United
States (the “ Annual Commercial Plan ”). It is
understood by the Parties that BMS will continue to perform all
Commercial Operations activities, except that Otsuka shall deploy
MRs and MSLs (together with BMS, as set forth herein), and shall
perform any other Commercial Operations activities agreed by the
JCC (in which case the allocation between the Parties of
responsibility for performing a particular item or activity will be
set forth in the Annual Commercial Plan). The Annual Commercial
Plan shall specify the aggregate number of MRs and MSLs to be
deployed by the Parties in the United States and the total minimum
detailing requirements to be fulfilled by the Parties in the United
States for the upcoming calendar year (the “ Annual
Resource Commitment ”) and shall include a detailed
budget for the operating expenses to be incurred by the Parties (in
the aggregate, and also broken down to specific budgets for the
individual categories of Commercial Operations covered by the
Annual Commercial Plan) in connection with Commercial Operations in
the United States for the upcoming calendar year (the “
Annual Commercial Expense Budget ”). For clarity, each
Annual Commercial Plan (and any amendment or modification to any
Annual Commercial Plan or any part thereof), including the
allocation of responsibilities between the Parties with respect to
Commercial Operations activities, must be approved by mutual
agreement of the JCC (with neither Party having a tie-breaking vote
with regard to approval of any Annual Commercial Plan). If the JCC
is unable to agree upon and approve the Annual Commercial Plan for
any calendar year during the U.S. Abilify Extension Term, then the
Baseline Commercial Plan attached as Exhibit 1 to this
Amendment shall govern the Parties’ obligations and the total
expense budget with respect to Commercial Operations in the United
States for such year, and the aggregate number of MRs and MSLs to
be deployed by the Parties in the United States and the total
detailing requirements to be fulfilled by the Parties in the United
States set forth in the Baseline Commercial Plan shall be deemed to
be the Annual Resource Commitment for such calendar year, and the
aggregate expense budget set forth in the Baseline Commercial Plan
shall be deemed to be the Annual Commercial Expense Budget for such
year. From time to time during any such calendar year, the JCC may
agree to modify or amend the Annual Resource Commitment and/or the
Commercial Expense Budget for such year. Notwithstanding
Section 5.1.2 of the Restated Agreement (as amended by this
Amendment), neither the BMS Chair nor the Otsuka Chair of the JCC
shall have the tie-breaking vote with respect to establishing any
Annual Commercial Plan or modifying any Annual Resource Commitment
or Commercial Expense Budget, which must be mutually agreed to by
Otsuka’s Chair and BMS’ Chair on the JCC. For the
avoidance of doubt, the JCC shall continue to have final authority
and responsibility for development of the Marketing Plans in
accordance with Section 5.2 of the Restated Agreement, and
each Annual Commercial Plan and the Baseline Commercial Plan shall
form part of the Marketing Plans for the United States;
provided that, in the event of any inconsistency between the
terms of any Marketing Plan and the terms of the Baseline
Commercial Plan or any Annual Commercial Plan, the terms of the
Baseline Commercial Plan or Annual Commercial Plan (as the case may
be) shall govern.
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(d) Otsuka Promotional
Efforts . Without limiting its right under Paragraph 7(g) to
contribute additional resources (at its expense), Otsuka (or its
Affiliate) shall have the right during the period commencing
January 1, 2010, and ending June 30, 2014, to deploy [*]
MRs and [*]MSLs in the United States in each such year, with the
FTE Rates and Indirect Costs (as provided in Exhibit 2 to
this Amendment) associated with such MRs and MSLs being allocable
between the Parties as Operational Expenses.
At the time the JCC considers the
Annual Commercial Plan for each calendar year during the U.S.
Abilify Extension Term, and in any event at least six
(6) months prior to January 1 of each year during the
U.S. Abilify Extension Term, Otsuka shall determine in its
discretion, and shall inform BMS of, the number of MRs and MSLs (up
to the maximum numbers set forth above in this subparagraph (d))
that Otsuka (or its Affiliate) shall deploy during the upcoming
calendar year. The actual number of MRs and MSLs and details that
Otsuka commits to deploy in a particular calendar year during the
U.S. Abilify Extension Term is referred to in this Amendment as
Otsuka’s “ Required Resource Commitment ”
for such year. In each calendar year during the U.S. Abilify
Extension Term, Otsuka shall fulfill its Required Resource
Commitment for such year, and BMS shall fulfill the balance of the
Annual Resource Commitment for such year, which shall be the
difference between such Annual Resource Commitment and
Otsuka’s Required Resource Commitment for the year (such
remainder being BMS’ “ Required Resource
Commitment ” for such year). Each Party’s Required
Resource Commitment for each calendar year during the U.S. Abilify
Extension Term shall be set forth in the Annual Commercial Plan for
such calendar year.
As provided in greater detail in
Exhibit 3 to this Amendment, each Party’s MRs shall be
assigned an equitable share of valuable, productive accounts and an
equitable share of responsibility for opinion leaders, large
accounts and other more desirable accounts and
prescribers.
The JCC shall consult in good faith
regarding, and shall mutually determine (with neither Party having
a tie-breaking vote), a reasonable plan and budget, with a duration
of no more than ninety (90) days (the “[*] Plan
”), for the [*] pursuant to this subparagraph (d). The [*]
Plan shall also plan for [*]. In making [*] during such transition,
the Parties acknowledge that such transition will involve
disruption of [*] with respect to Product, but they shall work
cooperatively to minimize such disruption and to achieve an
efficient and cost-effective transition, and in manner consistent
with the ultimate achievement of the above-described equitable
allocation of responsibility. The [*] Plan shall be deemed to
be an amendment to the applicable Annual Commercial Plan, including
the associated Annual Commercial Expense Budget. The Parties
acknowledge that such agreed transition arrangements may result in
the inclusion in such Annual Commercial Plan and Annual Commercial
Expense Budget, and the charging by either or both Parties of,
Operational Expenses for [*] with respect to the Product, during
the limited period of such transition, than would otherwise have
been the case had Otsuka not exercised its right to deploy MRs
pursuant to this subparagraph (d).
(e) Co-Promotion Agreement .
In furtherance of the terms and conditions set forth in this
Paragraph 7, the Parties shall enter into a co-promotion agreement
(the “Co-Promotion Agreement” ) to be negotiated
in good faith by the Parties and entered into within one
hundred
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twenty (120) days subsequent to the
Amendment Effective Date. The Co-Promotion Agreement will include
the specific terms set forth in Exhibit 3 to this Amendment,
along with additional commercially reasonable terms and conditions
customary in the industry for an agreement of this type. In the
event of any inconsistency between the terms of this Amendment and
the terms of the Co-Promotion Agreement, the terms of this
Amendment shall prevail (unless the Co-Promotion Agreement
specifically states otherwise).
(f) Allocation and Payment of
Operational Expenses .
(i) Each Annual Commercial Expense
Budget shall itemize the Operational Expenses to be incurred by the
Parties in the applicable calendar year, in a detailed manner with
respect to each different category of Commercial Operations,
including (without limitation) costs of Product-related sales and
promotional literature, materials and supplies, costs of
advertisements and press materials, costs of educational symposia,
conferences and programs, and the cumulative cost of both
Parties’ direct expenses for MRs and MSLs (on an FTE basis)
budgeted to be incurred in fulfilling each Party’s Required
Resource Commitment in the calendar year.
(ii) It is understood and agreed by
the Parties that (A) all costs associated with the
Parties’ MRs and MSL