Exhibit 10.66
*Portions of this document marked
[*] are requested to be treated confidentially.
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COMMERCIAL MANUFACTURING
AGREEMENT
Salix Pharmaceuticals, Inc.,
Mesalamine Controlled Release Capsules
This Commercial Manufacturing
Agreement (“ Agreement ”) is made effective as
of this 9 th
day of September, 2008 (“
Effective Date ”), by and between Salix
Pharmaceuticals, Inc., a California corporation, with a place of
business at 1700 Perimeter Park Drive, Morrisville, NC, 27560
(“ Client ”), and Catalent Pharma Solutions,
LLC, a Delaware limited liability company with a place of business
at 14 Schoolhouse Road, Somerset, New Jersey 08873 (“
Catalent ”).
RECITALS
A. Client is a pharmaceutical
company that develops, markets and sells pharmaceutical products,
including the Product;
B. Catalent provides contract
pharmaceutical development, manufacturing, packaging and analytical
services to the pharmaceutical industry;
C. Client desires to engage Catalent
to provide certain services to Client in connection with the
processing of Client’s Product, and Catalent desires to
provide such services, all pursuant to the terms and conditions set
forth in this Agreement.
THEREFORE,
in consideration of the mutual
covenants, terms and conditions set forth below, the parties agree
as follows:
ARTICLE 1
DEFINITIONS
The following terms have the
following meanings in this Agreement:
1.1 “ Acknowledgement
” has the meaning set forth in Section 4.3.
1.2 “ Affiliate(s)
” means, with respect to Client or any third party, any
corporation, firm, partnership or other entity that controls, is
controlled by or is under common control with such entity; and with
respect to Catalent, Catalent Pharma Solutions, Inc. (“
CPS, Inc. ”) and any corporation, firm, partnership or
other entity controlled by CPS, Inc. For the purposes of this
definition, “ control ” shall mean the ownership
of at least 50% of the voting share capital of an entity or any
other comparable equity or ownership interest.
1.3 “ Agreement ”
has the meaning set forth in the introductory paragraph, and
includes all its Attachments and other appendices (all of which are
incorporated herein by reference) and any amendments to any of the
foregoing made as provided herein or therein.
1.4 “ API ” means
the compound 5-Amino Salicylic Acid, as further described in the
Specifications, as provided in this Agreement.
1.5 “ API Inventions
” has the meaning set forth in Article 11.
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1.6 “ Applicable Laws ” means
all laws, ordinances, rules and regulations of the United States
applicable to the Processing or any aspect thereof and the
obligations of Catalent or Client, as the context requires, under
this Agreement, as amended from time to time, including
(A) all applicable federal, state and local laws and
regulations of the United States, (B) the U.S. Federal Food,
Drug and Cosmetic Act and (C) cGMP.
1.7 “ Batch ”
means a defined quantity of Product that has been or is being
Processed in accordance with the Specifications.
1.8 “ Catalent ”
has the meaning set forth in the introductory paragraph, or any
successor or permitted assign. Catalent shall have the right to
cause any of its Affiliates to perform any of its obligations
hereunder, and Client shall accept such performance as if it were
performance by Catalent; provided that any Affiliate shall, at its
cost, comply with all Applicable Laws, including without
limitation, the Regulatory Approval for the Product, unless Client
requests the addition of the Affiliate to the Regulatory
Approval.
1.9 “ Catalent
Indemnitees ” has the meaning set forth in
Section 13.2.
1.10 “ Catalent IP
” has the meaning set forth in Article 11.
1.11 “ cGMP ”
means current Good Manufacturing Practices promulgated by the
Regulatory Authorities, including within the meaning of 21 C.F.R.
Parts 210 and 211, as amended.
1.12 “ Client ”
has the meaning set forth in the introductory paragraph, or any
successor or permitted assign.
1.13 “ Client
Indemnitees ” has the meaning set forth in
Section 13.1.
1.14 “ Client IP
” has the meaning set forth in Article 11.
1.15 “ Client-supplied
Materials ” means any materials to be supplied by or on
behalf of Client to Catalent for Processing, as provided in
Attachment B , including API.
1.16 “ Commencement
Date ” means the first date upon which a Regulatory
Authority approves Catalent as a manufacturer of any
Product.
1.17 “ Confidential
Information ” has the meaning set forth in
Section 10.2.
1.18 “ Contract Year
” means, with respect to Contract Year 1, the period
beginning on the Effective Date and ending on December 31st of
the first anniversary of the calendar year following the
Commencement Date, and with respect to each Contract Year
thereafter, each consecutive calendar year period beginning on
January 1st and ending on December 31st.
1.19 “ Defective
Product ” has the meaning set forth in
Section 5.1.
1.20 “ Effective Date
” has the meaning set forth in the introductory
paragraph.
1.21 “ Exception Notice
” has the meaning set forth in Section 5.1.
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1.22 “ Facility ” means
Catalent’s facility located in Winchester, Kentucky, USA or
such other facility as agreed in writing by the parties.
1.23 “ Firm Commitment
” has the meaning set forth in Section 4.2.
1.24 “ Invention
” has the meaning set forth in Article 11.
1.25 “ Losses ”
has the meaning set forth in Section 13.1.
1.26 [*] .
1.27 “ Process ”
or “ Processing ” means the compounding, filling
or pressing, producing and bulk packaging (but not secondary or
retail packaging) of the API and Raw Materials into Product, in
accordance with the Specifications and under the terms of this
Agreement.
1.28 “ Processing Date
” means the day on which Product is scheduled to be
compounded by Catalent, as identified in an Acknowledgement in
accordance with Section 4.3.
1.29 “ Process
Inventions ” has the meaning set forth in Article
11.
1.30 “ Product ”
means the fully compounded bulk pharmaceutical product containing
the API that has been Processed in accordance with the
Specifications.
1.31 “ Product Maintenance
Services ” has the meaning set forth in
Section 2.3.
1.32 “ Purchase Order
” has the meaning set forth in Section 4.3.
1.33 “ Quality
Agreement ” has the meaning set forth in
Section 9.7.
1.34 “ Raw Materials
” means all raw materials, supplies, components and packaging
necessary to manufacture and ship Product in accordance with the
Specifications, as provided in Attachment B , but not
including Client-supplied Materials.
1.35 “ Recall ”
has the meaning set forth in Section 9.6.
1.36 “ Regulatory
Approval ” means any approvals, permits, product and/or
establishment licenses, registrations or authorizations, including
approvals pursuant to U.S. Investigational New Drug applications,
New Drug Applications and Abbreviated New Drug Applications, as
applicable, of any Regulatory Authorities that are necessary or
advisable in connection with the development, manufacture, testing,
use, storage, exportation, importation, transport, promotion,
marketing, distribution or sale of Product in the
Territory.
1.37 “ Regulatory
Authority ” means the international, federal, state or
local governmental or regulatory bodies, agencies, departments,
bureaus, courts or other entities in the United States (including
the United States Food and Drug Administration) responsible for
(A) the regulation
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(including pricing) of any aspect of
pharmaceutical or medicinal products intended for human use or
(B) health, safety or environmental matters
generally.
1.38 “ Review Period
” has the meaning set forth in Section 5.1.
1.39 “ Rolling Forecast
” has the meaning set forth in Section 4.2.
1.40 “ Specifications
” means the procedures, requirements, standards, quality
control testing and other data and the scope of services as set
forth in Attachment B , along with any valid amendments or
modifications thereto, in accordance with Article 8.
1.41 “ Supplier ”
has the meaning set forth in Section 3.2(B).
1.42 “ Term ” has
the meaning set forth in Section 16.1.
1.43 “ Territory
” means the United States of America, and any other country
that the parties agree in writing to add to this definition of
Territory in an amendment to this Agreement.
1.44 “ Unit Pricing
” has the meaning set forth in
Section 7.1(B).
1.45 “ Validation
Services ” has the meaning set forth in
Section 2.1.
ARTICLE 2
VALIDATION, PROCESSING &
RELATED SERVICES
2.1 Validation Services .
Catalent shall perform the qualification, validation and stability
services described in Attachment A (the “
Validation Services ”). Notwithstanding anything to
the contrary in this Agreement, the Validation Services shall apply
to Client’s [*] for Contract Year 1.
2.2 Supply and Purchase of
Product . Catalent shall Process Product in accordance with the
Specifications, the Applicable Laws and the terms and conditions of
this Agreement.
2.3 Product Maintenance
Services . Client will receive product maintenance services
(the “ Product Maintenance Services ”),
[*] , as applicable. In the event Client does not [*]
pursuant to Section 4.1 herein. Catalent shall keep accurate
records of any Product Maintenance Services utilized by Client
during a given Contract Year. Beginning at the end of Contract Year
2, either, party may request an annual review of the actual usage
of Product Maintenance Services and Client shall be entitled to
audit Catalent’s records regarding Product Maintenance
Services rendered to Client. Thereafter, the parties shall
[*] .
2.4 Other Related Services .
Catalent, shall provide such Product-related services, other than
Validation Services, Processing or Product Maintenance Services, as
agreed to in writing by the parties from time to time. Such writing
shall include the scope and fees for any such services
and
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be appended to this Agreement. The terms and
conditions of this Agreement shall govern and apply to such
services.
ARTICLE 3
MATERIALS
3.1 API .
A. Client shall supply to Catalent
for Processing, at Client’s sole cost and risk, API, and any
other Client-supplied Materials, in quantities sufficient to meet
Client’s requirements for Product, as set forth in Article 4.
Client shall deliver such items, together with associated
certificates of analysis, to the Facility no later than [*]
days before, but not earlier than [*] months prior to, the
Processing Date upon which such items will be used by Catalent.
Client shall be responsible at its expense for securing any
necessary export or import clearances or permits required in
respect of supply to Catalent of such items. Catalent shall use
such items solely and exclusively for Processing of the Product.
Prior to delivery of any such items, Client shall provide to
Catalent a copy of all associated material safety data sheets, and
shall promptly provide any updates or revisions thereto.
B. Within 30 days of receipt of API
or any other Client-supplied Materials by Catalent, Catalent shall
inspect such items to verify their identity and test such items to
confirm that they meet the associated specifications or certificate
of analysis. In the event that Catalent detects a nonconformity
with Specifications, Catalent shall give Client prompt oral and
written notice of such nonconformity. Catalent shall not be liable
for any defects in API or any other Client-supplied Materials, or
in Product as a result of defective API or any other
Client-supplied Materials, unless Catalent failed to properly
perform the foregoing obligations. Catalent shall follow
Client’s reasonable written instructions in respect of return
or disposal of defective API or any other Client-supplied
Materials, at Client’s sole cost and risk.
C. Client shall retain title to API
and any other Client-supplied Materials at all times and shall
[*] .
3.2 Raw Materials
.
A. Catalent shall be responsible for
sourcing and qualifying third-party suppliers of Raw Materials.
Catalent shall also be responsible for procuring, inspecting and
releasing adequate Raw Materials as necessary to, meet the Firm
Commitment, unless otherwise agreed to by the parties in writing.
Unless a particular Raw Material can be replaced with the same raw
material from another supplier, Catalent shall not be liable for
any delay in delivery of Product if (i) Catalent, exercising
commercially reasonable efforts, is unable to obtain, in a timely
manner, a particular Raw Material necessary for Processing and
(ii) Catalent placed orders for such Raw Materials promptly
following receipt of Client’s Firm Commitment. In the event
that any Raw Material becomes subject to purchase lead time beyond
the Firm Commitment time frame, the
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parties will negotiate in good faith an
appropriate amendment to this Agreement, including Sections 3.4 and
4.2.
B. In certain instances, Client may
require a specific supplier, manufacturer or vendor (“
Supplier ”) to be used for Raw Material. In such an
event, (i) such Supplier will be identified in the
Specifications, (ii) Client shall be responsible for the
timeliness, quantity, and quality of supply of Raw Materials from
such Supplier, (iii) Catalent shall not be liable for any
defects in Raw Materials from such Supplier, or in Product as a
result of such defective Raw Materials, unless Catalent failed to
properly perform any testing required by the Specifications, and
(iv) the Raw Materials from such Supplier shall be deemed, for
purposes of liability hereunder, Client-supplied Materials. If the
cost of the Raw Material from any such Supplier is greater than
Catalent’s costs for the same raw material of equal quality
from other suppliers, Catalent shall notify Client in writing and
provide Client with documentary evidence of the same. If Client
does not, within 20 business days of its receipt of such notice,
designate a lower cost supplier identified in such notice, then
Catalent shall [*] . If the documented cost of the Raw
Material from any supplier mandated by Client is less than
Catalent’s documented cost for the same raw material of equal
quality from other suppliers, then Catalent shall [*] .
[*] will be responsible for all costs associated with
qualification of any such Supplier who has not been previously
[*] . Catalent shall maintain an inventory of Raw Materials
in sufficient quantities to be able to supply up to [*] per
dose strength that is included in the Firm Commitment portion of
the most recent Client forecast. Notwithstanding anything to the
contrary in this Section 3.2(B), a sole supplier of any Raw
Material shall not be deemed a Supplier required by Client, nor
shall the Raw Material supplied by such supplier be deemed
Client-supplied Materials.
3.3 Artwork and Packaging .
Client shall provide or approve, prior to the procurement of
applicable components, all artwork, advertising and packaging
information necessary for Processing, if any. Such artwork,
advertising and packaging information is and shall remain the
exclusive property of Client, and Client shall be solely
responsible for the content thereof. Such artwork, advertising and
packaging information or any reproduction thereof may not be used
by Catalent in any manner other than performing its obligations
hereunder.
3.4 Reimbursement for
Materials . In the event of (A) a Specification change for
any reason, (B) obsolescence of any Raw Material or
(C) further to Section 16.3(C), termination or expiration
of this Agreement, [*] shall bear the cost of any unused Raw
Materials (including packaging), so long as [*] .
ARTICLE 4
[*], PURCHASE ORDERS &
FORECASTS
4.1 [*] .
4.2 Forecast . On or before
the 15 th
day of each calendar month,
beginning at least 90 days prior to the anticipated Commencement
Date, Client shall furnish to Catalent a written [*]
rolling
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forecast of the quantities of Product that
Client intends to order from Catalent during such period (“
Rolling Forecast ”). The first [*] months of
such Rolling Forecast shall constitute a binding order for the
quantities of Product specified therein (“ Firm
Commitment ”) and the following [*] ; of the
Rolling Forecast shall be non-binding, good faith estimates;
provided however that Client shall be obligated to
provide purchase orders for the Firm commitment. If Client fails to
timely provide a Rolling Forecast, the most recently provided
Rolling Forecast shall be deemed resubmitted for the then-current
[*] .
4.3 Purchase Orders
.
A. From time to time as provided in
this Section 4.3(A), Client shall submit to Catalent a
[*] purchase order for Product specifying the number of
Batches to be Processed, the Batch size (to the extent the
Specifications permit Batches of different sizes) and the requested
delivery date for each Batch (“ Purchase Order
”); provided , that no Purchase Order may be for less
than [*] . Concurrently with the submission of each Rolling
Forecast, Client shall submit a Purchase Order for the Firm
Commitment. Purchase Orders for quantities of Product in excess of
the Firm Commitment shall be submitted by Client at least
[*] days in advance of the delivery date requested in the
Purchase Order (“Lead Time Requirement”). Catalent
shall be obligated to accept any Purchase Order that meets the Lead
Time Requirement and that is for a quantity of Product that does
not exceed [*] of the quantity of Product set forth and
agreed upon in the Firm Commitment. Catalent may reject Purchase
Orders in excess of [*] more than the Firm Commitment.
Failure to provide a Purchase Order does not absolve Client of its
obligation regarding the Firm Commitment.
B. Catalent shall confirm in writing
that a Purchase Order has been accepted within [*] business
days of receipt thereof by written acknowledgement (“
Acknowledgement ”) that it accepts or rejects such
Purchase Order. Each Acknowledgement shall include the Processing
Date and shall either confirm the delivery date set forth in the
Purchase Order or set forth a reasonable alternative delivery date;
provided that any alternative delivery date proposed by Catalent is
within [*] business days of the delivery date set forth in
the Purchase Order. Catalent’s failure to timely provide an
Acknowledgement shall be deemed an acceptance of Client’s
Purchase Order.
C. Notwithstanding
Section 4.3(A), Catalent shall use commercially reasonable
efforts to supply Client with quantities of Product which are up to
[*] % in excess of the quantities specified in the Firm
Commitment, subject to Catalent’s other supply co