Multiproduct Technology Transfer, Development & Li

EXHIBIT 10.38


MULTI PRODUCT TECHNOLOGY TRANSFER
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DEVELOPMENT AND LICENSE AGREEMENT
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AGREEMENT, effective as of this 30th August 1994 (hereinafter referred to as the "Effective Date"), by and between SCHEIN PHARMACEUTICAL, INC, 100 Campus Drive, Florham Park, NY 07932, U.S.A., (hereinafter referred to as "Schein") and ETHICAL HOLDINGS PLC, a company registered in the United Kingdom and having its principal place of business at Corpus Christi House, 9 West Street, Godmanchester, Cambridgeshire, PE18 8HG, U.K. (hereinafter referred to as "Ethical").

WITNESSETH THAT:
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WHEREAS, Ethical owns valuable Ethical Know-How (hereinafter defined) and has sought Patent Rights (hereinafter defined) relating to pharmaceutical formulations designed to provide controlled release of active constituents from solid dosage forms; and
WHEREAS, Ethical has a research and development capability in drug delivery systems and pharmaceuticals in areas, including but not limited to, efficacy, improved formulations and methods of drug delivery; and
WHEREAS, Schein desires that Ethical develop, as provided for in this Agreement, ****** **** ******** ** ****** **** ******** *** ** ***** *** *********** ******* ** ** *********** *** *** ** **** ****** ***** *** ******* ********* ***


WHEREAS, Schein has expressed an interest in entering into an agreement on terms similar to those contained herein in respect of the development and marketing in the United States of the ************* ******* *** ******* ** ******** ** ********* ********* ******** ******** ** ************* ***


WHEREAS, Schein desires to effect the final product development and registration with the regulatory authorities within the United States and outside of the United States and to make the regulatory filings.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants and conditions set forth herein, the parties hereto mutually agree as follows:
1. DEFINITIONS
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1.1 In this Agreement, unless the context otherwise requires, the
following terms shall have the meaning set forth in this clause:

1.1.1 "Ethical" means ETHICAL HOLDINGS PLC, Corpus Christi House, 9
West Street, Godmanchester, Cambs., PE18 8HG, UK.


* Page redacted pursuant to confidential treatment request.


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1.1.2 "Schein" means SCHEIN PHARMACEUTICAL, INC, 100 Campus Drive,
Florham Park, NY 07932, U.S.A.

1.1.3 "Effective Date" means 30th August 1994.

1.1.4 "Ethical Know-How" means all proprietary scientific and medical
information, technical data and marketing studies in Ethical's
possession or, from time to time invented or developed or
acquired by or on behalf of Ethical or under the control of
Ethical (other than Schein Know-How) relating specifically to
the registration, marketing, manufacture or use of its **** **
*********** **** ******** ********** as further detailed in
Schedule 1 including, but not limited to, toxicological,
pharmacological, analytical and clinical data, bioavailability
studies, product forms and formulations, control assays and
specifications, methods of preparation and stability data and
specifically including all information contained in all health
registration dossiers to be filed in various countries of the
world, and shall further include all Improvements and
Independent Third Party data which Ethical has access to and is
free to disclose without restriction or compensation to such
Independent Third Party (and relating to the Designated
Products). Notwithstanding the foregoing, the term 'Ethical
Know-How' shall not be deemed to refer to information and data
of the type which would not be required to be maintained as
confidential by either party pursuant to the provision of
Clause 22.


1.1.5 "Schein Know-How" means all proprietary scientific and medical
information and technical data from time to time developed or
acquired by or on behalf of Schein (other than Ethical Know-
How) relating specifically to the manufacture or use of the
technology and all Improvements including, but not limited to,
toxicological, pharmacological, analytical and clinical data,
bioavailability studies, product forms and formulations,
control assays and specifications, methods of preparation and
stability data, and specifically including all information
contained in all health registration dossiers filed by Schein
relating to the Designated Products. Notwithstanding the
foregoing, the term 'Schein Know-How' shall not be deemed to
refer to information and data of the type which would not be
required to be maintained as confidential by either party
pursuant to the provision of Clause 22.


1.1.6 "Patent Rights" means those patents and patent applications
listed in Schedule 2 and any and all patents and patent
applications filed
* redacted pursuant to confidential treatment request


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by or issued to Ethical and licensed or assigned to Ethical
relating to controlled release formulations for oral
administration in man, or the manufacture or use of them,
together with any and all patents that may issue or may have
issued therefrom, including any and all divisions,
continuations, continuations-in-part, extensions, additions or
reissues of or to any of the aforesaid patent applications in
any country in which Ethical has filed, or hereafter files,
patents.


1.1.7 "Prospective Development Products" means those pharmaceutical
compounds discussed by the parties and thereby listed in
Schedule 5 as amended from time to time.


1.1.8 "Designated Products" means the Prospective Development
Products selected by Schein pursuant to Schedule 3 and which
thereby are no longer included in the definition of Prospective
Development Products.


1.1.9 "Designated Product Extensions" means additional dosages,
strengths, indications, changes to specifications,
manufacturing procedures or regulatory compliancies of a
Designated Product in addition to those detailed in the
original Designated Development Programme.

1.1.10 "Territory" means the entire world except in respect of the
************* Product in which case it shall mean solely the
United States, its territories and possessions.

1.1.11 "Net Sales" means the gross sales of a Designated Product
actually invoiced by Schein or Schein's sublicensee hereunder
to an Independent Third Party, less chargebacks and rebates,
the total ordinary and customary trade discounts (but not
including cash discounts for prompt payments), rebate for
inventory price protection to counter competitive pressures,
excise taxes, other consumption taxes, customs duty, credits
and allowances actually granted on account of rejection or
return.


1.1.12 "Independent Third Party" means any party other than Ethical
and Schein and their respective subsidiaries and affiliates.

1.1.13 "Agreement" means this agreement duly signed by the parties.

1.1.14 "Designated Development Programme" means the programme of
development selected by the Notice under Schedule 3 containing
at least the obligations set forth in Schedule 4 prepared by
Ethical and


* redacted pursuant to confidential treatment request


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approved by Schein for the development of a Designated Product
for manufacture, use, promotion, distribution and sale in the
United States. Each Designated Development Programme may be
amended from time to time by the addition of Designated Product
Extensions or exclusion of any Granted Territory or as set out
under Clause 12 and Schedule 3, Clause 2.7, or otherwise as
agreed between the parties.


1.1.15 "Multi Product Development Programme" means the overall
programme of development in respect of all the Designated
Development Programmes.


1.1.16 "FDA" means the United States Food and Drug Administration.


1.1.17 "Marketing Authorisations" means the consent or approval of the
FDA and any applicable comparable state agencies required to
market and distribute a Designated Product in the United
States, its territories and possessions or the consent or
approval of any government or any governmental agency required
to market and distribute a Designated Product outside of the
United States.


1.1.18 "Improvements" means inventions, discoveries, developments,
ideas and indications relating to the Ethical Know-How and
Patent Rights.


1.1.19 "Granted Territory" shall mean those countries within the
Territory in which Ethical, by virtue of Clause 7 or Clause
11.4.8 has the right to use and licence the Patent Rights,
Ethical Know-How and Schein Know-How and to negotiate a licence
or other commercial arrangement with respect to the use, making
and/or manufacture, promotion, marketing and sale of a
Designated Product.

1.1.20 "Quarter" shall mean any of the four quarters commencing 31st
August, 30th November, 28th February and 31st May of any year.

1.2 In this Agreement


1.2.1 the singular includes the plural and vice versa, the masculine
includes the feminine and vice versa and references to natural
persons include corporate bodies, partnerships and vice versa.


1.2.2 any references to Clause or Schedule shall, unless otherwise
specifically provided, be to a Clause or Schedule of this
Agreement. All the Schedules of this Agreement shall have the
same force and


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effect as if they were set out in the main body of the
Agreement.


2. WARRANTY
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2.1 Ethical warrants that it is exclusive owner of all rights, title and
interest in and to the Patent Rights and Ethical Know-How and that it
is free to enter into this Agreement and to carry out all of the
provisions hereof including its agreement to grant to Schein an
exclusive licence with the right to grant certain sub-licences with
respect to the Designated Products in the Territory without any
consents from any third parties.


2.2 Ethical represents and warrants that the Designated Development
Programmes shall be in accordance with current Good Laboratory
Practices and current Good Manufacturing Practices, as per statute and
regulations of the FDA and with the laws and regulations of any other
governmental authority applicable thereto and that all laboratory,
scientific, technical and/or other data submitted by or on behalf of
Ethical relating to a Designated Product shall be true and correct and
shall not contain any deliberate or negligent falsification,
misrepresentation or omission.

2.3 Each of Ethical and Schein represents and warrants to the other that
it is not currently debarred, suspended or otherwise excluded by any
United States governmental agency from receiving Federal contracts.
3. LICENCE GRANT
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3.1 Subject to Clause 3.5 below, Ethical hereby grants to Schein, for the
Term (as hereinafter defined) of this Agreement the exclusive right
under the Patent Rights and Ethical Know-How with the right to
sublicence to make and/or manufacture, use, promote, market,
distribute and sell the Designated Products in the Territory.

3.2 All proprietary rights and rights of ownership with respect to the
Patent Rights, and Ethical Know-How shall, at all times, remain solely
with Ethical and Schein shall have no proprietary rights in or to the
Patent Rights and Ethical Know-How other than those specifically
granted herein. All proprietary rights to Schein Know-How belong to
and shall, at all times, remain solely with Schein, other than as
specifically provided herein.

3.3 For the term of this Agreement, Ethical agrees that it will not,
directly or indirectly, market, sell or distribute in the Territory,
or develop or assist in the development for use, manufacture,
marketing, promotion, sale or distribution in the Territory, any
Designated Product except as provided in


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this Agreement

3.4 For the avoidance of doubt Ethical shall have a continuing right to
make, have made and use for its own investigational and developmental
purposes (but not sell, directly or indirectly in, or to the
Territory) any Designated Product in the Territory. If Ethical
acquires or develops Improvements for the Designated Products it shall
make these available to Schein as part of the licence granted
hereunder.


3.5 For the avoidance of doubt the rights granted to Schein shall not
affect or prejudice Ethical's ability, at the request of Independent
Third Parties, to use the Ethical Know-How and Patent Rights to
formulate new chemical entities and/or new active compounds (other
than the Designated Products) for marketing and sale in the Territory.
4. SELECTION OF DESIGNATED PRODUCTS
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4.1 Schein agrees to select, in accordance with Schedule 3, ** ********
********** ******** **** *** *********** *********** *********


4.2 On the date on which each Prospective Development Product is selected
by Schein in accordance with Schedule 3 and thereby becomes a
Designated Product, the following provisions will apply from that date
to each such Designated Product.


4.2.1 Schein and Ethical shall immediately start work under the
Designated Development Programme for the Designated Product.


4.2.2 In the event that Designated Product Extensions are requested
by Schein and mutually agreed then the Designated Development
Programme shall be amended by Ethical and Schein to reflect
such agreed amendments.


4.2.3 For the period starting with the Effective Date and ending with
the first commercial sale of the Designated Product in the
Territory to an Independent Third Party, Ethical shall report
to Schein on a monthly basis the progress of the Designated
Development Programme of the Designated Product. Ethical will
use all reasonable efforts to carry out the Designated
Development Programme in accordance with the timetable set
forth therein subject to Clause 12. Ethical will carry out the
Designated Development Programme in accordance with all
applicable laws and regulations including, without limitation,
applicable United States laws and FDA regulations.


* redacted pursuant to confidential treatment request.


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4.2.4 Ethical will, on a continuous basis, provide to Schein any
Ethical Know-How developed, information acquired or development
planned in relation to the Designated Product and all
Improvements and modifications to the Designated Product.


4.2.5 Ethical shall make available to Schein, on a reasonable
consultation basis without charge to Schein, such advice of its
technical personnel as may reasonably be requested by Schein in
connection with the Designated Development Programme.


4.2.6 Schein shall disclose to Ethical and Ethical shall disclose to
Schein all reports or other knowledge they may possess with
respect to "adverse drug experiences" (as defined in
regulations promulgated by the FDA), mis-labelling, stability
failures or microbiological contamination with respect to the
Designated Product within 10 (ten) days of becoming aware of
same. With respect to "serious adverse drug experiences" (as
defined in 21 CFR #312.32 and #314.80 promulgated by the FDA),
Schein shall disclose to Ethical and Ethical shall disclose to
Schein all reports and other knowledge they may possess as soon
as possible, and in no event later than 2 (two) business days
of the receipt of such report or notification of the serious
adverse drug experience. The timing and content of such
disclosure shall comply with all FDA regulations applicable to
notification to the FDA with respect to such matters and shall
comply with the laws and regulations of any relevant country in
the Territory in which the Designated Product is promoted,
marketed, distributed and sold.

4.2.7 Throughout the term of each Designated Development Programme,
and in any event no less than 4 (four) times a year, Schein
shall furnish to Ethical any Schein Know-How and any other
information and data developed or acquired by or under the
control of Schein with respect to the Designated Product for
Ethical's use in any Granted Territory, and subject to
corresponding obligations of confidentiality as set forth
herein, all such Schein Know-How and information and data
without restriction and without additional compensation to
Schein, other than provided for in this Agreement, subject to
the following sentence. Schein shall be under no obligation to
provide any Schein Know-How, information or data to Ethical
hereunder if the disclosure of such would be in violation of
any bona fide agreement with any Independent Third Party and
such violation can be proved by Schein.


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5. PAYMENT
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5.1 In consideration of the granting of the exclusive licence under Clause
3 to use the Ethical Know-How and Patent Rights, Schein agrees to pay
Ethical U.S.$ 5,000,000 (five million U.S. dollars) upon the signing
of this Agreement.

5.2 The parties further agree that, subject to Clause 12 and Schedule 3,
Clauses 2.7 and 2.8, Schein will pay Ethical the sum of $27,000,000
(twenty seven million U.S. dollars), divided equally among the twelve
(12) Designated Development Programmes (the "Notional Sums") such
Notional Sums to be payable in accordance with Schedule 4, Clauses 2
and 3.


5.3 Each Quarter, Ethical shall prepare and send to Schein invoices in
respect of the percentage amounts of the Notional Sums due (if any) in
that Quarter under each Designated Development Programme. It is hereby
agreed the total amount so invoiced shall, with the exception of any
invoices in respect of payments due under Clause 3.8 of Schedule 4 and
unless otherwise agreed in writing by the parties, be subject to a
maximum of U.S.$********* **** ******* **** ******** per Quarter. Any
such amounts shall be payable 30 (thirty) days after the date of
Schein's receipt of the invoice.


5.4 In the event that scientific results do not indicate that one or more
of the Designated Product objectives can be obtained, or if any
Designated Development Programme contemplated hereby is terminated or
abandoned for any reason whatsoever, Schein may nominate or elect to
apply the balance of the Notional Sums in respect of the Common
Landmarks not therefore achieved under that Designated Development
Programme at the date of nomination to


5.4.1 an alternative Designated Development Programme;

5.4.2 the development programme relating to nifedipine for **** ***
***** daily administration as contemplated by the Licence &
Development Agreement dated 15th January 1993 between Schein
and Ethical;


5.4.3 the development programme relating to ********* *** **** *****
************** as contemplated by the Licence & Development
Agreement dated 30th November 1993; or


5.4.4 any Designated Product Extension.


* redacted pursuant to confidential treatment request


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5.5 For the first two nominations under Clause 5.4.1 above the amount of
the Notional Sums paid up to the date of nomination (the "Paid Up
Sum") in respect of the Designated Development Programme terminated or
abandoned shall be credited against the alternative Designated
Development Programme chosen. For the third and fourth nomination
under Clause 5.4.1 an amount equal to the Paid Up Sum shall be
deferred and payable by Schein on successful completion of the
alternative Designated Development Programme.
6. THIRD PARTY NEGOTIATIONS
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6.1 Ethical hereby undertakes that for, either a period of 18 (eighteen)
months beginning with the Effective Date for those Prospective
Development Products for which there are reference products as
identified in Schedule 5 attached hereto, or for a period of 6 (six)
months after the introduction of a reference product for those
Designated Products for which at the Effective Date there are no
reference products as identified in Schedule 5 (and in no event less
than 18 [eighteen] months beginning with the Effective Date), or for
such longer period as may be mutually agreed in writing between the
parties, not to enter into any negotiations or discussions with any
Independent Third Party in respect of any Prospective Development
Product.


6.2 In the event that, subsequent to the period set out in Clause 6.1,
Ethical enters into substantive negotiations or discussions with an
Independent Third Party in respect of any Prospective Development
Product it shall so notify Schein (the "Notice"). On receipt of the
Notice by Schein, its General Counsel shall, subject to reasonable
confidentiality undertakings, have the right to reasonable satisfy
himself that such substantive negotiations or discussions are bona
fide. Ethical may disclose to such Independent Third Party the
existence of this Agreement but not the terms hereof, may not disclose
Schein as a party to this Agreement and may not disclose the indentity
of any Prospective Development Product except for the specific
Prospective Development Product which is the subject of the
negotiations.


6.3 Upon receipt of the Notice, Schein shall have 8 weeks within which to
inform Ethical in writing as to whether or not it wishes Ethical to
prepare a development programme, as set out under Schedule 3, Clause
2.3, in respect of the Prospective Development Product detailed in the
Notice. If no such response is received by Ethical within such a
period, Ethical shall not be under any obligation to consider any
response received subsequently.


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6.4 Upon receipt of the development programme Schein shall have 8 weeks to
notify Ethical in writing as to whether or not it wishes to select the
development programme as the Designated Development Programme. If no
such response is received by Ethical within such a period, Ethical
shall not be under any obligation to consider any response received
subsequently.


6.5 For the avoidance of doubt, it is hereby agreed that Ethical may,
whilst it is complying with its obligations as detailed in Clauses
6.2, 6.3 and 6.4 continue its negotiations or discussions but not
enter into any definitive agreement with any Independent Third Party
in respect of any Prospective Development Product PROVIDED ALWAYS
THAT, should Schein give notice as set out under Clause 6.3 and 6.4,
Ethical shall promptly cease all such negotiations or discussions.


6.6 In the event that Ethical subsequent to the Effective Date enters in
to substantive negotiations with an Independent Third Party with
respect to any product not included in Schedule 5 it shall have no
o ...