Development & Scale-up Agreement

Exhibit 10.25


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Confidential Materials omitted and filed separately with the
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. --------------------------------------------------------------------------------


SKYEPHARMA AG / CRITICAL THERAPEUTICS INC


DEVELOPMENT AND SCALE-UP AGREEMENT


This DEVELOPMENT AND SCALE-UP AGREEMENT (this "Agreement"), effective as of the 5th day of May 2004 entered into between CRITICAL THERAPEUTICS INC, a company duly-organized and existing under the laws of the State of Delaware having a place of business at 675 Massachusetts Avenue, Cambridge, Massachusetts 02139, USA (hereinafter referred to as "CRITICAL THERAPEUTICS" or "CTI"), and JAGOTEC AG, a Swiss company having its place of business at Eptingerstrasse 51, CH-4132 Muttenz, Switzerland (hereinafter referred to as "SKYEPHARMA"; CRITICAL THERAPEUTICS and SKYEPHARMA hereinafter sometimes referred to individually as a "Party" or collectively the "Parties").


WITNESSETH:


WHEREAS, CRITICAL THERAPEUTICS is a company in the business of developing and distributing pharmaceutical products, including the Product (as defined below); and


WHEREAS, CRITICAL THERAPEUTICS is interested to have SKYEPHARMA (i) adapt and scale-up the Manufacturing Instructions (as defined below) for regulatory and commercial purposes in the Territories, (ii) to take delivery of the Formulation (as defined below) and the Manufacturing Instructions from Abbott (as defined below), and (iii) to manufacture clinical trial material and to produce all necessary registration batches, all pursuant to the terms and conditions of this Agreement; and


WHEREAS, SKYEPHARMA through its Affiliates (as defined below) has expertise and capacities in performing the foregoing activities, all pursuant to the terms of this Agreement; and


WHEREAS, the Parties intend to negotiate and enter into a mutually agreeable Manufacturing Agreement (as defined below), pursuant to which SKYEPHARMA may, upon registration of Product in the Territories, manufacture and supply to CRITICAL THERAPEUTICS and its marketing licensees Product for use, marketing, distribution and sale in the Territories.


NOW, THEREFORE, for and in consideration of the premises, mutual covenants and agreements contained herein, and intending to be legally bound hereby, the Parties hereby agree as follows:


1. DEFINITIONS


For purposes of this Agreement, the terms defined in this Article 1 shall
have the following meanings:


1.1 "ABBOTT" shall mean Abbott Laboratories of 100 Abbott Park road, Abbott
Park, Illinois, 60064-3500, USA.


1.2 "ABBOTT LICENSE" shall mean the License Agreement dated March 19, 2004 by
and between Abbott Laboratories and CTI.


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1.3 "ACTIVE INGREDIENT" shall mean the chemical compound known as Zileuton in
a form meeting the specifications set forth in the Manufacturing
Instructions and to be set forth in the Manufacturing Process.


1.4 "AFFILIATE" shall mean, with respect to either Party hereto, any
corporation, partnership or other entity controlled by, controlling or
under common control with, such Party, with "control" meaning direct or
indirect beneficial ownership of more than 50% of the voting power of, or
more than 50% of ownership interest in, such corporation, partnership or
other entity.


1.5 "APPLICABLE LAWS" shall mean all applicable laws, rules, regulations,
including, without limitation, any rules, regulations, guidelines or other
requirements of any Regulatory Authority, that may be in effect from time
to time in any country of the Territory and relating to the testing,
manufacture, use, storage, import, promotion, marketing or sale of an
ingredient, component or product.


1.6 "AUXILIARY MATERIALS" shall mean any and all materials, ingredients and
components required and/or necessary for the manufacturing of the
Formulation and/or the Product under and pursuant to the Manufacturing
Instructions and the Manufacturing Process, respectively, except the
Active Ingredient.


1.7 "BATCH" means 450 kilograms of the Product that is of uniform character
and quality, within specified limits, and is produced during a single
cycle of manufacture and is designated by a unique batch number.


1.8 "BATCH RECORDS" means the set of detailed manufacturing process
instructions and data prepared to establish that a particular Batch has
been manufactured according to cGMP.


1.9 "CGMP" shall mean the Current Good Manufacturing Practices as defined from
time to time under the U.S. Federal Food, Drug and Cosmetic Act of 1938,
the Public Health Service Act of 1944 and the regulations promulgated
under that Act, as may be amended from time to time, and other Applicable
Laws including the Current Good Manufacturing Practices set forth in 21
C.F.R. 210 and 21 C.F.R. 211 and relevant FDA guidance documents; and to
the extent applicable European Community Directive 91/356/EEC, Directive
2001/20/EC, Directive 2001/83/EC and all relevant implementations of such
directives and relevant guidelines including the EC Guidelines.


1.10 "CLINICAL SUPPLIES" shall have the meaning set forth in Section 4.1.


1.11 "COMMERCIAL SCALE" shall mean the manufacturing of Batches in conformance
with all Applicable Laws and on a scale suitable for commercial
manufacturing and supply as further described in the Manufacturing Process
after scale-up by SKYEPHARMA pursuant to Article 3 of this Agreement.


1.12 "CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
11.1 hereof.


1.13 "CONTROL" or "CONTROLLED" shall mean with respect to (a) any material,
know-how or other information, or (b) intellectual property right, the
possession (whether by license other than pursuant to this Agreement) or
ownership by a Party or its Affiliates of the ability to grant to the
other Party access and/or a license as provided herein without


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violating the terms of any agreement or arrangement with any Third Party
existing before or after the Effective Date.


1.14 "CHANGE IN CONTROL" shall mean with respect to a Party, (a) a merger or
consolidation of such Party with a Third Party that results in the voting
securities of such Party outstanding immediately prior thereto ceasing to
represent at least fifty percent (50%) of the combined voting power of the
surviving entity immediately after such merger or consolidation, or (b) a
Third Party, together with its Affiliates, becoming the beneficial owner
of fifty percent (50%) or more of the combined voting power of the
outstanding securities of such Party, or (c) the sale or other transfer to
a Third Party of all or substantially all of such Party's assets that
relate to this Agreement.


1.15 "CTI INDEMNIFIABLE PERSONS" shall have the meaning set forth in Section
10.7 hereof.


1.16 "DEVELOPMENT ACTIVITIES" shall have the meaning set forth in Section 2.1
hereof.


1.17 "EFFECTIVE DATE" shall mean the date first written herein above.


1.18 "EQUIPMENT" shall have the meaning set forth in Section 4.3 hereof.


1.19 "FACILITY" shall have the meaning set forth in Section 4.3 hereof.


1.20 "FORMULATION" shall mean the composition of the galenical form that (i)
was developed by Abbott prior to the Effective Date and licensed by Abbott
to CTI pursuant to the Abbott License, (ii) contains Active Ingredient and
(iii) was or is produced pursuant to the Manufacturing Instructions or the
Manufacturing Process, as applicable.


1.21 "MANUFACTURING INSTRUCTIONS" shall mean the written instructions,
specifications, formulae, procedures, tests, standards and other
instructions for the manufacturing of Formulation as developed by Abbott
prior to the Effective Date and made available by Abbott to CTI pursuant
to the Abbott License and as prescribed in the NDA 20-471.


1.22 "MANUFACTURING PROCESS" shall mean the Manufacturing Instructions that are
adapted and developed by SKYEPHARMA and approved by CRITICAL THERAPEUTICS
pursuant to Section 3.5 of this Agreement and that contain information
necessary for the manufacturing in compliance with all Applicable Laws of
(i) the Formulation at manufacturing site of SKYEPHARMA's Affiliate or any
other site selected by CRITICAL THERAPEUTICS at its sole discretion, and
(ii) the Product on Commercial Scale in the Territories, as described and
submitted in the request(s) of CRITICAL THERAPEUTICS for Registration of
the Product to any applicable Regulatory Authority in the Territories.


1.23 "MANUFACTURING AGREEMENT" shall mean the Manufacturing & Supply Agreement
entered into by the Parties at the appropriate time, it being understood
that the Parties shall use their respective good faith efforts to
negotiate and mutually finalize and execute such Manufacturing Agreement
within six (6) months as from the execution of this Agreement.


1.24 "MARKETING APPROVAL" means the approvals issued by any Regulatory
Authority in accordance with any procedures as may be required by
Applicable Law to market the Product in the relevant country.


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1.25 "NDA BATCHES" shall mean all batches manufactured to comply with
Applicable Laws for the registration to any regulatory authority,
including without limitation the FDA and EMEA, and any successor agency
thereof.


1.26 "NON-COMMERCIAL SUPPLIES" shall have the meaning set forth in Section 4.1
hereof.


1.27 "PILOT SCALE" shall mean the manufacturing of Formulation pursuant to the
Manufacturing Instructions existing as of the Effective Date on a scale
equivalent to no less than one tenth (1/10) of the Commercial Scale.


1.28 "PRODUCT" shall mean the pharmaceutical formulation containing Active
Ingredient manufactured and supplied hereunder by SKYEPHARMA in accordance
with the Manufacturing Process, which has been approved by the Regulatory
Authority of any of the Territories. For the avoidance of doubt, this will
be an immediate release formulation and not a sustained or controlled
release formulation.


1.29 "QUALITY AGREEMENT" shall mean a written agreement describing the
obligations of the parties with regards to compliance, quality systems,
and testing and Release of Product as may be required by Applicable Laws.


1.30 "REASONABLE COMMERCIAL EFFORTS" shall mean, with respect to the efforts to
be expended by a Party with respect to any objective, reasonable, good
faith efforts to accomplish such objective as such Party would normally
use to accomplish a similar objective under similar circumstances, it
being understood and agreed that with respect the development of a
Formulation or Product, such efforts shall be similar to those efforts and
resources commonly used by a Party for a similar pharmaceutical product
owned by it or to which it has rights, which product is at a similar stage
in its development or product life and is of similar market potential
taking into account efficacy, safety, approved labeling, the
competitiveness of alternative products in the marketplace, the patent and
other proprietary position of the product, the likelihood of regulatory
approval given the regulatory structure involved, the profitability of the
product including the royalties payable to licensors of patent or
intellectual property rights, alternative products and other relevant
factors.


1.31 "REGISTRATION" means any and all technical, medical and scientific
licenses, registrations, authorizations and/or approvals of the Product
(including clinical research authorization, manufacturing approvals and
authorizations, Marketing Approvals, manufacturing facility approvals or
authorizations, and pricing, third party reimbursement and labeling
approvals) that are required by any Agency for the manufacture,
distribution, use or sale of the Product in any country, as amended or
supplemented from time to time.


1.32 "REGULATORY AUTHORITY" shall mean any applicable supra-national, federal,
national, regional, state, provincial or local regulatory agency,
department, bureau or other governmental entity or authority in any
country or group of countries of the Territories regulating or otherwise
exercising authority over the testing, manufacture, use, storage, import,
promotion, marketing, distribution or sale, and/or to approve the price,
for pharmaceutical or therapeutic products in any country(ies) of the
Territories, including, without limitation, the FDA and EMEA, and any
successor agency thereof.


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1.33 "RELEASE" shall mean quality assurance review of all Manufacturing
documentation related to a Batch, and confirmation that a particular Batch
has been manufactured according to the Batch Records and cGMP, and meets
all Specifications.


1.34 "SKYEPHARMA INDEMNIFIABLE PERSONS" shall have the meaning set forth in
Section 10.5 hereof.


1.35 "SPECIFICATIONS" shall mean the performance parameters to which the
Non-Commercial Supplies, ingredients and packaging components must comply
to be considered acceptable including all written instructions,
specifications, formulae procedures, tests and standards for the Product,
including the requirements of all Registrations, as adopted pursuant to
Section 4.2 or as amended or supplemented from time to time in accordance
with Section 4.6.


1.36 "STABILITY TESTS" shall mean those tests necessary to establish the
storage conditions and expiry date of the Product required by 21 C.F.R.
211.137 and 21 C.F.R. 211.166 or any other Applicable Laws including Part
I, Module 3 of Annex 1 to Directive 2001/83/EC.


1.37 "TECHNOLOGY TRANSFER PROGRAM" shall mean the program of activities to
proposed to be performed by SKYEPHARMA hereunder, together with the
respective time-table for such activities and the budget therefor, as
attached hereto as Appendix A.


1.38 "TERRITORY" shall mean collectively each of (i) the European Union and
(ii) the United States of America and (iii) any other country or group of
countries mutually agreed upon by the Parties.


1.39 "THIRD PARTY" shall mean any person or entity other than a Party or any of
its Affiliates.


2. SUBJECT MATTER AND GRANT OF LICENSE


2.1 Subject Matter. Subject to the terms and conditions contained in this
Agreement and its Appendices, SKYEPHARMA hereby agrees to use Reasonable
Commercial Efforts to (i) adapt the current Manufacturing Instructions to
comply with the Applicable Laws for use in the Territories, (ii) scale up
the Manufacturing Instructions from Pilot Scale to Commercial Scale, (iii)
amend, change and develop the Manufacturing Instructions to create the
Manufacturing Process, and (v) develop the Manufacturing Process of
Formulation at Commercial Scale, and (vi) subject to agreement between the
parties on SKYEPHARMA carrying out the manufacture and supply of the
Product, perform all work necessary to enable SKYEPHARMA to manufacture
and supply Product in accordance with the Manufacturing Process and any
terms and conditions later agreed to by the parties in the Manufacturing
Agreement (collectively, the "DEVELOPMENT ACTIVITIES"). Subject to Section
8.2 hereof, it is understood and agreed by CRITICAL THERAPEUTICS that any
and all of the activities and obligations of SKYEPHARMA hereunder may be
assigned to and performed by SKYEPHARMA's Affiliates SkyePharma AG,
Muttenz, Switzerland, and SkyePharma SAS, Saint Quentin-Fallavier, France,
without the consent of CRITICAL THERAPEUTICS, and subject to the condition
that SKYEPHARMA's Affiliates shall assume in writing and comply with the
all obligations as imposed upon


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SKYEPHARMA in this Agreement and that SKYEPHARMA shall not be relieved of
any of its obligations hereunder.


2.2 Technology Transfer. CTI will provide SKYEPHARMA with access to the
Manufacturing Instructions and the Formulation following the
Effective Date.


2.3 Limited License. CRITICAL THERAPEUTICS hereby grants to SKYEPHARMA a
personal, non-transferable, limited, non-exclusive royalty-free right and
license without the right to sublicense (hereinafter referred to as the
"LICENSE") under any of the intellectual or industrial property rights
Controlled by CRITICAL THERAPEUTICS covering the Active Ingredient, the
Formulation, the Manufacturing Instructions, the Manufacturing Process
and/or the Product, solely to the extent necessary for SKYEPHARMA to
perform, and solely for the purpose of performing, its obligations
hereunder during the term of this Agreement.


3. TECHNOLOGY TRANSFER ACTIVITIES


3.1 Development Activities. After the Effective Date and upon receipt of first
sufficient quantity of Active Ingredient from CRITICAL THERAPEUTICS or its
designated supplier pursuant to Section 3.2 below, SKYEPHARMA shall
perform the Development Activities, all pursuant to and in accordance with
the timetable and other requirements set forth in the Technology Transfer
Program.


3.2 Supply of Active Ingredient. Promptly after the Effective Date, CRITICAL
THERAPEUTICS or its designated supplier shall supply SKYEPHARMA or its
Affiliate designated in accordance with this Agreement on a free-of-charge
basis from time to time with reasonable quantities of Active Ingredient as
necessary to perform the Technology Transfer Program in due time as
described in Appendix A. All such supplies shall be accompanied by
respective certificates of analysis and conformity. SKYEPHARMA shall use
or have used all Active Ingredient supplied hereunder solely and
exclusively in connection with the Technology Transfer Program as set
forth herein, and all such materials shall be deemed to be the
Confidential Information of CRITICAL THERAPEUTICS subject to the terms and
conditions of Section 11 hereof.


3.3 Standard of Effort. SKYEPHARMA undertakes to perform all activities
hereunder in an efficient, workmanlike and professional manner in
accordance with all applicable industry standards and Applicable Laws.
CRITICAL THERAPEUTICS shall use Reasonable Commercial Efforts to support
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