Emtricitabine Manufacturing Supply Agreement

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT 10.6 GILEAD SCIENCES LIMITED-DEGUSSA

EMTRICITABINE MANUFACTURING SUPPLY AGREEMENT

THE PARTIES HEREBY ACKNOWLEDGE AND AGREE TO THE FOLLOWING:

THIS SUPPLY AGREEMENT (" Agreement" ) is entered into as of June 6, 2006 (the " Effective Date" ), by and between Degussa AG, a German corporation (" Degussa" ) and Gilead Sciences Limited, an Irish limited company (" GSL" ) whose registered address is Unit 12, Stillorgan Industrial Park, Blackrock County, Dublin, Ireland. Degussa and GSL may each be referred to individually as a " Party" and collectively as the " Parties" in this Agreement.

WHEREAS, Degussa is a manufacturer of active pharmaceutical ingredients with expertise in cGMP manufacturing, and GSL and its designees manufacture and market pharmaceutical products for human use, including, but not limited to, emtricitabine 200 mg, known as Emtriva, tenofovir disoproxil fumarate 300 mg, known as Viread, the combination of both, known as Truvada, and others (each such pharmaceutical product which contains API (as defined below), a " Finished Product" and collectively, the " Finished Products" ); WHEREAS, Degussa and GSL desire to establish mutually agreeable terms for the commercial supply of bulk emtricitabine (" FTC" ) and/or other active pharmaceutical ingredients sold by Degussa to GSL and used by GSL in the manufacture of Finished Products (the " API" ) by Degussa to GSL;

WHEREAS, simultaneously with the execution of this Agreement, the Parties are entering into a definitive agreement (the " Stock Purchase Agreement" ) providing for the acquisition (the " Acquisition" ) by Gilead Sciences, Inc., a Delaware corporation (" GSI" ) of Raylo Chemicals Inc. located at 1021 Hayter Road, Edmonton, Alberta, Canada (" Raylo" ); and WHEREAS, simultaneously with the execution of this Agreement, GSI, the ultimate parent of GSL, has executed a guaranty on behalf of GSL, which form is acceptable to Degussa, whereby it guarantees all of the obligations of GSL to Degussa hereunder.

NOW, THEREFORE, in consideration of the promises, covenants, agreements and other valuable consideration hereinafter set forth, and intending to be legally bound, the Parties hereby, subject to the fulfillment of the condition precedent of the Acquisition as described in the recitals above, agree as follows:

1. AGREEMENT ACCEPTANCE: Degussa has read and understands this Agreement and understands that it will govern Degussa' s written acceptance of any order for or delivery of API. All terms and conditions with respect to an order for API proposed by Degussa or


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[ ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

GSL that are different from or in addition to this Agreement (including without limitation any such terms in the General Sales Conditions of Degussa or the General Purchase Conditions of GSL) and are not agreed to in writing by both Parties are hereby expressly rejected and shall not become a part of this Agreement or such order. GSL has read and understands this Agreement and will purchase the API manufactured by Degussa and pay for the supply of the API in accordance with the terms and provisions of this Agreement. Any delivery of API (excluding deliveries by Raylo in 2006 pursuant to purchase orders delivered by GSI or GSL to Raylo) after the Effective Date of this Agreement shall be governed by the terms of this Agreement. Any modifications to this Agreement shall, prior to their implementation, be mutually agreed upon by the Parties hereto and shall be made in accordance with Section 30. The Parties agree and acknowledge that, as expressly contemplated by this Agreement, certain of the Parties' rights may be exercised by, and certain of the Parties' obligations may be fulfilled by, corporate entities that control, are controlled by, or are under common control with the respective Party (such Party' s " Affiliates" ), provided, however, that in no event shall the exercise of a right or the fulfillment of an obligation of a Party by its Affiliate relieve such Party from its obligations hereunder unless agreed to in writing by the other Party. " Control" or " control" (including without limitation the terms " controlled by" and " under common control with" ), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, including without limitation the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person, provided that any Person directly or indirectly controlling Degussa and any Person under common control with any Person controlling Degussa shall not be deemed an Affiliate of Degussa. " Person" means an individual, corporation, partnership, association, trust, joint-stock company, limited liability company, joint venture or other entity, including without limitation a Governmental Authority. 2. TERM: The term of this Agreement shall begin as of the Effective Date, and shall remain in effect until December 31, 2013 (the " Term" ), unless earlier terminated by either Party according to Section 12 " Termination" of this Agreement; provided that in the event that GSI and GSL provide a joint written notice to Degussa, within ten (10) Business Days following a termination of the Stock Purchase Agreement in accordance with Section 9.01 thereof that this Agreement shall continue for calendar years 2007, 2008 and 2009 (a " Supply Agreement Continuation" ), the Term shall expire on December 31, 2009

3. SUPPLY: During the Term, Degussa will manufacture API for GSL for use in manufacture of Finished Products. During the Term, Degussa is obligated to manufacture API at the location and in the quantities set forth herein. Degussa will not manufacture or supply API to any person or entity other than GSL without GSL' s prior written consent. a) Facility: Degussa will manufacture the API for GSL only at its facilities located in [ * ] Dossenheim, Germany, or such other facilities as the Parties agree to in writing (collectively, the " Facility" ). GSL has inspected the Facility and has acknowledged that, based upon information in its possession as of the Effective Date, the Facility appears to be appropriate for the purposes of manufacturing the API consistent with Degussa' s obligations under this Agreement.


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[ ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED b) Minimum Quantities: During each year of the Term, GSL will purchase and Degussa will deliver at least the quantities of API set forth in Exhibit A (the " Minimum Quantities" ), as such Minimum Quantities may be adjusted pursuant to the terms of this Agreement. In the event that GSL fails to purchase the Minimum Quantities in any year, GSL shall be obligated to pay to Degussa the difference between [ * ] ; provided, however, GSL shall [ * ] . The invoice for such difference will be issued on December 31 in the calendar year for which the volume shortfall has occurred, and such invoice shall be paid by GSL within thirty (30) days of receipt. For clarity, Regulatory Actions (as defined in Section 12(d)) shall not be deemed to be breaches of GSL' s obligations under this Section 3(b) and will relieve GSL of its obligation to purchase the Minimum Quantities, except as set forth in Section 12(d).

c) Forecasting: On the first day of each [ * ] period beginning January 1, 2007, GSL will provide to Degussa the projected need for API for each month of the [ * ] from the date the forecast is provided. The quantities indicated in the [ * ] projection will be [ * ] , subject to Degussa' s obligations in Section 3(b) and the provisions of Exhibit A. The quantities indicated in the [ * ] will be [ * ] .

d) Acceptance: Degussa will respond to each purchase order received from GSL (" GSL Purchase Order" ) within [ * ] calendar days of receipt. The response shall include Degussa' s inability to comply with, or confirmation of the delivery dates and quantities set forth in the GSL Purchase Order.

e) Delay: If a shipment of API is delayed after Degussa has accepted an order, by more than [ * ] days beyond the forecasted date, as agreed by the Parties, it shall be considered a delay with respect to the quantity of such shipment and the following provisions shall apply:

(i) If such delay is caused by the fault of Degussa, Degussa will notify GSL as soon as practical after it becomes aware of such delay or that delay is expected. Degussa shall be obligated to cure such delay within [ * ] of the accepted delivery date indicated on the Degussa acceptance of the applicable GSL Purchase Order (the " Cure Period" ); provided however, that if Degussa notifies GSL that [ * ] , then the Parties shall [ * ] . If Degussa fails to deliver such quantity of API within the Cure Period, the delay shall then be treated as a failure to supply and the provisions of Section 3(f) shall apply. (ii) If such delay is caused by the fault of GSL, GSL will use its [ * ] , however, after [ * ] days from the date of the expected release and/or shipment, Degussa shall be entitled to [ * ] . For the avoidance of doubt, a delay caused by the fault of GSL will not be treated as a Shortfall (as defined below) or a failure to supply. f) Failure to Supply: If Degussa is unable to supply sufficient quantities of the API during a Cure Period pursuant to Section 3(e)(i), the Parties will [ * ] to alleviate such a shortfall (a " Shortfall" ), including, but not limited to, the manufacture by GSL or a third-party. GSL will have the right in its discretion to (i) require Degussa to use [ * ] or (ii) [ * ] . Any quantities manufactured by GSL or a third-party to meet such Shortfall shall [ * ] . If GSL must secure supply of API from a third-party to alleviate a Shortfall, Degussa shall [ * ] .

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[ ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED g) Material Shortfall: A Material Shortfall will be considered a material breach of this Agreement, and the provisions of Section 12 shall apply. A " Material Shortfall" shall mean a single Shortfall, or when aggregated in a single year, a series of Shortfalls, for which the failure of Degussa to supply GSL with API for such year amounted in total to greater than [ * ] of the Minimum Quantities for such year in which the Shortfall or series of Shortfalls, as applicable, occurred.

4. GOOD MANUFACTURING PRACTICES: Degussa will manufacture all API in accordance with, as then in effect, all laws, rules and regulations applicable in the U.S., the European Union (" EU" ) and its member states, Germany, and other countries in which GSL notifies Degussa that the Finished Product is to be clinically tested or marketed pertaining to the manufacture, use, storage, handling, testing and transport and disposal of pharmaceutical products and materials, to the extent such laws, rules and regulations are applicable to Degussa' s manufacturing activities in respect of the API, including without limitation (i) the U.S. Food, Drug and Cosmetics Act, as amended, (ii) the Federal Public Health Service Act, (iii) then-current good manufacturing practices (" cGMP" ) as established by the United States Food and Drug Administration (" FDA" ) or the European Medicines Evaluation Agency (" EMEA" ) or regulatory authorities in such other countries of member states of the EU (" EU Authorities" ) (each of FDA, EMEA and each EU Authority, a " Regulatory Authority" ), for the manufacture of pharmaceutical materials, and (iv) ICH Q7A Guideline (collectively, " Legal Requirements" ). Each Party will promptly notify the other of any new Legal Requirements, including but not limited to new instructions or new specifications required thereby, and will confer with each other with respect to the best means to comply with such requirements. Degussa and GSL will allocate between them any and all costs of implementing such changes on an equitable basis, unless such costs are the result of a change to the manufacturing process, in which case the second paragraph of Section 7 shall apply. Upon written request of GSL, Degussa will permit representatives of GSL to perform quality assurance audits of the Facility and API manufacturing and be present during any government inspection of Degussa' s manufacturing process for the API, at mutually agreeable times, and Degussa will permit GSL to inspect copies of Degussa' s manufacturing records for the API, including its batch records, for the purposes of assuring product quality and compliance with agreed-upon manufacturing procedures. 5. MANUFACTURING PROCESS: GSL will make available to Degussa, free of charge, all such know-how, information, and technical assistance that is necessary for Degussa to manufacture the API to the standards set by GSL or as stated in any current New Drug Applications for Finished Product filed in the U.S., any current Marketing Authorization Application filed for Finished Product in the EU, or any equivalents thereof in other jurisdictions (collectively, " Regulatory Approval Applications" or " RAAs" ), as will be more precisely described by GSL in writing to Degussa before the start of manufacturing of the API. Disclosure of such know-how, information, and technical assistance will not confer on Degussa any rights to such know-how and information other than those explicitly provided for in this Agreement. Degussa will manufacture the API in conformance with the specifications (the " Specifications" ), as set forth in the RAAs, as amended, and the Gilead Contract Manufacturing Manual for API that is in effect on the Effective Date of this Agreement, and as thereafter amended (the " Contract Manufacturing Manual" ), and according to the manufacturing process description as set forth in the RAAs and the Contract Manufacturing Manual.


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[ ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 6. RAW MATERIALS: Degussa will use raw materials in the manufacture of API that conform to the specifications set forth in the Contract Manufacturing Manual (the " Raw Material Specifications" ), and Degussa will verify such conformance in accordance with the testing standards and procedures specified therein. Degussa will facilitate changes to the Raw Material Specifications that are necessary or appropriate in light of FDA, EMEA or other regulatory requirements. Degussa shall not be liable under this Agreement for any API that fails to conform to the Specifications if the raw materials used meet the Raw Material Specifications and such non-conformity is due to the inadequacy of the Raw Material Specifications.

7. CHANGE IN MANUFACTURING PROCESS: Degussa will obtain GSL' s prior written approval before implementing any planned change (including substantial improvements) in the materials, equipment, process, raw material suppliers, analytical methods, or procedures used to manufacture the API that would [ * ] . Degussa will disclose all proposed changes in such manufacturing materials, equipment, process, or procedure to GSL at a level reasonably sufficient to enable GSL to practice such changed manufacturing process. If such proposed changes contain Degussa Know-How (as such term is defined in Section 8), such notification will clearly identify the Degussa Know-How proposed to be used; such notification shall not be considered as a license to GSL to use such technology. If GSL approves the proposed changes, [ * ] . GSL will notify Degussa in writing with reasonable notice of any change (including substantial improvements) [ * ] , and Degussa will [ * ] . Degussa will provide GSL with an authentic copy of the current Master Batch Record for the preparation of the API. [ * ] will bear any increased costs of implementing any amendment or change of whatever nature to [ * ] as they exist on the Effective Date of this Agreement, as well as [ * ] , through [ * ] .

8. PROCESS IMPROVEMENTS:

a) Degussa will communicate promptly to GSL any idea or substantial improvement (patented or unpatented) made or developed by Degussa solely or jointly with GSL employees or agents arising from its activities under this Agreement and relating to the processing, manufacture or testing of the API (" Improvement" ).

b) GSL shall own all right, title and interest in and to Improvements that have [ * ] .

c) GSL shall own all right, title and interest in and to Improvements that have [ applications ] [ * ] Degussa Know-How. " Degussa Know-How" shall mean all [ * ] . GSL hereby grants to Degussa a worldwide, royalty-free, exclusive sublicensable license to such Improvements for use in custom manufacturing of chemical products. d) Degussa shall own all right, title and interest in and to Improvements that have [ * ] . Degussa hereby grants to GSL a worldwide, royalty-free, non-exclusive license as to GSL


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[ ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

to such Improvements, [ * ] . Such license shall not be sublicensable other than [ * ] . If GSL engages another contract manufacturer for the processing, manufacturing or testing of the API or of structurally related GSL pharmaceutical compounds, GSL, [ * ] may [ * ] , and the Parties shall [ * ] for [ * ] .

e) GSL shall own all right, title and interest to improvements made or developed solely by GSL arising from activities under this Agreement.

9. QUALITY CONTROL SAMPLE AND DOCUMENTATION: Degussa will manufacture the API at all times in strict conformance with the Specifications, and Degussa will verify such conformance in accordance with the testing procedures specified in the Specifications and the Standard Test Methods as set forth in the Contract Manufacturing Manual. Prior to the delivery of any batch of API, Degussa will provide GSL with (i) a quality control sample of such batch to be held by GSL for analytical reference, (ii) written confirmation that Degussa' s quality assurance unit has reviewed and approved the relevant batch records (" Certificate of Compliance" ), and (iii) a Certificate of Analysis confirming that such batch complies with the Specifications ((i), (ii) and (iii) collectively being the " Quality Documentation" ). Degussa will conduct quality control sampling in accordance with the most current Drug Substance Sampling/Testing Plan contained in the Contract Manufacturing Manual, unless otherwise specified by GSL in writing. 10. QUANTITY AND PRICE: Subject to adjustment as provided in this Agreement, GSL will pay to Degussa the prices pursuant to Exhibit A. The baseline for all adjustments of the Base Selling Price and quantities is the [ * ] . The Parties agree to conduct an [ * ] review of the Base Selling Price (as defined in Exhibit A) [ * ] and establish the Base Selling Price on October 1 of [ * ] for the [ * ] , in accordance with the following provisions:

a) Adjustment Due to Changes in Cost of Raw Materials. If, due to market conditions, the cost of a raw material purchased by Degussa for manufacture of API increases or decreases by more than [ * ] percent ( [ * ] %) of the cost upon which the then-current applicable API price quote was based, the Parties will [ * ] . In addition, if, due to market conditions, the cost of energy or transportation purchased by Degussa for manufacture of API increases or decreases by more than [ * ] percent ( [ * ] %) of the cost upon which the then-current applicable API price quote was based, the Parties will [ * ] .

b) Adjustment Due to Use of Alternative Raw Material Sources. If Degussa or GSL identify alternative sources of or arrangements for raw materials, in each case that [ * ] , the Base Selling Price shall be determined as follows: (i) The Parties shall allocate and assign to each Party [ * ] . Such allocation shall be based on the principle that the Parties should [ * ] .

(ii) The Minimum Contribution Per Unit (as defined in Exhibit A) shall be [ * ] . Such adjustment to the Minimum Contribution Per Unit shall be in effect for all production batches after such decrease has been acknowledged by the Parties.

(iii) An example of the formula described in Section 10(b) (ii) is set forth on Exhibit B.


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[ ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED c) Adjustment Due to Yield Improvements. If there are decreases in variable costs due to a yield improvement, the Parties shall [ * ] , as follows:

(i) Unless agreed to otherwise by the Parties, the Parties shall allocate and assign to each Party [ * ] . Such allocation shall be based on the principle that the Parties should [ * ] .

(ii) The Minimum Contribution Per Unit shall be [ * ] . Such adjustment to the Minimum Contribution Per Unit shall be in effect for all production batches after such decrease has been acknowledged by the Parties. (iii) An example of the formula described in Section 10(c) (ii) is set forth on Exhibit B. d) GSL Improvement . Degussa and GSL acknowledge that the process improvement described in the Technology Transfer Documents entitled " FTC Second Generation Process," identified on Schedule 10(d) (the " Second Generation Process" ), shall be governed by Sections 10(b), (c) and (e)(i)(A), provided that the [ * ] . The effects of any improvements introduced after the Effective Date, other than those included in the Second Generation Process, shall be governed by Sections 10(b), (c) or (e), as applicable.

e) Adjustment Due to Reduction in Fixed Costs . If there are decreases in fixed costs due to process improvements identified by Degussa and/or GSL, in any such case that reduce the API manufacturing cost by [ * ] % or more, the Parties shall [ * ] , as follows:

(i) (A) If the fixed cost reduction due to process improvements was identified by GSL, and GSL agrees to the imple ...