Manufacturing And Supply Agreement

Exhibit 10.8

MANUFACTURING AND SUPPLY AGREEMENT

This MANUFACTURING AND SUPPLY AGREEMENT (this " Agreement" ), effective as of December 22, 2005 (the " Effective Date" ), is made by and between NeurogesX Inc., a Delaware corporation having a principal place of business at San Carlos Business Park, 981F Industrial Road, San Carlos, California 94070 U.S.A. (" NeurogesX" ), and Contract Pharmaceuticals Limited Canada, an Ontario corporation having a principal place of business at 7600 Danbro Crescent, Mississauga, Ontario Canada, L5N 6L6 (" CPL" ). NeurogesX and CPL may be referred to herein each, individually, as a " Party" or, collectively, as the " Parties" .

BACKGROUND

A. NeurogesX has developed a certain formulation and manufacturing process for a cleansing gel for use in connection with NeurogesX' s capsaicin products.

B. CPL has the capability and know-how necessary to manufacture and supply such cleansing gel in bulk and finished form, as well as to provide certain research, development and other services relating to such cleansing gel. C. NeurogesX desires to engage CPL, and CPL desires to perform, the manufacturing and supply of such cleansing gel in bulk and finished form and related services for NeurogesX, all on the terms and conditions set forth herein.

NOW THEREFORE, for and in consideration of the covenants, conditions, and undertakings hereinafter set forth, it is agreed by and between the Parties as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, the following capitalized terms shall have the meanings indicated below:

1.1 " Act" shall mean the United States Federal Food, Drug and Cosmetic Act (21 U.S.C. a7 301 et seq.) and the regulations promulgated thereunder, as such may be amended from time to time.

1.2 " Approval" shall have the meaning as set forth in Section 7.1 below.

1.3 " Confidential Information" shall have the meaning as set forth in Section 10.1 below.

1.4 " CPL Background Technology" shall mean all patent rights, know-how and other intellectual property rights developed by CPL outside the scope of this Agreement (including outside the scope of any Services) without use of or reference to NeurogesX' s Confidential Information, or otherwise acquired or licensed by CPL, in each case to the extent controlled by CPL as of the Effective Date or at any time during the term of this Agreement.

1.5 " Deliverables" shall mean the information, materials, Product batches, Documentation, and other identified items that CPL is obligated to provide to NeurogesX pursuant to a Proposal.

1.6 " Documentation" shall mean all written materials generated in connection with the Services, including the Master Production Record, test results, Certificate of Analysis (" CoA" ), analytical test methods, reports, protocols and any other documents related to the manufacturing process for the Product, as well as such other documents reasonably necessary for NeurogesX to complete its regulatory filings or technology transfer. 1.7 " Facility" shall mean CPL' s GMP manufacturing facility located at 7600 Danbro Crescent and/or testing laboratory (Innopharm) at 1 Valleywood Drive.

1.8 " FDA" shall mean the United States Food and Drug Administration, or any successor agency thereto.

1.9 " GMP" shall mean current good manufacturing practice and standards as provided for (and as amended from time to time) in the Current Good Manufacturing Practice Regulations of the U.S. Code of Federal Regulations Title 21 (21 CFR a7a7 210 and 211) and in European Community Directive 91/356/EEC (Principle and guidelines of good manufacturing practice for medicinal products) in relation to the production of pharmaceutical products, as interpreted by the ICH Harmonized Tripartite Guideline, any U.S., European, or other applicable laws, regulations or respective guidance documents subsequently established in the Territory, and any arrangements, additions or clarifications agreed from time to time between the Parties.

1.10 Master Production Record" shall mean that certain document approved by NeurogesX that defines the manufacturing methods and procedures, test methods, specifications, materials, and other procedures, directions and controls associated with the manufacture and testing of Product.

1.11 " NeurogesX IP" shall have the meaning set forth in Section 6.1 below.

1.12 " Product" shall mean the Bulk Product or Finished Product, as applicable. (a) " Bulk Product" shall mean the bulk cleansing gel product meeting the applicable Specifications. (b) " Finished Product" shall mean the packaged cleansing gel product meeting the applicable Specifications. 1.13 " Quality Agreement" shall mean that certain Quality Assurance Agreement between the Parties dated March 25, 2003, which is attached hereto as Exhibit A and as such may be modified pursuant to the terms set forth therein.

1.14 " Raw Materials" shall mean all raw materials, supplies, components and packaging necessary to manufacture the Product in accordance with the Specifications.


-2-

1.15 " Regulatory Requirements" shall mean (i) compliance with all applicable laws, rules, guidelines, regulations and standards of governmental authorities, including GMP, and (ii) obtaining and maintaining all licenses and other authorizations required by regulatory authorities, that in each case are applicable to the manufacturing, processing, and supply activities hereunder, the Facility, or any other facilities at which any of the manufacturing or process activities hereunder may be performed or are applicable in the Territory. 1.16 " Services" shall mean the development, validation, manufacturing and/or other services performed by CPL pursuant to a Proposal.

1.17 " Specifications" shall mean (i) with respect to Bulk Product, the specifications set forth on Exhibit B hereto, or (ii) with respect to Finished Product, the specifications set forth on Exhibit C hereto; in each case as such may be modified pursuant to Section 3.6 below. 1.18 " Proposal(s)" shall have the meaning set forth in Section 4.1 below, as such may be modified pursuant to Section 4.3 below.

1.19 " FTE" shall mean ' full-time equivalent' and provide the basis for charging CPL personnel to NeurogesX for services performed. The charge out rate will be $100 USD per hour.

1.20 " Territory" shall mean Canada, United States and European Union (EU) collectively. In addition, the Territory may be extended by NeurogesX to include countries and/or regulatory jurisdictions in accordance with Section 3.6(b) below.

ARTICLE 2

SUPPLY 2.1 Product Supply . Subject to the terms and conditions of this Agreement, CPL shall supply to NeurogesX all quantities of the Product ordered by NeurogesX under this Agreement.

2.2 Raw Materials . CPL shall be responsible, at its expense, for procuring, inspecting and releasing adequate Raw Materials from vendors approved by NeurogesX, which approval, shall not be unreasonably withheld or delayed, as necessary to meet NeurogesX' s purchase orders, unless otherwise agreed to by the Parties in writing. CPL shall conduct tests on each Raw Material and shall provide NeurogesX with results of such tests.

2.3 Forecasts . At least one hundred eighty (180) days before the commercial launch of the Product or a product incorporating the Product, NeurogesX shall provide CPL with an initial forecast of the quantities of Product estimated to be required from CPL during the four (4) calendar quarter period following such launch. Thereafter, at least ninety (90) days prior to each calendar quarter (" Q1" ), NeurogesX will provide CPL with a rolling forecast of the quantities of Product estimated to be required during Q1 and the next three (3) calendar quarters (" Q2" , " Q3" and " Q4" , respectively). For clarity, all forecasts provided to CPL under this Section 2.3 are for advisory purposes, with the exception of Q1 demand which will be binding on all required raw materials and packaging components to make the Product or a product incorporating the Product, and Q2 which will be binding on tubes only. Should orders for Product or a product incorporating the Product for Q1 not materialize within the period for which CPL has purchased materials per this Agreement, NeurogesX will reimburse CPL for the cost of all materials (raw materials and packaging components) purchased against the applicable forecast for Q1 and not used within six (6) months.


-3-

2.4 Orders . NeurogesX' s orders for Product shall be made pursuant to a written purchase order on its standard form specifying the desired quantity of Bulk Product and/or Finished Product, and will provide for shipment in accordance with reasonable delivery schedules and lead times as may be agreed upon from time to time by CPL and NeurogesX so long as the maximum lead time shall not exceed ninety (90) days unless otherwise agreed to by the Parties. ANY ADDITIONAL OR INCONSISTENT TERMS OR CONDITIONS OF ANY PURCHASE ORDER, ACKNOWLEDGMENT OR SIMILAR STANDARDIZED FORM GIVEN OR RECEIVED PURSUANT TO THIS AGREEMENT WILL HAVE NO EFFECT AND SUCH TERMS AND CONDITIONS ARE HEREBY EXCLUDED UNLESS THE PARTIES SPECIFICALLY AGREE IN WRITING FOR SUCH TERMS OR CONDITIONS TO SUPPLEMENT OR SUPERCEDE THE TERMS AND CONDITIONS OF THIS AGREEMENT.

2.5 Packaging . Product shall be shipped packaged in containers in accordance with the applicable Specifications or as otherwise agreed by the Parties in writing. Each such container will be individually labeled in accordance with any regulatory requirements which may include a description of its contents, including the manufacturer lot number, quantity of Product, and expiration date.

2.6 Delivery . CPL shall deliver the quantities of Product ordered by NeurogesX on the dates specified in NeurogesX' s purchase orders submitted in accordance with Section 2.4 above. All Product shall be delivered F.C.A point of shipment, CPL' s loading dock, Mississauga, Ontario. Upon CPL' s delivery of the Product F.C.A. point of shipment, NeurogesX will bear all risk of loss, delay, or damage in transit. NeurogesX shall select the carrier. All Product delivered hereunder shall be suitably packed for shipment by CPL in accordance with good commercial practice, and instructions provided to CPL by NeurogesX, with respect to protection of such Product during transportation and marked for shipment to NeurogesX' s specified receiving point. NeurogesX shall pay all shipping and insurance costs, as well as any special packaging expenses identified in advance by CPL.

2.7 Cost Reduction . The Parties will participate in cost reduction projects pertaining, but not limited to, the manufacture and supply of Product for NeurogesX. If a Party identifies a potential cost reduction measure, the identifying Party shall disclose the details to the other Party so that both Parties can evaluate whether such measure should be implemented and agree upon the costs of implementing such measure and the resulting cost savings. In the event the Parties agree on implementing a cost saving measure, the Parties agree to come together and discuss who will pay for the cost implementation and negotiate how to share the cost savings and the Parties shall adjust the price of the Product and revise Exhibit E accordingly. 2.8 Alternate Source(s) . The Parties agree that this Agreement is not an exclusive supply agreement, and NeurogesX shall have the right to manufacture itself or designate third party(ies) as alternate source(s) for the supply of the Product (each, an " Alternate Source" ). Upon NeurogesX' s request at any time, CPL shall cooperate with NeurogesX and the Alternate Source to fully transfer to such Alternate Source all manufacturing technology, know-how and information relating to the Product and its manufacture. CPL agrees to provide reasonable technical assistance to the Alternate


-4-

Source for such purposes as requested by NeurogesX, including without limitation, assisting the Alternate Source to successfully manufacture three (3) validation batches of Product conforming to the Specifications. NeurogesX shall pay to CPL reasonable FTE and out-of-pocket costs associated with such transfer and assistance in accordance with a budget approved in advance by NeurogesX; provided, however, if either (i) the need for an Alternate Source arises from a material breach of this Agreement by CPL and/or (ii) subject to Article 13.5, CPL fails to deliver two successive batches of Product of at least eighty percent (80%) of the quantities of Product specified in a purchase order submitted in accordance with this Agreement, to CPL hereunder within thirty (30) days after the delivery dates specified therein, then NeurogesX shall not be obligated to make any such payments associated with the FTE costs of CPL and CPL shall bear the FTE costs associated with transfer and up to a maximum of 20 FTE days, of FTE costs associated with assistance. In any case, CPL shall not be responsible for any costs associated with fee for service activities beyond the assistance described in this Section 2.8, performed on behalf of NeurogesX, for the Alternate Source nor any out-of-pocket costs (including, but not limited to, travel expenses) associated with the transfer. Any additional assistance requested by NeurogesX above the 20 FTE days described in this Section 2.8 shall be at NeurogesX' s expense.

ARTICLE 3

QUALITY 3.1 Quality . All Product supplied by CPL shall meet the current Specifications and shall be manufactured, packaged, tested and stored at the Facility in accordance with the Quality Agreement, all applicable Approvals and Regulatory Requirements, including GMP manufacturing and record keeping procedures.

3.2 Quality Control . Prior to each shipment of Product, CPL shall perform quality control testing procedures and inspections to verify that the Product to be shipped conforms fully to the Specifications, as set forth in the Quality Agreement. Each shipment of Product shall be accompanied by a certificate of analysis (" COA" ), in a form acceptable to NeurogesX, describing all current requirements of the Specifications, results of test performed certifying that the Product supplied have been manufactured, controlled and released at the Facility in accordance with the Specifications, all Approvals and applicable Regulatory Requirements. 3.3 Acceptance . Acceptance by NeurogesX of Product delivered by CPL shall be subject to inspection and applicable testing by NeurogesX or its designee. If on such inspection or testing NeurogesX or its designee discovers that any Product fails to conform with the Specifications or otherwise fails to conform to the warranties given by CPL in Section 8.1 below, NeurogesX or such designee may reject such Product, which rejection will be accomplished by giving written notice to CPL that specifies the manner in which the Product fails to meet the foregoing requirements. Upon request from CPL, NeurogesX shall return the rejected Product in accordance with CPL' s reasonable instructions at CPL' s expense, provided that such instructions comply with all applicable laws, regulations and Regulatory Requirements. In the event of a dispute between the parties over the validity of a rejection, NeurogesX and CPL agree to submit a sample of the rejected Product to an independent test facility to be agreed by both parties, and to accept the results of the testing performed by that facility as binding with regard to that lot of Product. The expense of such testing shall be borne by the losing party. CPL shall use reasonable commercial efforts to replace rejected Product within the shortest possible time within thirty (30) days after CPL' s receipt of notice thereof


-5-

provided materials are available, and in any event within ninety (90) days. The replacement of rejected Product shall have priority over the supply of Product ordered for shipment not more than ninety (90) days before, or any time after, the rejection of such nonconforming Product. If a Product shipment or part thereof is rejected before the date on which payment is due therefor, NeurogesX may withhold payment for such shipment or the rejected portion thereof. If a Product shipment or portion thereof is rejected after payment, NeurogesX may credit the amount paid therefor against other amounts due to CPL hereunder. If, subsequent to investigation, a Product deemed by NeurogesX to be rejected is found to meet Specifications, than NeurgesX will not only pay for the originally shipped Product but also any replacement Product made, or in process, while the investigation was being conducted. The warranties given by CPL in Section 8.1 below shall survive any failure to reject by NeurogesX under this Section 3.3. Subject to Section 3.4 and Article 8 below, Product shipments shall be deemed accepted if no notice to the contrary is received by CPL within sixty (60) days of NeurogesX' s receipt of such Product.

3.4 Latent Defects . As soon as either Party becomes aware of any defect in any Product that is not discoverable upon a reasonable inspection or quality control testing as set forth in the Specifications (" Latent Defect" ), but in no case later than thirty (30) days after reaching such awareness, it shall immediately notify the other Party and, at NeurogesX' s election, shall be deemed rejected as of the date of such notice. In the event of such rejection by NeurogesX, the applicable provisions of Section 3.3 shall apply. Notwithstanding anything herein to the contrary, CPL will only be responsible for Latent Defects resulting from an act or omission of CPL, reasonably demonstrated, relative to its manufacturing, packaging, and testing services responsibilities according to this Agreement. Any Latent Defect solely related to compatibility issues will not be the financial responsibility of CPL. The term " compatibility issues" as used in this Section 3.4 shall mean a surprise chemical reaction between the Product' s chemical components and packaging.

3.5 Presence At Facility . Upon at least fifteen (15) days' prior written notice given by NeurogesX to CPL, NeurogesX shall have the right to assign a reasonable number of employees or consultants of NeurogesX (not to exceed three (3) persons) to inspect and audit the Facility in order to verify CPL' s compliance with Regulatory Requirements and other agreed requirements. At all times, NeurgoesX personnel or consultants will be accompanied by CPL representatives and access will be limited to areas and documentation applicable to NeurogesX Product or Proposals.

3.6 (a) Changes to the Specifications . NeurogesX shall have the sole right to modify the Specifications with respect to all Bulk Products and Finished Products. All modifications shall be in writing and shall be signed by an authorized representative of NeurogesX and CPL, and shall be effective for purchase orders for Product placed after the effective date of the changes. If the modifications result in a change in CPL' s manufacturing costs, the Parties shall agree upon an appropriate adjustment to the price of the Product under this Agreement. If the modifications result in a delay in delivery, there shall be a reasonable extension of the affected lead times. If residual inventory of a raw material or packaging component results from a change to Specifications, NeurogesX shall reimburse CPL at cost plus 15% (to cover CPL' s administrative, finance, and warehousing) for all residual inventory or restocking charges at suppliers, for materials that CPL cannot use elsewhere or returned without charge. (b) Changes to the Territory. NeurogesX may expand the Territory upon written notice to CPL ...