Development Agreement

EXHIBIT 10.20


DEVELOPMENT AGREEMENT


THIS AGREEMENT, effective as of April 5, 1999 ("Effective Date") by and among Esperion AB, a corporation organized under the laws of Sweden having a principal place of business at Ekensbergsvagen 115, 17141 Solna, Sweden ("ESPERION")


AND


OctoPlus b.v., a company organized under the laws of The Netherlands having a principal place of business at Niels Bohrweg 11-13, 2333 CA Leiden, The Netherlands ("OCTOPLUS").


Background


ESPERION's parent company, Esperion Therapeutics Inc., has granted ESPERION a right to use all the rights acquired from Pharmacia AB of Active Ingredient (as hereinafter defined) and the rights to use compound for the Project (as hereinafter defined).


ESPERION and Esperion Therapeutics Inc. have successfully conducted first development studies on Active Ingredient (as hereinafter defined) based on a lipid formulation, the results of which shall be a basis for further development.


OCTOPLUS has experience in the development of pharmaceutical products containing compounds of biotechnological origin such as peptides, proteins and genes, including but not limited to formulation development, analytical services and stability testing..


OCTOPLUS and ESPERION wish to undertake a cooperative program aimed at developing a parenteral formulation with Active Ingredient (as hereinafter defined) which shall result in the supply of toxicology and clinical samples to be investigated for cholesterol removal therapy.


NOW THEREFORE, in consideration of the premises and mutual covenants and conditions set forth herein, the Parties agree as follows:


ARTICLE I
Definitions


1.01 When used in this Agreement, each of the following terms shall have the meanings set out in this Article I.


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1.02 "Active Ingredient" means the recombinant Apo-Al Milano protein in bulk
----------------- ready to be used for the manufacturing of the Formulation (as hereinafter defined).


1.03 "Affiliate" means any entity, which controls, is controlled by, or is
--------- under common control of a Party.


1.03.1 For purposes of this definition, a Party shall be deemed to control another entity


1.03.1.1. If it owns or controls, directly or indirectly, at least fifty percent (50%) of the voting equity of such other entity (or other comparable ownership interest for an entity other than a corporation) or


1.03.1.2. if it has management control of the other entity.


1.03.1.2. Any reference in this Agreement to either Party shall include its Affiliates (unless the context requires otherwise).


1.04 "ESPERION Patent" means, collectively, any Patents and patent applications
--------------- owned or controlled by ESPERION, and any international counterparts thereof, covering Active Ingredient its production and/or its pharmaceutical use, which can be used to develop and produce parenteral formulation of Formulation and which legally are at the disposal of ESPERION.


1.05 "Calendar Quarter" shall mean the Calendar Quarters of the year beginning
---------------- first of January, April, July and October.


1.06 "Clinical Samples" mean any parenteral formulation made by OCTOPLUS
------------------ according to GMP and supplied to ESPERION, or a sublicensee thereof, which meet the clinical Specifications mutually agreed upon by the Parties prior to release to ESPERION and/or such licensee for purpose of evaluation by ESPERION or its sublicensee in a clinical study. ESPERION shall be responsible for the release of Clinical Samples according to the Quality Assurance Functions (ANNEX E).


1.07 "Commercially Reasonable Best Efforts" means those efforts employed by the
------------------------------------ Parties, equivalent to that level of attention and care and providing of funding and manpower that they devote to their other businesses and products which will at least reach a standard normal for comparable businesses/research entities.


1.08 "Development Work" means the services carried out by OCTOPLUS to result in
------------------ the manufacturing and supply of Clinical Samples according to the Specifications.


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1.09 "ESPERION Know how" means information of ESPERION regarding the research
----------------- and development of the Active Ingredient.


1.10 "Formulation" means a parenteral formulation with Active Ingredient.
-----------


1.11 "Indication" means the treatment of hypercholesterol blood levels in
---------- humans.


1.12 "Know How" means all information concerning Active Ingredient and
-------- parenteral formulation developed under this Agreement.


1.13 "OCTOPLUS Know How" means information of OCTOPLUS regarding the general
----------------- development and manufacture of parenteral formulations and related technologies.


1.14 "Party" shall mean a Party of this Agreement.
-----


1.15 "Project" means a development program to be conducted by ESPERLON and
------- OCTOPLUS according to the Project Plan aimed at developing and manufacturing parenteral formulations for clinical trials.


1.16 "Project Group". The Project Group shall mean the committee to be formed
------------- pursuant to Article IV.


1.17 "Project Plan" shall be a cooperative undertaking for conducting the
------------ development of the Formulation and manufacturing and supply of Clinical Samples. The framework of the Project Plan is described in ANNEX A and it may be supplemented or amended from time to time by mutual agreement.


1.18 "Quality Assurance Functions" means a list of functions which shall apply
--------------------------- in the case Clinical Samples are manufactured by OCTOPLUS and supplied to ESPERION, attached hereto as an ANNEX E.


1.19 "Report" means the final report to ESPERJON containing OCTOPLUS' results
------ of OCTOPLUS' Development Work for a parenteral formulation which can be utilized to set up a program for a manufacturing dossier necessary for the registration dossier in the EEC.


1.20 "Specifications" means the written specifications developed by the Project
-------------- Group for the raw materials and for the manufacturing and quality control of the parenteral formulation, and any and all additions and amendments to the same made by the written agreement of the Parties during the term of this Agreement. The Specifications of the parenteral formulation will be attached to and made a part of this Agreement as ANNEX C.


1.21 "Sublicensee" means a Party whom ESPERION has sublicensed its license(s)
----------- granted hereunder.


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1.22 "Time Period" means the time within which OCTOPLUS shall finalize the
----------- Project as described in ANNEX B. .


1.23 "Toxicology Samples" means any parenteral formulation made by OCTOPLUS
-------------------- according to GMP and supplied to ESPERION, or a sublicensee thereof, which meet the Specifications mutually agreed upon by the Parties prior to release to ESPERION and/or such licensee for purpose of evaluation by ESPERION or its sublicensee in a toxicology study. ESPERION shall be responsible for the release of Toxicology Samples according to the Quality Assurance Functions (ANNEX E).


ARTICLE II
Contribution of OCTOPLUS


2.01 OCTOPLUS Services. OCTOPLUS shall conduct certain studies and tasks as
----------------- set forth in the Project Plan. OCTOPLUS shall use its Commercially Reasonable Best Efforts to provide the services necessary to fulfil the Project within the Time Period. In case of additional work which could not be foreseen in the Project Plan and which has been approved by the Project Group OCTOPLUS shall be entitled to perform and request a remuneration of such additional work according to Article V.


2.02 Report. The Development Work shall culminate in the Report as a summary
------ and documentation of the Development Work. 2.02.1. OCTOPLUS shall use Commercially Reasonable Best Efforts to present the Report to ESPERION within two months after the Formulation has been delivered to ESPERION.


2.02.2. If OCTOPLUS determines at any time during the term of this Agreement that the Report cannot be delivered on schedule due to whatever reasons, OCTOPLUS shall promptly notify ESPERION.


2.02.3. OCTOPLUS shall use its Commercially Reasonable Best Efforts to deliver the Report after an extension period of not more than two months.


2.02.4. In the event that Report cannot be delivered after the extension period has elapsed, ESPERION may terminate this Agreement within a period of 14 (fourteen) calendar days after the extended deadline has passed. The foregoing shall not apply if


1) ESPERION has agreed to a revised date or
2) if the delay is caused on events outside the control of
OCTOPLUS;
in this case, the period will be extended accordingly


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2.03 Samples of Formulation. OCTOPLUS shall supply ESPERION with
---------------------- investigational samples and clinical samples and prototypes developed under this Agreement at no cost other than the compensation as provided for in Article V.


2.03.1. OCTOPLUS' S Compliance with Specifications. OCTOPLUS warrants that all
------------------------------------------ OCTOPLUS'S Toxicology and Clinical Samples delivered under this Agreement shall conform to the Specifications.


2.03.2. GMP for Clinical Samples. In the event that Clinical Samples will be
------------------------ used by ESPERION trials in humans, OCTOPLUS shall employ current Good Manufacturing Practices (GMP) in the production of such Clinical Samples, including additions and amendments to such GMP regulations during the term of this Agreement, and shall comply with all other statutes and regulations applicable to it.


2.04 Quality Control. Each shipment of OCTOPLUS's clinical samples shall be
--------------- accompanied by quality control certificates for each batch as described in the Specifications. If not set forth explicitly otherwise, OCTOPLUS shall not be obliged to provide any additional quality control with regard to OCTOPLUS's clinical samples.


2.05 Audit at OCTOPLUS. OCTOPLUS will permit an authorized representative of
----------------- ESPERION or its Affiliates to inspect at all reasonable times the process of manufacture and storage of the Clinical Samples under such conditions as OCTOPLUS may reasonably require in order to protect the confidentiality of its and its other customer's proprietary and confidential information. ESPERION shall announce such audit at least one month in advance to OCTOPLUS.


ARTICLE III
Contributions of ESPERION


3.01 ESPERION Cooperation. ESPERION shall use its best efforts to duly
-------------------- cooperate during the entire course of the Project.


3.02 Active Ingredients Supply. ESPERION shall supply OCTOPLUS with such
------------------------- quantities of Active Ingredients at such times as OCTOPLUS reasonably, at its discretion, needs for the Project at no-cost to OCTOPLUS. Each shipment of Active Ingredients shall be accompanied by quality control certificates and safety data sheets for each batch. All Active Ingredients supplied hereunder shall be utilized by OCTOPLUS solely for conducting work on the Project.


3.03 ESPERION'S Sole Liability for ESPERION'S Active Ingredients. ESPERION
----------------------------------------------------------- shall, provided that the damage is not caused or under the control of OCTOPLUS, solely be liable for any damages caused by


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ESPERION Active Ingredients including damages of any raw materials, any materials used for production and Clinical Samples.


3.04 ESPERION'S Compliance with Specifications. ESPERION warrants that all
----------------------------------------- ESPERION'S Active Ingredients delivered under this Agreement shall conform to the Specifications as the Parties have agreed upon.


3.05 GMP for Active Ingredients. In the event that ESPERION Active Ingredients
-------------------------- are used by OCTOPLUS in order to produce Clinical Samples for use in humans, ESPERION shall employ current Good Manufacturing Practices (GMP) in the production of Active Ingredients, including additions and amendments to such GMP regulations during the term of this Agreement, and ESPERION shall comply with all other statutes and regulations applicable to it and to the manufacture of Active Ingredients.


3.06 Quality Control. Each shipment of ESPERION'S Active Ingredients shall be
--------------- accompanied by necessary quality control certificates for each batch as described in the Specifications. If not explicitly set, forth otherwise, OCTOPLUS shall not be obliged to provide any additional quality control with regard to ESPERION'S Active Ingredients.


3.07 Active Ingredients Data of ESPERION.
----------------------------------- ESPERION shall supply OCTOPLUS with relevant data related to the Project as set forth in ANNEX D and all other information OCTOPLUS might additionally require in good faith to fulfil the Project.


3.08 Evaluating Results. ESPERION shall duly evaluate the results in the
------------------ Report in order to promote the Project as much as practical. If ESPERION does not reprove such results in writing in detail within a definite period of forty five (45) calendar days after presentation, the same shall be irrevocably deemed to be finally approved.


3.09 Clinical Trials. ESPERION shall in its sole discretion be responsible for
--------------- planning and carrying out all clinical trials of Formulations, and for preparing the portions of the applicable regulatory documents which deal with the Active Ingredients, and with the clinical trial reports. ESPERION will own the results of all clinical trials and all regulatory documents that ESPERION files for registration and approval of Formulations.


ARTICLE IV
Project Group


4.01 Control over Project. The Project Group shall have the primary control
-------------------- over the direction and the course of the Project. The Project Group shall modify the Project Plan, and/or the Specifications as appropriate. In this sense "Project Group" means a group composed of one representative appointed by ESPERION and one appointed by OCTOPLUS which shall


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be responsible for planning and monitoring the Project to ensure diligent completion thereof. The persons now appointed by the respective Party are:


OCTOPLUS b.v. ESPERIONAB Dr Ewoud van Winden Dr. Hans Ageland Scientist Formulation Research VP of Operations and Projects Niels Bohr Weg 11 - 13 Svartviksslingan 114 2300 AS Leiden 16739 Bromma The Netherlands Sweden


4.02 Responsibility of the Project Group. The Parties have expressed their
----------------------------------- mutual intention that the Project be promptly completed, and, to that end, it is the responsibility of the Project Group to ensure that the Parties use their reasonable best efforts, equivalent to the same level of attention and care they devote to their other businesses and products.


4.03 Meetings. The Project Group shall meet at least quarterly, as appropriate
-------- also by teleconference or videoconference, to review the progress of the Project, to establish the program for the next quarter and to confirm that the Milestones, Project Plan and/or time schedule are correct and, if not, determine what modifications to same are required.


4.04 Decisions. All decisions, including consents, approvals, authorizations,
--------- directions or recommendations of the Project Group, shall be made by consensus of the Project Group arrived at in meetings, including those held by teleconference or videoconference method. If consensus cannot be reached , the representative of ESPERION shall have the casting voted In no case shall ESPERION misuse its position to request additional Development Work from OCTOPLUS which from technical and other, in the sole discretion of OCTOPLUS, internal reasons are not possible to perform.


ARTICLE V
Funding of Project


5.01 ESPERION Funding.
----------------


It shall be paid for as follows:


5.01.1. Hourly Payment. ESPERION shall compensate OCTOPLUS for all employee-
-------------- hours, which OCTOPLUS spends on the Project at the rate of


Dfl 250,- (two hundred twenty-five Dutch Gulders) or
correspondingly in Euro, plus VAT, if applicable.


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5.01.2. OCTOPLUS shall verify and document the time devoted by OCTOPLUS's employees to the Project, and will submit an accounting each quarter.


5.01.3. OCTOPLUS will allocate employee-hours consistently with its historical allocation practice.


5.02 Additional Payments. ESPERION shall compensate the costs at cost price
------------------- and to a fair market price for manufacturing of Clinical and Toxicology Samples.


5.03 Payment Schedule. ESPERION shall pay OCTOPLUS the amount provided for in
---------------- Section 5.01 in installments, each Installment to be paid quarterly in advance.


5.04 Installments. The first installment will be paid 30 days after this
------------ Agreement is executed and shall be pro-rated to represent the portion of the preceding quarter covered by the Agreement.


5.04.1. Initially, each installment will be either


Dfl 250,000.-- (two hundred fifty thousand Dutch Guilders) or
correspondingly in Euro, plus VAT, if applicable.


5.04.2. At the end of the second quarter after execution of this Agreement, and at the end of alternate quarters thereafter, the accountings presented by OCTOPLUS will be compared with ESPERION's payments. If the payments are in excess, the excess will be credited to future expenses. If OCTOPLUS's a ...