Manufacture And Supply Agreement

MANUFACTURE AND SUPPLY AGREEMENT


This Manufacture and Supply Agreement (hereinafter called "Agreement") is made and entered into as of the date of last signature below and is effective as of the 1st day of January, 2004 (the "Effective Date"), by and among


SERAGEN, INC., a corporation organized and existing under the laws of Delaware and having its principal place of business at 10275 Science Center Drive, San Diego, California 92121 (hereinafter called "SERAGEN") and


CAMBREX BIO SCIENCE HOPKINTON, INC., a corporation organized and existing under the laws of Delaware and having a principal place of business at 97 South Street, Hopkinton, MA 01748 (hereinafter called "CBSH").


WHEREAS, SERAGEN has developed a biological entity designated as DAB389IL-2, prepared as a purified drug substance; and


WHEREAS, SERAGEN desires to have CBSH (a) manufacture, store, test and supply Fermentation Pellets, First Gen PDS and Second Gen PDS (each as defined below), (b) test First Gen FDP and Second Gen FDP (each as defined below), and (c) perform stability testing on Fermentation Pellets, First Gen PDS, Second Gen PDS, First Gen FDP and Second Gen FDP, and (d) perform any and all services as described in Article II of this Agreement, all in accordance with cGMP; and


WHEREAS, SERAGEN may, from time to time, desire to purchase from CBSH additional services such as, but not limited to, cell line stock storage, supplemental Fermentation Pellets, First Gen PDS and Second Gen PDS storage and regulatory/CMC consulting, all in accordance with cGMP; and


WHEREAS, CBSH is willing to (a) undertake the manufacture, storage, testing and supply of Fermentation Pellets, First Gen PDS and Second Gen PDS, (b) test First Gen FDP and Second Gen FDP, (c) perform stability testing on Fermentation Pellets, First Gen PDS, Second Gen PDS, First Gen FDP and Second Gen FDP, and (d) perform services as described above according to the terms, conditions and covenants hereinafter set forth.


NOW, THEREFORE, the parties hereto, in consideration of the promises and the mutual covenants and agreements contained herein, the sufficiency of which are hereby acknowledged, agree as follows:


ARTICLE I


DEFINITIONS


1.0 DEFINED TERMS. In addition to terms otherwise defined in this Agreement, the following terms have the specified meanings for purposes of this Agreement:


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1.01 "Affiliate" shall mean any corporation, firm, partnership, individual or other form of business organization which is now or hereafter owned or controlled by a Party or, any corporation in which a Party owns at least fifty percent (50%) of the stock entitled to vote for directors or otherwise controls the election of directors, and any corporation, firm, partnership, individual or other form of business organization in which a Party has the maximum ownership interest it is permitted to have in the country where such business organization exists.


1.02 "Batch" shall mean:


For First Gen PDS: the total amount of PDS from the purification of a single Fermentation Pellet resulting in not less than *** of DAB389IL-2; and


For Second Gen PDS: the total amount of PDS from the purification of *** Fermentation Pellets resulting in not less than the minimum validated yield for DAB389IL-2 as shall be set forth on two (2) schedules to be proposed by SERAGEN and mutually agreed upon by the Parties and thereafter attached to this Agreement (and made a part thereof); a separate schedule shall be proposed, agreed and attached for each of (i) clinical and commercial Batches of Second Gen PDS and (ii) development and validation Batches of Second Gen PDS; and


For Fermentation Pellets: A minimum of *** pellets resulting in not less than *** grams of total protein per pellet according to validated procedures then in effect.


1.03 "Batch Acceptance Date" shall mean the later of (a) the date set forth on the applicable purchase order or (b) thirty (30) days after SERAGEN's receipt of all MRR Documentation, subject to the acceptance and rejection procedures set forth in Sections 2.14(a) and 2.14(c).


1.04 "Certificate of Analysis" means the form listing: the name and CBSH part number of the applicable Product, SERAGEN's name, all tests performed on such Product as specified in the current Specifications for such Product, each test method, each test specification and the reported assay result for each test.


1.05 "cGMP" shall mean as of the Effective Date of this Agreement, the current good manufacturing practices standards required by the FDA, as set forth in Title 21 C.F.R., Parts 210, 211 and 600 as applicable, in the United States Food and Drug Act, as amended, the good manufacturing practices required by the EMEA, as set forth in the European Rules and Guidances for Pharmaceutical Manufacturers and Distributors and/or the European Good Manufacturing Guidances, Rules and Directives, or the applicable FDA and EMEA regulations, policies or guidelines in effect, at the time of manufacture, for the manufacture and testing of pharmaceutical materials as applied to bulk pharmaceuticals and/or biologics.


1.06 "DAB389IL-2" shall mean a fusion protein developed by SERAGEN and sold in the United States under the trademark ONTAK(R) comprising the first 389 amino acids of the A and B fragments of the diphtheria toxin combined with interleukin-2.


1.07 "EMEA" shall mean the European Agency for the Evaluation of Medicinal Products.


***Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.


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1.08 "Facility" shall mean the testing and manufacturing facility at 97 South Street, Hopkinton, Massachusetts 01748 and the warehouse facility located at 99 South Street, Hopkinton, Massachusetts 01748.


1.09 "FDA" shall mean the United States Food and Drug Administration.


1.10 "Fermentation Pellet" shall mean the inclusion body preparation of unpurified DAB389IL-2 protein produced from the growth and induction of the DAB389IL-2 working cell bank.


1.11 "First Gen FDP" shall mean the final drug product processed and/or packaged in its final dosage form resulting from formulation and fill of First Gen PDS and whose samples are received by CBSH under CBSH part #90-204-02.


1.12 "First Gen PDS" shall mean DAB389IL-2 prepared as a purified drug substance and ready for fill/finish by SERAGEN, manufactured by CBSH pursuant to the applicable Manufacturing and Release Requirements set forth in the Production Record and in CBSH part #60-104.


1.13 "Food and Drug Act" shall mean the Food, Drug and Cosmetic Act, as set forth in 21 U.S.C. 301-391.


1.14 "Intellectual Property" shall mean all know-how, copyrights, designs, databases, mask works, patents, trademarks, trade names and other proprietary data and rights, and all registrations and applications therefor.


1.15 "Lot" shall mean, as applicable, (i) the total number of vials of First Gen FDP and Second Gen FDP resulting from a single fill and finishing process or (ii) the total number of vials qualified as part of a reference standard qualification or re-qualification.


1.16 "Manufacturing and Release Requirements" shall mean any and all Specifications and release requirements mutually agreed on between the Parties for Fermentation Pellets, First Gen PDS, or Second Gen PDS as the case may be, and as to each, its manufacture, including, without limitation, all raw materials, solvents, reagents, processing, storage, shipping and packaging specifications and necessary test protocols, release specifications, Certificates of Analysis and other documentation required to describe, control and assure the quality manufacture and testing of each in compliance with the applicable Regulatory Requirements, all as contained in the Production Record or the MRR Documentation and any SOPs which govern the manufacture, storage, handling and testing of each.


1.17 "MRR Documentation" means all production and release documentation as described in Exhibit "A".


1.18 "Party" or "party" shall mean either SERAGEN or CBSH, and the terms "Parties" or "parties" shall, as appropriate, mean SERAGEN and CBSH.


1.19 "Process Improvements" shall mean any improvement made to the method of manufacture of Fermentation Pellets, First Gen PDS and/or Second Gen PDS.


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1.20 "Product" shall mean Fermentation Pellets, First Gen PDS, Second Gen PDS, First Gen FDP and/or Second Gen FDP.


1.21 "Product Intellectual Property" shall mean all Intellectual Property which is specifically related to the Product and its method of manufacture, including Process Improvements which are specifically related to the Product. Product Intellectual Property shall not include Intellectual Property (including Process Improvements) that relates generally to the development and manufacture of biopharmaceuticals and that has application to and or value for developing and manufacturing biopharmaceuticals other than the Product.


1.22 "Production Record" means the documentation that contains a detailed description of the manufacturing process for Fermentation Pellets, First Gen PDS or Second Gen PDS, as the case may be, and any other instructions to be followed by CBSH in the production of Fermentation Pellets, First Gen PDS and/or Second Gen PDS.


1.23 "Regulatory Agency" shall mean, as of the Effective Date of this Agreement, the regulatory agencies with authority over the manufacture, testing and/or shipment of Product, and as further defined or supplemented pursuant to Exhibit "D".


1.24 "Regulatory Requirements" means the cGMP in effect at the particular time, issued or required by the Regulatory Agency for the methods to be used in, and the facilities and controls to be used for, the manufacture, processing, packaging and storage of the manufactured Product.


1.25 "Second Gen FDP" shall mean the final drug product processed and/or packaged in its final dosage form resulting from formulation and fill of Second Gen PDS and whose samples are received by CBSH under CBSH part #90-304-02.


1.26 "Second Gen PDS" shall mean DAB389IL-2 prepared as a purified drug substance and ready for formulation, fill and finish by SERAGEN, manufactured by CBSH pursuant to the applicable Manufacturing and Release Requirements set forth in the Production Record and in CBSH part #60-304.


1.27 "SERAGEN Authorized Personnel" shall mean SERAGEN or Ligand Pharmaceuticals Incorporated personnel set forth on attached Exhibit "F."


1.28 "Shipment Date" shall mean the date designated by SERAGEN in writing upon which Fermentation Pellets, First Gen PDS and/or Second Gen PDS will be delivered by CBSH to SERAGEN's designated carrier.


1.29 "SOPs" shall mean standard operating procedures related to the Product and the process of manufacturing the Product, as approved by both SERAGEN and CBSH.


1.30 "Specifications" shall mean any and all specifications mutually agreed on between the Parties for the manufacture of Fermentation Pellets, First Gen PDS and/or Second Gen PDS, including, without limitation, all raw materials, solvents, reagents and processing specifications contained within the MRR Documentation and part of the Manufacturing and Release Requirements.


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1.31 "Summary of Testing" shall mean the form that is used to report the results of testing for which there are no corresponding Specifications or for First Gen FDP and/or Second Gen FDP which is not released by CBSH; the responsibility for release of such First Gen FDP and/or Second Gen FDP rests with SERAGEN.


ARTICLE II


MANUFACTURE AND SUPPLY
OF FERMENTATION PELLETS, FIRST GEN PDS, AND
SECOND GEN PDS AND RELATED SERVICES


2.01 MANUFACTURE AND SUPPLY OF FERMENTATION PELLETS, FIRST GEN PDS AND/OR SECOND GEN PDS. CBSH shall, from time to time, as requested by SERAGEN, manufacture and supply to SERAGEN Fermentation Pellets, First Gen PDS and/or Second Gen PDS produced, tested and packaged according to the Manufacturing and Release Requirements under the terms and conditions of this Agreement, and in accordance with all Regulatory Requirements.


2.02 VALIDATION REQUIREMENTS.


(a) SECOND GENERATION VALIDATION. CBSH shall provide validation for all
equipment, manufacturing processes and procedures, cleaning processes
and procedures, and analytical test methodologies (together "Equipment
and Procedures") which are used in the manufacture and testing of
Second Gen PDS and testing of Second Gen FDP, in accordance with a
mutually agreed-upon validation plan according to the rates set forth
in Exhibit "C".


(b) MAINTENANCE OF CURRENT & FUTURE VALIDATIONS. CBSH shall use
commercially reasonable efforts to maintain the current and all future
validations for all Equipment and Procedures which are used in the
manufacture and testing of Fermentation Pellets, First Gen PDS and/or
Second Gen PDS and testing of First Gen FDP and/or Second Gen FDP.
CBSH shall use commercially reasonable efforts to maintain such
validations in accordance with cGMP.


(c) ADDITIONAL VALIDATIONS. Additional validations that may be requested
by SERAGEN (i) in connection with the manufacture and testing of
Fermentation Pellets, First Gen PDS, Second Gen PDS, First Gen FDP
and/or Second Gen FDP or (ii) to comply with the Regulatory
Requirements of a Regulatory Agency, will be executed as described in
the terms and conditions of this Agreement. All such additional
validations will be performed in accordance with the Additional
Services rates set forth in Exhibit "B". Any other additional
validations not covered by this Section 2.02(c) shall be at CBSH's
cost and expense.


2.03 REGULATORY INSPECTIONS. CBSH shall prepare for, submit to and endeavor to pass all inspections deemed necessary by the Regulatory Agencies, and both Parties shall cooperate to allow CBSH to promptly correct all deficiencies, and both Parties shall cooperate, such that CBSH is able to timely manufacture and supply Fermentation Pellets, First Gen PDS and/or Second Gen PDS for SERAGEN. Cost for such preparations, inspections and corrective actions


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for Fermentation Pellets, First Gen PDS, and/or Second Gen PDS-related inspections will be in accordance with the Additional Services rates set forth in Exhibit "B".


2.04 DEVIATIONS & INVESTIGATIONS. SERAGEN shall be notified in writing of all process deviations, manufacturing failures, errors/accidents and out-of-specification results, which are significant in each case, within one (1) working day of CBSH's knowledge of such. For purposes of this Section 2.04, all such notifications must be made by facsimile transmission to the current "Director, Quality Assurance & Compliance" for Ligand Pharmaceuticals Incorporated ("LIGAND") and LIGAND quality assurance (quality assurance hereinafter referred to as "QA"), which shall be deemed received upon confirmation of facsimile transmission, and those notice provisions set forth in Section 10.01 shall not be applicable. SERAGEN and CBSH shall agree on the scope and timing of resulting investigations as well as process changes for any subsequent Batches, all as consistent with cGMP and/or Regulatory Requirements.


2.05 RELEASE TESTING. CBSH shall, from time to time as requested by SERAGEN, perform analytical release testing using validated procedures for First Gen FDP and Second Gen FDP according to SOPs. CBSH shall perform the work detailed in all SOPs under cGMP conditions, and shall perform the work as detailed in the SOPs within the time defined in the SOP, including laboratory testing, QA review of data and final report. In the event that SERAGEN requests a repeat of a test, and the request is in accordance with CBSH's retest policy, CBSH shall begin the work within one (1) week of the request, and complete the work within the time specified in the SOPs. In the event that analytical results fail to meet Specifications or acceptance criteria as defined in the SOPs or Manufacturing and Release Requirements, CBSH will undertake any resulting investigations and other action required as per cGMP and CBSH internal standard operating procedures or protocols. Any investigations other than those required by cGMP and/or CBSH internal standard operating procedures or protocols and if requested by SERAGEN will be performed in accordance with the Additional Services rates set forth in "Exhibit B." Although CBSH will be performing First Gen FDP and Second Gen FDP release testing, SERAGEN is, and at all times will remain, responsible for final release of the First Gen FDP and Second Gen FDP for sale and/or use. CBSH assumes no responsibility or liability whatsoever related to final release of First Gen FDP and Second Gen FDP for sale and/or use.


2.06 STABILITY TESTING. CBSH shall, from time to time, as requested by SERAGEN, perform stability testing using validated procedures for First Gen FDP, Second Gen FDP, Fermentation Pellets, First Gen PDS and/or Second Gen PDS, according to SOPs. CBSH shall perform the work detailed in all SOPs or protocols under cGMP conditions, and shall perform the work as detailed in the SOPs or protocols within the time defined in the SOP or protocol, including laboratory testing, QA review of data and final report. In the event that SERAGEN requests a repeat of a test/SOP or protocol, CBSH shall begin the work within one (1) week of the request, and complete the work within the time specified in the SOPs or protocols. In the event that stability test results fail to meet Specifications or acceptance criteria as defined in the SOPs, protocols, or Manufacturing and Release Requirements, CBSH will undertake any resulting investigations and other action required as per cGMP and CBSH internal standard operating procedures or protocols. Any stability testing or investigations other than those required by cGMP and/or CBSH internal standard operating procedures or protocols and if requested by


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SERAGEN will be performed in accordance with the Additional Services rates set forth in "Exhibit B."


2.07 FORECASTS. SERAGEN will provide CBSH with an initial preliminary non-binding forecast for production of Fermentation Pellets, First Gen PDS and/or Second Gen PDS, covering the calendar year 2004, no later than ten (10) business days following the date of last signature below. Thereafter, on or before each December 31st (as to July through December of the following calendar year) and June 30th (as to January through June of the following calendar year) during the Term of the Agreement, SERAGEN will provide CBSH with a twelve (12) month preliminary non-binding forecast for production of Fermentation Pellets, First Gen PDS and/or Second Gen PDS. CBSH shall notify SERAGEN within ten (10) business days of receipt of each forecast if it anticipates that it will be unable to meet any or all of the last six (6) months of the forecasted requirements, provided however, that failure to make such notification will not obligate CBSH to supply amounts of Fermentation Pellets, First Gen PDS and/or Second Gen PDS beyond the limitations set forth below in Section 2.08.


2.08 PURCHASE ORDERS. SERAGEN will provide CBSH with the initial binding purchase order for production of Fermentation Pellets, First Gen PDS and/or Second Gen PDS requirements, covering the first six (6) months of calendar year 2004 and providing CBSH with no less than six (6) months lead time on the first proposed Batch Acceptance Date, no later than ten (10) business days following the date of last signature below. Thereafter, on or before each December 31st (as to July through December of the following calendar year) and June 30th (as to January through June of the following calendar year) during the Term of the Agreement, SERAGEN will provide CBSH with a six (6)-month binding purchase order for production of Fermentation Pellets, First Gen PDS and/or Second Gen PDS requirements. All binding purchase orders submitted by SERAGEN for manufacture of Fermentation Pellets, First Gen PDS and/or Second Gen PDS must contain Batch Acceptance Date(s) for such Fermentation Pellets, First Gen PDS and/or Second Gen PDS within the relevant time period covered by such purchase order. If CBSH is unable to meet a Batch Acceptance Date, CBSH shall notify SERAGEN within ten (10) business days of receipt of a purchase order and CBSH and SERAGEN shall work together, in good faith, to set an amended Batch Acceptance Date which is acceptable to both Parties. SERAGEN shall provide CBSH with a binding purchase order for First Gen FDP and/or Second Gen FDP release/stability testing and/or Fermentation Pellets, First Gen PDS and/or Second Gen PDS stability testing at least one (1) month prior to the scheduled initiation of the testing.


If SERAGEN requires additional manufacture of Fermentation Pellets, First Gen PDS and/or Second Gen PDS before or during any period that is over and above the quantity specified in the binding purchase order for such period, SERAGEN shall submit additional purchase order(s) for such additional Fermentation Pellets, First Gen PDS and/or Second Gen PDS. Such additional purchase orders shall be submitted to CBSH as soon as SERAGEN becomes aware of such additional quantity needs, but no later than ninety (90) days prior to the Batch Acceptance Date set forth in a binding purchase order for that additional quantity. CBSH will use commercially reasonable efforts to fulfill such additional purchase orders, but, subject to the foregoing, CBSH is under no obligation to accept and/or to fulfill any additional purchase order(s) for Fermentation Pellets, First Gen PDS and/or Second Gen PDS to the extent such purchase order(s), (i) when aggregated with previously received purchase orders for such period, exceeds


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by more than *** the amounts set forth in the binding portion of the forecast related to such period and submitted in accordance with Section 2.07, or (ii) cannot be filled due to circumstances arising under Section 10.10. CBSH shall notify Seragen in writing within ten (10) business days of receipt of any such additional purchase order(s) which CBSH rejects and/or will be unable to fulfill. If such notice is not received by SERAGEN within ten (10) business days of CBSH's receipt of such additional purchase order(s), the additional purchase order(s) shall be deemed accepted by CBSH.


CBSH shall notify SERAGEN, within ten (10) business days of receipt of a purchase order, of the scheduled commencement date for manufacture of Fermentation Pellets, First Gen PDS and/or Second Gen PDS.


Purchase orders shall be submitted by LIGAND on behalf of SERAGEN in substantially the form shown on Exhibit "E" hereto. In the event of a conflict between the terms and conditions listed on the reverse side of the purchase order and this Agreement, this Agreement shall govern. Unless otherwise noted on the face of such form, the Batch Acceptance Date shall appear under the title "Delivery Date".


2.09 SUPPLY AND STORAGE OF MATERIALS. CBSH shall be responsible for planning, ordering and maintaining an adequate supply of components, supplies, raw materials and reagents meeting the Specifications that are necessary to manufacture Fermentation Pellets, First Gen PDS and/or Second Gen PDS and to provide the services as described in this Agreement. Reference standard and controls qualification, maintenance and storage will be provided by CBSH in accordance with cGMP and all other Regulatory Requirements. Reference standard and controls qualifications shall be provided in accordance the applicable rates set forth in Exhibit "B." Further, CBSH shall provide facilities to adequately store and maintain all raw materials, reagents, and intermediates in accordance with Specifications. CBSH shall ensure that appropriate diligence, caution and management are taken in CBSH's storage and control of key cell lines and other reagents owned by SERAGEN which are directly related to the testing of First Gen FDP and/or Second Gen FDP and Fermentation Pellets, First Gen PDS and/or Second Gen PDS, such as, but not limited to, applicable cell lines and antibodies.


2.10 STORAGE OF FERMENTATION PELLETS, FIRST GEN PDS AND/OR SECOND GEN PDS. CBSH will store Fermentation Pellets if manufactured by CBSH under a purchase order in accordance with Section 2.08 and up to an amount necessary to manufacture a twelve (12)-months' supply of First Gen PDS and Second Gen PDS, as determined by the forecast submitted for such period, plus a *** safety stock. In addition, CBSH will store First Gen PDS and Second Gen PDS for up to twelve (12) months following the applicable Batch Acceptance Date. CBSH may store quantities of Fermentation Pellets, First Gen PDS or Second Gen PDS in excess of those set forth above and/or may store such for periods of time in excess of those set forth above at the storage rates set forth in Exhibit "B."


2.11 MANUFACTURING PROCESS CHANGES. Manufacturing and Release Requirements cannot be changed unless agreed to in a dated, written document signed by the Parties and incorporated into the Production Record. In addition, if any Regulatory Agency having jurisdiction in any country where SERAGEN is selling First Gen FDP and/or Second Gen FDP requires any changes to the Fermentation Pellets, First Gen PDS and/or Second Gen PDS Specifications,


***Portions of this page have been omitted pursuant to a request for Confidential Treatment and filed separately with the Commission.


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CBSH shall make reasonable efforts to make the required changes per section 3.02, so long as such changes do not conflict with cGMP. In the event amendments or supplements are required to the Specifications for the purpose of complying with current Regulatory Requirements, the Parties shall mutually agree on appropriate amendments or supplements and shall incorporate or include such amendment or supplement in or as part of the Production Record. Such activities shall be additional services if they are requested by SERAGEN (i) in connection with the manufacture and testing of Fermentation Pellets, First Gen PDS, Second Gen PDS, First Gen FDP and/or Second Gen FDP or (ii) to comply with the Regulatory Requirements of a Regulatory Agency, and will be performed in accordance with the Additional Services rates set forth in Exhibit "B".


2.12 PROCESS IMPROVEMENTS. Each of CBSH and SERAGEN shall have the right to request changes to implement Process Improvements or to reduce the cost of manufacturing at the Facility, by written notice delivered to the other party. CBSH and SERAGEN shall meet as soon as possible after such notification to discuss such changes, the cost impact of such changes and the continued provision of Fermentation Pellets, First Gen PDS and/or Second Gen PDS under this Agreement. No change shall be implemented by CBSH or SERAGEN, whether requested by either of the parties or requested or required by a Regulatory Agency and/or a governmental agency, until the Parties have agreed in writing to such change. Under no circumstances shall this section be construed to require either Party to agree to changes that do not comply with cGMP. Such activities shall be additional services if they are requested by SERAGEN (i) in connection with the manufacture and testing of Fermentation Pellets, First Gen PDS, Second Gen PDS, First Gen FDP and/or Second Gen FDP or (ii) to comply with the Regulatory Requirements of a Regulatory Agency, and will be performed in accordance with the Additional Services rates set forth in Exhibit "B".


2.13 QUALITY CONTROL AND QUALITY ASSURANCE. CBSH shall conduct quality control testing and release of Fermentation Pellets, First Gen PDS and/or Second Gen PDS (hereafter referred to as "CBSH QA Release") to SERAGEN or SERAGEN's designated carrier for further processing by SERAGEN in accordance with (a) the methods and procedures described in the Manufacturing and Release Require ...