Joint Development Mamufacturing/supply Agreement

JOINT DEVELOPMENT AND MANUFACTURING/SUPPLY AGREEMENT


THIS AGREEMENT is made and effective this 13th day
of March, 1992, by and between AMARILLO CELL CULTURE COMPANY,
INCORPORATED, a Texas corporation with it principal place of
business at 2505 Lakeview Drive, Suite 104, Amarillo, Texas
79109-1527 (hereinafter "ACC") and HAYASHIBARA BIOCHEMICAL
LABORATORIES, INC., with its principal place of business at
2-3, Shimoishii 1-chome, Okayama 700, Japan (hereinafter "HBL")
(ACC and HBL collectively referred to hereinafter as the
"Parties").


WHEREAS, HBL has substantial expertise in the
production and use of hamster culture derived human
lympho-bastoid interferon (hereinafter "IFN-a") and has
proprietary rights and know-how in the field of production,
purification and formulation of IFN-a;


WHEREAS, ACC desires to promote applications of its
proprietary technology relating to oral administration of
interferon in all species and desires to make available to its
human and animal health licensees or distributors
preformulated interferon-containing compositions packaged and
labeled for use and sale consistent with ACC's distribution
needs or ACC's grant of license to said human or animal health
licensees;


WHEREAS, HBL and ACC desire to enter into a joint
development arrangement, pursuant to which HBL will render a
broad range of support and assistance to ACC, both as an
interferon supplier and as a development partner;


WHEREAS, ACC desires to have the exclusive right to
distribute HBL IFN-a for oral use in non-human warm-blooded
species worldwide, and in human species worldwide except
Japan;


WHEREAS, ACC and HBL have heretofore entered into
that certain Manufacturing and Supply Agreement effective
October 4, 1989, which Agreement is hereby terminated, and
superseded in its entirety by the present Agreement;


NOW, THEREFORE, for and in consideration of the
mutual covenants contained herein, HBL and ACC agree as
follows:


ARTICLE I


DEFINITIONS


1.1. "Agreement" means this Joint Development and
Manufacturing/Supply Agreement.


1.2. "Sublicensee" shall mean any person or entity
licensed by ACC under patents and/or Technical Information
owned by or licensed to ACC for the use and sale of
interferon-containing products for oral administration to any
warm-blooded species. Copies of all sublicenses and


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documents relating thereto will be submitted to HBL within
thirty (30) days of execution.


1.3. "Affiliate" means a corporation, company,
partnership, or other business entity which controls or is
controlled by, or is under common control with, the
designated party. In the case of a corporation, "control"
means ownership either directly or indirectly of at least
fifty percent (50%) of the shares of stock entitled to vote
for the election of directors.


1.4. "Manufactured Product(s)" shall mean HBL
interferon-containing products, which meet all product
specifications contained in the Product Specification Sheet.


1.5. "Product Specification Sheet" for any
Manufactured Product means a listing of product
specifications for each Manufactured Product named to this
Agreement, as prepared by ACC and/or the Sublicensee for whom
said product is to be manufactured, and shall include all
specifications necessary and appropriate under applicable
laws or regulations to define the product formulation, its
container, labeling and package design.


1.6. "Net Sales Value" shall mean the gross
selling price of a Manufactured Product or other
interferon-containing product, as the case may be, sold by
ACC, its Affiliates or Sublicensees, after the product is

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diluted into packaged dose formulations or compositions
designated or detailed and labeled for oral use in any
warm-blooded species, including all packaging, instructional or
other charges made to a purchaser, but less ACC's actual
out-of-pocket costs related to packaging, labeling, and
instructional materials, and less customary trade discounts or
credits allowed for return of defective products. If products
are sold in transactions which are not bona fide arms-length
transactions, Net Sales Value for such sales shall be valued as
equal to the commercial sale of similar product to unrelated
third parties in similar quantities.


1.7. "Technical Information' means all information,
reports, results, inventions, licenses, know-how, improvements,
materials, and any other technical and scientific data,
specifications and formulae directly related to development,
regulatory approval, manufacture, testing, use, marketing and/or
sale of Manufactured Product or other interferon-containing
compositions, and any non-public information relevant to the
business of the Parties which is necessarily disclosed by one to
the other during the Parties' performance under this Agreement.
"ACC Technical Information" refers to Technical Information
originating with ACC or which ACC has developed through its
contractual relationships with third parties. For the purpose of
this Agreement, ACC


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Technical Information shall include Technical Information from
Sublicensees pertinent to development, manufacture and sale of
Manufactured product or other interferon-containing
compositions by said Sublicensee. "HBL Technical Information"
refers to Technical Information originating with HBL or which
HBL has obtained through its contractual relationships with
third parties. "Technical Information" when not otherwise
specified herein means both ACC Technical Information and HBL
Technical Information.


1.8. "HBL Interferon" means the natural IFN-a used
for the formulation of HBL's natural IFN-a-containing
formulation(s) for use in the treatment of human renal cell
carcinoma in Japan, presently under the manufacturing and
commercializing approval of the Ministry of Health and Welfare
in Japan, and which is produced, purified and formulated by
HBL utilizing HBL Technical information. HBL Interferon shall
be utilized in the formulation of Manufactured Product
hereunder.


ARTICLE II


HBL OBLIGATIONS


2.1. Subject to the terms and conditions of this
Agreement, HBL shall supply HBL Interferon for low dosage,
oral use in non-human warm-blooded species worldwide, and for
low dosage, oral use in human species worldwide excepting


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Japan, exclusively to ACC and/or Sublicensee, and to no other
persons or entities. HBL shall formulate, manufacture, and
supply Manufactured Product in accordance with Product
Specification Sheets for delivery to ACC and/or Sublicensee
f.o.b. HBL's manufacturing facilities. Manufactured Product
shall be delivered for shipment to ACC or its Sublicensee in
tablet or lozenge form, or, at ACC's request, packaged in bulk.
Manufactured Product shall be supplied in response to issuance
by ACC or Sublicensee of written purchase orders delivered to
HBL specifying the identity of the Manufactured Product(s),
and the quantity to be supplied, along with any special
instructions/requests regarding the supply and/or delivery of
the specified product or products.


2.2. Manufactured Products produced by HBL hereunder
shall conform to all specifications listed on the corresponding
Product Specification Sheet(s). HBL shall make no change in
the raw materials, place of manufacture, method of manufacture,
or quality control testing of Manufactured Products unless
agreed to in advance by ACC and/or Sublicensee in writing. HBL
will supply with each shipment of Manufactured Products a
certificate of compliance with the respective Product
Specification Sheet and HBL shall provide, upon request,
quality control data and records setting forth the basis of
such certificate of compliance.


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2.3. HBL agrees to cooperate with ACC and/or Sublicensee
to assist with their development of a Product Specification Sheet
for each Manufactured Product. HBL agrees to allow right of
reference to HBL's FDA Biologics Master File for HBL Interferon and
to do such other acts that are reasonably necessary, and within
HBL's control, to facilitate FDA approval of HBL
Interferon-containing formulations for oral use (that is,
Manufactured Products diluted into packaged dose formulations or
composition designated or detailed and labeled for oral use in human
or non-human warm-blooded species). HBL further agrees to provide,
subject to compliance with applicable FDA regulations, sufficient
HBL Interferon for formulation development, preliminary human and
animal studies and clinical trials as are appropriate and necessary
to support application for FDA approval and commercialization of the
contemplated Manufactured Products.


2.4. Upon request by ACC, HBL will enter into an agreement
with ACC for delivery of Manufactured Products in labeled
containers, ready for delivery to end-users, including instructions.
HBL shall be entitled to additional compensation for such packaging,
labels and instructions, which compensation will be based upon HBL's
actual out-of- pocket costs to provide such packaging, labelling and


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instructions, including, without limitation, development
costs. ACC and HBL agree to negotiate in good faith, upon
request by ACC for such packaging, labelling, and
instructions, to agree to any further matters as to which
agreement may be required, such as materials employed,
manufacturing and production time, delivery dates, etc.


2.5. HBL shall provide nine million dollars U.S.
($9,000,000) in funding to ACC ("Research Funding"). The
funding schedule, which may be adjusted by mutual consent of
the Parties, shall be as follows:


During Calendar Year 1992 $3.5 million
During Calendar Year 1993 $4.0 million
During Calendar Year 1994 $1.5 million


HBL shall not be required to advance the 1993 and
1994 amounts to ACC unless and until INDA and INADA filings
required to be made by ACC under Paragraph 3.2, below, shall
have been timely made.


The Research Funding shall be used per business
plan(s) to be provided to HBL by ACC, but is summarized as
follows:


R&D on products for humans, U.S. $5.7 million
R&D on products for animal health $2.0 million
R&D on products for humans, International $1.3 million


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ARTICLE III


CONSIDERATION; DUE DILIGENCE


3.1. HBL shall receive a transfer fee from ACC or
Sublicensee in the amount of * per 200 IU, 200
mg tablet or lozenge, or comparable tablet or lozenge, which
price shall include the interferon contained therein, maltose,
other required ingredients, interferon assays, and technical
assistance. If interferon is shipped in bulk, at ACC's
request, HBL shall still be entitled to the above described
transfer fee, based on the number of tablets manufactured from
the bulk product. If interferon is formulated, at ACC's
request, into tablets or lozenges by HBL in Japan, then in
addition to the above transfer fee, HBL shall also be entitled
to be reimbursed for incremental costs actually incurred by
HBL with regard to tableting and packaging, including labor
and materials. HBL shall also receive from ACC or Sublicensee,
as consideration for the Research Funding, a fractional,
undivided interest in future sales ("Royalty"), as follows:


a. * on the first one
hundred million dollars ($100,000,000) of Net Sales Value of
interferon-containing products sold by ACC for oral use in
humans, worldwide, and * on Net Sales Value


--------------
* Confidential treatment has been requested


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of all such products sold for such uses, over and above one
hundred million dollars ($100,000,000); and


b. * of Net Sales Value of
Manufactured Products sold by ACC for oral use in animals,
worldwide; and


c. * of Net Sales Value of
products containing interferons other than HBL interferon, for
oral use in animals, worldwide, until six million dollars
($6,000,000) has been received by HBL with respect to such
payments, and thereafter, * .


ACC shall provide to HBL, at least annually, proposed
budgets for the expenditure of the Research Funding. In
addition, there shall be created an Advisory Committee
consisting of at least four (4) persons, half of whom shall be
named by HBL and half of whom shall be named by ACC. The
Advisory Committee shall provide advice, assistance and
direction to ACC, with regard to the expenditure of the
Research Funding.


In addition to the transfer fees and Royalty, HBL
shall receive * of any license fee, option
fee, or other payment, except royalty or specific research or
patent expense reimbursements, which ACC may receive for the
sublicense of rights under this Agreement to the sale and/or
use of HBL Interferon (hereinafter, * . The transfer


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fees payable to HBL for Manufactured Products delivered to ACC
or Sublicensees shall accrue on delivery and shall be payable
to HBL within forty-five (45) days of the close of the
calendar quarter in which the products are sold to ACC or
Sublicensees, and each calendar quarter thereafter. The
* shall be payable to HBL within forty-five (45) days of the
close of the calendar quarter in which ACC receives any
payment from which such * fee should be calculated.


HBL shall also-have access to ACC Technical
Information for use in marketing HBL Interferon for use in
humans in Japan, and HBL is hereby granted by ACC a limited,
exclusive license under ACC Technical Information and certain
of its patents for oral use of HBL Interferon in humans in
Japan. HBL will pay ACC a future sales interest of *
of the Net Sales Value of sales of HBL
Interferon by HBL, its Affiliates, licensees or transferees,
for oral use in humans in Japan. For purposes of this
paragraph, "Net Sales Value" shall be calculated for sales by
HBL, its Affiliates, licensees or transferees in the same
manner as Net Sales Value is calculated for sales by ACC, its
Affiliates or sublicensees


3.2. ACC shall apply its reasonable efforts to
proceed with the development, regulatory approval process, and
marketing of at least two (2) clinical indications for
Manufactured Products, and shall file at least one (1)
Investigatory New Drug Application ("INDA"), and one (1)
Investigatory New Animal Drug Application ("INADA") for a


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Manufactured Product with the FDA within one (1) year of the
date of this Agreement. ACC shall maintain records of all ACC
expenditures with respect to its business efforts toward
development of Manufactured Products hereunder and such
records shall be sufficient to show the clinical indication
for which each such expenditure is made. ACC shall provide HBL
by January 31 of each year during the term of this Agreement,
a report of on-going efforts for the development of each
clinical indication for Manufactured Products, including a
report ...