Product Development Agreement

Exhibit 10.1EXECUTION VERSION PRODUCT DEVELOPMENT AGREEMENT BETWEEN COREPHARMA LLC AND KING PHARMACEUTICALS, INC. and KING PHARMACEUTICALS RESEARCH AND DEVELOPMENT, INC. Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


THIS PRODUCT DEVELOPMENT AGREEMENT (" Agreement" ) is made on June 18, 2008 (the " Effective Date" ) by and between COREPHARMA LLC , a limited liability company, incorporated under the laws of New Jersey (" Core" ), and KING PHARMACEUTICALS, INC. , a corporation incorporated under the laws of Tennessee (" KPI" ), and KING PHARMACEUTICALS RESEARCH AND DEVELOPMENT, INC. , a Delaware corporation and wholly owned subsidiary of KPI (" King R&D" , and together with KPI, " King" ). RECITALS : WHEREAS , King and Core are in the business of researching, developing, formulating and manufacturing pharmaceutical products; and WHEREAS , Core has certain expertise in formulating, manufacturing, and developing new formulations of metaxalone that present bioavailability profile that is higher than the Reference Product (as defined herein); WHEREAS , King possesses rights in certain intellectual property pertaining to product formulations of the active pharmaceutical ingredient metaxalone; WHEREAS , King desires to research, develop, and seek marketing approval for [***] improved formulations of metaxalone (as further described herein) [***]; WHEREAS , King seeks Core' s services in formulating, manufacturing, and development of [***] improved formulations of metaxalone (as further described herein) for human use and Core seeks to provide such services to King; and WHEREAS , KPI and Core shall, simultaneously with the execution of this Agreement, execute an Amended and Restated Skelaxin Manufacturing and Supply Agreement (the " Amended and Restated Skelaxin Manufacturing and Supply Agreement" ) to modify provisions of the Skelaxin Manufacturing and Supply Agreement dated as of May 11, 2006, between KPI and Core, as amended, to provide for the transactions contemplated herein and amend pricing relating to the Improved Product (as defined therein). NOW, THEREFORE, THE PARTIES HERETO, INTENDING TO BE LEGALLY BOUND, HEREBY AGREE AS FOLLOWS: ARTICLE 1 DEFINITIONS In this Agreement unless the context otherwise requires, the following terms shall have the following meanings: 1.1 " Affiliate(s)" means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. A Person will be regarded as in control of another Person if such Person owns, or directly or indirectly controls, more than 50% of the voting securities (or comparable equity interests) or other ownership interests of the other Person, or if such Person Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


directly or indirectly possesses the power to direct or cause the direction of the management or policies of the other Person, whether through the ownership of voting securities, by contract, or any other means whatsoever, provided, however, that, for purposes of this Agreement, the term " Affiliate" will not include subsidiaries in which a party or its Affiliates owns a majority of the ordinary voting power to elect a majority of the board of directors, but is restricted from electing such majority by contract or otherwise, until such time as such restrictions are no longer in effect. 1.2 " Agreement" shall have the meaning set forth in the preamble hereto. 1.3 " Amended and Restated Skelaxin Manufacturing and Supply Agreement" shall have the meaning set forth in the preamble hereto. 1.4 " API" shall mean the active pharmaceutical ingredient metaxalone polymorph 1. 1.5 " Background IP" shall mean, with respect to a Party, the Intellectual Property of such Party that is (a) reasonably useful or necessary for the performance of the Development Services or the development, manufacture, importation, use, marketing, distribution, and sale of Target Formulations in and for the Territory, and (b) Controlled by such Party on the Effective Date, or that comes within such Party' s Control during the Term (other than a Party' s rights in any Inventions); provided, however, that any Intellectual Property created in the process of the execution of the matters set forth on Schedule A prior to the Effective Date shall be deemed to be King Background IP. 1.6 " Completion of Development Activities for Target [***]" shall have the meaning assigned to such term in Section 3.1(a) . 1.7 " Confidentiality Agreement" shall be that Confidentiality Agreement between Core and KPI, dated August 18, 2005 attached hereto as Schedule B . 1.8 " Control" or " Controlled" shall mean, with respect to any Intellectual Property, the possession (whether by ownership or license), or the ability of a Party to assign, transfer, grant access to, or grant a license or sublicense of, such item or right as provided for herein. 1.9 " Core Indemnitees" shall have the meaning ascribed to such term in Section 6.1(a) . 1.10 " Covering" means, with respect to a product or with respect to technology, that, in the absence of a license granted under a Valid Claim, the making, use, offering for sale, or importation of such product or the practice of such technology would infringe such Valid Claim. 1.11 " Development Expense Cap" shall have the meaning ascribed to such term in Section 3.1(b) . 1.12 " Development Expenses" shall have the meaning ascribed to such term in Section 3.1(b) . 1.13 " Development Fees" shall have the meaning ascribed to such term in Section 3.1(a) . 1.14 " Development Plan" shall mean the workplan, projected timetable and budget described in Schedule A attached hereto (as amended by King and Core from time to time pursuant to Section 2.2 ) for the performance of (i) the Development Services, (ii) the Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


development of Target [***], (iii) the achievement of Successful Proof of Concept for Target [***], and (iv) the development of Target [***] following achievement of Successful Proof of Concept for Target [***]. 1.15 " Development Services" shall mean the services related to the research, development, and regulatory approval of Target [***] and Target [***] (after Successful Proof of Concept for Target [***] has been demonstrated to King) as described and to be performed by Core under this Agreement, including all research, preclinical, pharmaceutical, regulatory and other activities undertaken by Core pursuant to Section 2.3 , including without limitation all [***] and any other regulatory filings required for the successful commercialization of Target [***] in accordance with Section 2.3 and with the assistance of King, assisting King in its compilation, filing and obtaining approval of the NDA and any other regulatory filings required for the successful commercialization of Target [***] in accordance with Section 2.3 , such other activities as are more fully described in and in accordance with the Development Plan, and all technology transfer activities and assistance provided by Core pursuant to Section 2.6 . The Development Services shall also include services by Core to achieve Successful Proof of Concept for Target [***]. 1.16 " Discount" means, with respect to Target [***], the following as they relate to the sales of Target [***], and with respect to Target [***], the following as they relate to the sales of Target [***]: (a) all documented and verifiable applicable sales credits accrued in accordance with GAAP and customary discounts (such as cash discounts, volume discounts, chargebacks, promotional, shelf stock and other allowances, government mandated rebates (whether in existence now or enacted at any time hereafter) and other rebates, credits, and returns), and (b) sales, use or excise taxes. 1.17 " FDA" shall mean the United States Food and Drug Administration and any successor entity. 1.18 " First Commercial Sale" (i) with respect to branded Target [***] shall mean the first arm' s-length sale by King, its Affiliates, or any King licensee to a Third Party of Target [***] for end-use of consumption, including any sale to a wholesaler or distributor, of such product in a country after the applicable Regulatory Authority has granted regulatory approval for such product; and (ii) with respect to branded Target [***] shall mean the first arm' s-length sale by King, its Affiliates, or any King licensee to a Third Party of Target [***] for end-use of consumption, including any sale to a wholesaler or distributor, of such product in a country after the applicable Regulatory Authority has granted regulatory approval for such product. For purposes of this definition, any sale to an Affiliate or King licensee will not constitute a First Commercial Sale. 1.19 " Good Clinical Practices" shall mean the then-current standard for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of trials that involve the participation of human subjects to support or are intended to support applications for research or marketing permits for products regulated by the FDA. Good Clinical Practices are established through FDA regulations (including 21 CFR Parts 11, 50, 54, 312, and 314), FDA guidance, FDA current review and inspection standards, and current industry standards. Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


1.20 " Good Laboratory Practices" shall mean the then-current standards for conducting nonclinical laboratory studies that support or are intended to support applications for research or marketing permits for products regulated by the FDA. Good Laboratory Practices are established through FDA regulations (including 21 CFR Part 58), FDA guidance, FDA current review and inspection standards, and current industry standards. 1.21 " Good Manufacturing Practices" shall mean the then-current Good Manufacturing Practices as defined in the U.S. Code of Federal Regulations that are applicable to each Target Formulation as amended from time to time. Good Manufacturing Practices are established through FDA regulations (including 21 CFR Parts 210 and 211), FDA guidance, FDA current review and inspection standards, and current industry standards. 1.22 " Intellectual Property" shall mean (a) all compounds, formulations, materials, methods, techniques, trade secrets, copyrights, know-how, data, documentation, regulatory submissions, specifications, and other intellectual property of any kind (whether or not protectable under patent, trademark, copyright, or similar laws) and (b) for clarity, all patents and patent applications claiming the foregoing, as applicable, and all divisions, continuations and continuations-in-part of such patent applications, all patents issuing thereon and all reissues, reexaminations and extensions of any of the foregoing patents. 1.23 " Inventions" shall mean all Intellectual Property and discoveries, inventions, developments, modifications, innovations, updates, enhancements, improvements, writings, or rights (whether or not protectable under patent, trademark, copyright, or similar laws) that are conceived, discovered, invented, developed, created, made, or reduced to practice solely by a Party, or jointly by the Parties, in the course of performing their obligations under the Development Plan. 1.24 " King Indemnitees" shall have the meaning ascribed to such term in Section 6.1(b) . 1.25 " King Inventions" shall have the meaning ascribed to such term in Section 4.2 . 1.26 " Launch Quantity" shall have the meaning ascribed to such term in Section 2.5(c) . 1.27 " Loss of Market Exclusivity" means, with respect to Target [***], the date of the first FDA approved sale of a product under an ANDA referencing the NDA for Target [***], and with respect to Target [***], the date of the first FDA approved sale of a product under an ANDA referencing the NDA for Target [***]. 1.28 " Losses" shall have the meaning ascribed to such term in Section 6.1(a) . 1.29 " NDA" shall mean a New Drug Application or similar application or submission filed with a Regulatory Authority in a country or group of countries to obtain marketing approval for a Target Formulation in that country or in that group of countries. 1.30 " Net Sales" (i) in the case of Target [***], means [***]; and (ii) in the case of Target [***], means [***]. 1.31 " Party" shall mean Core or King; and " Parties" shall mean Core and King. 1.32 " Person" shall mean an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


joint stock company, trust, unincorporated association, joint venture, or other similar entity or organization including a government or political subdivision, department, or agency of a government. 1.33 " Project Team" shall have the meaning ascribed to such term in Section 2.2(c) . 1.34 " Project Technology" shall mean all data generated and everything discovered, developed, made, perfected, improved, designed, engineered, devised, produced, conceived, or first reduced to practice by Core or any of its employees or consultants, subcontractors, or development and/or collaborative partners in the course of providing the Development Services, whether tangible or intangible, including without limitation each and every Invention, work of authorship, trade secret, formula, process, routine, subroutine, technique, concept, method, idea, and algorithm, and all software and related documentation in any source of development (including but not limited to source code, object code, flow charts, diagrams and other materials of any type whatsoever) and all rights of any kind in or to any of the foregoing (including without limitation patents, trade secrets, know-how and copyrights) regardless of whether any or all of the foregoing constitutes copyrightable or patentable subject matter. 1.35 " Proof of Concept" shall mean the formulation experiments and other activities set forth in the Development Plan for the achievement of Successful Proof of Concept for Target [***]. 1.36 " Reference Product" shall mean that drug product containing a dosage of [***] of metaxalone as described in NDA #13-217. 1.37 " Regulatory Authority" shall mean any governmental regulatory authority which regulates any aspect of the manufacture, development, market approval, sale, distribution or use of any Target Formulation, including without limitation, FDA. 1.38 " Skelaxin Manufacturing Agreement" shall mean the Amended and Restated Manufacturing and Supply Agreement between KPI and Core, dated the date hereof, as such agreement may be amended, modified or supplemented from time to time. 1.39 " Successful Proof of Concept" shall have the meaning assigned to such term in Section 3.1(a) . 1.40 " Target A Royalty Rate" means [***]. 1.41 " Target Formulations" shall mean either Target [***] and/or Target [***]. 1.42 " Target [***]" shall mean [***]. 1.43 " Target [***] Patent Right" means any patents and patent applications Covering Target [***] conceived or reduced to practice by Core, issued patents resulting from such applications, and all divisions, continuations, substitutions, reissues, extensions, registrations, patent term extensions and renewals of the foregoing. 1.44 " Target [***] Royalty Period" shall have the meaning assigned to such term in Section 3.1(d)(i) . 1.45 " Target [***]" shall mean [***]. 1.46 " Target [***] Patent Right" means any patents and patent applications Covering Target [***] conceived or reduced to practice by Core, issued patents resulting from such Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


applications, and all divisions, continuations, substitutions, reissues, extensions, registrations, patent term extensions and renewals of the foregoing. 1.47 " Target [***] Royalty Period" shall have the meaning assigned to such term in Section 3.1(d)(ii) . 1.48 " Term" shall have the meaning ascribed to such term in Section 5.1 . 1.49 " Termination Notice Period" shall have the meaning ascribed to such term in Section 2.2(b) . 1.50 " Territory" shall mean all countries of the world. 1.51 " Third Party" shall mean any person or entity other than Core or King or their respective Affiliates. 1.52 " Valid Claim" means, as to Target [***], a claim in a Target [***] Patent Right, and as to Target [***], a claim in a Target [***] Patent Right, with respect to which none of the following ((i), (ii) or (iii)) apply: (i) has been held permanently revoked, unenforceable or invalid in the country in the Territory by a final unappealable decision of a court or government agency of competent jurisdiction over such claim, (ii) has been admitted to be invalid or unenforceable through agreement, disclaimers, consent decrees or otherwise, or (iii) in the case of a patent application, has been pending for more than five (5) years after the filing of its first priority application. ARTICLE 2 DEVELOPMENT OF PRODUCTS 2.1 General . King hereby retains Core and Core hereby agrees (i) to collaborate with King in, and to perform, the Development Services for Target [***], (ii) to collaborate with King in, and to perform the Development Services to achieve Successful Proof of Concept for Target [***], (iii) upon achievement of Successful Proof of Concept for Target [***], to collaborate with King to establish a target product profile that will become Target [***] and a Development Plan to achieve such target product profile, and (iv) to collaborate with King in, and to perform the Development Services established in connection with the Development Plan described in Section 2.1(iii) above. Core and King will perform their respective research and development responsibilities hereunder with respect to the Target Formulations in accordance with the Development Plan and will perform all their respective obligations and exercise their respective rights under this Agreement in compliance with all applicable laws and regulations. King will have final decision-making authority with respect to the establishment and execution of a target product profile for Target [***]and the Development Plan to achieve such target product profile for Target [***]. 2.2 Target Formulations and Development Plan . (a) Core and King have agreed upon the Development Plan attached hereto as Schedule A . From time to time King and Core may, in writing, agree to modify and revise the Development Plan pursuant to and subject to the terms of Section 2.1 (including, for the avoidance of doubt, the last sentence of Section 2.1 ), to add the Development Plan to achieve Target [***] following Successful Proof of Concept for Target [***]. (b) King may, at any time during the Term upon no less than fifteen (15) days' prior written notice to Core (the period beginning on the date upon which such notice is Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


given to the actual date of termination shall be referred to as the " Termination Notice Period" ), elect to terminate the development of any Target Formulation by Core and King under the Development Plan for any or no reason. In the event that at the time King delivers a termination notice pursuant to this Section 2.2(b) , Core has completed at least fifty percent (50%) of the work relating to the achievement of a milestone relating to the terminated Target Formulation within the Termination Notice Period, King shall pay Core the corresponding pro-rated share of the Development Fee(s) set forth under Section 3.1(a) for those milestone events partially achieved and those achieved in accordance with Section 3.1(a) within the Termination Notice Period. For the avoidance of doubt, such payment by King of the Development Fees shall be subject to receipt by King of a detailed invoice from Core and all supporting documentation reasonably requested by King to determine such partial achievement or achievement of the milestone(s). On the effective date of such termination of a Target Formulation, the Parties shall no longer be obligated to perform any activities under the Development Plan with respect to such Target Formulation. King shall promptly reimburse Core for Development Expenses incurred up to the effective date of such termination but shall not be obligated to reimburse Core for Development Expenses incurred after the effective date of such termination (other than Development Expenses in respect of non-cancelable or non-refundable commitments made prior to the notice date of such termination). For clarity, the Development Plan and King' s obligations to reimburse Core for Development Expenses with respect to the remaining Target Formulation, other than the terminated Target Formulation, shall be unaffected and Core and King shall continue their activities under the Development Plan in relation to such other Target Formulation. (c) Project Team . (i) Core and King will establish a project team (" Project Team" ) to oversee the Development Services and Core' s and King' s activities relating to the development of Target Formulation(s), to monitor the progress of the development of Target Formulation(s) at all stages of development and according to the benchmarks and milestones set forth in the Development Plan, to modify the Development Plan from time to time as provided in Section 2.2(a) , and to facilitate ongoing communication between Core and King. The Project Team shall consist of (i) a Core representative and (ii) a King representative from its Scientific Operations Department and (iii) a King representative from its Technical Operations Department. Core and King may appoint additional development, regulatory and business personnel to the Project Team as they deem necessary to accomplish the development of Target Formulation(s). In planning, administering, and monitoring the Development Services hereunder, the Project Team will allocate tasks and expertise in order to avoid duplication and to enhance synergies as well as to comply with the requirements of this Agreement. (ii) Subject to Section 2.1 , the Project Team shall operate by consensus, with the representatives of each of Core and King having collectively one (1) vote on behalf of such Party. The Project Team will meet monthly to review the status of the Development Plan and assess Core' s progress against the associated budget. For each meeting of the Project Team, the presence of at least one (1) representative of each of Core and King shall constitute a quorum. Action on any Project Team matter may be taken at a meeting, by teleconference or by videoconference and in each case documented in written minutes or by Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


other written agreement. Except as otherwise expressly provided for herein, each of Core and King shall bear their own expenses for maintaining their representatives on the Project Team. (iii) The Project Team shall attempt to resolve any and all disputes regarding the Development Plan by consensus. If the Project Team is unable to reach a consensus with respect to such a dispute, then such dispute shall be submitted to escalating levels of the senior management of Core and King for review. If such dispute cannot be resolved despite escalation, then the Chief Executive Officer of Core and the Chief Science Officer of King shall attempt to resolve such dispute. In the event that these Officers cannot reach an agreement regarding a dispute, then King shall have the right to decide the matter; provided , however that King may not amend or modify the Development Plan to require Core to engage in or perform any Development Services that are not expressly provided for in the Development Plan or otherwise agreed to by Core in writing, or require Core to incur Development Expenses in excess of the Development Expense Cap. 2.3 Core Responsibilities . Core shall use commercially reasonable efforts, consistent with the Development Plan and within the Development Expense Cap, to implement the Development Plan with respect to: (a) Target [***]: (i) complete [***]; (ii) manufacture, release, and complete stability analysis of clinical and registration batches of Target [***]; (iii) conduct the necessary [***]; (iv) produce final clinical, pharmaceutical development and stability reports; (v) develop, in conjunction with corresponding documentation in NDA submission-ready format reasonably acceptable to King, a drug product, which at a minimum meets the definition of Target [***]; and (vi) compile, file, prosecute and obtain approval of the NDA for Target [***], provided, however, that upon King' s written request Core shall immediately transfer all right title and interest in and to the NDA, as well as all documents, studies, work papers, work product (in any form or format), third party contracts, or other assets related to the NDA (either prior to filing with the FDA, or post filing with the FDA), and execute all documents necessary or requested by FDA to transfer ownership of the NDA and related matters to King, and to have King designated as the primary contact for all future communications with FDA related to the NDA for Target [***]. (b) Target [***]: (i) undertake an experimental program for Target [***] that constitutes Proof of Concept; (ii) upon achievement of Successful Proof of Concept for Target [***] and in accordance with and subject to Section 2.1 , collaborate with King to establish a target product profile that will become Target [***] and a Development Plan to achieve such target Note: Certain material has been redacted from this document and filed separately with the SEC pursuant to a request for confidential treatment under Rule 24b-2. The locations of these redactions are indicated throughout the document by the following marking: [***].


product profile, for Core' s provision of Development Services in connection with the Development Plan for Target [***]; and (iii) upon King' s approval of the Development Plan for Target [***], provide Development Services to King for Target [***] in accordance with the Development Plan and within the applicable budget to develop, in conjunction with corresponding documentation in NDA submission-ready format reasonably acceptable to King, a drug product, which at a minimum meets the definition of Target [***]. Such Development Services shall include, but not be limited to, production of clinical and registration batches of Target [***], and such reasonable assistance as King may require to successfully file and prosecute the NDA for Target [***]. (c) Records, cGLP, cGCP, and cGMP: Core shall maintain records regarding the Development Services in reasonably sufficient detail and in accordance with Good Laboratory Practices, Good Clinical Practices, and Good Manufacturing Practices to properly reflect and document, in a manner appropriate for purposes of supporting the filing of potential patent applications and the filing and obtaining of an NDA, all work done and results achieved in the performance of the Development Services hereunder. Core will make such records available to King during normal business hours upon reasonable notice. (d) Validation Protocols. Core shall be responsible for the preparation and execution of process validation protocols. Validation protocols shall be reviewed and approved by King prior to execution, such approval not to be unreasonably withheld. Core shall prepare the compl ...