Manufacturing Services Agreement

Exhibit 10.27


CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC") PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WITH RESPECT TO THE OMITTED
PORTIONS.
OMITTED PORTIONS ARE INDICATED BY [***].


BIOPHARMACEUTICAL DEVELOPMENT


AND MANUFACTURING SERVICES AGREEMENT


Between


PHARMATHENE, INC.


And


LAUREATE PHARMA, INC.


TABLE OF CONTENTS


Page Number
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Section 1. Definitions........................................................1 Section 2. Scope of Work; Orders for Products.................................5 Section 3. Program Performance................................................7 Section 4. Program Materials..................................................8 Section 5. Use of Subcontractors..............................................9 Section 6. Compliance with Government Regulations............................10 Section 7. Facility Visits, Audits and FDA Inspections.......................10 Section 8. Compensation......................................................11 Section 9. Change Orders.....................................................12 Section 10. Confidential Information/Legal Proceedings........................13 Section 11. Work Product......................................................14 Section 12. Inventions and Patents............................................14 Section 13. Independent Contractor............................................16 Section 14. Insurance.........................................................16 Section 15. Shipping; Risk of Loss; Inspection................................17 Section 16. Default...........................................................17 Section 17. Dispute Resolution................................................18 Section 18. Indemnification; Limitation of Liability..........................19 Section 19. Representations, Warranties and Covenants.........................21 Section 20. Force Majeure.....................................................23 Section 21. Use of Names......................................................23 Section 22. Term; Termination.................................................24 Section 23. Assignment; Third Party Beneficiary...............................25 Section 24. Notice............................................................25 Section 25. Choice of Law.....................................................26 Section 26. Headings..........................................................26 Section 27. Waiver/Severability...............................................26 Section 28. Entire Agreement; Modification/Counterparts.......................26


Annex A Letter of Intent Appendix 1 Cell Lines and Their Products Appendix 2 Approved Subcontractors and Services Appendix 3 Access and Audits Appendix 4 Scope Documents Appendix 5 Shipping Appendix 6 Termination Fees Appendix 7 FAR Clauses Schedule 4(b) Medarex Authorizations Schedule 5(c) Medarex Consent for Pre-approved Subcontractors


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BIOPHARMACEUTICAL DEVELOPMENT AND
MANUFACTURING SERVICES AGREEMENT


This BIOPHARMACEUTICAL DEVELOPMENT AND MANUFACTURING SERVICES AGREEMENT, effective as of this 15th day of June 2007 (the "Effective Date"), between PharmAthene, Inc., a Delaware corporation ("Customer"), having its principal place of business at 175 Admiral Cochrane Drive, Suite 101, Annapolis, MD 21401 and LAUREATE PHARMA, INC., a Delaware corporation ("Laureate"), having a principal place of business at 201 College Road East, Princeton, NJ 08540, (each a "Party", collectively the "Parties").


W I T N E S S E T H:


WHEREAS, Laureate provides a full range of bioprocessing services to the biopharmaceutical industry, including cell line development, process development, protein production, cell culture, protein purification, bioanalytical chemistry, aseptic filling and QC testing.


WHEREAS, on July 31, 2006, Laureate entered into a letter of intent and purchase order with Customer (the "LOI") and a Material and Technology Transfer Agreement (the "Medarex MTA") with Medarex, Inc. ("Medarex"), Customer's strategic partner with respect to the Drug Product, pursuant to which Laureate commenced the performance of certain bioprocessing services for Customer.


WHEREAS, on April 12, 2007, Laureate and Medarex entered into an amended and restated Medarex MTA (the "Amended and Restated Medarex MTA").


WHEREAS, for reference purposes only, a copy of the LOI is attached hereto as Annex A of this Agreement.


WHEREAS, Customer now desires Laureate to continue to perform those bioprocessing services and to perform additional bioprocessing services in accordance with the terms of this Agreement and any executed Scope (as hereinafter defined) related to the cGMP production and purification of a monoclonal antibody, produced by an engineered cell line, and Laureate desires to perform such services on behalf of Customer.


NOW, THEREFORE, in consideration of the above statements and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties hereto agree as follows:


Section 1. Definitions.


Terms defined elsewhere in this Agreement shall have the meanings set forth therein for all purposes of this Agreement unless otherwise specified to the contrary. The following terms shall have the meanings set forth below in this Section 1:


(a) "Affiliate(s)" for purposes of this Agreement shall mean any person, firm, trust, partnership, corporation, company or other entity or combination thereof which directly or indirectly: (i) controls a Party; (ii) is controlled by a Party; or (iii) is under common control with a Party. As used in this definition, the terms "control" and "controlled" shall mean ownership of fifty


percent (50%) or more (including ownership by trusts with substantially the same beneficial interests) of the voting and equity rights of such person, firm, trust, partnership, corporation, company or other entity or combination thereof or the power to direct the management of such person, firm, trust, corporation or other entity or combination thereof.


(b) "Agreement" means this document as signed by the Parties including the Scope and any referenced attachments and any amendments and additions to this document.


(c) "Assumptions" shall have the meaning as set forth in Section 9.


(d) "Batch" means a number of vials each filled at the same time with the same Lot or a group of Lots of Drug Product.


(e) "Batch Record" means a complete manufacturing record for a Batch generated by Laureate and approved by Customer made concurrently with the performance of each step of the production, purification and aseptic filling process for the Drug Substance, Drug Substance testing and lot release data, such that successive steps in such processes may be traced.


(f) "Cell Line" means the Chinese Hamster Ovary ("CHO") cell line that has been designed and engineered to produce the corresponding monoclonal antibody product as shown in Appendix 1, supplied by Medarex to Laureate pursuant to the Medarex MTA, particulars of which are set out in the Scope.


(g) "Certificate of Analysis" means a document signed by an authorized representative of Laureate, describing Specifications for, and testing methods applied to, any Drug Product, Drug Substance, samples or other Materials, and the results thereof.


(h) "Claim" shall have the meaning set forth in Section 18.


(i) "Compound" means the monoclonal antibody product candidate known as MDX-1303 or Valortim(TM).


(j) "Compound Materials" shall have the meaning given such term in the Amended and Restated Medarex MTA.


(k) "Contaminants" shall have the meaning set forth in Section 18(c).


(l) "Customer Confidential Information" means any information, business, technical or financial data related to the Program that is provided to Laureate by Customer.


(m) "Customer Know How" means all scientific, technical and other information relating to the Drug Product or the Process provided by Customer or Medarex other than Laureate Confidential Information.


(n) "Debarred Entity" means an entity that has been debarred by the FDA pursuant to 21 U.S.C. ss. 335(a) or (b).


(o) "Debarred Individual" means an individual that has been debarred by the FDA pursuant to 21 U.S.C. ss. 335(a) or (b).


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(p) "Drug Product" means the final dosage form pharmaceutical medicine containing Drug Substance that Customer or its Affiliates will use for clinical trials or for commercial supply, as applicable.


(q) "Drug Substance" is the bulk purified Compound produced using the Cell Line and the Process.


(r) "Facility" means Laureate's manufacturing facility located at 201 College Road East, Princeton, NJ 08540.


(s) "FDA" means the United States Food and Drug Administration, or any successor entity thereto having substantially the same functions.


(t) "Filling Components" means vials, stoppers and crimps used for an aseptic fill of the Drug Product.


(u) "Filled Product" means vials filled with Drug Product from an identified Lot or Lots which are in a form ready for release and shipment from the Facility.


(v) "Good Manufacturing Practices" or "GMP" or "cGMP" means current good manufacturing practices, as specified in regulations promulgated from time to time by the FDA for the manufacture and testing of pharmaceutical products. Laureate's operational quality standards are defined in internal cGMP policy documents and are based on Laureate's current interpretation of cGMP, which interpretation Laureate has reason to believe is in compliance with cGMP.


(w) "Laureate Confidential Information" means any information, business, technical or financial data, including, but not limited to, Laureate's production, purification and aseptic filling process and techniques and Laureate Know How, supplied by Laureate to Customer (excluding any such information or data provided by Medarex to Laureate in writing pursuant to the Amended and Restated Medarex MTA).


(x) "Laureate Group" shall have the meaning set forth in Section 18(b).


(y) "Laureate IP" shall have the meaning set forth in Section 12(b).


(z) "Laureate Know-How" shall have the meaning set forth in Section 12(b).


(aa) "Laureate SOP" means the written standard operating procedures and methods of Laureate, as the same may be amended, in Laureate's sole discretion, from time to time, but in any event, such SOPs will comply with all applicable laws in the United States.


(bb) "Loss" shall have the meaning set forth in Section 18.


(cc) "Lot" means the Drug Substance produced in a single production run, which may be contained in one or more containers thereof.


(dd) "Materials Invention" means any invention relating to the Compound Materials discovered or developed by Laureate, its employees, agents, consultants or contractors, solely or jointly with Medarex and/or Customer, in connection with the activities described in this Agreement or the Amended and Restated Medarex MTA.


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(ee) "Medarex" shall have the meaning set forth in the Recitals.


(ff) "Media Fill" means a fill of bacteriological growth media into vials for validation purposes.


(gg) "Modification" shall have the meaning set forth in Section 9.


(hh) "Permitted Regulatory Authority" shall have the meaning set forth in Section 7(b).


(ii) "Person" means an individual, partnership, corporation, limited liability company, joint stock company, unincorporated organization or association, trust or joint venture, or a governmental agency or political subdivision thereof.


(jj) "Process" means the production methods, purification processes and other know-how as provided by PharmAthene or Medarex pursuant to the Amended and Restated Medarex MTA for use by Laureate in the manufacture of Drug Substance and Drug Product from the Cell Line, and (ii) any modifications, enhancements or improvements to such methods or processes that may be made by Laureate, its employees, agents, consultants or contractors, solely or jointly with Customer, or Medarex from time-to-time.


(kk) "Process Consumables" means raw materials, filters, membranes, disposable analytical test kits, tubing, filling needles, disposable bags, disposable glass/plasticware, cleaning supplies and other changeover parts consumed during the manufacture of Drug Substance or Drug Product.


(ll) "Process Invention" means any invention relating to the Process discovered or developed by either Party or by Medarex (including each of its respective employees, agents, consultants or contractors, solely or jointly, in connection with the activities described in this Agreement or the Amended and Restated Medarex MTA.


(mm) "Product-Dedicated Equipment" means equipment such as chromatography columns and resins and filters and filter housings that will be used by Laureate solely for the manufacture of Drug Substance or Drug Products pursuant to a Scope under this Agreement.


(nn) "Product Invention" means any improvement or invention relating to the Compound (but excluding any Materials Invention or Process Invention) that is discovered by Laureate, its employees, agents, consultants or contractors, solely or jointly with Medarex and/or Customer, in connection with the activities described in this Agreement or the Amended and Restated Medarex MTA.


(oo) "Program" means the services to be performed by Laureate for Customer as described in a particular Scope.


(pp) "Quality Agreement" shall have the meaning set forth in Section 3(c).


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(qq) "Scope" means a detailed scope-of-work document entered into by the parties for the performance by Laureate of certain services on behalf of Customer relating to the Drug Substance, which shall be governed by, made part of, and be subject to this Agreement.


(rr) "Specification" means the requirements for tests, analysis, test procedures and acceptable test results with which Drug Substance and, as applicable, Drug Product, raw materials and excipients shall conform as set forth in a Scope, as amended from time-to-time by the Parties.


(ss) "Third Party" shall mean any party other than Customer or Laureate and their respective Affiliates.


Section 2. Scope of Work; Orders for Products.


(a) From time to time, the parties will prepare and enter into detailed Scopes for the Program and mutually agree to the associated Service Fees for each Scope. The Scopes shall be prepared by Laureate under Customer's direction and shall be subject to the final approval of Customer and shall be attached as an Appendix 4 to this Agreement. The first Scope document is attached hereto as Appendix 4-1. Each additional Scope shall be sequentially numbered (i.e., Scope #2, Scope #3) and shall be attached as additional appendices and numbered as follows: Appendix 4-2, Appendix 4-3, etc. Laureate will perform the services for Customer in accordance with each executed Scope. Each Scope will specify the Program design, information desired, estimated duration of the Program, and all other matters pertinent to completion of the Program, and will be deemed to be a part of this Agreement and incorporated herein by reference. Scope #1 was prepared by Laureate under Customer's direction and approved by Customer. The Service Fees associated with Scope #1 are attached to this Agreement as Appendix 4-1, Section II - "Service Fees and Payment Schedule."


(b) During the Term the parties will undertake the following procedures with respect to submitting forecasts and purchase orders for production runs under a Scope:


(i) Within [***], Customer will submit to Laureate for acceptance a written forecast for the scheduling of the bioreactor runs described in Scope #1. Within [***] of acceptance of the foregoing forecast by Laureate (the "Scope #1 Forecast"), Customer will submit to Laureate a purchase order (and corresponding reservation fees) for all production runs scheduled to take place within the [***] of the Scope #1 Forecast. Customer will submit to Laureate additional purchase orders (and corresponding reservation fees), on a [***] basis, if additional production runs are scheduled to occur on the Scope #1 Forecast but are scheduled to take place more than [***] after the delivery of the Scope #1 Forecast, provided such production runs have not been canceled as permitted by Section 22 of this Agreement. Each subsequently submitted purchase order shall include production runs scheduled to take place within [***] of the date of the purchase order.


(ii) Within [***] of the Effective Date, Customer shall, for Scope #2, submit to Laureate a written non-binding (except as set forth below), [***] rolling forecast setting forth the number of production runs of Drug Substance


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Customer reasonably believes it will require for each [***] during that period and the estimated timing for the delivery of those production runs of Drug Substance. Upon agreement by the Parties in writing, such forecast shall be deemed to be the initial forecast (the "Initial Forecast"). The Parties acknowledge that the Initial Forecast assumes the successful completion of [***] pursuant to Scope #1. If any consistency Lots are not completed successfully, as determined by Company in its reasonable discretion based on mutually agreed specifications for the consistency Lots, then the Initial Forecast shall be resubmitted by Customer to Laureate pursuant to this subsection (ii) and any [***] paid by Customer under the previously submitted [***], notwithstanding any other provision of this Agreement.


(iii) At the time that the [***] is determined by the Parties, Customer shall also submit to Laureate a purchase order for the total number of production runs of Drug Substance for the [***], if any, and the requested delivery dates for such production runs of Drug Substance, which dates will be the same as the dates set forth in the [***].


(iv) Customer will provide additional forecasts within [***] of the end of each calendar quarter during the period that the Scope is being performed, updating the information set forth in the Initial Forecast or any updated forecast (each, a "Forecast") for the [***] period following the completion of the first quarter of the immediately prior Forecast. For each additional Forecast, Laureate and Customer shall agree as to the delivery dates for production runs of Drug Substance not previously agreed to in a prior Forecast.


(v) At the time that each Forecast (other than the Initial Forecast) is agreed to by Customer and Laureate, Customer shall also deliver a purchase order for production runs of Drug Substance for the [***] of the Forecast. For the avoidance of doubt, the purchase order for the [***] of each subsequently delivered Forecast will already have been submitted to Laureate with the prior period's Forecast.


Any purchase order submitted under clauses (i), (iii) and (v) above, shall be firm and binding on Laureate and Customer at the time that Laureate receives the reservation fee for such production runs (such reservation fee to be determined in accordance with the appropriate Appendix 4). The purchase price for any purchase order for production runs shall be determined in accordance with, and shall be payable at the times set forth in the appropriate Appendix 4.


Additionally, if [***] notifies Laureate (either pursuant to a notification by Customer or a solicitation by Laureate) that it intends to schedule a production run [***], then Laureate shall promptly provide Customer with [***]. The notice from Laureate to Customer shall include the specific production runs of Drug Substance [***]. Customer shall have five (5) business days from the receipt of the notice to notify Laureate [***], at which time, such notification shall require Customer to pay Laureate a reservation fee in the manner set forth below. Failure by Customer to notify Laureate within such five (5) business day period shall be deemed to be [***]. Within ten (10) days after such notification by Customer, Customer will provide Laureate with the corresponding reservation fees for the Conflicting Customer Production Runs. [***] Laureate shall act in good faith and with a reasonable belief with respect to the notices that it is


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obligated to Provide Customer under this paragraph and such notices shall be provided by Laureate to Customer via electronic mail to the Customer project manager and to a member of Customer's senior management to be identified by Customer. Reservation fees paid by Customer under this paragraph shall be nonrefundable except as provided by Section 22(c); provided that once Customer notifies Laureate of its request to have [***], Customer shall be required to pay such reservation fees to Laureate, in the manner set forth above.


(c) Laureate shall consult with Customer in developing the Program design in a manner consistent with Laureate's current reasonable understanding of United States (the "US") regulatory guidelines, including cGMP. Provided that the Drug Product meets the Specifications in accordance with the terms of this Agreement (which Specifications may require compliance with cGMP), Laureate does not represent or warrant that any Program and/or any Program results will result in obtaining marketing approval for the Drug Product at the time of submission of the Program's results to such agencies.


(d) Laureate's performance of the Program will be based on technical information provided by or for the Customer. This information will be incorporated by Laureate into Program documents (scale up plans, Batch Records, Specifications, etc.) that will be reviewed and approved by the Customer prior to use by Laureate. These Program documents will form the sole basis upon which manufacturing runs will be performed. Laureate makes no representations or warranties that the execution of the Program according to the Program documents will result in any specific quantity of Drug Product or Drug Substance. Until the successful production of three (3) consistency Lots of Drug Substance, Laureate makes no representations or warranties that the execution of the Program according to the Program documents will result in any specific quality of Drug Substance.


(e) In addition to routine Program meetings, senior representatives of the Parties shall meet on an occasional basis or as necessary, the first meeting being no later than one (1) month from the Effective Date of a particular Scope, to review progress of the Program relative to the Scope and to agree on any necessary changes to the Scope. Any disagreement between the Parties concerning a Scope (including, without limitation, the failure of the Parties to agree upon any necessary changes to the Scope) shall be resolved in accordance with the dispute-resolution procedures set forth in Section 17 hereof.


Section 3. Program Performance.


(a) Laureate shall provide the Facility, supplies, and staff necessary to complete the Program as provided in a particular Scope, as it may be modified as provided herein, in accordance with the terms of this Agreement. In the event of any conflict between the terms and provisions of this Agreement and a Scope, the terms of this Agreement shall control.


(b) Laureate will appoint a Laureate representative (the "Program Manager") to be responsible for the completion of the Program pursuant to a Scope by Laureate. The Program Manager will coordinate performance of the Program with a representative designated by Customer (the "Customer Representative"), which representative shall have responsibility over all matters relating to performance of the Program on behalf of Customer. Unless otherwise agreed in a Scope, or mutually agreed to by the Parties, all communications between Laureate and the Customer regarding the conduct of the Program pursuant to a Scope shall be addressed to or routed through the Program


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Manager and Customer Representative. Laureate may, at its option, substitute the Program Manager during the course of the Program, on the condition that the substitute Program Manager is reasonably acceptable to Customer. Customer may, at its option, substitute the Customer Representative during the course of the Program.


(c) The parties have prepared and executed a detailed document ("Quality Agreement") specifying the quality and regulatory procedures and responsibilities of the parties hereunder with respect to the manufacture of Drug Substance and Drug Product.


Section 4. Program Materials.


(a) Laureate acknowledges that the Cell Line has been provided to Laureate by Medarex under the Medarex MTA. Customer is responsible for providing Laureate with sufficient amounts of Cell Line as reasonably requested by Laureate. Under any Scope, Customer is responsible for providing Laureate with reference standards and other substances, with which to perform the Program as specified in a particular Scope, as well as all documentation and such other data as may be necessary for Laureate to perform the Program as specified in a particular Scope and to apprise Laureate of the stability of the Compound and Compound Materials, process characteristics, proper storage, and manufacturing and safety requirements including, without limitation, the Certificate of Analysis and/or Material Safety Data Sheet, as applicable, relating to the Cell Line and reference standards as specified in a relevant Scope.


(b) Laureate shall procure the Compound, Filling Components, cell culture media, and Process Consumables for use in the Program and each manufacturing run all of which will comply with the Specifications. By written notice to Laureate, Customer may procure certain Filling Components specified in a Scope, such as media, resins, vials, overseals or stoppers. By written notice to Laureate from Customer, Laureate will procure and store, at Customer's sole cost and expense, materials, Filling Components, cell culture media, and Process Consumables in sufficient quantities to serve as "safety stock" for the completion of one 2000L production run. For clarity, the Parties acknowledge and agree that some materials described in this Section 4(b) may be obtained by Laureate from Medarex's supplier of media pursuant to written authorizations from Medarex to Laureate and from Medarex to its supplier of media, authorizing direct procurement by Laureate from Medarex's media supplier of media relating to the Program; copies of such authorizations attached hereto as Schedule 4(b).


(c) Laureate shall procure any Product-Dedicated Equipment and pass through the costs to the Customer cons ...