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Development Commercialization And Marketing Agreement

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EXECUTION COPY


DEVELOPMENT, COMMERCIALIZATION


AND MARKETING AGREEMENT


BETWEEN


ALTUS BIOLOGICS INC.


AND


DR. FALK PHARMA GMBH


DECEMBER 23, 2002


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


DEVELOPMENT, COMMERCIALIZATION AND MARKETING AGREEMENT


This Development, Commercialization and Marketing Agreement ("Agreement") dated as of December 23, 2002, by and between Altus Biologics Inc., a Delaware corporation, with its principal office at 625 Putnam Avenue, Cambridge, MA 02139 ("ALTUS"), and Dr. Falk Pharma GmbH, a German corporation, with its principal office at Leinenweberstra(Beta)e 5, 79041 Freiburg Germany ("FALK"). ALTUS and FALK are sometimes referred to herein individually as a "Party" and collectively as the "Parties."


RECITALS


1. ALTUS has developed a certain pharmaceutical compound known as TheraCLEC(TM)-Total (defined below) and has certain intellectual property rights and development capabilities related thereto.


2. FALK has development, marketing, distribution and sales capabilities in many countries in the Territory (defined below).


3. ALTUS and FALK wish to use their respective capabilities to conduct development of TheraCLEC-Total in a collaborative fashion so that the resources and expertise of each is put to good use.


4. By combining the development experience and expertise of both FALK and ALTUS, the Parties wish to expedite the regulatory approval of TheraCLEC-Total as a significant new therapeutic in the Territory.


5. ALTUS wishes to grant to FALK, and FALK wishes to obtain, a license under ALTUS' intellectual property rights with respect to TheraCLEC-Total to permit FALK to participate in collaborative TheraCLEC-Total product development and market TheraCLEC-Total in the Field in the Territory under the terms and conditions set forth below.


AGREEMENT


NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound hereby, do hereby agree as follows:


ARTICLE 1.
DEFINITIONS


The following capitalized terms, whether used in the singular or the plural, shall have the following meanings as used in this Agreement unless otherwise specifically indicated:


1.1 "AFFILIATE" shall mean any corporation, firm, limited liability company, partnership or other entity, which directly or indirectly controls or is controlled by or is under common control with a Party to this Agreement. For the purposes of this Section 1.1, "control" means ownership, directly or through one or more Affiliates, of fifty percent (50%) or more of the shares of stock entitled to vote for the election of directors, in the case of a corporation, or fifty percent (50%) or more of the equity interests in the entity, in the case of any other type of legal entity, status as a general partner in any partnership, or any other arrangement whereby a party controls or has the right to control the direction of the management or policies of an entity, whether through the ownership of voting securities, by contract or


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


otherwise. For the avoidance of doubt, the Parties agree that a company is deemed to be under "common control with" another company if the two companies are owned or controlled by the same group of individuals.


1.2 "ALTUS BACKGROUND TECHNOLOGY" shall mean any inventions (whether patentable or not) and Know-How owned or controlled by ALTUS prior to the Effective Date.


1.3 "ALTUS DEVELOPMENT COSTS" shall have the meaning set forth in Exhibit C to this Agreement.


1.4 "BASE PATENTS" shall have the meaning set forth in Section 1.29.


1.5 "CGMP" shall mean the regulatory requirements for current good manufacturing practices promulgated (1) under the Common Technical Document for the Registration of Pharmaceuticals for Human Use (ICH CTD) Guidelines and the ICH Good Manufacturing Practice Guide, as the same may be amended from time to time, and (2) by the United States Food and Drug Administration ("FDA") under the U.S. Food, Drug and Cosmetic Act ("FD&C Act") and the regulations promulgated thereunder, particularly 21 C.F.R. Section 210 et seq., and 21 C.F.R. Section 211 at seq., respectively, and related guidance documents, as the same may be amended from time to time.


1.6 "CLINICAL SUPPLIES" shall mean supplies of the Licensed Product, manufactured, packaged and labeled in such form and strength as agreed by the Parties, and ready to be used for the conduct of human clinical trials of the Licensed Product in the Field by the Parties.


1.7 "COMBINED PHASE III CLINICAL TRIAL" shall mean an international Phase III clinical trial as set forth in 21 C.F.R. Section 312.21 et seq. which is performed consistent with the ICH Guidelines and the guidelines of the United States Food and Drug Administration ("FDA") and the EMEA.


1.8 "COMMERCIALLY REASONABLE AND DILIGENT EFFORTS" shall mean with respect to development and commercialization, a Party's use of commercially reasonable efforts and resources for a company of its size consistent with (i) the exercise of prudent scientific and business judgment for a lead product of its type and (ii) such Party's efforts with respect to other lead products in its product pipeline, and in each case taking into consideration the impact of such efforts and resources on the development and commercialization of the Licensed Product in the Territory as a whole.


1.9 "CONTROLLED" with respect to the Licensed Product Patents or the Licensed Product Know-how shall mean the ability of a Party to grant a license or sublicense to such Licensed Product Patents or Licensed Product Know-how as provided for herein without violating the terms of any agreement or other arrangement with any Third Party existing and in effect at the time such Party would be required hereunder to grant the other Party such license or sublicense.


1.10 "COVER" (including variations such as "Covered", "Covering" and the like) shall mean that the manufacture, use, sale, offer for sale, or importation of a particular product would infringe an issued or pending claim of a patent or patent application (if that claim were to issue in a patent) in the absence of rights under such patent, as determined on a country-by-country basis.


1.11 "DISTRIBUTOR" shall mean a Third Party that purchases the Licensed Product from FALK or its Affiliates at a price that is - on a country-by-country-basis - less than or equal to [****] of the IMS-Price in the country in which the Licensed Product shall be sold to end-user customers.


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


1.12 "DRUG APPROVAL APPLICATION" shall mean an application for Regulatory Approval required for commercial sale or use of the Licensed Product as a drug in the Field in the Territory.


1.13 "EFFECTIVE DATE" shall mean the date first written above.


1.14 "EMEA" means the European Medicines Evaluation Agency.


1.15 "EUROPEAN DEVELOPMENT AND COMMERCIALIZATION PLAN" shall mean the plan for development and commercialization of the Licensed Product as set forth in Section 2.2, as may be amended from time to time.


1.16 "FALK BACKGROUND TECHNOLOGY" shall mean any inventions (whether patentable or not) and Know-How owned or controlled by FALK prior to the Effective Date.


1.17 "FALK DEVELOPMENT COSTS" shall have the meaning set forth in Exhibit C to this Agreement.


1.18 "FALK MARKETING COSTS" shall have the meaning set forth in Exhibit C to this Agreement.


1.19 "FIELD" shall mean [************************************************** ***************************************].


1.20 "FIRST COMMERCIAL SALE" shall mean the first sale of the Licensed Product in any particular country in the Territory by FALK for use by the general public after all required marketing and pricing approval has been granted by the governing authorities of that country or, if no such approval is required, the date of first commercial sale of the Licensed Product in such country.


1.21 "GERMAN EX-FACTORY PRICE" shall mean the [****] sales price (ex-factory in Germany) at which the Licensed Product is sold by FALK or its Affiliates to any non-Affiliated Third Party in Germany.


1.22 "ICH GUIDELINES" means the finalized published guidelines of the International Conference on Harmonization of Technical Requirements for the Registration of Pharmaceuticals for Human Use.


1.23 "IMS PRICE" shall mean the price - [************************] - at which the Licensed Product is sold to wholesalers in a country in the Territory as evidenced in the Intercontinental Medical Statistics ("IMS") for such country.


1.24 "INVENTION" shall mean any invention (whether or not patentable) or Know-how made after the Effective Date during the course of, in furtherance of, and as a direct result of the activities of the Parties hereunder. An "Invention" may be made by employees of ALTUS solely or jointly with a Third Party, by employees of FALK solely or jointly with a Third Party, or jointly by employees of ALTUS and FALK with or without a Third Party.


1.25 "KNOW-HOW" shall mean all proprietary information, trade secrets, techniques, data (including Confidential Information as defined in Article 10 below), discoveries, formulae, materials, practices, methods, knowledge, know-how, processes, experience, test data (including pharmacological,


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


toxicological and clinical information and test data), analytical and quality control data, marketing, pricing, distribution, cost and sales data or descriptions.


1.26 "THIRD PARTY LICENSED II" shall mean any patents; know-how and other intellectual property licensed to ALTUS by a Third Party as of the Effective Date, the practice of which is necessary to make, use or sell Licensed Product in the Field in the Territory, including the intellectual property licensed to ALTUS by [********************************************************************** ******************************************************************************** ******************************************************************************** ******************************************************************************** ******************************************************************************** *************************], in connection with the development of certain enzyme materials and the manufacturing of pharmaceutical products known as TheraCLECTota1(TM) (as defined below).


1.27 "LICENSED PRODUCT" shall mean any pharmaceutical form, dosage, strength, or formulation of TheraCLEC-Total purchased from ALTUS.


1.28 "LICENSED PRODUCT KNOW-HOW" shall mean Know-how which: (a) is Controlled by ALTUS as of the Effective Date or hereafter during the Term of this Agreement, and (b) is necessary to manufacture, commercialize, market, sell and distribute the Licensed Product in the Territory.


1.29 "LICENSED PRODUCT PATENTS" shall mean any and all patents and patent applications, together with any extensions (including supplementary protection certificates), registrations, reissues, continuations, divisions, continuations-in-part, re-examinations, substitutions or renewals thereof, and any patent issuing for any of the foregoing, owned or Controlled by ALTUS as of the Effective Date or at any time during the Term of the Agreement that contain one or more claims Covering a Licensed Product in the Field in the Territory. The Licensed Product Patents as of the Effective Date (hereinafter, the "Base Patents") are set forth on Exhibit A attached hereto and incorporated herein.


1.30 "MAJOR EUROPEAN COUNTRIES" shall mean [******************************* *****************************************************************].


1.31 "NET SALES" means the amount of gross invoiced sales of [************* ******************************************************************************** ***************************************], less the following amounts to the extent included as part of the gross invoiced sales of the Licensed Product sold by FALK or its Affiliates (regardless of whether separately stated on the sales invoice):


(A) any value added taxes ("VAT") charged to the purchaser and [****** ***********************************************************];


(B) bad debt [*****************] by FALK with respect to uncollected and uncollectable invoiced amounts that have been written off by FALK in accordance with its general accounting policies and German Generally Accepted Accounting Principles ("GAAP") consistently applied; provided that such amounts shall not be deducted to the extent they exceed [**************] of the gross invoiced sales of the Licensed Product in the Field in the Territory in the aggregate on a quarterly basis;


(C) trade, quantity, cash and any government-mandated discounts [**************] and taken, including without limitation, those granted on account of billing errors, rejected and damaged goods and recall returns, and ordinary and customary bona fide customer rebates to the extent such


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


discounts and rebates are consistent with industry practice, but not to the extent such discounts and rebates could reasonably be attributable to marketing expenses;


(D) [*******************] for returns (including allowances actually given for spoiled, damaged, out-dated, rejected, or returned product sold, withdrawals and recalls); and


(E) charges for shipping charges, insurance, freight, and other transportation costs [************************] of the Licensed Product.


In determining the amounts to be deducted under (e) above, FALK shall be entitled to deduct up to [******************] of its gross invoiced sales of Licensed Product for each quarter during the first three calendar quarters of a given year as a reasonable approximation of the amounts to be deducted under (e) above; provided that at the end of the fourth calendar quarter FALK shall be required to make up any difference or short-fall between the amounts actually deducted by FALK under (e) above during the first three calendar quarters, and the amount actually allowed to be deducted for the year, which allowed amount shall be calculated [*********************************************************** ******************************************************************************** *************************************************]. Any shortfall due and owing shall be paid by FALK as part of the payment due for the last calendar quarter each year. With respect to sales of Licensed Products sold by FALK (or any of its Affiliates) to a FALK Affiliate prior to resale to a non-Affiliated Third Party, the "Net Sales" attributable to such product shall be determined by [**** ******************************************************************************** ******************************************************************************** ****].


1.32 "PARTY" shall mean FALK or ALTUS, and, when used in the plural, shall mean both of them.


1.33 "PHASE I CLINICAL TRIAL" shall have the meaning set forth in 21 C.F.R. Section 312.21 et seq.


1.34 "PHASE II CLINICAL TRIAL" shall have the meaning set forth in 21 C.F.R. Section 312.21 et seq.


1.35 "PHASE III ENABLING CLINICAL TRIAL" shall mean a Phase I or Phase II Clinical Trial which has generated sufficient data to commence Combined Phase III Clinical Trials.


1.36 "PHASE IV STUDIES" shall mean any post-Regulatory Approval after-market studies required to be performed by any Regulatory Authority in connection with the commercialization of the Licensed Product.


1.37 "REGULATORY APPROVAL" shall mean any approvals (including pricing and reimbursement approvals), licenses, registrations or authorizations of any national or international or local regulatory agency, department, bureau or other governmental entity necessary for the manufacture and sale of the Licensed Product in the Field in the Territory.


1.38 "REGULATORY AUTHORITY" shall mean any local, national or international regulatory agency, department, bureau or other governmental authority whose approval is required prior to commercializing the Licensed Product in the Field in the Territory or any individual country therein.


1.39 "STEERING COMMITTEE" shall mean that body established pursuant to Section 3.1 below.


1.40 "TERRITORY" shall mean the countries listed on Appendix 1 hereto.


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


1.41 "THERACLEC-TOTAL" shall mean commercial formulations of that product currently known as TheraCLEC-Total consisting of the [************************ ***], as disclosed in IND Application No. [*****] filed with the United States Food and Drug ("FDA") Administration on May 28, 2002.


1.42 "THIRD PARTY" shall mean any entity other than ALTUS or FALK.


1.43 "VALID CLAIM" shall mean an issued claim, or a pending claim that is being prosecuted in good faith, of any Licensed Product Patent, that has not been withdrawn, cancelled, disclaimed, abandoned, or held invalid, unpatentable or unenforceable by a tribunal of competent jurisdiction in a final decision (i) which is unappealable or (ii) from which all appeals have been exhausted. If a Valid Claim is the subject of a final decision holding it not invalid, unpatentable or unenforceable, the scope of the Valid Claim shall be interpreted so as to reflect the construction placed upon it in the final decision.


ARTICLE 2.
SCOPE OF THE COLLABORATION


2.1 GLOBAL GOALS. The Parties agree, pursuant and subject to the terms of this Agreement, to further develop the Licensed Product in the Field in the Territory, with the goal of obtaining Regulatory Approval for the Licensed Product as soon as reasonably practicable for commercial marketing and sale in the Field in the Territory.


2.2 EUROPEAN DEVELOPMENT AND COMMERCIALIZATION PLAN. The overall strategy for the development, commercialization and marketing of the License Product in the Field in the Territory shall be set forth in a written plan (hereinafter, the "European Development and Commercialization Plan"). The European Development and Commercialization Plan shall include a Development Plan (to be provided by ALTUS in accordance with Section 4.3 below) and a Commercialization Plan (to be provided by FALK in accordance with Section 5.3 below). The European Development and Commercialization Plan will be reviewed periodically by the Steering Committee and shall be discussed at Steering Committee meetings. Notwithstanding the foregoing, in the event any provision set forth in the European Development and Commercialization Plan conflicts with or is inconsistent with a provision of this Agreement, the provisions of this Agreement shall control.


ARTICLE 3.
MANAGEMENT OF THE COLLABORATION


3.1 ESTABLISHMENT OF STEERING COMMITTEE. The Parties hereby establish a Steering Committee for coordinating the development, commercialization, and marketing of the Licensed Product in the Field in the Territory. The Steering Committee will be composed of [*******] representatives of each Party, who shall be appointed (and may be replaced at any time) by such Party on written notice to the other Party in accordance with this Agreement. Such representatives shall include individuals within the senior management of each Party with expertise and responsibilities in the areas of clinical development, process sciences, manufacturing, regulatory affairs or product development and marketing, as applicable to the stage of development or commercialization of the Licensed Product. One of the three representatives for each Party shall be designated as that Party's General Manager. Although the members of the Steering Committee can and should change as the life cycle of the Licensed Product changes, the Parties will endeavor to keep the General Managers consistent for each Party throughout the collaboration to maintain continuity in the collaboration. The initial Steering Committee members, including the General Manager, from each Party are listed on Exhibit D attached hereto to the extent identified therein. Any member of the Steering Committee may designate a substitute to attend and perform the functions of that member at any meeting of the Steering Committee. The Steering


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


Committee will meet at least [****] each year (face-to-face) during the Term of this Agreement, or at any frequency agreed by the Steering Committee. In any event, the Steering Committee will meet [************] after the execution of this Agreement or as soon as practicable as mutually agreed by the Parties. Each representative on the Steering Committee will have one vote in decisions submitted to the Steering Committee. Unless otherwise specifically set forth in this Agreement, all issues to be resolved by the Steering Committee shall be resolved by the affirmative vote of [**********************] on the Steering Committee (or such representative's designee). ALTUS shall also notify FALK of and shall use [************************************] to accommodate requests by FALK to participate in [******************************************************** ********************].


3.2 RESPONSIBILITIES OF STEERING COMMITTEE. The Steering Committee shall, subject to the provisions set forth in Article 4 and Article 5 hereinafter and the dispute resolution procedures of Article 16, be the primary vehicle for interaction between the Parties with respect to the development, commercialization, and marketing of the Licensed Product in the Field in the Territory. In particular, the Steering Committee shall perform the following functions consistent with its objective of managing an effective and efficient Combined Phase III Clinical Trial that satisfies the development, regulatory and commercialization requirements of North America and the Territory and leverages the clinical development activities in both territories:


(I) exchange of information and facilitation of cooperation and coordination between the Parties as they exercise their respective rights and meet their respective obligations under this Agreement;


(II) manage, review and monitor execution of the European Development and Commercialization Plan;


(III) review, prepare and recommend changes to the European Development and Commercialization Plan;


(IV) facilitate coordination of information flow, consistent with the EU privacy directive, with respect to regulatory approvals from the appropriate regulatory authorities in the Territory; and ensuring compliance in all material respects with all applicable laws, regulations, and all other requirements of applicable good laboratory practices;


(V) establish, monitor, review and modify all development time lines to be adhered to by the Parties for all Phase III and Phase IV clinical development and Regulatory Approval activities in the Territory;


(VI) approve all contracts, agreements, commitments and undertakings with Third Parties regarding Phase III and Phase IV clinical development activities in the Territory where the committed expenditures exceed a threshold amount to be determined by the Steering Committee;


(VII) facilitate coordination of information flow with respect to the Combined Phase III Clinical Trials and Phase IV Studies (if any) between the EU and North America;


(VIII) facilitate coordination of supply of Clinical Supplies for EU activities;


(IX) [**********] relating to material business, scientific, clinical, medical, regulatory or management issues arising out of this Agreement in accordance with Section 16.1; and


Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company's application requesting confidential treatment under Rule 406 of the Securities Act.


(X) perform such other functions as appropriate to further the purposes of this Agreement, as determined by the mutual agreement of the Parties.


3.3 STEERING COMMITTEE PROCEDURES. The representatives of the Steering Committee shall designate a Chairperson who will serve as such. The Chairperson shall send notices (not less than [*************] in advance of such meetings) and agendas for all regular Steering Committee meetings to all Steering Committee members. The location of regularly scheduled Steering Committee meetings shall alternate among the offices of the Parties, unless otherwise agreed. Meetings may be held telephonically, but each member shall attend at least [***] meeting in person each year. The Party hosting any Steering Committee meeting shall appoint one person (who need not be a member of the Steering Committee) to attend the meeting and record the minutes of the meeting. Such minutes shall be circulated to the Parties promptly following the meeting for review, comment and distribution.


3.4 PRODUCTION REQUIREMENTS REPORTS. FALK shall be responsible for preparing and delivering to the Steering Committee and ALTUS an [**********] Licensed Product production requirement report, which report shall be updated [********************]. Such report shall be provided to the Steering Committee and ALTUS within [*************] of the end of each [***************] (beginning with the [*************] following the Phase III Enabling Clinical Trial for the Licensed Product) and shall include the forecasted requirements for Clinical Supplies, Licensed Product placebo and commercial supplies for the subsequent [*****************] period.


3.5 DISPUTE RESOLUTION. Except as hereinafter provided, all issues that come before the Steering Committee that require action, approval or resolution and for which the Steering Committee is unable to reach agreement by a vote of a majority of the representatives of the Steering Committee shall be resolved in accordance with Article 16.


ARTICLE 4.
DEVELOPMENT


4.1 DEVELOPMENT EFFORTS. ALTUS shall be responsible for and shall [*********************************************] to develop the Licensed Product in the Field in the Territory in accordance with the terms o
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