EXHIBIT 10.25
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
MASTER MANUFACTURING AND SUPPLY AGREEMENT
This Master Manufacturing and Supply Agreement (this "Agreement") is
made and effective as of the 8th day of May, 2003 (the "Effective Date") by and
between Idenix (Cayman) Limited, with offices c/o Walkers SPV Limited, ▇▇▇▇▇▇
House, ▇▇▇▇ Street, P.O. Box 908GT, ▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands
("Idenix"), and Novartis Pharma AG, with offices at ▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ("Novartis").
1. Idenix, Idenix Pharmaceuticals, Inc. ("Idenix US") and
Novartis have entered into a Development, License and Commercialization
Agreement dated as of the date hereof (the "Development Agreement"), pursuant to
which the parties thereto agree, subject to the terms and conditions thereof, to
develop and commercialize the Selected Drug Candidates and Products (each as
defined in the Development Agreement) derived therefrom;
2. Idenix and Novartis desire to enter into this Agreement,
setting forth the general principles governing the Technical Development and
Manufacture and supply of the Products; and
3. The Parties contemplate entering into further detailed
manufacturing and supply agreements and quality agreements pertaining to the
transactions described herein.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, Idenix and Novartis hereby agree as follows:
1. Definitions.
1.1 Development Agreement Terms. All capitalized terms used, but
not defined, herein shall have the meaning ascribed to them in the Development
Agreement.
1.2 "API". API shall mean active pharmaceutical ingredient
Manufactured in bulk form.
1.3 "cGLP". cGLP shall mean the then-current good laboratory
practice legal, regulatory and administrative guidelines, standards,
specifications and requirements which apply to laboratory research of an API,
Finished Product or Packaged Product in a particular country in the world as
promulgated by the relevant Regulatory Authority.
1.4 "cGMP". cGMP shall mean the then-current good manufacturing
practice legal, regulatory and administrative guidelines, standards,
specifications and requirements which apply to the Manufacture of a Product or
the API, Finished Product or Packaged Product therefor in a particular country
in the world as promulgated by the relevant Regulatory Authority.
1.5 "Covenant Intellectual Property". Covenant Intellectual
Property shall mean Novartis Intellectual Property that is first developed by
Novartis or one of its Subject Affiliates primarily in connection with its
Manufacturing activities pursuant to this Agreement.
1.6 "Finished Product". Finished Product shall mean the galenic
formulation of the relevant APIs in bulk form without any packaging.
1.7 "Finish" or "Finishing". Finish or Finishing shall mean the
process of combining the relevant API(s) and necessary excipients into a
Finished Product.
1.8 "Fully Allocated Cost of Manufacture". Fully Allocated Cost of
Manufacture shall mean, with respect to a Manufacturing activity, all direct and
indirect costs and overhead allocable to the conduct of such activity in
accordance with GAAP or IAS, including but not limited to project and cost
accounting consistently applied, such cost items to include, without limitation,
costs of raw materials, supplies, other resources consumed in the conduct of
such activity, rent, real estate depreciation, utilities, insurance, equipment
lease payments, equipment depreciation and labor, plus general and
administrative and similar expenses reasonably allocated to the conduct of such
Manufacturing activity.
1.9 "Manufacture" or "Manufacturing". Manufacture or Manufacturing
shall mean any and all operations involved in or relating to the manufacturing,
quality control testing (including in-process, release and stability testing),
releasing and/or packaging of an API, Finished Product or Packaged Product,
including, without limitation, all Technical Development and optimization
thereof.
1.10 "Manufacturing Technology". Manufacturing Technology shall
mean all Know-How and other technology that relate to the Manufacture,
Finishing, Packaging, release testing, stability and/or shelf life of the APIs,
Finished Products and Packaged Products, including such formulations, records
and files that relate to processes relating to the foregoing.
1.11 "Package" or "Packaging". Package or Packaging shall mean the
process of packaging and labeling the Finished Product, thereby creating the
Packaged Product.
1.12 "Packaged Product". Packaged Product shall mean the Finished
Product in final packaged form, including approved labeling, labeling inserts as
required by applicable law, primary packaging, including but not limited to
blister packaging, wholesale bottling, and secondary packaging, including but
not limited to boxing, pillow packing, product inserts and other forms of
packaging necessary to meet the legal and commercial requirements intended for
clinical use or final retail sale.
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1.13 "Party". Party shall mean either Idenix or Novartis; Parties
shall mean Idenix and Novartis.
1.14 "Physical Embodiments". Physical Embodiments shall mean (a)
samples of compounds, (b) documentation, and (c) any other physical embodiment
as may be mutually agreed by the Parties.
1.15 "Pre-Selection Intellectual Property" Pre-Selection
Intellectual Property shall mean (A) Novartis Intellectual Property that: (i)
Novartis develops solely in the course of Manufacturing API for an HCV Drug
Candidate pursuant to Section 2.4(a); (ii) relates solely to the reduction in
cost, if any, of such API that Novartis achieves prior to the earlier of (x)
such HCV Drug Candidate's Selection Date, or (y) the date that such HCV Drug
Candidate becomes a Rejected Compound; and (iii) would, but for a license under
such Novartis Intellectual Property, be infringed by the Manufacture of such HCV
Drug Candidate at such reduced cost, if any; (B) Joint Intellectual Property
that Novartis develops solely in the course of Manufacturing API for an HCV Drug
Candidate pursuant to Section 2.4(a) prior to the earlier of (x) such HCV Drug
Candidate's Selection Date, or (y) the date that such HCV Drug Candidate becomes
a Rejected Compound; and (C) improvements to Idenix Intellectual Property, Joint
Intellectual Property and Manufacturing Technology Controlled by Idenix that
Novartis develops solely in the course of Manufacturing API for an HCV Drug
Candidate pursuant to Section 2.4(a) prior to the earlier of (x) such HCV Drug
Candidate's Selection Date, or (y) the date that such HCV Drug Candidate becomes
a Rejected Compound.
1.16 "Quality Assurance Requirements". Quality Assurance
Requirements shall mean all analytical, composition, Manufacturing, testing,
purity, stability, Packaging, labeling, and recordkeeping requirements and
standards pertaining to APIs, Finished Products and Packaged Products, as
applicable, arising under applicable NDAs (or equivalents thereof throughout the
world), Laws, regulations promulgated by Regulatory Authorities, including,
without limitation, cGMP, cGLP, and all applicable industrial standards,
including, without limitation, ICH guidelines.
1.17 "Specifications". Specifications shall mean, which respect to
an API, Finished Product or a Packaged Product, those analytical, composition,
Manufacturing, testing, purity, stability, packaging, labeling, safety and
record-keeping specifications for such API, Finished Product or Packaged
Product, as the case may be, as developed by the Joint Manufacturing Committee
in accordance with the requirements of any applicable approval issued by a
relevant Regulatory Authority, including but not limited to cGMP and cGLP.
1.18 Additional Definitions. Each of the following definitions is
set forth in the Section of this Agreement indicated below:
Definition Section
---------- --------
Agreement Preamble
API Manufacturer 2.2 (c)
Basic Percentage 5.3(a)
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Definition Section
---------- --------
Breaching Party 12.3
Development Agreement Preamble
Effective Date Preamble
Further Agreements 2.1(d)
HSE Requirements 2.2 (c)(v)(B)
Idenix Preamble
Idenix US Preamble
Indemnified Party 11.3 (a)
Indemnifying Party 11.3 (a)
1974 Convention 13.1
Non-Breaching Party 12.3
Novartis Preamble
Preliminary Winning Bid 2.2 (c)(iii)
Pre-Payment Percentage 5.2
Selection Criteria 2.2 (c)(iii)
Severed Clause 13.3
Title 11 13.11
2. Manufacture and Supply.
2.1 General. Subject to the terms and conditions of this Agreement
and the supervision of the Joint Manufacturing Committee to the extent provided
for in this Agreement or the Development Agreement:
(a) Manufacture of API for Finished and Packaged Products
derived from Selected Drug Candidates for Clinical and Commercial Supply. Idenix
shall appoint Novartis to Manufacture, or have Manufactured by Affiliates or
Third Parties, all APIs for Selected Drug Candidates for clinical supply of the
Products according to Section 2.2(a) below and shall have all APIs for Selected
Drug Candidates for commercial supply Manufactured by Novartis or Third Parties
based on a competitive bid and matching process in accordance with the terms of
Section 2.2(c) below.
(b) Manufacture of Finished and Packaged Product derived
from Selected Drug Candidates for Clinical and Commercial Supply. Idenix shall
appoint Novartis to Finish and Package, or have Finished and Packaged by
Affiliates or Third Parties, all Finished Products and Packaged Products for
Selected Drug Candidates for clinical and commercial supply of Products in
accordance with the terms of Section 2.3 below.
(c) Supply of Packaged Product derived from Selected Drug
Candidates for Clinical and Commercial Supply.
(i) Idenix shall supply all of Novartis'
clinical and commercial requirements for Packaged Product derived from
Selected Drug Candidates pursuant to the terms of this Agreement.
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(ii) Novartis shall obtain, and shall ensure that
all its Affiliates and sublicensees obtain, from Idenix all of their
clinical and commercial requirements for Packaged Products derived from
Selected Drug Candidates.
(d) Further Agreements. The Parties or their Affiliates
will enter into such further manufacturing and supply and quality agreements
("Further Agreements") as are necessary in connection with the transactions
contemplated by Sections 2.1 (a) through (c) above and Section 2.4 below, which
shall include applicable customary terms and conditions pertaining to, inter
alia, forecasting, ordering and delivery, and such of the provisions listed in
Section 2.2(c)(v)(A) through (G) as may be appropriate. Further Agreements
pertaining to the Manufacture and supply of Selected Drug Candidates shall be
entered into at least three (3) months prior to submission of an NDA (or
equivalent thereof anywhere in the world) for a Selected Drug Candidate, and
otherwise at such appropriate times as the Parties shall agree. If the Parties
are unable to reach agreement in the course of negotiating the aforementioned
agreements, the terms of such agreements shall be as agreed to by the Joint
Manufacturing Committee. In the event that the Joint Manufacturing Committee is
unable to resolve such dispute, such dispute shall be resolved in accordance
with Section 13.6 of the Development Agreement.
(e) Satisfaction of Obligations by Affiliates. Either
Party's obligations under this Agreement, including, without limitation,
Manufacturing obligations, may be performed by any of its Affiliates, provided
that such Party shall remain liable under this Agreement until such obligations
are satisfied.
2.2 Manufacture of API for Clinical and Commercial Supply.
(a) Novartis as API Manufacturer for Clinical Supply.
Idenix hereby appoints Novartis to Manufacture, or to have Manufactured by a
Third Party all APIs for clinical supply of all Selected Drug Candidates. The
cost for such clinical supply shall be a Development Expense, responsibility for
which shall be allocated between the Parties in accordance with Section 8.3 of
the Development Agreement. Notwithstanding the foregoing, the Parties agree and
acknowledge that the clinical supply of API for the LdT Product shall, until
such time as the Joint Manufacturing Committee determines otherwise, continue to
be supplied by the current Third Party manufacturer.
(b) Technical Development. Novartis shall conduct the
Technical Development of the clinical supply of APIs for Selected Drug
Candidates. The cost for such Technical Development shall be a Development
Expense, responsibility for which shall be allocated between the Parties in
accordance with Section 8.3 of the Development Agreement.
(c) Selection of API Manufacturer for Commercial Supply.
As soon as possible following the applicable Selection Date, Idenix, subject to
the prior approval of the Joint Manufacturing Committee, shall select and
appoint a Third Party, Novartis or an Affiliate of Novartis designated by
Novartis (such a Third Party, Novartis or Affiliate, as appropriate, an "API
Manufacturer") to Manufacture APIs for commercial supply on behalf of Idenix,
solely in accordance with the following:
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(i) Idenix, subject to the prior approval of the
Joint Manufacturing Committee: (A) shall seek API Manufacturers based
on a competitive bid process; and (B) shall request bids from at least
two (2) reputable Third Party manufacturers within the
biopharmaceuticals manufacturing industry for the Manufacture of the
commercial supply of API related to the Selected Drug Candidates.
(ii) Such Third Parties shall provide their bids
to Idenix (who shall provide them to the Joint Manufacturing
Committee), which bids shall include such detailed information as is
reasonably requested by Idenix (subject to the guidelines developed by
the Joint Manufacturing Committee), including, without limitation,
information regarding the bidders' cost, quality, lead time and
capacity to Manufacture the APIs.
(iii) After receipt of such bids, Idenix, subject
to the prior approval of the Joint Manufacturing Committee, shall
determine the preliminary winning bid from among such bids (the
"Preliminary Winning Bid") based upon an overall evaluation of the key
element thereof, including, without limitation, cost, quality, lead
time and capacity to Manufacture the APIs, and the ability of any such
Third Party to satisfy the conditions set forth in Section 2.2(c)(iv)
below (collectively, the "Selection Criteria"). Thereafter, Idenix
shall notify the Joint Manufacturing Committee and Novartis of the
Preliminary Winning Bid and provide to Novartis all information
received by all Third Party bidders along with all Third Party bids.
Within fourteen (14) days following receipt of such notification, along
with all information received by all Third Party bidders and all Third
Party bids, Novartis shall be entitled to match the Preliminary Winning
Bid (based upon an overall consideration of the Selection Criteria),
whereupon Novartis or its Affiliate shall be designated the API
Manufacturer. If Novartis elects not to match the Preliminary Winning
Bid, then Idenix, subject to the prior approval of the Joint
Manufacturing Committee, may designate the Third Party submitting the
Preliminary Winning Bid as the API Manufacturer. Unless otherwise
determined by Idenix, subject to the prior approval of the Joint
Manufacturing Committee, there will be only one bidding process in
respect of the Manufacture of API for each Product.
(iv) In evaluating submitted Third Party bids to
determine the Preliminary Winning Bid, Idenix, subject to the prior
approval of the Joint Manufacturing Committee, shall consider each
prospective Third Party API Manufacturer's ability to Manufacture and
supply the applicable API for commercial supply in a manner that:
(A) is cost competitive on a sustained
basis based on such prospective API
Manufacturer's estimated Fully
Allocated Costs of Manufacture of
such API (including, without
limitation, comparing bids on a
cost element-by-cost element basis,
and considering all expected costs
associated with having such
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prospective API Manufacturer comply
with the applicable Specifications,
Quality Assurance Requirements and
HSE Requirements and those
potential costs that may arise from
the failure of such prospective API
Manufacturer to meet any of its
obligations);
(B) satisfies all applicable
Manufacturing and supply
requirements and deadlines on a
sustained basis;
(C) adheres to all applicable
Specifications, Quality Assurance
Requirements and HSE Requirements
on a sustained basis;
(D) satisfies all of Idenix'
obligations under this Agreement
and the Development Agreement
pertaining to the Manufacture and
supply of such API;
(E) minimizes potential risks and
ensures long term supply of API to
ensure successful Commercialization
of the Product(s) derived
therefrom; and
(F) achieves the Parties' cost
improvement objectives.
(v) Each Third Party API Manufacturer shall be
required to execute with Idenix a manufacturing and supply and quality
agreement(s), in form and substance satisfactory to Idenix, subject to
the prior approval of the Joint Manufacturing Committee. Such
manufacturing and supply and quality agreements(s) shall, subject to
the Joint Manufacturing Committee's discretion, contain customary
terms, including, without limitation:
(A) representations, warranties,
penalties and indemnification
obligations customary to such
agreements;
(B) all of the Manufacturing, delivery
and legal compliance, applicable to
API Manufacturers as more fully
described in this Agreement,
including, without limitation, the
provisions set forth in Annex 1
hereto ("HSE Requirements");
(C) an obligation to assign or license
(with right to sublicense to
Novartis, its Affiliates and Third
Parties) to Idenix any and all
improvements to Manufacturing
Technology, whether or not
patentable or protectable as a
trade secret, that such
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API Manufacturer may develop in the
course of exercising its rights and
performing its obligations under
such manufacturing and supply and
quality agreement(s) sufficient for
the Parties and their Affiliates to
exercise their rights and perform
their obligations hereunder;
(D) an obligation to Manufacture, fill,
package, deliver and warehouse all
APIs in accordance with the
relevant Specifications and the
Quality Assurance Requirements and
fully comply with all applicable
Laws, including, without
limitation, health, safety and
environmental Laws and management
systems comparable with
international management standards
(e.g., ISO 14001, OHSAS 18001, BS
8800);
(E) an obligation to permit Idenix and
its designated agents, or
representatives or representatives
of any Regulatory Authority, to
inspect and audit all facilities
and operations used by such API
Manufacturer to confirm compliance
with the Specifications, the
Quality Assurances Requirements and
HSE Requirements;
(F) an obligation to keep and make
available to Idenix all records and
reports relating to the
Manufacture, storage, disposal and
transportation of the APIs,
including, without limitation, all
records as are necessary and
appropriate to demonstrate
compliance with the Specifications,
Quality Assurance and HSE
Requirements, and all other or
underlying materials related
thereto or used in connection
therewith, and to permit Idenix to
inspect, copy and provide such
records to the Joint Manufacturing
Committee as required; and
(G) an obligation to keep, throughout
the term of such agreement,
accurate books and accounts of
record in connection with the Fully
Allocated Cost of Manufacture of
all API in sufficient detail to
permit accurate determination and
verification of all such costs.
(vi) To the extent necessary for any API
Manufacturer to fulfill its obligations under such agreement, the
Parties agree that Idenix shall grant appropriate royalty-free licenses
under (A) the relevant Manufacturing
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Technology Controlled by Idenix and (B) those rights granted to Idenix
pursuant to Section 4.2(a) or (b), and may, subject to all applicable
restrictions, provide to such API Manufacturer one (1) copy of each
Physical Embodiment, if any, of such Manufacturing Technology provided
to Idenix pursuant to Section 4.4(c).
(vii) Idenix, subject to the prior approval of the
Joint Manufacturing Committee, may require API Manufacturers providing
commercial supply of the APIs for Selected Drug Candidates to enter
into cost improvement programs.
(viii) Idenix shall require that each Third Party
API Manufacturer keep and make available all records as are necessary
to demonstrate compliance with such Third Party API Manufacturer's
obligations under their agreements pursuant hereto, including, without
limitation, the Specifications, Quality Assurances Requirements and HSE
Requirements. Idenix shall provide to the Joint Manufacturing Committee
all records that Third Party API Manufacturers provide or are required
to provide to Idenix. Idenix shall inspect and conduct audits of Third
Party API Manufacturers as determined by the Joint Manufacturing
Committee to confirm compliance with such Third Party API
Manufacturers' obligations under its agreements pursuant hereto,
including, without limitation, the Specifications, the Quality
Assurances Requirements and HSE Requirements, and Novartis shall have
the right to attend and observe all such inspections and audits
performed by Idenix. Idenix shall enforce agreements with Third Party
API Manufacturers as determined by the Joint Manufacturing Committee.
(ix) Notwithstanding any other provision of this
Agreement or the Development Agreement, in the event that Idenix fails
to obtain any required approval of the Joint Manufacturing Committee
under this Agreement prior to engaging in any action for which such
approval is required, (A) such action by Idenix shall be a material
breach of this Agreement, and (B) Novartis shall, at its option, be
relieved of any liability it may have with respect to any obligation it
may have relating to such action by Idenix, including, without
limitation, any and all obligations to fund such activity; provided,
however, that Idenix' failure to obtain approval as provided in clause
(iv) of this Section 2.2(c) shall be a breach of this Agreement, but
shall be deemed a material breach depending on the relevant facts and
circumstances.
2.3 Appointment of Novartis as Idenix' Finishing and Packaging
Manufacturer for all Products derived from Selected Drug Candidates.
(a) Finishing of Products derived from Selected Drug
Candidates. Subject to the terms and conditions of this Agreement, Novartis
shall, itself or through an Affiliate or Third Party, formulate Finished
Products from API for Selected Drug Candidates. In connection with such
Finishing, Idenix shall pay Novartis' Fully Allocated Cost of Finishing [**],
which price shall be competitive, taking into account all relevant facts and
circumstances. In the event that Idenix disputes in good faith that the
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price for the Finishing of one or more of the Products is competitive, taking
into account all relevant facts and circumstances, the Joint Manufacturing
Committee shall make a determination as to whether any price reduction is
appropriate. In the event that the Joint Manufacturing Committee is unable to
resolve such dispute, such dispute shall be resolved in accordance with Section
13.6 of the Development Agreement.
(b) Technical Development. Novartis shall conduct the
Technical Development of all Finished Products for Selected Drug Candidates. The
cost for such Technical Development shall be a Development Expense,
responsibility for which shall be allocated between the Parties in accordance
with Section 8.3 of the Development Agreement.
(c) Packaging of Finished Products derived from Selected
Drug Candidates. Subject to the terms and conditions of this Agreement, Novartis
shall, itself or through an Affiliate or Third Party, Package the Finished
Products for Selected Drug Candidates. In connection with such Packaging, Idenix
shall pay Novartis' Fully Allocated Cost of Packaging [**], which price shall be
competitive, taking into account all relevant facts and circumstances. In the
event that Idenix disputes in good faith that the price for the Packaging of one
or more of the Products is competitive, taking into account all relevant facts
and circumstances, the Joint Manufacturing Committee shall make a determination
as to whether any price reduction is appropriate. In the event that the Joint
Manufacturing Committee is unable to resolve such dispute, such dispute shall be
resolved in accordance with Section 13.6 of the Development Agreement. Novartis
shall reimburse Idenix for the costs of Packaging for Products to be sold into
the Novartis Territory. The Parties shall allocate the cost of Packaging for
Products to be sold in the Major EU Countries in a manner to be agreed upon by
the Parties to achieve the allocation of benefit set forth in Section 5.3(b)
below. The Parties shall allocate the cost of Packaging for Products to be sold
in the U.S. Territory in a manner to be agreed upon by the Parties to achieve
the allocation of benefit set forth in Section 5.3(c) below.
(d) LdT Product. Without limiting the generality of the
provisions of Section 2.3(a) through (c) above, following the Effective Date:
(i) Clinical Service Form. Novartis shall,
itself or through an Affiliate or Third Party, supply to Idenix the
clinical service form 200 mg tablets for the LdT Product, as a Selected
Drug Candidate, [**].
(ii) Final Market Image. Novartis shall conduct,
at its sole expense (notwithstanding any provisions to the contrary in
the Development Agreement regarding responsibility for Development
Expenses), the Technical Development for the final market image of the
Finished and Packaged Product of the LdT Product, as a Selected Drug
Candidate. Novartis shall supply to Idenix the clinical supply of the
final market image for the Finished and Packaged Product of the LdT
Product [**].
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2.4 Special Situations.
(a) HCV Drug Candidates Prior to their Selection Date.
Notwithstanding the fact that, as of the Effective Date, the Initial HCV Drug
Candidate is not a Selected Drug Candidate, Novartis, [**], shall Manufacture,
or have Manufactured by Affiliates or Third Parties, and provide Idenix'
clinical supply, and conduct, in collaboration with Idenix to the extent
practicable subject to Novartis' rights and obligations hereunder, Technical
Development, of APIs, Finished Product and Packaged Product for the Initial HCV
Drug Candidate as soon as reasonably practicable following the Effective Date,
in accordance with a mutually agreed-upon transition plan; provided, however
that the Parties agree that the transfer to Novartis of the Physical Embodiments
of such Manufacturing Technology necessary for Novartis to begin Manufacturing
the Initial HCV Drug Candidate shall occur no later than September 1, 2003.
Additionally, at all times prior to the applicable Selection Date for any other
HCV Drug Candidate (including, without limitation, any other HCV Drug Candidate
that may become the Backup HCV Drug Candidate) for which an Investigational New
Drug Application (or equivalents thereof throughout the world) may be filed and
until such time, if any, as such other HCV Drug Candidate becomes a Rejected
Compound, Novartis shall have the right, upon notice to Idenix, at Novartis'
expense, to Manufacture, or have Manufactured by Affiliates or Third Parties,
and provide Idenix' clinical supply, and conduct, in collaboration with Idenix
to the extent practicable subject to Novartis' rights and obligations hereunder,
Technical Development, of APIs, Finished Product and Packaged Product for such
Backup HCV Drug Candidate or other HCV Drug Candidate. After the Selection Date,
if any, for any HCV Drug Candidate, the Technical Development, Manufacture and
supply of such HCV Product shall thereafter be governed by the terms and
conditions applicable to Selected Drug Candidates under this Agreement. If and
when the Initial HCV Drug Candidate or other HCV Drug Candidate then being
Manufactured and supplied by Novartis pursuant to this Section 2.4(a) becomes a
Rejected Compound prior to becoming a Selected Drug Candidate, Novartis shall,
unless and to the extent otherwise agreed by the Parties, discontinue (i) the
Manufacturing, by itself, its Affiliates or Third Parties, (ii) the provision to
Idenix of clinical supply, and (iii) the conducting of Technical Development, of
the APIs, Finished Product and/or Packaged Products therefor as soon as
reasonably practicable, subject to a mutually agreed-upon transition plan, and
thereafter Novartis shall not be under any further obligation to Idenix with
respect thereto. Subject to the provisions of Section 2.5(b) and the other
financial arrangements of the Parties with respect to Selected Drug Candidates,
all cost improvements achieved prior to the Selection Date for an HCV Drug
Candidate shall be for the benefit of Idenix.
(b) Manufacturing and Supply of Interferon. To the extent
Idenix obtains the Interferon License as described in Section 4.5 of the
Development Agreement, Novartis shall Manufacture, or have Manufactured by its
Affiliates or Third Parties, and supply to Idenix such Interferon, as
appropriate, in API, Finished Product and Packaged Product form. In
consideration for the Manufacture and supply of such Interferon, Idenix shall
pay to Novartis a price equal to [**] percent [**]%) of Novartis' Fully
Allocated Costs of Manufacture of the Interferon. Idenix shall obtain, and shall
ensure that all its Affiliates and sublicensees obtain, from Novartis all of
their clinical and
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commercial requirements for Interferon, and Novartis shall supply all of Idenix'
clinical and commercial requirements for such Interferon, in each case, pursuant
to the terms of this Agreement, the Development Agreement and any Further
Agreements. If such Interferon is included in a Combination Therapy in any of
the Territories as a fixed-dose Product containing as active ingredients
Interferon, on the one hand, and the Selected HCV Drug Candidate or any Selected
Other HCV Drug Candidate, on the other hand, such Interferon shall, with respect
to the relevant Territories, be treated as if it were an HCV Product, but solely
for the purposes of Articles 5 and 6 of this Agreement. If such Interferon is
included in a Combination Therapy in any of the Major EU Countries or the U.S.
Territory as a separate co-administration product sold together or promoted as a
combination with a Product containing as an active ingredient the Selected HCV
Drug Candidate or any Selected Other HCV Drug Candidate, such Interferon shall,
with respect to the Major EU Countries and the U.S. Territory only, be treated
as if it were an HCV Product, but solely for the purposes of Articles 5 and 6 of
this Agreement. For clarification, the immediately preceding sentence shall not
apply (i) to any such Combination Therapy in the Novartis Territory, or (ii) to
a Combination Therapy which is labeled or approved for labeling for sale in
co-administration in which the co-administered products are neither sold
together nor promoted as a combination.
2.5 Shared Cost Improvement for Selected Compounds.
(a) LdT Product. Notwithstanding the provisions of
Article 5, the Parties shall jointly undertake to participate in a research and
development program and other efforts to lower costs of Manufacturing the APIs
for the LdT Product from the currently projected U.S.$[**] per kg API price, by
funding and/or dedicating efforts to such program, and the Parties shall share
the benefits of such cost reductions in proportion to their respective
contributions thereto (taking into account, without limitation, the value of any
financial and non-financial contributions).
(b) Other Selected Products. Notwithstanding the
provisions of Article 5, following the relevant Selection Date for a Product,
the Parties may jointly undertake to participate in a research and development
program and other efforts, as further described in a Manufacturing Plan approved
by the Joint Manufacturing Committee, to lower costs of API for such Product
(other than the LdT Product, for which the provisions of Section 2.5(a) apply),
by funding and/or dedicating efforts to such program, and the Parties shall
share the benefits of such cost reductions in proportion to their respective
contributions thereto (taking into account, without limitation, the value of any
financial and non-financial contributions).
2.6 Back-Up Supply. To avoid out-of-stock situations the Joint
Manufacturing Committee shall determine whether and under what circumstances
back-up suppliers are necessary and/or when such suppliers shall be engaged.
2.7 Inventory.
(a) Idenix, itself or through its Affiliates or
sublicensees, shall carry such surplus inventory of all API for the Products as
well as Packaged Products for the
12
Products sold in the U.S. Territory consistent with guidelines mandated by the
Joint Manufacturing Committee; and
(b) Novartis, itself or through its Affiliates or
sublicensees, shall carry inventory of Packaged Product for the Products to be
sold outside the U.S. Territory consistent with guidelines mandated by the Joint
Manufacturing Committee.
2.8 Engaging Third Parties to Conduct Technical Development.
Idenix shall not, without the prior written approval of the Joint Manufacturing
Committee, initiate any Technical Development program with any Third Party or
disclose any Manufacturing Technology to any Third Party with respect to APIs,
Finished Product or Packaged Products for Selected Drug Candidates, or with
respect to any HCV Drug Candidate which and during such times as Novartis is
performing or funding Technical Development hereunder or pursuant to the
Development Agreement.
3. Quality; Samples; Qualifying Idenix.
3.1 Quality; Quality Records. Each Party, in respect of all APIs,
Finished Products or Packaged Products Manufactured or supplied by such Party
pursuant to this Agreement, shall ensure that such APIs, Finished Products or
Packaged Products are Manufactured or supplied in accordance with (a) all
applicable Specifications and Quality Assurance Requirements, and (b) all
applicable Laws, including, without limitation, health, safety and environmental
Laws and management systems comparable with international management standards
(e.g., ISO 14001, OHSAS 18001, BS 8800). Each of the Parties shall, and Idenix
shall require that all API Manufacturers, keep and, upon reasonable notice, make
available to the other Party all records as are necessary to demonstrate
compliance with the immediately preceding sentence.
3.2 Regulatory Samples. From time to time during the term of this
Agreement, each Party shall furnish to the other Party or Regulatory Authorities
such regulatory samples of the APIs, Finished Products and/or Packaged Products
as may be required by a Regulatory Authority.
3.3 Qualifying Idenix as a Supplier. For each Packaged Product,
Novartis shall undertake when required under applicable Law such reasonably
necessary actions (including, without limitation, a cGMP audit) to qualify
Idenix with Regulatory Authorities in the Major EU Countries and the relevant
Novartis Territory as a supplier to Novartis with respect to such Packaged
Product. Idenix agrees to cooperate with Novartis with respect to such
undertaking.
4. Intellectual Property and Manufacturing Technology.
4.1 Idenix Grant. Subject to the terms and conditions of this
Agreement and the Development Agreement, Idenix hereby grants to Novartis a
non-exclusive, royalty-free, sublicenseable, right and license in the relevant
Territory, under all Manufacturing Technology now or hereafter Controlled by
Idenix and under Idenix' rights in the Idenix Intellectual Property and Joint
Intellectual Property, solely to the extent necessary for
13
Novartis to exercise its rights and fulfill its obligations under this Agreement
and for no other purpose.
4.2 Novartis Grant and Covenant.
(a) In the event that Novartis discontinues Manufacturing
API for any Product hereunder, and subject to the terms and conditions of this
Agreement and the Development Agreement, Novartis hereby grants to Idenix a
non-exclusive, royalty-free, sublicenseable, right and license in the relevant
Territory under Novartis' rights in the Joint Intellectual Property solely to
the extent necessary for Idenix to exercise its rights and fulfill its
obligations under this Agreement with respect to such API and for no other
purpose.
(b) In the event that Novartis discontinues Manufacturing
API for any Product hereunder, Novartis shall, subject to the terms and
conditions of this Agreement and the Development Agreement, grant to Idenix a
non-exclusive, royalty-free, sublicenseable, right and license in the relevant
Territory under Novartis' rights in (i) all improvements to Idenix Intellectual
Property, Joint Intellectual Property and Manufacturing Technology Controlled by
Idenix that Novartis has developed hereunder relating to such API, and (ii) if
such Product is the HCV Product, all Pre-Selection Intellectual Property that
relates to the Manufacture of API for such HCV Drug Candidate (to the extent
such is not otherwise granted in clause (i) above), solely, in each case set
forth in clauses (i) and (ii) above, to the extent necessary for Idenix to
exercise its rights and fulfill its obligations under this Agreement with
respect to such API and for no other purpose.
(c) In the event that Novartis discontinues Manufacturing
an HCV Drug Candidate that is not a Selected Drug Candidate hereunder, and
subject to the terms and conditions of this Agreement, (i) Novartis shall grant
to Idenix a non-exclusive, royalty-free, sublicenseable, right and license under
Novartis' rights in the Pre-Selection Intellectual Property that relates solely
to the Manufacture of such API solely to Manufacture API for such HCV Drug
Candidate and for no other purpose, and (ii) the Parties shall negotiate in good
faith the terms under which Novartis may grant a license under the relevant
Pre-Selection Intellectual Property relating to the Finishing and Packaging of
such HCV Drug Candidate.
(d) Novartis may, in its sole discretion from time to
time during the term of this Agreement, grant to Idenix the right and license
under Novartis' rights in Novartis Intellectual Property not otherwise licensed
under Sections 4.2(b) or (c) above, with the right to grant sublicenses to the
extent and as determined by Novartis at the time of grant, for such purposes as
Novartis shall determine relating to Idenix' exercise of its rights and
fulfillment of its obligations under this Agreement and for no other purpose.
(e) Commencing at such time as Novartis discontinues
Manufacturing API for any Product or an HCV Drug Candidate that is not a
Selected Drug Candidate hereunder, Novartis agrees that neither it nor any of
its Subject Affiliates will bring a claim for infringement of any Covenant
Intellectual Property against Idenix or any of its
14
Affiliates or permitted sublicensees with respect to actions by Idenix or any of
its Affiliates or permitted sublicensees which (i) are solely in connection with
the Manufacturing of such API, and (ii) would, but for this Section 4.2(e), give
rise to such a claim. Notwithstanding anything contained herein to the contrary:
(I) this Section 4.2(e) (x) shall have no further force or effect upon
termination of this Agreement pursuant to Section 12.2(a) or by Novartis
pursuant to Sections 12.3 or 12.4 (or, in the event of a Country-Specific
Termination, pursuant to Section 12.2(a) or by Novartis pursuant to Sections
12.3 or 12.4, no further force or effect with respect to the Covenant
Intellectual Property within the relevant country(ies), or in the event of a
Product/Drug-Specific Termination pursuant to Section 12.2(a) or by Novartis
pursuant to Sections 12.3 or 12.4, no further force or effect with respect to
Covenant Intellectual Property relating to the relevant Product or Drug
Candidate, as applicable); and (y) shall, except as provided in clause (x)
above, survive termination of this Agreement in whole or in part; and (II) the
right set forth in this Section 4.2(e) may be assigned only in connection with
an assignment in accordance with Section 13.8, and provided that in connection
with such an assignment, the obligations of Novartis and its Subject Affiliates
under this Section 4.2(e) shall apply only with respect to that portion of the
assignee's business represented by Idenix' business succeeded to by such
assignee.
(f) Limitation. Notwithstanding any other provision to
the contrary contained in this Agreement but subject to the express grant of any
right or license by Novartis pursuant to Sections 4.2(d) or 4.4(b), Novartis and
its Affiliates do not and shall not grant hereunder any rights or licenses
under, or covenant not to ▇▇▇ with respect to, any intellectual property of
Novartis or its Affiliates that (i) is not first developed by Novartis or one of
its Subject Affiliates primarily in connection with, and used primarily in
connection with, the activities of Novartis or one of its Subject Affiliates
pursuant to this Agreement, or (ii) relates to Finishing or Packaging, unless,
in the case of this clause (ii) only, the Parties enter into a license agreement
with respect to Finishing and/or Packaging as provided in Sections 4.2(c),
4.4(d) or 12.5(c).
4.3 Sublicenses. All sublicenses granted pursuant to Sections 4.1
and 4.2(a) through (d) shall be on terms equivalent to those provided under
Sections 6.1(f) or 6.2(c) of the Development Agreement, as appropriate.
4.4 Technology Transfer.
(a) From time to time during the Term as applicable,
Idenix shall provide to Novartis one (1) copy of each Physical Embodiment, if
any, of all Idenix Intellectual Property, Joint Intellectual Property or
Manufacturing Technology now or hereafter Controlled by Idenix to the extent
such is reasonably necessary for Novartis to exercise its rights and perform its
obligations under this Agreement. Without limiting the generality of any other
provision of this Agreement, Idenix shall make its Manufacturing and other
relevant scientific and technical personnel available to Novartis to answer any
questions or provide instruction as reasonably requested by Novartis.
(b) Novartis may, in its sole discretion from time to
time during the term of this Agreement, provide to Idenix such Physical
Embodiments of Novartis
15
Intellectual Property Controlled by Novartis to the extent and as determined by
Novartis at the time of transfer, for such purposes as Novartis shall determine
relating to Idenix' exercise of its rights and fulfillment of its obligations
under this Agreement and for no other purpose.
(c) In the event that Novartis discontinues Manufacturing
API for any Product hereunder, Novartis shall provide to Idenix one (1) copy of
each Physical Embodiment, if any, of (i) all Joint Intellectual Property and
improvements to Idenix Intellectual Property, Joint Intellectual Property and
Manufacturing Technology Controlled by Idenix that Novartis has developed
hereunder relating to the Manufacture of such API, and (ii) if such Product is
the HCV Product, Pre-Selection Intellectual Property that relates to the
Manufacture of API for such HCV Drug Candidate (to the extent such is not
otherwise included in clause (i) above), solely, in each case set forth in
clauses (i) and (ii) above, to the extent necessary for a Third Party API
Manufacturer engaged pursuant to the terms of this Agreement to fulfill its
obligations. Without limiting the generality of any other provision of this
Agreement, in the event that Novartis discontinues Manufacturing API for any
Product hereunder, Novartis shall make its Manufacturing and other relevant
scientific and technical personnel available to Idenix to answer questions or
provide instruction as reasonably requested by Idenix.
(d) In the event that Novartis discontinues Manufacturing
an HCV Drug Candidate that is not a Selected Drug Candidate hereunder, and
subject to the terms and conditions of this Agreement,(i) Novartis shall provide
to Idenix one (1) copy of each Physical Embodiment, if any, of all Pre-Selection
Intellectual Property relating solely to the Manufacture of API for such HCV
Drug Candidate; and (ii) the Parties shall negotiate in good faith the terms
under which Novartis may provide Physical Embodiments, if any, of Pre-Selection
Intellectual Property that relates to the Finishing and Packaging of such HCV
Drug Candidate.
5. Payments for Product Supply.
5.1 Payments for Clinical Supply of Packaged Product Supplied by
Idenix. The clinical supply of any API, Finished Product or Packaged Product
Manufactured by or on behalf of Novartis shall be supplied by Idenix to
Novartis, its Affiliates and sublicensees [**].
5.2 Pre-Payments. With respect to commercial supply of Packaged
Products for Selected Drug Candidates to be sold in the Novartis Territory
and/or a Major EU Country (but not the U.S. Territory), Idenix shall invoice
Novartis an amount equal to [**] percent ([**]%) ("Pre-Payment Percentage") of
the weighted average of the estimated Net Sales, as specified in the applicable
Marketing Plan(s), with respect to such Product corresponding to the quantity of
Packaged Product delivered by Idenix; provided, however, the Pre-Payment
Percentage shall be [**]% [**]. All such pre-payments are subject to
reconciliation in accordance with Section 6.3 to achieve the amounts provided
for in Section 5.3(a)(i) through (iv), (b) and (d) below.
16
5.3 Payments for Commercial Supply of Packaged Product Supplied by
Idenix.
(a) Novartis Territory.
(i) Basic Percentage. With respect to commercial
supply of Packaged Products for Selected Drug Candidates to be sold in
the Novartis Territory, Novartis shall pay to Idenix a price equal to
[**] percent ([**]%) (the "Basic Percentage") of the Net Sales of such
Packaged Products in the relevant Novartis Territory.
(ii) Volume Adjustment. In the event that Net
Sales of a specific Product in the Novartis Territory satisfy the
applicable Annual Net Sales threshold in a Contract Year, the Basic
Percentage applicable to such specific Product shall [**] accordance
with the following schedule:
Incremental Annual Net Sales of applicable Product (on a Basic Percentage
Product-by-Product basis) in the Novartis Territory during the applicable Applicable to the Amount
Contract Year: Corresponding to Annual
Net Sales (and not greater
or lesser amounts):
Greater than $[**] and less than or equal to $[**]million [**]%
Greater than $[**] and less than or equal to $[**] million [**]%
Greater than $[**] and less than or equal to $[**]million [**]%
Greater than $[**] and less than or equal to $[**]million [**]%
Greater than $[**] and less than or equal to $[**] million [**]%
Greater than $[**] and less than or equal to $[**] million [**]%
Greater than $[**] and less than or equal to $[**] million [**]%
Greater than $[**] and less than or equal to $[**] million [**]%
Greater than $[**] and less than or equal to $[**] [**]%
Greater than $[**] [**]%
By way of example, in a Contract Year in which Annual Net Sales with
respect to a Product in the Novartis Territory are $1.2 billion, [**] will be
calculated as follows:[**] the total amount due to Idenix in respect of such
Product in such Contract Year.
(iii) [**]
(A) [**]Novartis [**] with respect to a
Product [**] in the Novartis
Territory [**]Novartis,[**] that
Novartis would otherwise be
required to make pursuant to
Sections 5.3(a)(i) and (ii) with
respect to such Product [**]
(B) [**] With respect to any Product in
which Novartis has [**], if
Novartis [**]then the payments [**]
that Novartis would otherwise be
required to make pursuant to
Sections 5.3(a)(i) and (ii) with
respect to such Product [**].
17
(iv) Price Renegotiation. Notwithstanding
anything to the contrary in this Section 5.3, in the event that the
local price for a Packaged Product sold into a specific country in the
Novartis Territory is less than the total Fully Allocated Cost
attributable to such Product in such country, the Parties shall in good
faith renegotiate the price to be paid to Idenix for such Packaged
Product.
(b) Major EU Countries. The invoicing and pricing of
Packaged Products sold in the Major EU Countries shall be structured, in a
manner to be agreed upon by the Parties, to achieve, in a tax-optimized fashion
to the extent permitted by applicable Law, the following [**] between the
Parties; provided, however, that such [**] shall be subject to all applicable
adjustment and reimbursement obligations under the Development Agreement:
Percentage Allocation of Benefit for the
Period During the Applicable Country Term in each of the Major EU Major EU Countries Countries
Idenix Novartis
-------------------------------------------------------------------- ----------------------------------------
The 12-month period beginning on the Launch Date in such country [**]% [**]%
The 12-month period beginning on the first anniversary of the Launch [**]% [**]%
Date in such country
Each 12-month period beginning on the second and subsequent
anniversaries of the Launch Date in such country through the end of
the applicable Country Term [**]% [**]%
(c) U.S. Territory. The invoicing and pricing of Packaged
Products sold in the U.S. Territory shall be structured, in a manner to be
agreed upon by the Parties, to achieve, in a tax-optimized fashion to the extent
permitted by applicable Law, [**] between the Parties; provided, however, that
such [**] shall be subject to all applicable adjustment and reimbursement
obligations under the Development Agreement.
(d) Minimum Payments. Subject to Section 5.3(a)(iv), but
notwithstanding anything to the contrary in Sections 5.3(a)(i)-(iii), (b) and
(c), in no event shall Novartis pay to Idenix an amount less than [**] percent
([**]%) of Idenix' Fully Allocated Cost of Manufacture of the relevant Product.
6. Payment Mechanics; Reports; Other Related Matters.
6.1 Invoicing. The invoicing and payment of Packaged Products
supplied by Idenix to Novartis shall be as set forth in 5.2 above and as set
forth in any applicable Further Agreements. Upon delivery of each shipment of
API, Finished Product or Packaged Product to Idenix' hereunder, Novartis shall
invoice Idenix and Idenix shall pay the applicable price based upon Novartis'
Fully Allocated Costs of Manufacture pursuant to the terms of applicable Further
Agreements.
18
6.2 Financial Records and Reports. Within thirty (30) days
following the end of each calendar quarter, each Party shall submit to the other
Party a written report setting forth in reasonable detail, on a
Product-by-Product and country-by-country basis, to the extent made or incurred
by such Party, its Affiliates or sublicensees, the following information with
respect to such calendar quarter (a) Net Sales, (b) Promotion Expenses, (c) the
applicable Fully Allocated Cost of Manufacture of APIs, Finished Products and
Packaged Products, and (d) the calculation of the price payable or receivable by
the selling Party pursuant to this Agreement.
6.3 Reconcilation. The Parties shall reconcile the reports within
sixty (60) days after the end of each calendar quarter. To the extent that one
Party must make a payment to the other Party to ensure that each Party bears the
appropriate financial burdens and benefits with respect to the payments in
accordance with this Agreement, the paying Party shall pay the other Party such
payments within thirty (30) days after reconciliation of such reports. In the
event of a dispute with respect thereto, (a) the paying Party shall remit on a
timely basis all amounts not disputed and shall provide written notice within
such thirty (30) day period after reconciliation of such reports, specifying in
detail the amounts in dispute and the basis for such dispute, (b) the matter
shall be referred to the Joint Steering Committee for resolution, and (c)
interest shall be payable on any additional amounts determined to be due in the
same manner as provided for in Section 6.9.
6.4 Audits. Each Party shall keep, and shall cause its Affiliates
and sublicensees to keep, complete and accurate records of the underlying
revenue and expense data relating to the reports and payments required under
this Agreement. Each Party will annually have the right at its own expense to
have an independent, certified public accountant, selected by such Party and
reasonably acceptable to the other Party, review any such records pertaining to
Net Sales and Promotional Expenses of the other Party, its Affiliates and
sublicensees, and Novartis shall have the right to review Idenix', its
Affiliates' and Third Party manufacturers' records pertaining to Idenix' Fully
Allocated Cost of Manufacture, in the location(s) where such records are
maintained by the other Party, its Affiliates and sublicensees, upon reasonable
notice and during regular business hours and under obligations of confidence,
for the sole purpose of verifying the basis and accuracy of payments made
pursuant to Sections 5 and 6.3, in each case within the prior twelve (12)
months. If the review of such records reveals that the audited Party has failed
to accurately report information pursuant to Sections 5 and 6.3, then the
audited Party shall promptly pay to the auditing Party any resulting amounts due
under Sections 5 and 6.3, together with interest calculated in the manner
provided in Section 6.9. If any such under payments are greater than ten percent
(10%) of the amounts actually due to the auditing Party for the reviewed period
pursuant to Sections 5 (as adjusted by Section 6.3), as applicable, then the
audited Party shall pay all of the costs of such review. In the event that
Idenix has a good faith belief that any prices based on Novartis' Fully
Allocated Cost of Manufacture are inaccurate, the Joint Manufacturing Committee
shall make a determination as to whether any price adjustment is appropriate. In
the event that the Joint Manufacturing Committee is unable to resolve such
dispute or either Party disagrees with the determination of the Joint
Manufacturing Committee, such dispute shall be resolved in accordance with
Section 13.6 of the Development
19
Agreement. In no event shall Idenix have the right to audit any records
pertaining to Novartis' Fully Allocated Cost of Manufacture.
6.5 Tax Matters. The Parties shall use all reasonable efforts to
reduce or otherwise optimize, in a manner consistent with applicable Laws, tax
withholding on payments made pursuant to this Agreement. Each Party agrees to
cooperate in good faith to provide the other Party with such documents and
certifications as are reasonably necessary to enable such other Party to
minimize any withholding tax obligations. The Parties will reasonably cooperate
in providing one another with documentation of the payment of any withholding
taxes paid pursuant to this Section 6 and in completing and filing documents
required under the provisions of any applicable tax Laws or under any other
applicable Law in connection with the making of any required tax payment or
withholding payment, or in connection with any claim to a refund of or credit
for any such payment.
6.6 United States Dollars. All dollar ($) amounts specified in
this Agreement are United States Dollar amounts.
6.7 Currency Exchange. With respect to payments based on Net Sales
and Fully Allocated Cost of Manufacture invoiced and/or expenses incurred, all
amounts shall be expressed in United States Dollars. Such United States Dollar
amounts shall be retrieved from Novartis' official reporting systems (which
official reports are in United States Dollars). The currency conversion for Net
Sales and Fully Allocated Cost of Manufacture and/or expenses incurred in
currencies other than United States Dollars shall be based on Novartis'
applicable standard SWAER (Sales Weighted Average Exchange) rates. All payments
hereunder shall be made in United States Dollar amounts.
6.8 Blocked Payments. If at any time legal restrictions in any
country in the relevant Territory prevent the prompt remittance of any payments
pursuant to this Agreement, the paying Party shall have the right and option to
make such payments by depositing the amount thereof in local currency to the
receiving Party's account in a bank or depository in such country designated by
the receiving Party, or, if none is designated by the receiving Party within
thirty (30) days, in a recognized banking institution selected by the paying
Party, its Affiliates or sublicensees, as the case may be and identified in a
written notice given to the receiving Party.
6.9 Late Payments. The paying Party shall pay interest to the
receiving Party on the aggregate amount of any payments that are not paid on or
before the date such payments are due under this Agreement at a rate per annum
equal to the lesser of one percent (1%) per month or the highest rate permitted
by applicable Law, compounded monthly, calculated on the number of days such
payments are paid.
7. Force Majeure. Except for obligations of payment, each Party shall be
excused for any delay or failure to fulfill any of its respective obligations
under this Agreement if such failure or delay is caused by any act of God,
accident, explosion, fire, storm, sabotage, earthquake, flood, drought, peril of
the sea, riot, embargo, war, any Law of general application, seizure,
requisition or allocation, any failure or delay of
20
transportation, shortage of or inability to obtain supplies, equipment, fuel or
labor, labor strike by common carriers or by the delayed Party's employees or
agents, or any other circumstance or event beyond the reasonable control of the
Party relying upon such circumstances or event to excuse such Party's delay or
failure to perform hereunder. Such Party shall be so excused only during the
period of such circumstance or event and such Party shall use Commercially
Reasonable Efforts to remedy such situation and commence compliance with this
Agreement as soon as possible notwithstanding such circumstance or event.
8. Limited Warranty.
8.1 Limited Warranty. Each Party, in respect of all Products
Manufactured and supplied by such Party pursuant to this Agreement, warrants
that such Products shall conform to the applicable Specifications and Quality
Assurance Requirements.
8.2 DISCLAIMER. EXCEPT AS STATED IN SECTION 8.1, THE DEVELOPMENT
AGREEMENT, THE STOCK PURCHASE AGREEMENT BETWEEN NOVARTIS AND IDENIX US OR ANY
OTHER AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF,
NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND,
EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
9. Limitations of Liability.
9.1 EXCEPT IN CASES OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
IDENIX OR ITS AFFILIATES, OR WITH RESPECT TO A PAYMENT TO A THIRD PARTY BY
IDENIX AS AN INDEMNIFYING PARTY UNDER ARTICLE 11, IDENIX' LIABILITY FOR DAMAGES
TO NOVARTIS FOR ANY CAUSE WHATSOEVER ARISING UNDER THIS AGREEMENT, REGARDLESS OF
THE FORM OF ANY CLAIM OR ACTION, SHALL NOT EXCEED THE TOTAL AMOUNT INVESTED BY
NOVARTIS IN THE DEVELOPMENT OF THE PRODUCTS MANUFACTURED UNDER THIS AGREEMENT
AND/OR DEVELOPED UNDER THE DEVELOPMENT AGREEMENT.
9.2 NEITHER PARTY HERETO WILL BE LIABLE TO THE OTHER FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR MULTIPLE DAMAGES ARISING OUT OF
THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOST PROFITS
ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY
NOTICE OF SUCH DAMAGES, EXCEPT WHERE SUCH DAMAGES OR LOST PROFITS ARE REQUIRED
TO BE PAID TO A THIRD PARTY BY AN INDEMNIFYING PARTY UNDER ARTICLE 11.
21
9.3 Nothing in Articles 8 or 9 is intended to limit any claims,
causes of actions, liabilities, damages or other remedies available under the
Development Agreement and the Stock Purchase Agreement and in the event of any
conflict between this Agreement, on the one hand, and the Development Agreement
or Stock Purchase Agreement, on the other, with respect to any claims, causes of
actions, liabilities, damages or other remedies which may be available to a
Party, the terms of the Development Agreement and/or the Stock Purchase
Agreement shall prevail.
10. Confidentiality. Confidential Information shall be protected in
accordance with Article 9 of the Development Agreement. All obligations of
confidentiality imposed under this Article 10 shall expire five (5) years
following termination or expiration of this Agreement.
11. Indemnification.
11.1 By Idenix. Idenix shall defend, indemnify and hold harmless
Novartis, its Affiliates and their respective directors, officers, employees and
agents, at Idenix' cost and expense, from and against any liabilities, losses,
costs, damages, fees or expenses (including reasonable fees and expenses of
legal counsel) arising out of (a) any breach by Idenix of any of its
representations, warranties or obligations pursuant to this Agreement or (b) the
negligence or willful misconduct of Idenix or its Affiliates, or sublicensees,
or any of their respective directors, officers, employees and agents, in the
performance of obligations or exercise of rights under this Agreement.
11.2 By Novartis. Novartis shall defend, indemnify and hold
harmless Idenix, its Affiliates and their respective directors, officers,
employees and agents, at Novartis' cost and expense, from and against any
liabilities, losses, costs, damages, fees or expenses (including reasonable fees
and expenses of legal counsel) arising out of (a) any breach by Novartis of any
of its representations, warranties or obligations pursuant to this Agreement or
(b) the negligence or willful misconduct of Novartis or its Affiliates or
sublicensees, or any of their respective directors, officers, employees and
agents, in the performance of obligations or exercise of rights under this
Agreement (except to the extent caused by a breach by Idenix of its
representations, warranties or obligations pursuant to this Agreement).
11.3 Claims for Indemnification with respect to Third Parties.
(a) With regard to any Third Party claim (for which
indemnification may be sought under this Article 11) against a person entitled
to indemnification under this Article 11 (an "Indemnified Party"), the
Indemnified Party shall give prompt written notification to the person from whom
indemnification is sought (the "Indemnifying Party") of the commencement of any
action, suit or proceeding relating to such Third Party claim or, if earlier,
upon the assertion of any such claim by a Third Party (it being understood and
agreed, however, that the failure by an Indemnified Party to give notice of a
Third-Party claim as provided in this Section 11.3(a) shall not relieve the
Indemnifying Party of its indemnification obligation under this Agreement except
and
22
only to the extent that such Indemnifying Party is actually prejudiced as a
result of such failure to give notice).
(b) Within thirty (30) days after delivery of such
notification, the Indemnifying Party may, upon written notice thereof to the
Indemnified Party, assume control of the defense of such action, suit,
proceeding or claim with counsel reasonably satisfactory to the Indemnified
Party. If the Indemnifying Party does not assume control of such defense, the
Indemnified Party shall control such defense.
(c) The Party not controlling such defense may
participate therein at its own expense; provided that if the Indemnifying Party
assumes control of such defense and the Indemnified Party reasonably concludes,
based on advice from counsel, that the Indemnifying Party and the Indemnified
Party have conflicting interests with respect to such action, suit, proceeding
or claim, the Indemnifying Party shall be responsible for the reasonable fees
and expenses of counsel to the Indemnified Party solely in connection therewith;
provided further, however, that in no event shall the Indemnifying Party be
responsible for the fees and expenses of more than one counsel in any one
jurisdiction for all Indemnified Parties.
(d) The Party controlling such defense shall keep the
other Party advised of the status of such action, suit, proceeding or claim and
the defense thereof and shall consider recommendations made by the other Party
with respect thereto.
(e) The Indemnified Party shall not agree to any
settlement of such action, suit, proceeding or claim without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld. The
Indemnifying Party shall not agree to any settlement of such action, suit,
proceeding or claim or consent to any judgment in respect thereof that does not
include a complete and unconditional release of the Indemnified Party from all
liability with respect thereto or that imposes any liability or obligation on
the Indemnified Party without the prior written consent of the Indemnified
Party.
12. Term and Termination.
12.1 Term. Unless sooner terminated pursuant to this Article 12,
the term of this Agreement shall commence on the Effective Date and shall
continue with respect to each particular Product and/or country in the relevant
Territory until the expiration of the Country Term for such Product in such
country in the relevant Territory.
12.2 Termination in connection with the Development Agreement.
(a) In the event and to the extent that Novartis
terminates the Development Agreement in its entirety, or on a Country-Specific
Termination or Product/Drug-Specific Termination basis, pursuant to Section 12.3
thereof, this Agreement shall terminate to the same extent.
(b) In the event and to the extent that Novartis
terminates the Development Agreement in its entirety, or on a Country-Specific
Termination or
23
Product/Drug-Specific Termination basis, pursuant to Section 12.4 thereof, this
Agreement shall terminate to the same extent.
(c) In the event and to the extent that Idenix terminates
the Development Agreement in its entirety, or on a Country-Specific Termination
or Product/Drug-Specific Termination basis, pursuant to Section 12.3 thereof,
this Agreement shall terminate to the same extent.
12.3 Termination For Material Breach. Upon any material breach of
this Agreement by either Party (the "Breaching Party"), the other Party (the
"Non-Breaching Party") may, by providing thirty (30) days' written notice to the
Breaching Party, terminate this Agreement on a Country-Specific Termination
basis if the material breach relates to one or more Products in one or more
countries, a Product/Drug-Specific Termination basis if the material breach
relates to a Product throughout the applicable Territory or an Entire Agreement
Termination basis if the material breach is not limited to a specific Product,
Drug Candidate or country, as applicable. The termination shall become effective
at the end of the notice period unless the Breaching Party cures such breach
during such notice period. Notwithstanding the foregoing, if such breach, by its
nature, is incurable, the Non-Breaching Party may terminate this Agreement
immediately upon written notice to the Breaching Party.
12.4 Insolvency. This Agreement may be terminated upon thirty (30)
days' prior written notice by either Party at any time during this Agreement if
the other Party files in any court pursuant to any statute of any government in
any country a petition in bankruptcy or insolvency or for reorganization or for
an arrangement or for the appointment of a receiver or trustee of the Party or
of its assets; or if any Person proposes a written agreement of composition for
extension of such other Party's debts; or if the other Party shall be served
with an involuntary petition against it, filed in any insolvency proceeding, and
such petition shall not be dismissed within sixty (60) days after filing
thereof; or if the other Party shall be a party to any dissolution or
liquidation; or if the other Party shall make a general assignment for the
benefit of its creditors; or if the other Party is subject to any final order
regarding insolvency or bankruptcy which can be expected to have a material
adverse effect on the Manufacture and/or supply of API or Packaged Product. For
the purposes of this Section 12.4, when "Party" refers to Idenix, "Party" shall
mean and include Idenix US.
12.5 Effects of Termination.
(a) Upon termination of this Agreement, on a
Country-Specific Termination, a Product/Drug-Specific Termination or an Entire
Agreement Termination basis, pursuant to Sections 12.1, 12.2, 12.3 or 12.4:
(i) all financial obligations under this
Agreement owed as of the effective date of such expiration or
termination shall remain in effect;
(ii) the provisions of Articles 8 through 13
shall survive;
24
(iii) the Development Agreement shall remain in
full force and effect except to the extent that it has otherwise
terminated or expired in accordance with its terms; and
(iv) except as set forth in Section 12.5(a)(i)
and (ii), all of the Parties' obligations under this Agreement,
including, without limitation, all of the Parties' payment obligations
under this Agreement, shall terminate with respect to any Product
and/or country with respect to which this Agreement has expired or
terminated.
(b) Upon termination of this Agreement, on a
Product/Drug-Specific Termination, a Country-Specific Termination or an Entire
Agreement Termination basis, (i) pursuant to Section 12.2(a), provided that
Novartis has elected to retain the licenses under the Development Agreement
pursuant to Section 12.5(a)(ii) thereof, or (ii) by Novartis pursuant to
Sections 12.3 or 12.4, then (A) Idenix shall grant to Novartis a non-exclusive,
royalty-free, sublicenseable, right and license in the relevant Territory under
all Manufacturing Technology Controlled by Idenix and under Idenix' rights in
the Idenix Intellectual Property and Joint Intellectual Property solely to the
extent necessary for Novartis to Manufacture, or have Manufactured, such
Product(s) for such countries with respect to which such termination relates;
and (B) Idenix shall, at Novartis' request, promptly transfer to Novartis at
least one (1) copy of each Physical Embodiment, if any, of all such Idenix
Intellectual Property, Joint Intellectual Property or Manufacturing Technology
Controlled by Idenix.
(c) Upon termination of this Agreement, on a
Product/Drug-Specific Termination, a Country-Specific Termination or an Entire
Agreement Termination basis, (i) pursuant to Sections 12.2(b) or 12.2(c),
provided that Idenix has elected to retain the licenses under the Development
Agreement pursuant to Section 12.5(b)(ii) thereof, or (ii) by Idenix pursuant to
Sections 12.3 or 12.4, then (A) Novartis shall grant to Idenix a non-exclusive,
royalty-free, sublicenseable, right and license under Novartis' rights in (i)
the Joint Intellectual Property and to all improvements to Idenix Intellectual
Property, Joint Intellectual Property and Manufacturing Technology Controlled by
Idenix that, in each case, Novartis has developed hereunder and relates solely
to the Manufacture of API of such terminated Product, and (ii) if such Product
is the HCV Product, Pre-Selection Intellectual Property that relates solely to
the Manufacture API of such HCV Drug Candidate (to the extent such is not
otherwise granted in clause (A)(i) above), solely, in each case set forth in
clauses (A)(i) and (ii) above, to the extent necessary for Idenix to
Manufacture, or have Manufactured, API for such Product(s) for such countries
with respect to which such termination relates; (B) the Parties shall negotiate
in good faith the terms under which Novartis may grant a license under, and
Physical Embodiments of, the relevant Joint Intellectual Property, improvements
to Idenix Intellectual Property, Joint Intellectual Property and Manufacturing
Technology Controlled by Idenix, and, if such Product is the HCV Product,
Pre-Selection Intellectual Property, relating, in each case, to the Finishing
and Packaging of such Product for such countries with respect to which such
termination relates; (C) Section 4.2(c) shall survive the termination of this
Agreement; and (D) Novartis shall, at Idenix' request, promptly transfer to
Idenix at least one (1) copy of each Physical Embodiment, if any, of all such
(i) Joint Intellectual
25
Property, (ii) improvements to Idenix Intellectual Property, Joint Intellectual
Property and Manufacturing Technology Controlled by Idenix, and (iii) if such
Product is the HCV Product, Pre-Selection Intellectual Property, that, in each
case set forth in clauses (D)(i) through (iii) above, Novartis has developed
hereunder and relates solely to the Manufacture of API for such terminated
Products for such terminated countries.
(d) In the event of any termination of this Agreement on
a Product/Drug-Specific Termination, a Country-Specific Termination or an Entire
Agreement Termination basis pursuant to Sections 12.3 or 12.4 of this Agreement,
and notwithstanding anything to the contrary in Sections 12.5(a) through (c),
the Parties will negotiate in good faith to revise the Development Agreement or
enter into a separate agreement to provide the Parties the benefits of the
financial terms (without taking into account any tax considerations) of this
Agreement with respect to the sales of the Products in the Territory as such
financial terms existed immediately prior to such termination. The provisions of
the immediately preceding sentence shall not apply to any termination of this
Agreement on a Product/Drug-Specific Termination, a Country-Specific Termination
or an Entire Agreement Termination basis pursuant to Section 12.2 hereof.
13. Miscellaneous.
13.1 Choice of Law. This Agreement shall be governed by and
interpreted under the laws of the State of New York, excluding: (a) its
conflicts of laws principles; (b) the United Nations Convention on Contracts for
the International Sale of Goods; (c) the 1974 Convention on the Limitation
Period in the International Sale of Goods (the "1974 Convention"); and (d) the
Protocol amending the 1974 Convention, done at Vienna April 11, 1980.
13.2 Notices. Any notice, request or report required or permitted
to be given or made under this Agreement by one of the Parties to the other
shall be in writing and shall be deemed to have been delivered upon personal
delivery or (a) in the case of notices provided between Parties in the
continental United States, four (4) days after deposit in the mail or the
business day next following deposit with a reputable overnight courier and (b)
in the case of notices provided by telecopy (which notice shall be followed
immediately by an additional notice pursuant to clause (a) above if the notice
is of a default hereunder), upon completion of transmissions to the addressee's
telecopier, as follows (or at such other addresses or facsimile numbers as may
have been furnished in writing by one of the Parties to the other as provided in
this Section 13.2):
If to Idenix: Idenix (Cayman) Limited
c/o Walkers SPV Limited
▇▇▇▇▇▇ House
▇▇▇▇ Street
P.O. Box 908GT
▇▇▇▇▇▇ Town
Grand Cayman
Cayman Islands
26
Attention: Secretary
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Idenix Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇.▇.
Attention:
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Novartis: Novartis Pharma AG
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: Head of Global Business
Development and Licensing
Facsimile No.: [41] 61 324 2100
With a copy to: Novartis Pharma AG
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
Attention: General Counsel
Facsimile No.: [41] 61 324 6859
13.3 Severability. If, under applicable law or regulation, any
provision hereof is invalid or unenforceable, or otherwise directly or
indirectly affects the validity of any other material provision(s) of this
Agreement ("Severed Clause"), then, it is mutually agreed that this Agreement
shall endure except for the Severed Clause. The Parties shall consult and use
their best efforts to agree upon a valid and enforceable provision which shall
be a reasonable substitute for such Severed Clause in light of the intent of
this Agreement.
13.4 Captions. All captions herein are for convenience only and
shall not be interpreted as having any substantive meaning.
13.5 Integration. This Agreement, the Stock Purchase Agreement and
the other Ancillary Agreements (including any exhibits and other attachments
hereto and thereto) constitute the entire agreement between the Parties and
their Affiliates with respect to the within subject matter and supersede all
previous agreements, whether written or oral, except that Confidentiality
Agreements, dated February 1, 2002, September 6, 2002 and October 8, 2002, by
and between the Parties shall survive the execution of this Agreement. This
Agreement may be amended only in writing signed by properly authorized
representatives of each of Idenix and Novartis. The Parties acknowledge that
27
this Agreement is being executed and delivered simultaneously with the execution
and delivery by the Parties or their Affiliates of the Development Agreement.
13.6 Dispute Resolution. Any dispute arising out of or relating to
this Agreement shall be resolved in accordance with Section 13.6 of the
Development Agreement.
13.7 Independent Contractors; No Agency. Neither Party shall have
any responsibility for the hiring, firing or compensation of the other Party's
employees or for any employee benefits. No employee or representative of a Party
shall have any authority to bind or obligate the other Party to this Agreement
for any sum or in any manner whatsoever, or to create or impose any contractual
or other liability on the other Party without said Party's written approval. For
all purposes, and notwithstanding any other provision of this Agreement to the
contrary, Idenix' legal relationship under this Agreement to Novartis shall be
that of independent contractor.
13.8 Assignment; Successors. Without limiting the generality of
Section 2.1(e), either Idenix nor Novartis may assign this Agreement in whole or
in part without the consent of the other Party; provided that (a) either Party
may assign this Agreement to an Affiliate on the condition that the assigning
Party shall remain primarily liable hereunder for the prompt and punctual
payment and performance of all obligations of the assignee, and (b) this
Agreement may be assigned by a Party to a Third Party in connection with a sale
or transfer of all or substantially all of such Party's business to which this
Agreement relates. This Agreement shall be binding upon, and shall inure to the
benefit of, all permitted successors and assigns.
13.9 Execution in Counterparts; Facsimile Signatures. This
Agreement may be executed in counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same instrument even
if both Parties have not executed the same counterpart. Signatures provided by
facsimile transmission shall be deemed to be original signatures.
13.10 Waivers. No failure on the part of Novartis or Idenix to
exercise and no delay in exercising any right, power, remedy or privilege under
this Agreement, or provided by statute or at law or in equity or otherwise,
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach of this Agreement or as
an acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy or privilege preclude any other or further exercise thereof
or the exercise of any other right, power, remedy or privilege.
13.11 Bankruptcy. All rights and licenses granted pursuant to this
Agreement are, for purposes of Section 365(n) of Title 11 of the United States
Code or any foreign equivalents thereof ("Title 11"), licenses of rights to
"intellectual property" as defined in Title 11. Each Party in its capacity as a
licensor hereunder agrees that, in the event of the commencement of bankruptcy
proceedings by or against such Party under Title 11, the other Party, in its
capacity as a licensee of rights under this Agreement, shall retain and
28
may fully exercise all of such licensed rights under this Agreement (including
the license granted hereunder) and all of its rights and elections under Title
11.
[Remainder of Page Intentionally Left Blank]
29
IN WITNESS WHEREOF, Idenix and Novartis have caused this Agreement to
be duly executed by their authorized representatives, in duplicate on the dates
written herein below.
IDENIX (CAYMAN) LIMITED
By: [illegible]
---------------------------------------
Title: Chief Executive Officer
Date: May 8, 2003
NOVARTIS PHARMA AG
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: General Counsel
Date: May 8, 2003
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Head Operational Treasury
Date: May 8, 2003
[Signature Page to Master Manufacturing and Supply Agreement]
ANNEX 1
HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION
Third Party API Manufacturers shall (a) warrant that all waste will be disposed
of in compliance with all applicable Laws, and that discarded printed material
and products are not illegally used; (b) agree to Manufacture the applicable
APIs in accordance with generally accepted standards of health, safety and
environmental protection; (c) permit the Parties to acquaint such API
Manufacturer with regard to special risks of manufacture the API in order to
avoid or minimize health, safety and environmental risks; (d) upon at least two
(2) weeks' prior notice to such API Manufacturer, as applicable, allow either of
the Parties to inspect, without in any way limiting the direct responsibility of
such API Manufacturer, as applicable, the API Manufacturer's Manufacturing
operations at its facility(ies) to review the conformance with health, safety
and environmental sound practices; (e) inform the Parties without delay of any
health, safety and environmental incident related to API and any serious
production problems relating to the manufacture of API with regard to safety,
health and environmental aspects; and (f) be held fully liable with respect to
any claim (whether from private parties or from public bodies), which may arise
from such API Manufacturer's failing to meet applicable occupational health,
safety or environmental protection Laws.