Quality Agreement Dated as of September 3rd, 2013 (the “EFFECTIVE Date”) By and Between PolyPeptide Laboratories San Diego (“PPL-SD”) And Dipexium Pharmaceuticals (‘‘Dipexium’’)

PPL-
SD

Dipexium

ACTIVITIES

1.0 Regulatory Authorizations and Communications

1.1

Will maintain all licenses and authorizations as are required by APPLICABLE LAWS to operate a cGMP facility for MANUFACTURING of SUBSTANCE

X

1.2

Will prepare, submit, and maintain the necessary regulatory documentation to regulatory agencies in accordance with APPLICABLE LAWS.

X

X

1.3

Will provide copies of documentation necessary for responding to inquiries by regulatory agencies relating to SUBSTANCE

X

X

1.4

PPL-SD will promptly inform Dipexium of any regulatory agency action that could materially affect the contracted SUBSTANCEs to be manufactured. Dipexium will promptly inform PPL-SD of any regulatory agency action that materially affects the contracted services for SUBSTANCEs manufactured by PPL-SD.

X

X

2.0 GMP Compliance

2.1 Organizational and Personnel

2.1.1

Will maintain a QUALITY UNIT that is independent of the production unit and has the responsibility and authority to approve or reject MATERIALS, SUBSTANCE, STANDARD OPERATING PROCEDURES, MASTER BATCH RECORDS, DEVIATIONS, INVESTIGATIONS, and PRODUCTION BATCH RECORDS.

X

2.1.2

Will maintain adequate and qualified manufacturing personnel in the facilities during the MANUFACTURE of SUBSTANCE to ensure compliance with cGMP and the consisten MANUFACTURING of SUBSTANCE.

X

2.1.3

Will ensure that responsibilities and procedures applicable to QUALITY UNIT are documented in writing and consistently followed.

X

2.1.4

Will ensure that the use of consultants meets the requirements as defined in regulatory requirements.

X

2.1.5

Will conduct internal audits of all relevant activities to ensure compliance with cGMP and applicable STANDARD OPERATING PROCEDURES. Audit findings and corrective actions must be documented, brought to the attention of PPL-SD’s site management, and resolved in timely and effective

X

manner.

2.1.6

Will maintain and operate the areas of the Facility related to the MANUFACTURE of SUBSTANCE in compliance with US regulatory requirements.

X

2.2 Building and Facilities

2.2.1

Will maintain and operate in the areas of the FACILITY related to the MANUFACTURE of SUBSTANCE in compliance with US regulatory requirements.

X

PPL-
SD

Dipexium

ACTIVITIES

2.2.2

Will maintain controlled access to the FACILITY

2.2.3

Will comply with applicable cGMP regulations in the control and prevention of contamination as defined in regulatory requirements

X

2.2.4

Will allow Dipexium to review PPL-SD procedures, controls, and cleaning methods that will be implemented within the FACILITY to address any contamination issues.

X

2.3 Equipment and Utility Services

2.3.1

Will qualify, maintain, and calibrate equipment and utility services associated with MANUFACTURING SUBSTANCE in accordance with cGMP, APPLICABLE LAWS, and STANDARD OPERATING PROCEDURES.

X

2.3.2

Will verify/validate cleaning processes to be carried out on substance contact surfaces between batches of different substances to prevent contamination.

X

2.3.3

Will not conduct production and handling of highly sensitizing materials (such as penicillins or cephalosporins) in the equipment being used for SUBSTANCE. Production of such materials in the same building being used for the SUBSTANCE is permitted only if performed in a closed and dedicated system.

X

2.3.4

Will not conduct the production of certain additional products, such as certain highly active (such as steroids, hormones) or toxic drugs and non-medicinal products in the same equipment used for SUBSTANCE. In case of PPL-SD intends to conduct production of any such product in the same equipment used for SUBSTANCE, PPL-SD shall provide Dipexium with the necessary information to allow Dipexium a proper risk assessment. Dipexium will then approve or reject PPL-SD’s request on a scientific basis.

X

X

2.3.5

Will maintain complete and accurate cleaning and use logs of multiple-use equipment used for the MANUFACTURE of SUBSTANCE, when applicable

X

2.3.6

Will adequately control any equipment and utensils dedicated to the MANUFACTURE of SUBSTANCE to prevent its use for

X

other substances.

2.4 Process

2.4.1

Will manufacture SUBSTANCE in accordance with regulatory requirements, cGMP MASTER BATCH RECORDS, STANDARD OPERATING PROCEDURES, SPECIFICATIONS, and APPLICABLE LAWS.

X

2.4.2

Will document and execute, as appropriate, change control programs to assure that the process history of development is documented.

X

2.4.3

Will not REPROCESS or REWORK SUBSTANCE without prior notification and written approval by Dipexium

X

2.5 MATERIALS

2.5.1

Will be responsible for maintenance of SPECIFICATIONS and TEST METHODS. Will ensure revision control of SPECIFICATIONS and TEST METHODS for all MATERIALS

X

2.5.2

Will procure, store, sample, test, release, and track each delivery of MATERIALS

X

2.5.3

Will ensure that all MATERIALS are tested and released in accordance with their SPECIFICATIONS and STANDARD OPERATING PROCEDURES, and relevant compendia standards.

X

2.5.4

Will obtain supplier’s Certificate of Analysis and perform at least one specific identification test on each lot of MATERIALS used in the manufacturing of the SUBSTANCE (provided MATERIALS are not of hazardous nature, or provided sampling is not expected to be detrimental to the integrity of MATERIAL, in which case they may be accepted on a Certificate of Analysis basis.).

X

2.5.5

Will ensure supplier’s Certificate of Analysis contains a BSE/TSE statement for the specific amino acids. The certificate shall indicate if the amino acids is of human or animal origin or any materials used to manufacture the amino acid is of human or animal origin. An updated BSE/TSE certificate must be issued after any change to the suppliers manufacturing process which involves new raw materials or for amino acids that have been sourced from a different supplier.

X

2.5.6

Will maintain traceability of all lots of MATERIALS to specific lots of SUBSTANCE 

X

2.5.7

Will maintain a program to evaluate and/or qualify suppliers of Materials used in MANUFACTURING consistent with PPL-SD QUALITY SYSTEMS.

X

2.5.8

Will be complaint with regulatory requirements pertaining to BSE/TSE

X

3.0 Process Controls

3.1 MASTER BATCH RECORDS

3.1.1

PPL-SD is responsible for creating and amending MASTER BATCH RECORDS. Dipexium will have a time period as mutually agreed to provide written comments to PPL-SD if written comment is required. If written comment is not received within such time period, PPL-SD may proceed without written comment. Documentation changes that are purely administrative and not process related do not require Dipexium’s approval.

X

X

3.2.2

For those changes required to comply with APPLICABLE LAWS and US regulatory requirements, PPL-SD will notify Dipexium of such requirements after PPL-SD becomes aware of the need for such change. Dipexium’s comment shall not be required for such changes.

X

X

4.0 Storage and Distribution

4.1

Will maintain adequate controls and storage areas for MATERIALS in accordance with regulatory requirements and PPL-SD procedures.

X

4.2

Will maintain procedures to store SUBSTANCE in clean, sealed, undamaged containers free from extraneous matter and under appropriate conditions of temperature and light to maximize SUBSTANCE stability until SUBSTANCE is shipped from the FACILITY.

Each specific container of SUBSTANCE shipped must be identified with the following information:

·                  SUBSTANCE name or other identifier;

·                  Quantity;

·                  PPL-SD’s batch number and/or control number;

·                  Any special storage conditions;

·                  Manufacturer’s name and address;

·                  “Investigational use only”

Dipexium will provide details of any container sealing and integrity requirements, and storage and shipping conditions for SUBSTANCE

X

4.3

Packing and labeling will comply with regulatory requirements

X

4.4

Will control MATERIALS and SUBSTANCES that have been rejected by labeling and/or physical segregation

X

4.5

Will maintain distribution records for SUBSTANCE that have rejected by labeling and/or physical segregation

X

4.6

Will maintain written procedures for the holding of returned SUBSTANCE in a quarantined area and will maintain records of returned SUBSTANCE including: batch number, name of consignee, reason for the return, quantity returned, and action to

X

be taken for the returned SUBSTANCE (i.e. REPROCESS, or destroy) according to Dipexium’s instructions.

5.0 LABORATORY

5.1.1

Will use QULIFIED or VALIDATED ANALTICAL METHODOLOGY as applicable for the release testing of SUBSTANCE according to the PPL-SD QUALITY SYSTEM.

X

5.1.2

One Party will transfer to the other Party SUBSTANCE test methods according to one Party’s procedures. The Parties may evaluate the appropriateness of the methodology to ensure compliance with cGMP and such other Party’s standard operating procedures.

X

X

5.1.3

PPL-SD will qualify any analytical subcontractors that are used according to the PPL-SD QUALITY SYSTEM subject to Dipexium’s review, as necessary, of such subcontractor’s qualification by PPL-SD.

X

X

5.2 Analytical Change Control

5.2.1

Any changes to CRITICAL MATERIAL and SUBSTANCE TEST METHODS and SPECIFICATIONS will be performed in accordance with applicable regulatory requirements and STANDARD OPERATING PROCEDURES.

X

5.2.2

Will notify Dipexium of changes to CRITICAL MATERIAL and SUBSTANCE TEST METHODS and SPECIFICATIONS prior to the implementation of such changes. Dipexium will have a time period mutually agreed to provide

X

X

5.2.3

For those changes required to comply with APPLICABLE LAWS and regulatory requirements, PPL-SD will notify Dipexium of such requirements after PPL-SD becomes aware of the need for such change. Dipexium’s consent shall not be required for such changes.

X

5.3 SUBSTANCE Testing and OOS INVESTIGATIONS

5.3.1

Will perform all in-process testing on SUBSTANCE in accordance with approved procedures.

X

5.3.2

Will sample each bath of SUBSTANCE in a sufficient quantity to support both the release testing by PPL-SD and to meet the retention sample requirements of STANDARD OPERATING PROCEDURES.

X

5.3.3

Will perform release testing on SUBSTANCE and shall advise Dipexium of any test result of SUBSTANCE which fails to meet SPECIFICATIONS for testing performed by PPL-SD

X

5.3.4

Will notify Dipexium within at least two (2) business days upon confirmation of any OOS or unusual laboratory test results on any batch of SUBSTANCE

X

5.3.5

Will send a copy of all completed OOS or unusual laboratory test result INVESTIGATIONS and BATCH DOCUMENTATION to Dipexium.

X

5.3.6

Will have the right to conduct an independent INVESTIGATION reltated to any OOS/atypical test result only if Dipexium deems the OOS investigation report received from PPL-SD to be scientifically inappropriate or unreasonable.

X

5.4 Laboratory Equipment

5.4.1

Will maintain records of equipment qualifications, calibrations, and preventative maintenance program.

X

6.0 Quality Control/Assurance

6.1 PRODUCTION BATCH RECORDS and Analytical Testing Records

6.1.1

Will review all records and release each SUBSTANCE batch.

X

6.2 DEVIATIONS and INVESTIGATIONS

6.2.1

Will investigate and document specific DEVIATIONS form the MASTER BATCH RECORDS and SPECIFICATIONS according to PPL-SD QUALITY SYSTEM

X

6.2.2

Will notify Dipexium within two(2) business days upon discovery of critical DEVIATIONS/abnormalities in MANUFACTURING SUBSTANCE from STANDARD OPERATING PROCEDURES, SPECIFICATIONS, or MASTER BATCH RECORDS that may have an impact on SUBSTANCE quality.

X

6.2.3

Will provide Dipexium with a copy of DEVIATION/abnormality reports on INVESTIGATIONS and resolution of such DEVIATIONS, if requested by Dipexium. Communicate with Dipexium and satisfactory resolve DEVIATION reports and/or INVESTIGATION reports that have a direct impact on the quality of SUBSTANCE.

X

6.2.4

Will have the right to conduct an independent INVESTIGATION related to any DEVIATIONS/abnormalities if Dipexium deems INVESTIGATION report received from PPL-SD to be scientifically inappropriate or unreasonable.

X

6.2.5

For any batch of SUBSTANCE previously delivered, will notify Dipexium promptly upon confirmation of any quality issue that may affect clinical suitability of SUBSTANCE.

X

6.3 SUBSTANCE Release

6.3.1

Will create and provide Dipexium with a Certificate of Analysis as defined in Attachment C upon completion of records review and QA release. The Certificate of Analysis shall state that the SUBSTANCE lot has been manufactured in compliance with GMP requirements.

X

6.3.2

Will provide Dipexium copies of the executed batch record on written request.

X

6.3.2

Will create and provide Dipexium with a BSE/TSE certificate for the SUBSTANCE. The certificate shall indicate if the SUBSTANCE is of human or animal origin, and if materials of human or animal origin are used during the manufacturing process of the SUBSTANCE. An updated BSE/TSE certificate must be issued after any change to the manufacturing process which involves new raw materials or for raw materials that have been sourced from a different supplier.

X

6.3.3

Will release to Dipexium (or a Dipexium’s designated consignee) only those lots of SUBSTANCE that: (i) meet all SPECIFICATIONS; and (ii) have been released by Quality Unit unless otherwise manually agreed to in writing between all Parties. Any quality-related dispute between the parties with respect to release of Product shall be resolved in accordance with Section 8.0

X

6.3.4

Will ship SUBSTANCE after receiving a written request for shipment from Dipexium.

X

6.4 Disposition/ Destruction of SUBSTANCE

6.4.1

Will determine the dispositions of each batch of SUBSTANCE within PPL-SD QUALITY SYSTEM

X

6.4.2

Will determine the disposition of each batch of SUBSTANCE released by PPL-SD within Dipexium’s quality system.

X

6.4.3

Will determine final disposition of any rejected or returned SUBSTANCE. NO SUBSTANCE will be destroyed until written authorization is provided by.

X

6.5 Record Retention

6.5.1

Will store the original MASTER and EXECUTED BATCH RECORD(S) and all the other original BATCH DOCUMENTATION that is related to the MANUFACTURE of SUBSTANCE and that is required to be maintained under regulatory requirements in an environment with limited/controlled access to five (5) years from the date of the

X

MANUFACTURE of each batch.

6.5.2

Will notify Dipexium of any intention to destroy any records after five (5) years and shall afford Dipexium the opportunity to obtain such records.

X

6.6 Sample Retention

6.6.1

Will store SUBSTANCE retention samples in sufficient quantities as defined by PPL-SD procedures. Samples are to be retained for three (3) years from the date of the MANUFACTURE and shall be identified with or have traceability to the following information:

·                  SUBSTANCE name or other identifier;

·                  PPL-SD’s batch number.

Will notify Dipexium of any intention to dispose of the samples prior to their disposal.

X

6.6.2

Will make SUBSTANCE retention samples available to Dipexium promptly upon request prior to their disposal.

X

6.7 Third Party Complaints

6.7.1

Will collect and log all information relating to complaints and adverse events of SUBSTANCE.

X

X

6.7.1

Will inform PPL-SD of any complaints received relating to the MANUFACTURE of SUBSTANCE

X

6.7.2

Will inform PPL-SD of any complaints received related to the MANUFACTURE of SUBSTANCE

X

6.7.3

Will assist Dipexium in investigating and resolving all SUBSTANCE complaints and/or SUBSTANCE quality inquiries associated to an adverse event(s) that may be related to the MANUFACTURE of SUBSTANCE.

X

6.7.4

Will document and provide Dipexium with any information relating to the MANUFACTURE of SUBSTANCE, which is necessary to address SUBSTANCE complaints or adverse agents.

X

6.7.5

Will take any corrective actions agreed to by the Parties to avoid future occurrences of SUBSTANCE complaints

X

7.0 Dipexium Oversight

7.1 On-Site Audits

7.1.1

Will allow and support quality audits by Dipexium or its representative by appointment no more frequently than once per

X

year, unless a “for cause” audit is required.

7.1.2

Will provide reasonable prior written request to PPL-SD for scheduling quality audits.

X

7.1.3

Will allow and support “for cause” audits as requested by Dipexium, and as mutually agreed to by PPL-SD, to address specific quality problems related to SUBSTANCE or in direct response to regulatory requirements, for circumstances where the Parties reasonably believe that quality issues exist.

X

7.1.4

During audits, to be performed during normal business hours, will provide reasonable access to areas within the FACILITY where handling of SUBSTANCE and related documentation occur, provided that such access is deemed safe and does not violate US regulations.

X

7.1.5

Will provide PPL-SD with a written audit report detailing observations and conclusions arising from each quality audit within thirty (30) days.

X

7.1.6

Will provide Dipexium with a written response to report on audit observations and conclusions within thirty (30) days of receiving the audit report

X

7.1.7

Will take any corrective actions agreed to by the Parties to avoid future occurrences of audit deficiencies.

X

7.2 Regulatory Inspections/Notifications

7.2.1

Will notify Dipexium as soon as reasonably possible of learning of any proposed inspection or visit to the FACILITY by regulatory agencies specifically related to SUBSTANCE

X

7.2.2

Will notify Dipexium as soon as reasonably possible after the commencement of any unannounced visit or inspection of the FACILITY to regulatory agencies specifically related to SUBSTANCE

X

7.2.3

Will provide Dipexium with copies of all reports provided to or received from regulatory agencies relating specifically to SUBSTANCE, as soon as reasonably possible but no more than ten (10) business days from receipt or provision.

X

7.2.4

Will notify Dipexium of any requests for information, notices of violations, or other communication from regulatory agencies directly relating to SUBSTANCE.

X

7.3 Sub-contracting

7.3.1

Will not sub-contract to a third party or having done by a third party any of the work entrusted to them under this Quality Agreement (except for testing by approved contract laboratories, that are handled by approved PPL-SD procedures) without

X

Dipexium’s prior written approval. If such agreement is given, PPL-SD shall nonetheless remain fully responsible for the quality of the materials or services provided by sub-contractors and for all commitments as agreed upon with this Quality Agreement, including but not limited to commitments to Dipexium’s right to on-site audit of sub-contractors pursuant to Section 7.1 hereof.

7.3.2

Will provide a list of currently approved sub-contractors related to the manufacture of the SUBSTANCE. In case that PPL-SD would like to use a new sub-contractor that list needs to be updated and is subject to approval by Dipexium. Any change in sub-contracting shall follow the established change control procedure.

X

7.4 Review and Revision of Quality Agreement

7.4.1

Will obtain written approval from both Parties for any amendments to this Quality Agreement. This Quality Agreement will be reviewed at least annually and revised as necessary.

X

X

8.0 Dispute Resolution

8.0.1

Will attempt to amicably resolve any dispute arising out of or relating to this Quality Agreement by escalating such disputes to Senior Executives within the Quality organizations of both Parties. If unsuccessful, the Parties will revert to Dispute Resolution contained in the MSA.

X

X

Dipexium Pharmaceuticals

PolyPeptide Laboratories San Diego

Position: Co-founder and Managing Partner

Position: Manager, Quality Assurance

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Date:

      10-1-13

Date:

      October 01, 2013

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