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EXHIBIT 10.3
AMENDMENT NO. TWO
TO
LICENSE AGREEMENT
THIS AMENDMENT NUMBER TWO TO LICENSE AGREEMENT FOR INTERFERON GAMMA
("AMENDMENT") is entered into effective January 15, 1999, by and between
Genentech, Inc. ("Genentech") and Connetics Corporation ("Connetics").
R E C I T A L S
A. The Parties have previously entered into that certain License Agreement
for Interferon Gamma, dated May 5, 1998, as amended on December 23, 1998
(the "License Agreement").
B. Pursuant to Section 2.3(c) of the License Agreement, Connetics has the
right to sublicense certain of its rights under the Agreement to
InterMune Pharmaceutical, Inc. ("InterMune"), and has in fact entered
into a sublicense to that effect dated August 21, 1998
C. On December 3, 1998, the Parties entered into a Letter Agreement to
document the intent and agreement of Connetics and Genentech with
respect to additional terms governing the transfer and distribution of
Interferon Gamma-1B, pending the preparation of an amendment to the
License Agreement.
D. The Parties now desire to enter into a definitive amendment to the
License Agreement, effective as of the date first written above, to
permit a limited distribution of Interferon Gamma-1B by Connetics or its
sublicensee under Genentech labels and to add other additional terms
governing the transfer and distribution of Interferon Gamma-1B.
NOW THEREFORE, the Parties hereby agree as follows:
AGREEMENT
1. Terms not otherwise defined in this Amendment shall have the meanings
defined in the License Agreement.
2. Section 1.29 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
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1.29 "Transfer Date" shall mean January 15, 1999, unless
otherwise mutually agreed to in writing by the Parties.
3. A new Section 1.30 is added to the License Agreement to read in its entirety
as follows:
1.30 "Connetics Product" shall mean Finished Product under the
ACTIMMUNE(R) trademark and labeled under the name of Connetics or
its sublicensee. For clarification, all terms and conditions of
this Agreement that apply to Finished Product shall also apply to
Connetics Product.
4. A new Section 1.31 is added to the License Agreement to read in its entirety
as follows:
1.31 "Distribution Period" shall mean the period of time
beginning January 15, 1999 and ending on the earlier of:
(a) the first date on which Genentech supplies InterMune
with Connetics Product or (b) sixty (60) days after
InterMune's receipt of a license from the FDA to sell
Interferon Gamma-1B for CGD.
5. A new Section 1.32 is added to the License Agreement to read in its entirety
as follows:
1.32 "Genentech Finished Product" shall mean Genentech's
inventory of Interferon Gamma-1B under the ACTIMMUNE(R) trademark
and labeled under Genentech's name. For clarification, Genentech
Finished Product is a Licensed Product under this Agreement.
6. A new Section 1.33 is added to the License Agreement to read in its entirety
as follows:
1.33 "Genentech Bulk Product" shall mean Genentech's inventory of
Interferon Gamma-1B bulk protein existing as of the Transfer
Date.
7. A new Section 1.34 is added to the License Agreement to read in its entirety
as follows:
1.34 "Genentech Product" shall mean, together, Genentech Finished
Product and Genentech Bulk Product.
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8. A new Section 1.35 is added to the License Agreement to read in its entirety
as follows:
1.35 "Fully Burdened Manufacturing Cost" shall mean [*], which
shall be comprised of the sum of: [*].
9. A new Section 1.36 is added to the License Agreement to read in its entirety
as follows:
1.36 "Third Party Manufacturing Royalties" shall mean all
royalties paid or incurred by Genentech to third parties under licenses
taken by Genentech with respect to patents or patent applications that,
but for such license(s), would be infringed by the manufacture, use,
sale, offer for sale or importation of Genentech Finished Product or
Genentech Bulk Product, which royalties are based on the manufacture and
sale of Genentech Finished Product or Genentech Bulk Product by
Genentech (or its contract manufacturer) or by Connetics or its
sublicensees (or a contract manufacturer on their behalf). Genentech
shall notify Connetics in writing during the term of this Agreement if
it becomes aware of any Third Party Manufacturing Royalties.
10. A new Subsection 2.5(k) is added to the License Agreement to read in its
entirety as follows:
2.5(k) Provided that all the activities listed on Exhibit H
attached hereto are completed, Genentech also shall transfer to
Connetics or its sublicensee on the Transfer Date all responsibility for
the distribution, sales and product support of Genentech Finished
Product, in the Territory, for the treatment of infections associated
with CGD, subject to the provisions of Section 4.3 below and the
following terms and conditions:
(i) Product support of Genentech Finished Product shall include,
without limitation, all financial services, all reporting required by
federal and state law or regulation, professional services, customer
inquiries, product returns, government chargebacks, product refunds, and
patient assistance programs,
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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except for the processing of state Medicaid invoices and certain product
returns, as provided in Subsections 2.5(k)(iii) and (iv) below.
(ii) Connetics or its sublicensee shall sell and distribute
Genentech Finished Product only during the Distribution Period, after
which time Connetics or its sublicensee shall market, sell and
distribute Connetics Product, or other Finished Product, for CGD.
Notwithstanding the foregoing, for a period of ten (10) business days
after the last day of the Distribution Period, Connetics or its
sublicensee may continue to sell and distribute its existing inventory
of Genentech Finished Product in order to reduce or exhaust such
existing inventory. Under no circumstances, however, will Genentech be
required to manufacture, fill, label, package, or otherwise supply
Genentech Finished Product to Connetics or its sublicensees after the
end of the Distribution Period. After the Distribution Period Connetics
or its sublicensees shall retain full responsibility, and provide all
product support, for all Genentech Product sold or distributed by
Genentech, Connetics or its sublicensees, prior to, during and after the
Distribution Period, including without limitation, Genentech Product in
distribution channels.
(iii) Notwithstanding the above, Genentech shall remain
responsible for processing state Medicaid invoices for Genentech
Finished Product, in accordance with this subsection, during the
Distribution Period and for that period of time after the Distribution
Period during which states continue to send Medicaid rebate invoices for
Genentech Finished Product sold under the Genentech NDC label number
50242. Within fifteen (15) days after the end of each calendar quarter,
Connetics or its sublicensee shall supply Genentech with a report of its
Average Manufacturer Price ("AMP") and Best Price ("BP"), as defined in
the U.S. Omnibus Budget Reconciliation Act of 1990 ("OBRA 90"), for
Genentech Finished Product for such quarter, and detailed calculations
determining such AMP and BP. The AMP, BP and supporting calculations
shall be based on the carton price for Genentech Finished Product.
Genentech shall report such quarterly AMP and BP to the Health Care
Finance Administration as required by law and regulation, and will also
process state Medicaid rebate invoices received for Genentech Finished
Product. Genentech will pay, adjust or dispute the state Medicaid rebate
invoices as permitted under OBRA 90. Within sixty (60) days of receipt
of an invoice from Genentech, Connetics or its sublicensee will
reimburse Genentech the full amounts of Medicaid rebates paid by
Genentech. Genentech will have the right to examine, but not more than
once every calendar year, the books of account and records of Connetics
and its sublicensees for the purpose of determining the correctness of
the quarterly reports provided by Connetics or its sublicensees under
this subsection. If Genentech reasonably determines that any such
reports(s) were incorrect, Connetics shall pay Genentech's costs of
correcting its reports to federal agencies and will also pay any
penalties or fees associated with such incorrect reporting.
(iv) As of the Transfer Date, Connetics or its sublicensees will
be responsible for processing returns and related credits for all
Finished Product,
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except that Genentech will process credits for returns of Genentech
Finished Product if Genentech receives a returned Genentech Finished
Product from a third party. Within sixty (60) days of receipt of an
invoice from Genentech, Connetics or its sublicensees will reimburse
Genentech for such return credits processed by Genentech.
(v) Connetics or its sublicensees shall be responsible for all
government chargebacks for Genentech Finished Product sold by
wholesalers to customers on and after the Transfer Date, and for all
government chargebacks for all Connetics Product and other Finished
Product sold by Connetics and its sublicensees.
(vi) Connetics and its sublicensees shall not actively market or
promote Interferon Gamma-1B during the Distribution Period and while
selling or distributing Genentech Finished Product. During the
Distribution Period, Connetics and its sublicensees shall not distribute
any notice, publication or make any presentation to any third party
regarding Interferon Gamma-1B without Genenetch's prior review of such
notice, publication or presentation, and receipt of Genentech's prior
written consent. Connetics and its sublicensees shall not sell Genentech
Finished Product at a price higher than that charged by Genentech on
January 14, 1999.
11. A new Section 2.5(l) is added to the License Agreement to read in its
entirety as follows:
2.5(l) Connetics agrees that, as of the Transfer Date and under
the terms and conditions below, it or its sublicensee will supply
Genentech Finished Product to those certain patients in the U.S. to whom
Genentech has an existing contractual or regulatory obligation to supply
Interferon Gamma-1B, including prior clinical study patients. In
addition, Connetics or its sublicensee will supply Genentech Finished
Product to Xxxxxxx-XxXxxxx Canada Limited ("Roche Canada") for
distribution to patients to whom there is a contractual or regulatory
obligation to supply Interferon Gamma-1B. Connetics also agrees that it
or its sublicensee will supply Genentech Finished Product free of charge
to those [*] oncology study patients (including [*] National Cancer
Institute oncology clinical trial patients) who are continuing to
receive Interferon Gamma-1B. Genentech shall supply a list of all such
patients, and information regarding the amount and destination of such
Interferon Gamma-1B, as soon as reasonably possible. After the end of
the Distribution Period, Connetics or its sublicensee shall supply
Connetics Product, or other Finished Product, to such patients and to
Roche Canada in the same quantities. No other right or license is
implied or granted to Connetics or its sublicensees to distribute
Genentech Finished Product, or any other Licensed Product, outside the
Field of Use or outside the Territory.
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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(i) To supply the patients and Roche Canada as described above,
Connetics or its sublicensee shall pay a price for such Genentech
Finished Product, and such Connetics Product and other Finished Product
supplied by Genentech, equal to [*] percent [*] of Genentech's Fully
Burdened Manufacturing Cost, plus [*] of Third Party Manufacturing
Royalties attributable to the manufacture or distribution of such
Genentech Finished Product or other Finished Product.
(ii) For U.S. CGD clinical study patients that do not qualify for
Connetics' (or its sublicensee's) indigent patient program, Connetics
(or its sublicensee) shall supply, at its own cost, Genentech Finished
Product and Finished Product to such patients free of charge for a
period of time ending not later than December 31, 1999. Connetics (or
its sublicensee) shall notify such patients that such drug shall not
continue to be supplied free of charge by Genentech, Connetics or its
sublicensee, and Connetics or its sublicensee shall use its best efforts
to terminate such supply of drug before December 31, 1999, after
reasonable prior notice to such patients. [*]
(iii) Roche Canada will reimburse Connetics, or its sublicensee,
for its cost of supplying such Genentech Finished Product and Connetics
Product to the patients in Canada under a separate agreement to be
negotiated and executed by Roche Canada and Connetics.
(iv) Connetics, or its sublicensee, will supply Genentech
Finished Product and Finished Product to the [*] oncology patients
without charge to Genentech or to such patients. If, however, Genentech
has not extended the Field of Use of this Agreement to the field of
oncology within six (6) months of the Effective Date of this Amendment
No. 2, then Genentech will reimburse Connetics, or its sublicensee, for
the cost of such Genentech Finished Product and Finished Product during
such six month period. If Genentech thereafter extends the Field of Use
to oncology, then as of the effective date of such extension Connetics
or its sublicensee will provide Finished Product to such patients
without charge to Genentech or to such patients. If Genentech does not
extend the Field of Use to oncology, Connetics or its sublicensee will
continue to supply such oncology patients, but Genentech will reimburse
Connetics, or its sublicensee, for such drug in an amount equal to one
hundred percent (100%) of the price paid to Genentech for such Genentech
Finished Product and Finished Product and the direct administrative and
distribution costs of providing such drug to such patients.
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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12. A new Section 4.3 is added to the License Agreement to read in its
entirety as follows:
4.3 (a) Genentech shall sell to Connetics, or its sublicensee,
Genentech's existing inventory of Genentech Product for commercial sale
solely for the treatment of infections associated with CGD. Connetics
shall pay a price for such Genentech Product equal to [*] percent [*] of
Genentech's Fully Burdened Manufacturing Cost, plus [*] of Third Party
Manufacturing Royalties attributable to the manufacture or sale of such
Genentech Product.
(b) Genentech shall deliver Genentech Finished Product to
Connetics to a single destination in the United States chosen by
Connetics, by carrier identified by Connetics. Title and risk of loss as
to all Genentech Finished Product shall pass to Connetics at point of
origin (FOB Genentech). Connetics shall be responsible for all freight,
freight brokerage, insurance and other costs associated with shipping
Genentech Finished Product hereunder. As soon as reasonably possible
after each shipment of Genentech Finished Product, Genentech shall
forward to Connetics all customary documents concerning the shipment,
including Genentech's invoice relating to such shipment. To the extent
possible, a certificate of analysis will be included in each shipment.
Where it is not possible to include a certificate of analysis with a
shipment, Genentech shall furnish the same to Connetics as soon as
reasonably possible.
(c) Payment by Connetics shall be made within sixty (60) days
after Connetics' receipt of Genentech's invoice for the supply of
Genentech Finished Product. All payments to Genentech by Connetics under
this Agreement shall be made in United States dollars by wire transfer
(or such other reasonable means as Genentech may direct) to such United
States bank account as Genentech may direct. If a wire transfer is to be
made, Connetics shall provide notice at least five (5) days prior to the
date of transfer of the amount of payment and the date good funds will
be received. Such notice should be given to the Treasurer of Genentech
at the address set forth at the beginning of this Agreement or such
other address as Genentech may subsequently direct.
(d) Genentech shall use its best efforts to maintain its Fully
Burdened Manufacturing Cost for Genentech Finished Product at or below
the benchmark costs of [*] dollars [*] per vial of Genentech Finished
Product (the "Benchmark Costs"). All the provisions of Section 2.6(e) of
that certain Supply Agreement, dated May 5, 1998, between Genentech and
Connetics, shall apply to such Benchmark Costs herein.
(e) All transfer of Genentech Finished Product to Connetics or
its sublicensee hereunder shall be subject to the provisions hereof and
shall not be subject to the terms and conditions contained on any
purchase order or
*Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to
the omitted portions.
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confirmation by Genentech, except insofar as any such purchase order or
confirmation establishes: (i) the quantity and form of Genentech
Product; (ii) the shipment date; (iii) the shipment routes and
destinations; or (iv) the carrier.
13. This Amendment supersedes in its entirety the Letter Agreement dated
December 3, 1998.
14. All other terms and provisions of the License Agreement, including all
exhibits to that Agreement, will continue in full force and effect as
though fully set forth in this Amendment. Nothing in this Amendment
shall be construed as affecting Connetics' obligations to be liable and
responsible for the performance of all of the obligations of Connetics
and its sublicensees under the License Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment Number Two to
License Agreement as of the date first written above.
GENENTECH, INC. CONNETICS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxx By: /s/ X. Xxxxxxx
--------------------------------- ----------------------------------
Name: Xxxxxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
------------------------------ President and Chief Executive Officer
Title: Vice President, Business and
Corporate Development
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Acknowledged and agreed as to InterMune's rights and obligations hereunder as
Connetics' sublicensee under the License Agreement:
INTERMUNE PHARMACEUTICALS, INC.
By: /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx, M.D.
President
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