Exhibit 10.5(h)**
[LOGO OF CEPHALON APPEARS HERE]
January 21, 1998
Laboratoire X. Xxxxx
00, xxx Xxxxxxxx xxx
00000 Xxxxx
XXXXXX
Re Amendment No. 5 to License Agreement and Supply Agreement
Gentlemen:
This letter shall serve as an amendment to (i) that certain License
Agreement dated as of January 20, 1993, as amended (the "License Agreement"),
between Cephalon, Inc. (hereinafter "Cephalon") and Laboratoire X. Xxxxx
(hereinafter "Xxxxx"); and (ii) that certain Supply Agreement (the "Supply
Agreement") dated as of January 20, 1993, as amended, between Cephalon and
Xxxxx. Unless otherwise defined herein, all capitalized terms shall have the
meanings ascribed to them in the License Agreement and the Supply Agreement.
1. Under the terms of the License Agreement, Xxxxx granted Cephalon a
license, with the right to sublicense to a Japanese company, to develop and
commercialize in Japan products containing the drug substance "modafinil" (the
"Compound"). Under the terms of the Supply Agreement, Xxxxx agreed to supply the
Compound to Cephalon or to its sublicensee in Japan. Cephalon hereby provides
notice that it has agreed to such a sublicense arrangement with Nippon Shoji
Kaisha., Ltd. ("Nippon Shoji"), and in connection with such arrangement,
Cephalon and Xxxxx hereby agree to the following:
a. Under the terms of a sublicense, product development and compound
supply agreement, Cephalon will grant Nippon Shoji the right to make tablets,
use and sell the Product in Japan, and will agree to supply Nippon Shoji with
Compound, as well as provide Nippon Shoji with access to certain pre-clinical
and clinical data concerning the Product. In consideration of this grant of
rights and supply of Compound, Nippon Shoji will pay Cephalon an amount equal to
[*] percent ([*]) of Net Sales of Product in Japan (as well as an additional
[*] percent ([*]) in connection with the use of a trademark which Cephalon will
remit on its behalf directly to the trademark owner). As provided in amendment
number four to the License Agreement and the Supply Agreement dated August 23,
1995, Xxxxx and Cephalon hereby agree to further amend the aforementioned
License Agreement and Supply Agreement insofar as the
* THE CONFIDENTIAL MATERIAL CONTAINED HEREIN
HAS BEEN OMITTED AND HAS BEEN FILED
SEPARATELY WITH THE COMMISSION.
** Certain portions of this exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
royalty rate applicable under Article V(2) of the License Agreement for the
grant of rights in Japan, and the price to be paid to Xxxxx by Cephalon under
Article 3(b) of the Supply Agreement for the supply of Compound for use in
Japan, shall be an amount equal to [*] percent [*]of Net Sales of Product in
Japan by Nippon Shoji.
b. With reference to Article 8 of the Supply Agreement concerning
the right of rejection of Compound, the parties agree that with respect to
Compound shipped to Japan, Cephalon shall not be deemed to be in receipt of
Compound until the date on which Nippon Shoji has released said Compound into
its inventory, and Cephalon shall have thirty (30) days from such date to notify
Xxxxx of its intent to reject.
2. With reference to Article 3 of the Supply Agreement, the parties
confirm their understanding with respect to the calculation of compensation to
Xxxxx for the supply of Compound, as follows:
x. Xxxxx will supply Compound to Cephalon free of charge for the
following purposes: (i) to conduct pre-clinical and clinical studies in
countries in the Territory prior to the date of initial marketing approval in
such country, and to conduct such studies subsequent to the date of such initial
marketing approval in any given country in the Territory if required by the
respective regulatory authorities or if intended for purposes of obtaining new
or expanded indications for the Product in such country; (ii) to manufacture
Product samples to be distributed by Cephalon prior to the third anniversary
date of commercial launch of the Product in the United States (with such amount
of Compound not to exceed 120 kilograms during any twelve-month period, unless
otherwise mutually agreed); and (iii) to develop a Product formulation that
does not contain Compressil(R).
b. The initial provisional price for Compound ordered by Cephalon
shall be set at an amount equal to US$[*] per kilogram (except for quantities of
Compound to be used for those non-commercial purposes specified in subparagraph
(a) above, as to which no provisional price or compensation shall be due Xxxxx).
The parties acknowledge that this initial provisional price is based upon the
current selling price charged by Xxxxx for sale of the Product in France; the
parties further acknowledge that the selling price to be charged by Cephalon for
sale of the Product in the United States may well be lower than such amount, and
accordingly, the parties agree to reduce this initial provisional price to
properly reflect the actual U.S. selling price promptly after such U.S. selling
price is established by Cephalon. Following this adjustment in the provisional
price, and as provided in the Supply Agreement, the parties will adjust the
provisional price annually (or more often, if necessary) so that said
provisional price will reflect accurately the selling price for Product in the
Territory.
c. Within two months after the end of each calendar year, Cephalon
and Xxxxx will reconcile the provisional price paid by Cephalon for all Compound
delivered during such preceding calendar year with the amount of compensation
due Xxxxx under the Supply Agreement. Except for (i) those quantities specified
in clause (a) above;
* THE CONFIDENTIAL MATERIAL CONTAINED
HEREIN HAS BEEN OMITTED AND HAS
BEEN FILED SEPARATELY WITH THE
COMMISSION.
and (ii) a quantity in an amount equal to three percent (3%) of all Compound
delivered in such preceding calendar year (in order to properly reflect the
ordinary and customary yield loss in preparing the finished Product), Cephalon
will pay Xxxxx for all kilograms of Compound delivered an amount per kilogram
equal to the percentage of Net Sales specified in the Supply Agreement (e.g.,
11% for Compound sold in the United States), multiplied by the average Net Sales
Price per kilogram of Compound sold during the immediately preceding year in the
corresponding country within the Territory.
3. Cephalon and Xxxxx further confirm their understanding as to the
calculation of "Net Sales," as defined in Article I of the License Agreement, as
follows:
a. With respect to calculations to be made under the terms of the
License Agreement and the Supply Agreement, Cephalon may deduct from its gross
sales proceeds in the Territory the amount of any governmental rebates and
allowances (including Medicaid rebates), and the amount of any wholesaler
credits or chargebacks, as well as those deductions otherwise specified in such
definition.
b. With respect to calculations to be made under the terms of the
License Agreement (but not the Supply Agreement), Cephalon may further deduct
from its gross sales proceeds in the Territory the amount of any uncollected
accounts or receivables.
Please indicate your consent to the sublicense arrangement described
above, and your agreement with the other terms, conditions and clarifications
set forth above, by signing this letter in the space provided below, and return
an executed copy to us at your earliest convenience.
CEPHALON, INC.
By /s/ Xxxxx Xxxxxxx
----------------------------
Xxxxx Xxxxxxx
AGREED, ACKNOWLEDGED AND ACCEPTED:
LABORATOIRE X. XXXXX
By: /s/ X.X. Xxxxx
-----------------------------
X.X. Xxxxx
