SECOND AMENDMENT TO THE MANUFACTURING AND SUPPLY AGREEMENT OF DECEMBER 7 2003
EXHIBIT
10.32
SECOND
AMENDMENT
TO
THE
MANUFACTURING
AND SUPPLY AGREEMENT OF DECEMBER 7 2003
THIS
SECOND AMENDMENT TO THE MANUFACTURING AND SUPPLY AGREEMENT DATED DECEMBER 7
2003
("2nd Amendment")
is made effective as of 19 May 2006 (the “2nd
Amendment Effective Date”),
by and between Lonza Biologics PLC, having its principal place of business
at
000 Xxxx Xxxx, Xxxxxx, Xxxxxxxxx XX0 0XX, Xxxxxxx ("LB"),
Lonza Biologics, Inc. having its principal place of business at 000
Xxxxxxxxxxxxx Xxxxx Xxxxxxxxxx, Xxx Xxxxxxxxx 00000 ("Lonza
Inc")
(collectively LB and Lonza Inc, hereinafter "Lonza"),
and Genentech, Inc., a Delaware corporation, having its principal place of
business at Xxx XXX Xxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 ("Genentech").
BACKGROUND
The
Parties have executed that certain Manufacturing and Supply Agreement by and
between the Parties dated December 7, 2003, as amended 14 March 2005 (the
“1st
Amendment”),
(collectively, the “Agreement”)
and wish now to further amend said Agreement.
Lonza
and Genentech desire to modify the Lonza Facility to [*],
and in conjunction therewith, Lonza agrees to grant Genentech an option to
implement such modification in accordance with the terms of this 2nd
Amendment.
Lonza
and Genentech also desire to amend the Purchase Price to be paid by Genentech
for certain Batches of Product produced by Lonza, provide a means to estimate
and true-up invoicing of the Purchase Price for Batches, amend the milestone
payments to be paid by Genentech upon Lonza achievement of certain milestones,
re-schedule certain Campaigns to be conducted by Lonza, provide for an
alternative means of invoicing for Batches resulting from a Project, and amend
the Manufacturing Process.
NOW,
THEREFORE, IN CONSIDERATION OF the mutual covenants set forth in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Parties hereby agree as follows:
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1.
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[*].
Lonza hereby grants to Genentech an option to require Lonza to implement
a
project [*]
(as further described in Exhibit
1
attached hereto, the “[*]”).
Genentech may exercise such option by providing written notice to
Lonza at
any time during the Term. Upon Genentech’s exercise of such option, Lonza
shall use its Commercially Reasonable Best Efforts to initiate and
complete the [*]
Project in accordance with the requirements, costs and timelines
set forth
in Exhibit 1.
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2.
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Adjustment
to Purchase Price for Successful Commercial Batches.
Section 6.4.3 of the Agreement is amended to add a new subsection
(e) as
follows:
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(e) Notwithstanding
Section 6.4.3(a) above, commencing
with the first Successful Commercial Batch resulting from a Commercial Run
that
entered the [*]
at the Lonza Facility in the [*]
Campaign,
and continuing thereafter for the remainder of the Term, for
each such Successful Commercial Batch (up to the Campaign Maximum in a
particular
1
Campaign)
manufactured after commencement of the [*]
Campaign in compliance with this Agreement and in conformance with cGMP and
the
Bulk Drug Specifications, the Target Yield, and the warranties provided in
Section 7.1 hereof, Genentech shall pay Lonza an amount as set forth below.
Such amount shall be the Purchase Price for such Successful Commercial
Batches.
(i) If
the Yield for such Successful Commercial Batch is [*],
Genentech shall pay Lonza an amount for such Batch equal to [*];
(ii) If
the Yield for such Successful Commercial Batch is [*],
Genentech shall pay Lonza an amount for such Batch [*];
or
(iii) If
the Yield for such Successful Commercial Batch is [*],
Genentech shall pay Lonza an amount for such Batch [*]
The
Yield for each such Successful Commercial Batch shall be determined from its
Batch Record using the protein concentration as reported in its Certificate
of
Analysis.
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3.
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Invoicing
the Purchase Price for Successful Commercial Batches.
Section 6.4.4 shall be amended to revise the last three sentences
of that
Section as follows:
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Such
invoices shall reference the Acceptance Date, the Batch delivered and the total
Purchase Price; provided, for the sake of administrative ease, with respect
to
invoices issued under Section 6.4.3(e), Lonza shall invoice all such Successful
Commercial Batches at an estimated Purchase Price of [*],
and, [*]
after the end of each calendar year, Lonza shall send to Genentech a report
comparing the actual Purchase Price for such Successful Commercial Batches
and
the estimated Purchase Price invoiced to Genentech for such calendar year.
Any
payment required by Lonza to Genentech or by Genentech to Lonza to compensate
for such difference between the actual Purchase Price and estimated Purchase
Price shall be made to the appropriate Party no later than [*]
of year in which such report is delivered.
In
addition, for invoices issued with respect to Section 6.4.2(c), such invoices
shall also reference a complete list of the Successful Commercial Batches
produced, shipped and accepted by Genentech during such calendar
year.
Amounts
due under undisputed correct invoices shall be due and payable in U.S. currency
within [*]
after receipt of such invoice.
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4.
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Process
Validation Batches for [*].
With respect to that Qualification Batch identified internally by
Lonza as
“[*]”,
notwithstanding Sections 6.4.2 and 6.4.3(c) of the Agreement, Lonza
and
Genentech agree that Genentech shall purchase such Batch from Lonza
for an
amount equal to [*]
(the “Batch
Payment”)
[*].
Such Batch Payment and [*]
shall
be the Purchase Price for [*].
Genentech shall pay such amount within [*]
of the 2nd
Amendment Effective Date.
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5.
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Milestone
Payments for Calendar Years 2005 and 2006.
Section 6.4.3(d) is amended in entirety as
follows:
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(d) In
consideration for Lonza’s success in manufacturing and supplying to Genentech
Successful Commercial Batches during the calendar year 2005, Genentech shall
pay
to Lonza a [*]
of the 2nd
Amendment Effective Date. In
addition, Lonza shall also be entitled to receive:
(i) [*]
upon Lonza quality release of a [*],
which Batches resulted from Campaign [*]
or Campaign [*].
Such
additional amount shall be payable upon [*]
Commercial Batch resulting from such Campaigns; and
(ii) a
[*]
payment of [*]
upon Lonza quality release by [*]
of
a [*]
Successful
Commercial Batches [*].
For the avoidance of doubt, no Successful Commercial Batches resulting from
Campaign [*]
shall
count toward such milestone. Such additional amount shall be payable upon
Genentech’s final release of such Commercial Batches.
For
the avoidance of doubt, such amounts shall in no event be paid more than once
each, and with respect to (i) and (ii) only on achievement of such milestone
by
the date indicated above.
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6.
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[*].
As
of the 2nd
Amendment Effective Date, Genentech and Lonza are in the process
of
gathering additional data in order to [*]
from Campaign [*].
Lonza and Genentech agree, that with respect to such [*],
Genentech shall continue to use commercially reasonable efforts to
perform
certain activities and testing as necessary, in Genentech reasonable
judgment and in conformance with the Quality Agreement, to determine
[*].
Lonza and Genentech further agree:
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(a) If
Genentech determines that such Batch is a Successful Commercial Batch, Genentech
shall pay to Lonza the amounts specified in Section 6.4.3(a) of the Agreement
for such Successful Commercial Batch, less [*].
Such amounts shall be due and payable upon Genentech’s release of such Batch;
or
(b) If
Genentech rejects such Batch [*]
and/or if such Batch expires prior to the completion of [*]:
(i) Genentech shall have no obligation to pay Lonza any amounts for such Batch
and (ii) Lonza shall pay to Genentech an amount equal to [*].
Such amount shall be due and payable upon Genentech’s written notice to
Lonza.
[*]
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7.
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Rescheduling
of Campaigns.
Notwithstanding
the Campaign, Campaign Minimum and Campaign Minimum Run schedule
listed on
Exhibit A of the Agreement (including any amendments thereof in the
1st
Amendment):
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(a) the
[*]
Campaigns scheduled to commence on [*],
shall be conducted in [*],
with: (i) [*],
to continue for a Campaign Minimum of [*],
during which time Lonza shall be obligated to perform [*]
Campaign Minimum Runs; and (ii) such Campaign [*]
and continue for a Campaign Minimum of [*],
during which time Lonza shall be obligated to perform [*]
Campaign Minimum Runs (with the expectation of the Parties that [*]
Campaign Minimum Runs shall be allocated to conducting [*],
as further described in Section 3 of the 1st
Amendment); and
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(b) the
[*]
Campaign
and the [*]
Campaign, scheduled to commence on [*],
shall be [*]
Campaign, and shall be rescheduled to commence on [*]
and continue for a Campaign Minimum of [*]
during which time Lonza shall be obligated to [*]
Campaign Minimum Runs.
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8.
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Invoicing
of Project Batches deemed releasable by Genentech but subject to
Regulatory Approval.
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Notwithstanding
Section 5.4.6, but subject to Genentech's
rights to make claims under Article 9 of the Agreement,
for Batches manufactured as part of a mutually agreed project subject to
Regulatory Approval, [*]
(each a “Project
Batch”),
the
Acceptance Date shall be defined as the date on which Lonza receives written
notice from Genentech that such Batch has been released, or deemed releasable,
by Genentech pursuant to applicable release testing standard operating protocols
as described in the Quality Agreement. For the avoidance of doubt, per
Section 6.4.4, Lonza may issue invoices for such Project Batches on or after
the
related Acceptance Date.
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9.
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Amendment
to the Manufacturing Process; Non-Conforming Bulk Drug Resulting
from such
amended Manufacturing Process.
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The
Parties agree to amend the Manufacturing Process to provide a [*].
Should any Non-Conforming Bulk Drug result from a Commercial Batch manufactured
in accordance with such amended Manufacturing Process [*],
and such non-conformity was not caused by Lonza (or its agents), the Parties
agree that Genentech will pay to Lonza (a) [*]
the Purchase Price that would have otherwise been due for such Bulk Drug if
it
resulted from a Successful Commercial Batch, and (b) [*]
of the Acquisition Cost for the raw materials utilized to produce such Bulk
Drug. Any investigation of such Non-Conforming Bulk Drug shall be completed
in
accordance with Article 9 of the Agreement.
10. All
terms and conditions of the Agreement not modified by this 2nd
Amendment shall continue in full force and effect in accordance with their
terms. All capitalized terms not otherwise defined herein shall have the same
definition as in the Agreement.
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remainder of this page intentionally blank]
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IN
WITNESS WHEREOF, the Parties have caused this 2nd
Amendment to be executed as of the Effective Date.
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GENENTECH,
INC.
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By:
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/s/ XXXXXX
XXXXXXX
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Name:
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Xxxxxx
Xxxxxxx
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Title:
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Vice
President, Manufacturing
Collaborations & Contract Manufacturing
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LONZA
BIOLOGICS, INC.
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By:
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/s/ XXXXXXX
XXXXXX
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Name:
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Xxxxxxx
Xxxxxx
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Title:
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Chief
Operating Officer
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LONZA
BIOLOGICS, PLC
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By:
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/s/ XXXXXXX
XXXXXX
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Name:
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Xxxxxxx
Xxxxxx
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Title:
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Chief
Operating Officer
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EXHIBIT
1
[*]
Project
Upon
Genentech’s exercise of its option set forth in Section 1 above of this
2nd
Amendment, Lonza shall complete all activities required to implement
[*]
including those outlined below:
1. [*].
Feasibility
of doing [*]
is to be assessed by the parties first confirming the maximum buffer used if
[*]
were to be run. To perform [*],
an additional capital investment will be required if, and only if, it can be
determined that enough [*]
is available to provide a safety level during processing. That determination
can
only be assessed after the [*]
are run. Commercial terms for proceeding with capital investments or any other
charges related to [*]
will be mutually agreed upon prior to implementation.
It
is estimated that an [*]
will correlate to an increase of [*].
Furthermore,
it is estimated that due to the associated changes required (see details below)
[*].
Other
improvements which have increased the reliability of operations in the plant
should be considered as well.
1.1 Details
of [*]
[*]
is not currently validated for use in [*]
but will be required for the additional supply of the [*].
The CIP and SIP code are in place but not validated. This
change will require operations, process validation, documentation, controls
and
computer validation resources.
Also,
[*]
requires that[*]
of the [*]
be used to [*],
there will [*]
to allow for safety margins in respect to volume. Instead of using [*],
the separately prepared [*]
can be used for this step instead. This will also allow for [*]
because the [*]
can be retained [*]
instead of the [*]
in which the [*].
The extra [*]
may
increase the overall recovery [*].
This
will require operations, process validation, documentation, controls and
computer validation resources.
As
a final change, [*]
requested that [*].
This was requested to maintain consistency with the other [*]
chromatography steps. This
will require operations and documentation support.
Lonza
assumes that all of these changes will require [*]
to ensure the change has been completed as desired.
2. Actions/Activity
Required.
1) [*]
a) Write
change controls and route for approvals (OPS).
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b) [*].
c) Add
code to support [*]
tanks
of [*]
(Con).
d) Validate
any additional code required (CpV).
e) Rewrite
[*]
document to include [*]
in BR (OPS).
f) Provide
GMP documentation support (DOCS)
g) Rewrite
[*]
records (OPS).
2) Use
[*]
Equil. instead of [*]
to equilibrate the skid prior to [*].
a) Code
the change (CON)
b) Validate
the code change (CpV)
c) Rewrite
batch records (OPS)
d) Provide
GMP documentation support (DOC)
3) Use
[*]
instead of [*]
for flushing filters
a) Change
batch records
b) Provide
GMP documentation support
4) Provide
[*]
including buffer preparations.
a) [*]
(upstream and downstream)
3. Schedule
It
is estimated that [*]
will be required to make the change from [*]
from the time that Lonza initiates a change control to the [*]
tests
Also
[*]
of down time during the campaign due to [*]
and [*]
tests
are estimated for which we can provide more detail on the affect to the
scheduling and batch output.
[*]
Genentech
and Lonza agree that the time required to implement the project will
[*].
4. Cost
and Benefit
4.1 Costs.
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(a) [*].
The
loss [*]
shall be borne by Genentech; provided such [*]
shall in no event exceed [*]
without Genentech’s prior written consent. Such [*]
shall be invoiced to Genentech at a cost of [*].
Lonza shall invoice Genentech for such costs on a [*]
basis. Genentech shall pay all true and correct invoices within [*].
For the avoidance of doubt, any loss of [*]
in excess of [*]
to implement the [*]
shall be borne by Lonza, and the total amount that may be invoiced to Genentech
by Lonza under this Section 4.1 of Exhibit 1 shall [*],
in each case, without Genentech prior written consent.
(b) Reimbursement
of Costs of [*]. Lonza
shall reimburse all amounts paid by Genentech to Lonza for [*]
in accordance with the following. Commencing
with the first Successful Commercial Batch resulting from [*]
at the Lonza Facility after Lonza commences the [*],
and continuing thereafter until Lonza reimburses Genentech for all amounts
paid
by Genentech to Lonza for [*],
for
each such Successful Commercial Batch whose Yield is [*],
Lonza shall reimburse to Genentech an amount [*]. In
conjunction with the report Lonza is to send to Genentech under Section 6.4.4
of
the Agreement in each calendar year (as described in Section 3 of this
2nd
Amendment above), Lonza shall also provide a report of the Successful Commercial
Batches for such calendar year which are subject to reimbursement by Lonza
to
Genentech. Any reimbursement required by Lonza to Genentech under this Section
4.1(b) of Exhibit 1 shall be made to Genentech no later than [*]
of year in which such report is delivered.
(c) Activity
Costs. The
actual [*]
costs to be incurred by Lonza to implement the [*]
Project as currently projected by the Parties are [*]
(the “Activity
Costs”).
Such Activity Costs shall be borne by Genentech. Lonza shall invoice Genentech
for a) [*]
of the expected Activity Costs prior to commencing the [*]
Project and b) the balance of actual Activity Costs incurred upon completing
the
[*]
Project and concurrent with such invoice, Lonza shall provide Genentech with
a
written report summarizing the activities completed and the Activity Costs
incurred by Lonza in support of such activities. Genentech shall pay all
undisputed invoices within [*]
of receipt thereof. In the event that Genentech believes that an invoice is
incorrect, it will inform Lonza within [*]
of receipt and such disputed amount will be investigated by the parties. Once
the dispute has been resolved, Genentech shall pay the corrected invoice within
[*]
of receipt thereof.
(d) Project
Scope Changes.
In the event that the scope of the [*]
Project changes [*],
the Parties shall agree in writing to both the scope changes and new estimates
for the Activity Costs and [*]
prior to Genentech exercising its option as outlined in Section 1 above of
this
2nd
Amendment.
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