EXHIBIT 10.1
November 5, 2003
Shire US Inc.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
RE: TRANSACTION AGREEMENT, DATED AS OF FEBRUARY 26, 2003, BY AND
AMONG NOVEN PHARMACEUTICALS, INC., SHIRE US INC. AND SHIRE
PHARMACEUTICALS GROUP PLC (THE "TRANSACTION AGREEMENT")
Dear Xxxx:
This letter agreement (together with the Exhibits hereto, this
"Agreement") sets forth the mutual agreement and understanding of Noven
Pharmaceuticals, Inc. ("Noven") and Shire US Inc. ("Shire US"), acting on behalf
of itself and its affiliate Shire Pharmaceuticals Ireland Limited ("Shire
Ireland" and, together with Shire US, "Shire") with respect to Shire's
performance of a product study of Noven's transdermal methylphenidate drug
delivery system (the "Product"), for which New Drug Application 21-514 (the
"Product NDA") is currently pending. Capitalized terms used and not defined in
this Agreement shall have the meanings set forth in the Transaction Agreement.
The parties acknowledge the following background facts. The closing of
the transactions contemplated by the Transaction Agreement took place on April
7, 2003, at which time Noven and Shire Ireland entered into a license agreement
(the "License Agreement") for the license of certain intellectual property of
Noven to Shire Ireland for the purpose of the development and sale of the
Product by Shire Ireland, as well as a Toll Conversion and Supply Agreement (the
"Toll Conversion and Supply Agreement") pursuant to which Noven agreed to
manufacture the Product for Shire Ireland. The Transaction Agreement provides
that upon receipt of Regulatory Approval of the Product by the FDA, the Product
NDA, along with related regulatory materials, will be transferred to Shire US.
On April 25, 2003, Noven received a letter from the FDA notifying Noven
that the Product NDA was "not approvable" under Section 505(d) of the FDC Act
(the "FDA Notice"). Since Noven's receipt of the FDA Notice, Noven and Shire
have cooperated in good faith in exploring various ways in which Regulatory
Approval of the Product NDA may be obtained despite the FDA Notice.
The parties hereby agree that the study protocol synopsis attached as
EXHIBIT A hereto, which shall serve as a preliminary outline for a finalized
protocol (as such finalized protocol may be subsequently amended or supplemented
as contemplated herein, the "Protocol"), reflects the agreement of the parties
regarding the terms of a pivotal controlled study of the Product, which
study shall be followed by a six (6) month open-label study of the Product
pursuant to a protocol to be agreed upon between the parties (such studies
together constituting the "Product Study"), which Product Study shall be
conducted by Shire in accordance with the terms and conditions set forth herein.
Shire agrees to submit the Protocol to the FDA for review as soon as practicable
following the date of this Agreement. Shire further agrees to use reasonable
efforts to commence the Product Study as soon as practicable, and in any event
within four (4) months, following the date of the FDA's approval of the
Protocol; provided that Noven has fulfilled its obligations with regard to
Clinical Supplies as set forth below. As soon as practicable prior to the
commencement of the open-label study, Shire shall submit to Noven the proposed
protocol for such study, which protocol shall be agreed upon by the parties in
good faith. The Product Study shall be designed and managed by Shire, performed
in accordance with the Protocol and conducted by the individuals listed in
EXHIBIT B hereto.
Any material deviation from the Protocol prior to the date of
commencement of the Product Study shall require the prior written approval of
Noven. Any material deviation from the Protocol after the commencement of the
Product Study shall be made in accordance with Shire SOPs; PROVIDED, that Shire
shall provide at least three (3) days written notice of any such proposed
deviation to Noven, during which time Noven shall have the opportunity to submit
an objection to such deviation. In the event that Noven does not object within
such three (3) day period, the deviation proposed by Shire shall automatically
take effect. In the event that Noven does object to any such proposed deviation,
Shire shall have the option to implement such deviation notwithstanding Noven's
objection, subject to Shire's indemnification obligation as contemplated below.
Shire agrees to provide monthly reports to Noven during the performance of the
Product Study regarding the activities undertaken to date and the status of the
Product Study.
Noven shall (a) reimburse Shire for all of Shire's reasonable
out-of-pocket expenses actually incurred by Shire and paid to a third party in
connection with the Product Study including, without limitation except as
otherwise contemplated below, costs related to contract research organizations,
laboratory services, document control, protocol development, investigator
meetings, study conduct and close out, drug safety monitoring and reporting,
data retrieval and management, statistical analysis and reporting, investigator
grants, expenses and preparation and storage and distribution of study
materials, and (b) absorb all costs with respect to the manufacture by Noven of
the Product for the Product Study including, without limitation, the cost of the
active ingredient and all inactive ingredients of the Product, manufacturing
costs, testing, quality-related costs, packaging and labeling costs, shipment,
delivery, storage and handling costs and costs of insurance for the Product;
PROVIDED HOWEVER, that notwithstanding the foregoing, Noven shall have no
obligation to pay or reimburse Shire for (i) Shire's creation, design,
development, implementation, management, monitoring or documentation of the
Product Study which are not performed by a third party or any similar internal
costs of Shire associated with the Product Study, (ii) any labor or other costs
related to Shire's employees, or (iii) any costs or expenses incurred by Shire
in connection with executing this Agreement (including without limitation
attorneys' fees and expenses); and PROVIDED FURTHER, that the aggregate costs
and expenses to be paid to Shire under this Agreement shall not exceed
$10,900,000 (plus the costs actually incurred by Shire for any API used in
Clinical Supplies) without the prior written approval of Noven (it being
understood that, except for its indemnification obligations set forth
2
herein and any obligations undertaken by Noven directly, all such costs shall be
paid directly to Shire and that Noven shall have no liability to any third party
pursuant to this Agreement).
Noven shall defend, indemnify and hold harmless Shire and its
Affiliates and each of their respective officers, directors, agents, employees
and shareholders (collectively "Shire Indemnitees") from and against any all
Damages which Shire Indemnitees may incur or suffer arising out of the Product
Study or arising out of Noven's breach of the terms hereof, except to the extent
that those Damages arise out of (i) any material deviation from the Protocol
after commencement of the Product Study to which Noven shall have submitted an
objection during the three (3) day period contemplated above, or (ii) the
misconduct or negligence of, or a violation of any Applicable Law by, Shire or
Shire Indemnitees; PROVIDED, that Noven shall have no obligation to indemnify
Shire for any Damages incurred by Shire in connection with Shire's
indemnification of third parties with respect to performance of the Product
Study, other than Shire's indemnification of third parties for Damages relating
to the Product. Shire shall defend, indemnify and hold harmless Noven and its
Affiliates and each of their respective officers, directors, agents, employees
and shareholders (collectively "Noven Indemnitees") from and against any and all
Damages which Noven Indemnitees may incur or suffer arising out of (i) any
material deviation from the Protocol after commencement of the Product Study to
which Noven shall have submitted an objection during the three (3) day period
contemplated above, (ii) Shire's breach of the terms hereof, or (iii) Shire's
misconduct or negligence in the conduct of the Product Study or a violation of
any Applicable Law by Shire or Shire Indemnitees.
Shire agrees that in connection with its performance of the Product
Study, including without limitation the negotiation of agreements or other
arrangements with third parties in connection therewith, Shire shall conduct the
Product Study as if Shire were solely responsible for all costs and expenses, as
well as any potential liabilities or obligations, associated with the Product
Study.
Shire shall submit invoices to Noven monthly to the Finance Contact
listed below, together with supporting documentation for each expense for which
Shire seeks reimbursement; PROVIDED that Shire shall review each third party
invoice for accuracy before submitting it to Noven. Shire's review shall be
conducted as if Shire were solely responsible for payment of the invoice. Noven
shall pay each invoice received from Shire within thirty (30) days of receipt.
In the event that Noven breaches any of its payment obligations set forth
herein, in addition to any rights or remedies that Shire may have at law or
under the Transaction Agreement, Shire may in its sole discretion complete the
Product Study at Shire's cost and may seek reimbursement from Noven for any
costs and expenses incurred by Shire and contemplated to be paid to Shire or
absorbed by Noven in accordance with this Agreement; PROVIDED, that the failure
of Noven to perform its payment obligations hereunder shall not give rise to a
right of termination of any party (not otherwise existing) under any of the
Transaction Documents.
Accounts Payable
Noven Pharmaceuticals, Inc.
00000 XX 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
3
Shire shall submit to Noven orders for supply of the Product and
placebos necessary for the Product Study (the "Clinical Supplies"). The
manufacture of Clinical Supplies shall be pursuant to and in accordance with the
terms and conditions set forth in Section 5.01 of the Toll Conversion and Supply
Agreement. Notwithstanding anything to the contrary in the Toll Conversion and
Supply Agreement, (i) Noven agrees that it has sufficient quantities of Active
Ingredient on hand to manufacture all Clinical Supplies, (ii) with regard to
quality releases of Clinical Supplies, Noven shall provide a release of bulk,
packaged Clinical Supplies to Shire, Shire shall arrange for the labeling of
such bulk Clinical Supplies and Shire shall release the final Clinical Supplies
for use in the Product Study and (iii) Noven shall conduct any and all testing
necessary for the manufacture, packaging or release of Clinical Supplies.
The parties covenant and agree that, at the conclusion of the Product
Study, if Shire does not exercise its termination option set forth in the next
paragraph, each party shall cooperate in good faith with the other to submit the
results of the Product Study, along with the Product NDA, to the FDA for the
purpose of seeking Regulatory Approval of the Product NDA, and shall continue to
cooperate in good faith with each other and with the FDA to pursue diligently
Regulatory Approval of the Product until the earlier of (i) receipt of
Regulatory Approval, (ii) receipt of a Non-Approval Notice, or (iii) such time
as the parties shall reach mutual agreement to abandon pursuit of Regulatory
Approval ("Abandonment"), and that neither party shall have the right to
terminate this Agreement without the prior written consent of the other party
prior to such time. With respect to the Product Study, and except as otherwise
contemplated in the following paragraph, Noven shall appoint Shire as the agent
for the Product IND and Shire shall assume a leadership role with respect to all
registration strategies, communication, correspondence and meeting attendance
with the FDA; PROVIDED, that Noven shall at all times remain the sponsor of the
Product IND and the Product NDA and shall be represented in all such
communications, correspondence and meetings with the FDA.
In the event that after the unblinding of the data from the Product
Study, Shire determines in its reasonable opinion based upon such data that the
submission of the Product Study and the Product NDA to the FDA will not render a
commercially viable Product, Shire shall have the option to terminate this
Agreement, the Transaction Agreement and the other Transaction Documents upon
written notice to Noven; PROVIDED, that all assets purchased by Shire pursuant
to the Transaction Agreement shall thereupon be repurchased by Noven for an
aggregate consideration of $1.00, the License Agreement shall be automatically
terminated and Shire shall forfeit any remedies otherwise available to it under
the Transaction Documents, including without limitation the right to receive
$5,000,000 in consideration for the repurchase of such assets. Shire's option to
terminate this Agreement, the Transaction Agreement and the other Transaction
Documents shall expire sixty (60) days after the unblinding of the data from the
Product Study. In the event Shire shall exercise such right of termination,
Noven shall have the right to make any submission to, and to engage in necessary
correspondence and meetings with, the FDA in an effort to obtain Regulatory
Approval of the Product without the participation or approval of Shire.
Shire hereby covenants and agrees that from and after the date hereof
and until the termination of this Agreement, whether by (i) receipt of
Regulatory Approval, (ii) receipt of a Non-Approval Notice, (iii) Abandonment or
(iv) Shire's termination of this Agreement in accordance with the foregoing
paragraph (the "Product Study Period"), Shire shall not exercise
4
any right under the Transaction Agreement or any of the other Transaction
Documents, including without limitation Section 9.02(c) of the Transaction
Agreement, to terminate the Transaction Agreement or any of the other
Transaction Documents or to demand that Noven repurchase the assets purchased by
Shire under the Transaction Agreement. To the extent required, the foregoing
constitutes an express waiver of Shire's rights under Section 9.02(c) of the
Transaction Agreement for and during the Product Study Period in accordance with
Section 13.07 of the Transaction Agreement. The parties acknowledge and agree
that except as otherwise contemplated above, Shire is not waiving any rights it
may have under Section 9.02(c) for any period after the conclusion of the
Product Study Period.
The parties further acknowledge and agree that Shire has no right under
Section 9.02(c) of the Transaction Agreement to demand that Noven repurchase the
assets purchased by Shire under the Transaction Agreement or to terminate the
License Agreement by reason of Noven's receipt of the FDA Notice. The parties
acknowledge and agree that other than with respect to the FDA Notice and except
as otherwise contemplated above, Section 9.02(c)(i) of the Transaction Agreement
remains in full force and effect.
The parties agree that Section 11.01(a) of the Transaction Agreement is
hereby amended such that the rights of the respective parties to make a claim
for breach of any of the representations or warranties made in the Transaction
Agreement shall survive the date of the first commercial sale of Product for a
period of one year thereafter.
To the extent required, the parties acknowledge and agree that this
Agreement constitutes an amendment to the Transaction Documents in accordance
with the terms and conditions thereof, and that except as the context of this
Agreement requires to give effect to the intent and purposes hereof, the
Transaction Documents shall remain in full force and effect without any further
amendments or modifications. This Agreement shall be construed in accordance
with and governed by the substantive laws of the State of Delaware, without
giving effect to the conflict of laws principles thereof. This Agreement shall
become binding when any one or more counterparts hereof, individually or in the
aggregate, shall bear the signatures of each of the parties hereto. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original as against the party whose signature appears thereon, but all
of which taken together shall constitute one and the same instrument. Facsimile
signatures of authorized signatories of the parties shall constitute the due
execution and delivery of this Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors and
permitted assigns. Any disputes arising under this Agreement shall be resolved
in accordance with the dispute resolution mechanism provided in the Transaction
Agreement.
Very truly yours,
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxx
President, CEO and Chairman
5
ACKNOWLEDGED AND AGREED THIS
5th DAY OF NOVEMBER, 2003:
SHIRE US INC.
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
By: Xxxxxxx X. Xxxxxx
Title: President and CEO
6
