EXHIBIT 99.1
Portions of this Exhibit
have been omitted
pursuant to a request
for confidential
treatment. The omitted
portions are marked
***** and have been
filed separately with
the Commission.
PRE-VALIDATION AGREEMENT
This Agreement ("PV Agreement") is made the 16th day of October, 1998 between
CELL THERAPEUTICS, INC., whose registered office is at 000 Xxxxxxx Xxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxxxxx, 00000, XXX ("Company"), and CHIREX (DUDLEY),
LTD., of Dudley, Xxxxxxxxxxx, Xxxxxxxxxxxxxx, XX00 0XX, XXXXXXX ("Supplier").
RECITALS
WHEREAS, Supplier and Company are parties to a Supply Agreement dated
January 21, 1997 ("Supply Agreement");
WHEREAS, the scope of the Supply Agreement is limited to Pilot, Validation
and Commercial Lots as defined therein;
WHEREAS, in support of Company's clinical and regulatory development
efforts, Company and Supplier desire that Supplier provide additional
manufacturing services not contemplated by the Supply Agreement, specifically,
CCA and Compound Pre-Validation batches (as defined below); and
WHEREAS, Company and Supplier intend that this PV Agreement document the
parties' entire understanding of each party's obligations and rights concerning
the Pre-Validation batches.
AGREEMENTS
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties agree as follows:
1. DEFINITIONS:
ACTUAL COST shall mean all of Supplier's Actual Costs (direct and indirect)
-----------
incurred in preparing CCA and Compound, which shall be deemed to include an
allocation of manufacturing overhead which is calculated based on Supplier's
standard overhead and cost systems in effect upon commencement of Pre-
Validation.
(The information below marked by ***** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.)
COMPOUND is Company's proprietary compound, lisofylline, having a chemical name,
--------
*****.
(The information below marked by ***** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.)
CCA has the chemical name ***** and is the key intermediate for preparation of
---
Compound.
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cGMP are current Good Manufacturing Practices, specifically as defined in United
----
States Code of Federal Regulations, Title 21, (S) 210 and 211, related FDA
guidelines, and as interpreted by Company.
INTELLECTUAL PROPERTY (IP) includes, but is not limited to, patentable
---------------------
inventions, trade secrets and know how.
PRE-VALIDATION PROJECT PLAN (PV PROJECT PLAN) has been prepared by the Company
and agreed to by the Supplier. It is attached hereto as Exhibit A and defines
and delineates specific roles for Company and Supplier for Pre-Validation,
including, without limitation, personnel training and completion of required
quantities of CCA and Compound. The PV Project Plan includes a comprehensive
compilation of the technical specifications and compliance and documentation
requirements that shall govern the manufacture, testing, packaging and labeling
of Pre-Validation lots of CCA and Compound manufactured by Supplier for Company
per this PV Agreement (collectively, the "Pre-Validation Manufacturing
Standards"). The PV Project Plan also sets forth a schedule of activities and
resource utilization for completing the activities scheduled for each batch of
the stages identified in the Project Plan.
SUPPLIER'S FEE is an amount paid by Company to Supplier in accordance with the
--------------
provisions of Paragraph 10(b).
2. PV AGREEMENT SCOPE: The Pre-Validation batches under this PV Agreement are
designed to confirm the CCA and Compound processes at a commercial manufacturing
scale in Supplier's validated equipment under full cGMP compliance.
Specifically, Supplier will timely produce CCA and Compound Pre-Validation
batches as set forth in the PV Project Plan.
3. TERM: This PV Agreement shall commence upon complete execution by both
parties, and unless terminated sooner, shall remain in effect until the
completion of the Pre-Validation batches set forth in the Project Plan.
4. REPRESENTATIONS AND WARRANTIES:
Company represents and warrants to Supplier:
a) The proprietary manufacturing processes that Company has disclosed to
Supplier and pertaining to the Compound or CCA, except to the extent the
processes incorporate Supplier proprietary technology, are owned by Company,
free and clear of any liens or claims and performance thereof will not infringe
any third party rights.
b) The Project Plan (and all supporting documentation referenced therein) are
complete and accurate and contain all information necessary for Supplier to
manufacture the Compound or CCA, and when followed, will result in finished
products which comply with the Pre-Validation Manufacturing Standards.
c) Compound meeting the Pre-Validation Manufacturing Standards is fit for the
purpose intended by Company.
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d) Company has all requisite power and authority to execute and deliver this PV
Agreement and the other exhibits and instruments to be executed and delivered by
the parties pursuant hereto.
e) This PV Agreement does not conflict with any other agreement, instrument,
obligation, understanding or arrangement Company may have with another party.
Supplier represents and warrants to Company:
a) Supplier will perform all manufacturing for Company in accordance with all
written technical documentation mutually agreed to by the parties, specifically
including the Pre-Validation Manufacturing Standards.
b) For all phases of production, Supplier will comply with all applicable U.S.
governmental regulatory requirements, specifically cGMP, for all phases of
production including, without limitation, maintaining adequate documentation.
c) Supplier has all requisite power and authority to execute and deliver the PV
Agreement and the other exhibits and instruments to be executed and delivered by
the parties pursuant hereto.
d) This PV Agreement does not conflict with any other agreement, instrument,
obligation, understanding or arrangement Supplier may have with another party.
5. COMPOUND RELEASE AND NON-CONFORMANCE: Company is responsible for releasing
both CCA and Compound manufactured by Supplier in accordance with the Pre-
Validation Manufacturing Standards. However, Supplier is responsible for
conducting all required analytical testing on material produced by Supplier for
Company which is set forth in the Pre-Validation Manufacturing Standards (by
inclusion or reference therein). Company reserves the right to repeat tests
conducted by Supplier (at Company's cost) prior to Company's release of material
to confirm that the material meets the Pre-Validation Manufacturing Standards.
Should Company not be able to release CCA or Compound in accordance with the
Pre-Validation Manufacturing Standards, the CCA or Compound shall be deemed non-
conforming.
6. SHIPPING: Company shall notify Supplier of shipment location(s) for
Compound released by Company no more than ninety (90) days after Supplier's
notice to Company that Supplier has completed Compound manufacture. Except as
otherwise provided, all Compound manufactured by Supplier hereunder shall be
delivered to Company ex Xxxxxx. Company shall set forth all shipment,
packaging, labeling and storage requirements in the Pre-Validation Manufacturing
Standards. Supplier shall ship Compound to a location specified in writing by
Company. Supplier will maintain adequate business insurance to cover material
replacement in the event of material loss or damage during Supplier's
manufacture or material storage up to a maximum of the cumulative amounts
invoiced by Supplier for Pre-Validation. If Company fails to notify Supplier of
shipment location(s) for Compound within the aforementioned ninety (90) day
period, Supplier shall ship Compound to Company at the address specified in
Section 9 in accordance with the shipment requirements in the Pre-Validation
Manufacturing Standards.
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7. INDEPENDENT CONTRACTOR AND THIRD PARTY SUBCONTRACTORS: Supplier is an
independent contractor, not an employee or agent of Company, and will be solely
responsible for maintaining its labor force and operations. Supplier shall have
no right to bind Company by contract, otherwise transact any business or make
any representations in Company's name or on Company's behalf.
Supplier shall remain directly responsible for Supplier's performance hereunder,
even though Supplier may utilize third party contractors that it deems have the
requisite expertise and skill to meet Supplier's performance obligations under
this PV Agreement. Should Supplier utilize third party personnel other than
those previously approved by Company, Supplier will provide Company with an
opportunity to review and confirm Supplier's selection.
8. FACILITY ACCESS: Upon giving prior written notice to Supplier, Company (or
its authorized designees) shall have the right to inspect Supplier's facilities
and documentation at normal business hours to ensure compliance with this PV
Agreement, including applicable regulatory and or other governmental
requirements. Company may review or request copies of regulatory or cGMP data
at any time.
Supplier will not unreasonably withhold access by Company to data,
documentation, material, laboratories or facilities, wherever located, if such
access is reasonably required for verification of Supplier's performance
hereunder or is required in connection with government regulatory agency
requests.
9. NOTICES:
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a) Inspection: Supplier will immediately notify Company's Director of Quality
Affairs of a duly authorized governmental agency's (federal, state or municipal)
communication, visit, investigation or inquiry relating to Supplier's process or
facilities in connection with manufacture of CCA or Compound (Event).
Supplier's written confirmation of an Event shall not be later than twenty-four
(24) hours from Supplier's first knowledge thereof. Supplier's notice shall
provide Company's Director of Quality Affairs with the following information:
a) The agency;
b) Purpose of communication, visit, investigation or inquiry;
c) Name(s) of inspector(s) and credential number; and
d) A copy of form(s) issued by inspector, if any.
Supplier will handle Confidential and Proprietary Information in accordance with
the provisions of Paragraphs 11 (Confidentiality) and 13 (Publication and
Promotion). Supplier shall obtain Company's approval prior to Supplier
providing to any third party copies of documentation which contain Company
information.
Page 4 of 9
Company will assist Supplier in responding to the communication, visit,
investigation or inquiry relating to an Event.
b) General: In addition to the foregoing, Supplier will notify Company's
Director of Manufacturing Operations orally and in writing of any interruption
in Supplier's manufacturing activities that relates to or affects Supplier's
performance under this PV Agreement. Supplier's notice shall not be later than
forty-eight (48) hours from Supplier's first knowledge of the manufacturing
interruption.
Unless otherwise specified herein, all notices required or permitted to be given
under this PV Agreement shall be in writing and shall be delivered personally,
sent by secure facsimile or mailed prepaid to the persons named and addresses
set forth below.
If to Company: Director of Manufacturing Operations
Cell Therapeutics, Inc.
000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
If to Supplier: Chief Operating Officer
c/o ChiRex (Dudley) Ltd.
Xxxxxx, Xxxxxxxxxxx
Xxxxxxxxxxxxxx, XX00 0XX
XXXXXXX
Telephone No.: 0000 000 0000
Facsimile No.: 0191 250 1154
with a copy to: General Counsel
ChiRex, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
10. COSTS, INVOICING, FINANCIAL AUDITING AND PAYMENT:
a) Costs: Actual Costs shall be accounted for and billed by Supplier to
-----
Company.
(The information below marked by ***** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.)
b) Invoicing: Monthly, Supplier shall invoice all Actual Costs incurred in
---------
manufacturing CCA and Compound during the corresponding manufacturing month.
When Supplier invoices Company, Supplier's Invoice (an example of which is
attached hereto as Exhibit B) shall include a Supplier's Fee equal to *****
percent (*****%) of the Actual Costs. Supplier's Invoices will be in US dollars
(US $) and shall comply with specific requirements set forth in the attached
sample Supplier's Invoice.
Page 5 of 9
Contemporaneously with Supplier's submission of monthly invoices, Supplier shall
deliver to Company a Monthly Report and copies of all Project Timesheets
completed by Supplier personnel during the respective monthly invoice period,
examples of which are attached as Exhibit C. Supplier agrees that it will
collect labor hours by having Supplier's employees record time spent on Pre-
Validation in the appropriate time category(ies) represented on the attached
Project Timesheet.
Company and Supplier agree that British pounds ((Pounds)) will be converted to
US dollars ($) using the applicable closing conversion rate quoted in the Wall
Street Journal(R) three business days prior to the end of every monthly
invoicing period.
c) Financial Auditing: Supplier shall permit Company the right to periodically
audit Supplier's financial records and documentation (including Supplier's
overhead and standard cost systems) giving at least ten (10) business days prior
notice to Supplier.
Company's timely payment of any outstanding invoice due will not waive Company's
right to later dispute any Actual Costs invoiced.
(The information below marked by ***** has been omitted by a request for
confidential treatment. The omitted portion has been separately filed with the
Commission.)
d) Payment: Company shall pay invoiced amounts to Supplier in US dollars, no
later than the twentieth day of the month following the month of the respective
invoice date. Company will pay to Supplier ***** dollars ($*****)(US) as an
advance payment ("Advance Payment") against Actual Costs and Supplier's Fees
which will be incurred by and due to Supplier in the course of Supplier's
performance hereunder; $***** to be paid within ***** days of mutual execution
of this PV Agreement and the remaining $***** to be paid within ***** days of
mutual execution of this PV Agreement. Supplier will apply (in US dollars) *****
percent (*****%) of the advance payment against each of the first five monthly
Supplier's Invoices. In the event that the applied ***** percent (*****%) of the
Advance Payment exceeds any one of the first months' Supplier's Invoices, the
excess shall be carried and applied to the next successive month's Supplier's
Invoice.
On all outstanding balances due (from the date on which said amount is due until
paid), Supplier shall assess interest at a per annum rate equal to two percent
(2%) over the LIBOR rate quoted by Midland Bank on the date payment is overdue.
11. CONFIDENTIALITY: Supplier shall remain bound by the terms and conditions
of the Confidential Disclosure Agreement between Company and Supplier, dated
March 22, 1994, and amended April 25, 1996 (collectively, CDA), which is
incorporated by reference in its entirety.
12. INTELLECTUAL PROPERTY: Supplier agrees that Company shall own all
intellectual property created hereunder and specifically related to manufacture
of CCA and Compound ("IP"), except to the extent that any IP may embody
Supplier's proprietary technology used in Pre-Validation. Supplier agrees to
assist Company and perform all acts reasonably regarded by Company as
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necessary to assist Company in securing, perfecting and enforcing its IP
ownership rights provided herein.
13. PUBLICATION AND PROMOTION: Supplier may not publish details of the
synthesis or manufacture of Compound or CCA without Company's prior written
consent.
Supplier agrees not to use or imply Company's name for advertising, self-
promotion purposes, raising capital, recommending investments, which, inter
alia, implies endorsement by Company, and will only reference Company's name
after obtaining Company's prior written permission. Notwithstanding the
foregoing, Supplier may identify Company as one of its customers in its SEC
filings and Annual Report.
14. INDEMNIFICATION AND LIABILITY: Supplier and Company ("Indemnifying Party")
shall indemnify, defend and hold harmless the other and other's officers,
directors, employees, and agents (collectively the "Indemnified Party") against
any and all liability, obligation, loss or damage (including reasonable
attorney's fees) which result from the Indemnifying Party's breach of its
representations, warranties or obligations hereunder or its negligent act or
omission or willful misconduct.
Supplier and Company agree that each will be liable to the other for damages
resulting from any such party's breach of its respective representations,
warranties or obligations hereunder.
15. APPLICABLE LAW AND JURISDICTION: This PV Agreement shall be construed in
accordance with, and its performance shall be governed by, the laws of the State
of New York, exclusive of choice of law provisions.
16. AMENDMENTS: Any amendments, changes, or revisions to this PV Agreement
must be proposed in writing by either party, and accepted in writing by the
other party before they shall become effective and binding.
17. ASSIGNMENT: This PV Agreement is for specialized manufacturing services.
Supplier shall not assign, transfer or convey this PV Agreement, any
obligations, or any moneys due or to become due hereunder without the prior
written consent of Company. This PV Agreement shall inure to the benefit of
Company, its assigns, subsidiaries or successors in business.
18. ENTIRE AGREEMENT: This PV Agreement (all Exhibits and documents attached
hereto and referenced herein) represents the entire understanding and agreement
between Company and Supplier. In the event that a conflict arises between this
PV Agreement and printed terms and conditions on any subsequently prepared
document concerning performance of the parties under this PV Agreement, the
terms and conditions provided in this PV Agreement shall prevail, unless the
document satisfies the requirements herein for amendments to this PV Agreement.
19. SUPPLY AGREEMENT: Supplier has completed all manufacturing services
required by Company under the Supply Agreement, specifically within the scope of
Paragraphs 2(a) and 12 and relating to the Pilot and Validation Lots of CCA and
Compound. Supplier and Company
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acknowledge that Supplier's manufacture of Commercial Lots under the Supply
Agreement is conditioned upon an amendment of the pricing terms of the Supply
Agreement (including, without limitation, Paragraph 12 thereof).
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IN WITNESS WHEREOF, the parties by their authorized representatives have set
their hands on the day first above written.
CELL THERAPEUTICS, INC. CHIREX (XXXXXX) LTD.
By: /s/ XXXXXXX X. XXXXXXX By: /s/ XXXX X. XXXXX
--------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxx Xxxx X. Xxxxx
Title: EVP, Product Development Title: Director
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Address: 000 Xxxxxxx Xxxxxx Xxxx Address: Dudley, Cramlington
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Xxxxxxx, Xxxxxxxxxx 00000 Xxxxxxxxxxxxxx, XX000XX
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USA ENGLAND
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