AMENDMENT AGREEMENT to the DISTRIBUTION AGREEMENT dated April 3, 1998 by and between CENTOCOR, INC., CNA DEVELOPMENT, LLC (as licensee to Centocor, Inc.’s worldwide rights to Golimumab Product), and SCHERING-PLOUGH (IRELAND) COMPANY (as successor in...
Exhibit 10.1
to the
DISTRIBUTION AGREEMENT
dated April 3, 1998
dated April 3, 1998
by and between
CENTOCOR, INC.,
CNA DEVELOPMENT, LLC
(as licensee to Centocor, Inc.’s worldwide rights to Golimumab Product),
(as licensee to Centocor, Inc.’s worldwide rights to Golimumab Product),
and
SCHERING-PLOUGH (IRELAND) COMPANY
(as successor in interest to Schering-Plough Ltd.)
(as successor in interest to Schering-Plough Ltd.)
DECEMBER 20, 2007
Portions of this exhibit have been omitted and filed separately pursuant to an application for
confidential treatment filed with the Securities and Exchange Commission pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. Omissions are designated as [* *].
This Amendment Agreement (hereinafter the “Amendment Agreement”), dated as of December 20,
2007 (the “Amendment Date”), is made by and between Centocor, Inc. a corporation organized under
the laws of Pennsylvania with its principal office at 000 Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxxxx
(“Centocor”), CNA Development, LLC, a limited liability company organized under the laws of
Delaware (“CNA Development”, and collectively with Centocor, the “Centocor Parties”); and
Schering-Plough (Ireland) Company, a corporation organized under the laws of Ireland, with offices
at Rathdrum, County Wicklow, Ireland (“Schering-Plough”) (Schering-Plough and the Centocor Parties,
each referred to from time to time herein as a “Party” and collectively as the “Parties”). To the
extent set forth herein, this Amendment Agreement modifies and amends the Distribution Agreement
referenced below.
RECITALS
WHEREAS, on April, 3, 1998, Centocor and Schering-Plough Ltd., a corporation
organized under the laws Switzerland with its principal offices at Xxxxxxxxxx 00, XX 0000 Xxxxxxx,
Xxxxxxxxxxx (“SPL”) entered into a Distribution Agreement, as previously amended (the “Distribution
Agreement”) and SPL subsequently assigned the Distribution Agreement to its Affiliate,
Schering-Plough, under the terms of that certain Assignment and Assumption Agreement, dated August
25, 2005; and
WHEREAS, pursuant to the terms of the Distribution Agreement the Parties and their respective
Affiliates have been developing and commercializing the chimeric anti-TNF monoclonal antibody
Product (known as cA2 or infliximab) in the Territory under the Trademark REMICADE (the “Remicade
Product”); and
WHEREAS Centocor has developed a fully human anti-TNF monoclonal antibody product known as
golimumab (the “Golimumab Product”) through Phase IIb clinical trials and, prior to the exercise by
Schering-Plough of its rights under Section 12.1 of the Distribution Agreement to participate in
the continued development and commercialization of the Golimumab Product as a Product under the
Distribution Agreement (the “Golimumab Option”), Centocor licensed the worldwide rights to
Golimumab Product, subject to the Golimumab Option, to its Affiliate, CNA Development; and
WHEREAS Schering-Plough has exercised its Golimumab Option rights and Schering-Plough and
Centocor subsequently arbitrated a disagreement over the duration of Schering-Plough’s rights to
the Golimumab Product under the Distribution Agreement resulting in a final decision by the
arbitrator that the term of Schering-Plough’s rights to the Golimumab Product under the
Distribution Agreement will continue for a period of fifteen years from the date of first
Commercial Sale of Golimumab Product in the Territory; and
WHEREAS Centocor has appealed the decision of the arbitrator and Centocor and Schering-Plough
have recently engaged in good faith discussions in an attempt to settle and finally resolve their
dispute over the term of Schering-Plough’s rights to Golimumab Product as well as to resolve
certain additional outstanding issues related to the development and commercialization of Remicade
Product and/or Golimumab Product under the terms of the Distribution Agreement, and now desire to
document their mutual agreement on all such matters, as set forth in detail herein; and
WHEREAS Centocor has therefore agreed to terminate and permanently withdraw its appeal of the
aforementioned arbitrator’s decision in conjunction herewith and as provided herein; and
WHEREAS CNA Development is also in agreement with all of the amendments and modifications to
the Distribution Agreement set forth herein pertaining to the Golimumab Product;
NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, the Parties hereby agree as follows:
Except as otherwise expressly set forth in this Amendment Agreement, the capitalized terms
used herein (whether in the singular or plural) shall have the respective meanings set forth in the
Distribution Agreement.
ARTICLE 1
DISTRIBUTION AGREEMENT AMENDMENTS, CLARIFICATIONS AND MODIFICATIONS
DISTRIBUTION AGREEMENT AMENDMENTS, CLARIFICATIONS AND MODIFICATIONS
The following amendments, clarifications and modifications to the Distribution Agreement shall
become effective immediately upon execution of this Amendment Agreement:
1.1 Clarification of Product Definition. The definition of Product shall include,
without limitation, the Remicade Product and the Golimumab Product, as well as any Improvements to
either such Product. However, for clarity, the occurrence of the term “Product” in the first
sentence of the second whereas clause of the Distribution Agreement
and in the proviso to the “Cost of Goods Sold” definition shall be deemed to refer to
Remicade Product only, and all references in the Distribution Agreement to the “Product” as being
“described” or “set forth” in Appendix A to that agreement shall be deemed to be references to the
relevant Product as described in the revised Appendix A attached hereto. In addition, the various
references to “Trademark” in Section 4.3(b) of the Distribution Agreement, when used in connection
with the term “Product”, shall be deemed to refer to the relevant Trademark for each of Remicade
Product and Golimumab Product, respectively, it being understood that the Product Committee shall
be responsible for agreeing upon the Trademark(s) to be used for Golimumab Product in the
Territory. The Parties also agree that the references to “Product” appearing in third paragraph of
Section 5.1 of the Distribution Agreement shall be deemed to only refer to Remicade Product and
that the “Manufacture and Supply
Agreement” referred to in that paragraph is the Remicade Supply Agreement (as defined below).
1.2 Affiliate Definition; Delegation and Assignment. The last sentence of the
definition of “Affiliate” (i.e., the sentence: “Any reference in this Agreement to Centocor or
Schering-Plough includes the Affiliates of that Party unless the context clearly indicates to the
contrary.”) is hereby deleted. Notwithstanding such deletion, and consistent with Section 12.8 of
the Distribution Agreement, it is understood and agreed that each Party may license and/or delegate
or assign any rights and the performance of any of its obligations under the Distribution Agreement
to an Affiliate without the prior consent of the other Party.
1.3 Affiliate-Controlled IP. The Parties acknowledge that either Party may from time
to time during the Term propose that proprietary technology, materials, processes, know-how, data,
information, patent rights and/or other intellectual property rights that are owned or controlled
by an Affiliate of such Party (“Affiliate-Controlled IP”) be utilized by the Parties in the
development, manufacture and/or commercialization of one or more Products in the Territory.
Centocor is under no obligation to agree to any such proposal by Schering-Plough. It is further
understood that any use of Affiliate-Controlled IP (i) shall be subject to the prior approval
requirement in Section 6.2(a)(i) of the Distribution Agreement if it would result in obligations to
directly or indirectly pay license fees, milestones, royalties or other payments to one or more
unaffiliated third parties in the case of any Centocor Affliliate-Controlled IP and (ii) shall be
subject to a comparable prior consent requirement in the case of any Schering-Plough
Affiliate-Controlled IP. The Parties further agree that the Party making available such
Affiliate-Controlled IP to the other Party shall not charge or require reimbursement from the other
Party (or the other Party’s Affiliates) for, or include in the calculation of Contribution Income,
any licensee fees, milestones, royalties or other payments due or payable to its Affiliates as a
result of the use of such Affiliate-Controlled IP in connection with development, manufacture
and/or commercialization of the Products in the Territory, with the exception of such amounts
that are pass through amounts payable by such Affiliate(s) to unaffiliated third party licensors as
a result of such use of such Affiliate-Controlled IP. In addition, any costs and expenses
previously incurred by or on behalf of such Affiliates in the development of such
Affiliate-Controlled IP shall not be included in Product Development Costs unless expressly agreed
by the Parties in writing. Nothing in this Section 1.3 shall be construed as (i) granting
(whether expressly or by implication) to either Party any licenses or other rights to any
Affiliate-Controlled IP that has not, as of the Amendment Date, already been utilized by written
agreement of the Parties for the development, manufacture or commercialization of the Products in
the Territory, or (ii) obligating either Party to make available any new or additional
Affiliate-Controlled IP for such use. For the avoidance of doubt, it is understood that Centocor
may (without Schering-Plough’s prior consent) utilize, and grant Schering-Plough the right to
utilize, any new or additional Centocor proprietary technology, materials, processes, know-how,
data, information, patent rights and/or other intellectual property rights or any Centocor
Affiliate-Controlled IP in connection with the development, manufacture and commercialization of
Products in the Territory; provided that such utilization does not
result in
(x) any requirement for additional consideration or compensation to be paid by Schering-Plough or
its Affiliates in connection with such Affiliate-Controlled IP, (y) any development costs
associated with such Affiliated-Controlled IP being included as Product Development Costs, or (z)
any additional Affiliate or unrelated third party pass-through costs
being included in the calculation of Contribution Income.
1.4 Term of the Distribution Agreement. Section 8.1 of the Distribution Agreement is
hereby deleted and replaced in its entirety with the following:
“8.1 Term. The term of this Agreement (the “Term”) shall commence on the
Effective Date and continue for a period ending on the later to occur of the last day
of the Remicade Term or the Golimumab Term, unless this Agreement is earlier terminated
pursuant to the provisions of this Agreement. The foregoing notwithstanding, in the
event that prior to the expiration of the Term (as defined above) Schering-Plough
acquires rights, pursuant to Section 12.1 of this Agreement, to any
additional fully human anti-TNF monoclonal antibodies developed by Centocor through
transgenic animals or plants or other technology (an “Additional Section 12.1
Product”), then the term of this Agreement shall be extended, solely with respect to
such Additional Section 12.1 Product, to expire on the fifteenth anniversary of the
date of the first Commercial Sale of such Additional Section 12.1 Product in the
European Union after the grant of the first Marketing Approval of such Additional
Section 12.1 Product in the European Union.”
The following new definitions are hereby added to Article 1 of the Distribution Agreement:
“Remicade Term” shall mean the period beginning on the Effective Date and ending on
September 1, 2014.
“Golimumab Term” shall mean the period beginning on the date of the first Commercial
Sale of Golimumab Product to occur in the European Union after the grant of the first
Marketing Approval of Golimumab Product in the European Union (the “First Golimumab
Commercial Sale”), and ending upon the fifteenth (15th) anniversary of such
date.
For
clarity, in the event that the Term of the Distribution Agreement is extended due to the acquisition by
Schering-Plough of rights to any Additional Section 12.1 Products, any such extension of the Term
shall have no effect on the expiration of Schering-Plough’s rights to the Remicade Product or the
Golimumab Product, each of which shall still expire and revert to Centocor, respectively, on
expiration of the Remicade Term (in the case of Remicade Product) or on expiration of the Golimumab
Term (in the case of Golimumab Product).
1.5 Milestone Payments. The Parties acknowledge and agree that the various payments
provided for in Sections 3.1, 3.2 and 3.3 of the Distribution Agreement have been paid with respect
to Remicade Product, and that the development and commercialization of Golimumab Product does not
and will not give rise to any additional payment obligations under those Sections of the
Distribution Agreement.
1.6 Separate Contribution Income Calculations for Golimumab Product and Remicade
Product. For convenience and transparency to product line information, the Parties agree that
Contribution Income will be calculated separately for Remicade Product and Golimumab Product based
upon the Net Sales of each such Product in the Territory. Nonetheless, for the purpose of clarity,
the manner and elements of calculating Contribution Income will be the same for Remicade Product
and Golimumab Product, and shall continue to be as set forth in Section 6.2 of the Distribution
Agreement and Section 7.1 of the Supply Agreement, dated September 15, 1999, between Centocor and
Schering-Plough, as amended (the “Remicade Supply Agreement”). For further clarity, the Parties
agree that the $150,000,000 Net Sales threshold in Section 6.2(c) shall apply separately to
Golimumab Product and to Remicade Product, rather than to the aggregated Product sales, for all
periods prior to the Trigger Date (as defined below).
1.7 Golimumab Costs Prior to the First Golimumab Product Marketing Approval. The
Parties acknowledge and agree that, subject to the terms and conditions set forth in this Section
1.7, the Parties shall have the right to include in the Contribution Income calculation any
Marketing Expenses and/or sales costs related to the commercialization of Golimumab Product in the
Territory that are incurred prior to the first Marketing Approval of Golimumab Product in the
Territory (collectively, the “Pre-Approval Marketing and Sales Costs”). The total of all
Pre-Approval Marketing and Sales Costs incurred for the 2006 and 2007 Agreement Years that are to
be included in the Contribution Income calculation for the Products shall be subject to the caps on
such amounts set forth in Schedule 1.7 (attached hereto). With respect to the 2008 Agreement Year
and any subsequent Agreement Years (or partial Agreement Year) occurring prior to the Trigger Date,
the Parties shall be permitted to include in the Contribution Income calculation for the Products
in the relevant Agreement Year those Pre-Approval Marketing and Sales Costs that are incurred in
such Agreement Year in connection with the performance of the Country Marketing Plans established
for Golimumab Product in the Territory. For clarity, the Parties agree that notwithstanding the
date on which the first Commercial Sale of Golimumab Product in the Territory occurs, the inclusion
of Pre-Approval Marketing and Sales Costs in the calculation of Contribution Income shall become
effective on the Amendment Date. The foregoing notwithstanding, to the extent that the aggregate
total of all Pre-Approval Marketing and Sales Costs incurred by Schering-Plough over the entire
period extending from January 1, 2006 to the Trigger Date exceeds [**] dollars
($[**]) (the “Pre-Approval Cost-Sharing Cap”), Schering-Plough shall be solely responsible
for all such Pre-Approval Marketing and Sales Costs in excess of the Pre-Approval Cost-Sharing Cap,
shall not be entitled to any reimbursement from or cost sharing by Centocor for such excess
amounts, and shall not include such excess amounts in the Contribution Income calculation. For
clarity, the
costs of any ongoing or future Phase III or Phase IIIb studies for the Golimumab Product shall
not be included in determining Pre-Approval Marketing and Sales Costs.
1.8 Tanabe Rights. Without modifying the provisions of Section 2.3(a) of the
Distribution Agreement, the Parties agree that Schering-Plough’s rights in that section will not be
triggered in the event that Tanabe Seiyaku Co. Ltd. (“Tanabe”), or any of Tanabe’s Affiliates or
successors in interest, grants to Centocor or a Centocor Affiliate co-promotion rights,
co-marketing rights or other semi-exclusive commercialization rights (e.g., where Tanabe, its
Affiliates or successors in interest, and/or its or their third party sublicensees or distributors,
still hold non-exclusive or co-exclusive rights to distribute, market, promote and/or sell Product
in the relevant country(ies)) to one or more Products in any one or more of the following
countries: Japan, Taiwan or Indonesia. It is acknowledged and agreed that Schering-Plough’s rights
under Section 2.3(a) no longer apply to the Peoples Republic of China.
1.9 Rights to Cilag Autoinjector; Reimbursement of Development Costs. The Parties
have agreed to develop and commercialize the Golimumab Product utilizing the autoinjector device
developed by Cilag GmbH International (“Cilag”), an Affiliate of Centocor (the “Cilag
Autoinjector”). Centocor shall be responsible for procuring the grant of any licenses, sublicenses
or other rights from Cilag that are necessary to develop, manufacture and/or commercialize the
Golimumab Product with the Cilag Autoinjector in the Territory; provided that any financial
obligations to Cilag arising in connection with such license shall be subject to the provisions of
Section 1.3 and Section 1.11 of this Amendment Agreement. In consideration for such rights and the
Autoinjector Development Costs (as defined below) incurred by Cilag, Schering-Plough shall make a
one time payment of twenty million five hundred thousand dollars ($20,500,000) within ten (10)
business days after the Amendment Date. In addition, within thirty (30) days after the date of
submission of the first application for Regulatory Approval of Golimumab Product in the EMEA,
Schering-Plough shall pay to Centocor a milestone payment in the amount equal to the lesser of four
million two hundred and fifty thousand dollars ($4,250,000) or the amount determined as follows:
| (i) | [**] percent [**] of the total of all Autoinjector Development Costs incurred as of the date of such EMEA submission, |
| minus |
| (ii) | twenty million five hundred thousand dollars ($20,500,000). |
Such milestone payment shall be made pursuant to an invoice (with supporting documentation in
reasonable detail) to be provided to Schering-Plough by Centocor. Thereafter, to the extent that
Schering-Plough’s total payments made pursuant to this Section 1.9 are less than twenty-four
million, seven hundred and fifty thousand dollars ($24,750,000) and at all times subject to the
Autoinjector Reimbursement Cap (as defined below), Centocor shall
include [**] percent [**] of
the ongoing Autoinjector Development Costs incurred in a given calendar quarter in the quarterly
Product
Development Cost xxxxxxxx for such calendar quarter under the Distribution Agreement. As used in
this Section 1.9, the term “Autoinjector Development Costs” means the development costs incurred by
Cilag in connection with the development of the Cilag Autoinjector (including Cilag’s or its
Affiliates’ FTE costs, but excluding any Centocor FTE costs incurred on or after the Amendment
Date); provided, however, that any costs and expenses incurred in connection with
activities specifically directed to the use of the Cilag Autoinjector for any products other than Golimumab
Product shall be excluded. The term “Autoinjector Reimbursement Cap” means an aggregate total of
[**] dollars ($[**]) of Autoinjector Development
Costs which is the maximum amount that will be subject to sharing and/or reimbursement by
Schering-Plough under the terms of this Section 1.9. The Parties acknowledge and agree that the
aggregate total of all of Schering-Plough’s payments pursuant to this Section 1.9 shall not exceed
an amount equal to [**] percent ([**]%) of the Autoinjector Reimbursement Cap (i.e., twenty-four
million, seven hundred and fifty thousand dollars ($24,750,000)), and that Schering-Plough shall
have no obligation to reimburse or share in any portion of Autoinjector Development Costs that
exceed the Autoinjector Reimbursement Cap. The Parties agree that any payments due under this
Section 1.9 shall be paid by Schering-Plough directly to Cilag on Centocor’s behalf.
1.10
Supplies of Cilag Autoinjector. (a) Schering-Plough hereby agrees to exclusively
source all of its requirements for supplies of autoinjector devices for use in connection with the
development and commercialization of Golimumab Product in the Territory from Centocor or its
Affiliates and Centocor or its Affiliates shall be responsible for supplying to Schering-Plough
such quantities of Cilag Autoinjector as it may order in accordance with the Autoinjector Supply
Agreement (as defined below) for development and commercialization of the Golimumab Product in the
Territory. As soon as practicable after the Amendment Date, the Parties will in good faith
negotiate and enter into a supply agreement with respect to the Cilag Autoinjector (the
“Autoinjector Supply Agreement”) which shall be consistent with the terms of the Distribution
Agreement, as amended hereby, and the non-product and/or price specific terms of the Remicade
Supply Agreement. The Autoinjector Supply Agreement shall, in any event, include provisions to
provide that:
| (i) | in the event of an actual or projected shortfall in supplies of Cilag Autoinjector, (x) Centocor shall ensure (A) that the available inventory and production capacity for that device is appropriately allocated based upon the collective firm orders and forecast requirements of the Parties for supplies of Cilag Autoinjector for use in connection with Golimumab Product (whether inside or outside the Territory) and any other firm orders and forecast requirements of Centocor or its Affiliates for supplies of the Cilag Autoinjector for the development and commercialization of Centocor’s or its Affiliates’ other products, and (B) that such supply quantity allocated to Golimumab Product requirements would be split between Schering-Plough (and its Affiliates), on the one hand, and Centocor (and its Affiliates) on the other hand, in |
| the same proportion as their respective firm orders and forecast requirements for supplies of Cilag Autoinjector for use in connection with Golimumab Products such that the shortfall in such supplies would be shared between them and (y) to the extent any such actual or projected shortfall results in forecasted market shortages for the Cilag Autoinjector, Schering-Plough and Centocor will jointly pursue alternative sourcing to ensure continued supply of autoinjector devices to both Parties; and |
| (ii) | in the event that Centocor develops a new autoinjector device for use with Golimumab Product and does not permit Schering-Plough to commercialize Golimumab Product utilizing such new device, Schering-Plough will be relieved of its obligations to source autoinjector devices for the Golimumab Product exclusively from Centocor. |
The Parties will agree upon an
initial price per unit to be paid by
Schering-Plough for supplies of the Cilag Autoinjector under the
Autoinjector Supply Agreement, which determination shall be made in
connection with the determination of the initial supply price for
Golimumab Product pursuant to Section 1.16. The supply price for the
Cilag Autoinjector shall also be subject to periodic review and adjustment,
as necessary, by the Product Committee in connection with any review and
adjustment of the supply price for Golimumab Product pursuant to Section 6.1
of the Distribution Agreement. The foregoing notwithstanding, for purposes of Contribution
Income calculations, the actual cost per unit of Cilag Autoinjector, without
xxxx-up and subject to the application of the cap as set forth under Section 1.11, shall be used.
(b) Alternative Devices. In the event that the Parties agree to develop and/or commercialize
Golimumab Product in the Territory using an alternative autoinjector device, the Parties shall also
agree upon mutually acceptable arrangements for the manufacture and supply of supplies of the
alternative device, it being understood that if a Party (or one of its Affiliates) has either
internally developed such alternative device or licensed or acquired rights to such alternative
device, that Party shall be primarily responsible for procuring the manufacture and supply of all
requirements for supplies of the alternative device for use in connection with the Golimumab
Product in the Territory. To the extent that Schering-Plough is the Party responsible for
procuring supplies of such alternative autoinjector device, the Parties shall, upon request by
Centocor, also negotiate in good faith and enter into a supply agreement for the manufacture and
supply on commercially reasonable terms of Centocor’s requirements of such device for use in
connection with Golimumab Product in countries outside the Territory. Any such supply agreement
shall be consistent with the terms of the non-product and/or price specific terms of the Remicade
Supply Agreement, including without limitation clauses to provide that in the event of an actual or
projected shortfall in supplies of such device, (i) Schering-Plough shall ensure that the available
inventory and production capacity for that device is appropriately allocated based upon the
Parties’ firm orders and forecast requirements for the device for use in connection with Golimumab
Products both within and outside the Territory and (ii) to the extent any such actual or projected
shortfall results in forecasted market shortages for the device, Schering-Plough and Centocor will
jointly pursue alternative sourcing to ensure continued supply of autoinjector devices to both
Parties.
1.11
Cost of Cilag Autoinjector for Contribution Income Purposes. The actual cost per unit for autoinjector devices
for Golimumab Product will be included in the calculation of Contribution Income; provided that
such cost will be subject to a cap of [**] dollars ($[**]) per unit throughout the Term of the
Distribution Agreement. The same principles for determining actual cost used in Appendix B to the
Distribution Agreement with respect to Remicade Product shall be used in determining the actual
cost per unit of the Cilag Autoinjector.
To the
extent Cilag’s actual per unit cost for the Cilag Autoinjector
device exceeds [**]
dollars ($[**]) per unit, such excess costs shall not be included in the calculation of
Contribution Income and Centocor shall be solely responsible for such excess costs and shall not be
entitled to any reimbursement from Schering-Plough for such excess costs. The costs of all third
party royalties, license fees and milestones under third party licenses existing as of the
Amendment Date are included in the capped $[**] price. Any additional royalties due under future
third-party licences shall be included in the Contribution Income calculation and shall not be
included in the cap calculation; provided that Centocor shall not enter into any additional
agreements with third parties that include provisions requiring the payment of license fees,
milestones, royalties or other payments relating to the sale of the Autoinjector in the Territory
without the prior consent of Schering-Plough.
1.12 Golimumab Crohn’s Disease Indication. The Parties agree to allow the Product
Committee a period of six (6) months from the Amendment Date (the “CD Decision Period”) to reach a
final decision on whether or not to develop Golimumab Product for a Crohn’s Disease indication (the
“CD Development Program”). In the event that at the end of the CD Decision Period, the Product
Committee still cannot agree on whether to develop Golimumab Product for a Crohn’s Disease
indication, then Schering-Plough shall be permitted to pursue the independent development and
commercialization of Golimumab Product for Crohn’s Disease in accordance with the provisions set
forth in Sections 1.12(a)-(n) of this Amendment Agreement, as well as such other supplemental terms
and conditions as the Parties may agree upon in writing during the CD Decision Period
(collectively, the “Crohn’s Terms”). The development plan and budget for the CD Development
Program will be finalized and a copy provided to Centocor at least six (6) weeks prior to the end
of the CD Decision Period (the “CD Development Plan and Budget”).
(a) Conduct of the CD Development Program. In the event that Schering-Plough decides to
proceed with independent development of Golimumab Product for Crohn’s Disease pursuant to this
Section 1.12, Schering-Plough will be responsible for the conduct of the CD Development Program in
accordance with the CD Development Plan and Budget (including as it may be amended) and shall have
the right to select and utilize third party contractors in connection with the performance of the
CD Development Program. Schering-Plough will be responsible for, but shall consult with Centocor
with regard to the design of the overall CD Development Program, and shall provide Centocor a
reasonable opportunity to review and comment on the protocols proposed for each clinical trial to
be conducted as part of the CD Development Program. Schering-Plough shall in good faith reasonably
consider any comments timely provided by Centocor with regard to the CD Development Program and/or
such protocols. For clarity and without limiting the scope of the Centocor MAH Matters
described in Section 1.12(e), below, it is understood and agreed that Schering-Plough shall have final
decision making authority over the scope of the CD Development Plan
and Budget and any amendments
thereto.
(b) Centocor Contract Assistance. Schering-Plough may desire to contract with Centocor for
the performance by Centocor of certain activities within the scope of the CD Development Program on
Schering-Plough’s behalf and at Schering-Plough’s
cost. In such event, Schering-Plough shall so notify Centocor and the Parties shall discuss
in good faith the scope and terms governing any such contracted activities; provided that
it is understood that Centocor shall not be under any obligation to perform any such activities on
Schering-Plough’s behalf unless such scope and terms have been agreed in writing. The Parties
acknowledge and agree, however, that whether or not they enter into any such contract for the performance by
Centocor of activities within the scope of the CD Development Program, Centocor is obligated under
this Amendment Agreement to perform the activities described in Sections 1.12(d), (e), (j), (k), (l)
and (m) in support of the CD Development Program. Any Centocor internal FTE costs incurred in the
performance of any such contracted activities or any of the
obligations described in Sections 1.12(d), (e), (j), (k), (l) and (m), shall be charged at
the rate of $250,000 per FTE. Any and all amounts paid by Schering-Plough to Centocor under such
contract shall be included in Schering-Plough’s out-of-pocket development costs for the purposes of
determining the amount to be paid by Centocor if it exercises its option under Section 2.1(c)(ii)
of the Distribution Agreement, as amended hereby, to share in the Contribution Income derived from
the Crohn’s Disease indication (the “CD Option Right”).
(c) Pre-Exercise Product Development Costs. Unless and until such time as Centocor exercises
its CD Option Right, Schering-Plough will be solely responsible for all costs and expenses incurred
in connection with the performance of the CD Development Program. To the extent that Centocor
performs any activities requested by Schering-Plough in support of the CD Development Program,
Schering-Plough shall reimburse Centocor’s costs and expenses incurred in the performance of such
activities (with any Centocor internal FTEs being reimbursed at the rate set forth in Section
1.12(b) of this Amendment Agreement). Any such reimbursements shall be paid quarterly within
thirty (30) days after receipt of invoices (together with supporting documentation in reasonable
detail) by Schering-Plough from Centocor. Notwithstanding the
foregoing and except as otherwise agreed in any contract for
services as contemplated under Section 1.12(b) with respect to
such services, Schering-Plough shall not
be obligated to reimburse Centocor for any such costs and expenses in excess of one hundred and
five percent (105%) of the amount budgeted for the relevant Agreement
Year for the activities
being performed by Centocor in connection with the CD Development Program unless such excess costs
and expenses are approved by Schering-Plough in writing in advance.
(d) Golimumab Product Supply During CD Development Program. Centocor shall be responsible for
manufacturing and supplying all clinical supplies of bulk unlabeled Golimumab Product and placebo
needed for the conduct of the CD Development Program. Consistent with the provisions of Section
2.1(c)(ii) of the Distribution Agreement, as amended hereby, and the terms of the Golimumab Supply
Agreement (as defined in Section 1.16 below), Centocor shall provide such supplies of Golimumab
Product and placebo pursuant to written forecasts and orders to be provided by Schering-Plough.
In addition, effective upon Schering-Plough’s written notice to Centocor no later than the end of the CD Decision Period
(a “Packaging & Labeling Notice”), Centocor shall be responsible for performing the clinical
packaging and labeling of all clinical supplies of Golimumab Product and placebo needed for conduct
of the CD Development Program,
in
accordance with, and as more fully set forth in, the Golimumab
Supply Agreement. If Schering-Plough fails to provide a
Packaging & Labeling Notice prior to the expiration of the
CD Decision Period, then Schering-Plough shall be solely responsible for the clinical packaging and
labeling of all clinical supplies of Golimumab Product and placebo needed for conduct of the CD
Development Program. For clarity, Centocor shall also be responsible for providing supplies of
Cilag Autoinjector required by Schering-Plough for the conduct of the CD Development Program in
accordance with the terms of the Autoinjector Supply Agreement.
(e) MAH Responsibilities. Centocor will continue to hold the marketing authorizations for
Golimumab Product in accordance with the terms of the Distribution Agreement and, accordingly, will
therefore also have primary responsibility for certain matters pertaining to the product safety and
regulatory compliance aspects of the development and commercialization of Golimumab Product for the
Crohn’s Disease indication in the Territory (the “MAH Matters”), specifically including those
matters listed on Exhibit A attached hereto. During the Term, Centocor shall promptly execute any
delegation agreements or other documentation that the Parties mutually agree are necessary or
appropriate, consistent with the terms of this Section 1.12, in order for Schering-Plough to
conduct the CD Development Program and/or commercialize Golimumab Product in the Territory for the
Crohn’s Disease indication.
(f) CD Development Program Updates. Schering-Plough shall provide quarterly updates to the
Product Committee on the status of the CD Development Program, including activities engaged in and
the budget expenditures against such activities, and shall otherwise keep Centocor informed of
significant developments or changes to the CD Development Plan and Budget.
(g) Centocor Opt-In Following Successful Completion of Phase III. Schering-Plough shall
notify Centocor in writing (as provided in Section 2.1(c) of the Distribution Agreement) upon
Successful Completion (to be defined) of the Phase III studies to be conducted under the CD
Development Program (the “Successful Completion Notice”). The Parties will use good faith efforts
to discuss and agree upon a definition of Successful Completion during the CD Decision Period; it
being understood that a decision by Schering-Plough’s executive management following completion of
such Phase III studies that the data and results of the CD Development Program are adequate to
proceed with preparation and submission of an application for Regulatory Approval of Golimumab
Product for the Crohn’s Disease indication in the European Union shall de facto mean that
such studies have been Successfully Completed. The Successful Completion Notice shall include (i)
top line safety and efficacy results from the studies along with associated tables and figures as
well as (ii) the total estimated amount (the “Preliminary CD Development Amount”) of
Schering-Plough’s out-of-pocket development costs from the CD Development Program through the Opt
In Date (as defined below) (together with supporting documentation in reasonable detail).
Schering-Plough will also promptly provide Centocor with any other specific data available from the
studies that is reasonably requested by Centocor to aid in assessment of its CD Option Right. Upon
receipt of a Successful Completion Notice (and any additional data reasonably requested by Centocor
as provided above), Centocor shall have a period of
sixty (60) days (the “Review Period”) to exercise the CD Option Right by providing written
notice to Schering-Plough (the date of such notice of exercise, the “Opt In Date”) and within ten
(10) Business Days after any such Opt In Date Centocor shall reimburse Schering-Plough for
seventy-five percent (75%) of the Preliminary CD Development Amount. Within ninety (90) days after
the Opt In Date the Parties will complete a true-up of the total amount of Schering-Plough’s
out-of-pocket development costs from the CD Development Program actually incurred through the Opt
In Date (the “Final CD Development Amount”) as compared to the Preliminary CD Development Amount.
If requested by Centocor, such true-up process will be subject to an audit to be conducted by
Centocor’s independent auditors (at Centocor’s expense) to confirm the Final CD Development Amount,
and (if necessary) the ninety (90) day true up period shall be extended by the reasonable period of
time necessary for Centocor to complete such audit. The Final CD Development Amount shall
include, without limitation, (i) the Centocor internal FTE costs that are billed and paid by
Schering-Plough up through the Opt In Date, but shall not include any Schering-Plough
internal FTE costs, and (ii) any amounts paid by Schering-Plough to Centocor as reimbursement for
costs and expenses incurred by Centocor in performance of activities requested by Schering-Plough
in support of the CD Development Program (including without limitation payments for supplies of
Golimumab Product and/or placebos). Within ten (10) Business Days after the Final CD Development
Amount is established (including as such amount may be confirmed or modified following the exercise
of Centocor’s audit right): (i) if the Final CD Development Amount is greater than the Preliminary
CD Amount, then Centocor shall pay to Schering-Plough an amount equal to seventy-five percent (75%)
of the difference between such amounts; or (ii) if the Final CD Development Amount is less than the
Preliminary CD Amount, then Schering-Plough shall pay to Centocor an amount equal to seventy-five
percent (75%) of such difference. The CD Option Rights shall expire if Centocor fails to exercise
the CD Option Rights by the end of the Review Period (the “Option Expiry Date”). Schering-Plough’s
expenses in procuring Golimumab Product for the CD Development Program shall be included in the
costs and expenses of the CD Development Program for which
Schering-Plough is responsible and will be included in the amount to be paid by
Centocor if it exercises the CD Option Right.
(h) Centocor Opt In Prior to Successful Completion of Phase III. Centocor may exercise its CD
Option Right at any time prior to receipt of a Successful Completion Notice by providing an early
exercise notice to Schering-Plough (the “Early Exercise Notice”); provided that Centocor
shall only be permitted one (1) opportunity to exercise its CD Option Right through an Early
Exercise Notice. Upon receipt of the Early Exercise Notice, Schering-Plough shall provide (i) any
specific data that is available from the CD Development Program studies that may be reasonably
requested by Centocor in the Early Exercise Notice and (ii) the Preliminary CD Development Amount
(together with supporting documentation in reasonable detail). Centocor shall have a 60-day Review
Period upon receipt of such information to confirm the exercise of its CD Option Right. If
Centocor confirms its exercise in writing, such date shall constitute the Opt In Date for purposes
of Section 1.12(g), which section will then govern the rights and obligations with respect to
exercise of the CD Option Right. If Centocor does not confirm its exercise in writing prior to the
end of such 60-day Review Period, the Early
Exercise Notice shall be deemed to have lapsed, Centocor’s rights under this Section 1.12(h)
will have been exhausted, and the CD Option Right shall remain in effect in accordance with Section
1.12(g).
(i) Opt-in Implications. In the event that Centocor exercises the CD Option Right, the CD
Terms related to responsibility for and conduct of the CD Development Program shall cease to apply
effective as of the Opt In Date and the development of Golimumab Product for the Crohn’s Disease
indication shall thereafter be conducted jointly by the parties in accordance with the terms set
forth in the Distribution Agreement.
(j) Opt-out Implications. In the event that Centocor does not exercise the CD Option Right,
then (i) Schering-Plough shall thereafter retain one hundred percent (100%) of all Contribution
Income resulting from the sale of Golimumab Product in the Territory for the Crohn’s Disease
indication (for clarity, Centocor shall continue to share in Contribution Income resulting from the
sale of Golimumab Product in the Territory for Rheumatoid Arthritis and any other indications that
are developed by the Parties within the scope of the Distribution Agreement); (ii) Centocor shall
continue to manufacture and supply and Schering-Plough shall continue to purchase its requirements
of Golimumab Product for the Crohn’s Disease indication from Centocor at Centocor’s actual cost as
set forth in Section 1.12(d) (above), and (iii) the restrictions set forth in Section 2.1(c) of the
Distribution Agreement on use of a different dosage form, formulation and trademark shall not apply
to sales of Golimumab Product in the Territory for Crohn’s Disease, and Schering Plough shall have
the right to utilize the same formulations, dosage forms and trademarks as are used for non-Crohn’s
Disease indication Golimumab Product sales; provided that
prior to the first Commercial Sale of Golimumab Product after
Regulatory Approval for Crohn's Disease Schering-Plough and Centocor shall agree upon an appropriate commercially
reasonable means for determining sales of Golimumab Product in the Territory for Crohn’s Disease as
opposed to sales for other indications (an example being the mechanism used by Centocor for
determining royalty bearing sales of Product in the Territory under the Xxxxxxx Agreement.)
(k) Restrictions on Use of Data. If Centocor does not exercise its CD Option Right, Centocor
and its Affiliates shall not have any rights to use (or cross-reference), or to grant any third
party any rights to use (or cross-reference), any of the data and information generated by the CD
Development Program to prepare, file or otherwise support any application for Regulatory Approval
in any country outside the Territory of Golimumab Product for use in the treatment of Crohn’s
Disease (or any other inflammatory bowel disease). Centocor will acquire such rights solely in the
event that, and effective upon the date that, it exercises the CD Option Right in accordance with
the provisions of this Section 1.12. However, Centocor shall at all times have the right to use
the data from the CD Development Program solely to meet its legal obligations as the marketing
authorization holder for Golimumab Product, including, but not limited to adverse event reporting
and, to the extent requested by regulatory authorities, cross-indication analyses. Any other use
of such data by Centocor or its Affiliates prior to the exercise of the Opt In Date shall be subject to Schering-Plough’s prior written approval,
which shall not be unreasonably withheld.
(l) Schering-Plough’s Access to Information. Centocor shall provide Schering-Plough with
rights to use and reasonable access to any data and information in its or its Affiliates’
possession or control related to Golimumab Product that is necessary to enable Schering-Plough to
plan and conduct the CD Development Program. In addition, Centocor shall upon request reasonably
cooperate with Schering-Plough to support the conduct of the CD
Development Program by (x) making available relevant Centocor personnel to provide technical
information and/or assist Schering-Plough in preparing submissions and/or responses to inquiries
from regulatory authorities related to Golimumab Product, (y) providing appropriately trained and
experienced personnel who, collectively, are knowledgeable with respect to the Golimumab Product and
Centocor’s internal processes, to work with Schering-Plough
personnel to coordinate activities being performed by Centocor or
its Affiliates with regard to the CD Development
Program persuant to this Section 1.12 or any separate contract
entered into by the Parties as contemplated in Section 1.12(b) and (z) being named as the sponsor of clinical trials and/or holder of relevant
applications (such as INDs and Clinical Trial Applications under the Clinical Trial Directive) for
Crohn’s Disease if and to the extent that Schering-Plough and/or its Affiliates are not able to
perform such functions due to regulatory constraints.
(m) Selection of Clinical Study Sites. Schering-Plough will be responsible for the selection
of clinical study sites for the CD Development Program, and shall have the right to include study
sites in any country, including the United States, in any clinical studies conducted as part of the
CD Development Program; provided that prior to selecting any site in the United States,
Schering-Plough shall give Centocor prior written notice identifying such potential site. To the
extent that either (i) Centocor has clinical studies already underway at such site for a product
being
studied in Crohn’s Disease patients, or (ii) Centocor objects to such site based on reasonable quality or
compliance concerns stemming from Centocor’s legal obligations as marketing authorization holder
for the Golimumab Product, then Centocor shall so notify Schering-Plough to that effect and
Schering-Plough shall select a different clinical study site. If a United States site is selected,
Centocor shall be responsible for any corresponding FDA submissions. For purposes of this Section
1.12(m), a Centocor clinical study shall be considered “underway” at a given site only during the
period of time beginning on the effective date of the definitive contract with such study site for
the conduct of the study and ending on the date on which patient enrollment for the study at such
site has been completed.
(n) Agreement limited to Crohn’s Indication. The terms set forth above in Sections 1.12(a)
through (m) shall apply only to Schering-Plough’s CD Development Program and, if applicable,
commercialization of Golimumab Product for that indication in the Territory. Any efforts by the
Parties to develop other additional indications for any Product shall continue to be governed by
Section 2.1(c) of the Distribution Agreement with the specific terms for such development to be
agreed between the Parties as contemplated under Section 2.1(c).
1.13 Withdrawal of Arbitration Appeal. Centocor agrees that on or promptly after the
Amendment Date it will (i) execute a Dismissal Agreement (in the form attached hereto as Exhibit B)
pursuant to F.R.A.P. 42(b) withdrawing with prejudice and without
costs its appeal of the matter
captioned, Centocor, Inc. v. Schering-Plough, Ltd., No. 06-4995 (3d Cir.) (the “Appeal”) pending
before the United States Court of Appeals for the Third Circuit, (ii) pay any fees due to the court
with respect to the Appeal and execute any additional documents and/or perform or cause to be
performed any other reasonable actions that may be necessary to accomplish withdrawal of the
Appeal.
1.14 Golimumab Product License Grant. In order to facilitate Schering-Plough’s right
to participate in the development and commercialization of Golimumab Product on the terms set forth
in the Distribution Agreement (as amended hereby) and as contemplated under Section 12.1 of the
Distribution Agreement, Centocor and CNA Development agree to grant to Schering-Plough
certain license rights as set forth in a License Agreement to be executed by Centocor, CNA and
Schering-Plough on the date hereof, in the form of Exhibit B (the “Golimumab License Agreement”).
1.15 Failure to Achieve
the Trigger Date. In the event that the Trigger Date does not
occur and Schering-Plough’s rights to Remicade Product expire on September 1, 2014, then
Centocor shall cause its Affiliate, Cilag, to repay to Schering-Plough within thirty (30) days
after such date an amount equal to the lesser of (i) twenty-four
million seven hundred and fifty thousand dollars ($24,750,000) or
(ii) the aggregate total of all payments received by Cilag from
Schering-Plough pursuant to Section 1.9 of this Amendment Agreement.
1.16 Golimumab Supply Agreement. As soon as practicable after the Amendment Date
(and in any event prior to expiration of the CD Decision Period), the Parties will in good
faith negotiate and enter into a supply agreement with respect to bulk unlabeled Golimumab
Product (the “Golimumab Supply Agreement”). Such Golimumab Supply Agreement shall be
consistent with the terms of the Distribution Agreement, as amended hereby, and the
Remicade Supply Agreement, including for the avoidance of doubt, provisions to provide
that: (i) Golimumab Product will be supplied by Centocor or its designated Affiliate at an
initial supply price per unit to be determined by the Parties in a manner consistent with
Section 6.1 of the Distribution Agreement; (ii) the Product Committee will periodically
review and adjust the supply price for Golimumab Product as necessary in accordance with
Section 6.1 of the Distribution Agreement; and (iii) in the event that Centocor receives a
Packaging & Labeling Notice from Schering-Plough during the CD Decision Period, the
packaging and labeling of clinical supplies of Golimumab Product and placebo for the CD
Development Program shall be performed by Centocor on terms to be agreed. For clarity, the
Parties agree that determination of the initial supply price for Golimumab Product, and any
subsequent adjustments to the supply price, shall take into consideration the supply price
(and any adjustments to such price) for the Cilag Autoinjector. The foregoing
notwithstanding, for purposes of Contribution Income calculations, the actual Cost of Goods
Sold for Golimumab Product, without xxxx-up and subject to the application of any
applicable Golimumab COGS Cap, shall be used.
ARTICLE II
CONTINGENT AMENDMENTS, CLARIFICATIONS AND SUPPLEMENTAL AGREEMENTS
The amendments, clarifications and modifications agreements set forth in this Article II shall
become effective upon, and only upon, the date of the first Marketing Approval for Golimumab
Product in the European Union (the “Trigger Date”); provided,
however, that if no such Marketing
Approval has been obtained by September 1, 2014 (the “Cut-Off Date”) then the provisions of this
Article II shall lapse and have no further effect and the Trigger Date will be deemed not to have
occurred should such a Regulatory Approval for Golimumab Product be obtained in the European Union
after the Cut-Off Date:
2.1 Term of the Distribution Agreement. The Remicade Term is hereby extended to
expire on the later of (i) September 1, 2014 or (ii) the last day of the Golimumab Term.
2.2 Division of Contribution Income. The division of Contribution Income resulting
from Net Sales of Products in the Territory shall be governed by the terms set forth in Section 6.2
of the Distribution Agreement; provided that starting with Net Sales of Products for the 2010 Agreement Year and
for each Agreement Year thereafter, the percentage of Contribution Income to be allocated between
Schering-Plough and Centocor shall be as set forth below and the provisions of Section 6.2(c)
(including the $150 million sales threshold contained therein) shall no longer apply. For clarity,
the applicable percentage will be used to divide Contribution Income arising from all Net Sales of
Remicade Product and Net Sales of Golimumab Product in the Territory during the applicable
Agreement Year.
Contribution Income Split
| Agreement Year | S-P | Centocor | ||||||
2010 |
60 | % | 40 | % | ||||
2011 |
58 | % | 42 | % | ||||
2012 |
55 | % | 45 | % | ||||
2013 |
52 | % | 48 | % | ||||
2014 |
50 | % | 50 | % | ||||
All subsequent years |
50 | % | 50 | % | ||||
In the event that the Trigger Date occurs after January 1, 2010, the provisions of Section 6.2(c)
shall apply to the portion of the Agreement Year prior to the Trigger Date (with the $150 million
sales threshold pro-rated to the portion of the Agreement Year prior to the Trigger Date) and for
the remainder of such Agreement Year, the Contribution Income split specified above for such
Agreement Year shall apply.
2.3 Additional Third Party Royalties included in calculation of Contribution Income.
(a) Xxxxxxx Royalty. Royalties actually paid by or on behalf of Centocor to the Xxxxxxx
Institute (“Xxxxxxx”) pursuant to the Agreement between Centocor and Xxxxxxx, dated January 1, 1992
(as amended on July 29, 2004, the “Xxxxxxx Agreement”), based upon sales of Products in the Territory occurring on or after the Trigger
Date will be included in the calculation of Contribution Income for each of the relevant Products
in accordance with and subject to the terms set forth in Section 6.2(a)(i)
of the Distribution
Agreement. Centocor shall remain solely responsible for any and all royalties paid or payable to
Xxxxxxx based upon sales of Products in the Territory prior to the Trigger Date, and no such
amounts shall be included in the calculation of Contribution Income or otherwise subject to sharing
or reimbursement by Schering-Plough. In addition, in the event that Centocor at any time during
the remaining Term of the Distribution Agreement amends its agreement with Xxxxxxx in any way that
results in an increase in the royalty rate payable to Xxxxxxx on sales of any Product, unless and
until such amendment is approved in writing by Schering-Plough, Centocor shall be solely
responsible for the incremental increase in royalties which shall not be included in the
calculation of Contribution Income. For clarity, the foregoing approval requirement shall not be
construed to apply to changes in royalty amounts or calculations that result from labeling changes,
additional indications or royalty calculation methodology under Section 3.07 of the Xxxxxxx
Agreement, and not from an amendment entered into by Centocor and Xxxxxxx. The Parties agree that
to the extent royalties are payable under the Xxxxxxx Agreement on sales of more than one Product
in the Territory, the same methodology shall be used to determine eligible sales and to calculate
royalties due and payable for each of the relevant Products.
(b) Third Party Royalties on Golimumab Product. All third-party royalties due with respect to
sales of Golimumab Product will be included in the Contribution Income calculation and the
provisions of Section 6.2(a)(i) shall apply only to Remicade Product; provided that as of the
Trigger Date, Centocor shall not enter into any other additional agreements with third parties that
include provisions requiring the payment of license fees, milestones, royalties or other payments
relating to commercialization of Golimumab Product in the Territory without the prior consent of
Schering-Plough.
2.4 Cost of Goods Sold Definition. Effective as of the Trigger Date, the proviso in
the definition of “Cost of Goods Sold” shall be deleted and replaced with the following language:
“provided, however, that (i) the Cost of Goods Sold for finished Remicade Product will not exceed
the Remicade COGS Cap, as adjusted pursuant to Section 6.2(f) and (ii) commencing with the sixth
(6th) full Agreement Year after the First Golimumab Commercial Sale, the Cost of Goods
Sold for finished Golimumab Product will not exceed the Golimumab COGS Cap, as adjusted pursuant to
Section 6.2(g). For the avoidance of doubt, (i) the actual COGS for Golimumab Product (without any
cap) shall apply with respect to all Golimumab Product sales prior to the beginning of the sixth
full Agreement Year after the First Golimumab Commercial Sale and (ii) the Remicade COGS Cap and
any Golimumab COGS Cap shall not supersede or otherwise alter the caps on fill and finish and
packaging costs that are established in accordance with the cost neutrality (such cost neutrality
being determined based solely upon any impact on the Contribution Income calculation) obligations
of Section 5.1 of this Agreement. To the extent that Schering-Plough is or becomes responsible for
conducting fill and finish and/or packaging activities for a Product as a result of the exercise of
its rights under Section 5.1 of this Agreement it shall have the right to select the country(ies)
in which it conducts such activities in order to minimize Schering-Plough’s costs related
to such
Product(s); provided that it continues to satisfy the aforementioned cost neutrality
obligation.
2.5 Remicade COGS Adjustment. The following new Section 6.2(f) shall be inserted in
the Distribution Agreement:
“(f) Remicade Product COGS Adjustment. The Cost of Goods Sold for Contribution Income
purposes for Remicade Product shall be capped (the “Remicade COGS Cap”) at $[**] per gram, including
also the respective per gram and per vial caps for each manufacturing component in use as set forth
on Schedule 6.2(f) (the “Initial Cap”), until the Trigger Date. If the Trigger Date occurs prior
to January 1, 2010, then commencing with sales of Remicade Product by Schering-Plough in the
Territory after the Trigger Date, the Remicade COGS Cap shall be $[**] per gram through December 31, 2009. From January 1, 2010, until December 31, 2011, the Remicade COGS Cap shall be $[**]
plus the lesser of [**] percent ([**]%) of such amount or the adjustment in Centocor’s actual cost of
goods for the bulk portion during the 2009 Agreement Year. From January 1, 2012 and every two
years thereafter, the Remicade COGS Cap shall be similarly adjusted for the bulk portion by the
lesser of [**]% or the documented change in Centocor’s actual cost of goods for the bulk portion
during the immediately preceding Agreement Year. The Remicade COGS Cap so determined will be
reviewed by the parties in the 4th quarter of the year prior to the scheduled commencement of each
bi-annual revision. In the event that the Trigger Date does not occur prior to January 1, 2010,
the Initial Cap will continue to apply; provided, however that the above reset calculation will
continue to be made in parallel and upon the occurrence of the Trigger Date, the then prevailing
numeric result of such parallel calculation shall become the new Remicade COGS Cap and shall be
reviewed and reset bi-annually thereafter as described above. For
clarity, the Parties intend that
this parallel calculation of the cap shall commence in 2008 and be updated every two years in this
manner. The Parties agree that Cost of Goods Sold for the Remicade Product bulk portion for
Contribution Income purposes shall at all times be equal to the
lesser of actual Cost of Goods Sold or the then
current Remicade COGS Cap. In addition, the Remicade COGS Cap parallel calculation shall not
decline from any one year to the next, but instead shall only either remain the same as the prior
year or increase pursuant to the calculations described above. An example demonstrating the
Remicade COGS Cap calculation is set forth in Schedule 6.2(f) hereto.”
2.6 Golimumab COGS Adjustment. The following new Section 6.2(g) shall be inserted in
the Distribution Agreement:
“(g)
Golimumab Product COGS Adjustment. The Cost of Goods Sold for
Contribution Income purposes for Golimumab Product shall be uncapped and reflect the actual Cost of Goods Sold for
the first five full years after the Trigger Date. Commencing with the sixth (6th) full
Agreement Year after the Trigger Date, the Cost of Goods Sold for
Contribution Income purposes for finished Golimumab Product shall be capped (the “Golimumab COGS Cap”) at the lesser of (x) the actual Cost of Goods Sold for
finished Golimumab Product during the fifth (5th) full Agreement Year after the
Trigger
Date escalated by the CPI-U Index Average Change (as defined below) since the beginning of such
sixth (6th) Agreement Year after the Trigger Date (i.e., Column B on Schedule 6.2(g) and
(y) the actual Cost of Goods Sold for finished Golimumab Product during the prior Agreement Year
adjusted by the CPI-U Index Average Change since the beginning of the prior Agreement Year (i.e.,
Column C on Schedule 6.2(g)). A sample calculation demonstrating the Golimumab COGS Cap adjustment
process is set forth in Schedule 6.2(g) hereto. The Parties may in the future agree to utilize an
alternative measure to the CPI-U Index Average Change. The Parties agree that Cost of Goods Sold
for Golimumab Product for Contribution Income purposes shall at all times be the lesser of actual
Cost of Goods Sold or the then current Golimumab COGS Cap. For purposes of this clause (g), “CPI-U Index Average
Change” means the simple mathematical average of the cumulative year-to-year changes in the
following two indices published by the U.S. Department of Labor, Bureau of Labor Statistics: (1)
the CPI-U, US City Average, All Items and (2) the CPI-U, US City Average, All Items Less Food and
Energy. In other words, the percentage change in the two indices will be added together and then
divided by two. ”
2.7 No Product-Specific Termination. Without limitation to any other rights or
remedies available under the Distribution Agreement, the Parties confirm and agree that in
assessing whether a breach with respect to either Remicade Product or Golimumab Product is
“material” for purposes of the Distribution Agreement termination rights under Section 8.2(a), the
breach must be material to the Remicade Product and Golimumab Product development and
commercialization efforts collectively and not individually. Other than as expressly provided in
this Amendment Agreement with respect to the failure to achieve the Trigger Date, the development
and commercialization rights with respect to Remicade Product and Golimumab Product may not be
separately terminated unless specifically agreed to by Parties in writing.
ARTICLE III
MISCELLANEOUS
3.1 Definitions. All capitalized terms used in this Amendment Agreement that are
not otherwise defined herein shall have the meanings set forth in the Distribution Agreement.
3.2 Access to Records. For clarity, the provisions of Section 6.4 of the Distribution
Agreement shall also apply to the books and records of the Parties related to all matters provided
for in this Amendment Agreement; provided that the limitation therein restricting audits to the
24-month period prior to the date of request for access shall not apply in connection with any
audit under Section 1.12(g) or Section 1.9 of this Amendment Agreement. An audit under Section
1.12(g) or Section 1.9 shall also not count toward the single inspection that each Party is
permitted per calendar year under Section 6.4 of the Distribution Agreement.
3.3 Effect of Amendment Agreement; Joinder. Except as expressly modified or amended
by or otherwise directly in conflict with this Amendment Agreement, the Distribution Agreement and
License Agreement all side letters and supplementary agreements executed in connection therewith
shall remain in full force and effect in accordance with their stated terms. There are no
agreements, restrictions, promises, warranties, covenants or undertakings regarding the matters
addressed in this Amendment Agreement other than those expressly set forth or referred to herein.
The Distribution Agreement and License Agreement, as modified, amended, clarified or modified by
this Amendment Agreement, supersede all prior agreements and undertakings between the parties with
respect to the subject matters addressed in this Amendment Agreement.
3.4 Non-Waiver. By entering into this Amendment Agreement, neither Schering-Plough
nor Centocor waives or concedes any interpretation, position, right, claim or defense that pertains
to the Distribution Agreement, Remicade Supply Agreement or any other related agreement including,
but not limited to, any interpretation, position, right, claim or defense with respect to matters
not specifically addressed herein.
3.5 Expenses. Each party shall bear the expenses and costs, including attorney fees,
it incurs in connection with the preparation of this Amendment Agreement.
3.6 Counterparts. This Amendment Agreement may be executed by the parties in separate
counterparts, each of which when so executed and delivered is deemed an original. All such
counterparts together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to be signed by their
duly authorized representatives as of the date and year first written above.
| CENTOCOR, INC. | SCHERING-PLOUGH (IRELAND) COMPANY | ||||||
By:
|
By: | ||||||
| Name: | Name: | ||||||
| Title: | Title: | ||||||
| Date: December 20, 2007 | Date: December 20, 2007 | ||||||
| CNA DEVELOPMENT, LLC | |||||||
By:
|
|||||||
| Name: | |||||||
| Title: | |||||||
| Date: December 20, 2007 | |||||||
