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Certain Confidential Information has been omitted
and filed separately with the Commission
Exhibit 10.1
genzyme CONFIDENTIAL
SEVELAMER SUPPLY AGREEMENT
GENZYME CORPORATION & RENAGEL LLC
TERM SHEET: MARCH 13, 2000
BACKGROUND
The terms attached were developed by Genzyme in response to the RenaGel LLC's
Request for Proposals (RFP) of October 1999 for a [ * ] manufacturing capacity
facility (Appendix A). They reflect Genzyme's response to the RFP in our
proposal of November 9th and the revised terms of the December 16, 1999 update.
On December 16, 1999 Genzyme was informed by the LLC of our selection as the
`winner' of the RFP process for the Large Scale Plant (LSP).
Consequently, the terms below serve as the basis for a definitive supply
agreement between Genzyme and the LLC. Genzyme and the LLC each hereby
acknowledge that this Term Sheet is a legally binding and enforceable obligation
of each of the parties.
It is understood that there will be two agreements relating to the LSP. The
first agreement will be between Genzyme and the LLC for the supply of sevelamer
for the LLC's Territory. The second agreement will be between Genzyme and Chugai
Pharmaceutical Co. Ltd. for the supply of sevelamer for the Chugai Territory.
The two agreements will be prepared to work together with respect to maximum
capacity, minimum purchase commitments and volume driven pricing.
The terms below reflect discussions between Xxxx Xxxxxxxx and Xxx Xxxxx on Jan.
17th, 25th, 26th, Feb 7th, 15th, 22nd, March 3rd and 9th.
TERMS:
1. The Development and Capital costs for the LSP will be paid by Genzyme.
2. The project will start in January 2000 and Genzyme will use its
commercially reasonable and diligent efforts to complete the design,
construction, commission, validation and regulatory approval of the LSP by
mid-2002.
3. The LLC requests a 50kg sample of Sevelamer manufactured by the proposed
process of the LSP for delivery by March 2000, principally for tableting
studies to be conducted. As per the November 9th proposal, Genzyme requests
reimbursement from the LLC for the incremental costs associated with
providing this sample, currently estimated at [ * ], and will not exceed
[ * ]. Genzyme does not
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propose [ * ] the provision of this sample.
The 50kg sample will be used for tableting studies at [ * ]. The sample
will not be produced to GMP and can only be used for non-human use. The
sample must meet the following criteria:
I. Meet the current release specifications for Sevelamer API
II. Be made as far as possible by the proposed process
GelTex will be responsible for the formulation and tableting studies to be
conducted by [ * ]. In the event that the material does not meet the
tableting requirements, then GelTex will identify the areas of concern and
work with Genzyme to produce a sample to meet the requirements. Genzyme
will bear the cost associated with its efforts to develop a process to
produce a sample that meets the tableting requirements. The incremental
costs of actually producing additional material once the development work
is complete will be paid for by the LLC. Genzyme will not [ * ] to make
this material.
4. The supply agreement will be a "Take or Pay" contract for [ * ] from
facility approval, as per the RFP. At [ * ] nominal capacity, the LLC
commits to the following minimum off take:
[ * ]
Not withstanding the above, the minimum quantities to which Xxxxxx commits
in its contract with Genzyme will serve to reduce the minimum commitment of
the LLC on a ton for ton basis (i.e., if Chugai commits to a minimum take
in 2003 of [ * ], the LLC minimum for 2003 shall be [ * ].).
5. The product price to the LLC and Chugai will be:
[ * ]
For volumes between [ * ] the price will be adjusted as per the
price schedule included in the December 16th update. All quantities
purchased by Chugai will be aggregated with those purchased by the LLC in
order to determine the appropriate product price for the LLC and Chugai.
The "Take or Pay" agreement commits the LLC to take a minimum [ * ]
output per year (less any minimum amount to which Chugai is or becomes
contractually
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committed) or pay the fixed price (less raw materials cost) if less output
is required in a given year.
6. All prices are based on 1999 costs; future costs will be adjusted using an
agreed price index.
7. The prices quoted are based on the cost of [ * ], [ * ]. The prices are
also based on a ratio of [ * ] in the process. Genzyme will be
responsible for the freight & duty cost of [ * ] to the Haverhill site.
GelTex will be responsible for securing a source of supply of [ * ]. The
prices will be adjusted pro rata to reflect any change in the cost of
[ * ]. The prices will not be adjusted for any change in the use ratio of
[ * ].
GelTex will examine the option of a European [ * ] supply in order to
reduce material cost and the freight and duty cost for [ * ].
8. The estimated cost of manufacturing Sevelamer is made up of a variable cost
and a fixed cost. The variable cost includes materials, utilities,
consumables, direct production labour and depreciation. The fixed cost
includes other labour, site overheads and UK management overheads. Genzyme
agrees to [ * ].
9. The existing supply agreement between the LLC and Genzyme (dated Jan 1st
1998) remains in effect, with termination scheduled for [ * ].
Genzyme plans to transition all production into the LSP upon approval, i.e.
mid-2002. Therefore, the LLC's purchase commitment in the years 2002 and
2003 are expected to be as follows (subject to adjustment for Xxxxxx's
commitment, as discussed above):
[ * ]
10. Either party can terminate the LSP agreement by giving at least [ * ]
written notice, effective on [ * ], but not before completion of [ * ]
of output from the LSP after facility approval.
11. The LLC and Chugai will each grant to Genzyme the right of first refusal to
supply the aggregate requirements of the LLC and Chugai above [ * ]
("Excess Requirements"). In connection therewith, the LLC and Chugai,
either jointly or separately as suits the particular needs of the LLC and
Chugai, shall be allowed to issue an RFP to obtain bids from third parties
for any Excess Requirements and shall provide Genzyme with a description of
the most favourable terms obtained. Genzyme shall respond to the terms
provided in a timely manner, and shall use commercially reasonable and
diligent efforts to respond in the time frame reasonably requested by the
LLC and/or Chugai, as the case may be. If Genzyme notifies the LLC and/or
Chugai, as the case may be, that it is able to match such terms for the
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Excess Requirements specified in the RFP, then Genzyme shall have the right
to manufacture such Excess Requirements. If Genzyme notifies the LLC and
/or Chugai, as the case may be, that it is unable to match the most
favourable terms obtained for such Excess Requirements, then the LLC and/or
Chugai, as the case may be, shall have the right to enter into a supply
agreement with the third party that submitted such terms; provided,
however, that the LLC and/or Chugai, as the case may be, may not offer such
third party more favorable terms than those set forth in the bid without
first offering such terms to Genzyme and providing Genzyme an opportunity
to accept such terms. Genzyme's right of first refusal shall remain in
effect for any subsequent Excess Requirements of the LLC and Chugai. For
the avoidance of doubt, it is understood that Genzyme will supply the LLC
and Xxxxxx's aggregate requirements up to and including [ * ],
regardless of the allocation of amounts between the two companies in any
given year, and the right of first refusal described in this section
relates to the LLC and Xxxxxx's aggregate needs in excess of [ * ].
12. Genzyme will grant the LLC a non-exclusive, worldwide, [ * ] license,
with the right to grant sublicenses to its contract manufacturers (without
the right allow such parties to grant further sublicenses), to use the
technology developed by Genzyme for the manufacture of Sevelamer in the LSP
to manufacture Sevelamer; provided, however, that the LLC will not have the
right to grant sublicenses to Chugai, Kirin Brewery Co. Ltd. or any other
party having the right to develop and/or commercialize products comprising
Sevelamer. Genzyme will also grant GelTex a non-exclusive, worldwide,
[ * ] license to use such technology for all applications other than
Sevelamer production applications for Renagel.
13. All prices have been developed using an exchange rate of $ 1.60 per
Sterling Pound. On the first business day of each quarter, the exchange
rate (US $:(pound)) published in the Financial Times will be used to
determine the price of Sevelamer for that calendar quarter.
14. Genzyme reserves the right to develop and maintain master files with
regulatory authorities in support of the manufacture of Sevelamer at its
Haverhill facilities and to provide appropriate access to these files for
drug registrations with regulatory authorities. The LLC will use
commercially reasonable and diligent efforts to submit the appropriate
regulatory applications for the territories in an expeditious manner.
15. Genzyme and Xxxxxx will also negotiate a supply agreement for the LSP. In
connection with that agreement, Xxxxxx has requested a 150 kg sample of
Sevelamer manufactured by the proposed process of the LSP for delivery by
March, '00, principally for tableting studies to be conducted. As per the
November 9th proposal, Genzyme requests reimbursement from Chugai for the
incremental costs associated with providing this sample, currently
estimated as [ * ], and will not exceed [ * ]. Genzyme does not propose
[ * ] the provision of this sample.
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The 150kg sample will be used for tableting studies at Chugai. The sample
will not be produced to GMP and can only be used for non-human use. The
sample must meet the following criteria:
I. Meet the current release specifications for Sevelamer API
II. Be made as far as possible by the proposed process
Xxxxxx will be responsible for the formulation and tableting studies. In
the event that the material does not meet these requirements, then Chugai
will identify the areas of concern and work with Genzyme to produce a
sample to meet the requirements. Genzyme will bear the cost associated with
its efforts to develop a process to produce a sample that meets the
tableting requirements. The incremental costs of actually producing
additional material once the development work is complete, will be paid for
by Xxxxxx. The incremental costs to actually produce additional material
once the development efforts have been completed will be paid by Xxxxxx.
Genzyme will not [ * ] to make this material.
16. Genzyme reserves the right to develop and maintain master files with
regulatory authorities in Chugai's Territory in support of the manufacture
of Sevelamer at its Haverhill facilities and to provide appropriate access
to these files for drug registrations with regulatory authorities. Chugai
will use commercially reasonable and diligent efforts to submit the
appropriate regulatory applications for the territories in an expeditious
manner.
Dated: March 16, 2000
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RENAGEL LLC GENZYME CORPORATION
By: GelTex Pharmaceuticals, Inc., its Member By: /s/ Xxxxx Xxxxxxxxx
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By: /s/ Xxxx Xxxxxxxxx Name: Xxxxx Xxxxxxxxx
--------------------------- Title: Senior Vice President,
Name: Xxxx Xxxxxxxxx Operations
Title: President and CEO
By: Genzyme Corporation, its Member
By: /s/ X. Xxx xxx Xxxx
--------------------------
Name: X. Xxx xxx Xxxx
Title: Executive Vice President
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