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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A-2
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: MARCH 31, 1996 Commission File Number: 0-19319
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VERTEX PHARMACEUTICALS INCORPORATED
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS
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(State or other jurisdiction incorporation or organization)
04-3039129
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(I.R.S. Employer Identification No.)
130 WAVERLY STREET, CAMBRIDGE, MASSACHUSETTS 02139-4242
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(Address of principal executive offices, including zip code)
617-577-6000
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 9, 1996
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Common Stock, par value $.01 per share 17,368,453
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PART II
OTHER INFORMATION
Item 6. Exhibits:
10.1 License Agreement and Supply Agreement, both dated May 9,
1996, between the Registrant and BioChem Pharma
(International) (filed herewith with certain confidential
information omitted).
10.2 Research and Development Agreement, dated April 13, 1993,
between the Registrant and Kissei Pharmaceutical Co., Ltd.*
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*Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q/A for the
quarter ended March 31, 1996 and incorporated herein by reference. The
Registrant omitted portions of the Research and Development Agreement for which
it requested confidential treatment from the Securities and Exchange Commission.
The portions of that agreement for which confidential treatment has been
requested have been marked "Confidential Information Omitted" and have been
filed separately in unredacted form with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned thereunto duly authorized.
VERTEX PHARMACEUTICALS INCORPORATED
Date: July 22, 1996 /s/ Thomas G. Auchincloss, Jr.
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Thomas G. Auchincloss, Jr.
Senior Director of Finance and Treasurer
(Principal Financial Officer)
/s/ Hans D. van Houte
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Hans D. van Houte
Controller
(Principal Accounting Officer)
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Vertex Pharmaceuticals Incorporated has omitted portions of the attached License
Agreement and Supply Agreement for which it requested confidential treatment
from the Securities and Exchange Commission. The portions of those agreements
for which confidential treatment has been requested have been marked
"Confidential Information Omitted" and have been filed separately in unredacted
form with the Securities and Exchange Commission.
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Exhibit 10.1
CANCER MULTIDRUG RESISTANCE PROGRAM
LICENSE AGREEMENT
between
VERTEX PHARMACEUTICALS INCORPORATED
and
BIOCHEM PHARMA (INTERNATIONAL) INC.
MAY 9, 1996
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LICENSE AGREEMENT
This Agreement is made and entered into as of May 9th, 1996 between
Vertex Pharmaceuticals Incorporated (hereinafter "VERTEX"), a Massachusetts
corporation with principal offices at 130 Waverly Street, Cambridge, MA
02139-4211, USA, and BioChem Pharma (International) Inc. (hereinafter
"BIOCHEM"), a Canadian corporation with its registered office located at
Commerce Court West, Suite 5300, Toronto, Ontario, M5L 2B9, CANADA.
INTRODUCTION
WHEREAS, VERTEX has designed a certain chemical compound ("VX-710")
which appears to inhibit cancer-related multidrug resistance, and which BIOCHEM
wishes to license, develop and commercialize as a pharmaceutical product;
WHEREAS, BIOCHEM wishes to obtain, and VERTEX is willing, and has the
unrestricted right, to grant to BIOCHEM in accordance with the terms and
conditions set forth herein, the right to license, develop and commercialize in
the Territory products incorporating VX-710.
NOW THEREFORE, in consideration of the foregoing premises, the parties
agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Affiliate" shall mean at any time, any person or legal entity,
then directly or indirectly controlled by, controlling or under common control
with the party with respect to which this term is associated, and shall include,
without limitation, any person or legal entity which owns, either of record or
beneficially, more than fifty (50%) percent of the voting stock of any party
hereto, or more than fifty (50%) percent of the voting stock of which is owned
by any party hereto. The term "control" as referenced in the preceding sentence
shall include the power to direct decisions of another person or legal entity,
including the power to direct the management and policies of another person or
legal entity, whether by reason of ownership or contract.
1.2 "CANCER MDR" shall mean cancer-related multidrug resistance
associated with (i) the expression of multidrug resistance 1 gene (MDR1), (ii)
its product P-glycoprotein (P-gp), (iii) multidrug resistance associated protein
(MRP) or (iv) other proteins associated with MDR in cancer patients.
1.3 "Compounds" shall mean small molecule inhibitors of CANCER MDR.
License Agreement - Page 1
CONFIDENTIAL - May 9, 1996
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1.4 "Development Plan" shall mean the detailed written plan which
expands upon the Summary Development Plan and outlines the development strategy
for Licensed Products in the Territory as prepared by the Development
Subcommittee in accordance with Section 3.4 of this Agreement.
1.5 "Development Program" shall mean activities associated with
development of Licensed Products for sale in the Territory, including but not
limited to (a) preclinical studies of VX-710, to the extent necessary for
regulatory approval of VX-710 in the Territory; (b) formulation of Licensed
Products for use in clinical trials, to the extent a formulation other than
VERTEX's standard formulation is required by BIOCHEM; (c) planning,
implementation, evaluation and administration of human clinical trials in the
Territory; and (d) preparation and submission of applications for regulatory
approval.
1.6 "Due Diligence" shall mean all reasonable efforts consistent with
prudent business judgment.
1.7 "Effective Date" shall mean the effective date of this Agreement as
set forth on the first page hereof.
1.8 "Field" shall mean the use of Licensed Products in humans.
1.9 "First Commercial Sale" shall mean the first sale of a Licensed
Product by BIOCHEM, or an Affiliate or sublicensee of BIOCHEM, in the Territory
to a third party following issuance of an NOC (or any successor regulatory
approval mechanism) with respect to the Licensed Product in the Territory.
1.10 "HPB" shall mean the Health Protection Branch, Health Canada, and
any successor or replacement entity thereof.
1.11 "Licensed Patent" shall mean any claim in the Field to VX-710
contained in any VERTEX Patent.
1.12 "Licensed Product" shall mean VX-710, or a pharmaceutical product
containing VX-710.
1.13 "NOC" shall mean a Notice of Compliance issued by HPB (or any
successor regulatory approval mechanism), signifying regulatory approval of a
Licensed Product for which an NDS has been filed.
1.14 "NDA" shall mean a New Drug Application (or any successor
regulatory approval mechanism) filed by or on behalf of VERTEX with the United
States Food and Drug Administration for the Licensed Product.
1.15 "NDS" shall mean a New Drug Submission (or any successor
regulatory approval mechanism) filed by or on behalf of BIOCHEM with HPB for a
License Product.
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CONFIDENTIAL - May 9, 1996
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1.16 "Phase II Initiation Date" shall mean the commencement date of the
initial well-controlled clinical trial (a "Phase II Clinical Trial") of a
Licensed Product sponsored by BIOCHEM, its Affiliates or its sublicensees. For
purposes of the preceding sentence, a Phase II Clinical Trial shall be deemed to
have commenced when a Licensed Product is first administered to any patient
enrolled in a clinical trial conducted by or on behalf of BIOCHEM in the
Territory.
1.17 "Phase III Initiation Date" shall mean the commencement date of a
human clinical trial intended to generate data concerning the safety and
efficacy of a Licensed Product sufficient to support an NDS of the Licensed
Product in the Territory. The date of initiation of this trial shall be the date
upon which a Licensed Product is first administered to any patient enrolled in
that trial.
1.18 "Summary Development Plan" shall mean the plan prepared by
BIOCHEM, approved by VERTEX and attached hereto as Exhibit A, which sets forth
in summary form the design of BIOCHEM's planned clinical studies and its
strategy for obtaining regulatory approval for the sale of Licensed Products in
the Territory.
1.19 "Supply Agreement" shall mean that certain Supply Agreement of
even date herewith by and between VERTEX and BIOCHEM, attached as Exhibit B
hereto.
1.20 "Territory" shall mean Canada and all of its territories,
provinces and possessions as the same exist as of the Effective Date, and any
political entities that are derived therefrom.
1.21 "Valid Claim" means a claim of an issued and unexpired Licensed
Patent.
1.22 "VX-710" shall mean C34H41N3O7x2(C6H8O7), the Compound described
in the VERTEX Patents that VERTEX is currently developing for the prevention and
treatment of CANCER MDR, and all Improvements thereto (as defined in Section 3.6
(c)(i) hereof).
1.23 "VERTEX Patents" shall mean any existing or later-filed patents or
patent applications filed by or on behalf of VERTEX or any of its Affiliates in
the Territory containing claims describing VX-710 or a Licensed Product,
including any and all divisions, continuations, continuations-in-part,
extensions, substitutions, renewals, confirmations, supplementary protection
certificates, registrations, revalidations, reissues or additions of or to any
of the aforesaid patent and patent applications. A list of VERTEX Patents as of
the Effective Date is included on Schedule 1.23 hereto. VERTEX will keep BIOCHEM
informed of additions and amendments thereto.
1.24 "VERTEX Technical Information" shall mean all know-how and
proprietary information of VERTEX, its Affiliates and, to the extent
permissible, its licensees (other than BIOCHEM) relating to the development or
use of a Licensed Product, including but not limited to processes, techniques,
methods, products, materials, and
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CONFIDENTIAL - May 9, 1996
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compositions, and including any know-how or proprietary information lawfully
obtained from a third party without restriction on disclosure to BIOCHEM.
1.25 "BIOCHEM Technical Information" shall mean all know-how and
proprietary information of BIOCHEM, its Affiliates and its sublicensees relating
to the development or use of a Licensed Product, including but not limited to
processes, techniques, methods, products, materials, and compositions and
including any know-how or proprietary information lawfully obtained from a third
party without restriction on disclosure to VERTEX.
1.26 "Worldwide VX-710 Program" shall mean VERTEX's overall
development, manufacturing, marketing and commercialization program for VX-710
and products incorporating VX-710 throughout the world as such program may be
revised and amended from time to time (any such revisions and amendments to be
provided to BIOCHEM as soon as practicable).
ARTICLE II
LICENSE
2.1 GRANT TO BIOCHEM. VERTEX hereby grants to BIOCHEM the sole and
exclusive right in the Territory under the Licensed Patents, even as to VERTEX,
to seek regulatory approval from HPB for, and to develop, formulate, market and
sell Licensed Products in the Field, and to use VERTEX Technical Information in
connection therewith. The above-referenced license to develop, formulate, market
and sell Licensed Products shall not extend to manufacture or sale of VX-710 in
an unformulated, bulk form, except for sales to a sublicensee of BIOCHEM
permitted under this Agreement for resale as Licensed Products. BIOCHEM shall
have the right to grant sublicenses under the Licensed Patents on terms
consistent with this Agreement, provided that BIOCHEM shall forthwith notify
VERTEX of the grant of any such sublicense, together with the name and address
of any such sublicensee, shall provide VERTEX with a summary of the principal
terms, with financial terms redacted, of any such sublicense, shall promptly
take all reasonable steps in the event of the breach of any such sublicense by
the sublicensee to enforce the same, and in the event of a breach of any such
sublicense shall, if so requested by VERTEX, terminate that sublicense in
accordance with the procedures prescribed therein. BIOCHEM shall not permit any
third party (including BIOCHEM subcontractors or sublicensees) to use VERTEX
Technical Information without provisions safeguarding confidentiality equivalent
to those provided in this Agreement. Promptly following the execution of this
Agreement, and continuously during the term hereof, VERTEX shall, with Due
Diligence, furnish VERTEX Technical Information and information concerning
VERTEX Patents to BIOCHEM as such information becomes available.
2.2 DUE DILIGENCE.
(a) BIOCHEM shall promptly commence the Development Program in
the Territory with respect to VX-710 and shall use Due Diligence to effect
introduction of Licensed Products into the commercial market in the Territory as
soon as practicable following receipt of an NOC for such Licensed Product,
consistent with the reasonable requirements of the Development Program.
Following First Commercial Sale of a Licensed Product and until
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CONFIDENTIAL - May 9, 1996
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the expiration of the license granted with respect to such Licensed Product,
BIOCHEM shall endeavor to keep Licensed Products reasonably available to the
public in the Territory.
(b) Subject to the arbitration provisions of Section 11.2 hereof,
VERTEX shall have the right to terminate BIOCHEM's rights under this License
Agreement upon forty-five (45) days' written notice to BIOCHEM (which notice
VERTEX will provide to the members of the Management Committee for review and
comments at least fifteen (15) days prior to delivery to BIOCHEM), if BIOCHEM or
an Affiliate is not demonstrably and with Due Diligence engaged in development
or marketing programs, as appropriate, directed toward placing Licensed Products
into commercial use in the Territory, or, following product introduction in the
Territory, BIOCHEM or its Affiliate is not keeping Licensed Products reasonably
available to the public therein. In making this determination there shall be
taken into account the normal course of such programs conducted in accordance
with sound and reasonable business practices and judgment. VERTEX shall also
have the right to terminate BIOCHEM's license hereunder in the Territory at any
time upon sixty (60) days' written notice to BIOCHEM if, within three (3) months
from the date of issuance of an NOC for the initial sale of Licensed Products in
the Territory, neither BIOCHEM nor its Affiliates have put Licensed Products
into commercial use in the Territory; provided that the three (3) month period
referenced above shall be extended by the length of any period during which
VERTEX shall have failed to provide supplies of VX-710, as provided for in the
Supply Agreement, sufficient for commercial launch of Licensed Products in the
Territory.
(c) VERTEX shall use Due Diligence in conducting development of
VX-710 in the United States, and shall undertake with Due Diligence to provide
BIOCHEM with the overall development and commercialization plan for VX-710
reflected in its Worldwide VX-710 Program, as such Program may be revised and
amended from time to time.
ARTICLE III
DEVELOPMENT
3.1 MANAGEMENT COMMITTEE. Upon the execution of this Agreement, VERTEX
and BIOCHEM will establish a Management Committee which shall consist of four
(4) persons (or such other number as may be agreed by the Management Committee
from time to time) as follows: two (2) persons shall be designated from time to
time by VERTEX and two (2) persons shall be designated from time to time by
BIOCHEM. The Management Committee may establish such sub-committees as it may
deem appropriate in connection with development and commercialization of
Licensed Products, including the Development Subcommittee referenced in Section
3.3 hereof, which will be established by the Management Committee upon the
execution of this Agreement. The Management Committee shall meet formally at
least once annually in person and at such other times by teleconference as the
members of the Management Committee may agree. The first such meeting shall take
place at VERTEX's principal offices in Massachusetts, the second at BIOCHEM's
principal offices in Quebec and alternatively thereafter between each location
or at such other location or locations as the Management Committee shall
specify. The Management Committee shall have the following responsibilities:
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(a) To oversee the general conduct and administration of this
Agreement; to review and, if necessary, revise the overall marketing and
commercialization strategy for Licensed Products in the Territory; to coordinate
development, marketing and commercialization activities in the Territory; to
review the conduct of development, marketing and commercialization efforts for
Licensed Products in the Territory;
(b) To receive and review the business plan and budget referenced
in Section 3.2 below in connection with the launch of Licensed Products;
(c) To assist in coordinating the marketing and commercialization
of Licensed Products in the Territory as set forth in the Worldwide VX-710
Program.
In general, the parties expect that decisions made by the Management
Committee will be by mutual agreement of the members. If disputes arise
regarding matters properly before the Management Committee and the disputes
cannot be resolved by the members of that Committee, the parties will attempt to
resolve those disputes by direct discussions, in person if appropriate, between
the Chief Executive Officers of VERTEX and BIOCHEM. The parties will resolve any
disagreements with respect to overall marketing and commercialization strategy
in a manner which is not inconsistent with VERTEX's overall worldwide strategy
for marketing and commercialization of VX-710 as set forth in the Worldwide
VX-710 Program. Failing agreement on matters requiring agreement, the parties
will seek arbitration in accordance with Article XI hereof.
3.2 MARKETING ACTIVITIES. BIOCHEM shall be responsible for the
marketing, sale and distribution of Licensed Products in the Territory. BIOCHEM
will attempt in good faith to coordinate its marketing efforts with any overall
marketing plan for VX-710 which may be contemplated by VERTEX and its other
licensees in accordance with the Worldwide VX-710 Program. As soon as
practicable, but in any case at least six (6) months before the earliest
projected date for initial commercial launch of a Licensed Product in the
Territory, BIOCHEM will prepare and submit to the Management Committee for its
review a business plan and budgets with respect to launch and subsequent
commercial sale of the Licensed Product. The business plan and budgets will be
periodically updated and distributed to the Management Committee to reflect
materially changed circumstances as they occur. BIOCHEM and VERTEX will discuss
the form and content of all marketing aids and support materials during their
development, and BIOCHEM will use Due Diligence to provide final copies of all
such marketing aids and support materials to VERTEX at least thirty (30) days
prior to publication. BIOCHEM will attempt in good faith to ensure that all of
its marketing aids and support materials are not inconsistent with the overall
worldwide marketing plan for VX-710 as set forth in the Worldwide VX-710
Program.
3.3 DEVELOPMENT SUBCOMMITTEE. Upon the execution of this Agreement,
VERTEX and BIOCHEM will establish a Development Subcommittee of the Management
Committee which shall consist of six (6) persons (or such
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other number as may be agreed by the Development Subcommittee from time to time)
as follows: three (3) persons shall be designated from time to time by VERTEX
and three (3) persons shall be designated from time to time by BIOCHEM. The
Development Subcommittee may establish such sub-committees as it may deem
appropriate in connection with development activities with respect to Licensed
Products. The Development Subcommittee shall prepare the Development Plan
(defined in Section 3.4 below) and shall meet formally on a quarterly basis,
twice annually at VERTEX's principal offices in Massachusetts and twice annually
at BIOCHEM's principal offices in Quebec or with such other frequency, and at
such time and location, as may be established by the Development Subcommittee,
for the following purposes:
(a) To determine, review and, if necessary, revise the overall
development strategy for Licensed Products in the Territory, as set forth in the
Development Plan; to oversee and coordinate development activities; to assist
with the implementation and fulfillment of the Supply Agreement and in resolving
any issues which arise thereunder; and to review the conduct of development
efforts for Licensed Products in the Territory;
(b) To receive and review reports by VERTEX and BIOCHEM, which
shall be prepared by each party and submitted to the other party and to the
Development Subcommittee on a quarterly basis within thirty (30) days after the
end of the quarter, setting forth in reasonable detail, with supporting data,
the results of work performed during the preceding calendar quarter under the
Development Program by the party submitting the report, including any planned or
filed patent applications covering Licensed Products; and
(c) To assist in coordinating scientific interactions and
resolving issues between VERTEX and BIOCHEM during the course of the Development
Program.
In general, the parties expect that decisions made by the Development
Subcommittee will be by mutual agreement of the members. If disputes arise which
cannot be resolved by the members, the parties will attempt to resolve those
disputes by direct discussions, in person if appropriate, between the Chief
Executive Officers of VERTEX and BIOCHEM. Any disagreements which are not so
resolved with respect to overall development strategy and the coordination and
conduct of development activities will be determined by VERTEX, acting
reasonably and in good faith. Failing agreement on other matters requiring
agreement, the parties will seek arbitration in accordance with Article XI
hereof.
3.4 DEVELOPMENT PLAN. Development of Licensed Products shall proceed
substantially in accordance with the Summary Development Plan (the "Summary
Development Plan") attached to this Agreement as Exhibit A, as the Summary
Development Plan may be subsequently modified by the Development Plan referenced
below, and as either may be subsequently modified by the Development
Subcommittee. Within one (1) month of the execution of this Agreement, the
Development Subcommittee shall prepare and distribute to the Chief Executive
Officers of VERTEX and BIOCHEM a fully detailed plan for the Development Program
(the "Development Plan"), setting forth in full the
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development strategies and planned activities of the parties in connection with
the development of Licensed Products in the Territory. The Development Plan
shall include, but shall not be limited to, projections of required supplies of
VX-710 for clinical trials in the Territory. The Development Plan will be
designed to effect introduction of Licensed Product into formal clinical trials
in the Territory as soon as reasonably practicable, consistent with the overall
development plan for VX-710 previously adopted by VERTEX for development outside
the Territory as set forth in the Worldwide VX-710 Program. BIOCHEM's
development strategies and activities shall be coordinated and consistent with
VERTEX's worldwide development strategy for VX-710.
3.5 DEVELOPMENT COSTS. VERTEX is currently conducting a preclinical and
clinical trial program outside the Territory with VX-710, which is intended to
generate preclinical and clinical data to support registration of VX-710 and
products incorporating VX-710 outside the Territory in the Worldwide VX-710
Program. VERTEX will provide BIOCHEM with all data and results at its disposal
from the Worldwide VX-710 Program in the Field, and will provide BIOCHEM with
access to all of its regulatory filings at its disposal, and copies of any such
regulatory filings upon request, including its NDA and any other submissions
made in countries outside the United States and the Territory. VERTEX will use
reasonable efforts to obtain unrestricted access to any such data, results and
filings which are under the control of third party partners or collaborators of
VERTEX. At the request of BIOCHEM, VERTEX shall provide, or shall cause its
licensees other than BIOCHEM to provide, to HPB a letter authorizing
cross-reference to such regulatory filings for the purpose of supporting
regulatory filings in the Territory with respect to Licensed Products. BIOCHEM
will bear the cost of and be responsible for conducting the Development Program
in the Territory, including, without limitation, completing any preclinical and
clinical studies which are not part of the Worldwide VX-710 Program but which
are necessary or advisable in order to obtain regulatory approval of Licensed
Products in the Territory. If VERTEX should request BIOCHEM to conduct
development activities which are not required for regulatory approval for the
marketing of Licensed Products in the Territory, VERTEX shall bear the cost of
such activities.
BIOCHEM will also reimburse VERTEX for the cost of any specific
development activities undertaken by VERTEX after the Effective Date, with the
written approval (whether prior to or after the conduct of the activity) of
BIOCHEM, which are designed to produce information for use in an NDS for a
Licensed Product in the Territory and which are not part of the Worldwide VX-710
Program.
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3.6 INFORMATION SHARING.
(a) Preclinical and Clinical Data. Each party will provide the
other on a timely basis with any and all preclinical and clinical data
(including both raw data and analyzed data generated in the course of clinical
trials) generated by it, its Affiliates, or its licensees or sublicensees, to
the extent permissible, as part of the development of Licensed Products. Subject
to Article VII of this Agreement, BIOCHEM, its Affiliates and sublicensees shall
be free to use any such information for the purpose of developing, marketing and
selling Licensed Products within the Territory, and subject to Article VII of
this Agreement, VERTEX, its Affiliates and licensees shall be free to use any
such information for similar purposes outside the Territory. VERTEX and BIOCHEM
will use reasonable efforts to coordinate and facilitate the sharing of
development information among BIOCHEM, its sublicensees, and VERTEX's third
party licensees.
(b) Access to Regulatory Filings. Each party will provide the
other, without charge, with access to all of its regulatory filings, and one
copy of any such regulatory filings upon request, as may be necessary to support
comparable filings by such other party (and its Affiliates, licensees or
sublicensees) with regulatory authorities in other jurisdictions. In that
connection, each party may cross-reference the regulatory filings of the other
party.
(c) Improvements and Inventions. Each party shall keep the other
party fully advised of:
(i) any improvements relating to Licensed Products or
methods of making Licensed Products, made by or on behalf of
the advising party or its Affiliates or sublicensees during
the term of this Agreement ("Improvements");
(ii) any other inventions relating to Licensed Products or
methods of making Licensed Products made jointly with the
other party or its employees or Affiliates during the term
of this Agreement ("Joint Inventions").
3.7 ASSIGNMENT OF RIGHTS TO IMPROVEMENTS AND INVENTIONS. Upon written
notice by VERTEX to BIOCHEM delivered at any time during the term of this
Agreement (including the period ending one (1) year after the termination
hereof), BIOCHEM will forthwith assign to VERTEX on a worldwide, royalty-free
basis, all of its right, title and interest in and to any Improvements and Joint
Inventions, and rights to such Improvements and Joint Inventions shall thereupon
be licensed by VERTEX to BIOCHEM in the Territory pursuant to the terms and
conditions of this Agreement at no additional cost.
3.8 CO-LABELING AND TRADEMARK. All labels, packaging and packaging
inserts and sales literature relative to Licensed Products sold in the Territory
shall reference the name "Vertex Pharmaceuticals Incorporated" with prominence
equal to that of BIOCHEM's name (or that of its sublicensee) to the extent
permissible by law. To the extent possible, VERTEX shall apply in the Territory
for, and BIOCHEM will use on all Licensed Products marketed in the Territory,
trademarks substantially identical to those used on similar products
incorporating VX-710 being marketed in the United States (except that in the
event of a third party action alleging trademark infringement BIOCHEM may, at
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CONFIDENTIAL - May 9, 1996
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its option, adopt another trademark, the ownership of which will be assigned to
VERTEX). BIOCHEM shall be consulted with respect to VERTEX's choice of trademark
counsel for the Territory and shall also be consulted with respect to and kept
continuously informed of all matters relating to the preparation, filing,
prosecution and maintenance of trademarks for Licensed Products in the
Territory. VERTEX shall afford due consideration to BIOCHEM's comments and
concerns with respect to trademark matters in the Territory, provided that
VERTEX shall have the ultimate authority and responsibility for decisions
relating to such trademark matters. BIOCHEM shall reimburse VERTEX for all
reasonable expenses, in connection with the preparation, filing, prosecution and
maintenance of trademarks for the Licensed Products in the Territory; provided
that the parties will discuss sharing of costs in connection with the defense of
any third party trademark infringement actions.
3.9 RIGHT OF FIRST NEGOTIATION. If, during the term of this Agreement,
VERTEX shall propose to license development or marketing rights in the Territory
with respect to any Compound other than VX-710, for use in the Field, VERTEX
will discuss potential licensing arrangements with BIOCHEM before entering into
a license with any other party. VERTEX will provide BIOCHEM with a reasonable
opportunity to discuss the terms upon which BIOCHEM might acquire rights to
develop, market and sell any such Compound in the Territory on terms consistent
with the terms in this Agreement. VERTEX shall nonetheless be free to negotiate
and enter transactions with respect to such Compound with another party or
parties; provided, however, that the financial terms of any such agreement shall
not be materially more favorable, taken as a whole, than the terms proposed to
BIOCHEM for the same activities. If VERTEX itself chooses (either directly or
through an Affiliate) to market a Compound other than a Licensed Product in the
Territory, VERTEX will offer Co-promotion Rights for that Compound to BIOCHEM in
the Territory. "Co-promotion Rights" shall mean the right for BIOCHEM to market
and detail, through its own sales force, Licensed Product(s) in the Territory,
under the trademark and trade dress of VERTEX, and with VERTEX assuming
leadership for organizing all key steps regarding exploiting, processing,
registering and distributing the Licensed Products. "Market and detail" as used
above shall mean personal visits by professional sales representatives to health
care practitioners, health care institutions and/or appropriate outlets and
their agents or employees and the use of selling aids and/or similar forms of
activity consistent with the terms of this Agreement, designed to increase sales
and/or use of the Licensed Product.
ARTICLE IV
SUPPLY
4.1 CLINICAL TRIALS. VERTEX will supply VX-710 in Bulk Active Form, or
in VERTEX's Standard Finished Form (both as defined in the Supply Agreement)
whichever shall de deemed by the parties to be most appropriate, in amounts
necessary to meet BIOCHEM's requirements for clinical trial material ("CTM") for
the conduct of its development activities hereunder as set forth in the Supply
Agreement.
4.2 COMMERCIAL SUPPLY. VERTEX will supply and BIOCHEM will purchase
exclusively from VERTEX all of BIOCHEM's commercial requirements for VX-710 upon
the terms and conditions set forth in the Supply Agreement.
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<PAGE> 12
ARTICLE V
REPORTING
5.1 DEVELOPMENT REPORTS. BIOCHEM shall prepare and submit to VERTEX, on
a quarterly basis or as otherwise approved by the Development Subcommittee,
reports which set forth in reasonable detail the progress of the Development
Program and the results of work performed thereunder during the preceding
quarter. VERTEX shall also report to BIOCHEM on a quarterly basis the results of
any development work which it or its third party licensees may have undertaken
during the preceding quarter outside the Territory with respect to Licensed
Products.
5.2 EXCHANGE OF INFORMATION.
(a) General. VERTEX and BIOCHEM will promptly and freely share
technical and regulatory filing information useful in connection with the
development of Licensed Products in the Field, including VERTEX Technical
Information and BIOCHEM Technical Information, which is not subject to
restrictions imposed by a third party on disclosure to or use by the other
party. Each party will inform the other prior to entering any agreement with a
third party which such party might reasonably expect to involve the imposition
of any such restriction. BIOCHEM will permit VERTEX to review the ongoing
activities which it is conducting under the Development Program and to discuss
that information with its officers, all at such reasonable times and as often as
may be reasonably requested.
(b) Notice of Pharmaceutical Side-Effects. The parties shall,
during the term of this Agreement, keep each other promptly and fully informed
of all of their pharmacological, toxicological and clinical trials,
investigations and findings relating to Licensed Products. Each of the parties
will notify appropriate authorities in accordance with applicable law, and the
other party, promptly after receipt of information with respect to any serious
adverse reaction, as defined by the World Health Organization, directly or
indirectly attributable to the use or application of Licensed Products. In the
event of any such adverse reaction in the Territory, the parties shall meet as
soon as possible to define, according to local regulations, appropriate
procedures and actions to address the situation. Each party also shall forward
regularly to the other information on adverse reactions or any difficulty
associated with the clinical use, study, investigation, testing and prescription
of Licensed Products.
ARTICLE VI
PAYMENTS
6.1 DEVELOPMENT PAYMENTS. BIOCHEM will make the following milestone
payments (in United States dollars) to VERTEX upon the achievement of any of the
following milestones with respect to Licensed Products.
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<PAGE> 13
[CONFIDENTIAL INFORMATION OMITTED]
Payment upon the first milestone shall be made upon the Execution of the License
Agreement. All subsequent milestone payments shall be made on or before the
fifteenth (15) day following the occurrence of an event giving rise to a payment
obligation hereunder.
[CONFIDENTIAL INFORMATION OMITTED]
Any milestone payment not already made will become due upon the
occurrence of a subsequent milestone event. All payments shall be made by check
or wire transfer in United States dollars to the credit of such bank account as
may be designated by VERTEX in writing to BIOCHEM. Any payment which falls due
on a date which is a legal holiday in the Commonwealth of Massachusetts or in
the Territory may be made on the next succeeding day which is not a legal
holiday in the Commonwealth or in the Territory. All payments specified above
are net of any and all taxes, charges, duties and assessments, including but not
limited to any and all income tax withholding requirements.
6.2 PAYMENT DELAY. In case of any delay in payment by BIOCHEM to VERTEX
not occasioned by force majeure, interest at the rate of one (1%) percent per
month, assessed from the thirty-first day after the due date of the payment,
shall be due by BIOCHEM without any special notice.
ARTICLE VII
CONFIDENTIALITY
7.1 UNDERTAKING. During the term of this Agreement, each party shall
keep confidential, and other than as provided herein shall not use or disclose,
directly or indirectly, any trade secrets, confidential or proprietary
information, or any other knowledge, information, documents or materials, owned,
developed or possessed by the other party, whether in tangible or intangible
form, the confidentiality of which such other party takes reasonable measures to
protect, including but not limited to VERTEX Technical Information and BIOCHEM
Technical Information. Each party shall take any and all lawful measures to
prevent the unauthorized use and disclosure of such information, and to prevent
unauthorized persons or entities from obtaining or using such information. Each
party further agrees to refrain from directly or indirectly taking any action
which would constitute or facilitate the unauthorized use or disclosure of such
information. Each party may disclose such information to its officers, employees
and agents, to authorized licensees and sublicensees, and to subcontractors in
connection with the development or manufacture of Licensed
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CONFIDENTIAL - May 9, 1996
<PAGE> 14
Products, to the extent necessary to enable such parties to perform their
obligations hereunder or under the applicable license, sublicense or
subcontract, as the case may be; provided, that such officers, employees,
agents, licensees, sublicensees and subcontractors have entered into appropriate
confidentiality agreements for secrecy and non-use of such information which by
their terms shall be enforceable by injunctive relief at the instance of the
disclosing party. Each party shall be liable for any unauthorized use and
disclosure of such information by its officers, employees and agents and any
such sublicensees and subcontractors.
7.2 EXCEPTIONS. Notwithstanding the foregoing, the provisions of
Section 7.1 hereof shall not apply to knowledge, information, documents or
materials which the receiving party can conclusively establish: (i) have entered
the public domain without such party's breach of any obligation owed to the
disclosing party; (ii) have become known to the receiving party or its
Affiliates prior to the disclosing party's disclosure of such information to
such receiving party; (iii) are permitted to be disclosed by the prior written
consent of the disclosing party or its Affiliates; (iv) have become known to the
receiving party or its Affiliates from a source other than the disclosing party
or its Affiliates other than by breach of an obligation of confidentiality owed
to the disclosing party or its Affiliates; (v) are disclosed by the disclosing
party or its Affiliates to a third party without restrictions on its disclosure;
(vi) are independently developed by the receiving party or its Affiliates
without breach of this Agreement; or (vii) are required to be disclosed by the
receiving party to comply with applicable laws or regulations, to defend or
prosecute litigation or to comply with governmental regulations, provided that
the receiving party provides prior written notice of such disclosure to the
disclosing party and takes reasonable and lawful actions to avoid or minimize
the degree of such disclosure.
7.3 PUBLICITY. The timing and content of any press releases or other
public communications relating to this Agreement and the transactions
contemplated herein will, except as otherwise required by law, be determined
jointly by BIOCHEM and VERTEX. Neither party hereto nor its representatives or
employees shall make any public disclosure, whether to the press, stockholders
or otherwise, revealing the material non-public terms of this Agreement or of
any amendment hereto without the prior written approval of the other, provided
however, that nothing shall prevent either party hereto from making such
disclosures or statements which in the opinion of counsel are legally required
or may be required in the opinion of such party's certified public accountant to
conform to generally accepted accounting principles. In the event any such
disclosure or statement is required, the disclosing party will endeavor to give
prior written notice to the other party, wherever practicable, of the proposed
disclosure or statement and the reason therefor.
7.4 SURVIVAL. The provisions of this Article VII shall survive the
termination of this Agreement. The obligations of confidentiality,
non-disclosure and non-use set forth in this Article VII shall survive the
termination of this Agreement and shall continue in effect until the relevant
information falls within any of the exceptions provided for in Section 7.2
above.
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<PAGE> 15
ARTICLE VIII
PUBLICATION
8.1 BIOCHEM shall have the initial right to publish or publicly present
the results of the Development Program. BIOCHEM will submit a draft of any
proposed manuscript or speech regarding VX-710 or a Licensed Product to VERTEX
for comment at least thirty (30) days prior to submission for publication or
oral presentation. VERTEX shall notify BIOCHEM in writing within fifteen (15)
days of receipt of such draft whether such draft contains information which
VERTEX considers to be confidential under the provisions of Article VII hereof.
In any such notification, VERTEX shall indicate with specificity its suggestions
regarding the manner and degree of disclosing such information. BIOCHEM shall
have the final authority to determine the scope and content of any BIOCHEM
publication, provided that such authority shall be exercised with reasonable
regard for the interests of VERTEX and in a manner consistent with BIOCHEM's
obligations under Article VII. VERTEX will provide BIOCHEM with prior notice (at
least thirty (30) days, to the extent practicable) of its participation in any
major international conference relative to, and a pre-publication copy of any
manuscript with respect to, VX-710.
ARTICLE IX
PATENTS
9.1 PREPARATION. VERTEX shall be responsible for the preparation,
filing, prosecution and maintenance of any and all patent applications and
patents in the Territory included in the VERTEX Patents, provided that BIOCHEM
shall be consulted with respect to VERTEX's choice of patent counsel for the
Territory and shall also be consulted with respect to and kept continuously
informed of all matters relating to the preparation, filing, prosecution and
maintenance of VERTEX Patents in the Territory. VERTEX shall afford due
consideration to BIOCHEM's comments and concerns with respect to matters
relating to VERTEX Patents in the Territory, provided that VERTEX shall have the
ultimate authority and responsibility for decisions relating to such matters.
Each party shall provide to the other prompt notice as to all matters which may
come to its attention and which may affect the preparation, filing, prosecution
or maintenance of any such patent applications or patents. BIOCHEM acknowledges
the importance of maintaining the confidentiality of any inventions or other
information relating to potential patent claims prior to the filing of patent
applications with respect thereto and will cooperate fully with VERTEX with
respect to such matters. If VERTEX fails to take with Due Diligence any action
reasonably necessary to prepare, file, prosecute or maintain patents and patent
applications included in the VERTEX Patents in the Territory, BIOCHEM may take
such action at its own expense on behalf of VERTEX after first providing VERTEX
with thirty (30) days written notice of its intention to do so.
9.2 COST REIMBURSEMENT. BIOCHEM shall reimburse VERTEX for all
reasonable out-of-pocket expenses VERTEX has incurred, or may incur in the
future, for all reasonable activities undertaken in connection with the
preparation, filing, prosecution and maintenance of Licensed Patents in the
Territory. The treatment of any extraordinary expenses will be discussed between
the parties. VERTEX shall invoice BIOCHEM on a monthly basis for any such
expenses and shall include with each invoice a copy of the invoice received from
the patent counsel or
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CONFIDENTIAL - May 9, 1996
<PAGE> 16
foreign patent agent (which shall contain a reasonable amount of detail with
respect to time and disbursements), and any other invoices or statements, to
which the expenses contained on the VERTEX invoice shall relate. If BIOCHEM
shall fail to reimburse or obtain reimbursement for VERTEX with respect to a
patent application or patent within sixty (60) days after delivery by VERTEX of
an invoice with respect thereto as referenced above, VERTEX may terminate
BIOCHEM's rights hereunder with respect to that patent or patent application
upon thirty (30) days' written notice thereof to BIOCHEM, unless BIOCHEM during
such thirty (30) day period shall have submitted the invoiced payment to VERTEX
pursuant hereto.
ARTICLE X
INFRINGEMENT
10.1 INFRINGEMENT. Each party shall notify the other promptly of any
possible infringements, unauthorized possession, knowledge or use of the
intellectual property embodied in any of the Licensed Patents by others in the
Territory, of which such party becomes aware, and shall promptly furnish the
other party with full details of such infringements, unauthorized possession,
knowledge or use. VERTEX shall have the first right, but not the obligation, at
its expense, to bring any legal action on account of any such infringements,
unauthorized possessions, knowledge or use, and BIOCHEM shall cooperate with
VERTEX, as VERTEX may reasonably request, in connection with any such action. In
the event that VERTEX decides to bring suit, VERTEX shall give prompt written
notice to BIOCHEM of that fact, and BIOCHEM shall take all reasonable steps to
assist VERTEX in such suit.
[CONFIDENTIAL INFORMATION OMITTED]
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CONFIDENTIAL - May 9, 1996
<PAGE> 17
[CONFIDENTIAL INFORMATION OMITTED]
If, within sixty (60) days after receipt by VERTEX of a written request
from BIOCHEM that VERTEX bring an action, VERTEX does not do so, BIOCHEM shall
have the right[, but not the obligation] at its expense and in its own name or
in the name of VERTEX, if required by law, to do so on its own behalf and on
behalf of VERTEX, and VERTEX shall cooperate with BIOCHEM, as BIOCHEM may
reasonably request, in connection with such action. No such legal action may be
settled by one party without the other's prior written consent, which consent
shall not be unreasonably withheld. In such event, BIOCHEM shall be entitled to
all amounts recovered in such suit.
10.2 THIRD PARTY PATENT RIGHTS. To each party's knowledge, the exercise
of the rights granted herein will not result in the infringement of valid
patents of third parties. Neither party gives any warranty regarding the
infringement of third party rights by practice of the license granted hereunder.
Nevertheless, each party will promptly notify the other in the event (i) any
relevant third party patents come to its notice, (ii) any warning letter or
other notice of infringement is received by a party, or (iii) any action, suit
or proceeding is brought against a party alleging infringement of a patent right
of any third person by reason of the manufacture, use or sale of Licensed
Products. The parties shall consult with each other to consider appropriate
steps to respond to such claims including, without limitation, litigation, the
undertaking of a license with the third person patent holder or termination of
any license granted hereunder. If any warning letter or other notice of
infringement is received by a party to this Agreement, or an action, suit or
proceeding is brought against a party to this Agreement alleging infringement of
a patent right of any third person or entity by reason of the manufacture, use
or sale of Licensed Products in the Territory, the recipient party shall
promptly notify the other party. The parties shall consult with each other to
consider appropriate steps to respond to such claims including, without
limitation, litigation, the undertaking of a license with the third person
patent holder or termination of any license granted hereunder
[CONFIDENTIAL INFORMATION OMITTED]
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<PAGE> 18
[CONFIDENTIAL INFORMATION OMITTED]
ARTICLE XI
DISPUTE RESOLUTION
11.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts. Both parties hereto agree to submit to personal jurisdiction in
the Commonwealth of Massachusetts and to accept and agree to venue in that
State.
11.2 ARBITRATION. In the event of any controversy or claim arising out
of or relating to any provision of this Agreement or the breach thereof, the
parties shall try to settle their differences amicably between themselves. Any
such controversy or claim which the parties are unable to resolve shall
initially be submitted for review and resolution by the Chief Executive Officers
of VERTEX and BIOCHEM. Any disagreements which are not so resolved with respect
to overall development strategy and the coordination and conduct of development
activities will be determined by VERTEX, acting reasonably and in good faith.
Failing settlement of any other controversy, any such controversy or claim
shall, upon the written request of one party delivered to the other party, be
submitted to and be settled by arbitration in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association (the "AAA")
then in effect (except as hereinafter stated), and judgment upon the award
rendered by the arbitrators shall be final and binding on the parties and may be
entered in any court having jurisdiction thereof. If arbitration is initiated by
BIOCHEM, the location shall be Boston, Massachusetts. If arbitration is
initiated by VERTEX, the location shall be Montreal. Notwithstanding anything to
the contrary which may be contained in the rules of the AAA, the parties further
agree as follows:
(a) Each party will appoint one person approved by the AAA and
otherwise independent and unAffiliated with either party to hear and determine
the dispute within fifteen (l5) days after receipt of notice of arbitration from
the noticing party. The two persons so chosen will select a third impartial
arbitrator, and their majority decision will be final and conclusive upon the
parties hereto. If either party fails to designate its arbitrator within fifteen
(l5) days after delivery of the notice provided for herein, then the arbitrator
designated by the one party will act as sole arbitrator, and will be deemed to
be the single, mutually approved arbitrator to resolve the controversy. In the
event the
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<PAGE> 19
parties are unable to agree upon a rate of compensation for the arbitrators,
they will be compensated for their services at a rate to be determined by the
AAA.
(b) The parties shall enjoy, but are not limited to, the same
rights to discovery as they would enjoy under the Federal Rules of Civil
Procedure for the district in which the City of Boston is located.
(c) Each party will bear its own costs, including attorneys'
fees, in the arbitration, and will split equally the cost of the arbitrators.
(d) The arbitrators will, upon the request of either party, issue
a written opinion of their findings of fact and conclusions of law and shall
deliver a copy of such opinion to both parties.
(e) Upon receipt of said written opinion, either party will have
the right, within fifteen (l5) days thereof, to file with the arbitrators a
motion to reconsider, and the arbitrators thereupon will reconsider the issues
raised by said motion and either confirm or alter their decision, which will
then be final and conclusive upon both parties hereto. The costs of such a
motion for reconsideration and written opinion of the arbitrators, including
attorneys' fees, will be paid by the non-prevailing party. Any motion to
reconsider shall be sent to the other party at the time it is filed with the
arbitrators.
The arbitration carried out hereunder shall apply to the exclusion of
regular legal means, provided that, in urgent situations in which time is of the
essence, the rights of the parties to obtain proper remedies in courts of law or
equity shall remain unimpaired.
ARTICLE XII
TERM AND TERMINATION
12.1 TERM. Unless earlier terminated in accordance with the provisions
hereof, the term of this Agreement shall extend until the last to expire of the
Licensed Patents, or if there is no Valid Claim under a Licensed Patent, ten
(10) years from the most recent date of First Commercial Sale of a Licensed
Product in the Territory and in any event from year to year thereafter unless
terminated upon one (1) year's notice in writing delivered to VERTEX by
BIOCHEM..
12.2 TERMINATION BY BIOCHEM. BIOCHEM may terminate this Agreement and
its participation in the Development Program upon at least six (6) months prior
written notice to VERTEX delivered at any time on or after the first anniversary
of this Agreement. Upon termination, all rights granted hereunder shall
terminate. BIOCHEM shall be liable for any payments which become due and payable
hereunder on or before the effective date of such termination.
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<PAGE> 20
12.3 TERMINATION BY VERTEX. VERTEX may terminate this Agreement at any
time upon sixty (60) days' written notice to BIOCHEM if, within three (3) months
from the date of issuance of an NOC (or successor regulatory approval mechanism)
for the initial sale of Licensed Products in the Territory, neither BIOCHEM nor
its Affiliates have put Licensed Products into commercial use in the Territory;
provided that the three (3) month period referenced above shall be extended by
the length of any period during which VERTEX shall have failed to provide
supplies of VX-710, as provided for in the Supply Agreement, sufficient for
commercial launch of Licensed Products in the Territory.
12.4 TERMINATION FOR CAUSE. In addition to rights of termination which
may be granted to either party under other provisions of this Agreement, either
party may terminate this Agreement upon thirty (30) days' prior written notice
to the other party upon the material breach by such other party of any of its
obligations under this Agreement, provided that such termination shall become
effective only if the breaching party shall fail to remedy or cure the breach
within such thirty (30) day period. Any right to terminate arising under this
Section 12.4 shall be stayed if, during the relevant cure period, the party
alleged to have been in default shall:
(a) have initiated arbitration in accordance with Article XI,
Section 11.2 above, with respect to the alleged default; and
(b) be diligently and in good faith cooperating in the prompt
resolution of such arbitration proceedings.
The right of either party to terminate this Agreement shall not be
affected in any way by the failure by such party to take any action with respect
to any prior circumstances or default which may have given rise to a right to
terminate.
12.5 EFFECT OF TERMINATION. Termination of this Agreement for any
reason, or expiration of this Agreement, will not affect: (i) obligations which
have accrued as of the effective date of termination or expiration, and (ii)
rights and obligations which, from the context thereof, are intended to survive
termination or expiration of this Agreement. Upon termination by BIOCHEM other
than for cause, BIOCHEM shall provide access to and deliver to VERTEX BIOCHEM
Technical Information and regulatory filings to enable VERTEX to complete its
development and commercialization plans for Licensed Products in a timely
manner. VERTEX's right to cross-reference the regulatory filings of BIOCHEM
shall survive the termination of this Agreement. Upon termination by BIOCHEM for
cause, VERTEX shall provide access to and deliver to BIOCHEM VERTEX Technical
Information and regulatory filings to enable BIOCHEM to complete its development
and commercialization plan for Licensed Products in a timely manner. BIOCHEM's
right to cross-reference the regulatory filings of VERTEX shall survive the
termination of this Agreement.
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<PAGE> 21
ARTICLE XIII
INDEMNIFICATION
13.1 INDEMNIFICATION BY VERTEX. VERTEX shall indemnify, protect and
hold BIOCHEM and BIOCHEM's Affiliates, directors, officers, employees,
shareholders and agents harmless from and against any and all losses, damages,
fines, costs, liabilities and expenses (including the reasonable fees, costs and
expenses of attorneys and other professional and court costs, but excluding
consequential damages for lost profits), based on any civil, criminal,
statutory, regulatory or other claims of liability (referred to collectively as
"Liabilities"), asserted at any time arising out of or involving a breach of
VERTEX's obligations under this Agreement or misstatement by VERTEX of its
representations and warranties under this Agreement (including under the
Schedules hereto).
13.2 INDEMNIFICATION BY BIOCHEM. BIOCHEM shall indemnify, protect and
hold VERTEX and VERTEX's Affiliates, directors, officers, employees,
shareholders and agents harmless from and against any and all losses, damages,
fines, costs, liabilities and expenses (including the reasonable fees, costs and
expenses of attorneys and other professional and court costs, but excluding
consequential damages for lost profits), based on any civil, criminal,
statutory, regulatory or other claims of liability (referred to collectively as
"Liabilities"), asserted at any time arising out of or involving a breach of
BIOCHEM's obligations under this Agreement or misstatement by BIOCHEM of its
representations and warranties under this Agreement (including under the
Schedules hereto).
13.3 INDEMNIFICATION PROCEDURES. A party (the "indemnitee") which
intends to claim indemnification under this Article XIII shall promptly notify
the other party (the "indemnitor") in writing of the action, claim or liability
with respect to which the claim of indemnification relates. The indemnitee shall
permit, and shall cause its employees and agents to permit, the indemnitor, at
its discretion, to settle any such action, claim or liability, the defense and
settlement of which shall be under the complete control of the indemnitor;
provided, however, that such settlement shall not adversely affect the
indemnitee's rights hereunder or impose any obligations on the indemnitee in
addition to those set forth herein in order for it to exercise those rights. No
such action, claim or liability shall be settled without the prior written
consent of the indemnitor, and the indemnitor shall not be responsible for any
legal fees or other costs incurred other than as provided herein. The
indemnitee, its employees and agents shall cooperate fully with the indemnitor
and its legal representatives in the investigation and defense of any action,
claim or liability covered by this indemnification. The indemnitee shall have
the right, but not the obligation, to be represented by counsel of its own
selection and expense.
13.4 EXCEPTION. No indemnification shall be made to a party to the
extent any Liabilities arise out of, result from or involve (i) the breach or
misstatement by such party of its representations, warranties or obligations
under this Agreement or the Schedules hereto or (ii) the negligence or willful
misconduct of such party.
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<PAGE> 22
13.5 INSURANCE. BIOCHEM and VERTEX shall each have and maintain such
type and amounts of liability insurance covering the manufacturing, supply, use
and sale of Licensed Products as is normal and customary in the pharmaceutical
industry generally for parties similarly situated, and will provide the other
party with a copy of its policies of insurance in that regard, as well as any
amendments and revisions thereto.
13.6 SURVIVAL. The provisions of this Article XIII shall survive the
termination of this Agreement.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 REPRESENTATIONS AND WARRANTIES. VERTEX and BIOCHEM each
represents and warrants to the other that:
(a) it is free to enter into this Agreement;
(b) its execution, delivery and performance of this Agreement do
not and will not violate or conflict with any provision of law or any other
agreement to which it is a party and no consents, approvals or authorizations,
registration or filings are required in connection with the execution, delivery,
performance, validity, or enforceability of this Agreement, except as have been
obtained or made or set forth herein;
(c) (in respect of VERTEX only) to the best of VERTEX's
knowledge, after due inquiry, there is no outstanding or potential claim or
allegation that the VERTEX Patents, VX-710 or VERTEX Technical Information
infringe upon any patent rights of a third person or entity, and VERTEX has no
actual knowledge that the practice of any VERTEX Patents or other VERTEX
Technical Information would infringe the intellectual property rights of any
person or entity;
(d) (in respect of VERTEX only) to the best of VERTEX's
knowledge, after due inquiry, VERTEX has informed BIOCHEM about all information
in VERTEX's possession or of which VERTEX otherwise has knowledge concerning
side effects, injury, toxicity or sensitivity reactions and incidents (in each
case provided same are material), associated with all uses, studies,
investigations or tests involving VX-710 (animal or human) throughout the world,
whether or not determined to be attributable to VX-710, which could reasonably
be expected to materially and adversely affect the planned development of VX-710
in the Territory. Without limiting the generality of the foregoing, BIOCHEM
acknowledges that it has been provided with access to the IND, as such term is
defined in the Supply Agreement.
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<PAGE> 23
(e) it is a corporation duly organized and validly existing under
the laws of the jurisdiction first indicated above with respect to such
corporation and, by virtue of such jurisdiction's laws, is in good standing as a
domestic corporation of such jurisdiction;
(f) it is qualified to do business in all jurisdictions in which
such qualification is necessary in order to perform its obligations hereunder;
(g) (in respect of VERTEX only) without limiting the generality
of Subsection 14.1(b) above, VERTEX has the full right, power and authority to
grant the rights granted to BIOCHEM hereunder, free and clear of any mortgage,
lien, encumbrance or other third party interest of any kind (provided that the
foregoing shall not be construed to entail a representation beyond that set
forth in Subsection 14.1(c) above regarding infringement of the intellectual
property rights of others), and except as specifically provided for herein, to
the actual knowledge of VERTEX, neither VX-710, the VERTEX Patents nor the
VERTEX Technical Information are subject to any contractual restrictions,
covenants, licenses, or judicial or administrative orders of any kind which
detract in any material respect from the value of either or which would
interfere with the use thereof by BIOCHEM as contemplated in this Agreement in
connection with BIOCHEM's commercial exploitation thereof; and
(h) the execution, delivery and performance by it of this
Agreement have been duly authorized by all requisite corporate action and each
such document, when signed, will constitute its legal, valid and binding
obligation, enforceable according to its terms and condition.
14.2 WAIVER. No provision of the Agreement may be waived except in
writing by both parties hereto. No failure or delay by either party hereto in
exercising any right or remedy hereunder or under applicable law will operate as
a waiver thereof, or a waiver of a particular right or waiver of any right or
remedy on any subsequent occasion.
14.3 FORCE MAJEURE. Neither party shall be held liable or responsible
to the other party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement, other than an obligation to make a payment, when such failure or
delay is caused by or results from fire, floods, embargoes, government
regulations, prohibitions or interventions, war, acts of war (whether war be
declared or not), insurrections, riots, civil commotions, strikes, lockouts,
acts of God, or any other cause beyond the reasonable control of the affected
party.
14.4 SEVERABILITY. It is the intention of the parties to comply with
all applicable laws domestic or foreign in connection with the performance of
their respective obligations hereunder. In the event that any provision of this
Agreement, or any part hereof, is found invalid or unenforceable, the remainder
of this Agreement will be binding on the parties hereto, and will be construed
as if the invalid or unenforceable provision or part thereof had been deleted,
and the
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<PAGE> 24
Agreement shall be deemed modified to the extent necessary to render the
surviving provisions enforceable to the fullest extent permitted by law.
14.5 GOVERNMENT ACTS. In the event that any act, regulation, directive,
or law of a government within the Territory, including its departments, agencies
or courts, should make impossible or prohibit, restrain, modify or limit any
material act or obligation of BIOCHEM or VERTEX under this Agreement and if any
party to this Agreement is adversely affected thereby, the parties shall attempt
in good faith to negotiate a lawful and enforceable modification to this
Agreement which substantially eliminates the adverse effect; provided that
failing any agreement, in that regard, the party, if any, who is adversely
affected, shall have the right, at its option, to terminate this Agreement.
14.6 GOVERNMENT APPROVALS. BIOCHEM will use Due Diligence to seek to
obtain any government approval required in the Territory to enable this
Agreement to become effective, or to enable any payment hereunder to be made, or
any other obligation hereunder to be observed or performed. Each party will keep
the other informed of progress in obtaining any such approvals.
14.7 EXPORT CONTROLS. This Agreement is made subject to any
restrictions concerning the export of materials and Technical Information from
the United States which may be imposed upon or related to either party to this
Agreement from time to time by the Government of the United States. Furthermore,
neither party will export, directly or indirectly, any Technical Information of
the other party, or any Compounds utilizing such Technical Information, to any
countries for which the United States Government or any agency thereof at the
time of export requires an export license or other governmental approval,
without first obtaining the written consent to do so from the Department of
Commerce or other agency of the United States Government when required by
applicable statute or regulation.
14.8 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by either party without the written consent of the other party
which, in the case of assignment to an Affiliate, shall not be unreasonably
withheld or delayed; provided, however, that either party may, without such
consent, assign this Agreement in connection with the transfer or sale of all or
substantially all of its pharmaceuticals business or in the event of its merger,
acquisition or consolidation with another company; and provided further, that
any assignment by BIOCHEM to its existing subsidiary, BIOCHEM Therapeutic Inc.,
shall not require the written consent of VERTEX. Any purported assignment in
violation of the preceding sentence shall be void. Any permitted assignee shall
assume all obligations of its assignor under this Agreement. No assignment shall
relieve either party of responsibility for the performance of any accrued
obligation which such party then has hereunder.
14.9 COUNTERPARTS. This Agreement may be executed in duplicate both of
which shall be deemed to be originals, and both of which shall constitute one
and the same Agreement.
License Agreement - Page 23
CONFIDENTIAL - May 9, 1996
<PAGE> 25
14.10 NO AGENCY. Notwithstanding any of the provisions of this
Agreement, neither party shall at any time enter into, incur, or hold itself out
to third parties as having authority to enter into or incur, on behalf of the
other party, any commitment, expense, or liability whatsoever, and all
contracts, expenses and liabilities undertaken or incurred by one party in
connection with or relating to the development, manufacture or sale of VX-710
and Licensed Products shall be undertaken, incurred or paid exclusively by that
party except as specifically referenced herein, and not as an agent or
representative of the other party.
14.11 NOTICE. All communications between the parties with respect to
any of the provisions of this Agreement will be sent to the addresses set out
below, or to other addresses as notified by the parties for the purpose of this
clause, by prepaid, registered or certified air mail which shall be deemed
received by the other party on the seventh business day following deposit in the
mails, or by cable, telex, facsimile transmission, or other electronic means of
communication (which shall be deemed received when transmitted), with
confirmation by letter given by the close of business on the next following
business day:
(a) if to BIOCHEM, at:
BioChem Pharma (International) Inc.
275 Armand-Frappier Boulevard
Laval, Quebec H7T 4A7
CANADA
Attention: Michael Grey, Vice-President
With a copy to: Charles Tessier, Vice-President Legal
Affairs & Corporate Secretary,
BioChem Pharma Inc. (same address)
(b) if to VERTEX, at:
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA 02139-4211
Attention: Richard H. Aldrich, Senior Vice President and
Chief Business Officer
14.12 HEADINGS. The paragraph headings are for convenience only and
will not be deemed to affect in any way the language of the provisions to which
they refer.
14.13 AUTHORITY. The undersigned represent that they are authorized to
sign this Agreement on behalf of the parties hereto. The parties each represent
that no provision of this Agreement will violate any other agreement that a
party may have with any other person or company. Each party has relied on that
representation in entering into this Agreement.
License Agreement - Page 24
CONFIDENTIAL - May 9, 1996
<PAGE> 26
14.14 COMPETITION.
[CONFIDENTIAL INFORMATION OMITTED]
[CONFIDENTIAL INFORMATION OMITTED]
If BIOCHEM or its Affiliates or sublicensees
shall breach the foregoing provisions, then VERTEX, in addition to any other
remedies it may have in law or equity, may at any time thereafter, effective
upon ninety (90) days' prior written notice to BIOCHEM, terminate this Agreement
and all of BIOCHEM's rights hereunder.
14.15 ENTIRE AGREEMENT. This Agreement, including the Schedules
appended hereto, contains the entire understanding of the parties relating to
the matters referred to herein, and may only be amended by a written document,
duly executed on behalf of the respective parties.
<TABLE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
<S> <C>
Date of signature: ___________________ Date of signature: __________________
VERTEX PHARMACEUTICALS INCORPORATED BIOCHEM PHARMA (INTERNATIONAL) INC.
By: __________________________________ By: _________________________________
Name: Richard H. Aldrich Name: Michael Grey
Title: Senior Vice-President and Chief Title: Vice-President
Business Officer
By: _________________________________
Name: FranAois Legault
Title: Treasurer
</TABLE>
License Agreement - Page 25
CONFIDENTIAL - May 9, 1996
<PAGE> 27
SCHEDULE 1.23
VERTEX PATENTS
Patents Covering VX-710
- -----------------------
VERTEX has filed composition of matter and method of use patents which include
coverage of VX-710. 91-03 CIP (WO 92/19593) and 92-05 CIP (WO 94/07858) have
been published in Europe, and they have also been filed nationally in Canada. In
Canada, 92-05 CIP has serial number 2,144,962 and entered national phase March
17, 1995. Also in Canada, 91-03 CIP has serial number 2,102,180 and entered
national phase November 1, 1993.
License Agreement - Schedule 1.23
CONFIDENTIAL - May 9, 1996
<PAGE> 28
EXHIBIT A
SUMMARY DEVELOPMENT PLAN
Exhibit A consists of five pages of information which the Registrant has
requested confidential treatment from the Securities and Exchange Commission.
The Registrant has filed Exhibit A separately in unredacted form with the
Securities and Exchange Commission.
License Agreement - Exhibit A
CONFIDENTIAL - May 9, 1996
<PAGE> 29
EXHIBIT B
SUPPLY AGREEMENT
License Agreement - Exhibit B
CONFIDENTIAL - May 9, 1996
<PAGE> 30
CANCER MULTIDRUG RESISTANCE PROGRAM
SUPPLY AGREEMENT
between
VERTEX PHARMACEUTICALS INCORPORATED
and
BIOCHEM PHARMA (INTERNATIONAL) INC.
MAY 9, 1996
<PAGE> 31
SUPPLY AGREEMENT
This Agreement is made and entered into as of May 9th, 1996 between
Vertex Pharmaceuticals Incorporated (hereinafter "VERTEX"), a Massachusetts
corporation with principal offices at 130 Waverly Street, Cambridge, MA
02139-4211, USA, and BioChem Pharma (International) Inc. (hereinafter
"BIOCHEM"), a Canadian corporation with its registered office located at
Commerce Court West, Suite 5300, Toronto, Ontario, M5L 2B9, CANADA.
INTRODUCTION
WHEREAS, VERTEX has designed a certain chemical compound ("VX-710")
which appears to inhibit cancer-related multidrug resistance ("CANCER-MDR");
WHEREAS, BIOCHEM wishes to license, develop and commercialize novel
drugs to treat CANCER-MDR ("Licensed Products") in the Territory and has been
granted certain rights to VX-710 pursuant to the License Agreement of even date
herewith between VERTEX and BIOCHEM; and
WHEREAS, BIOCHEM wishes to purchase, and VERTEX is willing to supply to
BIOCHEM, quantities of VX-710, in bulk form or finished form, in accordance with
the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing premises, the parties
agree as follows:
Supply Agreement -- Page 1
CONFIDENTIAL - May 9, 1996
<PAGE> 32
ARTICLE I
DEFINITIONS
1.1 "Agreement" shall mean this Supply Agreement, as amended from time
to time.
1.2 "Contract Manufacturer" shall mean any person or entity which
manufactures VX-710 for VERTEX under contract.
1.3 "Delivery Date" shall mean a date for which delivery of VX-710 to
BIOCHEM by VERTEX is properly requested in a purchase order and confirmed by
VERTEX.
1.4 "Effective Date" shall mean the effective date of this Agreement as
set forth on the first page hereof.
1.5 "License Agreement" shall mean that certain License Agreement of
even date herewith by and between VERTEX and BIOCHEM.
1.6 "Manufacturing Cost" means VERTEX's manufacturing cost for VX-710,
which shall include (a) to the extent VX-710 is being manufactured by a Contract
Manufacturer, the cost to VERTEX as invoiced by such Manufacturer, and (b) to
the extent VX-710 is being manufactured by VERTEX, VERTEX's fully-allocated
manufacturing cost (including overhead allocated in accordance with VERTEX's
customary accounting practice), supported by invoice where appropriate.
1.7 "Net Sales" shall mean the gross sales (i.e., gross invoice prices)
of Licensed Product billed by BIOCHEM or, in the event of a sublicense, by
BIOCHEM's sublicensees, to
Supply Agreement -- Page 2
CONFIDENTIAL - May 9, 1996
<PAGE> 33
third party customers, less (a) actual credited allowances to such third party
customers for spoiled, damaged, outdated and returned Licensed Product and for
retroactive price reductions, all as consistent with customary industry
practices (b) the amounts of actual trade and cash discounts and rebates given
that were not already credited to such third party customers at the time of
invoice, (c) all invoiced transportation and handling charges (including transit
insurance), sales taxes, excise taxes, use taxes or import/export duties and
rebates (including rebates to third party payers) actually paid, and (d) other
reasonable and customary allowances and adjustments actually credited to
customers, whether during a specific quarter or not, provided that:
1.7.1 in the case of any sale or other disposal of a
Licensed Product by a party hereto to an
Affiliate of BIOCHEM, for resale, the Net Sales
shall be calculated as above on the value
charged or invoiced on the first arm's length
sale to a party who is not an Affiliate;
1.7.2 in the case of any sale which is not invoiced or
is delivered before invoice, Net Sales shall be
calculated at the time of delivery or when the
Licensed Product is paid for, if paid for before
delivery or invoice;
1.7.3 in the case of any sale or other disposal of a
Licensed Product for value, otherwise than in an
arm's length transaction exclusively for money,
such as barter or counter-trade, Net Sales shall
be calculated as above on the fair market price
(if higher) in the Territory.
1.8 "Product Approval" means final approval by the Canadian regulatory
authority to market VX-710 commercially in the Territory for use in humans.
Supply Agreement -- Page 3
CONFIDENTIAL - May 9, 1996
<PAGE> 34
1.9 The following terms shall have the definitions as set forth in the
Licensing Agreement:
Affiliate
CANCER-MDR
Compounds
Due Diligence
Field
First Commercial Sale
HPB
Licensed Product
NDS
NOC
Phase III Initiation Date
Territory
VERTEX Technical Information
VX-710
Worldwide VX-710 Program
1.10 "Bulk Active Form" and "Standard Finished Form" shall mean,
respectively, the form of VX-710 referred to as "Drug Substance" and "Drug
Product" in VERTEX's Investigational New Drug Application filed with the U.S.
Food and Drug Administration, as amended and updated from time to time.
ARTICLE II
SUPPLY
2.1 SALE AND PURCHASE. VERTEX shall use Due Diligence to supply to
BIOCHEM, its Affiliates and sublicensees such quantities of VX-710 in Bulk
Active Form or VERTEX's Standard Finished Form (sometimes referred to
collectively herein as "VX-710") as BIOCHEM may order in accordance herewith for
(i) use in seeking Product Approval ("Clinical Trial Material" or "CTM") and,
(ii) following receipt of Product Approval, preparing Licensed Product
Supply Agreement -- Page 4
CONFIDENTIAL - May 9, 1996
<PAGE> 35
for sale in the Territory ("Commercial Material"). VX-710 in Bulk Active Form
and Standard Finished Form are as described in VERTEX's Investigational New Drug
Application ("IND") currently on file with the U.S. Food and Drug Administration
as it may be amended and updated from time to time. BIOCHEM, its Affiliates and
sublicensees shall purchase all of their respective requirements of VX-710,
including both Clinical Trial Material and Commercial Material, from VERTEX,
except as set forth in Section 2.7 hereof. VERTEX may from time to time contract
with such third parties for the manufacture of VX-710 ("Contract Manufacturers")
as VERTEX deems advisable. Notwithstanding the foregoing, if BIOCHEM's Product
Approval precedes the regulatory approval of VERTEX's commercial manufacturing
process for VX-710 in the United States, VERTEX shall not be obligated to supply
all of BIOCHEM's requirements of VX-710, but instead, the parties shall meet to
discuss the available supply of VX-710 and amounts that may be allocated to
BIOCHEM prior to marketing approval for VX-710 in the United States, giving due
consideration to VERTEX's supply requirements for the conduct of ongoing
clinical trials.
2.2 COMPLIANCE WITH GOOD MANUFACTURING PRACTICES. Notwithstanding the
foregoing, VERTEX shall not supply, and BIOCHEM shall not be obligated to
purchase from VERTEX, VX-710, unless and until VERTEX or VERTEX's Contract
Manufacturer, as the case may be, shall have complied with Good Manufacturing
Practices governing the manufacturing and supply of products such as VX-710. For
the purpose of this Agreement, "Good Manufacturing Practices" shall mean U.S.
cGMP as set forth by the United States Food and Drug Administration.
Supply Agreement -- Page 5
CONFIDENTIAL - May 9, 1996
<PAGE> 36
2.3 SUPPLY RESTRICTIONS. During the term of this Agreement, VERTEX
shall not distribute, sell or otherwise provide VX-710, directly or indirectly,
to any third party other than BIOCHEM for use or sale anywhere in the Territory.
In addition, to the extent not inconsistent with applicable law, VERTEX will not
distribute, sell or otherwise provide VX-710 to any third party as aforesaid,
where VERTEX has reasonable grounds to believe that such third party will sell
or cause VX-710 to be sold in the Territory.
2.4 QUANTITY; FORECASTS.
(a) FORECASTS. BIOCHEM shall prepare, maintain, and promptly
deliver to VERTEX a twelve month rolling forecast of its quantity requirements
of VX-710 during the term of this Agreement, specifying either Bulk Active Form
or Standard Finished Form, and anticipated delivery dates. The forecast shall be
reviewed and updated monthly and revised as necessary to reflect changes in
forecasted requirements. Copies of the updated forecast, with all revisions,
shall be delivered to VERTEX on a monthly basis promptly after completion. Each
forecast, including any revision thereof, shall reflect a good faith attempt by
BIOCHEM to estimate quantity requirements based on anticipated product demand.
(b) PURCHASE ORDER. BIOCHEM shall provide VERTEX with irrevocable
purchase orders for VX-710, specifying either Bulk Active Form or Standard
Finished Form and requested delivery dates, not less than nine (9) months prior
to the earliest delivery date requested in the purchase order. VERTEX shall
promptly advise BIOCHEM of the anticipated delivery date of VX-710 so ordered
(the "Delivery Date"). All orders for VX-710 to be purchased
Supply Agreement -- Page 6
CONFIDENTIAL - May 9, 1996
<PAGE> 37
hereunder shall be placed on BIOCHEM's standard purchase order form, as amended,
a copy of which is attached hereto as Schedule 2.4. In the event of any
inconsistency between this Agreement and the terms of any such purchase order,
the terms of this Agreement shall prevail. For greater certainty, the terms and
provisions appearing in the recto side of BIOCHEM's purchase order shall not
apply to any order for VX-710 placed hereunder.
2.5 DELIVERY. All VX-710 delivered to BIOCHEM shall be F.O.B. (Per
Incoterms, ICC Ed. 1990) VERTEX's plant or VERTEX's Contract Manufacturer's
plant. VERTEX shall use its reasonable efforts to deliver VX-710 within five (5)
days of the applicable Delivery Dates and assist BIOCHEM in arranging any
desired insurance (in amounts that BIOCHEM shall determine) and transportation,
via air freight unless otherwise specified in writing, to any destinations
specified in writing from time to time by BIOCHEM. All customs, duties, costs,
taxes, insurance premiums and other expenses relating to such transportation and
delivery, shall be at BIOCHEM's expense. VERTEX shall provide customary shipping
documentation in accordance with that requested in BIOCHEM's purchase order, as
well as a Certificate of Analysis and such other usual and customary
documentation relating to the material shipped as BIOCHEM may reasonably request
in writing from time to time, for each production lot included in a shipment.
VERTEX shall package VX-710 for shipment hereunder in accordance with all
applicable laws in the United States and Canada. VERTEX will use Due Diligence
to honor any purchase order for VX-710 received from BIOCHEM, in addition to
those submitted in accordance with Section 2.4 above, which relates to
additional supplies of VX-710 being purchased by BIOCHEM to replace supplies
lost or damaged in shipment from VERTEX.
Supply Agreement -- Page 7
CONFIDENTIAL - May 9, 1996
<PAGE> 38
2.6 BIOCHEM'S OBLIGATIONS. BIOCHEM shall:
(a) ascertain and comply with all applicable laws, regulations
and standards of industry or professional conduct in connection with the use,
distribution or promotion of VX-710 and Licensed Products, including without
limitation, those laws, regulations and standards applicable to product claims,
labeling, approvals, registrations and notifications. BIOCHEM will also obtain
VERTEX's prior written approval of all product claims, labels, instructions,
packaging and the like, which approval will not be unreasonably withheld.
(b) use Due Diligence, at its sole expense, to obtain and
maintain any applicable approvals, registrations, notifications or the like with
regard to marketing, using (for diagnostic and/or therapeutic use, as may be
specified by VERTEX), selling, labeling or otherwise promoting or making claims
regarding VX-710 or its uses, or reimbursement therefor, in the Territory.
2.7 BIOCHEM CONTINUATION OF PROGRAM. If VERTEX terminates the Worldwide
VX-710 Program, and BIOCHEM nonetheless elects to continue marketing and sale of
Licensed Products in the Territory, VERTEX may at its option (a) continue to
supply VX-710 to BIOCHEM under the terms of this Supply Agreement, which shall
in such event remain in effect except that the compensation payable to VERTEX
for Commercial Material hereunder shall be reduced to seventy-two (72%) percent
of the amount otherwise payable; or (b) elect to terminate this Agreement. In
the latter case, upon request of BIOCHEM, VERTEX shall grant to BIOCHEM a
license to manufacture VX-710 for sale in the Field in the Territory and shall
Supply Agreement -- Page 8
CONFIDENTIAL - May 9, 1996
<PAGE> 39
provide to BIOCHEM access to all VERTEX Technical Information necessary for
manufacture of VX-710.
ARTICLE III
PRICE AND PAYMENTS
3.1 PAYMENT FOR CLINICAL TRIAL MATERIAL.
[CONFIDENTIAL INFORMATION OMITTED]
3.2 PAYMENT FOR COMMERCIAL MATERIAL IN BULK ACTIVE FORM.
[CONFIDENTIAL INFORMATION OMITTED]
3.3 PAYMENT FOR COMMERCIAL MATERIAL IN STANDARD FINISHED FORM.
[CONFIDENTIAL INFORMATION OMITTED]
Supply Agreement -- Page 9
CONFIDENTIAL - May 9, 1996
<PAGE> 40
3.4 PAYMENTS FOR SPECIAL FORMULATION. If BIOCHEM requests a formulation
that is different from VERTEX's Standard Finished Form for Clinical Trial
Material or Commercial Material, BIOCHEM will be responsible for any and all
incremental expenses incurred by VERTEX in providing that formulation to
BIOCHEM, in addition to the payments required pursuant to Sections 3.1 and 3.3
above.
3.5 METHOD OF PAYMENT. All payments due to VERTEX hereunder shall be
made in United States dollars, by wire or check, and shall be payable as
follows:
[CONFIDENTIAL INFORMATION OMITTED]
Translation of currency from Canadian to United States
dollars for purpose of payments hereof shall be calculated using the simple
average of the exchange rates published by the Bank of Canada on each day of the
month during which the purchase order is first sent to VERTEX. Any payment which
falls due on a date which is a legal holiday in the Commonwealth of
Massachusetts or in the Territory may be made on the next succeeding day which
is not a legal holiday in the Commonwealth or in the Territory, as the case may
be. All payments hereunder are net of any and all taxes, charges, duties and
assessments, including but not limited to any and all income tax withholding
requirements. BIOCHEM shall be responsible for all payments, including late
payments, that are due to VERTEX but have not been paid by BIOCHEM's
sublicensees within the period specified in this Agreement.
Supply Agreement -- Page 10
CONFIDENTIAL - May 9, 1996
<PAGE> 41
3.6 CREDITS.
[CONFIDENTIAL INFORMATION OMITTED]
3.7 INTEREST. Interest shall be payable at the rate of one (1%) percent
per month on unpaid balances due hereunder, assessed from the thirty-first day
after the date of invoice, without any special notice.
3.8 REPORTS. For each calendar quarter following the First Commercial
Sale of a Licensed Product in the Territory, BIOCHEM shall furnish or cause to
be furnished to VERTEX a written report showing (i) the volume of Net Sales of
all Licensed Products in the Territory during such quarter by BIOCHEM and each
Affiliate and sublicensee; and (ii) the weighted average Net Sales price of
VX-710 or Licensed Product sold during each quarter, calculated as set forth on
Schedule 3.2 hereof, with supporting documentation. BIOCHEM shall keep accurate
records in sufficient detail to enable the information referenced above to be
determined and to be verified by VERTEX.
3.9 RIGHT TO AUDIT
(a) VERTEX. VERTEX shall have the right, at its own expense, for
any period during which VX-710 is purchased by BIOCHEM hereunder and for one (1)
year thereafter, to have an independent public accountant, reasonably acceptable
to BIOCHEM, examine the relevant financial books and records of account of
BIOCHEM during normal
Supply Agreement -- Page 11
CONFIDENTIAL - May 9, 1996
<PAGE> 42
business hours, upon reasonable notice, to determine or verify Net Sales and
specified weighted average Net Sales prices of VX-710 sold in the Territory
during such period. If errors of five (5%) percent or more in VERTEX's favor are
discovered as a result of such examination, BIOCHEM shall reimburse VERTEX for
the reasonable expense of such examination and pay the deficiency immediately.
As a condition to such examination, the independent public accountant selected
by VERTEX shall execute a written agreement, reasonably satisfactory in form and
substance to BIOCHEM, to maintain in confidence all information obtained during
the course of any such examination except for disclosure to VERTEX as necessary
for the above purpose.
(b) BIOCHEM. BIOCHEM shall have the right, at its own expense,
for any period during which VX-710 is purchased by BIOCHEM hereunder and for one
(1) year thereafter, to have an independent public accountant, reasonably
acceptable to VERTEX, examine the relevant financial books and records of
account of VERTEX during normal business hours, upon reasonable notice, to
determine or verify any Manufacturing Cost charged to BIOCHEM on account of
VX-710 purchased hereunder. If errors of five (5%) percent or more in BIOCHEM's
favor are discovered as a result of such examination, VERTEX shall reimburse
BIOCHEM for the reasonable expense of such examination and pay the deficiency
immediately. As a condition to such examination, the independent public
accountant selected by BIOCHEM shall execute a written agreement, reasonably
satisfactory in form and substance to VERTEX, to maintain in confidence all
information obtained during the course of any such examination except for
disclosure to BIOCHEM as necessary for the above purpose.
Supply Agreement -- Page 12
CONFIDENTIAL - May 9, 1996
<PAGE> 43
ARTICLE IV
SPECIFICATIONS; QUALITY CONTROL; RECORDS
4.1 SPECIFICATIONS. All VX-710 supplied by VERTEX to BIOCHEM hereunder
shall be manufactured and stored by or on behalf of VERTEX in compliance with
all applicable laws and requirements of the regulatory authorities in the
jurisdiction in which VERTEX is situated, and in accordance with the procedures,
requirements, standards and other specifications set forth in the IND currently
on file with the U.S. Food and Drug Administration, as the IND in respect of
these procedures, requirements, standards and specifications may be amended and
updated from time to time (collectively, the "Specifications"). As the
manufacturing processes and scale-up are finalized, it is likely that the
Specifications will be modified, and such modifications will be appropriately
reflected in the IND. Without limiting the generality of the foregoing, VERTEX
shall use reasonable effort to obtain and maintain all licenses, permits and
registrations necessary to manufacture and supply VX-710 hereunder.
4.2 AMENDMENTS TO SPECIFICATIONS. VERTEX will notify BIOCHEM
immediately in the event that it amends the Specifications, providing advance
notice of any such amendment to the extent practicable, to BIOCHEM and will use
Due Diligence in assisting BIOCHEM in satisfying the requirements of HPB and the
Canadian regulatory authorities relating to manufacture and supply of VX-710.
4.3 QUALITY CONTROL. VERTEX shall be responsible for performing all
customary quality control tests and assays on materials used in preparing VX-710
and packaging it for
Supply Agreement -- Page 13
CONFIDENTIAL - May 9, 1996
<PAGE> 44
shipment, in a manner consistent with the Specifications and quality control
procedures as referenced in the IND.
4.4 SITE RECORDS. VERTEX shall make available to BIOCHEM all records
pertaining to complaint investigations and inspections by regulatory authorities
relating to any site where VX-710 is manufactured or packaged for shipment,
including a record of any actions taken by or on behalf of VERTEX in response to
such investigations and inspections.
4.5 COMPLAINTS. VERTEX agrees to promptly (i.e. within one (1) business
day) inform BIOCHEM of any complaints or inquiries that raise potentially
serious quality, health or safety concerns regarding VX-710. Each party will
fully cooperate with the other in any decision to recall, retrieve or replace
any VX-710 or Licensed Product.
4.6 MANUFACTURING AND SALES RECORDS. Each party shall keep complete and
accurate records pertaining to (a) the manufacture and supply of VX-710 (in the
case of VERTEX), including batch records and file samples, and (b) the sale of
such Licensed Product (in the case of BIOCHEM), for at least five (5) years, or
for such longer period if and as required by law and shall in any event retain
such records as may be necessary to adequately administer any recall of VX-710
or a Licensed Product. Each party shall make such records available to the other
party, for such lawful purpose as the other party may reasonably request in
writing.
Supply Agreement -- Page 14
CONFIDENTIAL - May 9, 1996
<PAGE> 45
ARTICLE V
NONCONFORMITY
5.1 NONCONFORMITY. BIOCHEM shall be deemed to have accepted delivery of
VX-710 in good order and condition, unless BIOCHEM has notified VERTEX in
writing of any short delivery or nonconformity with the Specifications (as
defined above) in respect of a shipment of VX-710 within fifteen (15) days
following receipt of same. Notwithstanding the foregoing, in the case of any
nonconformity which is not readily apparent or discoverable upon reasonable
inspection within such fifteen (15) day period, any claim of nonconformity with
respect thereto shall not be deemed waived and delivery of the VX-710 shall not
be deemed to have been accepted if BIOCHEM notifies VERTEX within forty-eight
(48) hours following the date on which BIOCHEM learns of such nonconformity.
5.2 NONCONFORMITY REPORT. Any claim of nonconformity hereunder shall be
accompanied by a report of analysis of the allegedly nonconforming VX-710
prepared by or on behalf of BIOCHEM. If, after analyzing a sample of such
VX-710, VERTEX confirms BIOCHEM's claim of nonconformity, VERTEX shall, at
BIOCHEM's election, replace the nonconforming VX-710 with conforming VX-710 at
VERTEX's expense or refund the entire purchase price therefore to BIOCHEM.
Pursuant to written directions from VERTEX, BIOCHEM shall either return the
nonconforming VX-710 to VERTEX, or destroy same, in each case, at VERTEX's
expense. If VERTEX's analysis does not confirm BIOCHEM's claim of nonconformity,
the parties shall commence good faith discussions with a view to resolving the
issue. In the event the issue cannot be resolved within thirty (30) days
following the start of such discussions, a sample of the VX-710 in dispute shall
be submitted to an independent laboratory,
Supply Agreement -- Page 15
CONFIDENTIAL - May 9, 1996
<PAGE> 46
mutually accepted by the parties, for testing. The results of such testing shall
be binding upon the parties. The party whose position with respect to conformity
or non-conformity of the VX-710 in question is not confirmed by the independent
laboratory shall bear all costs relating to such testing.
5.3 SURVIVAL OF INDEMNIFICATION AND WARRANTY. Notwithstanding anything
to the contrary contained in this Article V, VERTEX's warranties and
indemnification obligations hereunder shall survive the failure by BIOCHEM to
reject any VX-710.
ARTICLE VI
TERM AND TERMINATION
6.1 TERM. Unless earlier terminated pursuant to this Article VI, this
Agreement shall extend for the period during which the License Agreement shall
be in effect.
6.2 TERMINATION BY DEFAULT. If either party materially defaults in the
performance of any material agreement, condition or covenant of this Agreement,
and such default or noncompliance shall not have been remedied, or steps
initiated to remedy the same to the other party's reasonable satisfaction,
within sixty (60) days (or 15 days in the case of non-payment) after receipt by
the defaulting party of a notice thereof from the other party, the party not in
default may terminate this Agreement. Any right to terminate arising under this
Section 6.2 shall be stayed if, during the relevant cure period, the party
alleged to have been in default shall:
(i) have initiated arbitration in accordance with Section 8.8
below, with respect to the alleged default; and
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CONFIDENTIAL - May 9, 1996
<PAGE> 47
(ii) be diligently and in good faith cooperating in the prompt
resolution of such arbitration proceedings.
The right of either party to terminate this Agreement shall not be affected in
any way by the failure of such party to take any action with respect to any
prior circumstance or default which may have given rise to a right to terminate.
6.3 TERMINATION.
Termination of this Agreement for any reason, or expiration of
this Agreement, will not affect (i) obligations which have accrued as of the
effective date of termination or expiration, and (ii) rights and obligations
which, from the context thereof, are intended to survive termination or
expiration of this Agreement.
ARTICLE VII
WARRANTY AND INDEMNIFICATION
7.1 WARRANTY AND INDEMNIFICATION. VERTEX warrants that manufacture of
VX-710 sold to BIOCHEM will be accomplished in accordance with the
Specifications. VERTEX will indemnify BIOCHEM against any damages caused by the
failure of products supplied by VERTEX to meet the Specifications.
EXCEPT FOR THE FOREGOING WARRANTY, VERTEX DOES NOT WARRANT THE
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY LICENSED PRODUCT OR
THE PERFORMANCE OR NON-INFRINGEMENT THEREOF, DOES NOT MAKE ANY OTHER WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT
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CONFIDENTIAL - May 9, 1996
<PAGE> 48
TO LICENSED PRODUCTS OR THE SPECIFICATIONS THEREOF, AND MAKES NO WARRANTY TO
BIOCHEM'S CUSTOMERS OR AGENTS. VERTEX HAS NOT AUTHORIZED ANYONE TO MAKE ANY
REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.1 WAIVER. No provision of the Agreement may be waived except in
writing by both parties hereto. No failure or delay by either party hereto in
exercising any right or remedy hereunder or under applicable law will operate as
a waiver thereof, or a waiver of a particular right or waiver of any right or
remedy on any subsequent occasion.
8.2 FORCE MAJEURE. Neither party shall be held liable or responsible to
the other party nor be deemed to have defaulted under or breached this Agreement
for failure or delay in fulfilling or performing any term of this Agreement,
other than an obligation to make a payment, when such failure or delay is caused
by or results from fire, floods, embargoes, government regulations, prohibitions
or interventions, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotions, strikes, lockouts, acts of God, or any
other cause beyond the reasonable control of the affected party.
8.3 RELATIONSHIPS OF THE PARTIES. Both parties are independent
contractors under this Agreement. Nothing contained in this Agreement is
intended nor is to be construed so as to constitute VERTEX and BIOCHEM as
partners, agents or joint venturers with respect to this
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CONFIDENTIAL - May 9, 1996
<PAGE> 49
Agreement. Neither party hereto shall have any express or implied right or
authority to assume or create any obligations on behalf of or in the name of the
other party or to bind the other party to any contract, agreement or undertaking
with any third party. All contracts, expenses and liabilities undertaken or
incurred by one party in connection with or relating to the development,
manufacture, marketing or sale of Licensed Products shall be undertaken,
incurred or paid exclusively by that party, and not as an agent or
representative of the other party.
8.4 SEVERABILITY. It is the intention of the parties to comply with all
applicable laws domestic or foreign in connection with the performance of its
obligations hereunder. In the event that any provision of this Agreement, or any
part hereof, is found invalid or unenforceable, the remainder of this Agreement
will be binding on the parties hereto, and will be construed as if the invalid
or unenforceable provision or part thereof had been deleted, and the Agreement
shall be deemed modified to the extent necessary to render the surviving
provisions enforceable to the fullest extent permitted by law.
8.5 GOVERNMENT ACTS. In the event that any act, regulation, directive,
or law of a government within the Territory, including its departments, agencies
or courts, should make impossible or prohibit, restrain, modify or limit any
material act or obligation of BIOCHEM or VERTEX under this Agreement and if any
party to this Agreement is adversely affected thereby, the parties shall attempt
in good faith to negotiate a lawful and enforceable modification to this
Agreement which substantially eliminates the adverse effect; provided that
failing any agreement, in that regard, the party, if any, who is adversely
affected, shall have the right, at its option, to suspend or terminate this
Agreement.
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CONFIDENTIAL - May 9, 1996
<PAGE> 50
8.6 GOVERNMENT APPROVALS. BIOCHEM will diligently seek to obtain any
government approval required in the Territory to enable this Agreement to become
effective, or to enable any payment hereunder to be made, or any other
obligation hereunder to be observed or performed. Each party will keep the other
informed of progress in obtaining any such approvals.
8.7 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by either party without the written consent of the other party
which, in the case of assignment to an Affiliate, shall not be unreasonably
withheld or delayed; provided, however, that either party may, without such
consent, assign this Agreement in connection with the transfer or sale of all or
substantially all of its pharmaceuticals business or in the event of its merger
or consolidation with another company; and provided further, that any assignment
by BIOCHEM to its existing subsidiary BioChem Therapeutic Inc. shall not require
the written consent of VERTEX. Any purported assignment in violation of the
preceding sentence shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement. No assignment shall relieve
either party of responsibility for the performance of any accrued obligation
which such party then has hereunder.
8.8 DISPUTE RESOLUTION. Disputes arising out of or relating to any
provision of this Agreement or the breach thereof, which the parties hereto are
unable to resolve, shall be submitted to and be settled in accordance with the
provisions of Article XI of the License Agreement.
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<PAGE> 51
8.9 COUNTERPARTS. This Agreement may be executed in duplicate both of
which shall be deemed to be originals, and both of which shall constitute one
and the same Agreement.
8.10 NOTICE. All communications between the parties with respect to any
of the provisions of this Agreement will be sent to the addresses set out below,
or to other addresses as notified by the parties for the purpose of this clause,
by prepaid, registered or certified air mail which shall be deemed received by
the other party on the seventh business day following deposit in the mails, or
by cable, telex, facsimile transmission, or other electronic means of
communication (which shall be deemed received when transmitted), with
confirmation by letter given by the close of business on the next following
business day:
if to BIOCHEM, at:
BioChem Pharma (International) Inc.
275 Armand-Frappier Boulevard
Laval, QuEbec H7V 4A7
CANADA
Attention: Michael Grey, Vice-President
With a copy to: Charles Tessier, Vice-President Legal Affairs
and Corporate Secretary, BioChem Pharma Inc. (same address)
if to VERTEX, at:
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA 02139-4211
USA
Attention: Richard H. Aldrich, Senior Vice-President and Chief
Business Officer
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<PAGE> 52
8.11 HEADINGS. The paragraph headings are for convenience only and will
not be deemed to affect in any way the language of the provisions to which they
refer.
8.12 AUTHORITY. The undersigned represent that they are authorized to
sign this Agreement on behalf of the parties hereto. The parties each represent
that no provision of this Agreement will violate any other agreement that a
party may have with any other person or company. Each party has relied on that
representation in entering into this Agreement.
8.13 ENTIRE AGREEMENT. This Agreement, including the Schedules appended
hereto, contains the entire understanding of the parties relating to the matters
referred to herein, and may only be amended by a written document, duly executed
on behalf of the respective parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
Date of signature: __________________ Date of signature: _________________
VERTEX PHARMACEUTICALS BIOCHEM PHARMA (INTERNATIONAL)
INCORPORATED INC.
By: ________________________________
By: _________________________________ Name: Michael Grey
Name: Richard H. Aldrich Title: Vice-President
Title: Senior Vice-President and
Chief Business Officer
By: ________________________________
Name: Francois Legault
Title: Treasurer
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CONFIDENTIAL - May 9, 1996
<PAGE> 53
<TABLE>
SCHEDULE 2.4
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PURCHASE ORDER FORM
---------------------------------------- ---------------------------------
BON DE COMMANDE DOIT FIGURER SUR TOUS LES DOCUMENTS
PURCHASE ORDER RELATIFS A CETTE COMMANDE __________________
BIOCHEM PHARMA MUST APPEAR ON ALL DOCUMENTS No. demande
BIOCHEM THRAPEUTIQUE PERTAINING TO THIS ORDER Req. No.
---------------------------------------- ---------------------------------
FACTURER A / INVOICE TO:
---------------------------------------- ---------------------------------
BIOCHEM THERAPEUTIQUE INC. Livrer a /Ship to: Attention:
UNE FILIALE DE / A SUBSIDIARY OF BIOCHEM PHARMA INC. BioChem Therapeutic Inc. ---------------------------------
275, Boul. Armand-Frappier 275, Boul. Armand-Frappier Service / Dept:
Laval (Quebec) H7V 4A7 Laval (Quebec) H7V 4A7 ---------------------------------
Telephone / Tel: (514) 667-4910 Telephone / Tel: (514) 667-4910 Commande le / Ordered on:
Telecopier / Fax: (514) 978-7767 Telecopier / Fax: (514) 978-7767 ---------------------------------
Date de livraison:
Delivery date:
- -----------------------------------------------------------------------------------------------------------------------------------
Fournisseur / Supplier: Contact: Regiements / Terms:
---------------------------------------- ---------------------------------
Telephone / Phone: F.A.B. / F.O.B.
---------------------------------------- ---------------------------------
Telecopieur / Fax: Garantile / Warranty:
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Quantite Unite Prix unitaire Sous-total
Quantity Unit Code d'article et description / Part number and description Unit price Sub-total T.P.S./G.S.T. T.V.Q./Q.S.T.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C> <C>
Code comptable TOTAL DE CETTE COMMANDE
Accounting code Demandeur / Requisilionner Autorisation / Approval TOTAL OF THIS ORDER
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Supply Agreement - Schedule 2.4
CONFIDENTIAL - May 9, 1996
<PAGE> 54
<TABLE>
<S> <C>
- ------------------------------------------------------------------------- Cei achat est aulet aux tarmes et conditions
apparalssant a lendos.
- -------------------------------------------------------------------------
Finance: Approvisionement: This purchase is made subject to the terms and
Purchasing: conditions shown on the back hereof.
- ----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION DES COPIES -BLANC: Fournisseur -JAUNE: Complabilite -VERT: Acheteur -ROSE: Inventaire
COPIES DISTRIBUTION -WHITE: Supplier YELLOW: Accounting -GREEN: Buyer -PINK:: Inventory
</TABLE>
Supply Agreement - Schedule 2.4
CONFIDENTIAL - May 9, 1996
<PAGE> 55
SCHEDULE 3.2
- --------------------------------------------------------------------------------
COMPUTATION OF SALES PRICE
[CONFIDENTIAL INFORMATION OMITTED]
