1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-Q
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
VERTEX PHARMACEUTICALS INCORPORATED
(Exact name of registrant as specified in its charter)
Massachusetts 04-3039129
------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
130 WAVERLY STREET, CAMBRIDGE, MASSACHUSETTS 02139-4242
------------------------------------------------------
(Address of principal executive offices, including zip code)
(617) 577-6000
--------------
(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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, par value $.01 per share 17,368,453
- - -------------------------------------- --------------------------
Class Outstanding at May 9, 1996
-1-
2
VERTEX PHARMACEUTICALS INCORPORATED
INDEX
PAGE
PART I. - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 1996 and December 31, 1995 3
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1996 and 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. - OTHER INFORMATION 9
SIGNATURES 10
-2-
3
VERTEX PHARMACEUTICALS INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
March 31, December 31,
1996 1995
---- ----
ASSETS
Current assets:
Cash and cash equivalents $ 20,178 $ 28,390
Short-term investments 57,078 58,588
Prepaid expenses and other current assets 1,330 959
-------- --------
Total current assets 78,586 87,937
Restricted cash 2,316 2,316
Property and equipment, net 7,591 7,840
Other assets 1,827 888
-------- --------
Total assets $ 90,320 $ 98,981
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Obligations under capital lease $ 2,112 $ 2,075
Accounts payable and accrued expenses 4,210 6,525
Deferred revenue 1,197 197
-------- --------
Total current liabilities 7,519 8,797
-------- --------
Obligations under capital leases, excluding
current portion 4,371 4,912
-------- --------
Total liabilities 11,890 13,709
-------- --------
Stockholders' equity:
Common stock 174 173
Additional paid-in capital 142,907 142,038
Equity adjustments (244) ---
Accumulated deficit (64,407) (56,939)
-------- --------
Total stockholders' equity 78,430 85,272
-------- --------
Total liabilities and stockholders' equity $ 90,320 $ 98,981
======== ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-3-
4
VERTEX PHARMACEUTICALS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except share and per share data)
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
Revenues:
Collaborative and other research and development $ 2,473 $ 5,053
Interest income 1,278 1,280
----------- -----------
Total revenues 3,751 6,333
----------- -----------
Costs and expenses:
Research and development 9,337 9,362
General and administrative 1,763 1,558
Interest 119 116
----------- -----------
Total costs and expenses 11,219 11,036
----------- -----------
Net loss $ (7,468) $ (4,703)
=========== ===========
Net loss per common share $ (0.43) $ ( 0.27)
=========== ===========
Weighted average number of common shares
outstanding 17,331,896 17,189,676
=========== ===========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-4-
5
VERTEX PHARMACEUTICALS INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Three Months Ended March 31,
----------------------------
1996 1995
---- ----
Cash flows from operating activities:
Net loss $(7,468) $ (4,703)
Adjustment to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 828 984
Changes in assets and liabilities:
Prepaid expenses and other
current assets (371) (1,144)
Accounts payable and accrued
expenses (2,315) (112)
Deferred revenue 1,000 ---
------- --------
Net cash provided (used) by
operating activities (8,326) (4,975)
------- --------
Cash flows from investing activities:
Short-term investments 1,267 (12,780)
Deposit to collateralize letter of credit --- (2,316)
Expenditures for property and equipment (579) (548)
Other assets (939) (22)
------- --------
Net cash provided (used) by
investing activities (251) (15,666)
------- --------
Cash flows from financing activities:
Other issuances of common stock 870 165
Proceeds from equipment sale/leaseback --- 697
Repayment of capital lease obligations (504) (432)
------- --------
Net cash provided (used) by
financing activities 366 430
------- --------
Effect of exchange rate changes on cash (1) 2
------- --------
Decrease in cash and cash equivalents (8,212) (20,209)
Cash and cash equivalents at beginning of period 28,390 71,643
------- --------
Cash and cash equivalents at end of period $20,178 $ 51,434
======= ========
The accompanying notes are an integral part of these
condensed consolidated financial statements.
-5-
6
VERTEX PHARMACEUTICALS INCORPORATED
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements are unaudited and have been prepared
by the Company in accordance with generally accepted accounting principles.
Certain information and footnote disclosures normally included in the
Company's annual financial statements have been condensed or omitted. The
interim financial statements, in the opinion of management, reflect all
adjustments (including normal recurring accruals) necessary for a fair statement
of the results for the interim periods ended March 31, 1996 and 1995.
The results of operations for the interim periods are not necessarily
indicative of the results of operations to be expected for the fiscal year,
although the Company expects to incur a substantial loss for the year ended
December 31, 1996. These interim financial statements should be read in
conjunction with the audited financial statements for the year ended December
31, 1995, which are contained in the Company's 1995 Annual Report to its
shareholders and in its Form 10-K filed with the Securities and Exchange
Commission.
2. CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments with maturities of three months or less at the date of
purchase to be cash equivalents. Changes in cash and cash equivalents may be
affected by shifts in investment portfolio maturities as well as by actual net
cash receipts or disbursements.
3. NET LOSS PER COMMON SHARE
The net loss per common share is computed based upon the weighted average
number of common shares outstanding. Common equivalent shares are not included
in the per-share calculations where the effect of their inclusion would be
anti-dilutive.
4. SUBSEQUENT EVENT - LICENSE AGREEMENT WITH BIOCHEM PHARMA INC.
On May 9, 1996, Vertex signed an exclusive license and supply agreement
with BioChem Pharma Inc. for development and marketing in Canada of VX-710,
Vertex's lead multidrug resistance reversal agent. Under the development
agreement, BioChem Pharma will pay Vertex an initial licensing fee, and make
payments for development and commercialization milestones. BioChem Pharma will
fund development of VX-710 in Canada, including planned Phase II clinical trials
in two different cancer indications. Vertex will supply Biochem Pharma's
clinical and commercial drug supply needs. BioChem Pharma will pay Vertex a
portion of its net sales which will cover Vertex's cost of supplying material
and will provide a profit to Vertex.
-6-
7
VERTEX PHARMACEUTICALS INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Vertex Pharmaceuticals Incorporated ("Vertex" or "the Company") is engaged
in the discovery, development and commercialization of novel, small molecule
pharmaceuticals for the treatment of major diseases for which there are
currently limited or no effective treatments. The Company is a leader in the use
of structure-based drug design, an approach to drug discovery that integrates
advanced biology, biophysics and chemistry. The Company is conducting seven
significant pharmaceutical research and development programs to develop
pharmaceuticals for the treatment of viral diseases, multidrug resistance in
cancer, hemoglobin disorders, inflammation, autoimmune diseases and organ
transplant rejection. Three of these programs are in the development phase, and
the other four are in the research phase. During the first quarter of 1996,
Glaxo Wellcome plc. conducted Phase I/II clinical trials to assess the safety,
pharmacokinetics and initial efficacy of VX-478, the lead compound from the
Company's HIV Program. Kissei Pharmaceutical Co., Ltd. ("Kissei") is also
developing VX-478 as Vertex's partner for the HIV Program in the Far East. Phase
I/II clinical trials of VX-710, the Company's lead compound in its Cancer
Multidrug Resistance Program, continued according to plan. The Company recently
entered into a collaboration with BioChem Pharma (International) Inc.
("BioChem") for the development and commercialization of VX-710 in Canada. The
Company, together with its partners Alpha Therapeutic Corporation ("Alpha") and
Ravizza Farmaceutici S.p.A., also continued development of VX-366 in its
Hemoglobin Disorders Program.
To date, the Company has not received any revenues from the sale of
pharmaceutical products and does not expect to receive such revenues ,if any,
for several years. The Company has incurred, since its inception, and expects
to incur over the next several years, significant operating losses as a result
of expenditures for its research and development programs. The Company expects
that losses will fluctuate from quarter to quarter and that such fluctuations
may be substantial.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED WITH THREE MONTHS ENDED MARCH
31, 1995. For the first quarter of 1996, the Company's total revenues were
$3,751,000 as compared to $6,333,000 during the same period in 1995. From
quarter to quarter, the Company's revenues fluctuate as a result of changes in
the timing and amount of partner research support payments, partner
reimbursements of Vertex drug development costs, and payments for the
achievement of various research and development milestones. The quarterly
revenue decline for the three months ended March 31, 1996 compared to the three
months ended March 31, 1995 was principally due to the conclusion of research
funding requirements of the Chugai Pharmaceutical Co., Ltd. and Kissei
collaborative agreements in April and December 1995, respectively. These two
collaborations generated $1,938,000 of revenue during the first quarter of 1995.
In the first quarter of 1996, the Company earned $2,281,000 in revenue from its
collaborative agreements, $1,278,000 in interest earned on invested funds and
$192,000 from government grants and other revenue. In the first quarter of 1995,
revenues consisted of $4,921,000 earned under collaborative agreements,
$1,280,000 in interest earned on invested funds and $132,000 from government
grants.
-7-
8
The Company's total costs and expenses increased to $11,219,000 in the
first quarter of 1996, from $11,036,000 during the same period in 1995. Research
and development expenses were $9,337,000 in the first quarter of 1996 as
compared to $9,362,000 during the same period in 1995. The Company experienced
higher research costs associated with an increase in the number of research
employees which was largely offset by lower contracted development costs. While
development activities associated with the Company's clinical candidates have
been increasing, these costs and activities have largely been borne by Vertex's
partners. General and administrative expenses increased during the first quarter
of 1996 to $1,763,000 from $1,558,000 in the first quarter of 1995 due primarily
to an increase in costs associated with patent protection for the Company's
intellectual property as well as an increase in Altus Biologics' marketing
efforts. Interest expense was $119,000 in the first quarter of 1996 as compared
to $116,000 during the same period in 1995.
The Company incurred a net loss of $7,468,000 or $.43 per share in the
first quarter of 1996 as compared to a net loss of $4,703,000 or $.27 per share
in the first quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company's operations have been funded principally
through strategic collaborative agreements, public offerings and private
placements of the Company's equity securities, equipment lease financing,
government grants and interest income. The Company expects to incur increased
research and development and related supporting expenses and, consequently,
continued losses on a quarterly and annual basis as it continues developing
existing and future compounds as well as undertaking clinical trials of
potential drugs. The Company also expects to incur substantial administrative
and commercialization expenditures in the future and increased expenses related
to the filing, prosecution, defense and enforcement of patent and other
intellectual property rights.
The Company expects to finance these substantial cash needs through
existing cash and investments, together with interest earned thereon, future
payments under its existing collaborative agreements, and facilities and
equipment financing. To the extent that funds from these sources are not
sufficient to fund the Company's activities, it will be necessary to raise
additional funds through public offerings or private placements of securities or
other methods of financing. There can be no assurance that such financing will
be available on acceptable terms, if at all.
On May 9, 1996, the Company entered into a collaborative agreement with
BioChem Pharma (International) Inc. for the development and commercialization of
VX-710, the Company's lead compound in its cancer multidrug resistance program.
Under the collaborative agreement, BioChem has exclusive rights to develop and
commercialize VX-710 in Canada. BioChem is obligated to pay the Company an
initial license fee and make payments for development and commercialization
milestones. In addition, BioChem is obligated to bear the costs of development
of VX-710 under the collaboration. The Company will supply BioChem's
requirements of bulk and finished forms of VX-710. BioChem will make payments to
the Company for those materials based on sales of products by BioChem, which
will cover Vertex's cost of supplying materials and provide a profit to Vertex.
BioChem has the right to terminate the agreement without cause upon six months
notice, at any time after May 8, 1997. Termination will relieve BioChem of any
further payment obligations under the agreement and will end any license granted
to BioChem from Vertex thereunder.
The Company's aggregate cash and investments decreased by $9,722,000 during
the three months ended March 31, 1996 to $77,256,000. Cash used by operations,
principally to fund research and development activities, was $8,326,000 during
the same period.
-8-
9
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings:
------------------
None
Item 2. Changes in Securities:
----------------------
None
Item 3. Defaults Upon Senior Securities:
--------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders:
----------------------------------------------------
None
Item 5. Other Information:
------------------
None
Item 6. Exhibits:
10.1 License Agreement and Supply Agreement, both dated May 9, 1996,
between the Company and BioChem Pharma (International) Inc. (filed
herewith with certain confidential information omitted)
27 Financial Data Schedule. (Exhibit 27 is submitted as an exhibit
only in the electronic format of this Quarterly Report on Form
10-Q submitted to the Securities and Exchange Commission.)
Reports on Form 8-K:
--------------------
None
-9-
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VERTEX PHARMACEUTICALS INCORPORATED
Date: May 14, 1996 /s/ Thomas G. Auchincloss, Jr.
------------------------------
Thomas G. Auchincloss, Jr.
Senior Director of Finance and Treasurer
(Principal Financial Officer)
/s/ Hans D. van Houte
------------------------------
Hans D. van Houte
Controller
(Principal Accounting Officer)
-10-
1
EXHIBIT 10.1
CANCER MULTIDRUG RESISTANCE PROGRAM
LICENSE AGREEMENT
between
VERTEX PHARMACEUTICALS INCORPORATED
and
BIOCHEM PHARMA (INTERNATIONAL) INC.
MAY 9, 1996
2
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
Note: [ ] = Formula Equation
3
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.
License Agreement - Page 2
CONFIDENTIAL - May 9, 1996
4
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 C[34]H[41]N[3]O[7].2(C[6]H[8]O[7]), 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
License Agreement - Page 3
CONFIDENTIAL - May 9, 1996
5
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
License Agreement - Page 4
CONFIDENTIAL - May 9, 1996
6
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:
License Agreement - Page 5
CONFIDENTIAL - May 9, 1996
7
(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
License Agreement - Page 6
CONFIDENTIAL - May 9, 1996
8
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
License Agreement - Page 7
CONFIDENTIAL - May 9, 1996
9
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.
License Agreement - Page 8
CONFIDENTIAL - May 9, 1996
10
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
License Agreement - Page 9
CONFIDENTIAL - May 9, 1996
11
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.
License Agreement - Page 10
CONFIDENTIAL - May 9, 1996
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.
License Agreement - Page 11
CONFIDENTIAL - May 9, 1996
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
License Agreement - Page 12
CONFIDENTIAL - May 9, 1996
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.
License Agreement - Page 13
CONFIDENTIAL - May 9, 1996
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
License Agreement - Page 14
CONFIDENTIAL - May 9, 1996
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]
License Agreement - Page 15
CONFIDENTIAL - May 9, 1996
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]
License Agreement - Page 16
CONFIDENTIAL - May 9, 1996
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
License Agreement - Page 17
CONFIDENTIAL - May 9, 1996
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.
License Agreement - Page 18
CONFIDENTIAL - May 9, 1996
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) 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.
License Agreement - Page 19
CONFIDENTIAL - May 9, 1996
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.
License Agreement - Page 20
CONFIDENTIAL - May 9, 1996
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.
(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;
License Agreement - Page 21
CONFIDENTIAL - May 9, 1996
23
(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 Agreement shall be deemed modified to the extent necessary to
render the surviving provisions enforceable to the fullest extent permitted by
law.
License Agreement - Page 22
CONFIDENTIAL - May 9, 1996
24
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.
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
License Agreement - Page 23
CONFIDENTIAL - May 9, 1996
25
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.
14.14 COMPETITION.
[CONFIDENTIAL INFORMATION OMITTED]
License Agreement - Page 24
CONFIDENTIAL - May 9, 1996
26
[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.
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 INCORPORATED BIOCHEM PHARMA (INTERNATIONAL) INC.
By:________________________________ By:________________________________
Name: Richard H. Aldrich Name: Michael Grey
Title: Senior Vice-President and Title: Vice-President
Chief Business Officer
By:________________________________
Name: Francois Legault
Title: Treasurer
License Agreement - Page 25
CONFIDENTIAL - May 9, 1996
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
28
EXHIBIT A
SUMMARY DEVELOPMENT PLAN
[CONFIDENTIAL INFORMATION OMITTED]
License Agreement - Exhibit A
CONFIDENTIAL - May 9, 1996
29
EXHIBIT B
SUPPLY AGREEMENT
License Agreement - Exhibit B
CONFIDENTIAL - May 9, 1996
30
CANCER MULTIDRUG RESISTANCE PROGRAM
SUPPLY AGREEMENT
between
VERTEX PHARMACEUTICALS INCORPORATED
and
BIOCHEM PHARMA (INTERNATIONAL) INC.
MAY 9, 1996
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:
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.
Supply Agreement -- Page 1
CONFIDENTIAL - May 9, 1996
32
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 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;
Supply Agreement -- Page 2
CONFIDENTIAL - May 9, 1996
33
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.
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
Supply Agreement -- Page 3
CONFIDENTIAL - May 9, 1996
34
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 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.
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.
Supply Agreement -- Page 4
CONFIDENTIAL - May 9, 1996
35
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
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
Supply Agreement -- Page 5
CONFIDENTIAL - May 9, 1996
36
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.
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 provide to BIOCHEM access to all VERTEX Technical Information
necessary for manufacture of VX-710.
Supply Agreement -- Page 6
CONFIDENTIAL - May 9, 1996
37
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]
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
Supply Agreement -- Page 7
CONFIDENTIAL - May 9, 1996
38
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.
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
Supply Agreement -- Page 8
CONFIDENTIAL - May 9, 1996
39
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 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 9
CONFIDENTIAL - May 9, 1996
40
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 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.
Supply Agreement -- Page 10
CONFIDENTIAL - May 9, 1996
41
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.
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
Supply Agreement -- Page 11
CONFIDENTIAL - May 9, 1996
42
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, 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
(ii) be diligently and in good faith cooperating in the
prompt resolution of such arbitration proceedings.
Supply Agreement -- Page 12
CONFIDENTIAL - May 9, 1996
43
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 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.
Supply Agreement -- Page 13
CONFIDENTIAL - May 9, 1996
44
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 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
Supply Agreement -- Page 14
CONFIDENTIAL - May 9, 1996
45
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.
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.
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
Supply Agreement -- Page 15
CONFIDENTIAL - May 9, 1996
46
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
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.
Supply Agreement -- Page 16
CONFIDENTIAL - May 9, 1996
47
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 INCORPORATED BIOCHEM PHARMA (INTERNATIONAL) 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
Supply Agreement -- Page 17
CONFIDENTIAL - May 9, 1996
48
SCHEDULE 2.4
PURCHASE ORDER FORM
The Purchase Order Form is on file with the Registrant.
Supply Agreement - Schedule 2.4
CONFIDENTIAL - May 9, 1996
49
SCHEDULE 3.2
COMPUTATION OF SALES PRICE
[CONFIDENTIAL INFORMATION OMITTED]
Supply Agreement - Schedule 3.2
CONFIDENTIAL - May 9, 1996
5
1,000
U.S. DOLLARS
3-MOS
DEC-31-1996
JAN-01-1996
MAR-31-1996
1
20,178
57,078
0
0
0
78,586
25,297
17,706
90,320
7,519
0
174
0
0
78,256
90,320
0
3,751
0
11,100
0
0
119
(7,468)
0
0
0
0
0
(7,468)
(0.43)
0
