EXHIBIT 10.1
AMENDMENT NO. 3
TO
LICENSE AND DEVELOPMENT AGREEMENT
This Amendment No. 3 to License and Development Agreement (this
"Amendment") is made as of the 25th day of March, 1997 (the "Effective Date") by
and between Aronex Pharmaceuticals, Inc., a Delaware corporation ("Aronex"), and
Genzyme Corporation, a Massachusetts corporation ("Genzyme"). Capitalized terms
used without definition in this Amendment shall have the meanings given to such
terms in the Development Agreement (as defined below).
RECITALS
WHEREAS, Aronex (f/k/a Argus Pharmaceuticals, Inc.) and Genzyme entered
into a License and Development Agreement dated September 10, 1993 (as
subsequently amended by amendments dated September 8, 1995 and September 10,
1996, the "Development Agreement") relating to the development, license,
manufacture, marketing and sale of pharmaceutical compositions incorporating
"AR-623" (also known as "Atragen/(TM)/"); and
WHEREAS, Aronex and Genzyme desire to amend the Development Agreement (i)
to release Genzyme from any obligation to perform further development work for
AR-623 and (ii) to convert the license granted to Genzyme in the Development
Agreement to an option to market and sell Products as provided herein; and
WHEREAS, Aronex is willing to assume certain responsibility for further
development work for AR-623 and marketing and sales as provided herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, Aronex and Genzyme agree as follows:
1. TERMINATION OF LICENSE; GRANT OF MARKETING RIGHTS OPTION TO GENZYME.
The license granted to Genzyme pursuant to Article 2 of the Development
Agreement is hereby terminated and shall be of no further force and effect.
Article 2 of the Development Agreement is hereby amended and restated to read in
its entirety as follows:
2. MARKETING RIGHTS.
2.1 Genzyme Option. Subject to the terms and conditions of this
Agreement, Genzyme shall have the option (the "Option"), exercisable in its
sole discretion, to obtain (i) the exclusive right (with the right to
sublicense) to use, market, import, export and sell any Product in the
Field throughout the world excluding the United States and its territories
and possessions and (ii) the right to co-promote with Aronex pursuant to
Section 5.3 any Product in the Field in the United States and its
territories and possessions (the "Marketing Rights").
2.2 Exercise of Option; Royalties. Genzyme may exercise the Option
at any time prior to the date that is six months after the filing of an NDA
for a Product for any indication (the "Option
Expiration Date") by (i) giving Aronex written notice of its exercise of
the Option and (ii) paying Aronex Three Million Dollars ($3,000,000.00). If
Genzyme exercises the Option, Genzyme shall pay Aronex a royalty equal to
[*] of Net Sales by Genzyme, its Affiliates and its sublicensees throughout
the world. If Genzyme does not exercise the Option within six months after
the filing of an NDA for the Product for any indication, the Option shall
expire and may not thereafter be exercised with respect to the Product for
which the NDA is filed or any subsequent Product or indication.
2.3 Aronex Right to Re-Acquire Marketing Rights. Notwithstanding the
foregoing, Aronex shall have the right, exercisable at any time before the
end of the twelve-month period following the filing of an NDA, to re-
acquire the Marketing Rights and to terminate Genzyme's rights thereunder
by (i) giving Genzyme written notice of its exercise of such right, (ii)
paying Genzyme Two Million Dollars ($2,000,000.00) and (iii), if such right
is exercised after Genzyme's exercise of the Option, additionally returning
to Genzyme the Three Million Dollars ($3,000,000.00) received from Genzyme
in connection with Genzyme's exercise of the Option. If Aronex terminates
Genzyme's rights to use, market, import, export and sell Products pursuant
to this Section 2.3, Aronex shall pay Genzyme a royalty equal to (i) [*] of
Net Sales by Aronex and its Affiliates throughout the world and (ii) [*] of
Sublicensee Royalties received by Aronex and its Affiliates; provided that
Aronex shall pay a minimum of $500,000 of royalties within the first twelve
months following the due date of the $2,000,000 payment provided for above
(which amount shall be credited against the percentage royalties
contemplated hereby). Aronex's obligation to pay such royalties shall
terminate once Aronex has paid a total of Thirteen Million Dollars
($13,000,000.00) in royalties.
2.4 Failure to Exercise or Termination by Genzyme. If Genzyme does not
exercise the Option, or if Genzyme terminates the Option prior to the
Option Expiration Date as provided below, Aronex shall pay Genzyme Two
Million Dollars ($2,000,000.00) within thirty (30) days after the Option
Expiration Date or such earlier termination. In addition, Aronex shall pay
Genzyme a royalty equal to (i) [*] of Net Sales by Aronex and its
Affiliates throughout the world and (ii) [*] of Sublicensee Royalties
received by Aronex and its Affiliates; provided that Aronex shall pay a
minimum of $500,000 of royalties within the first twelve months following
the due date of the $2,000,000 payment provided for above (which amount
shall be credited against the percentage royalties contemplated hereby).
Aronex's obligations to pay such royalties shall terminate once Aronex has
paid a total of Eight Million Dollars ($8,000,000.00) in royalties. Genzyme
may terminate the Option and relinquish its rights thereunder at any time
prior to the Option Expiration Date, but no earlier than the earlier of (i)
March 24, 1999 and (ii), if applicable, Aronex's termination of all
clinical development of AR-623, by giving Aronex written notice of such
termination.
2.5 Reports and Payments. Any party obligated to pay royalties
hereunder (the "Paying Party") shall keep, and shall require all Affiliates
and sublicensees to keep, for a period of three years after a payment is
due, accurate records in sufficient detail to enable the amounts due
hereunder to be determined. Within sixty (60) days after the end of each
calendar quarter, the Paying Party shall deliver to the other party a
written accounting, including quantities and monetary amounts of sales of
each Product by the Paying Party and its Affiliates and any sublicensees,
on a country-by-country basis, and the amount of royalty payments, if any,
due for such quarter. The Paying Party, upon delivery of such accounting,
shall pay all royalties shown to be due thereunder.
* Confidential treatment requested
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2.6 Audit Rights. A Paying Party shall permit the other party or its
representatives to have access to the Paying Party's books and records for
the sole purpose of verifying the royalties payable hereunder. Such review
may be conducted no more than once during each year royalties are due
hereunder and twice during the three years following termination of this
Agreement. The review shall be conducted after reasonable notice and
during reasonable business hours. If such review reveals that royalties
have been understated for any calendar year, such underpayment shall be
immediately paid by the Paying Party; provided that if such examination was
not conducted by an independent accountant, the Paying Party shall have the
right to engage an independent accountant reasonably acceptable to the
other party to verify the results of such review. The fees and expenses of
such accountant shall be paid by the party alleging an error unless the
error is more than ten percent (10%) of the actual amount due, in which
case the party who made the error shall pay all reasonable costs and
expenses incurred by the investigating party in the course of making such
determination. Any sublicense granted by either party shall contain audit
provisions as set forth in this subsection 2.6.
2.7 Payment Currency. All payments to be made under this Agreement
shall be made in United States dollars. In the case of sales in foreign
currencies, the rate of exchange to be used in computing the amount of
currency equivalent in United States dollars due hereunder shall be made at
the rate of exchange prevailing on the last day of the calendar quarter
published by the money center bank designated by the Paying Party which it
uses for currency conversion in the preparation of its public financial
reports.
2.8 Payment Mechanics. All payments under this Agreement shall be
made by wire transfer of immediately available funds to such account as the
receiving party shall specify or by other payment method acceptable to the
parties. If royalties are due for Net Sales in a country where, for
reasons of currency, tax or other regulations, transfer of foreign currency
out of such country is prohibited, the Paying Party may pay such royalties
by placing them in a bank account in such country in the name of and under
the sole control of the receiving party; provided, however, that the bank
selected be reasonably acceptable to the receiving party and that the
Paying Party inform the receiving party of the location, account number,
amount and currency of money deposited therein.
2.9 Acquisition of Third Party Rights. Aronex shall use all
commercially reasonable efforts to obtain any rights from any Third Party
that are necessary for the manufacture, use or sale of the Product in
accordance with this Agreement and upon such acquisition by Aronex, such
rights shall be automatically included in the Option granted in Section 2.1
without any further action of the parties. The costs of obtaining such
rights shall be borne as follows:
(a) Aronex Costs. Aronex shall bear all costs associated with (i)
Third Party rights necessary for the manufacture or sale of both the
Product and other products under development or being sold by Aronex or its
Affiliates or sublicensees and (ii) Third Party rights with respect to
Product sales by Aronex or its Affiliates or sublicensees (other than
Genzyme).
(b) Genzyme Costs. Genzyme shall bear all costs associated with Third
Party rights with respect to Product sales by Genzyme or its Affiliates or
sublicensees.
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(c) Shared Costs. In the event Aronex and Genzyme co-promote sales of
the Product in the United States, Aronex and Genzyme shall share costs
associated with third party rights in proportion to their relative shares
of Net Profit.
2. DEVELOPMENT PROGRAM. Aronex and Genzyme agree that the research and
development being conducted by Genzyme in accordance with the current Work Plan
shall be terminated as promptly as practicable, and that Genzyme shall have no
obligation to perform any further research or development under the Development
Agreement. Notwithstanding the foregoing, Genzyme shall provide Aronex with an
NDA quality report with accompanying table summaries and case reports of the
phase II/III Kaposi's sarcoma clinical trial no later than August 1, 1997.
Aronex presently intends to continue certain research and development work for
AR-623, and to file an NDA and a PLA for the use of AR-623 for treatment of APL,
but shall have the right to discontinue all such research and development, in
its sole discretion, for any reason. Except as expressly set forth in this
Amendment, Article 3 of the Development Agreement is hereby amended and restated
to read in its entirety as follows:
3.1 Project Representatives. The parties have each designated a
Project Representative to facilitate as a liaison between it and the other
party, and to oversee and review the progress of the Development Program
and other relevant matters under this Agreement.
3.2 Progress Reports. Within 45 days following the end of each
calendar year, the Aronex Project Representative shall deliver to the
Genzyme Project Representative a reasonably detailed written report which
shall describe the progress of the Development Program performed by it
during the year.
3.3 Records and Data. Each party shall maintain records in
sufficient detail and in good scientific manner appropriate for patent and
FDA purposes and so as to properly reflect all work done and results
achieved in the performance of the Development Program. Such records shall
include books, records, reports, research notes, charts, graphs, comments,
computations, analyses, recordings, photographs, computer programs and
documentation thereof, computer information storage means, samples of
materials and other graphic or written data generated in connection with
the Development Program, including any data required to be maintained
pursuant to applicable governmental regulations. Each party shall provide
the other the right to inspect records, and shall provide copies of all
requested records, to the extent, reasonably related to the performance of
the other's obligations under this Agreement.
3. ALLOCATION OF COSTS; TERMINATION OF MILESTONE AND OTHER PAYMENTS. All
expenses incurred by either party pursuant to the Development Agreement through
the Effective Date shall be determined within thirty (30) days of the Effective
Date and responsibility for such costs and any resulting reimbursements shall be
made according to the terms of the Development Agreement as in effect prior to
this Amendment. Except for the foregoing allocation of costs, the Development
Agreement is hereby amended by deleting Article 4 thereof in its entirety.
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4. COMMERCIALIZATION RIGHTS. Article 5 of the Development Agreement is
hereby amended and restated to read in its entirety as follows:
5. COMMERCIALIZATION. In the event the Option is exercised:
5.1. Manufacturing. Aronex shall be responsible for manufacturing or
subcontracting the manufacture of all of Genzyme's requirements for
Product, subject to customary forecast and order procedures. If Aronex or
its subcontractor is manufacturing, Aronex's (or its subcontractor's)
responsibilities shall include all aspects of the manufacturing process,
including maintenance of manufacturing inventory, quality control and
shipment of Product in accordance with orders placed by Genzyme. As
compensation for such manufacturing services, Aronex shall be entitled to
receive payment of its fully burdened COGS.
5.2 Sales. Following regulatory approval in any country, Genzyme
shall use commercially reasonable efforts to market and sell the Product in
such country. All terms of sale, including pricing policies, credit terms,
cash discounts and returns and allowances, as well as the nature of
marketing efforts, shall be set by Genzyme. Genzyme shall be responsible
for invoicing the customers for Product and collecting payment therefor.
The Product shall be sold under the trademark "Atragen" (for which purpose
Genzyme shall have a royalty-free license to use such trademark) or such
other trademark as the parties may agree.
5.3 Co-Promotion. Aronex and Genzyme shall co-promote the Product in
the United States, subject to the following principles of agreement and
such other terms and conditions as the parties may agree upon at that time:
(a) Sales and Marketing. The parties shall select one party by
agreement which shall retain management responsibility for sales and
marketing of the Product (the "Marketing Manager"). All marketing decisions
will be made by the Marketing Manager, including but not limited to pricing
and other terms of sale, distribution channels, sales personnel,
advertising, promotion and marketing programs. All customer orders will be
received, executed and invoiced by the Marketing Manager. If the other
party receives any orders, it will refer the customer to the Marketing
Manager or appropriate drug wholesalers as designated by the Marketing
Manager. The parties shall agree upon the responsibilities and scope of
the party that is not selected to be the Marketing Manager, with the
expectation that such other party shall substantively participate in the
marketing and "technical detailing" of the Product.
(b) Profit Sharing. Aronex and Genzyme will each be entitled to [*]
of Net Profit on sales by the Marketing Manager and its Affiliates of
Products in the United States in any calendar year. All royalties with
respect to such sales shall be deducted from Net Sales before the foregoing
allocation of Net Profit is made.
(c) Trademark. The Product shall be sold under the trademark
"Atragen/(TM)/" or such other a trademark as the parties may agree.
(d) Co-Promotion Rights Not Assignable. Neither party's co-promotion
rights under this Section 5.3 may be assigned or transferred to any Third
Party, including an assignment as a result of a merger or consolidation of
such party, without the prior written consent of the other party, which
shall not be unreasonably withheld or delayed.
* Confidential treatment requested
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5. TERM OF DEVELOPMENT AGREEMENT. Section 10.1 of the Development
Agreement is hereby amended and restated to read in its entirety as follows:
10.1 Term of Agreement. This Agreement and any License granted
hereunder shall remain in effect on a country-by-country basis until the
later of (i) the expiration of the last-to-expire Patent relating to any
Product in such country or (ii) the date that is 10 years after the First
Commercial Sale in such country. If Genzyme has exercised the Option (and
Aronex has not reacquired the Marketing Rights), Genzyme shall thereafter
have a fully paid-up license to use the Patents and the Subject Technology
in such country.
Article 10 of the Development Agreement is further amended by deleting Section
10.3 thereof in its entirety.
6. DEFINITIONS. Article 1 of the Development Agreement is hereby amended
by replacing Sections 1.19 and 1.20 in their entirety and adding new
Section 1.30, as follows:
1.19 "Net Profit" means the difference between (a) Net Sales and (b)
the sum of (i) Cost of Goods Sold and (ii) 30% of Net Sales (for the
Marketing Manager's and its Affiliates' sales and marketing expense
relating to the Product regardless of the actual expenses incurred).
1.20 "Net Sales" means the gross amount billed for Product sold
pursuant to this Agreement to a Third Party, less discounts, rebates,
returns, credits, contractual allowances, sales deemed uncollectible,
shipping and insurance charges, sales taxes, duties, other governmental
charges measured by the amount billed and any royalties payable to Third
Parties; provided that, for purposes of the royalties payable under
Sections 2.3 or 2.4, Net Sales shall not include sales by sublicensees, if
any, of Aronex and its Affiliates.
In the event a Product is sold in a combination product with other
pharmacologically active components, Net Sales, for purposes of royalty
payments on the combination product, shall be calculated by multiplying the
Net Sales of that combination product by the fraction A/B, where A is the
gross selling price of the Product sold separately and B is the gross
selling price of the combination product. In the event that no such
separate sales are made by Aronex or Genzyme or their respective Affiliates
or sublicensees, the parties shall negotiate in good faith the meaning of
Net Sales for purposes of royalty payments on the combination product.
1.30 "Sublicensee Royalties" means all royalties paid to Aronex and
its Affiliates by sublicensees, if any, of Aronex and its Affiliates with
respect to such sublicensees' rights to and sales of the Product.
7. ADDITIONAL AMENDMENTS. Article 11 of the Development Agreement is
hereby terminated and shall be of no further force and effect.
8. "ATRAGEN/(TM)/" TRADEMARK. Genzyme hereby assigns and transfers to
Aronex, all right, title and interest it may have in the trade name "Atragen"
and the associated trademark and all related goodwill.
9. NO OTHER AMENDMENTS. Except as specifically amended hereby, the
Development Agreement shall continue in full force and effect.
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IN WITNESS WHEREOF the parties hereto have executed this Amendment in one
or more copies effective as of the Effective Date.
ARONEX PHARMACEUTICALS, INC.
By: /s/ James M. Chubb
------------------------------------
James M. Chubb, Ph.D., President
GENZYME CORPORATION
By: /s/ Richard Douglas
------------------------------------
Richard Douglas
Vice President-Corporate Development
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