EXHIBIT 10.16
PRODUCT RESEARCH AND DEVELOPMENT
AGREEMENT BETWEEN METRA BIOSYSTEMS, INC.
AND SUMITOMO PHARMACEUTICALS CO., LTD.
This Agreement is made as of June 29, 1994 between Metra Biosystems, Inc.,
265 N. Whisman Road, Mountain View, California 94043, U.S.A, ("METRA") and
Sumitomo Pharmaceuticals Co., Ltd., 2-8 Doshomachi 2-chome, Chuo-ku, Osaka, 541,
Japan ("SUMITOMO").
1. PRODUCTS COVERED BY AGREEMENT:
"TESTS" means diagnostic assay kits (including updates) in manual
microtiter plate format and automated instrument formats to be developed by
Metra for clinical (non-research) applications based on levels of insulin-like
growth factor binding protein-3 ("IGF-BP3") in serum and other bodily fluids.
Preliminary specifications for IGF-BP3 to be developed by Metra and marketed by
Sumitomo ("SPECIFICATIONS") are attached to this Agreement as EXHIBIT A and may
be modified by written agreement of Metra and Sumitomo.
2. DISTRIBUTION RIGHTS:
(a) Sumitomo will have the exclusive right to distribute (including the
right to appoint subdistributors) and market the Tests in Japan for use as
diagnostic assays.
(b) Metra is willing to discuss with Sumitomo non-exclusive distribution
and marketing rights for the Tests in the Republic of China (Taiwan), the
People's Republic of China and the Republic of Korea if and to the extent Metra
is permitted to do so contractually. Such distribution rights, if entered into
would be pursuant to the distribution agreements set forth in Section 13 below.
If granted, it is not intended that Sumitomo will make any additional payments
to Metra to acquire distribution and marketing rights for the Tests for these
three countries, but Sumitomo will make good effort to match marketing
commitments and transfer prices applicable to other distributors of the Tests in
these countries.
(c) If Sumitomo at any time declines interest in collaborating with Metra
to exert its best efforts to obtain regulatory approval and to market a Test,
then Sumitomo's rights to the such product shall revert to Metra. Sumitomo
shall have six months from date of completion of such product to inform Metra
whether or not it has interest.
3. DUTIES OF SUMITOMO:
Sumitomo will use reasonable diligence consistent with efforts related to
its own products to (i) perform necessary clinical trials for the Tests at
leading hospitals, (ii) apply for approval and registration of the Tests with
the Japan Ministry of Health and Welfare (the "MHW"), (iii) obtain insurance
reimbursement prices for the Tests, (iv) market and distribute the Tests once
approved, (v) not market or distribute competing tests that measure IGF-BP3
developed by Sumitomo or
third parties (other than Metra); except the RIA kits of IGF-BP3 provided by
Mediagnost GmbH which Sumitomo has already developed and will distribute and
sell jointly with SRL Inc. in Japan under the existing contract between
Sumitomo and Mediagnost, provided, however that following launch by Sumitomo
of the Tests in Japan, Sumitomo will not advertise or promote any competing
tests that measure IGF-BP3, (vi) provide information to Metra on the
regulatory testing procedures (stability and others) which Metra needs to
perform to satisfy regulatory requirements and standard industry practice for
the Tests in Japan, and (vii) provide a copy of each complete registration
package, including supporting data, to Metra at the time of submission to the
MHW.
4. DUTIES OF METRA:
Metra will use reasonable diligence consistent with efforts related to its
own products to (a) keep Sumitomo informed on a regular basis (through written
progress reports and visits in the United States and Japan) of Metra's progress
in developing the Tests, (b) perform (and supply at no charge reasonable
quantities of sample Tests necessary to perform) all tests (such as stability
testing and performance testing) necessary for Sumitomo to obtain regulatory
approval to market the Tests in Japan based on Sumitomo's instructions,
(c) supply sample Tests for the initial evaluation by Sumitomo free of charge,
and (d) supply sample Tests for the clinical trials performed by Sumitomo at
the price of $200 per Test.
5. RESEARCH AND DEVELOPMENT PLANS:
Metra will prepare the research and development plan for the Tests and
Sumitomo will prepare the development plan for the Tests for the Japanese market
promptly after signing this Agreement. Preliminary version of such a plan for
IGF-BP3 is attached to this Agreement as Exhibits B and C. Both companies will
use reasonable diligence to accomplish such a plan. The plan may be modified at
any time by Sumitomo and Metra. Both companies will meet at least semi-annually
to discuss such plans and to exchange information.
6. PAYMENTS TO METRA:
As part of the costs of the ongoing and future research, product
development and performance testing of the Tests by Metra, Sumitomo will make
the following payments to Metra based upon the following milestones promptly
after their accomplishment. These payments will be compensation for a part of
actual cost spent by Metra for the purpose of the research and development of
the Tests.
Payment
Date or Event Amount
------------------------------------------------- ------------
Signing of Agreement $100,000
Evaluation Tests sent to Sumitomo meet the
Specifications, excluding lot-to-lot precision
for three separate lots $100,000
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All payment will be in U.S. dollars. The maximum payment to be made by
Sumitomo pursuant to this Section 6 is US $200,000. If the Japanese Government
requires a withholding tax, Sumitomo may withhold such tax from such payments.
Metra shall invoice Sumitomo for the above payment within 30 days after the Date
or the Event. Sumitomo shall pay the amount within 30 days after the receipt of
the invoice.
7. TERM AND TERMINATION OF AGREEMENT:
(a) This Agreement will be effective from the date first above written and
will continue in effect 3 years from that date. After such 3 year period, this
Agreement will be automatically extended for every succeeding 1 year unless
either party notifies the other party of its desire to terminate this Agreement
at least six (6) months before each anniversary date.
(b) Sumitomo may terminate the Agreement at any time upon six months'
prior notice to Metra and payment of all amounts due to Metra in such six month
period. Upon such termination, all rights to the Tests (including product
registrations and trademarks) shall revert to Metra.
(c) Each party may terminate this Agreement without payment of any
compensation by giving a written notice of termination;
(i) if one party files a petition in bankruptcy or a petition to take
advantage of any insolvency or reorganization act or, if one
party be adjudicated a bankruptcy, or a court of competent
jurisdiction shall enter an order or decree appointing a receiver
of property of the party, and such adjudication, order or decree
shall not be vacated or set aside or stayed within 30 days from
its entry.
(ii) if one party has failed to perform a material provision of this
Agreement and has not corrected such failure within sixty days
after receipt of notice describing such failure.
8. SUPPLY OF TESTS AND REAGENTS.
Metra will stably supply Tests to Sumitomo meeting agreed labeling and
product specifications and with remaining kit shelf life of at least six (6)
months. The parties shall in good faith discuss Metra's production plan and
Sumitomo's delivery schedule and discuss the period of remaining shelf life of
Tests and whether any adjustment is necessary or possible. The transfer price
for the Tests will be determined by one price formula which will be chosen by
Sumitomo from the two options set forth below. Such transfer price per Test
shall be effective for the first calendar year after the Tests are launched by
Sumitomo in Japan and thereafter will be reviewed annually and if appropriate,
adjusted based upon mutual agreement. The transfer price will be FCA
(Incoterms) the international airport nearest to Metra's place of business in
Mountain View, California. All payments for the Tests purchased by Sumitomo
under this Agreement shall be made within sixty (60) days after the date of
shipment of Tests.
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(i) OPTION A: The transfer price will be based on the number of
Tests purchased during a given calendar year by Sumitomo. Sumitomo shall keep
Metra informed on a semi-annual basis of its projected requirements for Tests by
providing a rolling twelve (12) month forecast.
The transfer price of Option A is as follows:
Tests Purchased Price Per
Per Calendar Year Test
-------------------------------------------------------
First 400 Tests $300
Next 400 Tests $275
Test over 800 $250
OR
(ii) OPTION B: The transfer price will be based on the number of
Tests ordered pursuant to a binding purchase order which Sumitomo shall declare
for the one (1) year period following the month of such declaration. To obtain
the special pricing based on this Option B, Sumitomo must purchase and take
delivery of the binding purchase order within twelve (12) months of the purchase
order date. In the event that Metra fails to supply any quantities ordered
pursuant to this Option B, Sumitomo will pay for the Tests actually delivered at
the price which would have been applied to the originally declared quantity.
Sumitomo shall keep Metra informed on a semi-annual basis of its projected
requirements for Tests by providing a rolling twelve (12) month forecast. The
transfer price of this Option B is as follows:
Number of Tests Ordered Price per Test
--------------------------------------------------------
1-400 Tests $300 for every Test
401-800 Tests $275 for every Test
Any order over 800 Tests $250 for every Test
Metra shall use reasonable efforts to meet delivery dates set forth in accepted
purchase orders, but in any event will deliver Tests within ninety (90) days of
the requested delivery date. Metra will warrant that the Tests will meet the
Specifications and will promptly replace any Tests which do not meet the
Specifications at Metra's expense. Such warranty is the only warranty made by
Metra and is in place of any warranty of merchantability or fitness for a
particular purpose.
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9. PATENT MATTERS:
(a) Metra shall own all rights (including US and Japanese patent rights)
to the Tests and any improvements made pursuant to this Agreement. Metra shall
supply Sumitomo with improved versions of the Tests as provided in Section 8
above.
(b) In case the Tests infringe or may infringe the patents or other rights
of any third parties, both parties shall, in good faith, discuss the steps to be
taken to resolve such problem.
10. PUBLICITY:
Neither party will disclose the financial terms of the Agreement without
the written permission of the other party, except as required by law.
11. TRADEMARKS:
Trademarks for the Tests to be distributed by Sumitomo will be decided
separately by both parties.
12. LABELING:
All Tests will be labeled (including package inserts) to indicate that
Metra is the manufacturer of the Tests for Sumitomo.
13. DISTRIBUTION AGREEMENT:
Concerning the Tests, both parties will start a discussion about a
distribution agreement after Sumitomo's NDA in Japan is submitted and conclude
the agreement upon the registration of the Tests. This distribution agreement
will include the provisions of this Agreement and will extend to cover such
items as product liability, packaging, claims, returns and warranty among
others.
14. CONFIDENTIALITY:
Each party shall for the period of this Agreement and, for the longer of
(i) 5 years from the date of disclosure or (ii) 10 years from the date first
above written, thereafter keep secret and confidential all research, commercial
and business information received from the other party and shall not use such
information except for the purposes of this Agreement nor disclose such
information to any third party provided that the obligations contained in this
Clause shall not apply to information which:
(a) at the time of disclosure is in the public domain or which, after
disclosure, becomes in the public domain;
(b) at the time of disclosure is already in the possession of recipient;
(c) is disclosed to recipient by a third party which is entitled to make
such disclosure and is not itself under obligations of confidentiality;
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(d) either party discloses to government authorities for the purposes of
Registration of Tests.
15. NOTICE
Any notice given under, amendments made to or agreements reached in
pursuance of this Agreement shall be sent by facsimile followed
by registered letter and shall, in the case of Metra, be made by:
Metra Biosystems, Inc.,
265 N. Whisman Road
Mountain View, California 94043, U.S.A.
and, in the case of Sumitomo, be made by:
Manager, Corporate Planning Department
Sumitomo Pharmaceuticals Co., Ltd.
2-8 Doshomachi 2-chome
Chuo-ku Osaka 541,
Japan
or such other persons or addresses as either party may designate. The language
of this Agreement is English and all communications between the parties in
respect of this Agreement shall be in English.
16. ASSIGNMENT
Neither Metra nor Sumitomo shall transfer or in any way make over the
benefits or obligations of this Agreement in whole or in part to any third party
without prior written consent of the other except for the assignment to the
successor or assignee of all of its business or all of its diagnostic business
subject to a prior notice to the other party.
17. ENTIRE AGREEMENT
This Agreement set forth the entire agreement and understanding between the
parties regarding the subject matter hereof and supersede all prior discussions
and agreement. No amendment shall be effective unless made in writing by an
authorized signatory of the parties.
18. VALIDITY/SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision which shall
remain in full force and effect. The parties shall use their best efforts to
achieve the purpose of the invalid provision by a new, legally valid
stipulation.
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19. FORCE MAJEURE
Neither party shall be responsible for failure or delay in the performance
of any of its obligations hereunder due to Force Majeure. Force Majeure shall
mean any circumstance which, due to an event or a legal position beyond the
parties' reasonable control, renders impossible the fulfillment of any of the
parties' obligations hereunder, such as but not limited to, acts of God, acts,
regulations and laws of any government, wars, civil commotions, destruction of
production facilities or materials by fires, earthquakes or storms, labor
disturbances, shortages of public utilities, common carriers or raw materials or
any other causes of similar effects. The obligations hereunder which are
rendered impossible by any case of Force Majeure shall not be discharged, but
only be suspended and the party so affected shall continue to perform its
obligations as soon as such case of Force Majeure is removed or alleviated.
20. LAW OF AGREEMENT
This Agreement shall be governed by the laws of the State of California,
U.S.A. Any and all disputes, controversies or differences which may arise
between the parties hereto in relation to the interpretation or
administration of this Agreement shall finally be settled by arbitration in
accordance with the rules of the International Chamber of Commerce, by which
each party hereto is bound. The arbitration shall be held in Tokyo, Japan, if
demanded by Metra, in San Francisco, U.S.A., if demanded by Sumitomo.
In witness whereof the parties have executed two copies of this Agreement in
English.
Signed for and on behalf of Metra Biosystems Inc.
By: /s/ George W. Dunbar Jr.
------------------------------------
George W. Dunbar Jr.
President and CEO
Date: 06-29-94
----------------------------------
signed for and on behalf of Sumitomo Pharmaceuticals Co., Ltd.
By: /s/ Hiroshi Ishimoda
------------------------------------
Hiroshi Ishimoda
Managing Director
Date: 13 July 94
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EXHIBIT A
IGFBP-3 PRODUCT SPECIFICATIONS
Sample Serum
Sample Volume 50-100uL
sample dilution probably 1:100
Dye added to assay buffer
Total Assay Time/Temperature total time LESS THAN OR EQUAL TO 4 hours,
room temp.
Type of Assay Sandwich type
Format microtiter strip wells, 6 2x8 strips/kit
Standards 6 including 0
Controls 2, high and low
Minimum Detection Limit 2.5 ng/mL
Standard Range To be determined
(Current range 2.5-200 ng/mL
Enzyme conjugate Direct conjugate of Peroxidase, lyophilized
Dye Added
Substrate TMB
Stop Solution 0.3M H PO , 0.2M H SO , or 0.2M HCl
3 4 2 4
Kit Shelf Life 12 months at 2-8 degrees C
Specificity/Cross reactivity BP3 100%
BP1, 2, and 4 LESS THAN 2.5%
Within-run precision LESS THAN OR EQUAL TO 10% average
Between-run precision LESS THAN OR EQUAL TO 15% average
Lot-to-lot precision LESS THAN OR EQUAL TO 15% average
Spike Recovery Average 100 PLUS OR MINUS 10%
90% of individuals 100 PLUS OR MINUS 15%
10% of individuals 100 PLUS OR MINUS 25%
Linearity Average 100 PLUS OR MINUS 10%
90% of individuals 100 PLUS OR MINUS 15%
10% of individuals 100 PLUS OR MINUS 25%
Correlation to Mediagnost Kit r = 0.90
R. Hesley
June 24, 1994
EXHIBIT B
IGF-BP3 DEVELOPMENT TIMELINE
- --------------------------------------------------------------------------------------------
APR MAY JUN JUL AUG SEP OCT NOV DEC
- --------------------------------------------------------------------------------------------
M Standard Stability & Feas.
O value-assignment Study R&D-1
V Timing issues R&D-2
E Finalize Format R&D-3
Pilot-1
Pilot-2
Pilot-3
* * ^ *
P P | P
A A Initiate A
R R Real Time R
* * Stability *
EXHIBIT C
IGF-BP3 SUMITOMO DEVELOPMENT PLAN
'94 95' 96'
6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12
____________________________________________________________________________________________________
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Clinical Evaluation ^
Approval
^
Evaluation of Performance Using R & D Lot
^
Application ^
Metra; Stability Tests Launch
MEMORANDUM
With reference to the Product Research and Development Agreement dated
June 29, 1994, ("Agreement") both parties hereby agree to make this
MEMORANDUM related to the patent issue as follows;
In the event Sumitomo desires and requests that Metra should get
Genentech's license covering the manufacturing of IGFBP-3 diagnostics, Metra
shall make commercially reasonable efforts to obtain said license and to
obtain, as part of said license, a provision indemnifying Metra against
intellectual property claims. In that case, Sumitomo agrees that Metra shall
act solely to negotiate with Genentech, provided, however, that Metra shall
keep Sumitomo informed of the progress of such negotiation and of the
contents of Genentech's proposals. Metra shall not agree with Genentech
without prior consent of Sumitomo.
In case Metra shall be required to make a lump-sum payment and running
royalty to Genentech in consideration of all rights and licenses granted to
Metra, Sumitomo shall bear the same amount as such payments. The above
lump-sum payment will be paid to Metra by Sumitomo as an additional milestone
of the Agreement within 30 days of execution of the above referenced license
agreement with Genentech and the above running royalty will be paid to Metra
by Sumitomo by adding to the transfer price set forth in the Agreement of
IGFBP-3.
In Witness Whereof, the parties hereto have caused this MEMORANDUM to be
effective as of June 29, 1994 by their respective duly authorized
representatives.
Metra Biosystems Inc. Sumitomo Pharmaceuticals Co., Ltd
By: /s/ George W. Dunbar Jr. By: /s/ Hiroshi Ishimoda
-------------------------------- ---------------------------------
George W. Dunbar Jr. Hiroshi Ishimoda
President and CEO Managing Director