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EXHIBIT 10.1
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
[Letterhead of Mylan Pharmaceuticals, Inc.]
February 25, 2000
Jennifer Good, Chief Financial Officer
Penwest Pharmaceuticals Co.
2981 Route 22
Patterson, NY 12563
LETTER OF AGREEMENT
Dear Jennifer:
This Letter of Agreement shall serve to confirm the agreement of Mylan
Pharmaceuticals Inc. and Penwest Pharmaceuticals Co. with respect to the rights
and obligations of Penwest and Mylan with respect to the Product and Supply
Agreement entered into by Penwest Ltd. and Mylan dated August 17, 1994, (the
"Agreement") as a result of the proposed transaction between Mylan and Pfizer
regarding the sale and distribution of a generic controlled release version of
Procardia(R) XL in 30 mg, 60 mg and 90 mg strengths ("Generic Procardia XL(R)").
Subject to the conditions set forth herein, our agreement is as follows:
1.) The Agreement, as it relates to the 60 mg and 90 mg strengths of the
Designated Product, shall be deemed terminated as of the Effective Date of this
Letter of Agreement and, except as set forth herein, the parties shall have no
further rights or obligations with respect to the 60 mg and 90 mg strengths of
the Designated Products under this Letter of Agreement and these dosage
strengths shall cease to be deemed a Designated Product for purpose of the
Agreement. Mylan hereby agrees that the licenses to Penwest under Sections 6.4,
6.7, 6.8 and 6.9 shall include (in addition to their coverage as stated in such
sections) making, using and selling said dosage strengths in the Territory and
the use of the Mylan Test and Regulatory Data for purposes of complying with
governmental requests with respect to said dosage strengths for marketing and
use in the Territory; provided that the restrictions on sublicensing in such
provisions and the provisions requiring the payment of royalties shall not be
applicable to said dosage strengths.
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
2.) With respect to the 30 mg strength of the Designated Product and except as
set forth below, the rights and obligations of the parties under the Agreement
shall toll beginning on the Effective Date until such time, if ever, as Mylan,
or its Affiliates or sublicensee, markets the Designated Product. In the event
Mylan does market the 30 mg strength of the Designated Product, the Parties
recognize that Mylan may be obligated to pay to Pfizer a patent royalty. As
such, any royalties payable under the Agreement to Penwest for the 30 mg
strength of the Designated Product shall be paid at the percentages set forth in
the Agreement; provided however, the royalty amount due to Penwest shall be
calculated based upon Net Sales after any royalty amount paid to Pfizer on such
sales has been subtracted from Net Sales. Notwithstanding the foregoing,
Sections 6, 7, 8, 9, 10(excluding section 10.2) and 11 shall not toll and shall
remain in full force and effect until such time, if ever, as Mylan markets the
Designated Product.
3.) With respect to sales of the 30 mg strength of Generic Procardia XL(R),
Mylan agrees to pay to Penwest within 60 days from the end of each calendar
quarter in which sales by Mylan, or its Affiliates or sublicensee, in North
America of 30 mg Generic Procardia XL(R) occur a royalty rate equal to
************ of all Net Sales in North America.
4.) The Effective Date of this Letter of Agreement shall be deemed to take place
upon the occurrence of each and all of the following:
a.) The execution of a definitive agreement with respect to the supply and
distribution of the Generic Procardia XL(R) between Mylan and Pfizer; and
b.) The execution of the Settlement Agreement by and between Mylan and
Pfizer including the settlement of all issues related to the civil action
entitled PFIZER INC. V. JANE E. HENNEY, M.D., AS COMMISSIONER, FOOD AND
DRUG ADMINISTRATION AND UNITED STATES FOOD AND DRUG ADMINISTRATION, Civil
Action No. 99-907, currently pending in the United States District Court of
Delaware and the civil action entitled BAYER AG, BAYER CORPORATION AND
PFIZER INC. V. MYLAN LABORATORIES INC. AND MYLAN PHARMACEUTICALS INC.,
Civil Action No. 97-1309, currently pending in the United States District
Court for the Western District of Pennsylvania; and
c.) The receipt of Mylan's specified quantities of Generic Procardia XL(R)
by Mylan from Pfizer prior tO March 31, 2000.
5.) Those audit and payment terms set forth in Section 4.4 and 4.5 shall be
incorporated by reference as if fully set forth herein and shall be applicable
to the payment of royalties contemplated in Section 3 hereof.
6.) The term of this Letter of Agreement shall begin on the Effective Date and
shall continue until such time as Mylan, or its Affiliates or sublicensees,
permanently ceases to market and/or sell Generic Procardia XL(R). Mylan shall
use its best efforts to market, promote and sell Generic
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CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
Procardia XL(R) as soon as is reasonably possible following the Effective Date
of this Letter of Agreement.
7.) In addition to the other amounts set forth herein, Mylan shall pay to
Penwest ***** *************************************** in twelve equal monthly
installments with the first payment being due on July 1, 2000.
8.) On or about, September 1, 2000, Penwest shall deliver to Mylan in accordance
with Section 5.2 of the Agreement, ************* of Formulated TIMERx. With
respect to this shipment, the rights and obligations of Sections 5.4, 5.5 and
5.6 shall be incorporated by reference as if fully set forth herein.
9.) Mylan hereby warrants and represents that it has obtained the
**************** with respect to the proposed transaction with Pfizer. Mylan
hereby agrees to indemnify, defend and hold Penwest, its officers, directors and
Affiliates harmless from and against any and all third party claims to the
extent arising from, in connection with, based upon, by reason of or relating in
any way to any claim that the activities described herein, including but not
limited to the proposed transaction between Mylan and Pfizer, violate in any
respect any federal or state laws, statutes or regulations including without
limitation antitrust laws, except to the extent said claims result from the
negligence or intentional misconduct of Penwest or its officers, directors or
Affiliates. Any indemnification made pursuant to this Section shall be made in
accordance with Sections 9.8, 9.9 and 9.10 of the Agreement.
10.) To the extent not defined in the Letter of Agreement, the capitalized terms
contained herein shall be defined as set forth in the Agreement.
11.) Neither Party shall make any public announcement or other publication
regarding this Letter of Agreement or the issues addressed herein without the
prior written consent of the other party, which consent shall not be
unreasonably withheld; provided that the foregoing shall not prohibit any
disclosure which, in the opinion of counsel to the disclosing party is required
by any applicable law or by any competent government authority.
12.) The person signing this Letter of Agreement on behalf of both parties has
the requisite right and authority to enter into this Letter of Agreement and to
bind its principal to the rights and obligations set forth herein.
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Enclosed are two copies of this Letter of Agreement. Please sign them both
to signify your acknowledgment and acceptance of the terms contained herein.
Return one copy to me at your earliest convenience and retain one copy for your
files. Should you have any question, please feel free to contact me.
Sincerely,
/s/ Lynn Cayton
Lynn Cayton
Director of Business Development
Acknowledged and accepted by:
PENWEST PHARMACEUTICALS CO.
by:
/s/ Jennifer L. Good
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Its: VP Finance & Chief Financial Officer
February 26, 2000
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Date