AUXL » Topics » Development, Commercialization and Supply Agreement with Pfizer, Inc.

This excerpt taken from the AUXL 8-K filed Dec 18, 2008.

Development, Commercialization and Supply Agreement with Pfizer, Inc.

On December 17, 2008, Auxilium Pharmaceuticals, Inc. (“Auxilium”), Auxilium International Holdings, Inc., a wholly owned subsidiary of Auxilium, and Pfizer Inc. (“Pfizer”) (collectively, the “Parties”, and each individually, a “Party”) entered into a Development, Commercialization and Supply Agreement (the “Agreement”). Under the Agreement, Pfizer was granted the right to develop and commercialize Auxilium’s pharmaceutical product XIAFLEXTM (clostridial collagenase for injection) (the “Product”) for the treatment of Peyronie’s disease and Dupuytren’s contracture (the “Field”) in the 27 member countries of the European Union (as it exists as of the date hereof), Albania, Armenia, Azerbaijan, Belarus, Bosnia & Herzegovina, Croatia, Georgia, Kazakhstan, Kirghiz Republic, Macedonia, Moldova, Montenegro, Serbia, Tajikistan, Uzbekistan, Turkey, Iceland, Switzerland and Norway (the “Territory”).

A summary of certain terms of the Agreement is set forth below.

Upfront, Milestone and Commercialization Payments:

 

   

Pfizer will pay Auxilium an upfront payment of $75 million within five (5) business days of the date of the Agreement.

 

   

In addition to the $75 million upfront payment, Pfizer may make up to $410 million in potential payments to Auxilium upon the achievement of certain specified regulatory and commercial milestones for the Product (on an indication-by-indication basis or for the Product as a whole, as the case may be).

 

   

Subject to the requirement to make certain specified minimum commercialization payments, Pfizer will make commercialization payments to Auxilium based on a percentage of the aggregate annual net sales of the Product in the Territory on a quarterly basis. The percentage of Pfizer’s aggregate annual net sales to be paid to Auxilium increases in accordance with the achievement of specified thresholds of aggregate annual net sales of the Product in the Territory and decreases if a generic to the Product or a pharmaceutical product containing the same active ingredient as the Product is marketed in the Territory and the market share of such products exceed a specified threshold.

 

   

The amount of commercialization payments owned by Pfizer to Auxilium will be reduced upon the occurrence of a supply shortage as discussed below under the heading “Manufacturing rights/supply obligations”.

Term of the Agreement:

 

   

Subject to each Party’s termination rights, the term of the Agreement extends on a country-by-country and Product-by-Product basis from the date of the Agreement until the latest of (i) the date on which the Product is no longer covered by a valid patent or patent application in such country, (ii) the 15th anniversary of the first commercial sale by Pfizer of the Product in a given country after the receipt of required regulatory approvals and (iii) a generic entry or competitive product containing the same active ingredient with respect to the Product in such country (the “Term”).


Licenses/Intellectual Property:

 

   

Auxilium grants Pfizer, during the term of the Agreement, a license, with the right to sublicense, under certain of Auxilium’s intellectual property rights in the Territory to (i) co-exclusively, with Auxilium and its affiliates, develop the Product in the Territory and, (ii) exclusively, and subject to payment, commercialize the Product and use the trademark and trade dress associated with the Product in the Territory.

Manufacturing rights/supply obligations:

 

   

Pfizer will obtain the Product exclusively from Auxilium. The consideration payable by Pfizer to Auxilium for the supply of the Product for commercial sale is included in the commercial payment discussed above under the heading “Upfront, Milestone and Commercial Payments”.

 

   

In the event that Auxilium is unable to supply 75% of the amount of the Product ordered by Pfizer, then Pfizer’s commercialization payments will be reduced by 25% during the pendency of such shortage. In the event that Auxilium is unable to supply 67% of the amount of the Product ordered by Pfizer for a period of eight consecutive months, then (i) the 25% reduction of commercialization payments will continue and (ii) Pfizer will have the option, subject to certain specified exceptions, to engage a third party to manufacture the Product. Auxilium will have the right to re-establish supplying the Product if Auxilium can demonstrate, to Pfizer’s satisfaction, that it can meet Pfizer’s requirements for the Product and if Auxilium indemnifies Pfizer for any expenses associated with any third party manufacturer engaged by Pfizer.

 

   

Pfizer will also have the right to engage a third party to manufacture the Product in the event that Pfizer is making commercialization payments based on the minimum commercialization payments discussed above under the heading “Upfront, Milestone and Commercial Payments”.

Future indications in the Territory:

 

   

If Auxilium desires to develop or commercialize the Product in an indication outside of the Field in the Territory, then Pfizer shall have a right of negotiation with respect to such indication in the Territory.

 

   

If Pfizer does not desire to develop or commercialize the Product for such new indication, Auxilium may do so, provided that Auxilium is able to sufficiently differentiate, to Pfizer’s satisfaction, the Product for such indication such that it is not susceptible to use in the Field. The Agreement provides certain agreed-upon formulations that are deemed sufficiently differentiated.

Sharing of development/regulatory/commercialization costs:

 

   

Development costs will be borne by the Party incurring such costs; provided, that the Parties will share development costs associated with activities solely associated with obtaining Product Approval in the Territory.


   

Pfizer will be responsible for regulatory costs associated with Product Approval in the Territory, with Auxilium paying up to $2.5 million with respect to such regulatory costs related to Dupuytren’s contracture.

 

   

Pfizer is solely responsible for costs associated with commercializing the Product in the Territory.

Development/regulatory/commercialization responsibilities:

 

   

Auxilium is primarily responsible for development activities prior to granting of Product Approval, and Pfizer is primarily responsible for development activities in Territory thereafter. All development activities will be undertaken pursuant to a defined plan.

 

   

Pfizer is responsible for preparation of regulatory materials necessary for obtaining and maintaining regulatory approvals.

 

   

Pfizer is solely responsible for commercializing the Product in the Territory during the term of the Agreement subject to a defined plan.

 

   

Auxilium controls Product development at all times outside of the Territory.

Right to terminate agreement/license and effect of termination:

 

   

Either Party may terminate the Agreement as a result of the other Party’s breach or bankruptcy.

 

   

Pfizer may terminate the Agreement at will; provided that, during a specified period, such termination right is subject to the occurrence of certain specified events relating to the product, product development and regulatory approval.

The foregoing is a summary description of certain terms of the Agreement and, by its nature, is incomplete. It is qualified in its entirety by the text of the Agreement, attached as Exhibit 10.1 to this Current Report on Form 8-K. All readers are encouraged to read the entire text of the Agreement. Certain terms of the Agreement have been omitted from this Current Report on Form 8-K and the version of the Agreement attached as Exhibit 10.1 hereto pursuant to a Confidential Treatment Request that Auxilium filed with the Securities and Exchange Commission at the time of the filing this Current Report on Form 8-K.

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