Exhibit 10.7
CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT
PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
Execution Version
SUPPLY AGREEMENT
     This SUPPLY AGREEMENT (the “Agreement”) is made effective as of the 10th
day of September, 2010 (the “Effective Date”) by and between Pharming Group
N.V., a Dutch corporation having its principal place of business at Darwinweg
24, 2333 CR Leiden, The Netherlands, on behalf of itself and each of its
Affiliates, including Pharming Intellectual Property B.V. and Pharming
Technologies B.V. (“Pharming”), and Santarus, Inc., a Delaware corporation,
having offices at 3721 Valley Centre Drive, Suite 400, San Diego, California
92130, U.S.A. (“Santarus”). Pharming and Santarus are sometimes referred to
herein individually as a “Party” and collectively as the “Parties.”
RECITALS
     A. Pharming discovered and is developing a proprietary compound, Rhucin®,
that is believed to be useful for the treatment and prevention of certain human
diseases or conditions;
     B. Pharming and Santarus have entered into that certain License Agreement,
effective as of the date hereof (the “License Agreement”), pursuant to which
Santarus will, among other things, be granted exclusive rights to commercialize
Rhucin® for the treatment or prevention of human diseases and conditions in the
U.S., Canada and Mexico; and
     C. Pharming and Santarus desire to set forth in this Agreement the terms
and conditions upon which Pharming will manufacture and supply (or cause to be
manufactured and supplied) Santarus’, its Affiliates’ and its Sublicensees’
requirements of Rhucin® in the Territory.
ARTICLE 1
DEFINITIONS
     Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to them in the License Agreement. The word “including” or any
variation thereof means “including without limitation” and the word “including”
or any variation thereof will not be construed to limit any general statement
which it follows to the specific or similar items or matters immediately
following it.
     1.1 “Applicable Laws” mean laws, statutes, ordinances, codes, rules,
regulations, guidelines, and procedures enacted or made by a Government
Authority, including the FDA and any applicable Foreign Regulatory Authority,
that are in force during the Term to the extent applicable to the subject matter
of, or the performance by the Parties of their respective obligations under,
this Agreement, including the Manufacture of Skimmed Milk, Drug Substance, Drug
Product and Finished Product by Pharming.
     1.2 “Certificate of Analysis” means a document, in a form mutually agreed
by Pharming and Santarus, to certify that each batch or lot of the Skimmed Milk,
Drug Substance, Drug Product and Finished Product meets the Specifications.

 

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     1.3 “Certificate of Compliance” means a document, in a form mutually agreed
by Pharming and Santarus, to certify that each batch or lot of Finished Product
meets the applicable release criteria and was Manufactured in compliance with
cGMP.
     1.4 “cGMP” means current good manufacturing practices requirements of the
FDA (or any successor entity thereto), including those set forth in 21 C.F.R.
Parts 210, 211 and 606, and all similar requirements of Foreign Regulatory
Authorities.
     1.5 “Commercial Finished Product” has the meaning set forth in Section 2.1
     1.6 “Detailed Manufacturing Documentation and Materials” means the detailed
procedures and all electronic and paper form instructions, documentation and
materials including any biological material to be used and required for
manufacturing and testing the Finished Product and any other information
necessary to manufacture the Finished Product, as contained in or referenced by
the Module 3 of the Regulatory Approval to be filed for commercialization of the
Finished Product in the Territory.
     1.7 “Drug Substance” means purified and formulated Licensed Compound, as
further described in the Specifications.
     1.8 “Drug Product” means Drug Substance filled in vials and freeze-dried,
as further described in the Specifications.
     1.9 “FFDCA” means the U.S. Federal Food, Drug, and Cosmetic Act, and the
regulations promulgated thereunder, as amended.
     1.10 “Finished Product” means a packaged vial labeled for commercial sale
in the applicable country within the Territory, which contains approximately
2100 units of recombinant human C1 esterase inhibitor in lyophilized powder, as
further described in the Specifications, or such other formats as may be
mutually agreed by the Parties.
     1.11 “Foreign Regulatory Authority” means, for each country in the
Territory other than the U.S., any Government Authority that corresponds to the
FDA.
     1.12 “Government Authority” means any supra-national, national, regional,
state, provincial or local government, court, governmental agency, authority,
board, bureau, instrumentality or regulatory body having jurisdiction over the
Manufacturing activities hereunder.
     1.13 “Manufacture,” “Manufactured” or “Manufacturing” means the
manufacture, processing, packaging, testing, storage and shipment of Skimmed
Milk, Drug Substance, Drug Product and Finished Product, for Commercialization
in the Territory, including those activities described in Exhibit 1.13 attached
hereto.
     1.14 “Manufacturing Approvals” means any approvals, registrations or
authorizations of any supra-national, national, regional, state, provincial or
local regulatory

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agency, department, bureau or other governmental entity either within or outside
the Territory necessary to perform the Manufacture of Skimmed Milk, Drug
Substance, Drug Product and Finished Product, including establishment licensure
and permitting of any Manufacturing Facilities and Testing and Storage
Facilities (including any required comparability studies) and any veterinary
related approvals.
     1.15 “Negligence Event” means the expiry of, damage to, other obsolescence
of or inability to use Finished Product caused by the negligence of Santarus,
its Affiliates or Sublicensees in connection with the storage, shipment or
handling of Commercial Finished Product (including not delivering the Commercial
Finished Product to a Third Party purchaser on the basis of First Expiry/First
Out) or by the negligence of Third Party distribution, warehousing or storage
facilities with whom Santarus, its Affiliates or Sublicensees have contracted to
provide services for the Commercial Finished Product.
     1.16 “Payment Default” has the meaning set forth in Section 3.6(c).
     1.17 “Pharming Qualified Person” means the person defined in Article 48 of
Directive 2001/83/EC, responsible for certification and batch release of
Finished Product within the EC/EEA before being released for sale or supply in
the EC/EEA or for export.
     1.18 “Product Inventory” means Units of Finished Product owned by Pharming
or any Affiliate and available for supply to Santarus pursuant to this
Agreement.
     1.19 “Quality Agreement” means that certain Quality Agreement dated the
date hereof, by and between the Parties and as amended from time to time.
     1.20 “Regulatory or Clinical Data” means data and information in relation
to any submissions to be made in support of Regulatory Approval: (i) directly or
indirectly generated from any Development or Phase IV Clinical Trials, including
all raw data and analyses; (ii) arising from interactions with any regulatory
authority either within or outside the Territory, or drafted or prepared with
the intention of being submitted, or which is actually submitted to any such
regulatory authority and (iii) all preparatory data and Confidential Information
that supports or are or might be used to support the foregoing submissions.
     1.21 “Skimmed Milk” means skimmed transgenic rabbit milk containing
Licensed Compound, as further described in the Specifications.
     1.22 “SKU” means Stock Keeping Unit, currently meaning one (1) packaged and
labeled vial of Finished Product.
     1.23 “Specifications” means the written specifications for each of the
Skimmed Milk, Drug Substance, Drug Product and Finished Product set forth in
Exhibit 1.23 attached hereto; provided, however, that such specifications shall
at all times comply with Applicable Laws and the Manufacturing Approvals and
Regulatory Approvals then in effect. The Specifications with respect to any
particular country in the Territory shall automatically be amended with respect
to

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the Skimmed Milk, Drug Substance, Drug Product or Finished Product, as the case
may be, to be Commercialized in such country to the specifications set forth in
the applicable Manufacturing Approval and Regulatory Approval upon receipt of
required Manufacturing Approvals and Regulatory Approvals from the Government
Authority in such country. Copies of the then-current Specifications as set
forth in the Regulatory Approval to market and sell the Finished Product shall
be maintained by both Pharming and Santarus and shall be incorporated herein by
reference.
     1.24 “Supply Failure Triggers” means (a) Pharming’s inability to deliver
within [***] ([***]) weeks of the delivery date set forth in an Order any Drug
Product that was properly ordered due to (i) a Payment Default or (ii) the
negligence or misconduct of Pharming or (b) the bankruptcy, receivership or
insolvency of Pharming.
     1.25 “Transgene” means the genetic material comprised of regulatory
elements directing expression in the mammary gland and human cDNA coding
sequence for Licensed Compound.
     1.26 “Transgene Bank” means a well-characterized sample of the Transgene,
as further defined in the applicable Regulatory Approval.
ARTICLE 2
SOURCES OF SUPPLY AND SUPPLY RELATIONSHIP
     2.1 Commercial Supply of Finished Product. During the Term, Pharming shall
Manufacture (or shall cause to be Manufactured), in accordance with the
provisions of this Agreement, the Specifications, cGMP and Applicable Laws, all
quantities of the Finished Product ordered by Santarus, its Affiliates or
Sublicensees pursuant to this Agreement in connection with Commercialization
activities of Santarus, its Affiliates and its Sublicensees (the “Commercial
Finished Product”). Santarus shall pay Pharming the Supply Price in accordance
with the terms of the License Agreement for such Commercial Finished Product,
which shall be the sole consideration payable for the Commercial Finished
Product and all associated Manufacturing activities hereunder.
     2.2 Clinical Supply of Drug Product. During the Term, Pharming shall
Manufacture (or shall cause to be Manufactured), in accordance with the
provisions of this Agreement, the Specifications, cGMP and Applicable Laws, all
quantities of the Drug Product ordered by Santarus, its Affiliates or
Sublicensees pursuant to this Agreement in connection with Development
activities of Santarus, its Affiliates and its Sublicensees (the “Development
Drug Product”). The Development Drug Product will be supplied by Pharming at its
COGs, and the Parties will agree upon any sharing of that amount consistent with
the sharing of Development Costs contemplated by the License Agreement, which
shall be the sole consideration payable for the Development Drug Product and all
associated Manufacturing activities hereunder. Title and risk of loss for
Development Drug Product shall transfer upon delivery to Santarus, its
Affiliates or Sublicensees.
 

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     2.3 Exclusive Relationship. Subject to Pharming’s rights as a Developing
Party under Section 3.3(d) of the License Agreement with respect to any
applicable Additional Indication and Pharming’s compliance with the obligations
set forth in Section 3.3 of the License Agreement:
     (a) Pharming shall supply Finished Product exclusively to Santarus (and its
Affiliates and Sublicensees) for Commercialization in the Territory, and,
subject to Section 3.4, Santarus (and its Affiliates and Sublicensees) shall
order Finished Product for use in the Territory exclusively from Pharming; and
     (b) Pharming shall not supply Skimmed Milk, Drug Substance or Drug Product
(or any other Finished Product intermediaries) to any Person (other than
Santarus, its Affiliates and Sublicensees as contemplated by this Agreement and
the License Agreement) for Commercialization in the Territory.
     2.4 Use of Affiliates, Third Party Contractors and Facilities.
     (a) As of the Effective Date, Pharming utilizes the Affiliates (the
“Existing Manufacturing Affiliates”), Third Party contract manufacturers and
other service providers (the “Existing Third Party Contractors”), manufacturing
facilities (the “Existing Manufacturing Facilities”) and testing and storage
facilities (the “Existing Testing and Storage Facilities”) described on Exhibit
2.4(a) for the Manufacture of the Skimmed Milk, Drug Substance, Drug Product and
Finished Product. Promptly following the Effective Date and prior to submission
of the Drug Approval Application for the Initial Indication in the Territory,
the Parties shall cooperate to establish a plan to prepare for inspections by
FDA, Foreign Regulatory Authorities or Government Authorities of such Existing
Manufacturing Affiliates, Existing Third Party Contractors, Existing
Manufacturing Facilities and Existing Testing and Storage Facilities that are to
be listed in the Drug Approval Application for the Initial Indication in the
Territory.
     (b) Pharming may utilize Persons other than the Existing Manufacturing
Affiliates and Existing Third Party Contractors to perform portions of the
Manufacturing activities hereunder provided that Pharming has obtained the
appropriate Manufacturing Approvals and has cooperated with Santarus to obtain
the appropriate Regulatory Approvals (any such permitted additional Affiliates,
together with Existing Manufacturing Affiliates, the “Manufacturing Affiliates”
and any such permitted Third Party Contractors, together with Existing Third
Party Contractors, the “Third Party Contractors”). Pharming may utilize
facilities other than the Existing Manufacturing Facilities and Existing Testing
and Storage Facilities in connection with the Manufacturing activities hereunder
provided that Pharming has obtained the appropriate Manufacturing Approvals and
has cooperated with Santarus to obtain the appropriate Regulatory Approvals (any
such permitted additional manufacturing facilities, together with Existing
Manufacturing Facilities, the “Manufacturing Facilities” and any such permitted
additional testing and storage facilities, together with Existing Testing and
Storage Facilities, the “Testing and Storage Facilities”).
     (c) In addition to the requirements set forth in Section 2.4(b), with
regard to each existing and future Manufacturing Affiliate and Third Party
Contractor, (i) Pharming shall not

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utilize any Manufacturing Affiliate or Third Party Contractor without first
obtaining the appropriate Manufacturing Approvals and cooperating with Santarus
to obtain the appropriate Regulatory Approvals; (ii) Pharming shall ensure that
each Manufacturing Affiliate or Third Party Contractor is duly licensed and
qualified under cGMP and Applicable Laws to perform the applicable Manufacturing
activities and maintains such licenses and qualifications during the Term; and
(iii) Pharming shall at all times remain fully responsible to Santarus for the
performance of all obligations hereunder. References to Pharming in this Supply
Agreement shall be deemed to include permitted Manufacturing Affiliates and
Third Party Contractors, as appropriate.
     (d) In addition to the requirements set forth in Section 2.4(b), with
regard to each existing and future Manufacturing Facility and Testing and
Storage Facility, (i) Pharming shall not utilize any Manufacturing Facility or
Testing and Storage Facility without first obtaining the appropriate
Manufacturing Approvals and cooperating with Santarus to obtain the appropriate
Regulatory Approvals; and (ii) Pharming shall ensure that each Manufacturing
Facility and Testing and Storage Facility is duly licensed and qualified under
cGMP and Applicable Laws for the applicable Manufacture activities and maintains
such licenses and qualifications during the Term. Pharming shall ensure that
adequate Manufacturing equipment and tools are available and dedicated to
fulfill the Manufacture obligations hereunder and that such equipment and tools
are maintained in good working order.
     2.5 Additional Sources of Manufacturing and Supply. Subject to Section 2.4,
Pharming shall, at its cost and expense, (a) enter into one or more agreements
with Third Party Contractors providing for [***] Manufacture of the Drug
Substance, Drug Product and Finished Product and shall obtain appropriate
Manufacturing Approvals and cooperate with Santarus to obtain appropriate
Regulatory Approvals in connection therewith (while exercising Commercially
Reasonable Efforts to maintain Pharming’s existing arrangement with [***] have
been established and associated Regulatory Approvals and Manufacturing Approvals
have been obtained); (b) at the reasonable request of Santarus, establish and
qualify under all Applicable Laws an additional Manufacturing Facility (provided
that Pharming shall not be under an obligation to establish and qualify more
than [***] separate Manufacturing Facilities) for the production of Skimmed
Milk; and (c) establish and qualify under all Applicable Laws such other
additional sources of Manufacture as the Parties may determine are reasonably
prudent (collectively, (a), (b) and (c) shall be known as “Additional
Manufacturing Facilities”). Pharming shall keep Santarus informed as to the
status of these activities and shall provide Santarus with copies of draft
agreements with such Additional Manufacturing Facilities as the same are being
negotiated (redacted to exclude confidential commercial details of these
agreements which are not necessary for Santarus to determine Pharming’s
compliance with this Section 2.5) (it being acknowledged that Pharming has
provided to Santarus a copy of a draft agreement with a Third Party Contractor
for the Manufacture of Drug Product prior to the Effective Date) and excluding
related quality agreements, and shall, in good faith, consider and include any
reasonable comments made by Santarus to such drafts. Pharming shall notify
Santarus when an agreement has been concluded with any Additional Manufacturing
Facility and provide to Santarus a full and complete copy of any such agreement
redacted to exclude
 

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confidential commercial details of these agreements which are not necessary for
Santarus to determine Pharming’s compliance with this Section 2.5. As of the
Effective Date, such Additional Manufacturing Facility for the Drug Substance
consists of [***]). Pharming shall maintain an Additional Manufacturing Facility
for Drug Substance and, upon receipt of required approvals of any Additional
Manufacturing Facility(ies) for Drug Substance or Drug Product, shall maintain
such Additional Manufacturing Facility(ies) throughout the Term (Pharming has no
obligation to maintain more than [***] separate Manufacturing Facilities for
[***]).
     2.6 Supply Management Coordination. Within thirty (30) days following the
Effective Date, each Party shall designate those of its employees to be part of
the team responsible for managing the Manufacturing relationship between the
Parties (the “Manufacturing Relationship Team”). The Manufacturing Relationship
Team from each Party shall meet in person or by telephone or video conference
not less than [***] to review the current status of the business relationship
(including performance against the KPIs (as defined in Section 2.7 below) as
well as any additional Manufacturing performance indicators established by the
Parties) and address any issues that have arisen with respect to the
Manufacture. The Parties acknowledge that the Manufacturing Relationship Team
likely will need to meet more frequently than [***] during the period prior to
and immediately following First Commercial Sale and agree to reasonably
cooperate in that regard. For clarity, the Manufacturing Relationship Team shall
not have the right to modify or amend this Agreement or waive either Party’s
compliance with this Agreement. The Manufacturing Relationship Team shall be a
subcommittee of the Steering Committee established pursuant to Section 2.1 of
the License Agreement.
     2.7 Key Performance Indicators. Pharming and Santarus shall establish key
performance indicators to assist with monitoring the obligations and performance
of each Party under this Agreement (the “KPIs”). The initial KPIs will be
established reasonably in advance of First Commercial Sale. The KPIs will then
be reviewed by the Manufacturing Relationship Team at each periodic review
meeting contemplated by Section 2.6 to assess performance and, if necessary,
amend the KPIs in respect of the next subsequent meeting.
     2.8 Product Inventory. The written information that Pharming has provided
to Santarus as of the Effective Date concerning the existing levels and expiry
dating of Product Inventory as well as existing and planned purchase orders for
future Product Inventory is accurate and complete. All Product Inventory shall
have been and will be produced, manufactured, held, stored and shipped in
accordance with the applicable Specifications, cGMP, the Regulatory Approvals,
the Manufacturing Approvals, all applicable analytical methods and procedures,
material specifications, master batch records and stability protocols and in
compliance with Applicable Laws. Pharming shall keep Santarus informed
concerning its plans to produce and order additional Product Inventory
designated for Santarus. The Product Inventory manufactured and to be
manufactured in the [***] is and will be suitable for commercial sale, subject
to completion of the activities set forth in Section 4.1.
 

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ARTICLE 3
SUPPLY OF FINISHED PRODUCT
     3.1 Forecasts; Orders.
     (a) Forecasts. The Parties shall establish a process to ensure that
written, non-binding, rolling [***] ([***]) month forecasts, by month, of
estimated requirements for Finished Product in the Territory (“Forecast(s)”)
will be provided by Santarus to Pharming and will be approved on at least a
[***] basis by the Steering Committee at the meetings as specified in
Section 2.3 of the License Agreement or more frequently if reasonably requested
by either Party; such process shall include a mechanism by which (i) Pharming
shall communicate to Santarus its Manufacturing and distribution forecasts on a
global basis in advance of a Steering Committee meeting (with the necessary lead
time to be mutually agreed); (ii) the first Forecast (the “Initial Forecast”) is
approved by the Steering Committee on or before [***] of the License Agreement;
and (iii) the Forecast shall be updated and revised on a not less than [***]
basis. Pharming shall use the Forecast for planning purposes and make available
(or cause to be made available) the capacity required to Manufacture the
forecasted quantities of Finished Product within the time frames specified in
each Forecast.
     (b) Orders. Santarus shall submit to Pharming written orders consistent
with the applicable Forecast (each, an “Order”) for the delivery of Finished
Product at least [***] ([***]) calendar days prior to the specified delivery
date. Each Order will be approved by the Manufacturing Relationship Team. Each
Order shall specify the quantity or, if more than one shipment is requested,
quantities of Finished Product ordered by SKU, the requested delivery date or
dates, the delivery address(es) and any applicable shipping information.
Pharming shall Manufacture (or shall cause to be Manufactured) the Finished
Product in the quantities and by the delivery dates set forth in the applicable
Orders. In the event of a shortage of capacity at any Existing Manufacturing
Facility, the Parties shall ensure that Santarus receives at least [***] (based
upon the then applicable worldwide forecasts) with respect to available
capacity.
     3.2 Safety Stock. During the Term, Pharming shall maintain a safety stock
equal to at least [***] ([***]) months demand of each of the Skimmed Milk, Drug
Substance, Drug Product and Finished Product based on the then current Forecast
(or such other equivalent amounts of Skimmed Milk, Drug Substance, Drug Product
and Finished Product that together provide for approximately [***] ([***])
months of Finished Product inventory), excluding in each case Commercial
Finished Product held by Santarus [***] (the “Safety Stock”). For clarity, the
Santarus Safety Stock shall be allocated separately from safety stock Pharming
is required to hold for other Persons. Pharming shall inform Santarus from time
to time, upon Santarus’ reasonable request, concerning the inventory levels of
Safety Stock, and Pharming shall manage the Safety Stock as part of its overall
inventory on a First Expiry/First Out basis.
     3.3 Supply Commitment. Pharming shall supply to Santarus amounts of
Finished Product ordered by Santarus on any Order made in accordance with the
terms of this Agreement, and Pharming further agrees to use Commercially
Reasonable Efforts to supply (to the extent ordered by Santarus) quantities in
excess of these amounts.
 

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     3.4 [***]. In addition to the rights set forth in Section 3.6, Santarus
shall have the right, at any time during the Term following the Supply Failure
Triggers and for so long as the Supply Failure Triggers continue, to (a) step in
to cure any Payment Defaults under the agreements with [***] by making the
required payment and Pharming shall promptly notify Santarus of any such Payment
Defaults (but in any case within a sufficient period of time to permit Santarus
to exercise its cure right hereunder); and (b) assume sole responsibility for
the manufacture and supply of Drug Substance or Drug Product, as applicable,
including by entering into a separate agreement(s) with [***], under terms and
conditions materially similar to those contained in the definitive agreement(s)
with [***] entered into by Pharming (taking into account the Territory
limitation on the needs of Santarus with respect to supply of the Finished
Product and other appropriate adjustments). Santarus’ rights pursuant to the
preceding sentence and such agreement(s) referred to therein shall remain
unaffected in the event of bankruptcy, receivership or insolvency of Pharming or
any Pharming Affiliate responsible for manufacture and supply of the Drug
Substance, Drug Product or Finished Product. The conclusion of such agreement(s)
between Santarus and [***] shall not be subject to the consent of Pharming and
Pharming shall offer its due assistance with respect to the conclusion of such
an agreement(s), including initiating direct contact between Santarus and [***].
     3.5 Santarus Right to Step Into Agreements with Other Manufacturing
Facilities. In addition to the rights set forth in Sections 3.4 and 3.6,
Santarus shall have the right, at any time during the Term following the Supply
Failure Triggers and for so long as the Supply Failure Triggers continue, to
(a) step in to cure any Payment Defaults under the agreements with other Third
Party Contractors [***] or Manufacturing Facilities and Pharming shall promptly
notify Santarus of any such Payment Defaults (but in any case within a
sufficient period of time to permit Santarus to exercise its cure right
hereunder); and (b) assume sole responsibility for the manufacture and supply of
Drug Substance, Drug Product or Finished Product, as applicable, including by
stepping into the existing definitive agreement(s) between Pharming (or its
Affiliate) and such Third Party Contractor or Manufacturing Facility and to
order the Drug Substance, the Drug Product or Finished Product, as applicable,
directly from such Third Party Contractor or Manufacturing Facility. Santarus’
rights pursuant to the preceding sentence and such agreements referred to
therein shall remain unaffected in the event of bankruptcy, receivership or
insolvency of Pharming or any Pharming Affiliate responsible for manufacture and
supply of the Drug Substance, Drug Product or Finished Product. Santarus’
step-in rights shall not be subject to the consent of Pharming and Pharming
shall offer its due assistance with respect to the conclusion of such
arrangement(s), including initiating direct contact between Santarus and such
Third Party Contractor or Manufacturing Facility.
     3.6 Notice of Failure to Supply and Other Mechanics.
     (a) The Parties desire to establish a procedure to discuss and escalate any
failure by Pharming to timely and within the quantities ordered supply Finished
Product to Santarus. In furtherance of that desire, Pharming shall promptly
notify Santarus in the event that Pharming reasonably anticipates, for any
reason at any time during the Term, that it will be unable to supply Santarus
with the Finished Product as forecasted by Santarus according to this
 

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Agreement, including an inability to deliver Finished Product on time or because
Pharming is not technically capable of delivering Finished Product to the
Specifications required by the Regulatory Approvals or in the event of a Supply
Failure Trigger.
     (b) If an Order is not received at Santarus’ designated delivery location
in the Territory within [***] ([***]) [***] of the delivery date set forth in
the Order and provided that Santarus has taken into account sufficient lead time
(being at least [***] calendar days), then Santarus and Pharming will promptly
meet and discuss the situation and (in so far as necessary) will mutually agree
on an appropriate remediation and revised delivery date.
     (c) If an Order is not received at Santarus’ designated delivery location
within the Territory [***] ([***]) [***] of the delivery date set forth in the
Order, and provided that Santarus has taken into account sufficient lead time
(being at least [***] calendar days), then Pharming will promptly set up a
meeting to discuss with Santarus and the Third Party Contractor(s) responsible
for the delayed delivery the situation and the Parties will attempt to
understand the cause of the delayed delivery. If the delayed delivery occurred
as a result of an uncured payment default that is not the result of Pharming
contesting the invoice concerned and provided that a demand for payment has been
made by the Third Party Contractor(s) concerned (“Payment Default”), Santarus
shall have the right to cure any such Payment Default. If the cause of the
delayed delivery is other than a Payment Default, Santarus and Pharming will
mutually agree on an appropriate remediation and revised delivery date.
     (d) If a Supply Failure Trigger occurs, Santarus shall have the rights set
forth in Sections 3.4 or 3.5.
     (e) Santarus’ rights pursuant to this Section 3.6 shall remain unaffected
in the event of bankruptcy, receivership or insolvency of Pharming or any
Pharming Affiliate responsible for manufacture and supply of the Drug Substance,
Drug Product or Finished Product.
     (f) In the event that Santarus initiates its rights to enter into an
agreement(s) with [***] or exercises its step-in rights with any other Third
Party Contractor or Manufacturing Facility, Santarus shall have the continuing
right to manufacture and supply [***] percent ([***]%) of Santarus’, its
Affiliates’ and its sublicensees’ requirements for Drug Substance, Drug Product
or Finished Product until both (i) Pharming has provided written notice to
Santarus of its desire to re-initiate such manufacture and supply and
(ii) Santarus believes, in the exercise of its reasonable judgment, that
Pharming is capable of providing continuous and timely supply of Finished
Product pursuant to the terms of this Agreement (the “Re-initiation”). Upon the
occurrence of the Re-initiation, notwithstanding Pharming’s manufacture and
supply hereunder, Santarus shall be entitled to (I) continue to manufacture and
supply up to [***] percent ([***]%) of its, its Affiliates’ and its
sublicensees’ forecasted requirements for Drug Substance, Drug Product or
Finished Product, as applicable (through the arrangements which it established
following the Supply Failure Trigger or through new Third Party contractors) for
up to [***] ([***]) years following the Re-initiation or (II) if the term of the
agreement or arrangement into which Santarus entered as permitted hereunder is
greater than [***] ([***]) years, assign such agreement or arrangement to
Pharming.
 

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     (g) If Santarus has exercised its rights under Sections 3.4, 3.5 or this
3.6 to assume responsibility for all or a part of the manufacture and supply of
Drug Substance, Drug Product or Finished Product, the Supply Price payable under
the License Agreement with respect to Santarus-manufactured Drug Substance, Drug
Product or Finished Product shall be adjusted as set forth in Section 8.1 of the
License Agreement. In addition, [***] made by Santarus to the Third Party
Contractor(s) pursuant to Section 3.4, 3.5 or 3.6 (c) [***] made by Santarus
under Article 4 of the License Agreement.
     (h) For the avoidance of doubt, Santarus may exercise its rights under
Sections 3.4, 3.5 and this Section 3.6 while the Parties await an award to be
rendered in proceedings referred by either Party under Section 3.6(i).
     (i) Any dispute between the Parties as to whether the prerequisites for
exercising Santarus’ rights under Sections 3.4, 3.5 or this Section 3.6 are met
shall be submitted to the dispute resolution procedure set out in Section 15.2
of the License Agreement.
     (j) Santarus shall be solely responsible for its own costs in connection
with entering into an agreement(s) with [***] or exercising its step-in rights
with any other Third Party Contractor or Manufacturing Facility.
     3.7 Escrow.
     (a) Pharming shall place in escrow, in trust or otherwise grant Santarus
certain rights to use the Detailed Manufacturing Documentation and Materials,
Pharming Know-How and the Regulatory or Clinical Data in so far as such
documentation, materials, Know-How and data are necessary for Santarus to be
able to initiate and continue the manufacturing of Skimmed Milk, Drug Substance,
Drug Product and Finished Product and to obtain and maintain the associated
Regulatory Approvals and Manufacturing Approvals, so that those rights which are
attributed to Santarus hereunder or under the Deeds are safeguarded. Prior to
the Effective Date, Pharming has provided to Santarus a reasonably detailed list
of the Detailed Manufacturing Documentation and Materials, Pharming Know-How and
the Regulatory or Clinical Data which will be placed in escrow as set forth in
this Section 3.7.
     (b) In order for Pharming to meet its obligations pursuant to the preceding
paragraph, the Parties shall conclude a separate escrow agreement no later than
[***] ([***]) weeks after the Effective Date. The Parties shall negotiate in
good faith the contents of such escrow agreement taking into account the
interests of both Parties, and the escrow agent shall be acceptable to Santarus
in its reasonable discretion. Governing law of the escrow agreement shall be the
State of New York.
 

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ARTICLE 4
PRODUCT RELEASE, SHIPMENT AND DELIVERY
     4.1 Product Release.
     (a) By Pharming. A Pharming Qualified Person shall be responsible for
releasing each batch of the Skimmed Milk, Drug Substance, Drug Product and
Finished Product for export.
     (b) By Santarus. Pharming shall provide (or shall cause to be provided to
Santarus) the following documentation in advance of each shipment of Finished
Product ordered by Santarus: (i) a Certificate of Analysis, (ii) a Certificate
of Compliance, (iii) summaries of relevant batch records used in the Manufacture
of the Skimmed Milk, Drug Substance, Drug Product and Finished Product, provided
that upon the reasonable request of Santarus, Pharming shall provide complete
copies of the relevant batch records, (iv) additional documentation, if any,
confirming the release activities described in Section 4.1(a), and (v) any other
relevant documentation reasonably requested by Santarus. Santarus shall review
such documentation and shall be responsible for authorizing final product
release for the Finished Product in the Territory. No Finished Product shall be
shipped by or on behalf of Pharming to Santarus (or its designee) prior to
Santarus’ notification to Pharming in writing that Santarus has completed its
release procedures (which shall occur within [***] ([***]) days from the date on
which such documentation is received by Santarus) and has authorized the
Finished Product for shipment.
     4.2 Shipping and Customs. Pharming shall be responsible, at its cost and
expense, for (a) shipping the Finished Product to the delivery address on the
delivery date set forth in the applicable Order, and (b) obtaining any export
licenses or other official authorizations and carrying out all customs
formalities necessary to export the Finished Product to Santarus (or its
designee) in accordance with the terms specified in the applicable Order.
Finished Product shall be transported in accordance with the Specifications,
cGMP and Applicable Laws. In addition, Finished Product shall meet all
applicable export and customs laws, regulations and like requirements for export
to the Territory. Pharming shall notify Santarus in writing at the time of
shipment as to the quantity of Finished Product shipped, the identity of the
carrier and the anticipated delivery date. If any Order is delayed and is not
likely to be delivered on time, Pharming shall immediately notify Santarus and
Santarus may direct Pharming to ship such Order by expedited means of
transportation as designated by Santarus.
     4.3 Title and Risk of Loss. Pharming shall deliver the Commercial Finished
Product to Santarus [***]. [***], in accordance with Santarus’ or its
Affiliates’ or Sublicensees’ standard terms, at which point in time [***] to
Santarus, its Affiliate or Sublicensee and then to the Third Party purchaser.
Santarus shall ensure that the Commercial Finished Product delivered to Santarus
[***] is properly and safely stored in accordance with all Applicable Laws.
Santarus, its Affiliate or Sublicensee shall deliver the Commercial Finished
Product to the Third Party purchaser on the basis of First Expiry/First Out.
Subject to Santarus’ obligations pursuant to the License Agreement, all proceeds
of such sales to Third Parties shall be the sole property of Santarus, its
Affiliate or Sublicensee. With respect to Commercial Finished Product supplied
to Santarus, its Affiliates or Sublicensees hereunder, Pharming shall be
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damage to the Commercial Finished Product until title transfers to Santarus, its
Affiliate or Sublicensee; provided that Santarus, its Affiliate or Sublicensee
shall be responsible for loss or damage to the Commercial Finished Product
caused by a Negligence Event and Santarus shall compensate Pharming for such
loss or damage to the Commercial Finished Product by reimbursing Pharming for
its [***] for such Commercial Finished Product (including the reasonable costs
of destruction and/or disposal, if any).
     4.4 Late Delivery/Shortages and Overages. If a shipment of Finished Product
ordered by Santarus under this Agreement has not been delivered at the shipping
point within [***] ([***]) Business Days after the scheduled delivery date (any
delivery that is more than [***] ([***]) Business Days after the scheduled
delivery date stated on the corresponding Order due to reasons within Pharming’s
reasonable control is hereinafter referred to as a “Late Shipment”), or if the
shipment received by Santarus contains less than [***]% of the quantity
specified in the corresponding Order (a “Short Shipment”), Santarus shall notify
Pharming promptly upon such discovery and, in any event, not later than [***]
([***]) days after receipt of, or failure to receive, such ordered Finished
Product. Pharming shall use its best efforts to deliver the quantity of Finished
Product it had failed to ship in the case of a Late Shipment or the quantity by
which the shipment is short of the quantity ordered in the case of a Short
Shipment, as soon as possible after notification of such shortage, by expedited
means of transportation at Pharming’s expense in respect of any difference in
cost for such expedited means of transportation relative to regular delivery
costs.
     4.5 Storage of Skimmed Milk, Drug Substance, Drug Product and Finished
Product. Pharming shall store (and shall cause its Manufacturing Affiliates and
Third Party Contractors to store) all Skimmed Milk, Drug Substance, Drug Product
and Finished Product (and any other related materials and components) in
compliance with cGMP, Applicable Laws and the storage requirements set forth in
the Specifications.
     4.6 Returns; Expired or Obsolete Product. Santarus (and its Affiliates and
Sublicensees) shall have the right to return or destroy damaged, expired or
otherwise obsolete or unusable Commercial Finished Product, in each case at
Pharming’s direction and cost, except as further described in this Section 4.6.
In the case of a Negligence Event, Santarus shall compensate Pharming for this
loss or damage to the Commercial Finished Product by reimbursing Pharming for
its [***]for such Commercial Finished Product (including the reasonable costs of
destruction and/or disposal, if any). In addition, with regard to Commercial
Finished Product that has expired other than in connection with a Negligence
Event, [***] shall [***] the expense associated with the [***] for such expired
Commercial Finished Product (including the reasonable costs of destruction
and/or disposal, if any); provided, however, that Pharming shall be solely
responsible for all such costs to the extent that the Finished Product had a
shelf-life of less than [***] ([***]) months at the time of receipt by Santarus.
     4.7 Acceptance Procedures.
     (a) Deficiency Notice. Santarus has the right to reject any portion of any
shipment of Finished Product that deviates from the warranties set forth in
Section 5.1 (the “Pharming
 

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Manufacturing Responsibilities”), without invalidating any remainder of such
shipment. Santarus or its agent shall visually inspect the Finished Product
delivered by Pharming upon receipt thereof and shall give Pharming written
notice (a “Deficiency Notice”) of any Finished Product that deviates from the
Pharming Manufacturing Responsibilities within [***] ([***]) days after
Santarus’ receipt thereof (or, in the case of any defects not reasonably
susceptible to discovery upon receipt by visual inspection of the Finished
Product, including those requiring laboratory analysis, within [***] ([***])
days after discovery thereof by Santarus, but in no event after the expiration
date of the Finished Product). Should Santarus fail to provide Pharming with the
Deficiency Notice within the applicable [***]—day period, then the delivery
shall be deemed to have been accepted by Santarus on the [***] day after
delivery or discovery, as applicable.
     (b) Determination of Deficiency. Upon receipt of a Deficiency Notice,
Pharming shall have [***] ([***]) days to advise Santarus by notice in writing
that it disagrees with the contents of such Deficiency Notice. If Santarus and
Pharming fail to agree within [***] ([***]) days after Santarus’ receipt of
Pharming’s notice as to whether any Finished Product identified in the
Deficiency Notice deviates from the Pharming Manufacturing Responsibilities,
then the Parties shall select a mutually agreed Independent Person (or an
independent laboratory) to evaluate if the Finished Product deviates from the
Pharming Manufacturing Responsibilities. Such evaluation shall be binding on the
Parties, and if such evaluation certifies that any Finished Product deviates
from the Pharming Manufacturing Responsibilities, Santarus may reject such
Finished Product in the manner contemplated in this Section 4.7. If such
evaluation does not so certify in respect of any such Finished Product, then
Santarus shall be deemed to have accepted delivery of such Finished Product on
the [***] day after delivery (or, in the case of any defects not reasonably
susceptible to discovery upon receipt by visual inspection of the Finished
Product, including those requiring laboratory analysis, on the [***] day after
discovery thereof by Santarus, but in no event after the expiration date of the
Finished Product). The expenses of such expert opinion or testing shall be borne
by Pharming if the non-conformity with the Pharming Manufacturing
Responsibilities is confirmed, and otherwise by Santarus. The Parties mutually
agree that they shall use Commercially Reasonable Efforts to resolve all
determinations of deficiencies as quickly as possible.
     (c) Product Replacement. In the event Santarus rejects Finished Product in
accordance with this Section 4.7 and the rejected Finished Product is determined
not to conform to the Pharming Manufacturing Responsibilities, Pharming will use
its best efforts to replace such Finished Product with conforming Finished
Product as soon as reasonably possible. Further, Pharming shall reimburse
Santarus for all reasonable shipping, handling and storage charges incurred by
Santarus in association with such non-conforming Finished Product.
ARTICLE 5
STANDARDS OF MANUFACTURE
     5.1 Pharming Manufacturing Responsibilities.
     (a) Pharming hereby covenants that all Finished Product Manufactured for
Santarus, its Affiliates or its Sublicensees under this Agreement: (a) shall
have been manufactured, packaged,
 

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tested and stored in compliance with the Specifications, cGMP, Applicable Laws
and the terms and conditions of this Agreement and the Quality Agreement;
(b) shall be in compliance with all applicable provisions of the FFDCA, the
Public Health Service Act, 42 U.S.C. 262, and the regulations promulgated
thereunder; and (c) will have a shelf-life of not less than [***] months at the
time of receipt by Santarus (or such shorter shelf-life as may be approved by
Santarus in writing prior to shipment).
     (b) Pharming hereby covenants that all Drug Product Manufactured for
Santarus, its Affiliates or its Sublicensees under this Agreement: (a) shall
have been manufactured, packaged, tested and stored in compliance with the
Specifications, cGMP, Applicable Laws and the terms and conditions of this
Agreement and the Quality Agreement; and (b) shall be in compliance with all
applicable provisions of the FFDCA, the Public Health Service Act, 42 U.S.C.
262, and the regulations promulgated thereunder.
     (c) Pharming hereby covenants that all Drug Substance Manufactured for
Santarus, its Affiliates or its Sublicensees under this Agreement: (a) shall
have been manufactured, packaged, tested and stored in compliance with the
Specifications, cGMP, Applicable Laws and the terms and conditions of this
Agreement and the Quality Agreement; and (b) shall be in compliance with all
applicable provisions of the FFDCA, the Public Health Service Act, 42 U.S.C.
262, and the regulations promulgated thereunder
     (d) Pharming hereby covenants that all Skimmed Milk Manufactured for
Santarus, its Affiliates or its Sublicensees under this Agreement: (a) shall
have been manufactured, packaged, tested and stored in compliance with the
Specifications, cGMP, Applicable Laws and the terms and conditions of this
Agreement and the Quality Agreement; and (b) shall be in compliance with all
applicable provisions of the FFDCA, the Public Health Service Act, 42 U.S.C.
262, and the regulations promulgated thereunder.
     5.2 Quality Agreement. The terms of the Quality Agreement shall be
incorporated herein by reference. In cases where legal or contractual issues are
duplicated in the Quality Agreement and/or are in conflict with provisions of
this Agreement, the Quality Agreement shall be superseded by the terms and
conditions set forth in this Agreement.
     5.3 Stability Studies. Pharming shall conduct (or shall cause its
Manufacturing Affiliates and Third Party Contractors to conduct) stability
studies on each of the Skimmed Milk, Drug Substance, Drug Product and Finished
Product according to the Specifications therefor, as required by the FDA or by
applicable Foreign Regulatory Authorities. Pharming shall provide to Santarus a
report of all analytical results and data obtained from such stability studies
as they become available for each time point set forth in the applicable
protocol.
     5.4 Drug Master Files. Pharming shall maintain (and shall cause each
Manufacturing Affiliate and Third Party Contractor to maintain) any drug master
files (or comparable documents in the jurisdiction where Skimmed Milk, Drug
Substance, Drug Product and/or Finished Product, as the case may be, is
Manufactured) (“Drug Master File”) as may be necessary to support and maintain
Regulatory Approval of Licensed Products in the Territory.
 

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Santarus shall have a right to reference any such Drug Master Files for the
purpose of obtaining and maintaining Regulatory Approval of Licensed Products in
the Territory. Pharming shall provide Santarus with the reference numbers for
any Drug Master File describing the Manufacturing Facility and systems, as
applicable, to enable Santarus to cross reference the reference number in any of
its Drug Approval Applications (or other regulatory filings) concerning the
Skimmed Milk, Drug Substance, Drug Product and/or the Finished Product in the
Territory. In addition, Pharming shall provide to Santarus appropriate CMC
documentation for the Skimmed Milk, Drug Substance, Drug Product and/or Finished
Product as reasonably requested by Santarus for any regulatory submissions by
Santarus and shall otherwise provide such consulting services and support to
Santarus on Manufacturing-related regulatory issues as Santarus may reasonably
request.
     5.5 Manufacturing Approvals. Pharming shall obtain and maintain (and shall
cause each Manufacturing Affiliate and Third Party Contractor to obtain and
maintain) all necessary Manufacturing Approvals, in each case at its sole cost.
     5.6 Retention/Reserves. Pharming shall retain (or shall caused to be
retained) Manufacturing samples (including intermediates and components from the
Manufacturing process) in accordance with the terms of the Quality Agreement.
     5.7 Transgene Banks. Pharming will maintain (or shall cause to be
maintained) in at [***] a Master Transgene Bank (“MTB”) and a Master Working
Transgene Bank (“MWTB”) of semen. As of the Effective Date, these locations are
[***]. MTB and MWTB are maintained in accordance with good veterinary practice
for storage of semen under liquid and gas phase nitrogen and all other
Applicable Laws, and will continue to be so maintained throughout the Term.
Tanks and freezers holding the MTB and MWTB are kept under controlled conditions
and are constantly monitored, and will continue to be so kept and monitored
throughout the Term. Throughout the Term, Access and handling will be restricted
to trained personnel only and semen will be subjected to regular testing
according to approved protocols contained in the applicable Specifications.
     5.8 Specification Amendments.
     (a) Required Amendments. The Parties shall cooperate with each other to
amend or supplement the Specifications to the extent necessary to comply with
changes in cGMP, Applicable Laws or other requirements of Government Authorities
necessary to Commercialize in the Territory. If an amendment to the
Specifications requires FDA approval and/or the approval of a Foreign Regulatory
Authority, neither Pharming nor any Manufacturing Affiliate or Third Party
Contractor shall implement such amendment unless and until the necessary
Regulatory Approvals and Manufacturing Approvals have been obtained. In no event
shall Pharming or any Manufacturing Affiliate or Third Party Contractor
implement any other modification or addition to the Specifications, including
without limitation, changes in raw materials, equipment or methods of production
or testing for the Skimmed Milk, Drug Substance, Drug Product or Finished
Product, without first obtaining the appropriate
 

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Manufacturing Approvals and cooperating with Santarus to obtain appropriate
Regulatory Approvals.
     (b) Voluntary Amendments. Each of Pharming and Santarus shall have the
right to request other amendments or supplements to the Specifications from time
to time, with the prior written consent of the other Party, not to be
unreasonably withheld.
     5.9 Records. Pharming shall maintain (and shall cause each of its
Manufacturing Affiliates and Third Party Contractors to maintain) all records
necessary to comply with cGMP and Applicable Laws relating to the Manufacturing
activities hereunder. All such records shall be maintained for such period as
may be required by Applicable Laws; provided, however, that all records relating
to the manufacture, stability and quality control of each batch of Skimmed Milk,
Drug Substance, Drug Product and Finished Product shall be retained for such
additional periods of time in accordance with guidelines that the Parties shall
agree upon from time to time in writing.
     5.10 Audit Rights.
     (a) Pharming and its Affiliates. Upon reasonable prior notice and at
reasonable intervals, Pharming shall allow Santarus and its representatives to
inspect Pharming’s and its Manufacturing Affiliates’ books and records relating
to the Manufacture and permit Santarus to access any Pharming Manufacturing
Facilities or Pharming Testing and Storage Facilities used in the Manufacture
for the purposes of (a) making quality assurance audits of the facilities and of
the procedures and processes used in the Manufacture, and (b) confirming
compliance with this Agreement. Santarus, or its representative(s), shall
conduct such audit during normal business hours at a time on which the Parties
have mutually agreed, and in such a manner that does not unreasonably interfere
with normal business activities.
     (b) Third Party Audits. Santarus shall have the right to accompany Pharming
on its audits of Third Party Manufacturing Facilities or Third Party Testing and
Storage Facilities, which audits shall occur at reasonable intervals. To the
extent reasonably practicable, Pharming shall provide Santarus with least [***]
([***]) days’ prior written notice of its intent to conduct any such audit.
Pharming shall use its best efforts to ensure that any Third Party Agreements or
quality agreements with Third Parties do not exclude Santarus from accompanying
Pharming in the exercise of Pharming’s audit rights thereunder.
     5.11 Labeling and Packaging. As between the Parties, Santarus shall be
responsible for timely providing to Pharming the approved copy (including art
work) for physician and/or patient inserts and primary and secondary packaging
for Finished Product required for Commercialization within each country within
the Territory and shall be solely responsible for ensuring that the approved
content of any such labeling and packaging complies with the applicable
Regulatory Approval. Any relabeling or repackaging required as a result of a
mistake in the original approved copy materials shall be at Santarus’ sole cost;
all other mistakes shall be at Pharming’s sole cost.
 

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ARTICLE 6
REGULATORY MATTERS AND QUALITY CONTROL
     6.1 Compliance by Pharming. Pharming shall remain (and shall cause each
Manufacturing Affiliate and Third Party Contractor to remain) in compliance with
all Applicable Laws, including cGMP, at all times during the Term and, without
limiting the generality of the foregoing, maintain a quality control program
consistent with cGMP as required by the FDA and the applicable Foreign
Regulatory Authorities.
     6.2 Manufacturing Process. If any process event occurs during the
Manufacture of the Skimmed Milk, Drug Substance, Drug Product or Finished
Product, which event is likely to materially affect the safety, efficacy or
regulatory status of the Skimmed Milk, Drug Substance, Drug Product or Finished
Product, then Pharming shall promptly notify Santarus. Further, Pharming shall
fully and appropriately investigate and report to Santarus on all complaints and
notices of quality issues concerning the Skimmed Milk, Drug Substance, Drug
Product or Finished Product from the FDA, any Foreign Regulatory Authority or
Government Authority of which Santarus shall have given Pharming notice.
Santarus and Pharming shall consult with each other as to the disposition of all
affected batches of Skimmed Milk, Drug Substance, Drug Product and Finished
Product. Pharming shall report to Santarus in writing any other atypical process
event in accordance with the Quality Agreement.
     6.3 Communications. Each Party may communicate with the FDA or Foreign
Regulatory Authority or Government Authority regarding the Manufacturing
activities hereunder if such communication is necessary to comply with the terms
of this Agreement or the requirements of any Applicable Law, governmental order
or regulation; provided, however, that Pharming shall permit Santarus to
accompany Pharming and take part in any communications with the FDA or Foreign
Regulatory Authority or Government Authority regarding the Manufacturing
activities hereunder, and to receive copies of all such communications to and
from the FDA or any Foreign Regulatory Authority or Government Authority.
     6.4 Government Inspection.
     (a) Pharming shall make (and shall cause each Manufacturing Affiliate and
Third Party Contractor to make) its internal practices, books and records
relating to its Manufacturing activities hereunder available and allow access to
all Manufacturing Facilities and Testing and Storage Facilities to the FDA, any
Foreign Regulatory Authority and any other Government Authority having
jurisdiction over such activities or Commercialization of Licensed Products for
the purposes of determining compliance with cGMP and Applicable Laws.
     (b) Pharming agrees to advise Santarus by telephone, facsimile or e-mail
immediately of any proposed, announced or unannounced visit or inspection by the
FDA, Foreign Regulatory Authority or other Government Authority relating to the
Manufacturing activities hereunder. Pharming shall provide Santarus with a
reasonable description in writing of each such visit or inspection promptly (but
in no event later than [***] ([***]) calendar days) thereafter, and with copies
of any letters, reports or other documents (including form 483’s) issued by any
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authorities to which Pharming has access and that relate to the Manufacturing
activities hereunder. Santarus may review and comment upon Pharming’s and its
Affiliate’s responses to any such reports and communications prior to submission
of any response to the FDA, any Foreign Regulatory Authority or any other
Government Authority. Pharming shall use its best efforts to ensure that the
responses of any Third Party can be reviewed and commented on by Santarus. In
addition to any other obligations set forth in this Agreement, in no event shall
Pharming (or its Manufacturing Affiliate or Third Party Contractor) commit to
any changes to the Manufacturing process, Manufacturing Facilities, Testing and
Storage Facilities, equipment, tests and/or Specifications without first
obtaining the appropriate Manufacturing Approvals and cooperating with Santarus
to obtain the appropriate Regulatory Approvals in the Territory, including
pursuant to Section 5.8 (a).
     (c) If the FDA, any Foreign Regulatory Authority or any other Government
Authority conducts an inspection of a Manufacturing Facility or a Testing and
Storage Facility in circumstances that are not related to the Manufacturing
activities hereunder and issues a Form 483 observation, inspection report or
other formal or informal document in respect of such inspection which questions
Pharming’s (or its Manufacturing Affiliate’s or Third Party Contractor’s)
compliance with critical or major cGMP standards relating to operations at such
Manufacturing Facility or Testing and Storage Facility which otherwise could
have an adverse impact on the Manufacturing activities hereunder then Pharming
shall notify Santarus promptly (but in no event later than [***] ([***])
calendar days) after Pharming receives a written copy of such observation,
report or document.
     (d) Pharming shall keep Santarus informed of (i) any remediation plan
Pharming (or any Manufacturing Affiliate or Third Party Contractor) adopts to
alleviate any concerns raised by the FDA, any Foreign Regulatory Authority or
any other Government Authority contemplated by Sections 6.4(b) or 6.4(c),
(ii) progress in implementing the remediation plan and (iii) the formal
responses of the FDA, applicable Foreign Regulatory Authority or applicable
other Government Authority to such remediation plan and its implementation.
     6.5 Other Laws and Regulations. In carrying out its obligations under this
Agreement, Pharming (and each Manufacturing Affiliate and Third Party
Contractor) shall comply with all applicable environmental and health and safety
laws (current or as amended or added), and shall be solely responsible for
determining how to comply with same in carrying out these obligations. Pharming
shall promptly notify Santarus of any circumstances, including the receipt of
any notice, warning, citation, finding, report or service of process or the
occurrence of any release, spill, upset, or discharge of hazardous substances
(as may be defined under Applicable Laws) relating to Pharming’s (or its
Manufacturing Affiliate’s or Third Party Contractor’s) compliance with this
Section 6.5 and which relates to the Manufacturing activities hereunder.
     6.6 End-User Inquiries and Complaints. Subject to Pharming’s obligation to
report certain information on a more expedited basis as contemplated by
Section 7.1 below, Pharming shall notify and refer to Santarus, within [***]
([***]) Business Days after receipt, all
 

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communications from end-users of the Finished Product in the Territory (and also
outside the Territory if the circumstances related to such communications could
potentially have an impact on Finished Product in the Territory), including
without limitation, inquiries regarding the Finished Product and its uses, and
complaints, comments and suggestions regarding the Finished Product and its
effects on users. Santarus shall have the sole right to respond to all such
communications from end-users of Finished Product in the Territory, and Pharming
shall provide to Santarus reasonable cooperation and assistance in effecting
such responses (including conducting or causing to be conducted investigations
as may be reasonably requested by Santarus).
ARTICLE 7
PHARMACOVIGILANCE; RECALL
     7.1 Pharmacovigilance. Upon the transfer to Santarus of the IND for
Licensed Product in any indication or the transfer to Santarus of Regulatory
Approval to market and sell the Licensed Product in any indication, whichever
occurs first, Santarus will be responsible for pharmacovigilance reporting in
the Territory, and Pharming will provide data and other Information to assist
with Santarus’ pharmacovigilance reporting obligations. Pharming will be
responsible for maintaining the worldwide pharmacovigilance database. Prior to
such transfer of the regulatory filing (e.g., the IND or Regulatory Approval to
market and sell the Licensed Product) to Santarus, the Parties shall enter into
a separate pharmacovigilance agreement to conform with the respective
pharmacovigilance reporting obligations of Santarus in the Territory and
Pharming throughout the world.
     7.2 Notification and Recall. The handling of recalls and withdrawals of
Finished Product in the Territory shall be within the sole discretion of
Santarus, unless otherwise required by Applicable Laws. If any Government
Authority issues or requests a recall or takes similar action in connection with
Finished Product, or if either Party determines that an event, incident or
circumstance has occurred which may reasonably result in the need for a recall
or market withdrawal of Finished Product in the Territory (collectively,
“Recalls”), the Party shall, within [***] ([***]) hours, advise the other Party
thereof by telephone or facsimile, after which the Parties shall promptly
discuss and work together to effect an appropriate course of action.
Notification to FDA (or such other Foreign Regulatory Authority or Government
Authority in the Territory) and conducting such Recall shall be the
responsibility of Santarus. Pharming shall (a) cooperate fully with Santarus in
the event of any such Recall, withdrawal and/or related disposition of any
affected Finished Product in Pharming’s (or its Manufacturing Affiliates’ or
Third Party Contractors’) possession and (b) provide such assistance in
connection therewith as Santarus may reasonably request.
     7.3 Recall Expense. Pharming shall bear the full and reasonable expenses of
both Parties incurred in any Recall to the extent resulting from a failure of
Pharming (or its Manufacturing Affiliate or Third Party Contractor) to
manufacture the Skimmed Milk, Drug Substance, Drug Product or Finished Product
in accordance with the Pharming Manufacturing Responsibilities. In all other
circumstances Santarus shall bear the full and reasonable expenses
 

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of both Parties incurred in any Recall. Such expenses of Recall shall include,
without limitation, the expenses of notification and destruction or return of
the recalled Finished Product, distribution of replacement Finished Product and
all sums paid by Third Parties for the recalled Finished Product. Without
limiting the foregoing, to the extent any Recall is caused by the failure of
Pharming (or its Manufacturing Affiliate or Third Party Contractor) to
manufacture the Skimmed Milk, Drug Substance, Drug Product or Finished Product
in accordance with the Pharming Manufacturing Responsibilities, Pharming shall
further reimburse Santarus for any and all transportation and storage charges
incurred by Santarus in connection with such recalled Finished Product.
ARTICLE 8
TERM AND TERMINATION
     8.1 Incorporation of License Agreement Provisions. The terms and provisions
of Article 11 of the License Agreement shall be incorporated by reference
herein.
     8.2 Technical Transfer. In addition to the incorporation of Article 11 as
set forth in Section 8.1 upon termination or expiration of this Agreement,
(a) Pharming shall surrender to Santarus, or, at Santarus’ sole option and
expense, Pharming shall destroy and provide Santarus with a certificate signed
by a responsible executive of Pharming attesting to the destruction of, all
copies of any Confidential Information provided by Santarus hereunder (except to
the extent required to be maintained by Pharming pursuant to Applicable Laws,
the License Agreement or this Agreement); and (b) in furtherance of
Section 11.5(b)(iv) of the License Agreement or the exercise of Santarus’ rights
under the Security Agreement or the Deeds and in addition to Pharming’s
obligations under the Escrow Agreement, Pharming shall: (i) surrender to
Santarus all unused Licensed Compound, Skimmed Milk, Drug Substance, Finished
Product and other raw materials ordered or allocated separately for Santarus in
anticipation of satisfaction of Santarus’ forecasted requirements;
(ii) cooperate with Santarus and assist in the transfer to Santarus of all legal
and technical documents concerning Licensed Compound, Skimmed Milk, Drug
Substance and Finished Product, including master batch records, validation
reports, stability reports and relevant manufacturer authorizations, existing
retention samples and all such other documents and materials as may be
reasonably necessary or useful for Santarus to source Finished Products from
other qualified Third Parties; (iii) maintain all Regulatory Approvals and
Manufacturing Approvals; and (iv) provide, upon Santarus’ reasonable request, up
to [***] of personnel support in furtherance of the tech transfer contemplated
hereunder.
     8.3 Accrued Rights, Surviving Obligations. Termination of this Agreement
shall not affect any accrued rights and remedies of either Party. The terms of
Sections 2.8, 3.4, 4.6, 5.4, 5.7, 5.8, 5.9, 5.10, 6.4, 6.6 and Articles 9 and 10
of this Agreement shall survive any termination or expiration of this Agreement.
In addition, any other provisions which are required to interpret and enforce
the Parties’ rights and obligations under this Agreement shall also survive any
termination or expiration of this Agreement, but only to the extent required for
the full observation and performance of this Agreement, as well as any other
provisions of this
 

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Agreement which survive any termination or expiration of this Agreement as
described in Section 11.5 of the License Agreement.
ARTICLE 9
INDEMNIFICATION, INSURANCE AND LIMITATION ON LIABILITY
     The terms and provisions of Article 13 of the License Agreement shall be
incorporated by reference herein.
ARTICLE 10
MISCELLANEOUS
     The terms and provisions of Article 15 of the License Agreement shall be
incorporated by reference herein.
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     IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their proper officers as of the Effective Date.

                              SANTARUS, INC.       PHARMING GROUP N.V.    
 
                              By:   /s/ Gerald T. Proehl       By:   /s/ Sijmen
de Vries                          
 
  Name:   Gerald T. Proehl           Name:   Sijmen de Vries    
 
  Title:   President and Chief Executive Officer           Title:   Chief
Executive Officer    
 
                                            By:   /s/ Bruno M.L. Giannetti      
                       
 
                  Name:   Bruno M.L. Giannetti    
 
                  Title:   Chief Operations Officer