Exhibit 10.1

 

Confidential Treatment Requested.  Confidential portions of this document have
been redacted and have been separately filed with the Commission

 

AMENDMENT NO. 2 to

RESEARCH, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT, DATED MAY 24, 2004, by
and between VERTEX PHARMACEUTICALS INCORPORATED and CYSTIC FIBROSIS FOUNDATION
THERAPEUTICS INCORPORATED

 

This Amendment No. 2 (the “Second Amendment”) is made as of January 1, 2006 (the
“Effective Date”) by and between Vertex Pharmaceuticals Incorporated, a
Massachusetts corporation with its principal offices at 130 Waverly Street,
Cambridge, Massachusetts 02139-4242 (“Vertex”), and Cystic Fibrosis Foundation
Therapeutics Incorporated, a Delaware corporation with its principal offices at
6931 Arlington Road, Bethesda, Maryland 20814 (“CFFT”).

 

This Second Amendment amends the Research, Development and Commercialization
Agreement, dated May 24, 2004, by and between Vertex and CFFT (the “Existing
Agreement”), as amended by Amendment No. 1 to the Existing Agreement, dated
January 6, 2006, by and between Vertex and CFFT (the “First Amendment”).  Any
reference herein to the “Existing Agreement, as amended”, refers to the Existing
Agreement and the First Amendment, unless the context otherwise requires. 
Vertex and CFFT are referred to herein individually as a “Party” and
collectively as the “Parties.”

 

Background

 

In 1998, CFFT made an award to Aurora Biosciences Corporation (“Aurora”) to
conduct a feasibility study using high throughput screening for cystic fibrosis
targets.  On May 19, 2000, CFFT selected and provided support for Aurora to
conduct high throughput screening with respect to the cystic fibrosis
transmembrane conductance regulator (“CFTR”) target identified by CFFT.  Since
that time, Aurora, and then after its merger into Vertex, Vertex, have been

 

Information redacted pursuant to a confidential treatment request.  An
unredacted version of this exhibit has been filed separately with the
Commission.

 

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conducting a research program with CFFT’s support aimed at identification and
design of “Potentiator” and “Corrector” compounds, both of which are directed as
a principal mode of therapeutic action at modulation of the biological effect of
CFTR in different ways and with different anticipated results.

 

On May 24, 2004, the Parties executed the Existing Agreement.  The Existing
Agreement contemplated that during the course of the research program, Vertex,
with CFFT’s agreement, would select either the Potentiator or the Corrector
approach as its Primary Program (as defined in the Existing Agreement), to which
a majority of resources under the research program would be directed, and the
other approach would be designated as an Alternative Program (as defined in the
Existing Agreement), to which the balance of resources would be directed.

 

In 2005, with the concurrence of CFFT, Vertex selected the Potentiator approach
as the Primary Program, and designated a certain Potentiator Compound (“VX-770”)
as a Development Candidate under the terms of the Existing Agreement.

 

The Parties believe that it may be possible to create Corrector Compounds of
significant potential value as therapeutics.  To further that effort, on January
6, 2006, the Parties executed the First Amendment.  Among other things, the
First Amendment provided for continued funding for research relating to
Corrector Compounds.

 

In connection with the First Amendment, the Parties executed a Term Sheet (the
“Term Sheet”) outlining the financial terms upon which CFFT might consider
funding for the accelerated development of Potentiator Compounds.

 

This Second Amendment is intended to set forth the Parties’ agreement with
respect to additional funding for the accelerated development of Potentiator
Compounds, and to amend the Existing Agreement and the First Amendment
accordingly.

 

2

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Amendment

 

In consideration of the mutual covenants set forth in this Second Amendment, and
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Parties agree as follows:

 

Section 1.  Acceleration Funding Agreement

 

This Second Amendment is intended to constitute the Potentiator Funding
Agreement contemplated by the First Amendment (referenced as the “Acceleration
Funding Agreement” in the Term Sheet).  Capitalized terms not otherwise defined
in this Second Amendment shall have the meaning ascribed to them in the Existing
Agreement, as amended.  If specific provisions of this Second Amendment are
inconsistent with specific provisions of the Existing Agreement, as amended, the
provisions of this Second Amendment, with respect to the subject matter of this
Second Amendment, shall control.  Otherwise, the Existing Agreement, as amended,
shall continue to be applicable.

 

SECTION 2.  DEVELOPMENT AND DEVELOPMENT FUNDING.

 

2.1.         POTENTIATOR JDC ORGANIZATION AND OPERATION.

 

2.1.1       POTENTIATOR JDC MEMBERSHIP.  AS SOON AS PRACTICABLE AFTER THE
EFFECTIVE DATE, VERTEX WILL ESTABLISH A POTENTIATOR JOINT DEVELOPMENT COMMITTEE
(THE “POTENTIATOR JDC”) CONSISTING OF [***], AS MAY BE DETERMINED FROM TIME TO
TIME BY THE POTENTIATOR JDC.  THE POTENTIATOR JDC SHALL CONTINUE TO FUNCTION
UNTIL FDA APPROVAL OF A POTENTIATOR DRUG PRODUCT.  DURING THE PERIOD ENDING
DECEMBER 31, 2008, THE POTENTIATOR JDC SHALL INCLUDE AN [***].  THEREAFTER, CFFT
SHALL BE ENTITLED TO [***] ON THE POTENTIATOR JDC.  IN ADDITION TO MEMBERS
APPOINTED BY CFFT, THE POTENTIATOR JDC IS EXPECTED TO HAVE MEMBERS FROM THE
VARIOUS FUNCTIONAL GROUPS (E.G., RESEARCH, PRECLINICAL SAFETY, CLINICAL,
REGULATORY, MARKETING) THAT ARE OR

 

3

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will be expected to be involved from time to time in development and launch of
VX-770 or any other Potentiator Backup Compound that is substituted for VX-770
(collectively VX-770 and such Potentiator Backup Compounds are referred to
hereinafter as “VX-770”).  [***].  In addition to Potentiator JDC members,
attendees of Potentiator JDC meetings may include such Vertex or CFFT
representatives as may be required for presentation to or discussion with the
Potentiator JDC from time to time.

 

2.1.2       Potentiator JDC Operation.  The Potentiator JDC will be the
principal organization through which the development of VX-770 is planned and
evaluated, subject to appropriate review and approval at senior management
levels as required by Vertex from time to time.  The Potentiator JDC will be
responsible for preparation and implementation of the development plan described
in Section 2.1.3, below, with respect to VX-770.  The Potentiator JDC will
typically meet [***], depending on the level of current development activity. 
[***].

 

2.1.3       DEVELOPMENT PLAN.  THE POTENTIATOR JDC SHALL REVIEW THE
IMPLEMENTATION OF AN OVERALL DEVELOPMENT PLAN FOR VX-770.  THE DEVELOPMENT PLAN
SHALL DESCRIBE THE PROPOSED CLINICAL TRIAL ACTIVITIES, NON-CLINICAL DEVELOPMENT
ACTIVITIES, AND SUPPLY AND MANUFACTURING ACTIVITIES FOR VX-770.  THE INITIAL
DEVELOPMENT PLAN CONSIDERED BY VERTEX FOR VX-770 (THE “VX-770 BENCHMARK
POTENTIATOR DEVELOPMENT PLAN”) AND THE DEVELOPMENT PLAN CURRENTLY BEING
IMPLEMENTED BY VERTEX (THE “VX-770 ACCELERATED POTENTIATOR DEVELOPMENT PLAN”),
ARE ATTACHED HERETO AS EXHIBITS 2.1.3A AND 2.1.3B, RESPECTIVELY.  THE VX-770
ACCELERATED POTENTIATOR DEVELOPMENT PLAN [***].  THE VX-770 ACCELERATED
POTENTIATOR DEVELOPMENT PLAN WILL BE REVIEWED AND MAY BE FURTHER REFINED FROM
TIME TO TIME BY THE POTENTIATOR JDC, BASED IN PART ON DATA GENERATED IN EARLY
PRE-CLINICAL AND CLINICAL TRIALS.  [***]  THE ACTUAL DESIGN OF THOSE PHASE I AND
ANY FURTHER CLINICAL TRAILS MAY BE INFLUENCED BY FDA FEEDBACK, CLINICAL AND
NONCLINICAL TRIAL

 

4

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data and other scientific and medical information.  Any change in the clinical
plans will be reviewed [***].

 

2.1.4       Meeting Materials.  The Potentiator JDC will consider all
information that is material to an assessment of the status, direction and
progress of the development program for VX-770, including clinical trial
protocols, a summary of the IND package, enabling animal toxicity data reports,
clinical trial protocols, clinical trials final reports, summary data and
reports.  The Potentiator JDC will review progress reports prepared by Vertex,
which shall be submitted to the Potentiator JDC prior to each meeting and which
shall include a summary in written text of progress made during the preceding
[***] under the VX-770 Accelerated Potentiator Development Plan.  [***]  The
Potentiator JDC Chair will ensure that minutes are prepared and distributed to
each member of the Potentiator JDC after each meeting.  [***] CFFT’s
representatives on the Potentiator JDC will receive all documents and
information distributed or communicated to members of the Potentiator JDC.  In
any event, all information presented to the JDC or otherwise disclosed to CFFT
by or at the direction of Vertex shall be deemed confidential to Vertex and
subject to the confidentiality provisions of the Existing Agreement.

 

2.2          Therapeutic Development Network.  CFFT will use its good faith
efforts to foster discussions between the Therapeutic Development Network
(“TDN”) and Vertex so that the TDN may enter into appropriate agreements with
Vertex to provide to Vertex resources and expertise of the TDN to support
development efforts for VX-770.

 

2.3          Budget and Funding.  Exhibit 2.3A contains a summary “Benchmark
Potentiator Budget” that sets forth the estimated costs of the VX-770 Benchmark
Potentiator Development Plan originally proposed by Vertex, and a further
summary budget, the

 

5

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“Accelerated Potentiator Budget,” that sets forth the estimated costs of the
VX-770 Accelerated Potentiator Development Plan, in each case for the period
commencing January 1, 2006 and ending December 31, 2007 (the “CFFT Accelerated
Potentiator Funding Term”).  A more detailed budget for the VX-770 Accelerated
Potentiator Development Plan for 2006, based on Vertex’s most current activity
and cost assumptions, is also attached as Exhibit 2.3B.  Vertex will provide
comparable budgetary information [***] as soon as it becomes available in
[***].  CFFT agrees to bear $13.3 million of the actual Development Costs (as
defined below) for VX-770 under the VX-770 Accelerated Potentiator Development
Plan; provided that (i) CFFT’s aggregate funding obligation (the “CFFT
Accelerated Potentiator Funding”) shall not exceed [***] of that portion of
Vertex’s Development Costs incurred during the CFFT Accelerated Potentiator
Funding Term that are in excess of the aggregate Development Costs summarized in
the Benchmark Potentiator Budget for the CFFT Accelerated Potentiator Funding
Term; and (ii) CFFT’s funding obligation [***].  The budget for the VX-770
Accelerated Potentiator Development Plan may be revised by the Potentiator JDC
from time to time; except that the amount of CFFT Accelerated Potentiator
Funding shall not be increased without the written consent of CFFT.  For
purposes of this Amendment 2, the dates specified in Section 4.3 of the Existing
Agreement for Vertex to provide CFFT with an accounting of all internal FTE’s
and outsource costs will be changed to no later than [***], respectively; and
Vertex shall exercise its good faith efforts to furnish CFFT with such
accounting as early in January as is possible.  Funding will be reviewed by
Vertex and CFFT at the end of each calendar year during the CFFT Accelerated
Potentiator Funding Term, and any amounts paid by CFFT during the calendar year
that are in excess of the CFFT Accelerated Potentiator Funding amounts required
under this Second Amendment will be credited against CFFT’s 2007 funding
obligations hereunder (if paid

 

6

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on account of activities during 2006), or promptly refunded by Vertex (if paid
on account of activities during 2007).

 

For the purpose of this Second Amendment, “Development Costs” shall mean all
internal and external costs associated with the VX-770 Accelerated Potentiator
Development Plan, including but not limited to all (i) costs and expenses
invoiced by third parties, whether for goods or services associated with the
development plan, and (ii) FTE costs of Vertex development scientists and
management personnel with respect to time properly allocated to the VX-770
Accelerated Potentiator Development Plan activities.  Such internal costs may
include, but not be limited to, (a) laboratory work; (b) regulatory planning,
oversight and review; (c) quality assurance activities; (d) pharmaceutical
supply chain activities; (e) negotiations with clinical trial sites,
institutional review boards, and suppliers; (f) development plan research; (g)
program management activities; (h) intellectual property creation and
protection; (i) holding scientific discussions; (j) traveling to and attending
appropriate seminars and symposia; and (k) carrying out Potentiator JDC
activities, provided, however, costs associated with (i) and (j) above shall
only be allocated to the VX-770 Accelerated Potentiator Development Plan
activities if they are attributable to personnel who spent more than half of
their working time on such activities.  Activities included in calculating FTE’s
shall not include negotiation of this Second Amendment or modifications or
extensions of this Second Amendment or the Existing Agreement, as amended, or
administrative activities such as accounting, invoicing, personnel related
activities or the like.  FTEs allocated to activities under the VX-770
Accelerated Potentiator Development Plan shall be accounted for at the rate of
$[***] per FTE per annum.  Payments for internal and external costs shall be
invoiced and paid pursuant to Section 4.3 of the Existing Agreement.

 

7

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At its sole discretion, and except as to amounts previously due to Vertex, CFFT
shall have the right to terminate the CFFT Accelerated Potentiator Funding Term
and CFFT’s funding obligation hereunder effective December 31, 2006 or June 30,
2007 upon not less than [***] prior written notice to Vertex; provided, however,
that in the event of such a termination, the provisions of this Second Amendment
will cease to apply effective as of the date of such termination (and, with
respect to provisions of the Existing Agreement, as amended, which were
otherwise modified or amended by the provisions of this Second Amendment, such
provisions shall be read without regard to any amendment or modification set
forth in this Second Amendment).

 

Section 3.  Amendments to Corrector Contributions and Royalty Rates.

 

3.1          Corrector Contributions.  Effective as of January 6, 2006, Section
4.2 of the Existing Agreement, as amended, is further amended as follows: the
text in Section 4.2 up to and including the Initial Corrector Budget Chart is
deleted, and, in its place the following is inserted:

 

CFFT will fund [***] of the Initial Corrector Budget and Vertex will fund [***]
of the Initial Corrector Budget.  Based on the approved Initial Corrector Budget
of $[***] (which includes the $[***]of Potentiator research funding referenced
in the Research Plan), CFFT will make the payments to Vertex specified below
during the specified periods.

 

 

 

INITIAL CORRECTOR BUDGET (millions $)

 

Research Period

 

Aggregate Budget Amount

 

CFFT Financial
Commitment

 

 

 

 

 

 

 

January 1, 2006 –
December 31, 2006

 

$[***]

 

$[***]

 

 

 

 

 

 

 

January 1, 2007 –
March 31, 2008

 

$[***]

 

$[***]

 

 

The text in the balance of Section 4.2 of the First Amendment (i.e., following
the Initial Corrector Budget Chart) remains unchanged.

 

8

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3.2          Royalty Rates.  Section 5.3.1 of the Existing Agreement is amended,
as of the Effective Date, as follows:

 

(i)            [***]

 

(ii)           The paragraph following the royalty table in Section 5.3.1 of the
Existing Agreement, as amended, is deleted; and in its place, the following is
inserted:

 

[***]

 

(iii)         Section 5.3.2 of the Existing Agreement, as amended, is
redesignated as Section 5.3.3, and the following new Section 5.3.2 is inserted:

[***]

 

 

[***]

 

 

[***]

 

[***]

 

 

[***]

 

[***]

 

 

[***]

 

[***]

 

 

[***]

 

[***]

 

(iv)          The following new Section 5.3.4 is inserted:

 

Net Sales under this Section 5.3 shall not in any event include any Net Sales of
Drug Products that are the subject of the royalty obligations set forth in the
Section 5.3.3 or in Section 10.5.5.

 

Section 4.  Existing Agreement Ratified.

 

In all other respects, the Existing Agreement, as amended, is hereby ratified
and confirmed.

 

[SIGNATURE PAGE FOLLOWS]

 

9

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In witness whereof, the Parties hereto have executed this Agreement as of the
day and year first above written.

 

 

VERTEX PHARMACEUTICALS

CYSTIC FIBROSIS FOUNDATION

INCORPORATED

THERAPEUTICS INCORPORATED

 

 

 

 

By:

/s/ KENNETH S. BOGER

 

By:

/s/ ROBERT J. BEALL

 

 

 

Title: Senior Vice President and General Counsel

Title: President and Chief Executive Officer

 

 

Date: March 15, 2006

Date: March 9, 2006

 

10

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Exhibit 2.1.3A

 

[***]

 

 

11

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Exhibit 2.1.3B

 

[***]

 

12

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Exhibit 2.3B

 

Funding of VX-770 Development

 

Budget Summary:  The budget for the VX-770 Benchmark Potentiator Development
Plan (“Benchmark Potentiator Budget”) attached hereto as Exhibit 2.1.3A is as
follows:

 

 

[***]

[***]

[***]

 

 

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

The budget for the VX-770 Accelerated Potentiator Development Plan (the
“Accelerated Potentiator Budget”) attached hereto as Exhibit 2.1.3B is as
follows:

 

 

[***]

[***]

[***]

 

 

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

[***]

 

13

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Detailed Accelerated Potentiator Budget

 

[***]

 

14

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Detailed Accelerated Potentiator Budget

 

[***]

 

15

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