Exhibit 10.28

 

[*] = Certain confidential information contained in this document, marked by
brackets, is filed with the Securities and Exchange Commission pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended. 

 

 

 

 

 

 

 

Collaboration and License Agreement

 

by and between

 

KVK Tech, Inc.

 

and

 

KemPharm, Inc.

 

Dated as of October 25, 2018

 

 

 

--------------------------------------------------------------------------------

 

 

 

COLLABORATION AND LICENSE AGREEMENT

 

This Collaboration and License Agreement (the “Agreement”) is entered into as of
October 25, 2018 (the “Effective Date”) by and between KemPharm, Inc., a
Delaware corporation, with its principal place of business at 2500 Crosspark
Road, Suite E126, Coralville, IA 52241 (“KemPharm”) and KVK Tech, Inc., a
Delaware corporation having a place of business at 110 Terry Drive, Newtown, PA,
18940 (“KVK”). KemPharm and KVK are sometimes referred to herein individually as
a “Party” and collectively as the “Parties.”

 

RECITALS

 

Whereas, KemPharm has developed the Product, as defined below, for the
short-term management of acute pain, and has obtained regulatory approval of the
Product in the U.S. for such Indication, as defined below; and

 

Whereas, KVK desires to obtain from KemPharm an exclusive license to conduct
Regulatory Activities with respect to, manufacture and Commercialize, the
Licensed Products in the U.S., and KemPharm is willing to grant such license to
KVK, all under the terms and conditions hereof, with capitalized terms as
defined below.

 

Now, Therefore, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Agreement, the Parties
agree as follows:

 

Article 1     
Definitions

 

1.1     “Act” shall mean, as applicable, the United States Federal Food, Drug
and Cosmetic Act, 21 U.S.C. §§301 et seq., and/or the Public Health Service Act,
42 U.S.C. §§262 et seq., as such may be amended from time to time.

 

1.2     “Affiliate” means, with respect to a particular Party, a Person that
controls, is controlled by or is under common control with such Party. For the
purposes of this definition, the word “control” (including, with correlative
meaning, the terms “controlled by” or “under common control with”) means the
actual power, either directly or indirectly through one or more intermediaries,
to direct or cause the direction of the management and policies of such entity,
whether by the ownership of fifty percent (50%) or more of the voting stock of
such entity, or by contract or otherwise. For clarity, once a Person ceases to
be an Affiliate of a Party, then, without any further action, such Person shall
cease to have any rights, including license and sublicense rights, under this
Agreement by reason of being an Affiliate of such Party.

 

1.3     “Authorized Generic” means any version of Apadaz® specifically
authorized by KVK for marketing and distribution as a generic in the
Collaboration Territory.

 

1.4     “Business Day” means a day other than Saturday, Sunday or any day that
banks in New York, New York are required or permitted to be closed.

 

1.5     “Change of Control” means with respect to either Party: (a) the sale of
all or substantially all of such Party’s assets or business relating to this
Agreement; (b) a merger, reorganization or consolidation involving such Party in
which the voting securities of such Party outstanding immediately prior thereto
cease to represent at least fifty percent (50%) of the combined voting power of
the surviving entity immediately after such merger, reorganization or
consolidation; or (c) a person or entity, or group of persons or entities,
acting in concert acquire more than fifty percent (50%) of the voting equity
securities or management control of such Party.

 

1.6     “Collaboration Territory” means the U.S., including its territories and
possessions.

 

1.7     “CMC Information” means Information related to the chemistry,
manufacturing and controls of the Licensed Products, as specified by the FDA and
other applicable Regulatory Authorities.

 

1.8     “Commercialization,” with a correlative meaning for “Commercialize” and
“Commercializing,” means all activities undertaken before and after obtaining
Regulatory Approvals relating specifically to the pre-launch, launch, promotion,
detailing, medical education and medical liaison activities, marketing, pricing,
reimbursement, sale, and distribution of Licensed Products, including strategic
marketing, sales force detailing, advertising, market Licensed Product support,
all customer support, Licensed Product distribution and invoicing and sales
activities.

 

1.9     “Commercialization/Regulatory Expenses” means the actual, out-of-pocket
costs and expenses, in U.S. Dollars, as defined by KVK’s consistent application
of U.S. GAAP, incurred by or on behalf of KVK in (a) the Commercialization of
Licensed Products in the Field in the Collaboration Territory, including any
payments made by KVK to Third Parties in connection with obtaining or
maintaining intellectual property rights that are necessary or useful for the
Commercialization of Licensed Products under this Agreement (“Third Party
Commercial IP Costs”) (it being understood that, in the event that any other
Third Party is receiving the benefit of such Third Party intellectual property
from the applicable Third Party licensor, then the Parties, through the JSC, as
defined in Section 3.2(a), shall mutually agree upon an appropriate allocation
of such Third Party Commercial IP Costs as between, on the one hand, KVK and
KemPharm, and on the other hand, such Third Party licensee, prior to KVK
entering into an agreement with such Third Party) and (b) the maintenance of
Regulatory Approvals for Licensed Products.

 

1.10     “Commercially Reasonable Efforts” means, with respect to either Party’s
obligations under this Agreement, the carrying out of such obligations with a
level of efforts and resources consistent with the commercially reasonable
practices of a similarly situated company in the pharmaceutical industry for the
active and diligent commercialization of a similarly situated branded
pharmaceutical product as the Licensed Product at a similar stage of
commercialization, taking into account efficacy, safety, patent and regulatory
exclusivity, anticipated or approved labeling, present and future market
potential, competitive market conditions, the profitability of the product in
light of pricing and reimbursement issues, and all other relevant factors, but
not taking into account any payment owed to KemPharm under this Agreement or any
other pharmaceutical product that KVK is then researching, developing or
commercializing, alone or with one or more collaborators.

 

 

--------------------------------------------------------------------------------

 

 

1.11     [*].

 

1.12     “Confidential Information” of a Party means any and all Information,
separately or in combination, of such Party that is disclosed to the other Party
under this Agreement, whether in oral, written, graphic, or electronic form. In
addition, all Information disclosed by a Party pursuant to the confidentiality
agreement between the Parties dated November 28, 2017 (the “Confidentiality
Agreement”) shall be deemed to be Confidential Information of such Party
disclosed hereunder; provided, however, that any use or disclosure of any such
Information that is authorized under Article 12 shall not be restricted by, or
be deemed a violation of, the Confidentiality Agreement.

 

1.13     “Control” means, with respect to any material, Information, or
intellectual property right, that a Party (a) owns or (b) has a license, other
than a license granted to such Party under this Agreement, to such material,
Information, or intellectual property right and, in each case, has the ability
to grant to the other Party access, a license, or a sublicense, as applicable,
to the foregoing on the terms and conditions set forth in this Agreement without
violating the terms of any existing agreement or other arrangement with any
Third Party or being obligated to pay any royalties or other consideration
therefor.

 

1.14     “Data” means all data generated by or on behalf of a Party or its
Affiliate or their respective sublicensees pursuant to activities conducted
under this Agreement. For clarity, Data does not include (a) any patentable
inventions or (b) any formulations of benzhydrocodone or (c) any patentable
inventions or any formulations of benzhydrocodone with any other pharmaceutical
ingredient(s) other than acetaminophen.

 

1.15      “Development,” with a correlative meaning for “Develop” and
“Developing,” means all activities relating to preclinical and clinical trials,
toxicology testing, statistical analysis and publication and presentation of
study results with respect to Licensed Products (collectively, “Development
Activities”) and (b) the reporting, preparation and submission of applications
(including any CMC Information) for obtaining, registering and/or maintaining
Regulatory Approval of Licensed Products (collectively, “Regulatory
Activities”).

 

1.16     “FDA” means the U.S. Food and Drug Administration or any successor
entity.

 

1.17     “Field” means the therapeutic treatment of any and all human diseases
and conditions that are included in the KemPharm Indications for the Licensed
Product(s) and as are specifically indicated and included as per the Label.

 

1.18     “First Commercial Sale” means the first sale of a Licensed Product in
the Collaboration Territory to a Third Party after Regulatory Approval has been
obtained in the Collaboration Territory.

 

1.19     “Fiscal Year” means KVK’s fiscal year that starts from January 1st and
ends on December 31st.

 

1.20     “GCP” or “Good Clinical Practices” means the then-current standards,
practices and procedures promulgated or endorsed by the FDA as set forth in the
guidelines entitled “Guidance for Industry E6 Good Clinical Practice:
Consolidated Guidance,” including related regulatory requirements imposed by the
FDA, as they may be updated from time to time.

 

1.21      “GLP” or “Good Laboratory Practices” means the then-current good
laboratory practice standards promulgated or endorsed by the FDA as defined in
21 C.F.R. Part 58, as they may be updated from time to time.

 

1.22     “Governmental Authority” means any multi-national, national, federal,
state, local, municipal, provincial or other governmental authority of any
nature (including any governmental division, prefecture, subdivision,
department, agency, bureau, branch, office, commission, council, court or other
tribunal).

 

1.23     “Government Official” means (a) any official or employee of any
Governmental Authority, or any department, agency, or instrumentality thereof
(including without limitation commercial entities owned or controlled, directly
or indirectly, by a Governmental Authority), (b) any political party or official
thereof, or any candidate for political office, in the Collaboration Territory
or any other country, or (c) any official or employee of any public
international organization.

 

1.24      “IND” means an Investigational New Drug application filed with the
FDA, or an equivalent filing outside of the U.S.

 

1.25     “Indication” means a separately defined, well-categorized class of
human disease or condition for which a separate NDA (including any extensions or
supplements) may be, or has been, filed with the FDA. For clarity, if an NDA is
approved for a Licensed Product in a particular Indication and patient
population, a Label expansion for such Licensed Product to include such
Indication in a different patient population shall not be considered a separate
Indication.

 

1.26     “Information” means any data, results, technology, business or
financial information or information of any type whatsoever, in any tangible or
intangible form, including know-how, copyrights, trade secrets, practices,
techniques, methods, processes, inventions, developments, specifications,
formulae, software, algorithms, marketing reports, expertise, technology, test
data (including pharmacological, biological, chemical, biochemical, clinical
test data and data resulting from non-clinical studies), CMC Information,
stability data and other study data and procedures.

 

1.27     “Inventions” means any inventions and/or discoveries, including
Information, processes, methods, assays, designs, protocols, and formulas, and
improvements or modifications thereof, patentable or otherwise, that is
generated, developed, conceived or reduced to practice by or on behalf of a
Party or its Affiliate or their respective sublicensees pursuant to activities
conducted under this Agreement and that are directly related to the Licensed
Product (combination product of benzhydrocodone and acetaminophen, e.g. Apadaz®
, in each case including all rights, title and interest in and to the
intellectual property rights therein and thereto; provided, however, that
Inventions shall exclude Data.

 

1.28     “KemPharm Indications” means (a) any separately defined,
well-categorized class of human disease or condition for which KemPharm has
filed either a separate IND to an appropriate Regulatory Authority or a separate
application to an appropriate Regulatory Authority for approval to market
Licensed Products in the Collaboration Territory, or for which KemPharm is
otherwise developing or commercializing Licensed Products in the Collaboration
Territory (whether before or after the Effective Date) (which, for clarity,
includes the short-term management of acute pain) or (b) the Label

 

1.29     “KemPharm Product Mark” means KemPharm’s (or its Affiliates) trademark
Apadaz®, or the alternative trademark selected by KemPharm for the Licensed
Products in the Collaboration Territory pursuant to Section 9.6(a)(i), and
related trade dress.

 

1.30     “KVK Inventions” means any Inventions generated by or on behalf of KVK,
its Affiliates and their respective sublicensees, including their employees,
agents and contractors.

 

1.31     “KVK Patents” means any Patents that claim KVK Inventions.

 

1.32     “Label” means any and all Indications as approved by an appropriate
Regulatory Authority (e.g. FDA) for which the Licensed Product may be marketed,
sold and used in the Collaboration Territory. For purposes of clarity, as of the
Execution Date of this Agreement, the Label for the Licensed Product is attached
to this Agreement as Exhibit C.

 

1.33      “Laws” means all laws, statutes, rules, regulations, ordinances and
other pronouncements having the effect of law of any federal, national,
multinational, state, provincial, county, city or other political subdivision,
domestic or foreign.

 

1.34     “Licensed IP” means the Licensed Know-How and Licensed Patents.

 

1.35     “Licensed Know-How” means all Information (including Data and
Regulatory Materials) that (a) (i) is Controlled by KemPharm or its Affiliates
as of the Effective Date or (ii) becomes Controlled by KemPharm or its
Affiliates during the Term, and (b) is necessary for the conduct of Regulatory
Activities with respect to, Commercialization of, or the manufacture of,
Licensed Products in the Field in the Collaboration Territory.

 

1.36     “Licensed Patents” means (a) with respect to Patents Controlled by
KemPharm or any of its Affiliates as of the Effective Date, the Patents set
forth in Exhibit A; and (b) with respect to any Patents that become Controlled
by KemPharm or its Affiliates during the Term, such Patents that (i) are
necessary for the conduct of Regulatory Activities with respect to,
Commercialization of, or the manufacture of Licensed Products in the Field in
the Collaboration Territory.

 

1.37     “Limited Licensed Priority Patents” means (a) with respect to Patents
Controlled by KemPharm or any of its Affiliates as of the Effective Date, the
Patents set forth in Exhibit A-1 which are those Patents from any of the Patents
set forth in Exhibit A as noted in Section 1.35 herein. For sake of clarity,
issued claims within said Limited Licensed Priority Patents directly related to,
or encompassing, products, combinations, compounds etc. other than the
combination product of benzhydrocodone with acetaminophen are not included in
the scope of the Limited License.

 

1.38     “Licensed Product” shall mean (a) the Product (e.g. Apadaz®), including
any Authorized Generic version thereof, or (b) any other salt or polymorphic
form of the Product being developed or commercialized by KemPharm in the
Collaboration Territory. For clarity, Licensed Products shall exclude any
product that (i) contains benzhydrocodone, benzhydrocodone pro-drug or
benzyhydrocodone product candidate as the sole active ingredient, or (ii)
contains benzhydrocodone in combination with any pharmaceutical ingredient(s)
other than acetaminophen

 

1.39     “Manufacturing Expenses” means the fully burdened manufacturing cost in
U.S. Dollars, as defined by applicable Party’s consistent application of U.S.
GAAP, of producing or obtaining supply of Licensed Products, which cost shall
include, labor and material costs, quality assurance and control expenses,
including required stability monitoring, and allocable facilities costs;
provided, however, that if the applicable Party uses a contract manufacturer to
perform any manufacturing activities with respect to the supply of Licensed
Product under this Agreement, “Manufacturing Expenses” for such activities will
be the sum of: (a) the price such Party pays such contract manufacturer for such
activities, (b) such Party’s fully burdened cost of supporting the contract
manufacturer’s performance of manufacturing activities with respect to Licensed
Products and (c) any payments made by such Party to Third Parties in connection
with obtaining or maintaining intellectual property rights that are necessary or
useful for the manufacture of Licensed Products under this Agreement
(irrespective of whether such agreements with Third Parties were entered into
prior to the Effective Date or during the Term).

 

 

--------------------------------------------------------------------------------

 

 

1.40     “NDA” means a New Drug Application filed with the FDA required for
marketing approval for a Licensed Product in the U.S., but excluding pricing
approvals.

 

1.41     “Net Profits” means, with respect to a given Rolling Year, the amount
of Net Sales received by KVK, its Affiliates and their respective sublicensees
in the Field in the Collaboration Territory for sales of Licensed Products,
minus: (a) [*] incurred in such Rolling Year for Licensed Products and (b) [*]
incurred in such Rolling Year for Licensed Products. If the amount received by
KVK for Net Sales of Licensed Products in a given Rolling Year is less than the
sum of the [*] and [*] in such Rolling Year, then the amount of such deficit
shall be deemed a “Net Loss”.

 

1.42     “Net Sales” means the gross amounts billed or invoiced by KVK, its
Affiliates and their respective sublicensees for sales of Licensed Products to
unaffiliated Third Parties, less the following deductions to the extent
reasonable and customary, provided to unaffiliated entities and actually allowed
and taken with respect to such sales:

 

(a)     [*]

 

(b)     [*]

 

(c)     [*]

 

(d)     [*] and

 

(e)     [*].

 

Notwithstanding the foregoing, amounts received, billed or invoiced by KVK, its
Affiliates, or their respective sublicensees for the sale of Licensed Product
among KVK, its Affiliates or their respective sublicensees shall not be included
in the computation of Net Sales hereunder unless the purchasing entity is the
end-user. For purposes of determining Net Sales, the Licensed Product shall be
deemed to be sold when billed or invoiced. Net Sales shall be accounted for in
accordance with standard KVK practices for operation by KVK, its Affiliates or
their respective sublicensees, as practiced in the Collaboration Territory, but
in any event in accordance with U.S. GAAP, consistently applied in the
Collaboration Territory. For clarity, a particular item may only be deducted
once in the calculation of Net Sales.

 

With respect to any transfer of any Licensed Product in the Collaboration
Territory for any substantive consideration other than monetary consideration on
arm’s length terms, for the purposes of calculating the Net Sales under this
Agreement, such Licensed Product shall be deemed to be sold exclusively for
money at the average Net Sales price charged to Third Parties for cash sales in
the Collaboration Territory during the applicable reporting period, or if there
were only de minimis cash sales in the Collaboration Territory, at the fair
market value as determined by comparable markets.

 

KVK, its Affiliates, and their respective sublicensees shall sell the Licensed
Product as a standalone product and will not sell the Licensed Product as a part
of a bundle with other products or offer packaged arrangements to customers that
include the Licensed Product, except with KemPharm’s prior written consent.

 

1.43     “Patents” means (a) pending patent applications, issued patents,
utility models and designs; (b) all patents issuing from patent applications of
any of the foregoing; (c) reissues, substitutions, confirmations, registrations,
validations, re-examinations, additions, continuations, continued prosecution
applications, continuations-in-part, or divisions of or to any of the foregoing;
and (d) extensions, renewals or restorations of any of the foregoing by existing
or future extension, renewal or restoration mechanisms, including supplementary
protection certificate or the equivalent thereof.

 

1.44     “Patent Term Adjustment” means the calculation of an adjustment to any
United States Patent term pursuant to the Rules of the United States Patent
Office and U. S. patent law.

 

1.45     “Patent Term Extension” means extension of U.S. patent term under 35
U.S.C. § 156 and related statutes to compensate for product commercialization
delays due to regulatory review of the Licensed Product.

 

1.46     “Person” means an individual, corporation, partnership, limited
liability company, limited partnership, trust, business trust, association,
joint stock company, joint venture, pool, syndicate, “group” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, sole
proprietorship, unincorporated organization, Governmental Authority or any other
form of entity not specifically listed herein.

 

1.47     “Product” means specifically KemPharm’s benzhydrocodone/acetaminophen
combination product for the short-term management of acute pain, which is
branded in the U.S. as Apadaz® and sold in tablet form.

 

1.48     “Proper Conduct Practices” means, KVK and each of its Representatives
not, directly or indirectly, (a) making, offering, authorizing, providing or
paying anything of value in any form, whether in money, property, services or
otherwise to any Government Official, or other Person charged with similar
public or quasi-public duties, or to any customer, supplier, or any other
Person, or to any employee thereof, or failing to disclose fully any such
payments in violation of the laws of any relevant jurisdiction to (i) obtain
favorable treatment in obtaining or retaining business for it or any of its
Affiliates, (ii) pay for favorable treatment for business secured, (iii) obtain
special concessions or for special concessions already obtained, for or in
respect of it or any of its Affiliates, in each case which would have been in
violation of any applicable Law, (iv) influence an act or decision of the
recipient (including a decision not to act) in connection with the Person’s or
its Affiliate’s business, (v) induce the recipient to use his or her influence
to affect any government act or decision in connection with the Person’s or its
Affiliate’s business or (vi) induce the recipient to violate his or her duty of
loyalty to his or her organization, or as a reward for having done so; (b)
engaging in any transactions, establishing or maintaining any fund or assets in
which it or any of its Affiliates shall have proprietary rights that have not
been recorded in the books and records of it or any of its Affiliates; (c)
making any unlawful payment to any agent, employee, officer or director of any
Person with which it or any of its Affiliates does business for the purpose of
influencing such agent, employee, officer or director to do business with it or
any of its Affiliates; (d) making any payment in the nature of bribery, fraud,
or any other unlawful payment under the applicable Laws of any jurisdiction
where it or any of its Affiliates conducts business or is registered; or, (e) if
such Person or any of its Representatives is a Government Official, improperly
using his or her position as a Government Official to influence the award of
business or regulatory approvals to or for the benefit of such Person, its
Representatives or any of their business operations, or failing to recuse
himself or herself from any participation as a Government Official in decisions
relating to such Person, its Representatives or any of their business
operations.

 

1.49     “Regulatory Approval” means all approvals necessary for the commercial
sale of a Licensed Product in the Field in a given country or regulatory
jurisdiction.

 

1.50     “Regulatory Authority” means, in a particular country or jurisdiction,
any applicable Governmental Authority involved in granting Regulatory Approval
in such country or jurisdiction.

 

1.51      “Regulatory Materials” means regulatory applications, submissions,
notifications, communications, correspondence, registrations, Regulatory
Approvals and/or other filings made to, received from or otherwise conducted
with a Regulatory Authority in order to develop, manufacture, market, sell or
otherwise commercialize Licensed Products in a particular country or
jurisdiction.

 

1.52     “Representatives” means, as to any Person, such Person’s Affiliates and
its and their successors, controlling Persons, directors, officers and
employees.

 

1.53     “Retained Territory” means the world except for the Collaboration
Territory.

 

1.54     “Rolling Year” means, with respect to a given quarter, the period of
four (4) consecutive quarters immediately prior to such quarter.

 

1.55     “Territory” means worldwide.

 

1.56     “Third Party” means any entity other than KemPharm or KVK or an
Affiliate of either of them.

 

1.57     “Third Party Supply Agreement” means, collectively (a) the Material
Supply Agreement, dated November 2, 2009, by and between KemPharm, Inc. and
Johnson Matthey Inc., as amended by the First Amendment to the Material Supply
Agreement, dated December 9, 2016; (b) the Letter Agreement, dated February 19,
2018, by and between KemPharm, Inc. and Johnson Matthey Inc., in each case, as
amended; and (c) the Quality Agreement dated May 2, 2018, by and between
KemPharm, Inc. and Johnson Matthey Inc.

 

1.58     “Transaction Agreements” means, collectively, (a) this Agreement and
(b) any other agreement executed between the Parties in connection with any of
the foregoing.

 

1.59     “U.S. Dollar” means a U.S. dollar, and “US$” shall be interpreted
accordingly.

 

1.60     “U.S.” means the United States of America, including all possessions
and territories thereof.

 

1.61     “U.S. GAAP” means the generally accepted accounting principles as
applied to the U.S., including other comprehensive basis of accounting (“OCBOA”)
as consistently applied by KVK.

 

 

--------------------------------------------------------------------------------

 

 

1.62     Additional Definitions: The following table identifies the location of
definitions set forth in various Sections of the Agreement:

 

Defined Terms

Section

Agreement

Preamble

Alliance Manager

3.1

Claims

11.1

Commercialization Budget

6.2(a)

Commercialization Plan

6.2(a)

Confidentiality Agreement

1.11

Development Activities

1.14

Effective Date

Preamble

Enforcing Party

9.3(c)

Executive Officers

14.1

ICC Rules

14.2(a)

Indemnified Party

11.3

Indemnifying Party

11.3

Infringement

9.3(a)

Infringement Actions

9.4

Joint Steering Committee or JSC

3.2(a)

KemPharm

Preamble

KemPharm Indemnitees

11.2

KemPharm Partner

2.2

KVK

Preamble

KVK Housemarks

9.6(b)

KVK Indemnitees

11.1

KVK Sublicense Agreement

2.1(c)

Losses

11.1

NDA

1.38

Net Loss

1.39

Net Profit Report

8.4(b)

Net Profit Share

8.4(a)

Profit Sharing Percentage

8.4(a)

Party

Preamble

Pharmacovigilance Agreement

5.9

POMV Fee

8.1

Proof of Market Viability 

6.9

Proof of Market Viability Termination

6.9

Regulatory Activities

1.14

Remedial Action

5.10

Subcommittee

3.2(b)

Tax Withholding

8.9(c)

Term

13.1

Third Party Commercial IP Costs

61.9

VAT

8.9(d)

 

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Article 2     
License

 

2.1     License to KVK.

 

(a)     License Grant. Subject to the terms and conditions of this Agreement,
KemPharm hereby grants KVK an exclusive, even as to KemPharm except as provided
in Section 2.1(b) below, license, with the right to sublicense solely as
provided in Section 2.1(c), under the Licensed IP, to conduct Regulatory
Activities, distribute, market, promote, sell, have sold, offer for sale, import
and otherwise Commercialize or manufacture, Licensed Products in the Field in
the Collaboration Territory. For clarity, the foregoing license does not include
a right for KVK to (i) Develop, except to conduct Regulatory Activities, or (ii)
change the content of the Label or package of any Licensed Product, except to
provide applicable labeling or packaging material for Licensed Products to
KemPharm in accordance with Section 6.8. For further sake of clarity, the
License Grant of this section does include the right for KVK, pursuant to the
terms of the instant Agreement, to (1) Commercialize, including, but not limited
to, as permitted or obligated to perform under Article 6 or the
Commercialization Plan, (2) manufacture the Licensed Product, and (3) conduct
other permitted activities, utilize any rights or perform any obligations under
this Agreement or a Transaction Agreement.

 

(i)     Furthermore, Subject to the terms and conditions of this Agreement,
KemPharm grants KVK a limited non-exclusive license, with no right to sublicense
without the prior express written consent of KemPharm, under the Limited License
Priority Patents, for only Patent Enforcement and Third-Party Patent
Infringement Actions as per Article 9 herein.

 

(b)     KemPharm Retained Rights. Notwithstanding the exclusive rights granted
to KVK in Section 2.1(a), KemPharm and its Affiliates retain the following: (i)
the right to practice the Licensed IP within the scope of the license granted to
KVK under Section 2.1(a) only in order to perform, or have performed by a Third
Party contractor, KemPharm’s obligations under this Agreement or a Transaction
Agreement; (ii) the right to use and conduct Development Activities with respect
to Licensed Products anywhere in the world, including the Collaboration
Territory not otherwise in violation of this Agreement or a Transaction
Agreement; (iii) the right to manufacture or have manufactured Licensed Products
in the Retained Territory for sale and use in the Retained Territory or for sale
to KVK not otherwise in violation of this Agreement or a Transaction Agreement;
and (iv) the right to practice and license the Licensed IP outside the scope of
the license granted to KVK in Section 2.1(a). and (v) the right to manufacture,
subject to the Third Party Supply Agreement, practice and license and otherwise
commercialize the Limited License Priority Patents in full.

 

(c)     Sublicense Rights. KVK shall have the right to grant sublicenses of the
license granted in Section 2.1(a) only with KemPharm’s express prior written
consent, not to be unreasonably denied or unreasonably conditioned. Following
receipt of KemPharm’s consent, KVK shall, within [*] days after granting any
sublicense under Section 2.1(a), notify KemPharm of the grant of such sublicense
and provide KemPharm with a true and complete copy of the sublicense agreement
(each, a “KVK Sublicense Agreement”). Unless agreed to in writing by KemPharm,
each KVK Sublicense Agreement shall be consistent with the terms and conditions
of this Agreement, and KVK shall be solely responsible for all of its
sublicensees’ activities and any and all failures by its sublicensees to comply
with the terms of this Agreement. Without limiting the foregoing, each KVK
Sublicense Agreement shall include the following additional terms and
conditions:

 

(i)     the sublicensee shall be bound by non-use and non-disclosure obligations
no less stringent than those set forth in this Agreement;

 

(ii)     the sublicensee shall not have any right to grant further sublicenses
to the Licensed IP or to engage subcontractors to perform its obligations to
KVK, without the consent of KVK and KemPharm;

 

(iii)     the sublicensee shall not have any right to prosecute or maintain or
enforce any Licensed Patents;

 

(iv)     the sublicensee shall assign to KVK all Data and Inventions generated
by such sublicensee;

 

(v)     the sublicensee shall not have the right to submit, own or control any
Regulatory Materials for Licensed Products; and

 

(vi)     if this Agreement terminates, KemPharm shall, at its sole option and
discretion, have the right to either (a) assume KVK’s rights and obligations
under the KVK Sublicense Agreement or (b) terminate the KVK Sublicense Agreement
in its entirety without penalty or other obligation to the sublicensee.

 

2.2     KemPharm Partner. KemPharm has the right, in its sole discretion, to
enter into one or more agreements with Third Parties and grant such Third
Parties the right to exercise any of KemPharm’s retained rights under Section
2.1(b), including to conduct Development Activities or to manufacture Licensed
Products in the Collaboration Territory, or to Develop, manufacture or
Commercialize Licensed Products in the Retained Territory (each such Third
Party, a “KemPharm Partner”), and KemPharm shall have the right, but not the
obligation, to exercise any and/or all of its rights and/or fulfill any and/or
all of its obligations under this Agreement through KemPharm Partner(s),
including granting KemPharm Partner(s) the right to participate in any Committee
meetings as one or more of KemPharm’s representatives. KemPharm Partner(s) shall
be bound by the obligations of this Agreement to the extent applicable to any
rights of KVK herein and KemPharm shall be held solely responsible for any
breaches of this Agreement by KemPharm Partner(s). KVK shall cooperate fully
with KemPharm Partner(s) to the extent that KVK has the obligation under this
Agreement to cooperate with KemPharm. KemPharm shall have the right to disclose
to KemPharm Partner(s) all information regarding Licensed Products, including
all Regulatory Materials, disclosed by KVK to KemPharm under this Agreement, for
use by KemPharm Partner(s) in their conduct of Development Activities or
manufacturing of Licensed Products in the Collaboration Territory, or their
Development, manufacture or Commercialization of Licensed Products in the
Retained Territory, provided, however, that all such information disclosed to
KemPharm Partner(s) by KemPharm shall be deemed the Confidential Information of
KVK and KemPharm and KemPharm Partner(s) that receive any such information shall
be obligated to abide by restrictions on disclosure and use substantially
similar to the provisions set forth in Section 12.1.

 

2.3     Negative Covenant. KVK covenants that it will not, and further that it
will not permit any of its Affiliates or sublicensees to, use or practice (i)
any Licensed IP outside the scope of the license granted to it under Section
2.1(a) and (ii) any Limited Licensed Priority Patents outside the scope of the
limited license granted to it under Section 2.1(a)(i). KemPharm covenants that
it will not and will not permit any of its Affiliates or KemPharm Partner(s) to,
use or practice any Licensed IP except as explicitly permitted under Section
2.1(b).

 

2.4     No Implied Licenses. Except as explicitly set forth in this Agreement,
neither Party shall be deemed by estoppel or implication to have granted the
other Party any license or other right to any intellectual property of such
Party.

 

2.5     Exclusivity.

 

(a)     During the Term of this Agreement with respect to any country in the
Territory, [*] shall not, directly or indirectly, either by itself or through
its Affiliates or any arrangement, or series of arrangements, with a Third
Party, [*]; provided that, [*].

 

(b)     During the Term of this Agreement. [*] shall not, directly or
indirectly, either by itself or through its Affiliates or any arrangement, or
series of arrangements, with a Third Party, [*].

 

 

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Article 3     
Governance

 

3.1     Alliance Managers. Within [*] days after the Effective Date, each Party
shall appoint and notify the other Party of the identity of a representative
having the appropriate qualifications, including a general understanding of
pharmaceutical development and commercialization issues, to act as its alliance
manager under this Agreement (the “Alliance Manager”). The Alliance Managers
shall serve as the primary contact points between the Parties for the purpose of
providing each Party with information on the progress and results of KVK’s
conduct of Regulatory Activities with respect to, and Commercialization of,
Licensed Products. The Alliance Managers shall also be primarily responsible for
facilitating the flow of information and otherwise promoting communication,
coordination and collaboration between the Parties with respect to Licensed
Products. Each Party may replace its Alliance Manager at any time upon written
notice to the other Party.

 

3.2     Joint Committees.

 

(a)     JSC Formation and Role. Within [*] days after the Effective Date, the
Parties shall establish a joint steering committee (the “Joint Steering
Committee” or “JSC”) for the overall coordination and oversight of the Parties’
activities under this Agreement. The role of the JSC shall be:

 

(i)     to review, discuss, coordinate, and approve the overall strategy for the
conduct of Regulatory Activities with respect to, and Commercialization of,
Licensed Products in the Collaboration Territory;

 

(ii)     to review, discuss and coordinate the conduct of any Development
Activities by KemPharm;

 

(iii)     to discuss and coordinate manufacturing matters with respect to
Licensed Products, including discussing and coordinating the commercial supply
needs of KVK and sharing related supply forecasts, to ensure compliance with the
requirements of the Third Party Supply Agreement;

 

(iv)     to review, discuss and approve the Commercialization Plan and any
proposed amendments or revisions to such plan, and review and discuss the
Commercialization of Licensed Products in the Collaboration Territory;

 

(v)     to coordinate the Commercialization of Licensed Products in the
Collaboration Territory and Retained Territory to ensure consistent global
marketing of Licensed Products;

 

(vi)     to oversee the activities of the Subcommittees and attempt to resolve
issues presented to it by and disputes within the Subcommittees; and

 

(vii)     to perform such other functions as appropriate to further the purposes
of this Agreement, as expressly set forth in this Agreement or as determined by
the Parties in writing.

 

(b)     Subcommittee(s). From time to time, the JSC may establish joint
subcommittees to oversee particular projects or activities, such as Licensed
Product supply and manufacturing, conduct of Regulatory Activities and
Commercialization, as it deems necessary or advisable (each, a “Subcommittee”,
and together with the JSC, the “Committees”).

 

(c)     Members. Each Committee shall be comprised of an equal number of
representatives from each Party. Each Party’s representatives shall be officer
or employee of such Party or its Affiliate having sufficient seniority within
the applicable Party to make decisions arising within the scope of the
applicable Committee’s responsibilities. Each Party shall initially appoint [*]
representatives to the JSC. Each Committee may change its size from time to time
by mutual consent of its representatives, and each Party may replace its
representatives at any time upon written notice to the other Party. Each Party
shall appoint one (1) of its representatives on each Committee to act as the
co-chairperson of such Committee. The role of the co-chairpersons shall be to
convene and preside at the Committee meetings and to ensure the circulation of
meeting agendas at least [*] days in advance of Committee meetings and the
preparation of meeting minutes in accordance with Section 3.2(d), but the
co-chairpersons shall have no additional powers or rights beyond those held by
other Committee representatives.

 

(d)     Meetings. The JSC shall meet at least twice per calendar year during the
Term, unless the Parties mutually agree in writing to a different frequency for
such meetings. Either Party may also call a special meeting of any Committee, by
videoconference or teleconference, by at least [*] Business Days prior written
notice to the other Party in the event such Party reasonably believes that a
significant matter must be addressed prior to the next regularly scheduled
meeting, and such Party shall provide the applicable Committee no later than [*]
Business Days prior to the special meeting with materials reasonably adequate to
enable an informed decision. Each Committee may meet in person, by
videoconference or by teleconference, provided, however, that, unless the
Parties otherwise mutually agree, at least one such JSC meeting per calendar
year shall be in person, alternating between the headquarters of KemPharm and
KVK. All Committee meetings shall be conducted in English and all communications
under this Agreement shall be in English. The co-chairpersons shall be
responsible for preparing reasonably detailed written minutes of the Committee
meetings that reflect, without limitation, all material decisions made at such
meetings. The co-chairpersons shall send draft meeting minutes to each
representative of the applicable Committee for review and approval within [*]
Business Days after the Committee meeting. Such minutes shall be deemed approved
unless one or more Committee representatives object to the accuracy of such
minutes within [*] Business Days of receipt.

 

3.3     Decision Making. Each Committee shall strive to seek consensus in its
actions and decision-making process and all decisions by the Committees shall be
made by consensus, with each Party having collectively one (1) vote in all
decisions. If after reasonable discussion and good faith consideration of each
Party’s view on a particular matter before any Subcommittee, the representatives
of the Parties cannot reach an agreement as to such matter within [*] Business
Days after such matter was brought to such Subcommittee for resolution, such
disagreement shall be referred to the JSC for resolution. If after reasonable
discussion and good faith consideration of each Party’s view on a particular
matter before the JSC, the representatives of the Parties cannot reach an
agreement as to such matter within [*] Business Days after such matter was
brought to the JSC for resolution or after such matter has been referred to the
JSC, such disagreement shall be referred to the Executive Officers for
resolution. If the Executive Officers cannot resolve such matter within [*] days
after such matter has been referred to them, then: (i) KemPharm’s Executive
Officer shall have the final decision-making authority with respect to matters
related [*]; and (ii) KVK’s Executive Officer shall have the final decision
making authority with respect to [*], provided, however, that KemPharm’s
Executive Officer shall have the right to [*], any such determination by
KemPharm’s Executive Officer shall be in writing and provided to KVK:

 

(a)     [*]; and

 

(b)     [*].

 

For sake of clarity, KemPharm retains all authority and all decision-making
authority with respect to matters related to [*], other than the [*] herein.

 

3.4     Limitation of Committee Authority. Each Committee shall only have the
powers expressly assigned to it in this Article 3 and elsewhere in this
Agreement and shall not have the authority to: (a) modify or amend the terms and
conditions of this Agreement; (b) waive or determine either Party’s compliance
with the terms and conditions of under this Agreement; or (c) decide any issue
in a manner that would conflict with the express terms and conditions of this
Agreement. In no event shall KemPharm’s Executive Officer pursuant to Section
3.3(i) or KVK’s Executive Officer pursuant to Section 3.3(ii) make any decision
contrary to this Agreement without the written consent of the other Party.

 

3.5     Discontinuation of Committees. The activities to be performed by each
Committee shall solely relate to governance under this Agreement and are not
intended to be or involve the delivery of services. Each Committee shall
continue to exist until the Parties mutually agreeing to disband such Committee.
Once the Parties mutually agree, such Committee shall have no further
obligations under this Agreement and, thereafter, each Party shall designate a
contact person for the exchange of information relevant to such Committee under
this Agreement and decisions of such Committee shall be decisions as between the
Parties, subject to the other terms and conditions of this Agreement.

 

 

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Article 4     
DEVELOPMENT

 

4.1     Overview. Except with respect to the conduct of Regulatory Activities,
as further described in Article 5, KemPharm will be solely responsible for the
Development of Licensed Products in the Field in the Territory, at [*]. KVK
shall not conduct any Development Activities, other than to conduct Regulatory
Activities, with respect to Licensed Products at any time during the Term,
including in the Field in the Collaboration Territory.

 

4.2     Transfer of Licensed Know-How. Promptly after the Effective Date,
KemPharm shall provide KVK with complete and accurate copies of the Licensed
Know-How that is reasonably necessary to maintain Regulatory Approval of,
Commercialize of and manufacture of Licensed Products in the Field in the
Collaboration Territory in existence as of the Effective Date; provided that, to
the extent KVK requires additional Licensed Know-How during the Term in
connection with the conduct of Regulatory Activities or Commercialization
activities, KemPharm shall reasonably cooperate with KVK in providing KVK with
copies of such Licensed Know-How promptly (but in no event later than [*] after
receipt of KVK’s request. The Parties shall establish a process for ensuring
that such Licensed Know-How, including CMC Information, is treated as the
Confidential Information of KemPharm.

 

 

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Article 5     
Regulatory Matters

 

5.1     Regulatory Responsibilities. Subject to the terms and conditions of this
Agreement, KVK will be responsible, at its sole cost and expense, for the
conduct of all Regulatory Activities required to obtain and maintain Regulatory
Approval of Licensed Products in the Field in the Collaboration Territory,
including the preparation of all Regulatory Materials and all communications and
interactions with Regulatory Authorities in the Collaboration Territory with
respect to Licensed Products. Promptly after the Effective Date, in connection
with the transfer of Licensed Know-How under Section 4.2, KemPharm shall
transfer ownership of the NDA for the Product to KVK in accordance with 21
C.F.R. 314.72. For clarity, notwithstanding anything to the contrary in this
Agreement, as of the Effective Date, KemPharm has obtained Regulatory Approval
of the Product in the Collaboration Territory; as such, solely with respect to
the Product, and for clarity, excluding other Licensed Products that are not the
Product, the definition of “Regulatory Activities” shall be limited to the
reporting, preparation and submission of applications for maintaining (i.e., not
obtaining or registering) Regulatory Approval of Licensed Products in accordance
with the applicable sections of 21 C.F.R. 314, as well as all post-marketing
requirements and all post-approval activities, such as participation in required
REMS programs, PREA deferred pediatric studies and annual PDUFA program fees;
any other sections of this Agreement that reference the conduct of Regulatory
Activities, even without using such defined term, shall be deemed amended
accordingly.

 

5.2     Pricing. KVK shall be solely responsible for negotiating with applicable
Governmental Authorities regarding the price and reimbursement status of
Licensed Products in the Field in the Collaboration Territory. KVK shall keep
KemPharm timely informed on the status of any applications for pricing approvals
in the Collaboration Territory, including any discussion and correspondence with
any Regulatory Authority with respect thereto. KVK shall, subject to KVK’s
reasonable discretion, implement KemPharm’s reasonable comments with respect to
such applications, discussions or correspondences. In the event of a dispute
between KVK and KemPharm with respect to the inclusion of such a comment, KVK
shall prevail. KVK shall promptly notify KemPharm of pricing approvals obtained
for the Licensed Products in the Collaboration Territory.

 

5.3     Regulatory Information Sharing. KVK shall (i) provide KemPharm with the
original documents, in the electronic format in which it has been prepared by
KVK, of any supplemental NDA x related to the Regulatory Activities for the
Licensed Products, for KemPharm’s review and comment, in connection with
obtaining or maintaining any NDA approval for Licensed Products in the Field in
the Collaboration Territory, prior to the submission of such documents to the
Regulatory Authority in the Collaboration Territory; (ii) provide KemPharm with
the original documents, in the electronic format in which it has been prepared
by KVK, of any annual report or other regulatory submission within a reasonable
time after each has been submitted to FDA; and (iii) shall keep KemPharm
informed of any material verbal or written communication or question relating to
Licensed Products received by KVK from the Regulatory Authority in the
Collaboration Territory. Except as required by applicable Law, KVK, its
Affiliates and sublicensees shall not submit any Regulatory Materials to, or
communicate with, any Regulatory Authority in the Retained Territory regarding
any Licensed Products. If such submission or communication is required by
applicable Law, KVK shall promptly notify KemPharm in writing of such
requirement and the content of such submission or communication.

 

5.4     Meetings with Regulatory Authorities. KVK shall lead all interactions
with Regulatory Authorities in the Collaboration Territory with respect to
Licensed Products. KVK shall keep KemPharm reasonably informed of regulatory
developments related to Licensed Products in the Field in the Collaboration
Territory. At each regularly scheduled JSC meeting, KVK shall provide KemPharm
with a list and schedule of any in-person meeting or teleconference with the
applicable Regulatory Authorities, or related advisory committees, in the
Collaboration Territory planned for the next calendar quarter that relates to
any Licensed Product in the Field. In addition, KVK shall notify KemPharm as
soon as reasonably possible, but in no event later than [*], after KVK becomes
aware of any additional such meetings or teleconferences that become scheduled
for such calendar quarter. KemPharm shall provide all reasonable assistance
requested by KVK to prepare for any such meeting or teleconference. To the
extent permitted by applicable Laws, KemPharm shall have the right to
participate, whether directly or through a representative, in all such meetings
and teleconferences, at [*].

 

5.5     Regulatory Costs. Unless otherwise provided in this Agreement, KVK shall
be responsible for the costs and expenses incurred in connection with the
preparation and filing of any and all Regulatory Materials and the maintenance
of any and all Regulatory Approvals, including supplemental NDA approvals, if
any, participation in any required REMS programs, annual PDUFA program fees and
any required PREA deferred pediatric studies for Licensed Products in the Field
in the Collaboration Territory.

 

5.6     Right of Reference to Regulatory Materials. Each Party hereby grants to
the other Party the right of reference to all Regulatory Materials pertaining to
Licensed Products submitted by or on behalf of such Party. The receiving Party
may use such right of reference solely for the purpose of seeking, obtaining and
maintaining Regulatory Approval of Licensed Products in its respective
territory.

 

5.7     No Harmful Actions. If KemPharm believes that KVK is taking or intends
to take any action with respect to any Licensed Product that could reasonably be
expected to have a material adverse impact upon the development, manufacture,
commercialization or regulatory status of any Licensed Product in the Retained
Territory, KemPharm may bring the matter to the attention of the JSC and the
Parties shall discuss in good faith to promptly resolve such concern.

 

5.8     Notification of Threatened Action. Each Party shall immediately notify
the other Party of any information it receives regarding any threatened or
pending action, inspection or communication by or from any Third Party,
including without limitation a Regulatory Authority, which may affect the
development, manufacture, commercialization or regulatory status of any Licensed
Product. Upon receipt of such information, the Parties shall consult with each
other in an effort to arrive at a mutually acceptable procedure for taking
appropriate action.

 

5.9     Adverse Event Reporting and Safety Data Exchange. No later than [*] days
before the anticipated launch date of any Licensed Product in the Collaboration
Territory, the Parties shall enter into a written pharmacovigilance agreement
(the “Pharmacovigilance Agreement”) for the Commercialization of the Licensed
Product. These responsibilities shall include mutually acceptable guidelines and
procedures for the receipt, investigation, recordation, communication, and
exchange, as between the Parties, of adverse event reports, pregnancy reports,
and any other information concerning the safety of the Licensed Product. Such
guidelines and procedures shall be in accordance with, and enable the Parties to
fulfill, local and national regulatory reporting obligations under applicable
Laws. Furthermore, such agreed procedure shall be consistent with relevant ICH
guidelines, except where said guidelines may conflict with existing local
regulatory reporting safety reporting requirement, in which case local reporting
requirement shall prevail. The Pharmacovigilance Agreement shall provide for an
adverse event database for the Licensed Products in the Collaboration Territory
to be maintained by KVK at KVK’s expense, and also a global safety database for
the Licensed Products to be maintained by KemPharm at KemPharm’s expense. As
between the Parties, KVK shall be responsible for preparing and filing with
Regulatory Authorities in the Collaboration Territory all adverse event reports
and responses to safety issues and requests of Regulatory Authorities relating
to Licensed Products in the Collaboration Territory. As between the Parties, KVK
shall also be responsible for reporting quality complaints, adverse events and
safety data related to Licensed Products to KemPharm for inclusion in the global
safety database. Each Party hereby agrees to comply with its respective
obligations under such Pharmacovigilance Agreement and to cause its Affiliates
and permitted sublicensees to comply with such obligations.

 

5.10     Remedial Actions. Each Party will notify the other Party immediately,
and promptly confirm such notice in writing, if it obtains information
indicating that any Licensed Product may be subject to any recall, corrective
action or other regulatory action taken by virtue of applicable Laws (a
“Remedial Action”). The Parties will assist each other in gathering and
evaluating such information as is necessary to determine the necessity of
conducting a Remedial Action. KVK shall, and shall ensure that its Affiliates
and sublicensees will, maintain adequate records to permit the Parties to trace
the distribution, sale and use, to the extent possible, of the Licensed Product
in the Collaboration Territory. KVK shall have sole discretion with respect to
any matters relating to any Remedial Action in the Collaboration Territory,
including the decision to commence such Remedial Action and the control over
such Remedial Action in its territory, at its cost and expense; provided,
however, that if KemPharm determines that any Remedial Action with respect to
any Licensed Product in the Collaboration Territory should be commenced or is
required by applicable Laws or Regulatory Authority, KemPharm shall discuss such
Remedial Action with KVK and KVK shall carry out such Remedial Action upon
KemPharm’s request. Each Party shall provide the other Party, at the other
Party’s expense, with such assistance in connection with a Remedial Action as
may be reasonably requested by such other Party.

 

 

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Article 6     
Commercialization

 

6.1     Overview. Subject to the terms and conditions of this Agreement,
including the diligence obligations set forth below, KVK will be primarily
responsible for and have primary operational control over all aspects of the
Commercialization of Licensed Products in the Field in the Collaboration
Territory, including: (a) negotiating with applicable Governmental Authorities
regarding the price and reimbursement status of Licensed Products, subject to
Section 5.2; (b) marketing, advertising and promotion; (c) booking sales and
distribution and performance of related services; (d) handling all aspects of
order processing, invoicing and collection, inventory and receivables; (e)
providing customer support, including handling medical queries, and performing
other related functions; and (f) conforming its practices and procedures to
applicable Laws relating to the marketing, detailing and promotion of Licensed
Products in the Field in the Collaboration Territory; provided that, the Parties
shall jointly develop and execute a Commercialization Plan, as defined below,
for the Licensed Products in the Field in the Collaboration Territory, pursuant
to Section 6.2, including the Commercialization Budget (as defined below)
described therein, and (y) KemPharm shall exercise operational control over
certain aspects of Commercialization, as specified in the Commercialization
Plan. KVK shall fund all of the costs and expenses incurred by or on behalf of
KVK in connection with such Commercialization activities, and such costs and
expenses shall constitute “Commercialization/Regulatory Expenses”.

 

6.2     Commercialization Plan.

 

(a)     General. KVK shall Commercialize Licensed Products in the Field in the
Collaboration Territory pursuant to a commercialization plan (the
“Commercialization Plan”). The Commercialization Plan shall include (i) a
detailed description of all key strategic decisions (including messaging,
branding, marketing, advertising, sales force positioning, number of
representatives and details, pricing strategy, etc.), implementation tactics and
pre-launch and post-launch activities; (ii) a reasonably detailed description
and timeline of KVK’s, its Affiliates’ and their respective sublicensees’
Commercialization activities for Licensed Products in the Collaboration
Territory for the next Fiscal Year, including medical marketing activities,
sales forecasts and projections, pricing, reimbursement, market research, sales
training, distribution channels, customer service and sales force matters
related to the launch and sale of Licensed Products in the Collaboration
Territory, (iii) a mutually agreed-upon Commercialization budget
(“Commercialization Budget”), it being understood that any proposed increase in
the Commercialization Budget by either Party that is reasonably likely to result
in the Commercialization Budget being [*] greater than the previously approved
Commercialization Budget shall require mutual agreement of the Parties; and (iv)
a strategic plan for Commercialization of Licensed Products in the Collaboration
Territory for the following [*]. KemPharm shall provide ongoing support with
respect to the Commercialization of Licensed Products in the Field in the
Collaboration Territory, as specified in the Commercialization Plan.

 

(b)     Initial Plan and Amendments. The initial Commercialization Plan is
attached hereto as Exhibit B. Within a reasonable time, but no later than [*]
months, prior to the anticipated Regulatory Approval of the technology transfer
to KVK of each Licensed Product in the Collaboration Territory, the Parties
shall jointly, through the JSC, prepare updates and amendments, as appropriate,
to the initial Commercialization Plan, and shall present such plan to the JSC
for its review and approval. Thereafter, from time to time during the Term, but
at least on an annual basis, the Parties shall jointly, through the JSC, prepare
further updates and amendments, as appropriate, to the then-current
Commercialization Plan, and shall submit all updates and amendments to the
Commercialization Plan to the JSC for review and approval. Once approved by the
JSC, the Commercialization Plan shall become effective and supersede the
previous Commercialization Plan as of the date of such approval. The
Commercialization Plan shall specify the specific obligations of each Party with
respect to the Commercialization of Licensed Products in the Field in the
Collaboration Territory.

 

6.3     Pricing. Subject to any determination by applicable Regulatory
Authorities, KVK shall have the sole right to determine the pricing of the
Licensed Products in the Collaboration Territory, provided, however, that KVK
shall price Licensed Products in a manner that is intended to maximize the
profit of the Licensed Products and shall not price the Licensed Products in a
manner intended to induce the sale of any other products. KemPharm shall not
have any right to direct, control, or approve KVK’s pricing of the Licensed
Products in the Collaboration Territory.

 

6.4     Commercial Diligence.

 

(a)     KVK shall use Commercially Reasonable Efforts to Commercialize the
Licensed Products in the Field in the Collaboration Territory.

 

6.5     Commercialization Reports. KVK shall keep KemPharm reasonably informed
of KVK’s, its Affiliates’ and their respective sublicensees’ Commercialization
activities with respect to the Licensed Products in the Field in the
Collaboration Territory. Without limiting the foregoing, at each regularly
scheduled JSC meeting, KVK shall provide KemPharm with a written report
summarizing the significant Commercialization activities performed with respect
to the Licensed Products since the last JSC meeting and comparing such
activities with the Commercialization Plan for such time period. Such reports
shall be at a level of detail reasonably requested by KemPharm and sufficient to
enable KemPharm to determine KVK’s compliance with its diligence obligations
under Section 6.4. At such JSC meeting, the Parties shall discuss the status,
progress and results of KVK’s Commercialization activities. KVK shall promptly
respond to KemPharm’s reasonable questions or requests for additional
information relating to such Commercialization activities. In addition, within
[*] days after the end of each Fiscal Year, KVK shall provide KemPharm with a
detailed written annual report regarding the progress under the
Commercialization Plan and results thereof.

 

6.6     Cross-Territorial Restrictions. KVK hereby covenants and agrees that it
shall not, and shall ensure that its Affiliates and sublicensees will not,
either directly or indirectly, promote, market, distribute, import, sell or have
sold the Licensed Products, including via internet or mail order, into countries
in the Retained Territory. As to such countries in the Retained Territory (which
are exclusively reserved for KemPharm), KVK shall not, and shall ensure that its
Affiliates and their respective sublicensees will not: (a) establish or maintain
any branch, warehouse or distribution facility for Licensed Products in such
countries, (b) engage in any advertising or promotional activities relating to
Licensed Products that are directed primarily to customers or other purchaser or
users of Licensed Products located in such countries, (c) solicit orders for
Licensed Products from any prospective purchaser located in such countries, or
(d) sell or distribute Licensed Products to any person in the Collaboration
Territory who intends to sell or has in the past sold Licensed Products in such
countries. If KVK receives any order for any Licensed Product from a prospective
purchaser located in a country in the Retained Territory, KVK shall promptly
refer that order to KemPharm and KVK shall not accept any such orders. KVK shall
not deliver or tender, or cause to be delivered or tendered, Licensed Products
into a country in the Retained Territory. KVK shall not, and shall ensure, that
its Affiliates and their respective sublicensees will not, restrict or impede in
any manner KemPharm’s exercise of its retained exclusive rights in the Retained
Territory.

 

6.7     Label and Field Restrictions. KVK hereby covenants that it shall not,
nor shall it permit any Affiliate or sublicensee to, directly or indirectly,
market, promote, detail, sell or offer for sale Licensed Products in the
Collaboration Territory for any use outside (1) the Label or (2) the Field.
KemPharm acknowledges and understands that KVK cannot control the ultimate use
of Licensed Products it sells and that the purpose of the foregoing covenant is
to prevent KVK and its Affiliates and sublicensees from facilitating or
encouraging uses outside (1) the Label and/or (2) the Field.

 

6.8     Labeling. KVK shall provide KemPharm with proposed content for labeling
and packaging (including with respect to any product inserts) of Licensed
Products in the Field in the Collaboration Territory, for KemPharm’s review and
approval prior to use. Except with respect to KVK’s use of any KVK Housemark, as
defined below, for the Licensed Product, KVK shall not materially deviate from
KemPharm’s approved label for the Product in the design or content of the label
for any Licensed Product unless required to by Law or approved by KemPharm in
writing. KemPharm shall review KVK’s proposed labeling and packaging content and
shall provide comments to KVK within [*] days of delivery of such materials to
KemPharm, which comments KVK shall incorporate into the final labeling and
packaging content provided to KemPharm.

 

6.9     Payors and PBMs. Subject to the direction and authorization of the JSC,
and as set forth in the Commercialization Plan, KemPharm shall have the
responsibility for outreach to pharmacy benefit managers and other payors to
negotiate for utilization of the Licensed Products in place of traditional
hydrocodone/acetaminophen combination products for their members where
appropriate.

 

6.10     Proof of Market Viability Termination. In the event that the Parties’
joint efforts to Commercialize Licensed Products in the Field in the
Collaboration Territory pursuant to this Article 6 does not result by the [*] of
the effective date of this Agreement in KVK entering into agreements with Third
Party payors and/or pharmacy benefit managers whereby, based on such Third
Parties’ usage of hydrocodone and/or acetaminophen (for clarity, in all
strengths, and irrespective of whether branded or generic) in the immediately
preceding [*], KVK would be reasonably likely sell or have sold at least [*]
units of tablets of Licensed Product within a given [*] period (the achievement
of such result, the “Proof of Market Viability”), then either Party may, in its
sole discretion, elect to terminate this Agreement in its entirety (the “Proof
of Market Viability Termination”).

 

 

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Article 7     
API

 

7.1     Manufacture and Supply. As of the Effective Date, KemPharm has entered
into a Third Party Supply Agreement, including a Third Party Supply Quality
Agreement as per Section 1.56, pursuant to which Johnson Matthey is
manufacturing and supplying KemPharm API (benzhydrocodone hydrochloride) to
KemPharm.

 

(a)     KemPharm shall seek [*], pursuant to the terms of the Third Party Supply
Agreement, from the Third Party Supplier (Johnson Matthey) to [*] subject to the
provisions of Section 7.1(c) below.

 

(b)     KVK shall subsequently execute [*]. As part of this transfer assignment
agreement, to be attached hereto as Exhibit D, KVK will [*] and shall [*]
pursuant to Section 7.2 for purposes of manufacturing and commercializing the
Licensed Product. KVK agrees that, [*], it shall [*], such that KemPharm’s
supply obligations herein do not result in KemPharm’s breach of its Third Party
Supply Agreement.

 

(c)     Notwithstanding the above Section 7.1(a)-(b), KemPharm shall retain the
rights to purchase API (benzhydrocodone hydrochloride), alone or in combination
with other pharmaceutical ingredients, except for acetaminophen, for any and all
products, other than the Licensed Product(s), from the Third Party Supplier
pursuant to either the Third Party Supply Agreement or another agreement with
Johnson Matthey with substantially the same terms.

 

7.2     KVK shall exclusively purchase, subject to Section 7.1(c) above, the
KemPharm API through KemPharm by way of the Third Party Supply Agreement, and
KemPharm will use Commercially Reasonable Efforts to have manufactured and
supplied directly to KVK through the Third Party Supply Agreement, all of KVK’s
and its Affiliates’ and sublicensee’s requirements of KemPharm API and other raw
materials for Commercialization use and manufacture in the Field in the
Collaboration Territory under this Agreement. Johnson Matthey shall supply the
KemPharm API and other raw materials, and KVK shall be responsible for the
transportation, import and storage of the KemPharm API and/or raw materials at
KVK’s own cost and expense. All KemPharm API shall be delivered by Johnson
Matthey to KVK in accordance with the terms of the Third Party Supply Agreement.
The price for KemPharm API and other raw materials supplied by Johnson Matthey
through KemPharm to KVK Pursuant to the Third Party Supply Agreement for
Commercial use in the Field in the Collaboration Territory shall equal [*] (the
“Supply Price”).

 

7.3     Notwithstanding the foregoing, nothing contained in this Section 7 shall
require that [*]. Any requirement for KemPharm to make any extra payments of any
kind to Johnson Matthey, [*], shall be paid by [*]. Regarding the [*], [*] shall
be responsible to pay an amount equal to Johnson Matthey’s cost, while [*] shall
pay all other sums due to Johnson Matthey under [*].

 

7.4     Distribution. KVK will be solely responsible for the distribution of
Licensed Products in the Field in the Collaboration Territory.

 

7.5     Brand Security and Anti-Counterfeiting. The Parties will establish
contacts for communication regarding brand security issues and will each
reasonably cooperate with the other with respect thereto. Practices around these
incidents will comply with KemPharm’s then-current standards, where they define
product security features, warehouse/cargo protection requirements, and response
and communication process for such incidents. KemPharm shall inform KVK of any
changes to KemPharm’s standards with sufficient time for KVK to change any
practices, if necessary.

 

 

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Article 8     
Compensation

 

8.1     POMV Fee. Within ten (10) Business Days after achievement of the Proof
of Market Viability, KVK shall pay to KemPharm a one-time, upfront payment of
two million U.S. Dollars (US$2,000,000), free of any Tax Withholding pursuant to
Section 8.9, (the “POMV Fee”). The POMV Fee shall be fully creditable against
the future amount of any Net Profit Share payments owed to KemPharm pursuant to
Section 8.4.

 

8.2     Commercialization/Regulatory Expenses. Prior to achievement of Proof of
Market Viability pursuant to Article 6, KemPharm shall fund [*]
Commercialization/Regulatory Expenses incurred in connection with the
Commercialization or maintenance of Regulatory Approvals of Licensed Products in
the Field in the Collaboration Territory, in accordance with Articles 5 and 6.
Subsequent to achievement of Proof of Market Viability pursuant to Article 6,
KVK shall either directly fund, or reimburse KemPharm for, any expenses incurred
in connection with the Commercialization/Regulatory Expenses of Licensed
Products in the Field in the Collaboration Territory, such reimbursements to be
paid within [*] days after receipt of the applicable invoice from KemPharm. For
the avoidance of doubt, [*], as applicable.

 

8.3     Manufacturing Expenses. [*], as applicable.

 

 

8.4     Net Profit Share.

 

(a)     Following the First Commercial Sale of any Licensed Product in the Field
in the Collaboration Territory, KVK shall pay to KemPharm an initial percentage
of the Net Profits (if any), in accordance with the table below (“Net Profit
Sharing Percentage”; such profit share, the “Net Profit Share”).

 

Aggregate amount of Net Sales of Licensed Products sold in previous Rolling Year

Net Profit Share

Less than or equal to [*] 

70% to KVK / 30% to KemPharm

Greater than [*] but less than or equal to [*]

[*]% to KVK / [*]% to KemPharm

Greater than [*]

50% to KVK / 50% to KemPharm

 

 

For clarity, once a certain Net Profit Sharing Percentage is reached with
respect to a given Rolling Year, irrespective of the amount of future Net Sales
in subsequent calendar quarters, the Net Profit Sharing Percentage shall not
reset to a lower Net Profit Sharing Percentage for subsequent Rolling Years. An
hypothetical example computation of Net Profit Share is attached hereto as
Exhibit E.

 

(b)     Net Profit Share Payments; Reports. Within [*] days after the end of
each Calendar Quarter following the First Commercial Sale of a Licensed Product
in the Field in the Collaboration Territory, KVK shall submit to KemPharm a
report setting forth, with respect to the previous Rolling Year: (a) the amount
of gross sales and Net Sales of Licensed Products in the Field in the
Collaboration Territory in such Rolling Year, (b) an itemized calculation
showing the deductions from gross sales (by major category as set forth in the
definition of Net Sales) to determine Net Sales, (c) the amount of Manufacturing
Expenses paid by KVK to KemPharm for Licensed Products purchased by KVK during
such Rolling Year and (d) the amount of Commercialization/Regulatory Expenses
incurred by KVK, which shall include amounts paid to KemPharm pursuant to
Section 8.2, with respect to Licensed Products in the Field in the Collaboration
Territory during such Rolling Year and (e) a calculation of the Net Profits or
Net Losses, as applicable, for such Licensed Products (the “Net Profit Report”).

 

(c)     Payment of Net Profit Sharing Percentage. KVK shall pay all Net Profit
Share payments owed to KemPharm pursuant to this Section 8.4, if any, at the
time of submission of the Net Profit Report. In any quarter in which there is a
Net Loss, KVK shall be bear the full amount of such loss; provided that, KVK
shall be entitled to [*]. Notwithstanding this Section 8.4, KVK shall not [*].

 

8.5     Sales Milestone Payments. KVK shall promptly notify KemPharm upon the
achievement of the sales milestone events set forth below with respect to Net
Sales of Licensed Products in the Field in the Collaboration Territory in a
given Rolling Year. KVK shall pay to KemPharm the corresponding one-time,
non-refundable and non-creditable sales milestone payments set forth below
within [*] days after the achievement of such milestone event. For clarity, the
sales milestone payments herein are free of any Tax Withholding pursuant to
Section 8.9.

 

Sales Milestone Event

Milestone Payment

Net Sales in a Rolling Year equal or exceed [*] 

[*]

Net Sales in a Rolling Year equal or exceed [*]

[*]

Net Sales in a Rolling Year equal or exceed [*] 

[*]

Net Sales in a Rolling Year equal or exceed [*] 

[*]

Net Sales in a Rolling Year equal or exceed [*] 

[*]

 

8.6     Payment Method; Foreign Exchange. All payments owed by KVK under this
Agreement shall be made by wire transfer in immediately available funds to a
bank and account designated in writing by KemPharm. For clarity, all payments by
KVK to KemPharm pursuant to Sections 8.1, 8.3, 8.4 and 8.5 shall be in U.S.
Dollars. If applicable, the rate of exchange to be used in computing the amount
of currency equivalent in U.S. Dollars of any amounts payable in U.S. Dollars by
KVK to KemPharm under this Agreement shall be calculated in accordance with U.S.
GAAP. KemPharm shall invoice KVK for all amounts payable under Sections 8.2 and
8.3 in U.S. Dollars.

 

8.7     Interest on Late Payments. If KemPharm does not receive payment of any
sum due to it on or before the due date, [*] interest shall thereafter accrue on
the sum due to KemPharm until the date of payment at the [*] rate of [*] over
the then-current prime rate reported in The Wall Street Journal or the maximum
rate allowable by applicable Laws, whichever is lower.

 

8.8     Records; Audits.

 

(a)     KVK shall and shall ensure that its Affiliates and its and their
respective sublicensees, maintain complete and accurate records in sufficient
detail to permit KemPharm to confirm the accuracy of the calculation of Net Loss
and/or Net Profit Share payments and the achievement of the sales milestone
events, and KVK shall provide reconciliations of gross sales to net sales and
cost of goods sold, detailing any adjustments made by KVK as a result of its
application of OCBOA. All payments and other amounts under this Agreement shall
be accounted for in accordance with U.S. GAAP. Upon reasonable prior notice,
such records shall be available for examination during regular business hours
for a period of [*] years from the end of the Fiscal Year to which they pertain,
and not more often than once each Fiscal Year, by an independent certified
public accountant selected by KemPharm and reasonably acceptable to KVK, for the
sole purpose of verifying the accuracy of the financial reports furnished by KVK
pursuant to this Agreement and any payments with respect thereto. Any such
auditor shall not disclose KVK’s Confidential Information, except to the extent
such disclosure is necessary to verify the accuracy of the financial reports
furnished by KVK or the amount of payments due under this Agreement. Any amounts
shown to be owed but unpaid shall be paid within [*] days from the accountant’s
report, plus interest, as set forth in Section 8.7, from the original due date.
[*] shall bear the full cost of such audit unless such audit discloses an [*] of
more than [*] of the amount due for the audited period, in which case [*] shall
bear the full cost of such audit.

 

(b)     KemPharm shall, and shall ensure that its Affiliates and KemPharm
Partners, maintain complete and accurate records in sufficient detail to permit
KVK to confirm the accuracy of the calculation of the
Commercialization/Regulatory Expenses and the Manufacturing Expenses. All such
expenses shall be accounted for in accordance with U.S. GAAP. Upon reasonable
prior notice, such records shall be available for examination during regular
business hours for a period of [*] years from the end of the Fiscal Year to
which they pertain, and not more often than once each Fiscal Year, by an
independent certified public accountant selected by KVK and reasonably
acceptable to KemPharm, for the sole purpose of verifying the accuracy of the
amount of expenses furnished by KemPharm pursuant to this Agreement and any
payments with respect thereto. Any such auditor shall not disclose KemPharm’s
Confidential Information, except to the extent such disclosure is necessary to
verify the accuracy of the amount of expenses furnished by KVK or the amount of
payments due under this Agreement. Any overage assessed to KVK shall be
refunded, if applicable, within [*] days from the accountant’s report, plus
interest, in equal amounts as set forth in Section 8.7, from the original date
such overage was applied. [*] shall bear the full cost of such audit unless such
audit discloses an [*] of more than [*] of the for the audited period, in which
case [*] shall bear the full cost of such audit

 

8.9     Taxes.

 

(a)     Taxes on Income. Except as otherwise provided in this Section 8.9, each
Party shall be solely responsible for the payment of all taxes imposed on its
share of income arising directly or indirectly from the efforts of the Parties
under this Agreement.

 

(b)     Tax Cooperation. The Parties agree to cooperate with one another and use
reasonable efforts to reduce or eliminate tax withholding or similar obligations
in respect of the upfront fee, Net Profit Share payments, sales milestone
payments or other payments made by KVK to KemPharm under this Agreement. To the
extent KVK is required to deduct and withhold taxes from any payment to
KemPharm, KVK shall pay the amounts of such taxes to the proper Governmental
Authority in a timely manner and promptly transmit to KemPharm an official tax
certificate or other evidence of such withholding sufficient to enable KemPharm
to demonstrate such payment of taxes to any applicable Government Authority.
KemPharm shall provide KVK any tax forms that may be reasonably necessary in
order for KVK not to withhold tax or to withhold tax at a reduced rate under an
applicable bilateral income tax treaty. Each Party shall provide the other with
reasonable assistance to enable the recovery, as permitted by applicable Laws,
of withholding taxes or similar obligations resulting from payments made under
this Agreement, such recovery to be for the benefit of the Party bearing such
withholding tax.

 

(c)     Withholding Taxes. If KVK is required by applicable Laws to make any tax
deduction, tax withholding or similar payment from any amount paid or payable by
KVK to KemPharm (a “Tax Withholding”) under this Agreement, then KVK will pay
KemPharm the actual stated amount set forth under this Agreement in full and
shall also pay any such Tax Withholding, including any additional Tax
Withholding required with respect to KVK’s additional payments under this
Section 8.9, directly to the proper Governmental Authority. For clarity,
KemPharm shall receive, without any deduction or offset with respect to taxes
and free of any Tax Withholding, a net amount equal to, after payment of any Tax
Withholding, the amount to which KemPharm was otherwise entitled under this
Agreement and would have received had no Tax Withholding been required by Laws
to be made.

 

(d)     VAT. All payments due to KemPharm from KVK pursuant to this Agreement
shall be paid exclusive of, and without reduction for, any value-added tax
(“VAT”) (which, if applicable, shall be payable by KVK upon receipt of a valid
VAT invoice). If KemPharm determines that it is required to report any such tax,
KVK shall promptly provide KemPharm with applicable receipts and other
documentation necessary or appropriate for such report. For clarity, this
Section 8.9(d) is not intended to limit KVK’s right to deduct VAT in determining
Net Sales.

 

 

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Article 9     
Intellectual Property Matters

 

9.1     Ownership of Data and Inventions.

 

(a)     Data. KemPharm shall solely own all Data generated by KemPharm. The Data
Controlled by KemPharm and related solely and specifically to the Licensed
Products are included in the Licensed Know-How and licensed to KVK under Section
2.1(a). KVK shall solely own all Data generated by KVK in the conduct of
Regulatory Activities that is solely and specifically related to Licensed
Products in the Field in the Collaboration Territory. KVK hereby grants KemPharm
an irrevocable, perpetual, royalty-free, fully paid-up, exclusive license with
the right to grant sublicenses to use such Data generated and owned by KVK in
the Retained Territory for all purposes, and a non-exclusive license in the
Collaboration Territory upon expiration or termination of the Agreement, other
than termination of the Agreement by KVK pursuant to Sections 13.4 or 13.5.

 

(b)     Inventions. Inventorship of any Inventions will be determined in
accordance with the standards of inventorship and conception under U.S. patent
laws. For clarity, all Inventions directly related to the Licensed Product(s)
(i.e. combination product of benzhydrocodone and acetaminophen) made by KemPharm
are included in the Licensed IP and licensed to KVK under Section 2.1(a). KVK
shall promptly disclose in writing to KemPharm all KVK Inventions. KVK hereby
grants KemPharm an irrevocable, perpetual, royalty-free, fully paid-up,
non-exclusive license with the right to grant sublicenses in such KVK Inventions
directly related to the Licensed Products and invented during the Term in the
Retained Territory, and in the Collaboration Territory upon expiration or
termination of the Agreement. KVK shall have the sole right to file for patent
protection for such KVK Inventions. However, KVK shall have no duty to file for
patent protection for such KVK Inventions and shall prosecute such KVK
Inventions in its sole discretion, subject to KemPharm having an opportunity to
comment on any prosecution of KVK inventions which may affect the Licensed IP.
If KVK elects not to file or continue prosecution of the KVK Inventions, and if
KemPharm desires at its option to file or pursue prosecution of the KVK
Inventions, KVK may, at its option, assign said KVK Inventions to KemPharm and
KemPharm shall have the right to prosecute the assigned KVK Invention(s).
KemPharm shall provide KVK with all reasonable assistance and cooperation in the
patent prosecution efforts by KVK provided in this Section 9.1.

 

i. For sake of clarity, all inventions made by KemPharm, including but not
limited to any benzhydrocodone, benzhydrocodone compounds, inventions, pro-drugs
or combination of thereof with one or more additional pharmaceutical
ingredients, other than Apadaz®, are not included in the Licensed IP and are not
licensed to KVK.

 

(c)     KVK’s Affiliates, Sublicensees and Subcontractors. KVK shall ensure that
each of its Affiliates, sublicensees and subcontractors under this Agreement has
a contractual obligation to disclose to KVK all Data and Inventions generated,
invented, discovered, developed, made or otherwise created by them or their
employees, agents or independent contractors, and to provide sufficient rights
with respect thereto, so that KVK can comply with its obligations under Section
9.1(a).

 

9.2     Patent Prosecution.

 

(a)     Prosecution by KemPharm. As between the Parties, KemPharm shall have the
sole right to prepare, file, prosecute and maintain or abandon the Licensed
Patents during the term of this Agreement. KemPharm will use Commercially
Reasonable Efforts to prepare, file, prosecute, defend and maintain all Licensed
Patents; provided, however, that KemPharm does not represent or warrant that any
patent will issue or be granted based on patent applications contained in the
Licensed Patents. KemPharm shall provide KVK reasonable opportunity to review
and comment on such prosecution efforts regarding the Licensed Patents as
follows: KemPharm shall promptly provide KVK with copies of all material
communications from any patent authority and any translations in KemPharm
possession in the Collaboration Territory regarding the Licensed Patents, and
shall provide KVK, for its review and comment, with drafts of any material
filings or responses to be made to such patent authorities in a reasonable
amount of time in advance of submitting such filings or responses. KemPharm
shall consider in good faith comments thereto provided by KVK in connection with
the prosecution of the Licensed Patents. For the purpose of this Article 9,
“prosecution” shall include any post-grant proceeding in the Collaboration
Territory, including opposition proceedings.

 

(b)     Retained Territory. For clarity, KVK does not have any rights pursuant
to this Agreement with respect to any Licensed Patents in the Retained Territory
and, as between the Parties, KemPharm shall have the sole right in its sole
discretion to prepare, file, prosecute and maintain the Licensed Patents in the
Retained Territory.

 

(c)     Collaboration. KVK shall provide KemPharm with all reasonable assistance
and cooperation in the patent prosecution efforts by KemPharm provided in this
Section 9.2, including providing any necessary powers of attorney and executing
any other required documents or instruments for such prosecution, including but
not limited to the filing of Terminal Disclaimers.

 

9.3     Patent Enforcement.

 

(a)     Notification. If either Party becomes aware of any existing or
threatened infringement of any Licensed Patent (“Infringement”), it shall
promptly notify the other Party in writing to that effect and the Parties will
consult with each other regarding any actions to be taken with respect to such
Infringement.

 

(b)     Enforcement Rights. Each Party shall share with the other Party all
Information available to it regarding such alleged Infringement, pursuant to a
mutually agreeable “common interest agreement” executed by the Parties under
which the Parties agree to their shared, mutual interest in the outcome of any
suit to enforce the Licensed Patents against such Infringement. KemPharm shall
have the first right, but not the obligation, to bring an appropriate suit or
other action against any person or entity engaged in such Infringement, at [*].
If KemPharm elects to commence a suit to enforce the applicable Licensed Patents
against such Infringement, then KVK shall have the right but not the obligation,
to join such enforcement action upon notice to KemPharm, and in this case, the
Parties shall [*] of the enforcement action. If KemPharm notifies KVK that it
does not intend to commence a suit to enforce the applicable Licensed Patents
against such Infringement or to take other action to secure the abatement of
such Infringement, then, to the extent that such Infringement is resulting from
a Third Party’s use or sale of a product that (i) competes with a Licensed
Product in the Field and in the Collaboration Territory and (ii) consists of a
combination of benzhydrocodone and acetaminophen, KVK shall have the right,
subject to the foregoing, but not the obligation, to commence such a suit or
take such action. In such case, [*] related to such actions. KVK shall not have
the right to commence such an action without KemPharm’s consent if KemPharm
believes in good faith that the commencement of any such suit or action by KVK
would reasonably be likely to have a negative impact on any similar action that
KemPharm is pursuing against such person or entity. In such case, KemPharm shall
take reasonably appropriate actions in order to enable KVK to commence a suit or
take the actions set forth in the preceding sentence. Neither Party shall settle
any such suit or action in any manner that would negatively impact the Licensed
Patents or that would limit or restrict the ability of KVK to sell the Licensed
Products in the Collaboration Territory without the prior written consent of the
other Party.

 

(c)     Collaboration. Each Party shall provide to the Party bringing a claim,
suit or action under Section 9.3(b) (the “Enforcing Party”) with reasonable
assistance in such enforcement, at such Enforcing Party’s request and the
Party’s expense, including joining such action as a party plaintiff if required
by applicable Laws to pursue such action. If KVK is required to join such action
as a party plaintiff, KemPharm shall reimburse KVK’s reasonable costs and
attorney’s fees. The Enforcing Party shall keep the other Party regularly
informed of the status and progress of such enforcement efforts and shall
reasonably consider the other Party’s comments on any such efforts. The
non-enforcing Party shall be entitled to separate representation in such matter
by counsel of its own choice and at its own expense, except as otherwise
provided herein, but such Party shall at all times cooperate fully with the
Enforcing Party.

 

 

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(d)     Expenses and Recoveries. Subject to the terms of this Section 9.3(d),
[*] shall be [*] it incurs as a result of such enforcement action, except that
the Parties shall [*] of the enforcement action when [*] If the Enforcing Party
recovers monetary damages in such claim, suit or action brought under Section
9.3(b), such recovery shall be allocated first to the reimbursement of any
documented expenses incurred by the Parties in such enforcement action, and any
remaining amounts shall be shared by the Parties as follows:

 

(i)     [*];

 

(ii)     [*];

 

(iii)     [*];

 

(iv)     [*];

 

(v)     [*].

 

(e)     Other Infringements. KemPharm shall have the sole right to enforce
Licensed Patents in the Retained Territory, KemPharm shall be entitled to retain
all recoveries resulting from all such enforcements, and KVK shall not be
obligated to participate or assist in such enforcements.

 

9.4     Third Party Infringement Claims. If the manufacture, sale or use of the
Licensed Products in the Field in the Collaboration Territory pursuant to this
Agreement results in a claim, suit or proceeding alleging patent infringement
against KemPharm or KVK, or their respective Affiliates, licensees or
sublicensees (collectively, “Infringement Actions”), such Party shall promptly
notify the other Party hereto in writing. KemPharm shall direct and control the
defense of such Infringement Action, [*] with counsel of its choice; provided,
however, that if KVK has not been named as a defendant, KVK may participate in
the defense and/or settlement thereof, [*] with counsel of its choice. If KVK
has been named as a defendant, KemPharm shall, whether through its own counsel
or separate counsel in the event of a conflict, defend KVK [*], with regard
solely to said Third Party Infringement Claims. In any event, KemPharm agrees to
keep KVK reasonably informed of all material developments in connection with any
such Infringement Action for which KemPharm exercises its right to direct and
control the defense and shall provide any additional information about the
Infringement Action that KVK reasonably requests. Each Party shall share with
the other Party all Information available to it regarding such Infringement
Actions, pursuant to a mutually agreeable “common defense agreement” executed by
the Parties under which the Parties agree to their shared, mutual interest in
the outcome of any such Infringement Actions. KemPharm agrees not to settle such
Infringement Action, or make any admissions or assert any position in such
Infringement Action, in a manner that would materially adversely affect the
rights or interests of KVK, without the prior written consent of KVK, which
shall not be unreasonably withheld or delayed. If a license from a Third Party
is reasonably required in order for KVK to Commercialize the Licensed Products
or otherwise perform its obligations under this agreement, the Parties shall
mutually agree on such license and negotiate in good faith as to the allocation
of such license. The JSC shall review the Third-Party licensed IP expenses at
least annually. Notwithstanding the foregoing, under no circumstances shall KVK
be responsible or pay for any licensing fees related to use or sale (i) prior to
the Effective Date, (ii) after the Term of this Agreement, (iii) outside of the
Field, or (iv) outside of the Collaboration Territory.

 

9.5     Patent Term Extensions. KemPharm will cooperate with KVK, [*] in seeking
and obtaining patent term extensions, including any pediatric exclusivity
extensions as may be available, patent term adjustments or supplemental
protection certificates or their equivalents in the Collaboration Territory with
respect to any Licensed Patents or Licensed Products. If elections with respect
to obtaining such patent term extensions are to be made, KemPharm shall have the
sole right to make such elections.

 

9.6     Trademarks.

 

(a)     KemPharm Product Mark.

 

(i)     KVK shall Commercialize Licensed Products in the Collaboration Territory
under the applicable KemPharm Product Mark selected by KemPharm. KVK shall, and
shall ensure that its Affiliates and sublicensees will, (1) use the KemPharm
Product Mark solely in connection with the Commercialization and manufacture of
Licensed Products in the Field in the Collaboration Territory, (2) comply with
the requirements of KemPharm as to the form, manner, scale and context of the
use of the KemPharm Product Mark, the use of the statements to accompany the
KemPharm Product Mark, and the presentation or performance of the Licensed
Products, and (3) adhere to any branding strategy policies, including, without
limitation, logo design, product labeling, messaging points, and visual branding
elements, implemented by KemPharm for the use of the KemPharm Product Mark. KVK
shall display the proper form of trademark notice associated with the KemPharm
Product Mark in accordance with instructions received from KemPharm.

 

(ii)     Upon KemPharm’s request, to the extent permitted by applicable Laws,
KVK shall include KemPharm’s name and corporate logo on Licensed Product label,
packaging, promotional/marketing materials to indicate that the Licensed Product
is in-licensed from KemPharm, and shall display KemPharm’s name and corporate
logo with equal prominence and comparable size, resolution, print quality, and
location, as instructed by KemPharm from time to time, as KVK’s name and
corporate logo is displayed.

 

(iii)     KVK shall provide KemPharm with samples of proposed content for
Licensed Product labeling and packaging in accordance with Section 6.8, together
with any promotional/marketing materials that include the KemPharm Product
Marks, for review and approval prior to use. If concerns arise based upon
reviews of samples provided, KemPharm shall have a right to audit all uses of
the KemPharm Product Mark.

 

(iv)     KVK shall use the KemPharm Product Mark upon or in relation to the
Licensed Products only in such manner where the distinctiveness, reputation, and
validity of the KemPharm Product Mark shall not be impaired. Without prejudice
to the generality of the foregoing, KVK shall ensure in particular that the
KemPharm Product Mark is correctly spelled, and that any text, graphics, or
designs adjacent to the KemPharm Product Mark do not put the KemPharm Product
Mark or KemPharm in a negative or derogatory light. KVK shall not, and shall
ensure, that its Affiliates and sublicensees will not, engage in any action that
will interfere with or diminish KemPharm’s rights or goodwill in the KemPharm
Product Mark, including related names and logos.

 

(v)     KemPharm shall register and maintain in the Collaboration Territory, at
KemPharm’s cost and expense, the applicable KemPharm Product Mark that KemPharm
wishes to use in connection with the Commercialization of the Licensed Products
in the Collaboration Territory.

 

(vi)     KemPharm shall own all rights to the KemPharm Product Mark throughout
the world. KVK acknowledges that all use of the KemPharm Product Mark and all
rights and goodwill attached to or arising out of such use, shall accrue to the
benefit of KemPharm. KVK shall at any time, whether during or after the Term,
execute any documents that shall reasonably be required by KemPharm to confirm
KemPharm’s ownership of the KemPharm Product Mark.

 

(b)     KVK Housemarks. In addition to the KemPharm Product Mark, KVK shall have
the right to brand the Licensed Products in the Field in the Collaboration
Territory with those trademarks of KVK that are associated with KVK’s name or
identity (“KVK Housemarks”); provided, however, that KVK shall not, and shall
ensure that its Affiliates and sublicensees will not, make any use of trademarks
that are confusingly similar to any trademarks or house marks of KemPharm or its
Affiliates, including the corporate name of KemPharm or any of its Affiliates,
without KemPharm’s prior written consent. KVK shall own all rights in the KVK
Housemarks, and all goodwill in the KVK Housemarks shall accrue to KVK. KVK and
its Affiliates and sublicensees shall not use any trademarks, other than the
KemPharm Product Marks and the KVK Housemarks, in connection with the
Commercialization of Licensed Products in the Field in the Collaboration
Territory, without the prior written consent of KemPharm.

 

 

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Article 10     
Representations And Warranties; covenants

 

10.1     Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party as follows:

 

(a)     Corporate Existence. As of the Effective Date, it is a company or
corporation duly organized, validly existing, and in good standing under the
Laws of the jurisdiction in which it is incorporated.

 

(b)     Corporate Power, Authority and Binding Agreement. As of the Effective
Date, (i) it has the corporate power and authority and the legal right to enter
into this Agreement and perform its obligations hereunder; (ii) it has taken all
necessary corporate action on its part required to authorize the execution and
delivery of this Agreement and the performance of its obligations hereunder; and
(iii) this Agreement has been duly executed and delivered on behalf of such
Party, and constitutes a legal, valid, and binding obligation of such Party that
is enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting
creditors' rights and remedies generally.

 

(c)     No Debarment. Neither such Party nor any of its Affiliates is debarred
or disqualified under the Act or comparable applicable Laws outside the U.S.

 

10.2     Additional Representations and Warranties of KemPharm. KemPharm
represents and warrants to KVK as follows, as of the Effective Date:

 

(a)     Title; Encumbrances. It has sufficient legal and/or beneficial title,
ownership or license, free and clear from any mortgages, pledges, liens,
security interests, conditional and installment sale agreement, encumbrances,
charges or claim of any kind, of the Licensed IP to grant the licenses to KVK as
purported to be granted pursuant to this Agreement;

 

(b)     Notice of Infringement or Misappropriation. It has not received any
notice, written or otherwise, from any Third Party asserting or alleging that
the Commercialization of the Licensed Products in the Collaboration Territory
would infringe or misappropriate the intellectual property rights of such Third
Party;

 

(c)     No Proceeding. There is no pending, and to KemPharm’s knowledge, no
threatened, adverse action, suit or proceeding in the Collaboration Territory
against KemPharm involving Licensed IP or the Licensed Products; and

 

(d)     No Conflicts. KemPharm has not entered, and shall not enter, into any
agreement with any Third Party that is in conflict with the rights granted to
KVK under this Agreement with respect to the Licensed Product, and has not taken
and shall not take any action that would in any way prevent it from granting the
rights granted to KVK under this Agreement, or that would otherwise materially
conflict with or adversely affect KVK’s rights under this Agreement.

 

(e)     No Other Licenses. KemPharm has not granted and will not grant any
licenses or other contingent or non-contingent right, title, or interest under
or relating to Licensed IP that conflicts with the exclusivity granted to KVK
herein, and is not nor will be under any obligation, that does or will conflict
with or otherwise affect this Agreement with respect to such exclusivity.

 

(f)     Prior Art; Litigation. No prior art or other information exists, as of
the date of the execution of this Agreement, that would adversely affect the
validity, enforceability, term, or scope of any Licensed IP (Exhibit A) and
there is no settled, pending, or to its knowledge threatened litigation or
reissue application, re-examination, post-grant, inter partes, or covered
business method patent review, interference, derivation, opposition, claim of
invalidity, or other claim or proceeding, including in the form of any offer to
obtain a license, with respect to the Licensed IP.

 

(g)     Non-Infringement. The Licensed Products do not infringe any Third
Party’s intellectual property.

 

 

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10.3     Additional Representations and Warranties of KVK. KVK represents and
warrants to KemPharm as follows, as of the Effective Date:

 

(a)     KVK has not entered, and shall not enter, into any agreement with any
Third Party that is in conflict with the rights granted to KemPharm under this
Agreement with respect to the Licensed Product, and has not taken and shall not
take any action that would in any way prevent it from granting the rights
granted to KemPharm under this Agreement, or that would otherwise materially
conflict with or adversely affect KemPharm’s rights under this Agreement;

 

(b)     KVK represents and warrants to KemPharm that, to KVK’s knowledge as of
the Effective Date, any and all agreements, including, but not limited to
confidentiality agreements, sale agreements, purchase agreements, license
agreements, commercialization agreements, development agreements, or other
agreements between KVK and any Third Party does not relate to, affect, involve,
or impact any Intellectual Property rights of KVK for the manufacture and
commercialization of the Licensed Product pursuant to this Agreement.

 

(c)     KVK represents and warrants to KemPharm that, to KVK’s knowledge as of
the Effective Date, any and all settlement agreements of past litigation,
including, but not limited to actual or threatened litigation, do not adversely
affect, in any material manner or regard, KVK’s ability to manufacture, market,
sell or otherwise commercialize the Licensed Product(s) herein pursuant to this
Agreement.

 

(d)     KVK represents and warrants to KemPharm that, to KVK’s knowledge as of
the Effective Date, that there is no action, suit, claim, investigation or
proceeding pending or, to the reasonable knowledge of KVK, threatened against it
which questions the validity of this Agreement or the transactions contemplated
hereby, or any action taken or to be taken pursuant hereto or thereto.   There
are no outstanding orders, judgments, injunctions, awards or decrees of any
court, arbitrator or Governmental Entity or agency against KVK that adversely
affect, in any material manner or regard, KVK’s ability to manufacture, market,
sell or otherwise commercialize the Licensed Product(s) herein pursuant to this
Agreement.

 

(e)     KVK represents and warrants to KemPharm that, to KVK’s knowledge as of
the Effective Date, KVK does not Control any Patent that is necessary to make,
use, import, offer for sale or sell Licensed Products in the Field.

 

(f)     KVK represents and warrants to KemPharm that, to KVK’s knowledge as of
the Effective Date, that its material representations of financial viability,
stability, and general corporate financial health to KemPharm fairly represent
the financial condition of the KVK at the dates of said materials
representations and further represents and warrants that such material
representations of financial viability, stability, and general corporate health
are supported by information and documents prepared in accordance with U.S. GAAP
consistently applied and consistent with the books and records of KVK.

 

(g)     KVK represents and warrants to KemPharm that, to KVK’s knowledge as of
the Effective Date, as evidenced as of the dates of the KVK's financial
statements kept solely by the Company and not disclosed to KemPharm, KVK had no
liabilities, either accrued or contingent, of a nature required to be reflected
in the financial statements in accordance with U.S. GAAP, and whether due or to
become due, which individually or in the aggregate are reasonably likely to have
a material adverse effect on KVK or its ability to perform its duties and
obligations under this Agreement.

 

(h)     KVK represents and warrants to KemPharm that, to KVK's knowledge as of
the Effective Date, there are no foreign party, foreign actor, domestic party,
domestic actor, or any other third party known to KVK, or alternatively in
contractual relationship with KVK, which will materially impact the operation
and performance of this Agreement by KVK.

 

(i)     KVK represents and warrants to KemPharm that, to KVK's knowledge as of
the Effective Date, there is no existing contractual obligation of KVK or its
Subsidiaries or Affiliates is with or for the direct benefit of (i) any party
owning, or formerly owning, beneficially or of record, directly or indirectly,
in excess of five percent (5%) of the outstanding capital stock of KVK and/or
KemPharm, (ii) any director, officer or similar representative of KVK or
KemPharm, other than employment agreements, (iii) any natural person related by
blood, adoption or marriage to any party described in (i) or (ii), or (iv) any
entity in which any of the foregoing parties has, directly or indirectly, at
least a five percent (5%) beneficial interest (a "Related Party"). Without
limiting the generality of the foregoing, no Related Party, directly or
indirectly, owns or controls any material assets or material properties which
are used in the KVK's business and to the knowledge of KVK, no Related Party,
directly or indirectly, engages in or has any significant interest in or
connection with any business which is, or has been within the last two years, a
competitor, customer or supplier of KVK or has done business with the KVK or
which currently sells or provides products or services which are similar or
related to the products or services sold or provided in connection with the
Business.

 

(j)     KVK represents and warrants to KemPharm that there is no action, suit or
proceeding pending or, to KVK's Knowledge, threatened against KVK or
Affiliates which, if adversely determined, would, individually or together with
all such other actions, reasonably be expected to have a Material Adverse Effect
or otherwise affect KVK's performance of its obligations and responsibilities
pursuant to this Agreement. As of the Effective Date, there is no action, suit
or proceeding pending or, to KVK's Knowledge, threatened against KVK or any of
their Subsidiaries or Affiliates which challenges or impairs the ability of KVK
or any of their Subsidiaries or Affiliates to manufacture and sell the Licensed
Product herein, or otherwise execute, deliver or perform its obligations under
this Agreement.")

 

10.4     Compliance with Laws.

 

(a)     Each Party shall, and shall ensure that its Affiliates and their
respective sublicensees will, and KemPharm shall, and take all reasonable
actions to ensure KemPharm Partner(s)’s shall, comply in all respects with
Proper Conduct Practices and all applicable Laws in the conduct of Regulatory
Activities with respect to, and Commercialization of, Licensed Products and
performance of its obligations under this Agreement, including the GCP, GLP and
any Regulatory Authority and Government Authority health care programs having
jurisdiction in such Party’s respective territory, each as may be amended from
time to time.

 

(b)     Each Party shall immediately notify the other Party if it has any
information or suspicion that there may be a violation of any applicable Laws in
connection with its performance under this Agreement or the conduct of
Regulatory Activities with respect to, or Commercialization of, any Licensed
Product hereunder. In the event that either Party has violated or been suspected
of violating any of its obligations, representations, warranties or covenants in
Section 10.4(a), such Party will take reasonable actions to remedy such breach
and to prevent further such breaches from occurring.

 

10.5     Additional KVK Covenants. In addition to any covenants made by KVK
elsewhere in this Agreement, KVK hereby covenants to KemPharm as follows:

 

(a)     neither KVK nor any of its Affiliates will employ or use the services of
any Person who is debarred or disqualified under the Act, or comparable
applicable Laws outside the U.S., in connection with activities relating to any
Licensed Product; and in the event that KVK becomes aware of the debarment or
disqualification or threatened debarment or disqualification of any Person
providing services to KVK or any of its Affiliates with respect to any
activities relating to any Licensed Product, KVK will promptly notify KemPharm
in writing and KVK will cease, or cause its Affiliate to cease, as applicable,
employing, contracting with, or retaining any such Person to perform any
services relating to any Licensed Product; and

 

(b)     neither it nor its Affiliates, or its or their sublicensees, shall
exploit in any manner any Licensed Product outside of the scope of the licenses
expressly granted to KVK under this Agreement.

 

10.6     No Other Representations or Warranties. EXCEPT AS EXPRESSLY STATED IN
THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL
PROPERTY RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY OR ITS AFFILIATE,
AND ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR
OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED. For clarity and without limiting the
foregoing, KemPharm makes no representation or warranty concerning the Licensed
Products or Licensed IP except as expressly set forth in this Article 10.

 

 

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Article 11     
Indemnification

 

11.1     Indemnification by KemPharm. KemPharm shall defend, indemnify, and hold
KVK and its Affiliates and their respective officers, directors, employees, and
agents (the “KVK Indemnitees”) harmless from and against any and all losses,
damages, liabilities, expenses and costs, including reasonable legal expense and
attorneys’ fees (“Losses”) to which any KVK Indemnitee may become subject as a
result of any claim, demand, action or other proceeding by any Third Party
(collectively, “Claims”) arising out of, based on, or resulting from (a) the
Development of Licensed Products in the Field in the Collaboration Territory by
or on behalf of KemPharm, its Affiliates or KemPharm Partner(s) including,
without limitation, the formulation of the Licensed Products or failure to warn
regarding same, but excluding manufacture of said formulation or Licensed
Products, (b) the breach of any of KemPharm’s obligations under this Agreement,
including KemPharm’s representations and warranties set forth herein, (c) the
willful misconduct or negligent acts of any KemPharm Indemnitee or KemPharm
Partner(s) or such KemPharm Partner(s)’s respective officers, directors,
employees, and agents, (d) any Infringement Actions. The foregoing indemnity
obligation shall not apply to the extent that (i) the KVK Indemnitees fail to
materially comply with the indemnification procedures set forth in Section 11.3
and KemPharm’s defense of the relevant Claim is prejudiced by such failure, or
(ii) any Claim arises from, is based on, or results from any activity or
occurrence for which KVK is obligated to indemnify the KemPharm Indemnitees
under Section 11.2.

 

11.2     Indemnification by KVK. KVK shall defend, indemnify, and hold KemPharm
and its Affiliates and their respective officers, directors, employees, and
agents (the “KemPharm Indemnitees”) harmless from and against any and all Losses
to which any KemPharm Indemnitee may become subject as a result of any Claims by
any Third Party arising out of, based on, or resulting from (a) the conduct of
Regulatory Activities with respect to, or Commercialization of, Licensed
Products by or on behalf of KVK or its Affiliates or sublicensees (excluding (x)
any Infringement Actions, (y) the conduct of Commercialization activities by or
on behalf of KemPharm in accordance with the Commercialization Plan or otherwise
performed at the request or under the direction of KVK, and (z) any action done
at the request or demand of KemPharm or the JSC), (b) the breach of any of KVK’s
obligations under this Agreement, including KVK’s representations and warranties
set forth herein, (c) the manufacture of the Licensed Product and or
formulations thereof or (d) the willful misconduct or negligent acts of any KVK
Indemnitee. The foregoing indemnity obligation shall not apply to the extent
that (i) the KemPharm Indemnitees fail to materially comply with the
indemnification procedures set forth in Section 11.3 and KVK’s defense of the
relevant Claim is prejudiced by such failure, or (ii) any Claim arises from, is
based on, or results from any activity or occurrence for which KemPharm is
obligated to indemnify the KVK Indemnitees under Section 11.1.

 

11.3     Indemnification Procedures. The Party claiming indemnity under this
Article 11 (the “Indemnified Party”) shall give written notice to the Party from
whom indemnity is being sought (the “Indemnifying Party”) promptly after
learning of such Claim and shall offer control of the defense of such Claim to
the Indemnifying Party. The Indemnified Party shall provide the Indemnifying
Party with reasonable assistance, at the Indemnifying Party’s expense, in
connection with the defense of the Claim for which indemnity is being sought.
The Indemnified Party may participate in and monitor such defense with counsel
of its own choosing at its sole expense; provided, however, the Indemnifying
Party shall have the right to assume and conduct the defense of the Claim with
counsel of its choice. The Indemnifying Party shall not settle any Claim without
the prior written consent of the Indemnified Party, not to be unreasonably
withheld, unless the settlement involves only the payment of money. So long as
the Indemnifying Party is actively defending the Claim in good faith, the
Indemnified Party shall not settle or compromise any such Claim without the
prior written consent of the Indemnifying Party. If the Indemnifying Party does
not assume and conduct the defense of the Claim as provided above, (a) the
Indemnified Party may defend against, consent to the entry of any judgment, or
enter into any settlement with respect to such Claim in any manner the
Indemnified Party may deem reasonably appropriate, and the Indemnified Party
need not consult with, or obtain any consent from, the Indemnifying Party in
connection therewith, and (b) the Indemnifying Party shall remain responsible to
indemnify the Indemnified Party as provided in this Article 11. Notwithstanding
anything contained in the foregoing to the contrary, the provisions of Section
9.4 shall govern the defense of any Infringement Actions. Additionally, KVK
shall not be obligated to indemnify KemPharm for any Claims related to such
Infringement Action.

 

11.4     Limitation of Liability. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR
ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES ARISING
FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF
THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS
SECTION 11.4 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION
RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER SECTIONS 11.1, 11.2 or 11.3, OR DAMAGES
AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE 12 OR
FOR EITHER PARTY’S BREACH OF ITS OBLIGATIONS IN SECTION 2.5.

 

11.5     Insurance. Each Party shall procure and maintain insurance, including
product liability insurance, adequate to cover obligations for which it is
liable hereunder and consistent with normal business practices of prudent
companies similarly situated. It is understood that such insurance shall not be
construed to create a limit of either Party’s liability with respect to its
indemnification obligations under this Article 11. Each Party shall provide the
other Party with written evidence of such insurance upon request. Each Party
shall provide the other Party with written notice at least [*] days prior to the
cancellation, non-renewal or material change in such insurance.

 

 

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Article 12     
Confidentiality

 

12.1     Confidentiality. Each Party agrees that, during the Term and for a
period of [*] years thereafter, it shall keep confidential and shall not publish
or otherwise disclose and shall not use for any purpose other than as provided
for in this Agreement or any other Transaction Agreement (which includes the
exercise of any rights or the performance of any obligations hereunder or
thereunder) any Confidential Information of the other Party, except to the
extent expressly authorized by any Transaction Agreement or otherwise agreed in
writing by the Parties. The foregoing confidentiality and non-use obligations
shall not apply to any portion of the other Party’s Confidential Information
that the receiving Party can demonstrate by competent written proof:

 

(a)     was already known to the receiving Party or its Affiliate, other than
under an obligation of confidentiality, at the time of disclosure by the other
Party;

 

(b)     was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;

 

(c)     became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of the
receiving Party or its Affiliate in breach of this Agreement;

 

(d)     was disclosed to the receiving Party or its Affiliate by a Third Party
who has a legal right to make such disclosure and who did not obtain such
information directly or indirectly from the other Party; or

 

(e)     was independently discovered or developed by the receiving Party or its
Affiliate without access to or aid, application, use of the other Party’s
Confidential Information, as evidenced by a contemporaneous writing.

 

12.2     Authorized Disclosure. Notwithstanding the obligations set forth in
Section 12.1, a Party may disclose the other Party’s Confidential Information
and the terms of this Agreement to the extent:

 

(a)     such disclosure is reasonably necessary (i) for the filing or
prosecuting Patent rights as contemplated by any of the Transaction Agreements;
(ii) to comply with the requirements of Regulatory Authorities with respect to
obtaining and maintaining Regulatory Approval of Licensed Product; or (iii) for
the prosecuting or defending litigation as contemplated by any of the
Transaction Agreements;

 

(b)     such disclosure is reasonably necessary to its or its Affiliate’s
employees, agents, consultants, contractors, licensees or sublicensees on a
need-to-know basis for the sole purpose of performing its obligations or
exercising its rights under any of the Transaction Agreements; provided that in
each case, the disclosees are bound by written obligations of confidentiality
and non-use at least as restrictive as those contained in this Agreement;

 

(c)     such disclosure is reasonably necessary to any bona fide potential or
actual investor, acquiror, merger partner, or other financial or commercial
partner for the sole purpose of evaluating or carrying out an actual or
potential investment, acquisition or other business relationship; provided that
in connection with such disclosure, such Party shall inform each disclosee of
the confidential nature of such Confidential Information and require each
disclosee to treat such Confidential Information as confidential; or

 

(d)     such disclosure is reasonably necessary to comply with applicable Laws,
including regulations promulgated by applicable security exchanges, court order,
administrative subpoena or order.

 

Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party’s Confidential Information pursuant to Sections
12.2(a) or 12.2(d), such Party shall promptly notify the other Party of such
required disclosure and shall use reasonable efforts to obtain, or to assist the
other Party in obtaining, a protective order preventing or limiting the required
disclosure.

 

12.3     Publicity; Terms of Agreement.

 

(a)     The Parties agree that the terms of this Agreement are the Confidential
Information of both Parties, subject to the special authorized disclosure
provisions set forth in this Section 12.3.

 

(b)     If either Party desires to make a public disclosure concerning the terms
of this Agreement, such Party shall give reasonable prior advance notice of the
proposed text of such disclosure to the other Party for its prior review and
approval, except as otherwise provided herein, which approval shall not be
unreasonably withheld or delayed. A Party commenting on such a proposed
disclosure shall provide its comments, if any, within [*] Business Days after
receiving the proposed disclosure for review, or such shorter period of time as
necessitated by regulatory requirements. In addition, where required by
applicable Law, including regulations promulgated by applicable security
exchanges, either Party shall have the right to make a press release or other
public disclosure regarding the achievement of each sales milestone under this
Agreement as it is achieved, the achievements of Regulatory Approval in the
Collaboration Territory as they occur, or the occurrence of other events that
affect either Party’s rights or obligations under this Agreement, in each case
subject only to the review procedure set forth in the preceding sentences. In
relation to the other Party’s review of such an announcement, such other Party
may make specific, reasonable comments on such proposed press release within the
prescribed time for commentary. Neither Party shall be required to seek the
permission of the other Party to repeat any information regarding the terms of
this Agreement that has already been publicly disclosed by such Party, or by the
other Party, in accordance with this Section 12.3.

 

(c)     The Parties acknowledge that either or both Parties or their Affiliates
may be obligated to file under applicable Laws a copy of this Agreement with
Governmental Authorities. Each Party and its Affiliates shall be entitled to
make such a required filing, provided that it requests confidential treatment of
the commercial terms and sensitive technical terms hereof and thereof to the
extent such confidential treatment is reasonably available. In the event of any
such filing, each Party will provide the other Party with a copy of this
Agreement marked to show provisions for which such Party or its Affiliate
intends to seek confidential treatment and shall reasonably consider and
incorporate the other Party’s timely comments thereon to the extent consistent
with the legal requirements, with respect to the filing Party or Affiliate,
governing disclosure of material agreements and material information that must
be publicly filed.

 

12.4     Technical Publication. KVK may not publish peer reviewed manuscripts or
provide other forms of public disclosure, including abstracts and presentations,
pertaining to the Licensed Products or Licensed Know-How, without the prior
written consent of KemPharm.

 

12.5     Equitable Relief. Each Party acknowledges that its breach of this
Article 12 will cause irreparable harm to the other Party, which cannot be
reasonably or adequately compensated in damages in an action at law. By reasons
thereof, each Party agrees that the other Party shall be entitled, in addition
to any other remedies it may have under this Agreement or otherwise, to
preliminary and permanent injunctive and other equitable relief to prevent or
curtail any actual or threatened breach of the obligations relating to
Confidential Information set forth in this Article 12 by the other Party.

 

 

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Article 13     
Term And Termination

 

13.1     Term. The term of this Agreement (the “Term”) shall commence upon the
Effective Date and, unless earlier terminated pursuant to this Article 13, shall
expire on the later of (a) expiration of the last claim of a Licensed Patent in
the Collaboration Territory and (b) KVK’s cessation of all Commercialization of
Licensed Products in the Collaboration Territory.

 

13.2     Termination by KVK.

 

(a)     KVK may terminate this Agreement in its entirety for convenience upon
eighteen (18) months prior written notice given to KemPharm at any time after
the third (3rd) anniversary of the Effective Date; provided, however, that the
Parties may, upon mutual written consent, accelerate the effectiveness of such
termination to the extent permitted by applicable Law in the Collaboration
Territory.

 

(b)     KVK may terminate this Agreement upon ninety (90) days prior written
notice to KemPharm if a Regulatory Authority in the Collaboration Territory has
ordered KVK to stop all sales of Licensed Products in the Collaboration
Territory due to a safety concern; provided, however, that KVK has, for a period
of ninety (90) days prior to the provision of such notice by KVK, used
Commercially Reasonable Efforts to resolve such safety concern.

 

13.3     Termination by KemPharm.

 

(a)     KemPharm may terminate this Agreement upon written notice to KVK, if KVK
stops conducting Regulatory Activities with respect to, or Commercializing,
Licensed Products in the Collaboration Territory for a period of six (6) months
or more, unless the conduct of Regulatory Activities or Commercialization of
Licensed Products was prevented throughout such period by a force majeure for
which KVK provided notice pursuant to Section 15.2 prior to or at the start of
such period and that persisted throughout such period despite KVK’s reasonable
efforts to remove or mitigate it. Such termination shall go into effect on the
date specified in the applicable termination notice.

 

(b)     KemPharm may terminate this Agreement in its entirety upon written
notice to KVK, if KVK or its Affiliates or their respective sublicensees,
directly or indirectly, individually or in association with any other person or
entity, challenges the validity, enforceability or scope of any Licensed Patent.
Such termination shall go into effect on the date specified in the applicable
termination notice.

 

13.4     Termination for Breach. Each Party shall have the right to terminate
this Agreement in its entirety immediately upon written notice to the other
Party if the other Party materially breaches its obligations under any
Transaction Agreement and, after receiving written notice identifying such
material breach in reasonable detail, fails to cure such material breach within
thirty (30) days from the date of such notice.

 

13.5     Termination Due to Bankruptcy. Either Party may terminate this
Agreement if, at any time, the other Party files in any court or agency pursuant
to any statute or regulation of any state, country or jurisdiction, a petition
in bankruptcy or insolvency or for reorganization or for an arrangement or for
the appointment of a receiver or trustee of that Party or of its assets, or if
the other Party proposes a written agreement of composition or extension of its
debts, or if the other Party is served with an involuntary petition against it,
filed in any insolvency proceeding, and such petition is not dismissed within
sixty (60) days after the filing thereof, or if the other Party proposes or
becomes a Party to any dissolution or liquidation, or if the other Party makes
an assignment for the benefit of its creditors.

 

13.6     Proof of Market Viability Termination. Either Party may terminate this
Agreement in accordance with Section 6.9. In the event that KemPharm terminates
this Agreement pursuant to Section 6.9 and continues to Commercialize Licensed
Products in the Field in the Collaboration Territory, in addition to the effects
of termination described in Section 13.7, [*] prior to the effective date of
termination.

 

13.7     Effect of Termination or Expiration. Upon the any termination or
expiration of this Agreement, the following shall apply, in addition to any
other rights and obligations under this Agreement with respect to such
termination:

 

(a)     Licenses. All licenses and other rights granted by KemPharm to KVK under
this Agreement shall terminate, including all sublicenses granted by KVK unless
such sublicenses are assumed by KemPharm as contemplated by Section 2.1(c)(vi),
which shall survive expiration or termination. KemPharm shall have a reversion
of all rights previously licensed to KVK hereunder for which the relevant
licenses have terminated on a fully paid-up and royalty-free basis, itself or
with or through an Affiliate or Third Party, to conduct Regulatory Activities
with respect to, and Commercialize, the Licensed Products in the Field in the
Collaboration Territory at KemPharm’s discretion.

 

(b)     Regulatory Materials; Data. KVK shall transfer or assign to KemPharm or
its designee all Regulatory Materials, including Regulatory Approvals, for the
Licensed Products to the extent possible under applicable Law in the
Collaboration Territory. KVK shall also promptly transfer or assign to KemPharm
all Data, to the extent not already provided to KemPharm, including
pharmacovigilance data, generated by or on behalf of KVK. In addition, each
Party shall promptly return or destroy, at the other Party’s election, all
Confidential Information of such Party. If this Agreement is terminated by KVK
pursuant to Sections 13.4 or 13.5, KemPharm shall bear the cost arising out of
this subsection. If this Agreement is terminated by KVK pursuant to Sections
13.2(a) or if this Agreement is terminated by KemPharm pursuant to Sections
13.3(a), 13.3(b), 13.4, or 13.5, [*]. If this Agreement is terminated by KVK
pursuant to Section 13.2(b) or by either Party pursuant to Section 13.6, [*].

 

(c)     Transition Assistance. Upon KemPharm’s request, KVK shall provide such
assistance as may be reasonably necessary or useful for KemPharm to continue the
Commercialization of Licensed Products in the Collaboration Territory, to the
extent KVK or its Affiliate or sublicensee is then performing or having
performed such activities, including upon request of KemPharm, assigning or
amending as appropriate any agreements or arrangements with any Third Party for
the distribution, sale or otherwise Commercialization of Licensed Products. If
this Agreement is terminated by KVK pursuant to Sections 13.4 or 13.5, [*]. If
this Agreement is terminated by KVK pursuant to Sections 13.2(a) or if this
Agreement is terminated by KemPharm pursuant to Sections 13.3(a), 13.3(b), 13.4,
or 13.5, [*]. If this Agreement is terminated by KVK pursuant to Sections
13.2(b) or by either Party pursuant to Section 13.6, [*]. Without limiting KVK’s
obligations pursuant to Section 2.1(c)(vi), to the extent that any such contract
between KVK or its Affiliate or sublicensee and a Third Party is not assignable
to KemPharm, KVK shall reasonably cooperate with KemPharm, at KemPharm’s request
[*], to arrange to continue to provide such services for a reasonable time after
termination and to facilitate KemPharm’s entry into a replacement agreement with
such Third Party for such services. Additionally, KVK shall provide KemPharm
with copies of any promotional and marketing materials generated by or on behalf
of KVK with respect to Licensed Products prior to the effective date of
expiration or termination. Upon KemPharm’s request, KVK shall continue to
Commercialize the Licensed Products in the Collaboration Territory for up to [*]
after the effective date of expiration or termination of this Agreement, subject
to [*].

 

(d)     Inventory. In the event that this Agreement is terminated in its
entirety, KemPharm shall have the right, but not the obligation to purchase any
and all of the inventory of Licensed Products, including any samples and/or
ingredients, held by KVK or its Affiliates or sublicensees as of the date of
termination, at a price equal to (i) in the event that KVK is not the
manufacturer of the Licensed Products, [*], or (ii) in the event that KVK is the
manufacturer of the Licensed Products, [*]. Notwithstanding the above, if this
Agreement is terminated by KVK pursuant to Sections 13.4 or 13.5, KVK shall have
the right, at its sole discretion, to continue to be permitted to sell such
inventory for up to at least [*] months after the effective date of termination
of this Agreement.

 

13.8     Survival. Termination or expiration of this Agreement shall not affect
rights or obligations of the Parties under this Agreement that have accrued
prior to the date of termination or expiration. Notwithstanding anything to the
contrary, the following provisions shall survive any expiration or termination
of this Agreement: Articles 1 and 9 through 13, and Sections 2.1, 2.3, 2.4, 5.1,
5.3, 5.9, 5.10, 6.6, 6.7, 8.4 through 8.9, and 14.2.

 

13.9     Termination Not Sole Remedy. Termination is not the sole remedy under
this Agreement and, whether or not termination is affected and notwithstanding
anything contained in this Agreement to the contrary, all other remedies shall
remain available except as agreed to otherwise herein.

 

 

--------------------------------------------------------------------------------

 

 

Article 14     
Dispute Resolution

 

14.1     Disputes; Internal Resolution. The Parties recognize that disputes as
to certain matters may from time to time arise that relate to either Party’s
rights and/or obligations hereunder. It is the objective of the Parties to
establish procedures to facilitate the resolution of disputes arising under this
Agreement in an expedient manner by mutual cooperation. To accomplish this
objective, the Parties agree that, if a dispute arises under this Agreement with
respect to which a Party does not have final decision-making authority pursuant
to Section 3.3, and the Parties are unable to resolve such dispute within [*]
days after such dispute is first identified by either Party in writing to the
other, the Parties shall refer such dispute to the respective Chief Executive
Officer of KemPharm, or one of its Affiliates, and KVK (the “Executive
Officers”) for attempted resolution by good faith negotiations within [*] days
after such notice is received, which shall include at least one (1) in person
meeting of the Executive Officers within [*] days after such notice is received.
If the dispute is not resolved within such [*] days, either Party may resolve
such dispute in accordance with Section 14.2.

 

14.2     Governing Law. Resolution of all disputes and any remedies relating
thereto, shall be governed by and construed under the laws of the State of
Delaware, U.S., without giving effect to any choice of law principles that would
require the application of the laws of a different state. Each of the Parties
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware for any matter arising out
of or relating to this Agreement and the transactions contemplated hereby, and
agrees not to commence any litigation relating thereto except in such courts.
Each of the Parties hereby irrevocably and unconditionally waives any objection
to the laying of venue of any matter arising out of this Agreement or the
transactions contemplated hereby in the courts of the State of Delaware and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such matter brought in any such court has been
brought in an inconvenient forum.

 

Article 15     
Miscellaneous

 

15.1     Entire Agreement; Amendment. This Agreement, including the Exhibits
hereto, sets forth the complete, final and exclusive agreement and all the
covenants, promises, agreements, warranties, representations, conditions and
understandings between the Parties hereto with respect to the subject matter
hereof and supersedes, as of the Effective Date, all prior and contemporaneous
agreements and understandings between the Parties with respect to the subject
matter hereof, including the Confidentiality Agreement. The foregoing shall not
be interpreted as a waiver of any remedies available to either Party as a result
of any breach, prior to the Effective Date, by the other Party of its
obligations under the Confidentiality Agreement. There are no covenants,
promises, agreements, warranties, representations, conditions or understandings,
either oral or written, between the Parties other than as are set forth in this
Agreement. No subsequent alteration, amendment, change or addition to this
Agreement shall be binding upon the Parties unless reduced to writing and signed
by an authorized officer of each Party.

 

15.2     Force Majeure. Both Parties shall be excused from the performance of
their obligations under this Agreement to the extent that such performance is
prevented by force majeure and the nonperforming Party promptly provides notice
of the prevention to the other Party. Such excuse shall be continued so long as
the condition constituting force majeure continues and the nonperforming Party
takes reasonable efforts to remove the condition. For purposes of this
Agreement, force majeure shall include conditions beyond the reasonable control
of the applicable Party, which may include an act of God, war, civil commotion,
terrorist act, labor strike or lock-out, epidemic, failure or default of public
utilities or common carriers, destruction of production facilities or materials
by fire, earthquake, storm or like catastrophe, and failure of plant or
machinery. Notwithstanding the foregoing, a Party shall not be excused from
making payments owed hereunder because of a force majeure affecting such Party.
If a force majeure persists for more than ninety (90) days, then the Parties
will discuss in good faith the modification of the Parties’ obligations under
this Agreement in order to mitigate the delays caused by such force majeure.

 

15.3     Notices. Any notice required or permitted to be given under this
Agreement shall be in writing, shall specifically refer to this Agreement, and
shall be addressed to the appropriate Party at the address specified below or
such other address as may be specified by such Party in writing in accordance
with this Section 15.3, and shall be deemed to have been given for all purposes
(a) when received, if hand-delivered or sent by a reputable courier service, or
(b) [*] Business Days after mailing, if mailed by first class certified or
registered airmail, postage prepaid, return receipt requested.

 

 

If to KemPharm:

KemPharm Inc.

2500 Crosspark Road, Suite E126

Coralville, IA 52241
Attn: R. LaDuane Clifton, CFO, Secretary and Treasurer

 

with copies to, which shall not constitute notice:

 

Cooley LLP
One Freedom Square
Reston, VA 20190-5656

Attn: Brent Siler, Esq.

 

 

If to KVK:

KVK Tech, Inc.

110 Terry Drive
Newtown, PA 18940
Attn: Anthony P. Tabasso, CEO

 

with copies to, which shall not constitute notice:

 

Klehr Harrison Harvey Branzburg LLP

1835 Market Street

Philadelphia, PA 19103

Attn: Francis M. Correll, Jr., Esq.

 

 

--------------------------------------------------------------------------------

 

 

15.4     No Strict Construction; Headings. This Agreement has been prepared
jointly by the Parties and shall not be strictly construed against either Party.
Ambiguities, if any, in this Agreement shall not be construed against any Party,
irrespective of which Party may be deemed to have authored the ambiguous
provision. The headings of each Article and Section in this Agreement have been
inserted for convenience of reference only and are not intended to limit or
expand on the meaning of the language contained in the particular Article or
Section. Except where the context otherwise requires, the use of any gender
shall be applicable to all genders, and the word “or” is used in the inclusive
sense (and/or). The term “including” as used herein means including, without
limiting the generality of any description preceding such term.

 

15.5     Assignment; Change of Control.

 

(a)     Neither Party may assign or transfer this Agreement or any rights or
obligations hereunder without the prior written consent of the other Party,
except that either Party may make such an assignment without the other Party’s
express written consent to its Affiliates.

 

(b)     Notwithstanding Section 15.5(a), either Party may without such consent
but with prior written notice to the other Party, assign this Agreement and its
rights and obligations hereunder in connection with a Change of Control,
provided further that if the said assignee is engaged in a business that
competes with the Licensed Product and/or the notified Party’s business, the
notified Party shall have the right to terminate this Agreement without any
obligation to the other Party, by providing written notice thereof within [*]
after the receipt of such notice from the assigning Party. Any permitted
assignee shall assume all obligations of its assignor under this Agreement. Any
assignment or attempted assignment by either Party in violation of the terms of
this Section 15.5 shall be null, void and of no legal effect.

 

15.6     Performance by Affiliates. Each Party may discharge any obligations and
exercise any right hereunder through any of its Affiliates. Each Party hereby
guarantees the performance by its Affiliates of such Party’s obligations under
this Agreement and shall cause its Affiliates to comply with the provisions of
this Agreement in connection with such performance. Any breach by a Party’s
Affiliate of any of such Party’s obligations under this Agreement shall be
deemed a breach by such Party, and the other Party may proceed directly against
such Party without any obligation to first proceed against such Party’s
Affiliate.

 

15.7     Further Actions. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be necessary or
appropriate in order to carry out the purposes and intent of this Agreement.

 

15.8     Severability. If any one or more of the provisions of this Agreement is
held to be invalid or unenforceable by any court of competent jurisdiction from
which no appeal can be or is taken, the provision shall be considered severed
from this Agreement and shall not serve to invalidate any remaining provisions
hereof. The Parties shall make a good faith effort to replace any invalid or
unenforceable provision with a valid and enforceable one such that the
objectives contemplated by the Parties when entering this Agreement may be
realized.

 

15.9     No Waiver. Any delay in enforcing a Party’s rights under this Agreement
or any waiver as to a particular default or other matter shall not constitute a
waiver of such Party’s rights to the future enforcement of its rights under this
Agreement, except with respect to an express written and signed waiver relating
to a particular matter for a particular period of time.

 

15.10     Independent Contractors. Each Party shall act solely as an independent
contractor, and nothing in this Agreement shall be construed to give either
Party the power or authority to act for, bind, or commit the other Party in any
way. Nothing herein shall be construed to create the relationship of partners,
principal and agent, or joint-venture partners between the Parties.

 

15.11     English Language. This Agreement was prepared in the English language,
which language shall govern the interpretation of, and any dispute regarding,
the terms of this Agreement.

 

15.12     Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

{Signature Page Follows}

 

 

--------------------------------------------------------------------------------

 

 

 

In Witness Whereof, the Parties have executed this License, Development and
Commercialization Agreement in duplicate originals by their duly authorized
officers as of the Effective Date.

 

 

 

KemPharm, Inc.

 

By: /s/ R. LaDuane Clifton

Name: R. LaDuane Clifton

Title: CFO, Secretary and Treasurer

KVK Tech, Inc.

 

By: /s/ Anthony P. Tabasso

Name: Anthony P. Tabasso

Title: CEO and General Counsel

 

 

--------------------------------------------------------------------------------

 

 

 

Article 1     Definitions     1

 

Article 2     License     10

 

2.1     License to KVK     10

 

2.2     KemPharm Partner     11

 

2.3     Negative Covenant     12

 

2.4     No Implied Licenses     12

 

2.5     Exclusivity     12

 

Article 3     Governance     12

 

3.1     Alliance Managers     12

 

3.2     Joint Committees     13

 

3.3     Decision Making     14

 

3.4     Limitation of Committee Authority     15

 

3.5     Discontinuation of Committees     15

 

Article 4     DEVELOPMENT     15

 

4.1     Overview     15

 

4.2     Transfer of Licensed Know-How     15

 

Article 5     Regulatory Matters     16

 

5.1     Regulatory Responsibilities     16

 

5.2     Pricing     16

 

5.3     Regulatory Information Sharing     17

 

5.4     Meetings with Regulatory Authorities     17

 

5.5     Regulatory Costs     17

 

5.6     Right of Reference to Regulatory Materials     17

 

5.7     No Harmful Actions     18

 

5.8     Notification of Threatened Action     18

 

5.9     Adverse Event Reporting and Safety Data Exchange     18

 

5.10     Remedial Actions     18

 

Article 6     Commercialization     19

 

6.1     Overview     19

 

6.2     Commercialization Plan     19

 

6.3     Pricing     20

 

6.4     Commercial Diligence     20

 

6.5     Commercialization Reports     20

 

6.6     Cross-Territorial Restrictions     21

 

6.7     Field Restrictions     21

 

6.8     Labeling     21

 

6.9     Proof of Concept Termination     22

 

 

--------------------------------------------------------------------------------

 

 

Article 7     MANUFACTURE AND SUPPLY     22

 

7.1     Manufacture and Supply     22

 

7.2     Supply Price     22

 

7.3     [Intentionally Deleted]     22

 

7.4     Quality Agreement     23

 

7.5     Distribution     23

 

7.6     Brand Security and Anti-Counterfeiting     23

 

Article 8     Compensation     23

 

8.1     POMV Fee     23

 

8.2     Commercialization/Regulatory Expenses     23

 

8.3     Manufacturing Expenses     23

 

8.4     Net Profit Share     23

 

8.5     Sales Milestone Payments     25

 

8.6     Payment Method; Foreign Exchange     25

 

8.7     Interest on Late Payments     25

 

8.8     Records; Audits     25

 

8.9     Taxes     26

 

Article 9     Intellectual Property Matters     27

 

9.1     Ownership of Data and Inventions     27

 

9.2     Patent Prosecution     27

 

9.3     Patent Enforcement     28

 

9.4     Third Party Infringement Claims     29

 

9.5     Patent Term Extensions     30

 

9.6     Trademarks     30

 

Article 10     Representations And Warranties; covenants     31

 

10.1     Mutual Representations and Warranties     32

 

10.2     Additional Representations and Warranties of KemPharm     32

 

10.3     Additional Representations and Warranties of KVK     32

 

10.4     Compliance with Laws     33

 

10.5     Additional KVK Covenants     33

 

10.6     No Other Representations or Warranties     33

 

 

--------------------------------------------------------------------------------

 

 

Article 11     Indemnification     33

 

11.1     Indemnification by KemPharm     34

 

11.2     Indemnification by KVK     34

 

11.3     Indemnification Procedures     34

 

11.4     Limitation of Liability     35

 

11.5     Insurance     35

 

Article 12     Confidentiality     35

 

12.1     Confidentiality     35

 

12.2     Authorized Disclosure     36

 

12.3     Publicity; Terms of Agreement     37

 

12.4     Technical Publication     37

 

12.5     Equitable Relief     37

 

Article 13     Term And Termination     38

 

13.1     Term     38

 

13.2     Termination by KVK     38

 

13.3     Termination by KemPharm     38

 

13.4     Termination for Breach     38

 

13.5     Termination Due to Bankruptcy     39

 

13.6     Proof of Concept Termination     39

 

13.7     Effect of Termination or Expiration     39

 

13.8     Survival     40

 

13.9     Termination Not Sole Remedy     40

 

Article 14     Dispute Resolution     40

 

14.1     Disputes; Internal Resolution     41

 

14.2     Governing Law     41

 

Article 15     Miscellaneous     41

 

15.1     Entire Agreement; Amendment     41

 

15.2     Force Majeure     42

 

15.3     Notices     42

 

15.4     No Strict Construction; Headings     43

 

15.5     Assignment; Change of Control     43

 

15.6     Performance by Affiliates     43

 

15.7     Further Actions     43

 

15.8     Severability     43

 

15.9     No Waiver     44

 

15.10     Independent Contractors     44

 

15.11     English Language     44

 

15.12     Counterparts     44

 

 

 

--------------------------------------------------------------------------------

 

 

 

List of Exhibits

 

Exhibit A:     Licensed Patents

Exhibit A-1:     Limited Licensed Priority Patents

Exhibit B:     Initial Commercialization Plan

Exhibit C:     Licensed Product Label

Exhibit D:     [*]

Exhibit E:     Net Profit Share Example

 

 

--------------------------------------------------------------------------------

 

 

 

Exhibit A

Licensed Patents and Patent Applications

 

 

Title: [*]

 

Inventors: [*]

 

 

Application #

Filing Date

Patent #

Grant Date

1

[*]

[*]

[*]

[*]

2

[*]

[*]

[*]

[*]

3

[*]

[*]

   

 

 

--------------------------------------------------------------------------------

 

 

 

 

Exhibit A-1

Limited Licensed Priority Patents and Patent Applications

 

 

Title: [*]

 

Inventors: [*]

 

 

Application #

Filing Date

Patent #

Grant Date

1

[*]

[*]

   

2

[*]

[*]

[*]

[*]

3

[*]

[*]

[*]

[*]

4

[*]

[*]

[*]

[*]

5

[*]

[*]

[*]

[*]

6

[*]

[*]

   

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

Exhibit B

Initial Commercialization Plan

 

 

--------------------------------------------------------------------------------

 

 

 

[*]

 

--------------------------------------------------------------------------------

 

 

Exhibit C
Licensed Product Label

 

 

 

 

 

HIGHLIGHTS OF PRESCRIBING INFORMATION

These highlights do not include all the information needed to use APADAZ™ safely
and effectively. See full prescribing information for APADAZ.

 

APADAZ (benzhydrocodone and acetaminophen) tablets, for oral use, CII

Initial U.S. Approval: 1982

 

WARNING: ADDICTION, ABUSE, AND MISUSE; LIFE- THREATENING RESPIRATORY DEPRESSION;
ACCIDENTAL INGESTION; NEONATAL OPIOID WITHDRAWAL SYNDROME; HEPATOTOXICITY,
CYTOCHROME P450 3A4 INTERACTION, and RISKS FROM CONCOMITANT USE WITH
BENZODIAZEPINES OR OTHER CNS DEPRESSANTS

See full prescribing information for complete boxed warning.

●APADAZ exposes users to risks of addiction, abuse, and misuse, which can lead
to overdose and death. Assess patient’s risk before prescribing and monitor
regularly for these behaviors and conditions. (5.1)

●Serious, life-threatening, or fatal respiratory depression may occur. Monitor
closely, especially upon initiation or following a dose increase. (5.2)

●Accidental ingestion of APADAZ, especially by children, can result in a fatal
overdose of hydrocodone. (5.2)

●Prolonged use of APADAZ during pregnancy can result in neonatal opioid
withdrawal syndrome, which may be life- threatening if not recognized and
treated. If prolonged opioid use is required in a pregnant woman, advise the
patient of the risk of neonatal opioid withdrawal syndrome and ensure that
appropriate treatment will be available. (5.3)

●Concomitant use with CYP3A4 inhibitors (or discontinuation of CYP3A4 inducers)
can result in a fatal overdose of hydrocodone from APADAZ. (5.4, 7, 12.3)

●APADAZ contains acetaminophen. Acetaminophen has been associated with cases of
acute liver failure, at times resulting in liver transplant and death. Most of
the cases of liver injury are associated with the use of acetaminophen at doses
that exceed 4000 milligrams per day, and often involve more than one
acetaminophen-containing product. (5.5)

●Concomitant use of opioids with benzodiazepines or other central nervous system
(CNS) depressants, including alcohol, may result in profound sedation,
respiratory depression, coma, and death. Reserve concomitant prescribing for use
in patients for whom alternative treatment options are inadequate; limit dosages
and durations to the minimum required; and follow patients for signs and
symptoms of respiratory depression and sedation. (5.6, 7)

 

INDICATIONS AND USAGE     

APADAZ is a combination of benzhydrocodone, a prodrug of the opioid agonist
hydrocodone, and acetaminophen, and is indicated for the short-term (no more
than 14 days) management of acute pain severe enough to require an opioid
analgesic and for which alternative treatments are inadequate. (1)

 

Limitations of Use (1)

Because of the risks of addiction, abuse, and misuse with opioids,
even at recommended doses, reserve APADAZ for use in patients for whom
alternative treatment options [e.g., non-opioid analgesics]:

 

●

Have not been tolerated, or are not expected to be tolerated,

 

●

Have not provided adequate analgesia, or are not expected to provide adequate
analgesia.

 

DOSAGE AND ADMINISTRATION     

 

●

Use the lowest effective dose for the shortest duration consistent with
individual patient treatment goals. (2.1)

 

●

Individualize dosing based on the severity of pain, patient response, prior
analgesic experience, and risk factors for addiction, abuse, and misuse. (2.1)

 

●

Initiate treatment with APADAZ at 1 or 2 tablets every 4 to 6 hours as needed
for pain. Dosage should not exceed 12 tablets in a 24- hour period. (2.2)

 

●

6.12 mg benzhydrocodone is equivalent to 4.54 mg hydrocodone or 7.5 mg
hydrocodone bitartrate. If switching from immediate-release hydrocodone
bitartrate/acetaminophen, substitute 6.12 mg/325 mg APADAZ for 7.5 mg/325 mg
hydrocodone bitartrate/acetaminophen. Dosage of APADAZ should be adjusted
according to the severity of the pain and the response of the patient.

 

●

Do not stop APADAZ abruptly in a physically-dependent patient. (2.5)

 

DOSAGE FORMS AND STRENGTHS     

Immediate-release tablets: 6.12 mg benzhydrocodone (equivalent to 6.67 mg
benzhydrocodone hydrochloride) and 325 mg acetaminophen
(3)

 

CONTRAINDICATIONS     

 

●

Significant respiratory depression (4)

 

●

Acute or severe bronchial asthma in an unmonitored setting or in absence of
resuscitative equipment (4)

 

●

Known or suspected gastrointestinal obstruction, including paralytic ileus (4)

 

●

Hypersensitivity to hydrocodone or acetaminophen (4)

 

WARNINGS AND PRECAUTIONS     

 

●

Life-Threatening Respiratory Depression in Patients with Chronic Pulmonary
Disease or in Elderly, Cachectic, or Debilitated Patients: Monitor closely,
particularly during initiation and titration. (5.7)

 

●

Adrenal Insufficiency: If diagnosed, treat with physiologic replacement of
corticosteroids, and wean patient off of the opioid. (5.8)

 

●

Severe Hypotension: Monitor during dosage initiation and titration. Avoid use of
APADAZ in patients with circulatory shock. (5.9)

 

●

Serious Skin Reactions: Discontinue APADAZ immediately at the first appearance
of skin rash and if symptoms associated with allergy or hypersensitivity occur.
Do not use in patients with acetaminophen allergy. (5.10)

 

●

Risks of Use in Patients with Increased Intracranial Pressure, Brain Tumors,
Head Injury, or Impaired Consciousness: Monitor for sedation and respiratory
depression. Avoid use of APADAZ in patients with impaired consciousness or coma.
(5.11)

 

ADVERSE REACTIONS     

Most common adverse reactions (>5%) are nausea, somnolence, vomiting,
constipation, pruritus, dizziness, and headache. (6)

 

To report SUSPECTED ADVERSE REACTIONS, contact KemPharm, Inc. at 1-321-939-3416
or FDA at 1-800-FDA-1088 or www.fda.gov/medwatch

.

 

 

----------------------------- DRUG INTERACTIONS ----------------------------

 

●

Serotonergic Drugs: Concomitant use may result in serotonin syndrome.
Discontinue APADAZ if serotonin syndrome is suspected. (7)

 

●

Mixed Agonist/Antagonist and Partial Agonist Opioid Analgesics: Avoid use with
APADAZ because they may reduce analgesic effect of APADAZ or precipitate
withdrawal symptoms. (7)

 

●

Monoamine Oxidase Inhibitors (MAOIs): Can potentiate the effects of hydrocodone.
Avoid concomitant use in patients receiving MAOIs or within 14 days of stopping
treatment with an MAOI. (7)

 

USE IN SPECIFIC POPULATIONS     

Pregnancy: May cause fetal harm (8.1).

 

See 17 for PATIENT COUNSELING INFORMATION.

 

Revised: 02/2018

 

 

 

FULL PRESCRIBING INFORMATION: CONTENTS*

 

WARNING: ADDICTION, ABUSE, AND MISUSE; LIFE-THREATENING RESPIRATORY DEPRESSION;
ACCIDENTAL INGESTION; NEONATAL OPIOID WITHDRAWAL SYNDROME; AND HEPATOTOXICITY

 

1

INDICATIONS AND USAGE

2

DOSAGE AND ADMINISTRATION

 

2.1

Important Dosage and Administration Instructions

 

2.2

Initial Dosage

 

2.3

Conversion from Other Opioids to APADAZ

 

2.4

Titration and Maintenance of Therapy

 

2.5

Discontinuation of APADAZ

3

DOSAGE FORMS AND STRENGTHS

4

CONTRAINDICATIONS

5

WARNINGS AND PRECAUTIONS

 

5.1

Addiction, Abuse, and Misuse

 

5.2

Life-Threatening Respiratory Depression

 

5.3

Neonatal Opioid Withdrawal Syndrome

 

5.4

Risks of Concomitant Use or Discontinuation of Cytochrome P450 CYP3A4 Inhibitors
and Inducers

 

5.5

Acetaminophen Hepatotoxicity

 

5.6

Risks from Concomitant Use with Benzodiazepines or Other CNS Depressants

 

5.7

Life-Threatening Respiratory Depression in Patients with Chronic Pulmonary
Disease or in Elderly, Cachectic, or Debilitated Patients

 

5.8

Adrenal Insufficiency

 

5.9

Severe Hypotension

 

5.10

Serious Skin Reactions

 

5.11

Risks of Use in Patients with Increased Intracranial Pressure, Brain Tumors,
Head Injury, or Impaired Consciousness

 

5.12

Hypersensitivity/Anaphylaxis

 

5.13

Risk of Use in Patients with Gastrointestinal Conditions

 

5.14

Increased Risk of Seizures in Patients with Seizure Disorders

 

5.15

Withdrawal

 

5.16

Risks of Driving and Operating Machinery

6

ADVERSE REACTIONS

 

6.1

Clinical Trials Experience

 

6.2

Postmarketing Experience

7

DRUG INTERACTIONS

8

USE IN SPECIFIC POPULATIONS

 

8.1

Pregnancy

 

8.2

Lactation

 

8.3

Females and Males of Reproductive Potential

 

8.4

Pediatric Use

 

8.5

Geriatric Use

 

8.6

Hepatic Impairment

 

8.7

Renal Impairment

9

DRUG ABUSE AND DEPENDENCE

 

9.1

Controlled Substance

 

9.2

Abuse

 

9.3

Dependence

10

OVERDOSAGE

11

DESCRIPTION

12

CLINICAL PHARMACOLOGY

 

12.1

Mechanism of Action

 

12.2

Pharmacodynamics

 

12.3

Pharmacokinetics

13

NONCLINICAL TOXICOLOGY

 

13.1

Carcinogenesis, Mutagenesis, Impairment of Fertility

16

HOW SUPPLIED/STORAGE AND HANDLING

17

PATIENT COUNSELING INFORMATION

 

* Sections or subsections omitted from the full prescribing information are not
listed

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

FULL PRESCRIBING INFORMATION

 

WARNING: ADDICTION, ABUSE, AND MISUSE; LIFE-THREATENING RESPIRATORY
DEPRESSION; ACCIDENTAL INGESTION; NEONATAL OPIOID WITHDRAWAL
SYNDROME; CYTOCHROME P450 3A4 INTERACTION; HEPATOTOXICITY; and RISKS
FROM CONCOMITANT USE WITH BENZODIAZEPINES OR OTHER CNS
DEPRESSANTS

Addiction, Abuse, and Misuse

APADAZ exposes patients and other users to the risks of opioid addiction, abuse,
and misuse, which can lead to overdose and death. Assess each patient’s risk
prior to prescribing APADAZ, and monitor all patients regularly for the
development of these behaviors and conditions [see Warnings and Precautions
(5.1)].

Life-Threatening Respiratory Depression

Serious, life-threatening, or fatal respiratory depression may occur with use of
APADAZ. Monitor for respiratory depression, especially during initiation of
APADAZ or following a dose increase [see Warnings and Precautions (5.2)].

Accidental Ingestion

Accidental ingestion of even one dose of APADAZ, especially by children, can
result in a fatal overdose of hydrocodone [see Warnings and Precautions (5.2)].

Neonatal Opioid Withdrawal Syndrome

Prolonged use of APADAZ during pregnancy can result in neonatal opioid
withdrawal syndrome, which may be life-threatening if not recognized and
treated, and requires management according to protocols developed by neonatology
experts. If prolonged opioid use is required in a pregnant woman, advise the
patient of the risk of neonatal opioid withdrawal syndrome and ensure that
appropriate treatment will be available [see Warnings and Precautions (5.3)].

Cytochrome P450 3A4 Interaction

The concomitant use of APADAZ with all cytochrome P450 3A4 inhibitors may result
in an increase in hydrocodone plasma concentrations, which could increase or
prolong adverse reactions and may cause potentially fatal respiratory
depression. In addition, discontinuation of a concomitantly used cytochrome P450
3A4 inducer may result in an increase in hydrocodone plasma concentration.
Monitor patients receiving APADAZ and any CYP3A4 inhibitor or inducer [see
Warnings and Precautions (5.4), Drug Interactions (7), Clinical Pharmacology
(12.3)].

Hepatotoxicity

APADAZ contains acetaminophen. Acetaminophen has been associated with cases of
acute liver failure, at times resulting in liver transplant and death. Most of
the cases of liver injury are associated with the
use of acetaminophen at doses that exceed 4000 milligrams per day, and often
involve more than one acetaminophen-containing product [see Warnings and
Precautions (5.5)].

Risks From Concomitant Use With Benzodiazepines Or Other CNS Depressants

Concomitant use of opioids with benzodiazepines or other central nervous system
(CNS) depressants, including alcohol, may result in profound sedation,
respiratory 

depression, coma, and death [see Warnings and Precautions (5.6), Drug
Interactions (7)].

•Reserve concomitant prescribing of APADAZ and benzodiazepines or other CNS
depressants for use in patients for whom alternative treatment options are
inadequate.

•Limit dosages and durations to the minimum required.

•Follow patients for signs and symptoms of respiratory depression and sedation.

 

 

--------------------------------------------------------------------------------

 

 

1

INDICATIONS AND USAGE

 

APADAZ is indicated for the short-term (no more than 14 days) management of
acute pain severe enough to require an opioid analgesic and for which
alternative treatments are inadequate.

 

Limitations of Use

Because of the risks of addiction, abuse, and misuse with opioids, even at
recommended doses [see Warnings and Precautions (5.1)], reserve APADAZ for use
in patients for whom alternative treatment options [e.g., non-opioid
analgesics]:

 

 

•

Have not been tolerated, or are not expected to be tolerated,

 

 

•

Have not provided adequate analgesia, or are not expected to provide adequate
analgesia.

 

2

DOSAGE AND ADMINISTRATION

 

2.1

Important Dosage and Administration Instructions

 

 

•

Use the lowest effective dosage for the shortest duration consistent with
individual patient treatment goals [see Warnings and Precautions (5)]. The total
dosage of APADAZ and any concomitant acetaminophen-containing products should
not exceed 4000 mg of acetaminophen in a 24-hour period.

 

 

•

Initiate the dosing regimen for each patient individually, taking into account
the patient’s severity of pain, patient response, prior analgesic treatment
experience, and risk factors for addiction, abuse, and misuse [see Warnings and
Precautions (5.1)].

 

 

•

Monitor patients closely for respiratory depression, especially within the first
24-72 hours of initiating therapy and following dosage increases with APADAZ and
adjust the dosage accordingly [see Warnings and Precautions (5.2)].

 

2.2

Initial Dosage

 

Use of APADAZ as the First Opioid Analgesic

 

Initiate treatment with APADAZ at 1 to 2 tablets every 4 to 6 hours as needed
for pain. Dosage should not exceed 12 tablets in a 24-hour period.

 

2.3

Conversion from Other Opioids to APADAZ

 

There is inter-patient variability in the potency of opioid drugs and opioid
formulations. Therefore, a conservative approach is advised when determining the
total daily dosage of APADAZ. It is safer to underestimate a patient’s 24-hour
APADAZ dosage than to overestimate the 24-hour APADAZ dosage and manage an
adverse reaction due to overdose.

 

Conversion from Hydrocodone Bitartrate/Acetaminophen to APADAZ

 

Hydrocodone content in 6.12 mg benzhydrocodone is 4.54 mg hydrocodone or is
equivalent to 7.5 mg hydrocodone bitartrate. If switching from immediate-release
hydrocodone bitartrate/acetaminophen, substitute 6.12 mg/325 mg APADAZ for 7.5
mg/325 mg hydrocodone bitartrate/acetaminophen.

 

2.4

Titration and Maintenance of Therapy

 

Individually titrate APADAZ to a dose that provides adequate analgesia and
minimizes adverse reactions. Continually reevaluate patients receiving APADAZ to
assess the maintenance of pain control and the relative incidence of adverse
reactions, as well as monitoring for the development of addiction, abuse, or
misuse [see Warnings and Precautions (5.1)]. Frequent communication is important
among the prescriber, other members of the healthcare team, the patient, and the
caregiver/family during periods of changing analgesic requirements, including
initial titration.

 

If the level of pain increases after dosage stabilization, attempt to identify
the source of increased pain before increasing the APADAZ dosage. If
unacceptable opioid-related adverse reactions are observed, consider reducing
the dosage. Adjust the dosage to obtain an appropriate balance between
management of pain and opioid-related adverse reactions.

 

Total dosage of APADAZ and any concomitant acetaminophen-containing products
should not exceed 4000 mg of acetaminophen in a 24-hour period.

 

2.5

Discontinuation of APADAZ

 

When a patient who has been taking APADAZ regularly and may be physically
dependent no longer requires therapy with APADAZ, taper the dose gradually, by
25% to 50% every 2 to 4 days, while monitoring carefully for signs and symptoms
of withdrawal. If the patient develops these signs or symptoms, raise the dose
to the previous level and taper more slowly, either by increasing the interval
between decreases, decreasing the amount of change in dose, or both. Do not
abruptly discontinue APADAZ in a physically dependent patient [see Warnings and
Precautions (5.15), Drug Abuse and Dependence (9.3)].

 

3

DOSAGE FORMS AND STRENGTHS

 

Immediate-release tablet. Each capsule-shaped white tablet debossed with “KP201”
on one side contains 6.12 mg benzhydrocodone (equivalent to 6.67 mg
benzhydrocodone hydrochloride) and 325 mg acetaminophen.

 

4

CONTRAINDICATIONS

 

APADAZ is contraindicated in patients with:

 

 

•

Significant respiratory depression [see Warnings and Precautions (5.2)]

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

•

Acute or severe bronchial asthma in an unmonitored setting or in the absence of
resuscitative equipment [see Warnings and Precautions (5.7)]

 

 

•

Known or suspected gastrointestinal obstruction, including paralytic ileus [see
Warnings and Precautions (5.13)]

 

 

•

Hypersensitivity to hydrocodone or acetaminophen, or any other component of this
product (e.g., anaphylaxis) [see Warnings and Precautions (5.12), Adverse
Reactions (6)]

 

5

WARNINGS AND PRECAUTIONS

 

5.1

Addiction, Abuse, and Misuse

 

APADAZ contains benzhydrocodone, a Schedule II controlled substance. As an
opioid, APADAZ exposes users to the risks of addiction, abuse, and misuse [see
Drug Abuse and Dependence (9)].

 

Although the risk of addiction in any individual is unknown, it can occur in
patients appropriately prescribed APADAZ. Addiction can occur at recommended
dosages and if the drug is misused or abused.

 

Assess each patient’s risk for opioid addiction, abuse, or misuse prior to
prescribing APADAZ, and monitor all patients receiving APADAZ for the
development of these behaviors and conditions. Risks are increased in patients
with a personal or family history of substance abuse (including drug or alcohol
abuse or addiction) or mental illness (e.g., major depression). The potential
for these risks should not, however, prevent the proper management of pain in
any given patient. Patients at increased risk may be prescribed opioids such as
APADAZ, but use in such patients necessitates intensive counseling about the
risks and proper use of APADAZ along with intensive monitoring for signs of
addiction, abuse, and misuse.

 

Opioids are sought by drug abusers and people with addiction disorders and are
subject to criminal diversion. Consider these risks when prescribing or
dispensing APADAZ. Strategies to reduce these risks include prescribing the drug
in the smallest appropriate quantity and advising the patient on the proper
disposal of unused drug [see Patient Counseling Information (17)]. Contact local
state professional licensing board or state controlled substances authority for
information on how to prevent and detect abuse or diversion of this product.

 

5.2

Life-Threatening Respiratory Depression

 

Serious, life-threatening, or fatal respiratory depression has been reported
with the use of opioids, even when used as recommended. Respiratory depression,
if not immediately recognized and treated, may lead to respiratory arrest and
death. Management of respiratory depression may include close observation,
supportive measures, and use of opioid antagonists, depending on the patient’s
clinical status [see Overdosage (10)]. Carbon dioxide (CO2) retention from
opioid- induced respiratory depression can exacerbate the sedating effects of
opioids.

 

While serious, life-threatening, or fatal respiratory depression can occur at
any time during the use of APADAZ, the risk is greatest during the initiation of
therapy or following a dosage increase.

 

 

--------------------------------------------------------------------------------

 

 

 

 

Monitor patients closely for respiratory depression, especially within the first
24-72 hours of initiating therapy with and following dosage increases of APADAZ.

 

To reduce the risk of respiratory depression, proper dosing and titration of
APADAZ are essential [see Dosage and Administration (2)]. Overestimating the
APADAZ dosage when converting patients from another opioid product can result in
a fatal overdose with the first dose.

 

Accidental ingestion of even one dose of APADAZ, especially by children, can
result in respiratory depression and death due to an overdose of hydrocodone.

 

5.3

Neonatal Opioid Withdrawal Syndrome

 

Prolonged use of APADAZ during pregnancy can result in withdrawal in the
neonate. Neonatal opioid withdrawal syndrome, unlike opioid withdrawal syndrome
in adults, may be life-threatening if not recognized and treated, and requires
management according to protocols developed by neonatology experts. Observe
newborns for signs of neonatal opioid withdrawal syndrome and manage
accordingly. Advise pregnant women using opioids for a prolonged period of the
risk of neonatal opioid withdrawal syndrome and ensure that appropriate
treatment will be available [see Use in Specific Populations (8.1), Patient
Counseling Information(17)].

 

5.4

Risks of Concomitant Use or Discontinuation of Cytochrome P450 CYP3A4 Inhibitors
and Inducers

 

Concomitant use of APADAZ with a CYP3A4 inhibitor, such as macrolide antibiotics
(e.g., erythromycin), azole-antifungal agents (e.g., ketoconazole), and protease
inhibitors (e.g., ritonavir), may increase plasma concentrations of hydrocodone
and prolong opioid adverse reactions, which may cause potentially fatal
respiratory depression [see Warnings and Precautions (5.2)], particularly when
an inhibitor is added after a stable dose of APADAZ is achieved. Similarly,
discontinuation of a CYP3A4 inducer, such as rifampin, carbamazepine, and
phenytoin, in APADAZ-treated patients may increase hydrocodone plasma
concentrations and prolong opioid adverse reactions. When using APADAZ with
CYP3A4 inhibitors or discontinuing CYP3A4 inducers in APADAZ-treated patients,
monitor patients closely at frequent intervals and consider dosage reduction of
APADAZ until stable drug effects are achieved [see Drug Interactions (7)].

 

Concomitant use of APADAZ with CYP3A4 inducers or discontinuation of an CYP3A4
inhibitor could decrease hydrocodone plasma concentrations, decrease opioid
efficacy or, possibly, lead to a withdrawal syndrome in a patient who had
developed physical dependence to hydrocodone. When using APADAZ with CYP3A4
inducers or discontinuing CYP3A4 inhibitors, monitor patients closely at
frequent intervals and consider increasing the opioid dosage if needed to
maintain adequate analgesia or if symptoms of opioid withdrawal occur [see Drug
Interactions (7)].

 

5.5

Acetaminophen Hepatotoxicity

 

APADAZ contains acetaminophen. Acetaminophen has been associated with cases of
acute liver failure, at times resulting in liver transplant and death. Most of
the cases of liver injury are associated with the use of acetaminophen at doses
that exceed 4000 milligrams per day, and

 

 

--------------------------------------------------------------------------------

 

 

 

 

often involve more than one acetaminophen-containing product [see Overdosage
(10)]. The excessive intake of acetaminophen may be intentional to cause
self-harm or unintentional as patients attempt to obtain more pain relief or
unknowingly take other acetaminophen-containing products.

 

The risk of acute liver failure is higher in individuals with underlying liver
disease and in individuals who ingest alcohol while taking acetaminophen.

 

Instruct patients to look for acetaminophen or APAP on package labels and not to
use more than one product that contains acetaminophen. Instruct patients to seek
medical attention immediately upon ingestion of more than 4000 milligrams of
acetaminophen per day, even if they feel well.

 

5.6

Risks from Concomitant Use with Benzodiazepines or Other CNS Depressants

 

Profound sedation, respiratory depression, coma, and death may result from the
concomitant use of APADAZ with benzodiazepines or other CNS depressants (e.g.,
non-benzodiazepine sedatives/hypnotics, anxiolytics, tranquilizers, muscle
relaxants, general anesthetics, antipsychotics, other opioids, alcohol). Because
of these risks, reserve concomitant prescribing of these drugs for use in
patients for whom alternative treatment options are inadequate.

 

Observational studies have demonstrated that concomitant use of opioid
analgesics and benzodiazepines increases the risk of drug-related mortality
compared to use of opioid analgesics alone. Because of similar pharmacological
properties, it is reasonable to expect similar risk with the concomitant use of
other CNS depressant drugs with opioid analgesics [see Drug Interactions (7)].

 

If the decision is made to prescribe a benzodiazepine or other CNS depressant
concomitantly with an opioid analgesic, prescribe the lowest effective dosages
and minimum durations of concomitant use. In patients already receiving an
opioid analgesic, prescribe a lower initial dose of the benzodiazepine or other
CNS depressant than indicated in the absence of an opioid, and titrate based on
clinical response. If an opioid analgesic is initiated in a patient already
taking a benzodiazepine or other CNS depressant, prescribe a lower initial dose
of the opioid analgesic, and titrate based on clinical response. Follow patients
closely for signs and symptoms of respiratory depression and sedation.

 

Advise both patients and caregivers about the risks of respiratory depression
and sedation when APADAZ is used with benzodiazepines or other CNS depressants
(including alcohol and illicit drugs). Advise patients not to drive or operate
heavy machinery until the effects of concomitant use of the benzodiazepine or
other CNS depressant have been determined. Screen patients for risk of substance
use disorders, including opioid abuse and misuse, and warn them of the risk for
overdose and death associated with the use of additional CNS depressants
including alcohol and illicit drugs [see Drug Interactions (7), Patient
Counseling Information (17)].

 

 

--------------------------------------------------------------------------------

 

 

 

 

5.7

Life-Threatening Respiratory Depression in Patients with Chronic Pulmonary
Disease or in Elderly, Cachectic, or Debilitated Patients

 

The use of APADAZ in patients with acute or severe bronchial asthma in an
unmonitored setting or in the absence of resuscitative equipment is
contraindicated.

 

Patients with Chronic Pulmonary Disease: APADAZ-treated patients with
significant chronic obstructive pulmonary disease or cor pulmonale, and those
with a substantially decreased respiratory reserve, hypoxia, hypercapnia, or
pre-existing respiratory depression are at increased risk of decreased
respiratory drive including apnea, even at recommended dosages of APADAZ [see
Warnings and Precautions (5.2)].

 

Elderly, Cachetic, or Debilitated Patients: Life-threatening respiratory
depression is more likely to occur in elderly, cachectic, or debilitated
patients because they may have altered pharmacokinetics or altered clearance
compared to younger, healthier patients [see Warnings and Precautions (5.2)].

 

Monitor such patients closely, particularly when initiating and titrating APADAZ
and when APADAZ is given concomitantly with other drugs that depress respiration
[see Warnings and Precautions (5.2)]. Alternatively, consider the use of
non-opioid analgesics in these patients.

 

5.8

Adrenal Insufficiency

 

Cases of adrenal insufficiency have been reported with opioid use, more often
following greater than one month of use. Presentation of adrenal insufficiency
may include non-specific symptoms and signs including nausea, vomiting,
anorexia, fatigue, weakness, dizziness, and low blood pressure. If adrenal
insufficiency is suspected, confirm the diagnosis with diagnostic testing as
soon as possible. If adrenal insufficiency is diagnosed, treat with physiologic
replacement doses of corticosteroids. Wean the patient off of the opioid to
allow adrenal function to recover and continue corticosteroid treatment until
adrenal function recovers. Other opioids may be tried as some cases reported use
of a different opioid without recurrence of adrenal insufficiency. The
information available does not identify any particular opioids as being more
likely to be associated with adrenal insufficiency.

 

5.9

Severe Hypotension

 

APADAZ may cause severe hypotension including orthostatic hypotension and
syncope in ambulatory patients. There is increased risk in patients whose
ability to maintain blood pressure has already been compromised by a reduced
blood volume or concurrent administration of certain CNS depressant drugs (e.g.,
phenothiazines or general anesthetics) [see Drug Interactions (7)]. Monitor
these patients for signs of hypotension after initiating or titrating the dosage
of APADAZ. In patients with circulatory shock, APADAZ may cause vasodilation
that can further reduce cardiac output and blood pressure. Avoid the use of
APADAZ in patients with circulatory shock.

 

 

--------------------------------------------------------------------------------

 

 

 

 

5.10

Serious Skin Reactions

 

Rarely, acetaminophen may cause serious skin reactions such as acute generalized
exanthematous pustulosis (AGEP), Stevens-Johnson Syndrome (SJS), and toxic
epidermal necrolysis (TEN), which can be fatal. Inform patients about the signs
of serious skin reactions and discontinue use at the first appearance of skin
rash or any other sign of hypersensitivity.

 

5.11

Risks of Use in Patients with Increased Intracranial Pressure, Brain Tumors,
Head Injury, or Impaired Consciousness

 

In patients who may be susceptible to the intracranial effects of CO2 retention
(e.g., those with evidence of increased intracranial pressure or brain tumors),
APADAZ may reduce respiratory drive, and the resultant CO2 retention can further
increase intracranial pressure. Monitor such patients for signs of sedation and
respiratory depression, particularly when initiating therapy with APADAZ.

 

Opioids may also obscure the clinical course in a patient with a head injury.
Avoid the use of APADAZ in patients with impaired consciousness or coma.

 

5.12

Hypersensitivity/Anaphylaxis

 

There have been post-marketing reports of hypersensitivity and anaphylaxis
associated with use of acetaminophen. Clinical signs included swelling of the
face, mouth, and throat, respiratory distress, urticaria, rash, pruritus, and
vomiting. There were infrequent reports of life-threatening anaphylaxis
requiring emergency medical attention. Instruct patients to discontinue APADAZ
tablets immediately and seek medical care if they experience these symptoms. Do
not prescribe APADAZ tablets for patients with acetaminophen allergy.

 

5.13

Risks of Use in Patients with Gastrointestinal Conditions

 

APADAZ is contraindicated in patients with known or suspected gastrointestinal
obstruction, including paralytic ileus.

 

The hydrocodone from APADAZ may cause spasm of the sphincter of Oddi. Opioids
may cause increases in serum amylase. Monitor patients with biliary tract
disease, including acute pancreatitis for worsening symptoms.

 

5.14

Increased Risk of Seizures in Patients with Seizure Disorders

 

The hydrocodone from APADAZ may increase the frequency of seizures in patients
with seizure disorders, and may increase the risk of seizures occuring in other
clinical settings associated with seizures. Monitor patients with a history of
seizure disorders for worsened seizure control during APADAZ therapy.

 

5.15

Withdrawal

 

Avoid the use of mixed agonist/antagonist (e.g, pentazocine, nalbuphine, and
butorphanol) or partial agonist (e.g., buprenorphine) analgesics in patients who
are receiving a full opioid agonist

analgesic, including APADAZ [see Drug Interactions (7)]. In these patients,
mixed agonist/antagonist and partial agonist analgesics may reduce the analgesic
effect and/or precipitate withdrawal symptoms.

 

--------------------------------------------------------------------------------

 

 

 

When discontinuing APADAZ, gradually taper the dosage [see Dosage and
Administration (2.5)]. Do not abruptly discontinue APADAZ [see Drug Abuse and
Dependence (9.3)].

 

5.16

Risks of Driving and Operating Machinery

 

APADAZ may impair the mental or physical abilities needed to perform potentially
hazardous activities such as driving a car or operating machinery. Warn patients
not to drive or operate dangerous machinery unless they are tolerant to the
effects of APADAZ and know how they will react to the medication [see Patient
Counseling Information (17)].

 

6

ADVERSE REACTIONS

 

The following serious adverse reactions are described, or described in greater
detail, in other sections:

 

 

•

Addiction, Abuse, and Misuse [see Warnings and Precautions (5.1)]

 

 

•

Life-Threatening Respiratory Depression [see Warnings and Precautions (5.2)]

 

 

•

Neonatal Opioid Withdrawal Syndrome [see Warnings and Precautions (5.3)]

 

 

•

Hepatotoxicity [see Warnings and Precautions (5.5)]

 

 

•

Interactions with Benzodiazepines and other CNS Depressants [see Warnings and
Precautions (5.6)]

 

 

•

Adrenal Insufficiency [see Warnings and Precautions (5.8)]

 

 

•

Severe Hypotension [see Warnings and Precautions (5.9)]

 

 

•

Serious Skin Reactions [see Warnings and Precautions (5.10)]

 

 

•

Anaphylaxis and Other Hypersensitivity Reactions [see Warnings and Precautions
(5.12)]

 

 

•

Gastrointestinal Adverse Reactions [see Warnings and Precautions (5.13)]

 

 

•

Seizures [see Warnings and Precautions (5.14)]

 

 

•

Withdrawal [see Warnings and Precautions (5.15)]

 

6.1

Clinical Trials Experience

 

Because clinical trials are conducted under widely varying conditions, adverse
reaction rates observed in clinical trials of a drug cannot be directly compared
to rates in the clinical trials of another drug and may not reflect the rates
observed in practice.

 

The safety of APADAZ was evaluated in six Phase 1 studies in which a total of
200 healthy adult subjects receive at least one oral dose of APADAZ. The most
common AEs (>5%) reported across these studies were: nausea (21.5%), somnolence
(18.5%), vomiting (13.0%), constipation (12.0%), pruritus (11.5%), dizziness
(7.5%), and headache (6.0%).

 

 

--------------------------------------------------------------------------------

 

 

 

 

The following adverse reactions occurred with an incidence of 1% to 5% in
single-dose or repeated-dose clinical trials of APADAZ.

 

Gastrointestinal disorder: abdominal distension, abdominal pain, flatulence

 

General disorders and administration site conditions: asthenia

 

Nervous system disorders: presyncope, tremor

 

Respiratory, thoracic and mediastinal disorders: dyspnea

 

Vascular disorders: hot flush, hypotension

 

Adverse reactions occurring at less than 1%: the following lists clinically
relevant adverse reactions that occurred with an incidence of less than 1% in
APADAZ clinical trials.

 

Eye disorders: eye pruritus

 

Gastrointestinal disorders: diarrhea, gastrooesophageal reflux disease,
haematemesis

 

General disorders and administration site conditions: chest discomfort

 

Infections and infestations: rhinitis

 

Nervous system disorders: hypoesthesia, syncope

 

Psychiatric disorders: agitation, euphoric mood, nightmare

 

6.2

Postmarketing Experience

 

The following adverse reactions have been identified during post-approval use of
hydrocodone. Because these reactions are reported voluntarily from a population
of uncertain size, it is not always possible to reliably estimate their
frequency or establish a causal relationship to drug exposure.

 

Serotonin syndrome: Cases of serotonin syndrome, a potentially life-threatening
condition, have been reported during concomitant use of opioids with
serotonergic drugs.

 

Adrenal insufficiency: Cases of adrenal insufficiency have been reported with
opioid use, more often following greater than one month of use.

 

Anaphylaxis: Anaphylaxis has been reported with ingredients contained in APADAZ.

 

Androgen deficiency: Cases of androgen deficiency have occurred with chronic use
of opioids [see Clinical Pharmacology (12.2)].

 

 

--------------------------------------------------------------------------------

 

 

 

 

7

DRUG INTERACTIONS

 

Table 1 includes clinically significant drug interactions with APADAZ.

 

Table 1. Clinically Significant Drug Interactions with APADAZ

 

CYP3A4 and 2D6 Inhibitors

Clinical Impact:

The concomitant use of APADAZ and CYP3A4 inhibitors can increase the plasma
concentration of hydrocodone, resulting in increased or prolonged opioid
effects. These effects could be more pronounced with concomitant use of APADAZ
and CYP2D6 and CYP3A4 inhibitors, particularly when an inhibitor is added after
a stable dose of APADAZ is achieved [see Warnings and Precautions (5.4)].

After stopping a CYP3A4 inhibitor, as the effects of the inhibitor decline, the
hydrocodone plasma concentration will decrease [see Clinical Pharmacology
(12.3)], resulting in decreased opioid efficacy or a withdrawal syndrome in
patients who had developed physical dependence to hydrocodone.

Intervention:

If concomitant use is necessary, consider dosage reduction of APADAZ until
stable drug effects are achieved. Monitor patients for respiratory depression
and sedation at frequent intervals.

If a CYP3A4 inhibitor is discontinued, consider increasing the APADAZ dosage
until stable drug effects are achieved. Monitor for signs of opioid withdrawal.

Examples:

Macrolide antibiotics (e.g., erythromycin), azole-antifungal agents (e.g.
ketoconazole), protease inhibitors (e.g., ritonavir) etc.

CYP3A4 Inducers

Clinical Impact:

The concomitant use of APADAZ and CYP3A4 inducers can decrease the plasma
concentration of hydrocodone [see Clinical Pharmacology (12.3)], resulting in
decreased efficacy or onset of a withdrawal syndrome in patients who have
developed physical dependence to hydrocodone [see Warnings and Precautions
(5.15)].

After stopping a CYP3A4 inducer, as the effects of the inducer decline, the
hydrocodone plasma concentration will increase [see Clinical Pharmacology
(12.3)], which could increase or prolong both the therapeutic effects and
adverse reactions, and may cause serious respiratory depression.

Intervention:

If concomitant use is necessary, consider increasing the APADAZ dosage until
stable drug effects are achieved [see Dosage and Administration (2)]. Monitor
for signs of opioid withdrawal. If a CYP3A4 inducer is discontinued, consider
APADAZ dosage reduction and monitor for signs of respiratory depression.

Examples:

Rifampin, carbamazepine, phenytoin etc.

Benzodiazepines and Other Central Nervous System (CNS) Depressants

Clinical Impact:

Due to additive pharmacologic effect, the concomitant use of
benzodiazepines or other CNS depressants, including alcohol, increases the risk
of hypotension, respiratory depression, profound sedation, coma, and death.

Intervention:

Reserve concomitant prescribing of these drugs for use in patients for whom
alternative treatment options are inadequate. Limit dosages and durations to the
minimum required. Follow patients closely for signs of respiratory depression
and sedation [see Dosage and Administration (2.5), Warnings and Precautions
(5.6)].

Examples:

Benzodiazepines and other sedatives/hypnotics, anxiolytics, tranquilizers,
muscle relaxants, general anesthetics, antipsychotics, other opioids, alcohol.

Serotonergic Drugs

Clinical Impact:

The concomitant use of opioids with other drugs that affect the serotonergic
neurotransmitter system has resulted in serotonin syndrome.

Intervention:

If concomitant use is warranted, carefully observe the patient, particularly
during treatment initiation and dose adjustment. Discontinue APADAZ if serotonin
syndrome is suspected.

Examples:

Selective serotonin reuptake inhibitors (SSRIs), serotonin and norepinephrine
reuptake inhibitors (SNRIs), tricyclic antidepressants (TCAs), triptans, 5-HT3
receptor antagonists, drugs that affect the serotonin neurotransmitter system
(e.g., mirtazapine, trazodone, tramadol), monoamine oxidase (MAO) inhibitors
(those intended to treat psychiatric disorders and also others, such as
linezolid and intravenous methylene blue).

Monoamine Oxidase Inhibitors (MAOIs)

Clinical Impact:

MAOI interactions with opioids may manifest as serotonin syndrome or opioid
toxicity (e.g., respiratory depression, coma) [see Warnings and Precauitons
(5.2)].

If urgent use of an opioid is necessary, use test doses and frequent titration
of small doses to treat pain while closely monitoring blood pressure and signs
and symptoms of CNS and respiratory depression.

Intervention:

The use of APADAZ is not recommended for patients taking MAOIs or within 14 days
of stopping such treatment.

Examples:

phenelzine, tranylcypromine, linezolid

Mixed Agonist/Antagonist and Partial Agonist Opioid Analgesics

Clinical Impact:

May reduce the analgesic effect of APADAZ and/or precipitate withdrawal
symptoms.

Intervention:

Avoid concomitant use.

Examples:

butorphanol, nalbuphine, pentazocine, buprenorphine

Muscle Relaxants

Clinical Impact:

Hydrocodone may enhance the neuromuscular blocking action of skeletal muscle
relaxants and produce an increased degree of respiratory depression.

Intervention:

Monitor patients for signs of respiratory depression that may be greater than
otherwise expected and decrease the dosage of APADAZ and/or the muscle relaxant
as necessary.

Diuretics

Clinical Impact:

Opioids can reduce the efficacy of diuretics by inducing the release of
antidiuretic hormone.

Intervention:

Monitor patients for signs of diminished diuresis and/or effects on blood
pressure and increase the dosage of the diuretic as needed.

Anticholinergic Drugs

Clinical Impact:

The concomitant use of anticholinergic drugs may increase risk of urinary
retention and/or severe constipation, which may lead to paralytic ileus.

Intervention:

Monitor patients for signs of urinary retention or reduced gastric motility when
APADAZ is used concomitantly with anticholinergic drugs.

 

 

 

--------------------------------------------------------------------------------

 

 

 

8

USE IN SPECIFIC POPULATIONS

 

8.1

Pregnancy

 

Risk Summary

 

Prolonged use of opioid analgesics during pregnancy may cause neonatal opioid
withdrawal syndrome [see Warnings and Precautions (5.3)]. There are no available
human data on hydrocodone or APADAZ use during pregnancy to inform any drug
associated risks. However, neonatal opioid withdrawal and other adverse
reactions during pregnancy and labor can occur with use of APADAZ [see Clinical
Considerations].

 

Published studies with oral acetaminophen use during pregnancy have not reported
an association with major congenital malformations. No reproductive or
developmental toxicology studies in animals have been conducted with
benzhydrocodone or the combination of benzhydrocodone and acetaminophen.
Reproductive and developmental studies in rats and mice from the published
literature identified adverse events at clinically relevant doses with
acetaminophen. Treatment of pregnant rats with doses of acetaminophen
approximately equal to the maximum human daily dose (MHDD) showed evidence of
fetotoxicity and increases in bone variations in the fetuses. In another study,
necrosis was observed in the liver and kidney of both pregnant rats and fetuses
at doses approximately equal to the MHDD. In mice and rats treated with
acetaminophen at doses within the clinical dosing range, cumulative adverse
effects on reproductive capacity were reported. In mice, a reduction in number
of litters of the parental mating pair was observed as well as retarded growth,
abnormal sperm in their offspring, and reduced birth weight in the next
generation. In rats, female fertility was decreased following in utero exposure
to acetaminophen [see DATA].

 

The estimated background risk of major birth defects and miscarriage for the
indicated population is unknown. All pregnancies have a background risk of birth
defect, loss, or other adverse outcomes. In the U.S. general population, the
estimated background risk of major birth defects and miscarriage in clinically
recognized pregnancies is 2 to 4% and 15 to 20%, respectively.

 

Clinical Considerations

 

Fetal/Neonatal Adverse Reactions

 

Prolonged use of opioid analgesics during pregnancy for medical or nonmedical
purposes can result in physical dependence in the neonate and neonatal opioid
withdrawal syndrome shortly after birth.

 

Neonatal opioid withdrawal syndrome presents as irritability, hyperactivity and
abnormal sleep pattern, high pitched cry, tremor, vomiting, diarrhea and failure
to gain weight. The onset, duration, and severity of neonatal opioid withdrawal
syndrome vary based on the specific opioid used, duration of use, timing and
amount of last maternal use, and rate of elimination of the drug by the newborn.
Observe newborns for symptoms of neonatal opioid withdrawal syndrome and manage
accordingly [see Warnings and Precautions (5.3)].

 

 

--------------------------------------------------------------------------------

 

 

Labor or Delivery

 

Opioids cross the placenta and may produce respiratory depression and
psycho-physiologic effects in neonates. An opioid antagonist, such as naloxone,
must be available for reversal of opioid-induced respiratory depression in the
neonate. APADAZ is not recommended for use in pregnant women during or
immediately prior to labor, when other analgesic techniques are more
appropriate. Opioid analgesics, including APADAZ, can prolong labor through
actions which temporarily reduce the strength, duration, and frequency of
uterine contractions. However, this effect is not consistent and may be offset
by an increased rate of cervical dilation, which tends to shorten labor. Monitor
neonates exposed to opioid analgesics during labor for signs of excess sedation
and respiratory depression.

 

Data

 

Human Data

 

Acetaminophen:

 

Published data from a large population-based prospective cohort study and a
population-based, case-control study do not clearly report an association with
oral acetaminophen and major birth defects, miscarriage, or adverse maternal or
fetal outcomes when acetaminophen is used during pregnancy. However, these
studies cannot definitely establish the absence of any risk because of
methodological limitations including recall bias.

 

Animal Data

 

No reproductive or developmental toxicology studies were conducted with
benzhydrocodone or the combination of benzhydrocodone and acetaminophen. The
following data are based on findings from studies performed with acetaminophen
alone.

 

Studies in pregnant rats that received oral acetaminophen during organogenesis
at doses up to 0.88 the maximum human daily dose (MHDD) of 3.9 grams/day based
on a body surface area comparison showed evidence of fetotoxicity (reduced fetal
weight and length) and a dose-related

increase in bone variations (reduced ossification and rudimentary rib changes).
Offspring had no evidence of external, visceral, or skeletal malformations. When
pregnant rats received oral acetaminophen throughout gestation at doses of 1.2
times the MHDD (based on a body surface area comparison), areas of necrosis
occurred in both the liver and kidney of pregnant rats and fetuses. These
effects did not occur in animals that received oral acetaminophen at doses 0.3
times the MHDD, based on a body surface area comparison. In a continuous
breeding study, pregnant mice received 0.25, 0.5, or 1.0% acetaminophen via the
diet (357, 715, or 1430 mg/kg/day). These doses are approximately 0.45, 0.89,
and 1.78 times the MHDD, respectively, based on a body surface area comparison.
A dose-related reduction in body weights of fourth and fifth litter offspring of
the treated mating pair occurred during lactation and post-weaning at all doses.
Animals in the high dose group had a reduced number of litters per mating pair,
male offspring with an increased percentage of abnormal sperm, and reduced birth
weights in the next generation pups.

 

8.2

Lactation

 

Risk Summary

 

Hydrocodone is present in human milk. A published lactation study reports
variable concentrations of hydrocodone and hydromorphone (an active metabolite)
in breast milk with administration of hydrocodone to nursing mothers in the
early post-partum period. This lactation study did not assess breastfed infants
for potential adverse drug reactions. There is potential for sedation and
respiratory depression resulting from infant exposure to hydrocodone and its
metabolites in breast milk.

 

Acetaminophen is present in human milk in small quantities after oral
administration. Based on data from more than 15 nursing mothers, the calculated
infant daily dose of acetaminophen is approximately 1 to 2% of the maternal
dose. There is one well-documented report of a rash in a breast-fed infant that
resolved when the mother stopped acetaminophen use and recurred when she resumed
acetaminophen use.

 

The developmental and health benefits of breastfeeding should be considered
along with the mother’s clinical need for APADAZ and any potential adverse
effects on the breastfed child from APADAZ or from the underlying maternal
condition.

 

Clinical Considerations

 

Infants exposed to APADAZ through breast milk should be monitored for excess
sedation and respiratory depression. Withdrawal symptoms can occur in breastfed
infants when maternal administration of an opioid analgesic is stopped, or when
breast-feeding is stopped.

 

8.3

Females and Males of Reproductive Potential

 

Infertility

 

Chronic use of opioids may cause reduced fertility in females and males of
reproductive potential. It is not known whether these effects on fertility are
reversible [see Adverse Reactions (6.2),

Clinical Pharmacology (12.2)].

 

--------------------------------------------------------------------------------

 

 

 

Published animal studies report that oral acetaminophen treatment of male
animals at doses that are 1.2 times the MHDD and greater (based on a body
surface area comparison) result in decreased testicular weights, reduced
spermatogenesis, reduced fertility, and reduced implantation sites in females
given the same doses. Additional published animal studies indicate that
acetaminophen exposure in utero adversely impacts reproductive capacity of both
male and female offspring at clinically relevant exposures [see Nonclinical
Toxicology (13.1)].

 

8.4

Pediatric Use

 

Safety and effectiveness in pediatric patients below the age of 18 years have
not been established.

 

8.5

Geriatric Use

 

Elderly patients (aged 65 years or older) may have increased sensitivity to
hydrocodone. In general, use caution when selecting a dosage for an elderly
patient, usually starting at the low end of the dosing range, reflecting the
greater frequency of decreased hepatic, renal, or cardiac function and of
concomitant disease or other drug therapy.

 

Respiratory depression is the chief risk for elderly patients treated with
opioids, and has occurred after large initial doses were administered to
patients who were not opioid-tolerant or when opioids were co-administered with
other agents that depress respiration. Titrate the dosage of APADAZ slowly in
geriatric patients and monitor closely for signs of respiratory depression [see
Warnings and Precautions (5.2)].

 

Hydrocodone and acetaminophen are known to be substantially excreted by the
kidney, and the risk of adverse reactions to this drug may be greater in
patients with impaired renal function. Because elderly patients are more likely
to have decreased renal function, care should be taken in dose selection, and it
may be useful to monitor renal function.

 

8.6

Hepatic Impairment

 

The effect of hepatic impairment on the pharmacokinetics of APADAZ has not been
determined. Patients with hepatic impairment may have higher plasma
concentrations than those with normal function. Use a low initial dose of APADAZ
in patients with hepatic impairment or active liver disease and monitor closely
for adverse events such as respiratory depression and hepatotoxicity [see
Warnings and Precautions (5.2 and 5.5)].

 

8.7

Renal Impairment

 

The effect of renal impairment on the pharmacokinetics of APADAZ has not been
determined. Patients with renal impairment may have higher plasma concentrations
than those with normal function. Use a low initial dose of APADAZ in patients
with renal impairment and monitor closely for adverse events such as respiratory
depression.

 

 

 

9

DRUG ABUSE AND DEPENDENCE

 

9.1

Controlled Substance

 

APADAZ contains benzhydrocodone, a Schedule II controlled substance.

 

9.2

Abuse

 

APADAZ contains benzhydrocodone, a substance with a high potential for abuse
similar to other opioids including fentanyl, hydromorphone, methadone, morphine,
oxycodone, oxymorphone, and tapentadol. APADAZ can be abused and is subject to
misuse, addiction, and criminal diversion [see Warnings and Precautions (5.1)].

 

All patients treated with opioids require careful monitoring for signs of abuse
and addiction, because use of opioid analgesic products carries the risk of
addiction even under appropriate medical use.

 

Prescription drug abuse is the intentional non-therapeutic use of a prescription
drug, even once, for its rewarding psychological or physiological effects.

 

 

--------------------------------------------------------------------------------

 

 

Drug addiction is a cluster of behavioral, cognitive, and physiological
phenomena that develop after repeated substance use and includes: a strong
desire to take the drug, difficulties in controlling its use, persisting in its
use despite harmful consequences, a higher priority given to drug use than to
other activities and obligations, increased tolerance, and sometimes a physical
withdrawal.

 

“Drug-seeking” behavior is very common in persons with substance use disorders.
Drug-seeking tactics include emergency calls or visits near the end of office
hours, refusal to undergo appropriate examination, testing, or referral,
repeated “loss” of prescriptions, tampering with prescriptions, and reluctance
to provide prior medical records or contact information for other treating
healthcare provider(s). “Doctor shopping” (visiting multiple prescribers to
obtain additional prescriptions) is common among drug abusers and people
suffering from untreated addiction. Preoccupation with achieving adequate pain
relief can be appropriate behavior in a patient with poor pain control.

 

Abuse and addiction are separate and distinct from physical dependence and
tolerance. Health care providers should be aware that addiction may not be
accompanied by concurrent tolerance and symptoms of physical dependence in all
addicts. In addition, abuse of opioids can occur in the absence of true
addiction.

 

APADAZ, like other opioids, can be diverted for non-medical use into illicit
channels of distribution. Careful record-keeping of prescribing information,
including quantity, frequency, and renewal requests, as required by state and
federal law, is strongly advised.

 

Proper assessment of the patient, proper prescribing practices, periodic
re-evaluation of therapy, and proper dispensing and storage are appropriate
measures that help to limit abuse of opioid drugs.

 

Risks Specific to Abuse of APADAZ

 

APADAZ is for oral use only. Abuse of APADAZ poses a risk of overdose and death.
The risk is increased with concurrent use of APADAZ with alcohol and other
central nervous system depressants.

 

With intravenous abuse, the inactive ingredients in APADAZ can result in local
tissue necrosis, infection, pulmonary granulomas, embolism and death, and
increased risk of endocarditis and valvular heart injury. Parenteral drug abuse
is commonly associated with transmission of infectious diseases, such as
hepatitis and HIV.

 

Abuse Deterrent Studies

 

In vitro and human abuse potential studies comparing APADAZ to an
immediate-release hydrocodone/acetaminophen tablet control were conducted to
assess the potential abuse deterrent properties of APADAZ.

 

In Vitro Testing

 

In vitro physical and chemical manipulation studies were performed to evaluate
the ability of different methods to extract and convert benzyhydrocodone to
hydrocodone for the purpose of preparing APADAZ for abuse by the intravenous
route or by smoking. The efficiency of extracting benzhydrocodone from APADAZ
was similar compared to the efficiency of extracting hydrocodone from the
non-abuse-deterrent hydrocodone/acetaminophen control. Further conversion
(hydrolysis) of benzhydrocodone to hydrocodone in vitro is a difficult process.
Overall, these studies showed no advantage for APADAZ over the
hydrocodone/acetaminophen control.

 

Oral Clinical Abuse Potential Study

 

In an oral, single-center, randomized, double-blind, active- and
placebo-controlled, 7-period, crossover, human abuse potential study, 71
recreational opioid users were randomized into the Treatment Phase; 62 subjects
completed the study. Treatment arms included APADAZ (4, 8, and 12 tablets, each
containing 6.12 mg benzhydrocodone and 325 mg acetaminophen),
hydrocodone/acetaminophen (4, 8 and 12 tablets, each containing 4.54 mg
hydrocodone and 325 mg acetaminophen), and placebo. The respective dosage
strengths for APADAZ and hydrocodone/acetaminophen contained equimolar amounts
of hydrocodone. The rate (Cmax) and extent (AUClast, AUCinf) of hydrocodone
exposure following APADAZ administration was comparable to that for
hydrocodone/acetaminophen across all 3 dosage strengths. There were no
statistically significant differences nor any clinically meaningful differences
between APADAZ and the hydrocodone/acetaminophen control for the pre-specified
primary endpoint of maximal score (Emax) for Drug Liking VAS or secondary
endpoints of Emax for High VAS and Take Drug Again VAS. The results do not
support a finding that APADAZ can be expected to deter abuse by the oral route
of administration.

 

Intranasal Clinical Abuse Potential Study

 

In an intranasal single-center, randomized, double-blind, double-dummy, two-part
human abuse potential study, 46 recreational opioid users were randomized into
the Treatment Phase; 42

subjects completed the study. Five treatment arms included intranasal crushed
and oral APADAZ (2 tablets, each containing 6.12 mg benzhydrocodone and 325 mg
acetaminophen), intranasal crushed and oral hydrocodone/acetaminophen (2
tablets, each containing 4.54 mg hydrocodone and 325 mg acetaminophen), and
intranasal placebo powder. The respective dosage strengths for APADAZ and
hydrocodone/acetaminophen contained equimolar amounts of hydrocodone.

 

--------------------------------------------------------------------------------

 

 

 

The pharmacokinetic data showed that overall (AUClast, AUCinf, and Cmax)
hydrocodone exposure was comparable between intranasal crushed APADAZ and
intranasal crushed hydrocodone/acetaminophen. These treatments were also
comparable with cumulative hydrocodone exposure at the timepoints of 4, 8, and
24 hours (AUC0-4, AUC0-8, AUC0-24). Over the first 2 hours post-dosing
(AUC0-0.5, AUC0-1, and AUC0-2), the cumulative hydrocodone exposure was lower
following intranasal APADAZ compared to intranasal hydrocodone/ acetaminophen.

 

There were numerically small but not statistically significant differences
between APADAZ and the hydrocodone/acetaminophen control observed for the
pre-specified primary endpoint, maximum effect on Drug Liking VAS (Emax), and
the secondary endpoints of Emax for High VAS and Take Drug Again VAS.

 

Table 2:

Summary Statistics of Maximum Scores (Emax) on Drug Liking, High and Take Drug
Again, Following Intranasal Administration of Apadaz, Hydrocodone/APAP, and
Placebo

 

VAS Scale (100 point) intranasal (n=42)

Apadaz
Crushed

Hydrocodone/APAP Crushed

Placebo

Drug Liking *

     

Mean (SE)

75.9 (2.3)

79.0 (2.7)

53.0 (1.2)

Median (Range)

74.0 (50-100)

80.0 (50-100)

51.0 (50-85)

High**

     

Mean (SE)

61.8 (4.6)

59.1 (5.1)

8.8 (3.8)

Median (Range)

68.5 (0-100)

67.5 (0-100)

0.0 (0-100)

Take Drug Again*

     

Mean (SE)

69.5 (3.9)

74.5 (3.9)

48.2 (2.2)

Median (Range)

68.0 (0-100)

81.5 (0-100)

50.0 (0-100)

 

*Bipolar scale (0=maximum negative response, 50=neutral response, 100=maximum
positive response)

** Unipolar scale (0=maximum negative response, 100=maximum positive response)

 

Additional secondary analyses of Drug Liking based on area under the effect
curve analyses (AUE) for the first half hour, hour, and 2 hours post-dosing,
demonstrated numerically small differences between intranasal APADAZ and
intranasal hydrocodone/acetaminophen. However, there were no differences between
these two treatments with respect to the cumulative High experienced over the
first 2 hours post-dosing using similar AUE analyses. There are no data to
support that small differences in the early Drug Liking experience over the
first 2 hours are clinically relevant findings consistent with possible
abuse-deterrent effects, particularly in the

setting of the Emax analyses for Drug Liking, Take Drug Again, and High that do
not support a deterrent effect. Based on the overall results, APADAZ cannot be
expected to deter abuse by the intranasal route of administration.

 

--------------------------------------------------------------------------------

 

 

 

Summary

 

The in vitro studies that evaluated physical manipulation and extraction for the
purpose of preparing APADAZ for abuse by the intravenous route or by smoking did
not find an advantage for APADAZ over the hydrocodone/acetaminophen control.

 

The results of the oral and intranasal human abuse potential studies do not
support a finding that APADAZ can be expected to deter abuse by the oral or
nasal routes of administration.

 

9.3

Dependence

 

Both tolerance and physical dependence can develop during chronic opioid
therapy. Tolerance is the need for increasing doses of opioids to maintain a
defined effect such as analgesia (in the absence of disease progression or other
external factors). Tolerance may occur to both the desired and undesired effects
of drugs, and may develop at different rates for different effects.

 

Physical dependence results in withdrawal symptoms after abrupt discontinuation
or a significant dosage reduction of a drug. Withdrawal also may be precipitated
through the administration of drugs with opioid antagonist activity (e.g.,
naloxone, nalmefene), mixed agonist/antagonist analgesics (e.g., pentazocine,
butorphanol, nalbuphine), or partial agonists (e.g., buprenorphine). Physical
dependence may not occur to a clinically significant degree until after several
days to weeks of continued opioid usage.

 

APADAZ should not be abruptly discontinued in a physically-dependent patient
[see Dosage and Administration (2.5)]. If APADAZ is abruptly discontinued in a
physically-dependent patient, a withdrawal syndrome may occur. Some or all of
the following can characterize this syndrome: restlessness, lacrimation,
rhinorrhea, yawning, perspiration, chills, myalgia, and mydriasis. Other signs
and symptoms also may develop, including irritability, anxiety, backache, joint
pain, weakness, abdominal cramps, insomnia, nausea, anorexia, vomiting,
diarrhea, or increased blood pressure, respiratory rate, or heart rate.

 

Infants born to mothers physically dependent on opioids will also be physically
dependent and may exhibit respiratory difficulties and withdrawal signs [see Use
in Specific Populations (8.1)].

 

10

OVERDOSAGE

 

Clinical Presentation

 

Following an acute overdosage, toxicity may result from hydrocodone or
acetaminophen.

 

Hydrocodone

 

Acute overdose with APADAZ can be manifested by respiratory depression,
somnolence progressing to stupor or coma, skeletal muscle flaccidity, cold and
clammy skin, constricted

pupils, and, in some cases, pulmonary edema, bradycardia, hypotension, partial
or complete airway obstruction, atypical snoring, and death. Marked mydriasis
rather than miosis may be seen with hypoxia in overdose situations [see Clinical
Pharmacology (12.2)].

 

--------------------------------------------------------------------------------

 

 

 

Acetaminophen

 

In acute acetaminophen overdosage, dose-dependent, potentially fatal hepatic
necrosis is the most serious adverse effect. Renal tubular necrosis,
hypoglycemic coma, and thrombocytopenia also occur. Plasma acetaminophen levels
> 300 mcg/mL at 4 hours after oral ingestion were associated with hepatic damage
in 90% of patients; minimal hepatic damage is anticipated if plasma levels at 4
hours are < 150 mcg/mL or < 37.5 mcg/mL at 12 hours after ingestion. Early
symptoms following a potentially hepatotoxic overdose may include: nausea,
vomiting, diaphoresis, and general malaise. Clinical and laboratory evidence of
hepatic toxicity may not be apparent until 48 to 72 hours post-ingestion.

 

Treatment of Overdose

 

A single or multiple drug overdose with hydrocodone and acetaminophen is a
potentially lethal polydrug overdose, and consultation with a regional poison
control center is recommended. Immediate treatment includes support of
cardiorespiratory function and measures to reduce drug absorption. Oxygen,
intravenous fluids, vasopressors, assisted ventilation, and other supportive
measures should be employed as indicated.

 

Hydrocodone

 

In case of overdose, priorities are the reestablishment of a patent and
protected airway and institution of assisted or controlled ventilation, if
needed. Employ other supportive measures (including oxygen and vasopressors) in
the management of circulatory shock and pulmonary edema as indicated. Cardiac
arrest or arrhythmias will require advanced life-support techniques.

 

The opioid antagonists, naloxone or nalmefene, are specific antidotes to
respiratory depression resulting from opioid overdose. For clinically
significant respiratory or circulatory depression secondary to hydrocodone
overdose, administer an opioid antagonist. Opioid antagonists should not be
administered in the absence of clinically significant respiratory or circulatory
depression secondary to hydrocodone overdose.

 

Because the duration of opioid reversal is expected to be less than the duration
of action of hydrocodone from APADAZ, carefully monitor the patient until
spontaneous respiration is reliably re-established. If the response to an opioid
antagonist is suboptimal or only brief in nature, administer additional
antagonist as directed by the product’s prescribing information.

 

In an individual physically dependent on opioids, administration of the
recommended usual dosage of the antagonist will precipitate an acute withdrawal
syndrome. The severity of the withdrawal symptoms experienced will depend on the
degree of physical dependence and the dose of the antagonist administered. If a
decision is made to treat serious respiratory depression in the physically
dependent patient, administration of the antagonist should be begun with care
and by titration with smaller than usual doses of the antagonist.

 

 

 

Acetaminophen

 

If an acetaminophen overdose is suspected, obtain a serum acetaminophen assay as
soon as possible, but no sooner than 4 hours following oral ingestion. Obtain
liver function studies initially and repeat at 24-hour intervals. Administer the
antidote N-acetylcysteine (NAC) as early as possible. As a guide to treatment of
acute ingestion, the acetaminophen level can be plotted against time since oral
ingestion on a nomogram (Rumack-Matthew). The lower toxic line on the nomogram
is equivalent to 150 mcg/mL at 4 hours and 37.5 mcg/mL at 12 hours. If serum
level is above the lower line, administer the entire course of NAC treatment.
Withhold NAC therapy if the acetaminophen level is below the lower line.

 

Gastric decontamination with activated charcoal should be administered just
prior to N- acetylcysteine (NAC) to decrease systemic absorption if
acetaminophen ingestion is known or suspected to have occurred within a few
hours of presentation. Serum acetaminophen levels should be obtained immediately
if the patient presents 4 hours or more after ingestion to assess potential risk
of hepatotoxicity; acetaminophen levels drawn less than 4 hours post-ingestion
may be misleading. To obtain the best possible outcome, NAC should be
administered as soon as possible where impending or evolving liver injury is
suspected. Intravenous NAC may be administered when circumstances preclude oral
administration.

 

 

--------------------------------------------------------------------------------

 

 

Vigorous supportive therapy is required in severe intoxication. Procedures to
limit the continuing absorption of the drug must be readily performed since the
hepatic injury is dose-dependent and occurs early in the course of intoxication.

 

11

DESCRIPTION

 

APADAZ (benzhydrocodone and acetaminophen) tablet is an immediate-release,
fixed-dose combination of an opioid agonist and acetaminophen. APADAZ tablets
are white to off-white, capsule shaped tablets with KP201 debossed on one side
and contain 6.12 mg of benzhydrocodone (equivalent to 6.67 mg benzhydrocodone
hydrochloride) and 325 mg of acetaminophen for oral administration.

 

[ex_136268img001.gif]

 

 

 

Benzhydrocodone hydrochloride is a prodrug of hydrocodone. It occurs as a fine
white powder and is not affected by light. The chemical name is
6,7-didehydro-4,5á-epoxy-3-methoxy-17- methylmorphinan-6-yl benzoate
hydrochloride. The molecular formula is C25H26ClNO4, which corresponds to a
molecular weight of 439.93 g/mol. It has the following chemical structure:

 

 

 

Acetaminophen, 4’-hydroxyacetanilide, a slightly bitter, white, odorless,
crystalline powder, is a non-opiate, non-salicylate analgesic and antipyretic.
The molecular formula for acetaminophen is

C8H9NO2, which corresponds to a molecular weight of 151.16 g/mol. It has the
following structural [ex_136268img002.gif]

 

 

 

formula:

 

 

 

--------------------------------------------------------------------------------

 

 

 

APADAZ tablets contain 6.12 mg of benzhydrocodone (equivalent to 6.67 mg
benzhydrocodone hydrochloride) and 325 mg of acetaminophen and are white to
off-white in color. In addition, each tablet contains the following inactive
ingredients: crospovidone, microcrystalline cellulose, pregelatinized starch,
Povidone K30, and stearic acid.

 

12

CLINICAL PHARMACOLOGY

 

12.1

Mechanism of Action

 

Benzhydrocodone

 

Benzhydrocodone is a prodrug of hydrocodone.

 

Hydrocodone

 

Hydrocodone is a full opioid agonist with relative selectivity for the mu-opioid
receptor, although it can interact with other opioid receptors at higher doses.
The principal therapeutic action of hydrocodone is analgesia. Like all full
opioid agonists, there is no ceiling effect for analgesia with hydrocodone.
Clinically, dosage is titrated to provide adequate analgesia and may be limited
by adverse reactions, including respiratory and CNS depression.

 

The precise mechanism of the analgesic action is unknown. However, specific CNS
opioid receptors for endogenous compounds with opioid-like activity have been
identified throughout the brain and spinal cord and are thought to play a role
in the analgesic effects of this drug.

 

Acetaminophen

 

Acetaminophen is a non-opioid, non-salicylate analgesic. The site and mechanism
for the analgesic effect of acetaminophen has not been determined but is thought
to primarily involve central actions.

 

12.2

Pharmacodynamics

 

Hydrocodone

 

Effects on the Central Nervous System

 

Hydrocodone produces respiratory depression by direct action on brain stem
respiratory centers. The respiratory depression involves a reduction in the
responsiveness of the brain stem respiratory centers to both increases in carbon
dioxide tension and electrical stimulation.

 

 

 

Hydrocodone causes miosis, even in total darkness. Pinpoint pupils are a sign of
opioid overdose but are not pathognomonic (e.g., pontine lesions of hemorrhagic
or ischemic origins may produce similar findings). Marked mydriasis rather than
miosis may be seen with hypoxia in overdose situations.

 

Effects on the Gastrointestinal Tract and Other Smooth Muscle

 

Hydrocodone causes a reduction in motility associated with an increase in smooth
muscle tone in the antrum of the stomach and duodenum. Digestion of food in the
small intestine is delayed and propulsive contractions are decreased. Propulsive
peristaltic waves in the colon are decreased, while tone may be increased to the
point of spasm, resulting in constipation. Other opioid-induced effects may
include a reduction in biliary and pancreatic secretions, spasm of sphincter of
Oddi, and transient elevations in serum amylase.

 

 

--------------------------------------------------------------------------------

 

 

Effects on the Cardiovascular System

 

Hydrocodone produces peripheral vasodilation which may result in orthostatic
hypotension or syncope. Manifestations of histamine release and/or peripheral
vasodilation may include pruritus, flushing, red eyes, sweating, and/or
orthostatic hypotension.

 

Caution must be used in hypovolemic patients, such as those suffering acute
myocardial infarction, because hydrocodone may cause or further aggravate their
hypotension. Caution must also be used in patients with cor pulmonale who have
received therapeutic doses of opioids.

 

Effects on the Endocrine System

 

Opioids inhibit the secretion of adrenocorticotropic hormone (ACTH), cortisol,
and luteinizing hormone (LH) in humans [see Adverse Reactions (6.2)]. They also
stimulate prolactin, growth hormone (GH) secretion, and pancreatic secretion of
insulin and glucagon.

 

Chronic use of opioids may influence the hypothalamic-pituitary-gonadal axis,
leading to androgen deficiency that may manifest as low libido, impotence,
erectile dysfunction, amenorrhea, or infertility. The causal role of opioids in
the clinical syndrome of hypogonadism is unknown because the various medical,
physical, lifestyle, and psychological stressors that may influence gonadal
hormone levels have not been adequately controlled for in studies conducted to
date. Patients presenting with symptoms of androgen deficiency should undergo
laboratory evaluation [see Adverse Reactions (6.2)].

 

Effects on the Immune System

 

Opioids have been shown to have a variety of effects on components of the immune
system in in vitro and animal models. The clinical significance of these
findings is unknown. Overall, the effects of opioids appear to be modestly
immunosuppressive.

 

Concentration–Efficacy Relationships

 

The minimum effective analgesic concentration will vary widely among patients,
especially among patients who have been previously treated with potent agonist
opioids. The minimum effective analgesic concentration of hydrocodone for any
individual patient may increase over time due to an increase in pain, the
development of a new pain syndrome, and/or the development of analgesic
tolerance [see Dosage and Administration (2.1, 2.5)].

 

Concentration–Adverse Reaction Relationships

 

There is a relationship between increasing hydrocodone plasma concentration and
increasing frequency of dose-related opioid adverse reactions such as nausea,
vomiting, CNS effects, and respiratory depression. In opioid-tolerant patients,
the situation may be altered by the development of tolerance to opioid-related
adverse reactions [see Dosage and Administration (2.1, 2.2, 2.4)].

 

12.3

Pharmacokinetics

 

APADAZ has met the bioequivalence criteria for hydrocodone AUC and Cmax to other
immediate- release hydrocodone combination products. Benzhydrocodone was not
detectable in plasma after oral administration in clinical studies, indicating
that exposure to benzhydrocodone was minimal and transient. Steady state with
APADAZ is attained within 24 to 36 hours of dosing. The systemic exposure to
hydrocodone from APADAZ increases linearly after administration of single and
multiple doses of 2 tablets of APADAZ.

 

Absorption

 

Single–Dose Studies

 

In 2 comparative bioavailability studies following oral administration of single
dose to healthy subjects under fasted conditions, 6.67 mg/325 mg APADAZ tablet
met the bioequivalence criteria for hydrocodone AUC and Cmax to
immediate-release tablet of 7.5 mg hydrocodone/200 mg ibuprofen (N = 28); and
the bioequivalence criteria for acetaminophen AUC and Cmax to immediate-release
tablet of 37.5 mg tramadol/325 mg acetaminophen (N = 27)

 

In a comparative bioavailability study following oral administration of single
dose under fasted conditions in 24 healthy subjects comparing 6.67 mg/325 mg
APADAZ to immediate-release tablet of 7.5 mg hydrocodone/325 mg acetaminophen,
APADAZ met the bioequivalence criteria for hydrocodone Cmax and AUC; and met the
bioequivalence criteria for acetaminophen AUC, with comparable acetaminophen
Cmax.

 

In a study to assess the effect of food on the bioavailability and
pharmacokinetics of APADAZ in 38 healthy subjects, compared to fasted condition,
coadministration of APADAZ with a high-fat, high-calorie meal showed a slight
decrease in the rate but no change in the extent of hydrocodone absorption; and
no difference in rate and extent of acetaminophen absorption. The effect of a
high-fat, high-calorie meal on pharmacokinetics is similar between APADAZ and
immediate- release tablet of 7.5 mg hydrocodone/325 mg acetaminophen. APADAZ can
be administered without regard to food. The PK parameters for hydrocodone and
acetaminophen after oral administration of APADAZ tablet, 6.67 mg/325 mg under
fasted and fed conditions are shown in Table 3 below.

 

 

--------------------------------------------------------------------------------

 

 

 

 

Table 3.

PK parameters of hydrocodone and acetaminophen after oral administration of
APADAZ tablet, 6.67 mg/325 mg under fasted and fed conditions.

 

Parametera

Fed

Fasted

Hydrocodone

   

Cmax (ng/mL)

16.04 ± 3.60 (40)

19.18 ± 4.84 (38)

Tmax (h)

2.50 (40) [0.50–4.00]

1.25 (38) [0.50–3.00]

AUCinf (h●ng/mL)

130.91 ± 29.45 (40)

125.73 ± 36.78 (38)

t½ (h)

4.53 ± 0.70 (40)

4.33 ± 0.67 (38)

Acetaminophen

   

Cmax (“g/mL)

3.34 ± 1.01 (39)

4.05 ± 1.30 (38)

Tmax (h)

1.50 (39) [0.50–4.00]

1.00 (38) [0.50–3.00]

AUCinf (h●“g/mL)

15.0 ± 3.53 (36)

14.7 ± 3.87 (36)

t½ (h)

5.64 ± 1.58 (36)

4.78 ± 1.30 (36)

 

a Arithmetic mean ± standard deviation (N) except Tmax for which the median (N)
[Range] is reported

 

Multiple-Dose Study

 

A multiple-dose study in 24 healthy subjects showed no measurable exposure to
benzhydrocodone, when 2 tablets of APADAZ, 6.67 mg/325 mg, was administered
orally every 4 hours for a total of 13 doses. Steady state for hydrocodone and
acetaminophen was achieved after 24 hours and between 24 and 36 hours,
respectively. The accumulation ratios for hydrocodone Cmax and AUC values were
1.85-fold and 2.03-fold, respectively. The accumulation ratios for acetaminophen
Cmax and AUC values were 1.38-fold and 1.80-fold, respectively.

 

 

--------------------------------------------------------------------------------

 

 

Elimination

 

Hydrocodone is eliminated primarily from the kidneys. Elimination of
acetaminophen is principally by liver metabolism and subsequent renal excretion
of metabolites.

 

Metabolism

 

Benzhydrocodone is a prodrug of hydrocodone and is converted to active
hydrocodone by enzymes in the intestinal tract.

 

Hydrocodone exhibits a complex pattern of metabolism, including O-demethylation,
N- demethylation, and 6-keto reduction to the corresponding 6-á-and 6-®-hydroxy
metabolites. Hydromorphone, a potent opioid, is formed from the O-demethylation
of hydrocodone and contributes to the total analgesic effect of hydrocodone. The
O- and N- demethylation processes are mediated by separate P-450 isoenzymes:
CYP2D6 and CYP3A4, respectively. [see Drug Interactions (7)].

 

Acetaminophen is primarily metabolized in the liver by first-order kinetics and
involves three principal separate pathways:

 

a)

conjugation with glucuronide;

 

b)

conjugation with sulfate; and

 

c)

oxidation via the cytochrome, P450-dependent, mixed-function oxidase enzyme
pathway
to form a reactive intermediate metabolite, which conjugates with glutathione
and is then
further metabolized to form cysteine and mercapturic acid conjugates. The
principal cytochrome P450 isoenzyme involved appears to be CYP2E1, with CYP1A2
and CYP3A4 as additional pathways.

 

In adults, the majority of acetaminophen is conjugated with glucuronic acid and,
to a lesser extent, with sulfate. These glucuronide-, sulfate-, and
glutathione-derived metabolites lack biologic activity. In premature infants,
newborns, and young infants, the sulfate conjugate predominates.

 

Excretion

 

Hydrocodone and its metabolites are eliminated primarily in the kidneys, with a
mean plasma half- life of 4.5 hours.

 

The half-life of acetaminophen is about 2 to 3 hours in adults. It is somewhat
shorter in children and somewhat longer in neonates and in cirrhotic patients.
Acetaminophen is eliminated from the body primarily by formation of glucuronide
and sulfate conjugates in a dose-dependent manner. Less than 9% of acetaminophen
is excreted unchanged in the urine.

 

Specific Populations

 

Age

 

For hydrocodone, no significant pharmacokinetic differences based on age have
been demonstrated. For APAP, a population pharmacokinetic analysis of data
obtained from a clinical trial in patients with chronic pain treated with
immediate-release tablet of 7.5 mg hydrocodone/325 mg acetaminophen, which
included 55 patients between 65 and 75 years of age and 19 patients over 75
years of age, showed no significant changes in the pharmacokinetics of
acetaminophen in elderly patients with normal renal and hepatic function [see
Use in Specific Populations (8.5)].

 

Sex

 

For hydrocodone, no significant pharmacokinetic differences based on gender have
been demonstrated.

 

 

--------------------------------------------------------------------------------

 

 

Renal Impairment

 

The effect of renal insufficiency on the pharmacokinetics of APADAZ has not been
determined [see Use in Specific Populations (8.7)].

 

Hepatic Impairment

 

Because acetaminophen is extensively metabolized by the liver, the use of APADAZ
in patients with severe hepatic impairment or severe active liver disease is
contraindicated. The pharmacokinetics and tolerability of APADAZ in patients
with impaired hepatic function have not been studied [see Contraindications (4),
Use in Specific Populations (8.6)].

 

13

NONCLINICAL TOXICOLOGY

 

13.1

Carcinogenesis, Mutagenesis, Impairment of Fertility

 

Carcinogenesis

 

Long-term studies to evaluate the carcinogenic potential of benzhydrocodone or
the combination of benzhydrocodone and acetaminophen have not been conducted.

 

Long-term studies in mice and rats have been completed by the National
Toxicology Program to evaluate the carcinogenic potential of acetaminophen. In
2-year feeding studies, F344/N rats and B6C3F1 mice were fed a diet containing
acetaminophen up to 6000 ppm. Female rats demonstrated equivocal evidence of
carcinogenic activity based on increased incidences of mononuclear cell leukemia
at 0.8 times the maximum human daily dose (MHDD) of 3.9 grams/day, based on a
body surface area comparison. In contrast, there was no evidence of carcinogenic
activity in male rats (0.7 times) or mice (1.3-1.5 times the MHDD, based on a
body surface area comparison).

 

Mutagenesis

 

Benzhydrocodone was positive in an in vitro mammalian cell chromosome aberration
assay in the presence of a metabolic activation (S9 mix) and negative in the
absence of metabolic activation. Benzhydrocodone was negative in an in vitro
bacterial mutation assay as well as in the in vivo rat micronucleus and comet
assays.

 

Acetaminophen was not mutagenic in the bacterial reverse mutation assay (Ames
test). In contrast, acetaminophen tested positive in the in vitro mouse lymphoma
assay and the in vitro chromosomal aberration assay using human lymphocytes. In
the published literature, acetaminophen has been reported to be clastogenic when
administered at 1500 mg/kg/day to the rat model (3.7-times the MHDD, based on a
body surface area comparison). In contrast, no clastogenicity was noted at a
dose of 750 mg/kg/day (1.9-times the MHDD, based on a body surface area
comparison), suggesting a threshold effect.

 

Impairment of Fertility

 

No nonclinical fertility studies have been conducted with benzhydrocodone or the
combination of benzhydrocodone and acetaminophen.

 

In studies conducted by the National Toxicology Program, fertility assessments
with acetaminophen have been completed in Swiss CD-1 mice via a continuous
breeding study. There were no effects on fertility parameters in mice consuming
up to 1.8 times the MHDD of acetaminophen, based on a body surface area
comparison. Although there was no effect on sperm motility or sperm density in
the epididymis, there was a significant increase in the percentage of abnormal
sperm in mice consuming 1.8 times the MHDD (based on a body surface comparison)
and there was a reduction in the number of mating pairs producing a fifth litter
at this dose, suggesting the potential for cumulative toxicity with chronic
administration of acetaminophen near the upper limit of daily dosing.

 

Published studies in rodents report that oral acetaminophen treatment of male
animals at doses that are 1.2 times the MHDD and greater (based on a body
surface comparison) result in decreased testicular weights, reduced
spermatogenesis, reduced fertility, and reduced implantation sites in females
given the same doses. These effects appear to increase with the duration of
treatment.

 

 

--------------------------------------------------------------------------------

 

 

 

 

In a published mouse study, oral administration of 50 mg/kg acetaminophen to
pregnant mice from Gestation Day 7 to delivery (0.06 times the MHDD) reduced the
number of primordial follicles in female offspring and reduced the percentage of
full term pregnancies and number of pups born to these females exposed to
acetaminophen in utero.

 

In a published study, pregnant rats oral administration of 350 mg/kg
acetaminophen (0.9 times the MHDD) from Gestation Day 13 to 21 (dams), reduced
the number of germ cells in the fetal ovary and decreased ovary weight and
reduced number of pups per litter in F1 females as well as reduced ovary weights
in F2 females.

 

16

HOW SUPPLIED/STORAGE AND HANDLING

 

APADAZ (benzhydrocodone and acetaminophen) is a capsule-shaped white tablet
debossed with “KP201” on one side. Each tablet contains 6.12 mg benzhydrocodone
and 325 mg acetaminophen.

 

The tablets are supplied as:

 

NDC 70040-0167-1:     Bottles of 100 Tablets

 

NDC 70040-0167-3:     Blister Wallet Pack of 18 Tablets

 

Flush expired or unused APADAZ tablets that are no longer needed down the toilet
or contact the Drug Enforcement Agency (DEA) to find the location of an
authorized collector (1-800-882-9539).

 

Storage

 

Store at 20°C to 25°C (68°F to 77°F). Excursions permitted between 15°C to 30°C
(59°F to 86°F). [See USP Controlled Room Temperature].

 

 

 

17

PATIENT COUNSELING INFORMATION

 

Advise the patient to read the FDA-approved patient labeling (Medication Guide).

 

Important Administration Instructions

 

Instruct patients how to properly take APADAZ [see Dosage and Administration
(2), Warnings and Precautions (5)].

 

 

•

Do not take more than 4,000 milligrams of acetaminophen per day. Call your
doctor if you took more than the recommended dose.

 

•

Use APADAZ exactly as prescribed to reduce the risk of life-threatening adverse
reactions (e.g., respiratory depression)

 

•

Do not discontinue APADAZ without first discussing the need for a tapering
regimen with your doctor.

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

Addiction, Abuse, and Misuse

 

Inform patients that the use of APADAZ, even when taken as recommended, can
result in addiction, abuse, and misuse, which can lead to overdose and death
[see Warnings and Precautions (5.1)]. Instruct patients not to share APADAZ with
others and to take steps to protect APADAZ from theft or misuse.

 

Life-Threatening Respiratory Depression

 

Inform patients of the risk of life-threatening respiratory depression,
including information that the risk is greatest when starting APADAZ or when the
dosage is increased, and that it can occur even at recommended dosages [see
Warnings and Precautions (5.2)]. Advise patients how to recognize respiratory
depression and to seek medical attention if breathing difficulties develop.

 

Accidental Ingestion

 

Inform patients that accidental ingestion, especially by children, may result in
respiratory depression or death [see Warnings and Precautions (5.2)]. Instruct
patients to take steps to store APADAZ securely and to dispose of unused APADAZ
by flushing the tablets down the toilet.

 

Maximum Daily Acetaminophen Use

 

Advise patients not to take more than 4,000 milligrams of acetaminophen per day
and call their doctor if they have taken more than the recommended dose. Advise
patients not to take APADAZ in combination with other tramadol or
acetaminophen-containing products, including over-the- counter preparations (see
Warnings and Precautions (5.5)].

 

Interactions with Benzodiazepines and Other CNS Depressants

 

Inform patients that potentially fatal additive effects may occur if APADAZ is
used with benzodiazepines or other CNS depressants, including alcohol, and not
to use these unless supervised by a healthcare provider [see Warnings and
Precautions (5.6), Drug Interactions (7)].

 

Serotonin Syndrome

 

Inform patients that opioids could cause a rare but potentially life-threatening
condition resulting from concomitant administration of serotonergic drugs. Warn
patients of the symptoms of serotonin syndrome and to seek medical attention
right away if symptoms develop. Instruct patients to inform their healthcare
providers if they are taking, or plan to take serotonergic medications. [see
Drug Interactions (7)].

 

MAOI Interaction

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

Inform patients to avoid taking APADAZ while using any drugs that inhibit
monoamine oxidase. Patients should not start MAOIs while taking APADAZ [see Drug
Interactions (7)].

 

Adrenal Insufficiency

 

Inform patients that opioids could cause adrenal insufficiency, a potentially
life-threatening condition. Adrenal insufficiency may present with non-specific
symptoms and signs such as nausea, vomiting, anorexia, fatigue, weakness,
dizziness, and low blood pressure. Advise patients to seek medical attention if
they experience a constellation of these symptoms [see Warnings and Precautions
(5.8)].

 

Hypotension

 

Inform patients that APADAZ may cause orthostatic hypotension and syncope.
Instruct patients how to recognize symptoms of low blood pressure and how to
reduce the risk of serious consequences should hypotension occur (e.g., sit or
lie down, carefully rise from a sitting or lying position) [see Warnings and
Precautions (5.9)].

 

Serious Skin Reactions

 

Advise patients to stop APADAZ immediately if they develop any type of rash and
to contact their healthcare provider as soon as possible [see Warnings and
Precautions (5.10)].

 

Anaphylaxis

 

Inform patients that anaphylaxis have been reported with ingredients contained
in APADAZ. Advise patients how to recognize such a reaction and when to seek
medical attention [see Contraindications (4), Warnings and Precautions (5.12),
Adverse Reactions (6)].

 

Pregnancy

 

Neonatal Opioid Withdrawal Syndrome

 

Inform female patients of reproductive potential that prolonged use of APADAZ
during pregnancy can result in neonatal opioid withdrawal syndrome, which may be
life-threatening if not recognized and treated [see Warnings and Precautions
(5.3), Use in Specific Populations (8.1)].

 

Embryo-Fetal Toxicity

 

Inform female patients of reproductive potential that APADAZ can cause fetal
harm and to inform their healthcare provider of a known or suspected pregnancy
[see Use in Specific Populations (8.1)].

 

Lactation

 

Advise nursing mothers to monitor infants for increased sleepiness (more than
usual), breathing difficulties, or limpness. Instruct nursing mothers to seek
immediate medical care if they notice

these signs [see Use in Specific Populations (8.2)].

 

--------------------------------------------------------------------------------

 

 

 

Infertility

 

Inform patients that chronic use of opioids may cause reduced fertility. It is
not known whether these effects on fertility are reversible [see Use in Specific
Populations (8.3)].

 

Driving or Operating Heavy Machinery

 

Inform patients that APADAZ may impair the ability to perform potentially
hazardous activities such as driving a car or operating heavy machinery. Advise
patients not to perform such tasks until they know how they will react to the
medication [see Warnings and Precautions (5.16)].

 

Constipation

 

Advise patients of the potential for severe constipation, including management
instructions and when to seek medical attention [see Adverse Reactions (6)].

 

Disposal of Unused APADAZ

 

Advise patients to flush the unused tablets down the toilet when APADAZ is no
longer needed or to contact the Drug Enforcement Agency (DEA) to find the
location of an authorized collector (1-800-882-9539).

 

 

 

 

 

Manufactured for:

KemPharm, Inc.

2500 Crosspark Road

Coralville, IA 52241

[ex_136268img003.gif]

 

 

PI-0167-01 R.02/18

 

 

 

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Exhibit D

[*]

 

 

--------------------------------------------------------------------------------

 

 

 

Exhibit E

Example Net Profit Share Computation 

 

 

--------------------------------------------------------------------------------

 

 

[*]