Exhibit 10.2

 

THE COMPANY HAS APPLIED FOR CONFIDENTIAL TREATMENT OF CERTAIN PROVISIONS OF THIS
EXHIBIT WITH THE SECURITIES AND EXCHANGE COMMISSION. THE CONFIDENTIAL PORTIONS
OF THIS EXHIBIT ARE BRACKETED AND MARKED WITH ASTERISKS ([**]) AND HAVE BEEN
OMITTED. THE OMITTED PORTIONS OF THIS EXHIBIT WILL BE FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT.

 

        

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Process Development and cGMP

Manufacture of Phase III CTM

 

Auxilium Pharmaceuticals

 

June 28, 2005

 

Cobra Reference No. O630

or

Auxilium Exhibit No. 9

  

 

Cobra Biomanufacturing Plc

The Science Park,

Keele,

U.K.

ST5 5SP

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Executive Summary

 

The objective of this program of works is to develop a commercially scaleable
fermentation and purification process at the [****] scale, which is
reproducible, robust and delivers higher [*********] productivity than the
current [***] process [**************]. The activities detailed in this proposal
will be conducted with a goal of achieving a productivity [******] purified
material from a [*********] strain process; the feasibility of which is based on
previous productivities reported by BTC using the [*********] (and replicated by
COBRA) and the experience gained by Cobra using the [*********].

 

Cobra’s primary objective under this contract is to achieve a productivity of a
minimum [*************] process from the [***] strain providing Auxilium with a
commercially viable process and establishing the opportunity, at Auxilium’s sole
discretion, for a long-term commercial relationship with Cobra.

 

Initially, Cobra would like to reproduce the [**********************] under
which BTC reported a productivity which would result in the manufacture of a
minimum of [*************] fermentation. The results from this experiment will
set the benchmarking for productivities. This work will be done at Cobra’s cost
in order to ensure that the productivity goal of a minimum of [*************]
batch from the [********] is realistic and achievable.

 

In an effort to assume some of the risk in this Phase III partnership, Cobra
will inform Auxilium at the end of each Stage I, II, and III what productivity
may be expected from a [*************] process. If the [********] (or an
otherwise mutually agreed upon [****] productivities resulting from the
benchmark work using the [***********]) has not been met, then Cobra may suggest
moving forward with the achieved productivities in order to supply the [****]
material required for Auxilium’s initial Phase III trials according to the
established project timeline. Auxilium will have the right to terminate the
program at the completion of each Stage if the objective or the timeline has not
been met. In order to meet Auxillium’s timescales for supply and still deliver
an optimized fermentation process capable of achieving the [*******] or an
otherwise mutually agreed upon productivity, Cobra will commit to an additional
3-month process development program free of charge.

 

In order to produce cGMP clinical material for Phase III trials, a reproducible
and robust process will need to be established. All experiments will be
complemented with comprehensive analysis in order to obtain a better
understanding of the way the fermentation properties affect the quantity of the
[*************] expressed, the level of contaminants and the stability of the
[************] during the purification process. The process will be scaled up
from the [**] scale to the [****] scale, focusing on reproducibility and
robustness. Finally, an engineering run will be performed under cGMP in order to
test the process and make any necessary modifications prior to any additional
cGMP manufacture(s) and ultimately validation of the process.

 

Confidential Document   2    June 28, 2005

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Stage I

 

  •   Fermenter evaluation for [*****************] component media for
benchmarking and comparative purposes (FOC)

 

  •   Assess optimal media from [**] fermentations previously performed under
[*************]

 

  •   Investigate the fermentation strategy [(*************)]

 

  •   Establish a robustness & reproducible fermentation process

 

Price = [$**********]

 

Stage II

 

  •   DSP process development

 

Price = [$*********]

 

Stage III

 

  •   Scale up fermentation process from Stage I to [****] scale

 

  •   Including the inoculum preparation

 

  •   Scale up of DSP to [****] scale

 

Price = [$*********]

 

Stage IV

 

  •   cGMP Engineering Run of 1 Batch at [****] Scale

 

Price = [$*********]

 

Stage V

 

  •   cGMP Manufacture of 2 Batches at [****] Scale

 

Price = [$********]

 

Total Price = $3,315,000 (excluding consumables)

 

Confidential Document   3    June 28, 2005

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Quotation O630

 

Stage I - Process Development Fermentation

 

The majority of this work will be done on material from [**] fermentations.
Where more [***********] is required, a [***] run will be implemented specially
to address the issue.

 

Work to be Completed:

 

•   Fermenter evaluation for [*************] media for benchmarking and
comparative purposes (FOC)

 

•   Screen various [****************] in shake flasks aiming to achieve
[************************]

 

•   Assess fermentation strategies [(*************)] in [**] fermenters using
newly identified [********] sources if appropriate

 

•   Detailed analysis of fermentation samples [(*************)]

 

•   Estimation of [*************] and contaminant quantities

 

•   Set up a stability to evaluate [*************] degradation of
[************************]

 

•   Determine harvest window

 

•   Select best fermentation medium and strategy based on [*************],
levels of contaminants and [***********] stability [(*************)]

 

•   Generate material for purification studies by the [**********] (this will be
completed [***********])

 

•   Technical report on all completed work, data, data analysis, conclusions and
recommendations.

 

Key Deliverable: The deliverable for Stage I is a volumetric fermentation titre
of [*************] fermentation culture as estimated by [********] by
[**********].

 

Decision Point: If deliverable is met on schedule, then proceed to next stage of
proposal. If deliverable is not met on schedule, then Auxilium will review
available information and determine whether to proceed to next stage or
terminate the project.

 

Subtotal    [$**********]

 

Stage II – Process Development Purification

 

Using material generated in Stage I a [************] where more starting
material is required) process run through using the modified purification
process will be performed, the aim being to assess the productivity and the
purity of the material generated from the new process. Additionally, the product
will be characterized to demonstrate that at each

 

Confidential Document   4    June 28, 2005

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stage material recovered is comparable to the reference material supplied by
BTC. At the intermediate stage it will be compared [*************] and the bulk
drug substance will be compared to the Final Drug Product [*************]
reference material supplied by BTC [*************] to ensure they are comparable
to the material produced to date with regards to sequence.

 

Work to be Completed:

 

Product Characterization and Stability Studies

 

•   Characterization of the product generated at Cobra in comparison to existing
reference material

 

  •   [*********************]

 

  •   [*********************]

 

  •   [*********************]

 

•   Obtain a full understanding of the product stability during the purification
process and an initial evaluation of the stability of the liquid drug substance.

 

•   Assessment of procedures to inhibit [*************]

 

•   A structured study of product stability with inhibition of [*************]
of the [*************] products

 

Assessment of Modified Fermentation Process

 

•   Key hold steps and final product stages will be assessed and compared with
that observed for the existing process

 

•   Technical report on all completed work, data, data analysis, conclusions and
recommendations.

 

Key Deliverable: The deliverable for Stage II is
[*****************************************.]

 

If deliverable is met on schedule, then proceed to next stage of proposal. If
deliverable is not met on schedule, then Auxilium will review available
information and determine whether to proceed to next stage or terminate the
project.

 

Subtotal    [$**********]

 

Stage III - Process Scale-up and Intensification [(*************)]

 

Work to be Completed:

 

Fermentation

 

•   Identify efficient and effective inoculation steps to produce a robust
reproducible inoculum train

 

Confidential Document   5    June 28, 2005

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•   Assess the reproducibility of the inoculum preparation process
[*************]

 

•   Address issues of handling and preparing large quantities of media
[*************]

 

•   Perform [****] fermentation scale-up run

 

•   Analysis of fermentation harvest

 

•   Technical report on all completed work, data, data analysis, conclusions and
recommendations.

 

Purification

 

•   Removal of all un-scalable operations such as: [*************]

 

•   Intensification by attempting to process at [*************]

 

•   Increase throughput to [*************]

 

•   Increase [*************]

 

•   Small scale demonstration at [**] and [***] scale of purification process
[*************]

 

•   Generate new SOPs and BMRs documentation for cGMP Engineering Run in Stage
IV

 

•   Critical process parameters and operating ranges will be identified and
incorporated into SOPs and BMRs, however they will not be validated at this
stage

 

•   Analysis

 

•   Technical report

 

In Stage III, the intensified purification process will be performed at the
[*************] scale to demonstrate that product quality and yields are in-line
with expectations and to identify any logistical issues ahead of scaling the
purification process to the [****] scale. The product generated from this study
may be put through full QC clearance and will be made available to Auxilium for
in-house studies and possibly pre-clinical use.

 

Key Deliverable: The deliverable for Stage III is the small-scale demonstration
of a reproducible and robust process that will
[************************************************************.]

 

If deliverable is met on schedule, then proceed to next stage of proposal. If
deliverable is not met on schedule, then Auxilium will review available
information and determine whether to proceed to next stage or terminate the
project.

 

Critical Decision Point: If the demonstration of a robust and reproducible
process that
[******************************************************************************************
***********************************************************************,] then
the program will proceed to next stage of the proposal. If the productivities
obtained by the end of Stage III do not meet the deliverable or do not

 

Confidential Document   6    June 28, 2005

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reach the objectives of commercially viable scale, then Auxilium may instruct
Cobra to proceed with the current productivities for the cGMP Engineering Run
and/or implement a 3-month process development program immediately after
Decision Point considerations. Cobra will then outline exactly what the next
steps for a 3-month process development program and detail probability of
success and will implement the program after approval by Auxilium.

 

Subtotal    [$*************]

 

Stage IV – [****] cGMP Engineering Run

 

The fermentation and purification processes will be demonstrated by executing a
full scale [****] Engineering Run, the aim being to [************************]
drug substance for lyophilization. All materials will be tested to the agreed
specification. The Engineering Run will be performed to a cGMP BMR. Material
produced from this batch will be made available to the customer for potential
finished product processing.

 

Work to be Completed:

 

•   [****] cGMP Engineering run

 

•   [************************]

 

•   QC Clearance of bulk material

 

•   cGMP summary report for production of drug substance

 

•   QC analysis of lyophilized material (drug product)

 

•   Summary report for QC release of drug product

 

•   QP release

 

Subtotal    [$*************]

 

Key Deliverable: The deliverable for Stage IV is proof of full scale
manufacturing process as evidenced by production of [*************] that meets
preliminary/tentative specifications and was produced from the developed
manufacturing process under cGMP conditions [*************.]

 

Decision Point: Proceed with cGMP manufacture(s).

 

If the target deliverable is met on schedule, then proceed to the next stage of
the proposal. If deliverable is not met on schedule, then Auxilium will review
available information and determine whether to proceed to next stage or
terminate project.

 

Assumption of Risk: Cobra will accept responsibility for a failure due to a cGMP
requirement of the Engineering Run. Auxilium will accept responsibility for a
technical failure of the Engineering Run since time restraints prohibited a full
scale practice engineering run prior to cGMP.

 

Confidential Document   7    June 28, 2005

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Stage V – [***] cGMP Manufacture

 

Work to be Completed:

 

  •   cGMP reproducibility runs (minimum of [**] further cGMP process runs)

 

  •   QC analysis of intermediates and clearance of drug substance (bulk)

 

  •   QA review and provision of cGMP summary reports

 

  •   Work completed by [*************]

 

Subtotal    [$*************]

 

  •   QC analysis of lyophilized Drug Product [(*************)]

 

  •   QP release of Drug Product [(*************)]

 

Subtotal    [$*************]

 

Assumption of Risk by Cobra: Cobra will accept responsibility for any failed
cGMP runs.

 

Total    $3,315,000

 

This quotation is valid until July 15, 2005.

 

Notes:

 

1. The costs of consumables have not been included in the above quotation and
will be billed directly to the customer without additional charge. Estimates are
provided below, but cannot be confirmed until the final process is determined
[(*************).]

 

Fermentation      Stage 1    [$*************] Stage 2    [$*************] Stage
3    [$*************] Stage 4    [$*************] Stage 5    [$*************]

 

DSP      Stage 2    [$*************] Stage 3    [$*************] Stage 4   
[$*************] Stage 5    [$*************]

 

Other QA and Subcontract Whole Program    [$*************]

 

Confidential Document   8    June 28, 2005

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2. This proposal does not include formulation development, fill/finish or
lyophilization of final product.

 

3. This proposal does not include Process Validation.

 

4. All subcontract prices are estimates and are not binding (below).
Subcontracted work will be invoiced separately from the Cobra work program with
an additional 10% charge for coordination. Cobra will notify Auxilium prior to
any work being subcontracted.

 

  •   [*************]

 

  •   [*************]

 

  •   [*************]

 

5. Cobra will take responsibility for shipment. The price of shipment of bulk,
dosage forms and samples and insurance thereof is excluded from this contract.
Shipping will be arranged in consultation with the customer and will be billed
directly to the customer
[(*************)**********************************************************************].

 

6. Prior to any information being disclosed in the form of a Press Release
written approval must be obtained from the other party.

 

7. In order to comply with cGMP regulations; a separate technical agreement
between Cobra and Auxilium must be in place before cGMP manufacture is
initiated. A proforma template can be supplied by Cobra on request.

 

8. It is estimated that the cost of the additional process validation studies
may range from [$*************] depending on the scope of studies required for
this orphan drug by the FDA. A final price will be determined as soon as
possible or after meeting with the FDA.

 

9. All other terms and conditions of the Research and Development Agreement
(“the Agreement”) having an effective date of September 15, 2004 are
incorporated by reference as if fully set forth herein; provided, however, that
the parties specifically agree that Cobra shall not be entitled to terminate the
Agreement pursuant to Section 10.1 of the Agreement with respect to the Services
set forth in this Exhibit 9.

 

10.

For Work performed by Cobra regarding Stages I, II, and III this Proposal will
be governed by the Terms and Conditions of the Research and Development
Agreement executed between Cobra and Auxilium, dated [*************.] To the
extent that Cobra and Auxilium proceed to Stages IV and V of this Proposal, the
Cobra Services shall be subject to a final agreement to be negotiated between
the parties regarding contract manufacturing and clinical supply (“Final
Contract Manufacturing and Clinical Supply Agreement”). The Final Contract

 

Confidential Document   9    June 28, 2005

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Manufacturing and Clinical Supply Agreement shall include, but not be limited to
criteria and standards governing scale up and production, cGMP compliance,
including validation, testing, batch release and other quality assurance,
technical and regulatory requirements designated by Auxilium.

 

How to Proceed

 

Please return a signed copy of the contract with your formal Purchase Order to
Cobra Biomanufacturing.

 

[*************

 

*************

 

*************

 

*************

 

*************

 

*************

 

*************]

 

When timing is critical a faxed version is acceptable, but an original must be
signed and returned within fourteen days. Upon receipt Cobra will notify the
client of acceptance within 72 hours.

 

Confidential Document   10    June 28, 2005

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Auxilium Pharmaceuticals, Inc.

40 Valley Stream Parkway

Malvern, PA 19401

USA

 

June 28, 2005

 

Contract O630

 

Process Development and cGMP Manufacture of Phase III CTM

 

Total for Cobra Work Program:    $3,315,000

 

Terms of Payment

 

The following payment terms will apply upon signing of Proposal O630 by both
Cobra and Auxilium:

 

Purchase orders for each Stage of this proposal shall be issued by Auxilium upon
approval to commence the work outlined in the corresponding stage. Upon Auxilium
approval to initiate a Stage and receipt of the corresponding Purchase Order
from Auxilium, Cobra shall issue an invoice for [*************] of the total
Stage cost, in the case of Stage I and II, [***********] of the total Stage
cost, in the case of Stages III, IV and V. The remaining balance of each Stage’s
total cost shall be invoiced appropriately by Cobra on a monthly basis against
work completed. However, the final [******] of each Stage’s total cost shall not
be invoiced and become due until the delivery by Cobra and acceptance by
Auxilium of Technical Report and/or the Certificate of Analysis by Auxilium’s QA
Department for the respective Stage.

 

For Auxilium Pharmaceuticals, Inc.

     

For Cobra Biologics Ltd.

Accepted by:  

Gerri Henwood

     

David R. Thatcher, Chief Executive

Title:

 

CEO

     

Signature:

 

/s/ David R. Thatcher

Signature:

 

/s/ Gerri Henwood

     

Date:

 

July 27, 2005

Date:

 

July 27, 2005

           

 

Confidential Document   11    June 28, 2005

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Down Payment Invoice Scheme:

 

Upon signing of this proposal by both parties, Auxilium to issue Purchase Order
for Stages I and II of the program.

 

[*************]

 

[*************]

 

Cobra to invoice Auxilium for [*************] of total Stage cost.

 

Stages I and II Down Payment= [$*************]

 

Upon approval by Auxilium to commence subsequent Stages, Auxilium to issue
Purchase Order for approved Stage and Cobra to invoice [***] of total Stage
cost.

 

Stage III = $[******]    Down Payment= [$*************] Stage IV = $[******]   
Down Payment= [$*************] Stage V = $[******]    Down Payment=
[$*************]

 

Confidential Document   12    June 28, 2005