Exhibit 10.85
(CANGENE BIOPHARMA LOGO) [f55254f5525402.gif]
1
Supply Agreement

              Client Name:     QUESTCOR     Agreement Effective Date:    
01/21/2010    

1111 South Palm Street
Baltimore, MD 21230
(Ph) 410-843-51100
(Fax) 410-843-4414
 

1   [***]: Certain confidential information contained in this document marked
with [***] has been omitted and filed separately with the Securities and
Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended.

 

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PROJECT PROPOSAL
Contact Information:

             
TO
  Dave Medeiros   FROM   Greg Mino
 
  SVP, Manufacturing       Director, BD & PM
 
  Questcor Pharmaceuticals, Inc.       Cangene bioPharma, Inc.
 
  3260 Whipple Road       1111 South Paca Street
 
  Union City, CA 94587       Baltimore, MD 21230
 
  DMedeiros@questcor.com       mingog@cblinc.com
 
  Ph: (510) 400-0772       Ph: 410- 843-5005 x 2088
 
  Fax: (510) 400-0715       Fax: 410-843-4414

Product info:

     
Product Name
  HP Acthar Gel
Presentation
  Vial/liquid presentation
Regulatory Status
  Commercial

General Assumptions:
     Cangene bioPharma will:

  1   Provide processing and laboratory equipment for each manufacturing run.  
  2   Perform all work under approved Cangene bioPharma SOP’s and/or protocols.
    3   Ensure that all product contact equipment is either virgin, product
dedicated, or released as clean by validated cGMP methods.     4   Perform
validation work as listed within this proposal, which will, in general, precede
the sterile fill.     5   Fill product gravimetrically with density data
obtained during development.     6   Write a Cangene bioPharma batch record,
which is developed from information provided by the Client.     7   Provide
Client with a copy of the completed Batch Production Record, including a
Certificate of Analysis.

     QUESTCOR will provide the following:

  1   Provide to Cangene bioPharma the Signed Proposal Acceptance Sheet prior to
project commencement (commencement activities include development of timeline,
ordering of any project-related materials or development of protocols/batch
records).     2   Provide all pertinent product information such that Cangene
bioPharma can assure employee safety. For small molecules and polymers, Cangene
bioPharma requires the chemical structure of the API. For peptides, proteins or
nucleic acids, Cangene bioPharma is looking for suitable chemical
characterization data. For biologicals, safety documentation must include
testing for viral markers and validation of viral clearance steps in the
manufacture of API.     3   Provide those items as agreed upon and which may
include container and closures, pre-released bulk product, MSDS, Certificate of
Analysis, label text, assay methods, reference standard and other documentation.
    4   Approve the batch record by signature.     5   Secure any necessary
approvals for the use of the product.     6   Perform all additional testing
necessary for release of the product not performed by Cangene bioPharma.

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Agreement purpose:
THIS SUPPLY AGREEMENT (the “Agreement”) is entered into as of the effective
date, by and between Questcor Pharmaceuticals, Inc., having an address at 3260
Whipple Road, Union City, CA 94587 and Cangene bioPharma, INC., a Maryland
corporation having an address at 1111 South Paca Street, Baltimore, MD 21230,
with respect to the following:
RECITALS

  A.   Questcor is in the business of developing and commercializing drug
products.     B.   Cangene bioPharma is in the business of formulating,
sterilizing, filling, and packaging liquid injectable drug products.     C.  
Questcor and Cangene bioPharma desire to enter into this Agreement in order to
establish the terms and conditions under which Cangene bioPharma will formulate,
fill, and package for Questcor the various Products included in the Product
Descriptions at Exhibit A hereto.

NOW THEREFORE, in consideration of the premises and the mutual promises and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
The policies, terms and conditions detailed in this agreement and on the second
page of the acceptance page will be in effect for the duration of this agreement
and these terms and conditions will take precedence over any specified in other
documentation including Questcor’s.
ARTICLE II
The term of this Agreement shall commence on the effective date and continue
until notice of no less than twelve (12) months is given by either Questcor or
Cangene bioPharma to the other.
Cangene bioPharma will continue to provide the same manufacturing services, if
notice of termination is given by Cangene bioPharma, until Questcor transfers
the manufacturing to an alternative site and manufacturing at the alternative
site is approved by the FDA or until three (3) years from the date of the notice
of termination, whichever is shorter.
ARTICLE III
Cangene bioPharma shall prepare and maintain the Master Batch Record for the
fill of the product at Cangene bioPharma. This Master Batch Record will be
approved by Questcor and will detail required processing steps and indicate
responsibilities for supply of materials.

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ARTICLE IV
Commencing January 1, 2011 and on an annual basis thereafter, the price for the
Product may be increased by way of written notification from Cangene bioPharma
to Questcor. [***]†
 

[***]   CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

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Project Activities:
Equipment & Materials
Project Specific Direct Expenses
Due to the variable scope of projects at Cangene bioPharma, it is necessary to
recover project material costs [***]
Laboratory Support Activities
Manufacturing Support Activities
Engineering Run
While Cangene bioPharma has extensive expertise aseptically filling vials, every
fill has unique and significant nuances that are best addressed with formal
operator training. An obvious difference between fills is the product and the
product’s handling characteristics. Somewhat less obvious is the container that
holds the product and the fittings and specific manipulations required for each
fill. For nearly every product that Cangene bioPharma fills the instructions for
sterilization, including the mechanics for setup of the sterilization, are
unique. Often there is an accompanying formulation or associated temperature
control for which operator training is an issue.
Beyond sterilization, Cangene bioPharma routinely operates multiple pieces of
filling equipment, each with a wide variety of change parts. The total number of
combinations is just large enough that very few set-ups are counted as routine.
Besides operator training, other reasons for performing an engineering run
include assurance that the proper pump has been chosen and that the pump speeds
are consistent with the number of units to be filled. In addition Cangene
bioPharma operators will obtain equipment settings that can be added to the
batch record.
Engineering runs must, of course, be performed in the fill room with the actual
equipment and operators expected for the fill. However, a major reason for the
work is to obtain appropriate data for accurately writing the batch record. As a
consequence, the run will not be performed with a batch record but rather with a
protocol and in some cases with two or more protocols. Actual product may be
needed depending upon the specific study objectives. In other cases, it will be
possible to utilize a simulant (placebo) and obtain suitable results.
Documentation Support Activities
Master Batch Record Revision
Cangene bioPharma will revise an existing master batch record previously
generated at Cangene bioPharma and approved by Cangene bioPharma and the client.
All changes will be recorded in the change history in accordance with cGMPs.

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For each master batch record revised by Cangene bioPharma for a client, it is
expected that clients will have input to the master batch record prior to the
start of the revision process. Such input may come from a formal technical
transfer package provided to Cangene bioPharma, a client meeting, phone
conversations with the client, or other written or verbal communication. In
addition, after the first formal client review, it is expected that Cangene
bioPharma will make one round of corrections and changes at no charge, at which
time the proposed batch record will be sent to the client for final signature
indicating approval. Excluding corrections of information previously
transmitted, any additional client requested changes to the batch record will be
charged to the client at Cangene bioPharma’s hourly rate.
Other Documentation
Cangene bioPharma will develop other specifications, SOPs, testing standards, or
protocols as required to execute client requested activities. For these items,
Cangene bioPharma will provide a cost estimate for the work required for
approval by the client prior to commencing any work.
[***]‡
Manufacturing Activities
Fill Price
The price is based on a clean room day charge composed of a fixed and variable
portion, plus per unit packaging costs as detailed below

a)   Purchase and GMP receipt of excipients, components, other materials   b)  
Sufficient trained operators using [***] clean room and necessary ancillary
equipment and facilities [***] for the express purpose of manufacturing client
product according to a batch record that has been pre-determined and agreed to
by Cangene bioPharma and the client.   c)   A [***] room and trained [***]
personnel [***] as may be required by the agreed batch record and inclusive of
the filling time overlap.   d)   Standby, on call laboratory personnel to
perform in process QC testing.   e)   Environmental monitoring before, during
and after the fill and trained environmental personnel.   f)   Post process
cleaning and metrology overhead such as equipment maintenance, calibration, and
sterile filter integrity testing.   g)   Visual inspection of [***].   h)  
Finished product analytical testing that is performed at Cangene bioPharma.   i)
  Sterility Testing   j)   Quality assurance review of all GMP paperwork.   k)  
One copy of the completed batch record on file at Cangene bioPharma, including
all associated CofA’s, environmental reporting, and analytical and
microbiological results.

QA/Regulatory Requirements & Support
Investigations
In the case that testing reveals out-of-specification results or exceptional
results, the Client will be notified and an investigation will be completed. All
work (including the time-spent reviewing the investigation with management and
quality assurance personnel) associated with the investigations, which are not
deemed to be a Cangene bioPharma error, will be invoiced at an hourly rate
 

[***]   CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

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Regulatory Affairs Support
Regulatory Affairs and Quality Assurance personnel will be available to support
the preparation of the FDA submission and to support the submission during the
review process via telephone, mail or in person. Specific work that may be
charged to the client as regulatory support includes the following.

•   Meetings with government (US or foreign) authorities, whether in person or
by phone.   •   Preparation of documents in anticipation of a pre-Approval
Inspection (PAI).   •   Audits of Cangene bioPharma by or on the behalf of the
client in excess of one per year.   •   All audit correspondence beyond the
initial response, including client requested revisions to Cangene bioPharma’s
audit response.   •   Letters of reference from Cangene bioPharma or Cangene
bioPharma’s vendors that are requested by the client. (e.g. Master file
reference letters, rubber or glass component vendor letters)   •   Documentation
provided to regulatory authorities on behalf of the client. (e.g. GMP compliance
and Debarment letters)   •   All correspondence and documentation generated for
or on the behalf of the client.   •   Annual product reviews for commercial
products, as required by the controlling regulatory authority.   •   All time
used for collecting and photocopying client documentation. One copy of a
complete batch record is exempted from support charges.

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Pricing Page:
Equipment & Materials

                  Qty   Activity   Deliverable   Price   Estimated Total
(***§)
  Project Specific Direct Expenses
(invoiced with each fill)   Invoice   [***]   [***]

Laboratory Support Activities
Cangene bioPharma will notify N/A should testing yield aberrant or
out-of-specification data. All work (including time spent reviewing the
investigation with Laboratory management and quality assurance personnel)
associated with Laboratory investigations that are not deemed laboratory error
will be charged to N/A at the hourly rate. N/A also agrees to pay for any
retests that confirm the original test results including marginal pass/fail
results. Cangene bioPharma will revise transfer protocols and/or final reports
once at no additional charge upon N/A request. Additional revisions to protocols
or final reports will be conducted at the hourly rate. N/A will not be charged
for revisions required due to Cangene bioPharma error.
Manufacturing Support Activities

                  Qty   Activity   Deliverable   Price   Estimated Total [***]  
Engineering Run *
- If required
  Report   [***]   [***]

 

*   Unanticipated results may result in the need for additional Engineering runs
or other studies.

Documentation Support Activities

                  Qty   Activity   Deliverable   Price   Estimated Total
[***]
  Master Batch Record Revision   Master Batch Record   [***]   [***]
[***]
  Other Documentation   TBD   [***]   [***]

Manufacturing Activities

                  Qty   Activity   Deliverable   Price   Estimated Total [***]  
Fill Price — [***]
[***]
  Batch Record   [***]   [***]

QA/Regulatory Requirements & Support

                  Qty   Activity   Deliverable   Price   Estimated Total
[***]
  Investigations   Report   [***]   [***]
[***]
  Regulatory Affairs Support   Support   [***]   [***]

 

[***]   CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

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Terms: Purchase Orders for any work under this agreement are to be issued.

  •   (*****). at shipment of executed batch record, [***]     •  
Qualification/Validation Studies will be invoiced when each report is sent to
the client completed or for signature (if required), [***]     •   [***]     •  
Cangene bioPharma’s Cancellation and Terms and Conditions policies apply.     •
  Hazardous or medical waste will be manifested and discarded as required by
state and federal laws. [***]

Cangene bioPharma Scheduling Policy
In order for Cangene bioPharma to provide Clients with a meaningful expected
schedule, and reduce the chance of Clients being subjected to cancellation fees,
Cangene bioPharma adheres to this policy. This policy allows predictability in
timing of fills and a much higher level of assurance of an on-time delivery of
product.

  •   Clients will provide to Cangene bioPharma a [***] forecast [***].     •  
Clients will provide [***] materials identified as being client supplied
materials to Cangene bioPharma with proper documentation [***] in advance of a
fill.     •   Clients shall supply a Purchase Order for batches to be filled
[***].     •   Cangene bioPharma requires that an approved master batch record
for the fill along with any other project specific materials be in place prior
to a firm fill date being assigned.

Once the above conditions are met, Cangene bioPharma will provide the client a
fill date [***].
 

[***]   CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

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    [***]

Cangene bioPharma Cancellation Policy

1.   Clean room [***] will not be assigned without a valid purchase order.   2.
  All purchase orders must be accompanied by the requisite prepayment.   3.   If
a fill is CANCELLED, the fee schedule in effect at the time of the cancellation
will apply. [***]   4.   If the project or a project vignette is terminated by
the client, all hours obligated against the project will be billed [***].
Additionally, an early project termination fee [***] applies to project
cancellation.   5.   Once a fill is cancelled, a new quote and purchase order
will be required to renew the order.

Cangene bioPharma Document Approval Policy
In order for Cangene bioPharma to provide clients with meaningful schedules and
timely closeout of reports, deviations, executed batch records, etc., Cangene
bioPharma adheres to this policy. This policy allows for predictability in the
timing of the approval of master batch records, reports, deviations and other
documentation and encourages clients to provide thorough and timely feedback
during document approval.
Clients will have the following time periods for review and comment for the
documents below once sent by Cangene bioPharma. After that time period, Cangene
bioPharma may opt to close the document by noting that the client did not
respond within the required timeframe

  •   Master Batch Records: [***]     •   (Routine Validation or Laboratory
Reports: [***]     •   Technical Transfer and Process Validation Reports: [***]

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  •   Deviations: [***] (Failure to return deviations promptly will affect
executed batch release times)     •   Investigations: [***]

For master batch records specifically, [***] of master batch record approval
changes by the client is included in the cost of developing the initial master
batch record. Changes to batch records or requested planned variances after this
initial review by the client will be billed at the current rate for
documentation changes. Changes generated by Cangene bioPharma will not be billed
to the client. By signing the Master Batch Record, clients are agreeing that the
manufacturing process in the record is what they expect to occur. For this
reason, Cangene bioPharma expects clients to pay particular attention to the
most vital areas of the record, including but not limited to specifications,
formulation calculations and steps, in-process and final product testing and
fill target parameters, Cangene bioPharma will not be liable for errors in lots
filled in accordance with client approved master production records as a result
of incorrect or omitted client-and product-specific information.
Cangene bioPharma Project Completion Policy
In order for Cangene bioPharma to provide Clients with a satisfactory experience
and allow Cangene bioPharma to properly allocate resources, Cangene bioPharma
adheres to this policy. This policy allows for Cangene bioPharma to maintain its
focus on active projects while giving appropriate support to clients whose
projects have been completed.
Clients at Cangene bioPharma authorize work through signing quotes, contracts,
or change orders. In order to bring closure to the process, the project will be
considered closed one month after the last report or batch record is sent to the
client. Requests for information, regulatory support or additional work after
this point require Cangene bioPharma to identify the scope of the request and
issue a new quote, contract, or change order to cover the request.
This policy will ensure that clients at Cangene bioPharma will receive the
proper amount of attention while their projects are being completed.
Cangene bioPharma Inventory Return Policy
In order for Cangene bioPharma to provide Clients with a satisfactory experience
and allow Cangene bioPharma to properly allocate resources, Cangene bioPharma
adheres to this policy. This policy allows for Cangene bioPharma to maintain its
focus on active projects.
Clients frequently send material to Cangene bioPharma for developmental or GMP
use. These materials are given a period of [***]†† (unless a shorter length is
specified by the client) before they are designated as “aged material.” Clients
with “aged material” will be contacted by project management with a request for
disposition of the material. The material will be disposed of or returned to the
client at the client’s expense. [***]. If no instructions are received, the
material will be returned to the client. Additionally, if a client becomes
inactive (no purchase orders or projected schedule of fills at Cangene
bioPharma) [***], the client will be contacted by project management requesting
disposition instructions as above.
This policy will ensure that Cangene bioPharma has sufficient space to maintain
inventory for active projects.
 

[***]   CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH THE COMMISSION

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PROPOSAL ACCEPTANCE SHEET
Completion of this Acceptance Sheet signifies client acceptance of Cangene
bioPharma and Questcor Supply Agreement, dated 01/21/2010, including the terms
and conditions listed on the next page. These terms and conditions will take
precedence over any specified in the customer’s documentation.
All invoicing is to be sent directly to:

                      Accounts Payable       Optional additional Addressee:    
 
                   
Name:
          Name:        
Telephone No.:
 
 
      Address:   
 
   
 
 
 
       
 
   
Address:
                   
 
 
 
     
 
                               

Supply Agreement Approval Signatures:

             
Questcor Pharmaceuticals, Inc.
      Cangene bioPharma, Inc.    
 
           
 
     
 
   
Signature
      Signature    
 
           
 
    General Manager    
 
Title
      Title    
 
           
 
      Vicki Wolff-Long    
 
Name (type or print)
      Name    
 
             
 
Date
     
 
Date    

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Cangene bioPharma, INC.
Terms and Conditions Precedent w the Acceptance of a Purchase Order

1.   Cangene bioPharma will be responsible for dutifully performing instructions
according to a batch record, which has been jointly agreed to by the Customer
and Cangene bioPharma. The customer acknowledges that the work to be performed
by Cangene bioPharma is experimental in nature and portions of the work may not
have been fully validated within generally accepted standards of the
pharmaceutical industry. As such, Cangene bioPharma will not be responsible for
unexpected results that can be attributed to a process or procedure either
supplied by, or requested by the Customer, that has not been fully validated.  
2.   All documentation and submissions to regulatory authorities in support of
the Customer’s product are the responsibility of the Customer. No documentation
will be provided by Cangene bioPharma except as specifically contracted between
the Customer and Cangene bioPharma.   3.   Cangene bioPharma makes no
representation or warranties regarding the suitability of the Customer’s product
for any purpose whatsoever, or for the efficacy of such product.   4.   The
Customer is solely responsible for providing complete and accurate scientific
data to Cangene bioPharma regarding Customer’s product and Customer’s
requirements for formulation, fill and finish of Customer’s product.   5.   In
accepting its obligations under the terms of the Purchase Order, Cangene
bioPharma has relied upon the accuracy, completeness and correctness of the data
and information provided by the Customer in developing the project, any
associated time line and the estimated or fixed cost for the project. It is
understood by the Customer that additional charges may be billed to the Customer
in the event that any data or information provided by the customer proves to be
incorrect, incomplete or in error and as a result requires more effort by
Cangene bioPharma than anticipated in the original project proposal.   6.   The
Customer warrants to Cangene bioPharma that all substances delivered by Customer
to Cangene bioPharma will be free of hazardous or toxic material and that no
specific safe handling instructions are applicable to any such substance or
materials, except as disclosed to Cangene bioPharma in writing by Customer in
sufficient time for review by Cangene bioPharma and prior to delivery to Cangene
bioPharma.   7.   The Customer represents and warrants to Cangene bioPharma that
all finished product delivered by Cangene bioPharma to Customer will be held
and/or used or disposed of by Customer in a safe and responsible manner, and in
accordance with all applicable laws, rules and regulations.   8.   Prepayment
fees (not including Commencement/Project initiation fees), where applicable, are
refundable less charges under Cangene bioPharma’s Cancellation and Postponement
Policy and/or the expenses incurred by Cangene bioPharma prior to the
cancellation or postponement. Other payments including Commencement/Project
Initiation fees are non-refundable.   9.   The specific work to be invoiced by
Cangene bioPharma is set forth in the quote. The Customer acknowledges that the
quote may be inadequate due to unforeseen circumstances which increase the
amount of work required to complete the project. Cangene bioPharma will notify
the customer immediately if the costs to complete the project exceed the
proposed budget. No additional work involving charges in excess of the project
quote will commence without customer approval.   10.   The Customer acknowledges
and agrees that Cangene bioPharma’s liability to Customer is limited to the
value of the amounts invoiced by Cangene bioPharma and that Cangene bioPharma’s
obligations to Customer are limited to performance by Cangene bioPharma of
services (formulation, sterilization, fill and finish) in accordance with the
master batch record and applicable Good Manufacturing Practices (GMP’s).
Accordingly, except to the extent of value of the work invoiced,
notwithstanding. Cangene bioPharma’s negligence or failure to perform in
accordance with applicable GMP’s and the batch record, Cangene bioPharma shall
have no responsibility or obligation to Customer for Customer’s pharmaceutical
product delivered to Cangene bioPharma, or for any delay encountered by Customer
in its product development or product approval process, resulting from Cangene
bioPharma’s actions or inactions.   11.   In the course of performing its
obligation under the terms of the Purchase Order, Cangene bioPharma may purchase
materials in anticipation of events identified by the Quotation to which the
Purchase Order has authorized work or by Customer signed change orders to the
same. Should those materials become unusable to the project as a consequence of
delays in or changes to the project, including but not limited to postponement
or cancellation, and whether such delays or changes can be attributed to the
actions or inactions of Cangene bioPharma, the cost of such materials will be
invoiced to the customer and the customer agrees to pay to Cangene bioPharma the
amounts so invoiced.   12.   The arrangement between Cangene bioPharma and
Customer is one of service provider and Customer. No joint venture, partnership
or agency is to be created or deemed as between Cangene bioPharma and Customer.
  13.   The Customer agrees to indemnify and hold Cangene bioPharma and its
employees and agents harmless from any claim or liability, including attorney’s
fees, incurred or made against Cangene bioPharma arising out of or relating to
any breach of any representation or warranty made by Customer to Cangene
bioPharma hereunder, or otherwise, including, without limitation, any claim or
liability asserted by any participant in any clinical trial of Customer’s
product.   14.   Cangene bioPharma shall not be liable for the replacement or
for the cost or value of any Active Ingredient, Materials or production
equipment supplied to Cangene bioPharma by the Customer including but not
limited to any Active Ingredient Materials or production equipment lost or
damaged or incorporated into any rejected or nonconforming batch of product.

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