Exhibit 10.72
*** INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS
REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
SECOND AMENDMENT TO
TRANSITION AGREEMENT DATED JANUARY 28, 2005
     This SECOND AMENDMENT to the Agreement (hereinafter defined) (this “Second
Amendment”), effective September 8, 2006 (“Effective Date”), is made and entered
into by and between MEDICIS PHARMACEUTICAL CORPORATION, a Delaware corporation
maintaining its offices at 8125 North Hayden Road, Scottsdale, Arizona
85258-2463 (“MEDICIS”), and aaiPharma Inc., a Delaware corporation and the
parent company of AAIPharma Inc. (formerly known as AAI International, Inc.),
having offices at 2320 Scientific Park Drive, Wilmington, NC 28405
(“AAIPharma”).
RECITALS:
     A. MEDICIS and AAIPharma are parties to that certain Transition Agreement,
dated as of January 28, 2005, as amended pursuant that certain First Amendment,
dated August 11, 2006, (collectively, the “Agreement”); and
     B. MEDICIS and AAIPharma desire to amend the Agreement as hereinafter
provided.
     NOW, THEREFORE, in consideration of the foregoing recitals, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
     All capitalized terms not otherwise defined herein shall have the meaning
as set forth in the Agreement. The parties acknowledge and agree that this
Second Amendment amends, and supersedes in part, the Agreement in accordance
with the terms set forth herein.

A.   Agreement of Quality/Technical Responsibility of Exhibit III. The Agreement
of Quality/Technical Responsibility of Exhibit III is hereby deleted in its
entirety and replaced with the revised Agreement of Quality/Technical
Responsibility attached hereto.   B.   Binding Effect. Except as modified in
this Second Amendment, the Agreement, as previously amended, shall remain
unchanged and in full force and effect. The parties represent and warrant that,
as of the Effective Date, no other agreements, written or oral, exist between
the parties with respect to the subject matter covered herein except for the
Agreement and this Second Amendment. The parties acknowledge and agree that in
the event of any conflict between the terms amended pursuant to this Second
Amendment and the other terms of the Agreement, the terms of this Second
Amendment shall govern.   C.   Counterparts. This Second Amendment may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall be deemed one and the same instrument.   D.  
Authority. Each party represents and warrants to the other party that this
Second Amendment is being executed by the authorized representatives of each
party.

     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
be executed by their duly authorized representatives as of the Effective Date.

              MEDICIS PHARMACEUTICAL CORPORATION AAIPHARMA INC.  
By:  
      By:      
 
       
 
           
Name:
    Name:  
 
           
 
           
Title:
    Title:  
 
           

1

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AGREEMENT OF QUALITY / TECHNICAL RESPONSIBILITY
This document constitutes the Quality/Technical Agreement (“QT Agreement”) of
responsibilities for contract pharmaceutical manufacture and/or packaging is
between AAIPharma Inc., on behalf of itself and its subsidiaries (“AAI”) and
Medicis Pharmaceutical Corporation (“Medicis”). This QT Agreement is
incorporated within, and intended to supplement, the Manufacturing Terms
attached as Exhibit III to that certain Transition Agreement (the “Manufacturing
Terms”) between the parties dated January 28, 2005 with respect to the Product
manufactured thereunder.
This QT Agreement defines the individual responsibilities of Medicis and AAI,
and in particular defines who is responsible for the cGMP aspects of
manufacturing and specifies the way in which Product Batches will be released
for sale, ensuring that the Product complies with the Regulatory Approval and
the Product Specifications.
The QT Agreement takes the form of a detailed checklist of all the activities
associated with pharmaceutical production, analysis, release, and distribution.
Responsibility for each activity is assigned either to AAI or Medicis, or is
designated as not applicable (“N/A”) in the appropriate tick box. In the event
of a conflict between terms of this QT Agreement and the Manufacturing Terms,
the terms of the Manufacturing Terms shall govern.
KEY CONTACTS:
All quality issues (except medical or non-medical Product complaints, or
regulatory affairs) will be directed through the Key Quality Assurance contact,
as listed below, for each party.
If any key contacts change for a party, such party will notify the other party
in writing and designate a new contact person. Other contacts within each party
may be identified as needed to facilitate communication of technical issues.
KEY CONTACTS:

          Area of         Responsibility   AAI   Medicis
Quality Assurance
  ***   ***
 
       
Regulatory Affairs
  ***   ***
 
       
Technical Services
  ***   ***
 
       
Medical Affairs
  ***   ***
 
       
Non-medical Product Complaints
  ***   ***

 

*   Key Quality Assurance contact       NOTE: All documents for review and
approval are to be sent to quality@medicis.com

DEFINITIONS
Capitalized terms used, but not defined herein, shall have the meaning given to
them in the Manufacturing Terms.
TERMS

  1.   The term of this QT Agreement will begin on the Effective Date (see 3.
below) and will expire on the date of expiration or earlier termination of the
Manufacturing Terms.     2.   The parties will review this QT Agreement at least
annually to verify that the technical responsibilities allocated in this QT
Agreement are current and valid.

2

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

 

  3.   The “Effective Date” of this QT Agreement will be the signature date of
the last party to sign this QT Agreement. The QT Agreement shall be fully
implemented within *** of the Effective Date.

CHANGE CONTROL PROCESS

      Either party may propose updates, amendments, modifications, or
supplements (collectively, the “Amendments”) to this QT Agreement. No Amendment
will be valid or effective unless made in writing and signed by duly authorized
officers of both parties.

3

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

 

                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI
1
  COMPLIANCE REQUIREMENTS            
 
               
1.1
  Perform and maintain all audit documentation regarding supplier(s) of Active
Ingredient for the Products.   ***   ***   ***
 
               
1.2
  Perform and maintain all qualification documentation regarding suppliers of
Components for the Products.   ***   ***   ***
 
               
1.3
  Manufacture, test and package Product in strict adherence to the approved drug
application, cGMPs, and Specifications.   ***   ***   ***
 
               
1.4
  *** shall not subcontract any of the work to a third party without prior
written agreement of ***, which prior agreement shall not be unreasonably
withheld or delayed. *** shall be responsible for auditing subcontractors to
ensure cGMP compliance.   ***   ***   ***
 
               
1.5
  Provide *** with copies of all information supporting annual Product reports
for Products supplied to Medicis.   ***   ***   ***
 
               
1.6
  Provide *** with copies/correspondence regarding the approved drug
applications for the Products.   ***   ***   ***
 
               
1.7
  Notify *** and have written authorization from *** prior to implementing any
proposed changes to the facilities, manufacturing process, materials,
Specifications, and/or testing that impact the approved registration, or that
require revalidation. Identify for ***, in writing prior to delivery, the first
manufactured Batch incorporating any approved changes.   ***   ***   ***
 
               
1.8
  Provide notification to the other party of any organizational and/or personnel
changes to Quality Assurance, Technical Services, or Regulatory Affairs
Contacts.   ***   ***   ***
 
               
1.9
  *** will make every reasonable effort to provide copies of any Form 483s,
Warning Letters, Field Alerts or similar correspondence from Governmental
Authorities within one (1) business day of receipt and subsequent response(s)
relating to the Products or processes used to produce, test, or package the
Products promptly thereafter. *** approval is required for responses related to
the Products.   ***   ***   ***
 
               
1.10
  Notify *** within one (1) business day of any circumstances likely to result
in a recall, Product withdrawal or field correction, including any confirmed
Product failure.   ***   ***   ***
 
               
1.11
  Perform and maintain as current all appropriate validation, including but not
limited to: process, analytical method, cleaning, computer, and packaging.   ***
  ***   ***  
1.12
  Dispose of all production residue, manufacturing rejects, tailings, other
chemicals, containers and packaging materials associated with Products
manufactured for Medicis in compliance with all applicable laws and regulations.
  ***   ***   ***  
1.13
  *** will notify *** within two (2) business days, then proceed to promptly
investigate and resolve to the reasonable satisfaction of *** all “Out-of-   ***
  ***   ***

3

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

 

                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI
 
  Specification” results. *** to review and approve any retesting scenarios in
OOS investigations.            
 
               
1.14
  Notify *** of any requests for information, notices of violations or other
communication from a Governmental Agency related to the Medicis Products or
processes promptly within no more than two (2) business days after *** receipt
thereof.   ***   ***   ***
 
               
1.15
  Notify *** of any incident affecting compliance to environmental, occupational
health and safety laws related to handling Medicis Products or processes within
three (3) business days.   ***   ***   ***
 
               
2
  PRODUCTION AND TESTING OF BULK PRODUCT            
 
               
2.1
  *** to Maintain the Master Formula (or Product structure). *** to review and
approve.   ***   ***   ***
 
               
2.2
  *** will maintain approved Specifications.   ***   ***   ***
 
               
2.3
  Provide consistent Batch identification system for bulk manufacture.
Immediately notify *** of any proposed changes to identification system prior to
implementation of any such changes.   ***   ***   ***
 
               
2.4
  Qualify Active Ingredient suppliers.   ***   ***   ***
 
               
2.5
  Maintain Active Ingredient Specification, and ensure compliance of the
Specification with regulatory and compendial requirements.   ***   ***   ***
 
               
2.6
  Procure Active Ingredient (include Certificate of Analysis, COA, for the
Active Ingredient). The Active Ingredient shall have not *** left to expiration
upon receipt at AAI. Any exceptions to the above must be approved in writing by
AAI.   ***   ***   ***
 
               
2.7
  Store Active Ingredient.   ***   ***   ***
 
               
2.8
  Sample Active Ingredient.   ***   ***   ***
 
               
2.9
  Validate and/or transfer test method for Active Ingredient to ***. *** to
approve the analytical method.   ***   ***   ***
 
               
2.10
  Analyze Active Ingredient (include documentation, COA).   ***   ***   ***
 
               
2.11
  Release Active Ingredient.   ***   ***   ***
 
               
2.12
  Retain reference samples of Active Ingredient for a *** Product expiration
date, of the last lot using each batch of API.   ***   ***   ***
 
               
2.13
  Qualify inactive substance suppliers in accordance with ***. Qualification
does not include on-site audits.   ***   ***   ***
 
               
2.14
  Procure inactive substances (include COA).   ***   ***   ***
 
               
2.15
  Store inactive substances.   ***   ***   ***

4

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

 

                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI
2.16
  Sample inactive substances.   ***   ***   ***
 
               
2.17
  Validate and/or transfer test methods for the inactive substances to ***.  
***   ***   ***
 
               
2.18
  Analyze inactive substances (include documentation, COA).   ***   ***   ***
 
               
2.19
  Release inactive substances.   ***   ***   ***
 
               
2.20
  Perform Process Validation. *** to review and approve.   ***   ***   ***
 
               
2.21
  Perform Cleaning Validation. *** to review and approve.   ***   ***   ***
 
               
2.22
  Provide Bill of Materials (BOM) for bulk manufacture. *** to review and
approve.   ***   ***   ***
 
               
2.23
  Provide Manufacturing Transfer Document for transfer within ***.   ***   ***  
***
 
               
2.23A
  Review and approve the Manufacturing Transfer Document   ***   ***   ***
 
               
2.24
  Prepare Manufacturing Instructions (Production Operating Instructions). *** to
review and approve.   ***   ***   ***
 
               
2.25
  *** will maintain Specification for bulk Product and ensure compliance of the
Specification with regulatory and compendial requirements. *** will maintain
approved Specifications.   ***   ***   ***
 
               
2.26
  Produce bulk Product (include Batch documentation).   ***   ***   ***
 
               
2.27
  Document, investigate and resolve deviations from approved manufacturing
instructions or Specifications. *** to review and approve all deviations. *** to
be notified within two (2) business days of discovery of a deviation.   ***  
***   ***
 
               
2.28
  Not to reprocess or salvage any partially processed or fully processed
materials without the written consent of *** unless such activities are
expressly allowed in applicable approved regulatory documents.   ***   ***   ***
 
               
2.29
  Develop bulk Product sampling plan.   ***   ***   ***
 
               
2.29A
  Review and approve the Product sampling plan.   ***   ***   ***
 
               
2.31
  Validate and/or transfer test method for bulk Product to ***. *** to approve
analytical method.   ***   ***   ***  
2.32
  Analyze bulk Product.   ***   ***   ***
 
               
2.33
  Approve bulk Product for packaging.   ***   ***   ***
 
               
2.34
  Produce Certificate of Analysis for bulk Product.   ***   ***   ***
 
               
2.35
  Retain reference samples of bulk Product for the period of time specified in
AAI’s Standard Operating Procedures.   ***   ***   ***

5

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

 

                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI
2.36
  Perform manufacturing facility, equipment and instrument qualification,
preventive maintenance and calibration.   ***   ***   ***
 
               
2.37
  Perform laboratory facility, equipment and instrument qualification,
preventive maintenance and calibration.   ***   ***   ***
 
               
2.38
  Perform stability storage and testing of bulk Product as requested by *** in
accordance with the Manufacturing Terms or other service estimate.   ***   ***  
***
 
               
3.
  INSPECTION, PACKAGING OF FINISHED PRODUCT            
 
               
3.1
  Maintain finished Product Specification, and ensure compliance of the
Specifications with regulatory and compendial requirements.   ***   ***   ***
 
               
3.2
  Provide Batch identification system for finished Product.   ***   ***   ***
 
               
3.3
  Provide artwork and labeling text (blister, carton, leaflet, label, etc.) to
***.   ***   ***   ***
 
               
3.4
  Perform labeling review and approval.   ***   ***   ***
 
               
3.5
  Medicis will provide Specifications for packaging materials, and ensure
compliance of the Specifications with regulatory and compendial requirements.
*** will maintain approved Specifications.   ***   ***   ***
 
               
3.6
  Validate and/or transfer test method(s) for Product packaging materials to
***. *** to approve analytical methods.   ***   ***   ***  
3.7
  Qualify packaging component and labeling suppliers in accordance with AAI
policies. Qualification does not include on-site audits.   ***   ***   ***
 
               
3.8
  Procure packaging materials.   ***   ***   ***
 
               
3.9
  Analyze packaging materials.   ***   ***   ***
 
               
3.10
  Release packaging materials.   ***   ***   ***
 
               
3.11
  Retain samples of labeling materials for a *** Product expiry date. [NOTE:
Other packaging materials need not be retained separately since they are part of
the finished Product retains].   ***   ***   ***
 
               
3.12
  Perform Packaging Validation. *** to review and approve.   ***   ***   ***
 
               
3.13
  *** will provide Bill of Materials (BOM) for packaging. *** to review and
approve.   ***   ***   ***
 
               
3.14
  *** will prepare Packaging Instructions (Production Operating Instructions for
packaging). *** to review and approve.   ***   ***   ***
 
               
3.15
  Perform packaging operations (include documentation).   ***   ***   ***
 
               
3.16
  Perform in-process controls during packaging (include documentation).   ***  
***   ***
 
               
3.17
  Develop finished Product sampling plan consistent with the Manufacturing   ***
  ***   ***

6

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

 

                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI                  
 
  Terms for retain and stability samples. Provide finished Product release
sampling plan for *** review and approval.            
 
               
3.18
  Sample finished Product including retain samples, stability samples, release
samples, and customer samples.   ***   ***   ***
 
               
3.19
  Retain reference samples of finished Product for a *** past Product expiry
date.   ***   ***   ***
 
               
3.20
  Reconcile packaging materials.   ***   ***   ***
 
               
3.21
  Perform manufacturing facility, equipment and instrument qualification,
preventive maintenance and calibration.   ***   ***   ***
 
               
3.22
  Perform laboratory facility, equipment and instrument qualification,
preventive maintenance and calibration.   ***   ***   ***
 
               
3.23
  Document, investigate and resolve any deviations from approved packaging
instructions or Specifications. *** to review and approve all deviations. Notify
Medicis within two (2) business days of discovery of deviations.   ***   ***  
***
 
               
4.
  TESTING AND RELEASE OF FINISHED PRODUCT            
 
               
4.1
  Validate and/or transfer test method(s) for finished Product to ***. *** to
review and approve.   ***   ***   ***
 
               
4.2
  Perform laboratory equipment and instrument qualification, preventive
maintenance and calibration.   ***   ***   ***
 
               
4.3
  Analyze finished Product.   ***   ***   ***
 
               
4.4
  *** to approve shipment of finished Product to Medicis.*** to release Product
for distribution.   ***   ***   ***
 
               
4.5
  Review Batch Record including all pertinent documentation and data. Provide
copy to *** for review.   ***   ***   ***
 
               
4.6
  Produce Certificate of Analysis for finished Product testing.   ***   ***  
***
 
               
4.7
  Perform stability storage and testing as requested by *** in accordance with
the Manufacturing Terms or other service estimate. Notify Medicis immediately
within one (1) business day, if the Product fails to meet Specifications during
stability testing.   ***   ***   ***
 
               
4.8
  Stability Testing Protocol            
 
               
 
 
Define protocol requirements.
  ***   ***   ***
 
               
 
 
For each packaging configuration, place the*** production Batches of Product on
stability and *** annually.
  ***   ***   ***
 
               
 
 
Pull stability samples as per the approved stability protocol. Provide
reviewed/approved test results to *** within *** of completion of testing.
  ***   ***   ***

7

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

 

                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI                  
 
 
Perform stability facility, equipment and instrument qualification, preventive
maintenance and calibration.
  ***   ***   ***
 
               
4.9
  Establish approved expiration date.   ***   ***   ***
 
               
4.10
  Adverse Events and Product Complaints   ***   ***   ***
 
               
 
 
*** shall document Product complaints and adverse event claims. *** shall notify
the other’s key contact as specified in the Manufacturing Terms following
receipt of any Adverse Event or Product Complaint.
  ***   ***   ***
 
               
 
 
*** shall promptly investigate any such complaints. *** shall provide *** with a
summary of its investigation as soon as practicable, but in no event later than
***. Complaints designated by *** as “high priority complaints” shall be
investigated by *** within ***.
  ***   ***   ***
 
               
 
 
*** shall respond to regulatory agencies and reporters and shall be responsible
for all activities relating to medical surveillance.
  ***   ***   ***
 
               
 
 
Complete follow-up corrective action.
  ***   ***   ***
 
               
4.11
  Visually examine retain reference samples of finished Product annually.
Investigate if required. Report all results to ***.   ***   ***   ***
 
               
4.12
  Perform Annual Product Review. Provide copies of all information supporting
annual Product reporting to ***.   ***   ***   ***
 
               
4.13
  Prepare annual Product report and file with applicable regulatory agencies.  
***   ***   ***
 
               
4.14
  Product Recall            
 
               
 
 
Decide to initiate recall.
  ***   ***   ***
 
               
 
 
Notify appropriate regulatory agencies.
  ***   ***   ***
 
               
 
 
Manage recall.
  ***   ***   ***
 
               
 
 
Reconcile returned Product.
  ***   ***   ***
 
               
4.15
  Responsibility to Authorities            
 
               
 
 
Liaison with Regulatory Authorities for approval, maintenance and updating of
drug application.
  ***   ***   ***
 
               
 
 
Liaison with Regulatory Authorities for any site visits related to the Products
produced for Medicis. *** to notify *** promptly within no more than one
(1) business day after being contacted regarding such site visits.
  ***   ***   ***

8

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                  NO.   RESPONSIBILITIES   N/A   Medicis   AAI                  
 
 
Maintain safety/hazard and handling data on Products and Active Ingredient.
  ***   ***   ***
 
               
 
 
Maintain safety/hazard and handling data on Components.
  ***   ***   ***
 
               
4.16
  Special test requirements (specify):   ***   ***   ***
 
               
4.17
  Maintain all Batch Records for a *** Product expiry date and supply copies
(true or electronic) of all such records to *** on request.   ***   ***   ***
 
               
5
  STORAGE AND TRANSPORTATION OF BULK PRODUCT, FINISHED PRODUCT AND WASTE
DISPOSAL            
 
               
5.1
  Store bulk Product up to packaging.   ***   ***   ***
 
               
5.2
  Store finished Product after release by Medicis.   ***   ***   ***
 
               
5.3
  Store all materials under appropriate conditions of temperature, humidity,
light and cleanliness and in a manner to avoid deterioration, theft,
interference and Product contamination.   ***   ***   ***
 
               
6
  DOCUMENTATION            
 
               
6.1
  Provide *** with complete copies of Process Validation reports for the *** of
each Product.   ***   ***   ***
 
               
6.2
  Provide *** with complete copies of Packaging Validation reports for each
Product.   ***   ***   ***
 
               
6.3
  Provide the following documentation to *** for each Batch:            
 
               
 
 
Executed Batch record, including copies of labeling documenting expiration date
and lot number
  ***   ***   ***
 
               
 
 
Test results for Active Ingredient and Components (upon request)
  ***   ***   ***
 
               
 
 
Manufacturing release summary: Certificate of Compliance (COC) statement
indicating Product conformance with cGMP, signed by the responsible Quality
individual performing Product approval
  ***   ***   ***
 
               
 
 
If Product release testing is performed by ***, testing release summary,
Certificate of Analysis (COA), including:
  ***   ***   ***  
 
 
- Tests performed
             
 
 
- Test methods used
             
 
 
- Test Specifications
             
 
 
- Test results including retest results if required
             
 
 
- Date of release
             
 
 
- Signature of responsible Quality individual performing testing release
           

9

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

 

         
Medicis Pharmaceutical Corporation
  AAIPharma Inc.    
 
  Quality Assurance Approval:    
 
       
 
       
Name: Terri Magee
  Name:    
 
(Print/Type)
 
 
(Print/Type)    
Title: Director of QC
  Title:    
 
 
 
   
 
       
Signature:
  Signature:    
 
 
 
   
Date:
  Date:    
 
 
 
   
 
       
 
  AAIPharma Inc.    
 
  Executive Approval:    
 
 
 
   
 
       
 
  Name:    
 
 
 
(Print/Type)    
 
  Title:    

10