exv10w314



 



Exhibit 10.314



CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.






Ligand Pharmaceuticals Incorporated



10275 Science Center Drive
San Diego, CA




April 30, 2007




David Wood

Vice President, Global General Manager

Modified Release Technologies

Cardinal Health PTS LLC

14 Schoolhouse Road

Somerset, NJ 08873




VIA FACSIMILE AND FEDERAL EXPRESS




Re: Release and Termination of Manufacturing and Packaging Agreement




Dear Dave:



As you know, Ligand Pharmaceuticals Incorporated (“Ligand”) and Cardinal Health PTS, LLC
(“Cardinal”) are parties to that certain Manufacturing and Packaging Agreement, dated February 13,
2004, as amended (the “Manufacturing Agreement”) and those certain Quality Agreements for AVINZA®,
dated April 12, 2005, and April 10, 2006, respectively (the “Quality Agreements”). As you are also
aware, Ligand has assigned to King Pharmaceuticals, Inc. (“King”), as of February 26, 2007 (the
“Closing”), all or substantially all of its assets to which the Manufacturing Agreement relates,
including without limitation, its rights in and to the AVINZA® product, pursuant to a Purchase
Agreement, dated September 6, 2006, as amended (the “Purchase Agreement”). However, the
Manufacturing Agreement was not assigned to King as part of the Purchase Agreement. As such, each
of Ligand and Cardinal intend to terminate the Manufacturing Agreement pursuant to the terms set
forth below (the “Letter Agreement”).



1. Termination of Manufacturing Agreement. As of the date that this Letter Agreement is
fully executed by Cardinal and Ligand (the “Effective Date”) the Manufacturing Agreement and the
Quality Agreements shall be deemed terminated and of no further force or effect, including without
limitation, the termination of any and all provisions in the Manufacturing Agreement which were
expressly designated to survive termination, provided that, Sections 4.8 – 4.12, 9.2 and 9.4 and
Articles 11 and 16 (the “Surviving Provisions”) shall remain in full force and effect. In
addition, all open purchase orders under the Manufacturing Agreement are deemed cancelled and of no
further force or effect. Notwithstanding the foregoing, the parties desire for Cardinal to
continue to provide certain ongoing stability services, including active reference standards,
analytical assays and related program support, which are associated with the current validation and
commercial batches of AVINZA®, as referenced in Section 2.1 of the Manufacturing Agreement and as
performed by Cardinal pursuant to quotation [***]; quotation [***]; and one quotation as yet to be
agreed by the parties (altogether, the “AVINZA® Stability Services”).



2. WIP (Morphine) Reimbursement. From the Effective Date through [***], Cardinal shall
continue to maintain and be responsible for, at Cardinal’s sole cost, risk and expense, the
safekeeping of any batches of AVINZA® , the morphine in which was previously paid for by Ligand and
supplied to Cardinal under the






 




			
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Ligand Pharmaceuticals Incorporated

30 April 2007

Page 2



Manufacturing Agreement, that are work-in-process and in Cardinal’s possession (“WIP”). On or
before [***], Ligand shall, at its sole discretion, provide written notice to Cardinal of its
decision whether to (a) have Cardinal arrange for destruction of the WIP (at Ligand’s sole cost,
risk and expense), (b) have Cardinal pack the WIP for shipment on [***] (or such other date as
Cardinal and Ligand may agree in writing) to a designated non-Cardinal location (at Ligand’s sole
cost, risk and expense), or (c) assign the WIP to King; provided, that Ligand may not elect the
foregoing clause (c) if it has not granted its consent for Cardinal to supply AVINZA® to King
pursuant to paragraph 5(b) below. If Ligand fails to timely provide notice of its decision or if
Ligand elects the foregoing clause (a), Cardinal shall destroy or deliver to a third party for
destruction all WIP (at Ligand’s sole cost, risk and expense) not later than [***]. If Ligand
elects the foregoing clause (c) and Cardinal receives consideration from King for any WIP, then
Cardinal shall promptly (but in any event no later than five (5) business days thereafter) pay
Ligand, in immediately available funds, a dollar amount equal to [***]. In addition, if Ligand
elects the foregoing clause (c), it shall promptly provide to Cardinal evidence of such assignment.



3. Raw Morphine. From the Effective Date through [***], Cardinal shall continue to
maintain and be responsible for, at Cardinal’s sole cost, risk and expense, the safekeeping of any
raw morphine in Cardinal’s possession previously paid for by Ligand and supplied to Cardinal under
the Manufacturing Agreement. On or before [***], Ligand shall, at its sole discretion, provide
written notice to Cardinal of its decision whether to (a) have Cardinal arrange for destruction of
such morphine (at Ligand’s sole cost, risk and expense), (b) have Cardinal pack such morphine for
shipment on [***] (or such other date as Cardinal and Ligand may agree in writing) to a designated
non-Cardinal location (at Ligand’s sole cost, risk and expense), or (c) assign such morphine to
King; provided, that Ligand may not elect the foregoing clause (c) if it has not granted its
consent for Cardinal to supply AVINZA® to King pursuant to paragraph 5(b) below. If Ligand fails
to timely provide notice of its decision or if Ligand elects the foregoing clause (a), Cardinal
shall destroy or deliver to a third party for destruction all such morphine (at Ligand’s sole cost,
risk and expense) not later than [***]. If Ligand elects the foregoing clause (c), it shall
promptly provide to Cardinal evidence of such assignment.



4. CF Granulator. From the Effective Date through [***], Cardinal shall continue to
maintain and be responsible for the safekeeping of Ligand’s CF Granulator in Cardinal’s possession.
On or before [***], Ligand shall, at its sole discretion, provide written notice to Cardinal of
its decision whether to (a) have Cardinal dismantle the CF Granulator in preparation for removal by
Ligand (all at Ligand’s sole cost, risk and expense), or (b) assign to Cardinal, pursuant to a bill
of sale reflecting terms and consideration mutually agreed upon by Ligand and Cardinal, all of
Ligand’s, right, title and interest in and to the CF Granulator free of any liens and/or
encumbrances for a purchase price not greater than [***]. Notwithstanding the foregoing, if Ligand
grants its consent for Cardinal to supply AVINZA® to King pursuant to paragraph 5(b) below, the
foregoing clause (b) shall apply. In the event Ligand elects the foregoing clause (a), Cardinal
will pack or arrange for the packing of the CF Granulator components and reasonably cooperate with
Ligand’s shipper in connection with Ligand’s removal of the CF Granulator (all at Ligand’s sole
cost, risk and expense); and Cardinal shall be entitled to invoice Ligand for all costs of
returning the room in which the CF Granulator is housed at Cardinal’s Winchester, Kentucky,
facility to its original condition, provided such invoice shall not exceed [***]. If Ligand fails
to timely provide such notice, Cardinal shall be entitled to elect, at its sole discretion, either
of the foregoing options set forth in clauses (a) and (b) (all at Ligand’s sole cost, risk and
expense).



5. General Release. As of the Effective Date, each of Ligand and Cardinal will for
itself, its respective present and former heirs, agents, representatives, officers, directors,
employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, related
entities, predecessors, successors and assigns






 




			
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Ligand Pharmaceuticals Incorporated

30 April 2007

Page 3



(“Releasor Parties”), release and absolutely and forever discharge the other party and its present
and former heirs, agents, representatives, officers, directors, employees, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, related entities, predecessors, successors and
assigns (“Releasee Parties”) of and from any and all claims, demands, damages, debts, liabilities,
accounts, reckonings, obligations, costs, expenses, liens, actions and causes of action of every
kind and nature whatsoever, whether now known or unknown, suspected or unsuspected, which any
Releasor Party now has, owns or holds or at any time heretofore ever had, owned or held or could,
shall or may hereafter have, own or hold against any Releasee Party arising from or related to the
Manufacturing Agreement, including without limitation, [***]. Except with respect to the
obligations created by or arising out of this Letter Agreement, Cardinal on the one hand, and
Ligand on the other, hereby covenant not to sue each other or any of the Releasee Parties,
regarding any of the Released Matters, and not to aid or encourage any third party to institute or
prosecute any claims (e.g., in arbitration or meditation) or litigation (including, without
limitation, by providing sworn testimony not compelled by judicial process) with respect to any of
the Released Matters and/or matters that in any way relate to any act, omission, or other conduct
underlying any Released Matters. Notwithstanding anything to the contrary herein, the foregoing
release shall not and does not extend to (a) any obligations under this Letter Agreement and/or (b)
any obligations with respect to the AVINZA® Stability Services.




6. General Matters



(a) Neither Cardinal nor Ligand shall take any action that is materially inconsistent with this
Letter Agreement. Cardinal and Ligand shall each use commercially reasonable efforts to cooperate
in carrying out the terms hereof, including, but not limited to, the execution and delivery of such
other and further documents and instruments that are reasonable and necessary to accomplish such
terms.



(b) Cardinal covenants and agrees that, in consideration for the general release set forth above,
[***], neither Cardinal nor any of its direct or indirect, parents, subsidiaries, affiliates,
successors and/or assigns shall manufacture, supply or provide services in connection with the
AVINZA® product to any third party (including, without limitation, King) without the express prior
written consent of Ligand. Furthermore, Ligand and Cardinal acknowledge and agree that either
party would be irreparably damaged if any of the provisions of this Letter Agreement are not
performed in accordance with their specific terms and that any breach of this Letter Agreement by
the other party could not adequately be compensated in all cases by monetary damages alone.
Accordingly, in addition to any other right or remedy to which either party may be entitled, at law
or in equity, it may seek to enforce any provision of this Letter Agreement, without requirement to
post bond (or if such requirement cannot be waived, then the minimum amount so required), by a
decree of specific performance and to temporary, preliminary and permanent injunctive relief to
prevent breaches or threatened breaches of any of the provisions of this Letter Agreement.







 




			
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(c) All fees and expenses incurred in connection with this Letter Agreement and the transactions
contemplated hereby, including all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties incurred by a party in connection with the negotiation and
effectuation of the terms and conditions of this Letter Agreement and the transactions contemplated
hereby, shall be the obligation of the respective party incurring such fees and expenses.



(d) This Letter Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of New York.



(e) This Letter Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreement and understandings, both written and oral,
among the parties with respect to the subject matter hereof.



If you agree with the terms of this Letter Agreement, kindly countersign below.




Regards,




Ligand Pharmaceuticals Incorporated




	 	 	 	 	 
	 	 	 
	By:  	/s/ John L. Higgins
 	 
	Name:  	John L. Higgins 	 
	Its:  Chief Executive Officer 	 
	 



ACKNOWLEDGED, ACCEPTED AND AGREED:




Cardinal Health PTS, LLC




	 	 	 	 	 
	 	 	 
	By:  	/s/ David Wood
 	 
	Name:  	David Wood 	 
	Its:  Vice President, Global General Manager 	 
	Dated:  April 26, 2007