exv10w7






Exhibit 10.7



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.




Execution Version




SUPPLY AGREEMENT



     This SUPPLY AGREEMENT (the “Agreement”) is made effective as of the 10th day of
September, 2010 (the “Effective Date”) by and between Pharming Group N.V., a Dutch corporation
having its principal place of business at Darwinweg 24, 2333 CR Leiden, The Netherlands, on behalf
of itself and each of its Affiliates, including Pharming Intellectual Property B.V. and Pharming
Technologies B.V. (“Pharming”), and Santarus, Inc., a Delaware corporation, having offices at 3721
Valley Centre Drive, Suite 400, San Diego, California 92130, U.S.A. (“Santarus”). Pharming and
Santarus are sometimes referred to herein individually as a “Party” and collectively as the
“Parties.”



RECITALS



     A. Pharming discovered and is developing a proprietary compound, Rhucin®, that is
believed to be useful for the treatment and prevention of certain human diseases or conditions;



     B. Pharming and Santarus have entered into that certain License Agreement, effective as of the
date hereof (the “License Agreement”), pursuant to which Santarus will, among other things, be
granted exclusive rights to commercialize Rhucin® for the treatment or prevention of
human diseases and conditions in the U.S., Canada and Mexico; and



     C. Pharming and Santarus desire to set forth in this Agreement the terms and conditions upon
which Pharming will manufacture and supply (or cause to be manufactured and supplied) Santarus’,
its Affiliates’ and its Sublicensees’ requirements of Rhucin® in the Territory.



ARTICLE 1

DEFINITIONS



     Capitalized terms used but not otherwise defined herein shall have the meanings assigned to
them in the License Agreement. The word “including” or any variation thereof means “including
without limitation” and the word “including” or any variation thereof will not be construed to
limit any general statement which it follows to the specific or similar items or matters
immediately following it.



     1.1 “Applicable Laws” mean laws, statutes, ordinances, codes, rules, regulations, guidelines,
and procedures enacted or made by a Government Authority, including the FDA and any applicable
Foreign Regulatory Authority, that are in force during the Term to the extent applicable to the
subject matter of, or the performance by the Parties of their respective obligations under, this
Agreement, including the Manufacture of Skimmed Milk, Drug Substance, Drug Product and Finished
Product by Pharming.



     1.2 “Certificate of Analysis” means a document, in a form mutually agreed by Pharming and
Santarus, to certify that each batch or lot of the Skimmed Milk, Drug Substance, Drug Product and
Finished Product meets the Specifications.



 









 





     1.3 “Certificate of Compliance” means a document, in a form mutually agreed by Pharming and
Santarus, to certify that each batch or lot of Finished Product meets the applicable release
criteria and was Manufactured in compliance with cGMP.



     1.4 “cGMP” means current good manufacturing practices requirements of the FDA (or any
successor entity thereto), including those set forth in 21 C.F.R. Parts 210, 211 and 606, and all
similar requirements of Foreign Regulatory Authorities.



     1.5 “Commercial Finished Product” has the meaning set forth in Section 2.1



     1.6 “Detailed Manufacturing Documentation and Materials” means the detailed procedures and all
electronic and paper form instructions, documentation and materials including any biological
material to be used and required for manufacturing and testing the Finished Product and any other
information necessary to manufacture the Finished Product, as contained in or referenced by the
Module 3 of the Regulatory Approval to be filed for commercialization of the Finished Product in
the Territory.



     1.7 “Drug Substance” means purified and formulated Licensed Compound, as further described in
the Specifications.



     1.8 “Drug Product” means Drug Substance filled in vials and freeze-dried, as further described
in the Specifications.



     1.9 “FFDCA” means the U.S. Federal Food, Drug, and Cosmetic Act, and the regulations
promulgated thereunder, as amended.



     1.10 “Finished Product” means a packaged vial labeled for commercial sale in the applicable
country within the Territory, which contains approximately 2100 units of recombinant human C1
esterase inhibitor in lyophilized powder, as further described in the Specifications, or such other
formats as may be mutually agreed by the Parties.



     1.11 “Foreign Regulatory Authority” means, for each country in the Territory other than the
U.S., any Government Authority that corresponds to the FDA.



     1.12 “Government Authority” means any supra-national, national, regional, state, provincial or
local government, court, governmental agency, authority, board, bureau, instrumentality or
regulatory body having jurisdiction over the Manufacturing activities hereunder.



     1.13 “Manufacture,” “Manufactured” or “Manufacturing” means the manufacture, processing,
packaging, testing, storage and shipment of Skimmed Milk, Drug Substance, Drug Product and Finished
Product, for Commercialization in the Territory, including those activities described in
Exhibit 1.13 attached hereto.



     1.14 “Manufacturing Approvals” means any approvals, registrations or authorizations of any
supra-national, national, regional, state, provincial or local regulatory



2









 




agency, department, bureau or other governmental entity either within or outside the Territory
necessary to perform the Manufacture of Skimmed Milk, Drug Substance, Drug Product and Finished
Product, including establishment licensure and permitting of any Manufacturing Facilities and
Testing and Storage Facilities (including any required comparability studies) and any veterinary
related approvals.




     1.15 “Negligence Event” means the expiry of, damage to, other obsolescence of or inability to
use Finished Product caused by the negligence of Santarus, its Affiliates or Sublicensees in
connection with the storage, shipment or handling of Commercial Finished Product (including not
delivering the Commercial Finished Product to a Third Party purchaser on the basis of First
Expiry/First Out) or by the negligence of Third Party distribution, warehousing or storage
facilities with whom Santarus, its Affiliates or Sublicensees have contracted to provide services
for the Commercial Finished Product.



     1.16 “Payment Default” has the meaning set forth in Section 3.6(c).



     1.17 “Pharming Qualified Person” means the person defined in Article 48 of Directive
2001/83/EC, responsible for certification and batch release of Finished Product within the EC/EEA
before being released for sale or supply in the EC/EEA or for export.



     1.18 “Product Inventory” means Units of Finished Product owned by Pharming or any Affiliate
and available for supply to Santarus pursuant to this Agreement.



     1.19 “Quality Agreement” means that certain Quality Agreement dated the date hereof, by and
between the Parties and as amended from time to time.



     1.20 “Regulatory or Clinical Data” means data and information in relation to any submissions
to be made in support of Regulatory Approval: (i) directly or indirectly generated from any
Development or Phase IV Clinical Trials, including all raw data and analyses; (ii) arising from
interactions with any regulatory authority either within or outside the Territory, or drafted or
prepared with the intention of being submitted, or which is actually submitted to any such
regulatory authority and (iii) all preparatory data and Confidential Information that supports or
are or might be used to support the foregoing submissions.



     1.21 “Skimmed Milk” means skimmed transgenic rabbit milk containing Licensed Compound, as
further described in the Specifications.



     1.22 “SKU” means Stock Keeping Unit, currently meaning one (1) packaged and labeled vial of
Finished Product.



     1.23 “Specifications” means the written specifications for each of the Skimmed Milk, Drug
Substance, Drug Product and Finished Product set forth in Exhibit 1.23 attached hereto;
provided, however, that such specifications shall at all times comply with Applicable Laws and the
Manufacturing Approvals and Regulatory Approvals then in effect. The Specifications with respect to
any particular country in the Territory shall automatically be amended with respect to



3









 




the Skimmed Milk, Drug Substance, Drug Product or Finished Product, as the case may be, to be
Commercialized in such country to the specifications set forth in the applicable Manufacturing
Approval and Regulatory Approval upon receipt of required Manufacturing Approvals and Regulatory
Approvals from the Government Authority in such country. Copies of the then-current Specifications
as set forth in the Regulatory Approval to market and sell the Finished Product shall be maintained
by both Pharming and Santarus and shall be incorporated herein by reference.




     1.24
“Supply Failure Triggers” means (a) Pharming’s inability to deliver within [***] ([***])
weeks of the delivery date set forth in an Order any Drug Product that was properly ordered due to
(i) a Payment Default or (ii) the negligence or misconduct of Pharming or (b) the bankruptcy,
receivership or insolvency of Pharming.



     1.25 “Transgene” means the genetic material comprised of regulatory elements directing
expression in the mammary gland and human cDNA coding sequence for Licensed Compound.



     1.26 “Transgene Bank” means a well-characterized sample of the Transgene, as further defined
in the applicable Regulatory Approval.



ARTICLE 2

SOURCES OF SUPPLY AND SUPPLY RELATIONSHIP



     2.1 Commercial Supply of Finished Product. During the Term, Pharming shall Manufacture (or
shall cause to be Manufactured), in accordance with the provisions of this Agreement, the
Specifications, cGMP and Applicable Laws, all quantities of the Finished Product ordered by
Santarus, its Affiliates or Sublicensees pursuant to this Agreement in connection with
Commercialization activities of Santarus, its Affiliates and its Sublicensees (the “Commercial
Finished Product”). Santarus shall pay Pharming the Supply Price in accordance with the terms of
the License Agreement for such Commercial Finished Product, which shall be the sole consideration
payable for the Commercial Finished Product and all associated Manufacturing activities hereunder.



     2.2 Clinical Supply of Drug Product. During the Term, Pharming shall Manufacture (or shall
cause to be Manufactured), in accordance with the provisions of this Agreement, the Specifications,
cGMP and Applicable Laws, all quantities of the Drug Product ordered by Santarus, its Affiliates or
Sublicensees pursuant to this Agreement in connection with Development activities of Santarus, its
Affiliates and its Sublicensees (the “Development Drug Product”). The Development Drug Product will
be supplied by Pharming at its COGs, and the Parties will agree upon any sharing of that
amount consistent with the sharing of Development Costs contemplated by the License Agreement,
which shall be the sole consideration payable for the Development Drug Product and all associated
Manufacturing activities hereunder. Title and risk of loss for Development Drug Product shall
transfer upon delivery to Santarus, its Affiliates or Sublicensees.





 




			
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     2.3 Exclusive Relationship. Subject to Pharming’s rights as a Developing Party under Section
3.3(d) of the License Agreement with respect to any applicable Additional Indication and Pharming’s
compliance with the obligations set forth in Section 3.3 of the License Agreement:



     (a) Pharming shall supply Finished Product exclusively to Santarus (and its Affiliates and
Sublicensees) for Commercialization in the Territory, and, subject to Section 3.4, Santarus (and
its Affiliates and Sublicensees) shall order Finished Product for use in the Territory exclusively
from Pharming; and



     (b) Pharming shall not supply Skimmed Milk, Drug Substance or Drug Product (or any other
Finished Product intermediaries) to any Person (other than Santarus, its Affiliates and
Sublicensees as contemplated by this Agreement and the License Agreement) for Commercialization in
the Territory.



     2.4 Use of Affiliates, Third Party Contractors and Facilities.



     (a) As of the Effective Date, Pharming utilizes the Affiliates (the “Existing Manufacturing
Affiliates”), Third Party contract manufacturers and other service providers (the “Existing Third
Party Contractors”), manufacturing facilities (the “Existing Manufacturing Facilities”) and testing
and storage facilities (the “Existing Testing and Storage Facilities”) described on Exhibit
2.4(a) for the Manufacture of the Skimmed Milk, Drug Substance, Drug Product and Finished
Product. Promptly following the Effective Date and prior to submission of the Drug Approval
Application for the Initial Indication in the Territory, the Parties shall cooperate to establish a
plan to prepare for inspections by FDA, Foreign Regulatory Authorities or Government Authorities of
such Existing Manufacturing Affiliates, Existing Third Party Contractors, Existing Manufacturing
Facilities and Existing Testing and Storage Facilities that are to be listed in the Drug Approval
Application for the Initial Indication in the Territory.



     (b) Pharming may utilize Persons other than the Existing Manufacturing Affiliates and Existing
Third Party Contractors to perform portions of the Manufacturing activities hereunder provided that
Pharming has obtained the appropriate Manufacturing Approvals and has cooperated with Santarus to
obtain the appropriate Regulatory Approvals (any such permitted additional Affiliates, together
with Existing Manufacturing Affiliates, the “Manufacturing Affiliates” and any such permitted Third
Party Contractors, together with Existing Third Party Contractors, the “Third Party Contractors”).
Pharming may utilize facilities other than the Existing Manufacturing Facilities and Existing
Testing and Storage Facilities in connection with the Manufacturing activities hereunder provided
that Pharming has obtained the appropriate Manufacturing Approvals and has cooperated with Santarus
to obtain the appropriate Regulatory Approvals (any such permitted additional manufacturing facilities, together with
Existing Manufacturing Facilities, the “Manufacturing Facilities” and any such permitted additional
testing and storage facilities, together with Existing Testing and Storage Facilities, the “Testing
and Storage Facilities”).



     (c) In addition to the requirements set forth in Section 2.4(b), with regard to each existing
and future Manufacturing Affiliate and Third Party Contractor, (i) Pharming shall not



5









 




utilize any Manufacturing Affiliate or Third Party Contractor without first obtaining the
appropriate Manufacturing Approvals and cooperating with Santarus to obtain the appropriate
Regulatory Approvals; (ii) Pharming shall ensure that each Manufacturing Affiliate or Third Party
Contractor is duly licensed and qualified under cGMP and Applicable Laws to perform the applicable
Manufacturing activities and maintains such licenses and qualifications during the Term; and (iii)
Pharming shall at all times remain fully responsible to Santarus for the performance of all
obligations hereunder. References to Pharming in this Supply Agreement shall be deemed to include
permitted Manufacturing Affiliates and Third Party Contractors, as appropriate.




     (d) In addition to the requirements set forth in Section 2.4(b), with regard to each existing
and future Manufacturing Facility and Testing and Storage Facility, (i) Pharming shall not utilize
any Manufacturing Facility or Testing and Storage Facility without first obtaining the appropriate
Manufacturing Approvals and cooperating with Santarus to obtain the appropriate Regulatory
Approvals; and (ii) Pharming shall ensure that each Manufacturing Facility and Testing and Storage
Facility is duly licensed and qualified under cGMP and Applicable Laws for the applicable
Manufacture activities and maintains such licenses and qualifications during the Term. Pharming
shall ensure that adequate Manufacturing equipment and tools are available and dedicated to fulfill
the Manufacture obligations hereunder and that such equipment and tools are maintained in good
working order.



     2.5 Additional Sources of Manufacturing and Supply. Subject to Section 2.4, Pharming shall,
at its cost and expense, (a) enter into one or more agreements with Third Party Contractors
providing for [***] Manufacture of the Drug Substance, Drug Product and Finished Product and shall
obtain appropriate Manufacturing Approvals and cooperate with Santarus to obtain appropriate
Regulatory Approvals in connection therewith (while exercising Commercially Reasonable Efforts to
maintain Pharming’s existing arrangement with [***] have been established and associated Regulatory
Approvals and Manufacturing Approvals have been obtained); (b) at the reasonable request of
Santarus, establish and qualify under all Applicable Laws an additional Manufacturing Facility
(provided that Pharming shall not be under an obligation to establish and qualify more than [***]
separate Manufacturing Facilities) for the production of Skimmed Milk; and (c) establish and
qualify under all Applicable Laws such other additional sources of Manufacture as the Parties may
determine are reasonably prudent (collectively, (a), (b) and (c) shall be known as “Additional
Manufacturing Facilities”). Pharming shall keep Santarus informed as to the status of these
activities and shall provide Santarus with copies of draft agreements with such Additional
Manufacturing Facilities as the same are being negotiated (redacted to exclude confidential
commercial details of these agreements which are not necessary for Santarus to determine Pharming’s
compliance with this Section 2.5) (it being acknowledged that Pharming has provided to Santarus a
copy of a draft agreement with a Third Party Contractor for the Manufacture of Drug Product prior
to the Effective Date) and
excluding related quality agreements, and shall, in good faith, consider and include any
reasonable comments made by Santarus to such drafts. Pharming shall notify Santarus when an
agreement has been concluded with any Additional Manufacturing Facility and provide to Santarus a
full and complete copy of any such agreement redacted to exclude





 




			
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confidential commercial details of these agreements which are not necessary for Santarus to
determine Pharming’s compliance with this Section 2.5. As of the Effective Date, such Additional
Manufacturing Facility for the Drug Substance consists of [***]). Pharming shall maintain an
Additional Manufacturing Facility for Drug Substance and, upon receipt of required approvals of any
Additional Manufacturing Facility(ies) for Drug Substance or Drug Product, shall maintain such
Additional Manufacturing Facility(ies) throughout the Term (Pharming has no obligation to maintain
more than [***] separate Manufacturing Facilities for [***]).




     2.6 Supply Management Coordination. Within thirty (30) days following the Effective Date,
each Party shall designate those of its employees to be part of the team responsible for managing
the Manufacturing relationship between the Parties (the “Manufacturing Relationship Team”). The
Manufacturing Relationship Team from each Party shall meet in person or by telephone or video
conference not less than [***] to review the current status of the business relationship (including
performance against the KPIs (as defined in Section 2.7 below) as well as any additional
Manufacturing performance indicators established by the Parties) and address any issues that have
arisen with respect to the Manufacture. The Parties acknowledge that the Manufacturing
Relationship Team likely will need to meet more frequently than [***] during the period prior to
and immediately following First Commercial Sale and agree to reasonably cooperate in that regard.
For clarity, the Manufacturing Relationship Team shall not have the right to modify or amend this
Agreement or waive either Party’s compliance with this Agreement. The Manufacturing Relationship
Team shall be a subcommittee of the Steering Committee established pursuant to Section 2.1 of the
License Agreement.



     2.7 Key Performance Indicators. Pharming and Santarus shall establish key performance
indicators to assist with monitoring the obligations and performance of each Party under this
Agreement (the “KPIs”). The initial KPIs will be established reasonably in advance of First
Commercial Sale. The KPIs will then be reviewed by the Manufacturing Relationship Team at each
periodic review meeting contemplated by Section 2.6 to assess performance and, if necessary, amend
the KPIs in respect of the next subsequent meeting.



     2.8 Product Inventory. The written information that Pharming has provided to Santarus as of
the Effective Date concerning the existing levels and expiry dating of Product Inventory as well as
existing and planned purchase orders for future Product Inventory is accurate and complete. All
Product Inventory shall have been and will be produced, manufactured, held, stored and shipped in
accordance with the applicable Specifications, cGMP, the Regulatory Approvals, the Manufacturing
Approvals, all applicable analytical methods and procedures, material specifications, master batch
records and stability protocols and in compliance with Applicable Laws. Pharming shall keep
Santarus informed concerning its plans to produce and order additional Product Inventory designated
for Santarus. The Product Inventory manufactured and to be manufactured in the [***] is and will be suitable for commercial sale, subject to completion
of the activities set forth in Section 4.1.





 




			
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ARTICLE 3

SUPPLY OF FINISHED PRODUCT 


     3.1 Forecasts; Orders.


     (a) Forecasts. The Parties shall establish a process to ensure that written,
non-binding, rolling [***] ([***]) month forecasts, by month, of estimated requirements for
Finished Product in the Territory (“Forecast(s)”) will be provided by Santarus to Pharming and will
be approved on at least a [***] basis by the Steering Committee at the meetings as specified in
Section 2.3 of the License Agreement or more frequently if reasonably requested by either Party;
such process shall include a mechanism by which (i) Pharming shall communicate to Santarus its
Manufacturing and distribution forecasts on a global basis in advance of a Steering Committee
meeting (with the necessary lead time to be mutually agreed); (ii) the first Forecast (the “Initial
Forecast”) is approved by the Steering Committee on or before [***] of the License Agreement; and
(iii) the Forecast shall be updated and revised on a not less than [***] basis. Pharming shall use
the Forecast for planning purposes and make available (or cause to be made available) the capacity
required to Manufacture the forecasted quantities of Finished Product within the time frames
specified in each Forecast.



     (b) Orders. Santarus shall submit to Pharming written orders consistent with the
applicable Forecast (each, an “Order”) for the delivery of Finished Product at least [***] ([***])
calendar days prior to the specified delivery date. Each Order will be approved by the
Manufacturing Relationship Team. Each Order shall specify the quantity or, if more than one
shipment is requested, quantities of Finished Product ordered by SKU, the requested delivery date
or dates, the delivery address(es) and any applicable shipping information. Pharming shall
Manufacture (or shall cause to be Manufactured) the Finished Product in the quantities and by the
delivery dates set forth in the applicable Orders. In the event of a shortage of capacity at any
Existing Manufacturing Facility, the Parties shall ensure that Santarus receives at least [***]
(based upon the then applicable worldwide forecasts) with respect to available capacity.



     3.2 Safety Stock. During the Term, Pharming shall maintain a safety stock equal to at least
[***] ([***]) months demand of each of the Skimmed Milk, Drug Substance, Drug Product and Finished
Product based on the then current Forecast (or such other equivalent amounts of Skimmed Milk, Drug
Substance, Drug Product and Finished Product that together provide for approximately [***] ([***])
months of Finished Product inventory), excluding in each case Commercial Finished Product held by
Santarus [***] (the “Safety Stock”). For clarity, the Santarus Safety Stock shall be allocated
separately from safety stock Pharming is required to hold for other Persons. Pharming shall inform
Santarus from time to time, upon Santarus’ reasonable request, concerning the inventory
levels of Safety Stock, and Pharming shall manage the Safety Stock as part of its overall
inventory on a First Expiry/First Out basis.



     3.3 Supply Commitment. Pharming shall supply to Santarus amounts of Finished Product ordered
by Santarus on any Order made in accordance with the terms of this Agreement, and Pharming further
agrees to use Commercially Reasonable Efforts to supply (to the extent ordered by Santarus)
quantities in excess of these amounts.





 




			
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     3.4 [***]. In addition to the rights set forth in Section 3.6, Santarus shall have the right,
at any time during the Term following the Supply Failure Triggers and for so long as the Supply
Failure Triggers continue, to (a) step in to cure any Payment Defaults under the agreements with
[***] by making the required payment and Pharming shall promptly notify Santarus of any such
Payment Defaults (but in any case within a sufficient period of time to permit Santarus to exercise
its cure right hereunder); and (b) assume sole responsibility for the manufacture and supply of
Drug Substance or Drug Product, as applicable, including by entering into a separate agreement(s)
with [***], under terms and conditions materially similar to those contained in the definitive
agreement(s) with [***] entered into by Pharming (taking into account the Territory limitation on
the needs of Santarus with respect to supply of the Finished Product and other appropriate
adjustments). Santarus’ rights pursuant to the preceding sentence and such agreement(s) referred to
therein shall remain unaffected in the event of bankruptcy, receivership or insolvency of Pharming
or any Pharming Affiliate responsible for manufacture and supply of the Drug Substance, Drug
Product or Finished Product. The conclusion of such agreement(s) between Santarus and [***] shall
not be subject to the consent of Pharming and Pharming shall offer its due assistance with respect
to the conclusion of such an agreement(s), including initiating direct contact between Santarus and
[***].



     3.5 Santarus Right to Step Into Agreements with Other Manufacturing Facilities. In addition to
the rights set forth in Sections 3.4 and 3.6, Santarus shall have the right, at any time during the
Term following the Supply Failure Triggers and for so long as the Supply Failure Triggers continue,
to (a) step in to cure any Payment Defaults under the agreements with other Third Party Contractors
[***] or Manufacturing Facilities and Pharming shall promptly notify Santarus of any such Payment
Defaults (but in any case within a sufficient period of time to permit Santarus to exercise its
cure right hereunder); and (b) assume sole responsibility for the manufacture and supply of Drug
Substance, Drug Product or Finished Product, as applicable, including by stepping into the existing
definitive agreement(s) between Pharming (or its Affiliate) and such Third Party Contractor or
Manufacturing Facility and to order the Drug Substance, the Drug Product or Finished Product, as
applicable, directly from such Third Party Contractor or Manufacturing Facility. Santarus’ rights
pursuant to the preceding sentence and such agreements referred to therein shall remain unaffected
in the event of bankruptcy, receivership or insolvency of Pharming or any Pharming Affiliate
responsible for manufacture and supply of the Drug Substance, Drug Product or Finished Product.
Santarus’ step-in rights shall not be subject to the consent of Pharming and Pharming shall offer
its due assistance with respect to the conclusion of such arrangement(s), including initiating
direct contact between Santarus and such Third Party Contractor or Manufacturing Facility.



     3.6 Notice of Failure to Supply and Other Mechanics.



     (a) The Parties desire to establish a procedure to discuss and escalate any failure by
Pharming to timely and within the quantities ordered supply Finished Product to Santarus. In
furtherance of that desire, Pharming shall promptly notify Santarus in the event that Pharming
reasonably anticipates, for any reason at any time during the Term, that it will be unable to
supply Santarus with the Finished Product as forecasted by Santarus according to this





 




			
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Agreement, including an inability to deliver Finished Product on time or because Pharming is not
technically capable of delivering Finished Product to the Specifications required by the Regulatory
Approvals or in the event of a Supply Failure Trigger.




     (b) If an Order is not received at Santarus’ designated delivery location in the Territory
within [***] ([***]) [***] of the delivery date set forth in the Order and provided that Santarus
has taken into account sufficient lead time (being at least [***] calendar days), then Santarus and
Pharming will promptly meet and discuss the situation and (in so far as necessary) will mutually
agree on an appropriate remediation and revised delivery date.



     (c) If an Order is not received at Santarus’ designated delivery location within the Territory
[***] ([***]) [***] of the delivery date set forth in the Order, and provided that Santarus has
taken into account sufficient lead time (being at least [***] calendar days), then Pharming will
promptly set up a meeting to discuss with Santarus and the Third Party Contractor(s) responsible
for the delayed delivery the situation and the Parties will attempt to understand the cause of the
delayed delivery. If the delayed delivery occurred as a result of an uncured payment default that
is not the result of Pharming contesting the invoice concerned and provided that a demand for
payment has been made by the Third Party Contractor(s) concerned
(“Payment Default”), Santarus
shall have the right to cure any such Payment Default. If the cause of the delayed delivery is
other than a Payment Default, Santarus and Pharming will mutually agree on an appropriate
remediation and revised delivery date.



     (d) If a Supply Failure Trigger occurs, Santarus shall have the rights set forth in Sections
3.4 or 3.5.



     (e) Santarus’ rights pursuant to this Section 3.6 shall remain unaffected in the event of
bankruptcy, receivership or insolvency of Pharming or any Pharming Affiliate responsible for
manufacture and supply of the Drug Substance, Drug Product or Finished Product.



     (f) In the event that Santarus initiates its rights to enter into an agreement(s) with [***]
or exercises its step-in rights with any other Third Party Contractor or Manufacturing Facility,
Santarus shall have the continuing right to manufacture and supply [***] percent ([***]%) of
Santarus’, its Affiliates’ and its sublicensees’ requirements for Drug Substance, Drug Product or
Finished Product until both (i) Pharming has provided written notice to Santarus of its desire to
re-initiate such manufacture and supply and (ii) Santarus believes, in the exercise of its
reasonable judgment, that Pharming is capable of providing continuous and timely supply of Finished
Product pursuant to the terms of this Agreement (the “Re-initiation”). Upon
the occurrence of the Re-initiation, notwithstanding Pharming’s manufacture and supply
hereunder, Santarus shall be entitled to (I) continue to manufacture and supply up to [***] percent
([***]%) of its, its Affiliates’ and its sublicensees’ forecasted requirements for Drug Substance,
Drug Product or Finished Product, as applicable (through the arrangements which it established
following the Supply Failure Trigger or through new Third Party contractors) for up to [***]
([***]) years following the Re-initiation or (II) if the term of the agreement or arrangement into
which Santarus entered as permitted hereunder is greater than [***] ([***]) years, assign such
agreement or arrangement to Pharming.





 




			
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     (g) If Santarus has exercised its rights under Sections 3.4, 3.5 or this 3.6 to assume
responsibility for all or a part of the manufacture and supply of Drug Substance, Drug Product or
Finished Product, the Supply Price payable under the License Agreement with respect to
Santarus-manufactured Drug Substance, Drug Product or Finished Product shall be adjusted as set
forth in Section 8.1 of the License Agreement. In addition, [***] made by Santarus to the Third
Party Contractor(s) pursuant to Section 3.4, 3.5 or 3.6 (c) [***] made by Santarus under Article 4
of the License Agreement.



     (h) For the avoidance of doubt, Santarus may exercise its rights under Sections 3.4, 3.5 and
this Section 3.6 while the Parties await an award to be rendered in proceedings referred by either
Party under Section 3.6(i).



     (i) Any dispute between the Parties as to whether the prerequisites for exercising Santarus’
rights under Sections 3.4, 3.5 or this Section 3.6 are met shall be submitted to the dispute
resolution procedure set out in Section 15.2 of the License Agreement.



     (j) Santarus shall be solely responsible for its own costs in connection with entering into an
agreement(s) with [***] or exercising its step-in rights with any other Third Party Contractor or
Manufacturing Facility.



     3.7 Escrow.



     (a) Pharming shall place in escrow, in trust or otherwise grant Santarus certain rights to use
the Detailed Manufacturing Documentation and Materials, Pharming Know-How and the Regulatory or
Clinical Data in so far as such documentation, materials, Know-How and data are necessary for
Santarus to be able to initiate and continue the manufacturing of Skimmed Milk, Drug Substance,
Drug Product and Finished Product and to obtain and maintain the associated Regulatory Approvals
and Manufacturing Approvals, so that those rights which are attributed to Santarus hereunder or
under the Deeds are safeguarded. Prior to the Effective Date, Pharming has provided to Santarus a
reasonably detailed list of the Detailed Manufacturing Documentation and Materials, Pharming
Know-How and the Regulatory or Clinical Data which will be placed in escrow as set forth in this
Section 3.7.



     (b) In order for Pharming to meet its obligations pursuant to the preceding paragraph, the
Parties shall conclude a separate escrow agreement no later than [***] ([***]) weeks after the
Effective Date. The Parties shall negotiate in good faith the contents of such escrow agreement
taking into account the interests of both Parties, and the escrow agent shall be acceptable to
Santarus in its reasonable discretion. Governing law of the escrow agreement shall be the State of
New York.





 




			
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ARTICLE 4

PRODUCT RELEASE, SHIPMENT AND DELIVERY




     4.1 Product Release.



     (a) By Pharming. A Pharming Qualified Person shall be responsible for releasing each
batch of the Skimmed Milk, Drug Substance, Drug Product and Finished Product for export.



     (b) By Santarus. Pharming shall provide (or shall cause to be provided to Santarus)
the following documentation in advance of each shipment of Finished Product ordered by Santarus:
(i) a Certificate of Analysis, (ii) a Certificate of Compliance, (iii) summaries of relevant batch
records used in the Manufacture of the Skimmed Milk, Drug Substance, Drug Product and Finished
Product, provided that upon the reasonable request of Santarus, Pharming shall provide complete
copies of the relevant batch records, (iv) additional documentation, if any, confirming the release
activities described in Section 4.1(a), and (v) any other relevant documentation reasonably
requested by Santarus. Santarus shall review such documentation and shall be responsible for
authorizing final product release for the Finished Product in the Territory. No Finished Product
shall be shipped by or on behalf of Pharming to Santarus (or its designee) prior to Santarus’
notification to Pharming in writing that Santarus has completed its release procedures (which shall
occur within [***] ([***]) days from the date on which such documentation is received by Santarus)
and has authorized the Finished Product for shipment.



     4.2 Shipping and Customs. Pharming shall be responsible, at its cost and expense, for (a)
shipping the Finished Product to the delivery address on the delivery date set forth in the
applicable Order, and (b) obtaining any export licenses or other official authorizations and
carrying out all customs formalities necessary to export the Finished Product to Santarus (or its
designee) in accordance with the terms specified in the applicable Order. Finished Product shall be
transported in accordance with the Specifications, cGMP and Applicable Laws. In addition, Finished
Product shall meet all applicable export and customs laws, regulations and like requirements for
export to the Territory. Pharming shall notify Santarus in writing at the time of shipment as to
the quantity of Finished Product shipped, the identity of the carrier and the anticipated delivery
date. If any Order is delayed and is not likely to be delivered on time, Pharming shall
immediately notify Santarus and Santarus may direct Pharming to ship such Order by expedited means
of transportation as designated by Santarus.



     4.3 Title and Risk of Loss. Pharming shall deliver the Commercial Finished Product to Santarus
[***]. [***], in accordance with Santarus’ or its Affiliates’ or Sublicensees’ standard terms, at
which point in time [***] to Santarus, its Affiliate or Sublicensee and then to the Third Party purchaser. Santarus shall ensure that the Commercial
Finished Product delivered to Santarus [***] is properly and safely stored in accordance with all
Applicable Laws. Santarus, its Affiliate or Sublicensee shall deliver the Commercial Finished
Product to the Third Party purchaser on the basis of First Expiry/First Out. Subject to Santarus’
obligations pursuant to the License Agreement, all proceeds of such sales to Third Parties shall be
the sole property of Santarus, its Affiliate or Sublicensee. With respect to Commercial Finished
Product supplied to Santarus, its Affiliates or Sublicensees hereunder, Pharming shall be
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damage to the Commercial Finished Product until title transfers to Santarus, its Affiliate or
Sublicensee; provided that Santarus, its Affiliate or Sublicensee shall be responsible for loss or
damage to the Commercial Finished Product caused by a Negligence Event and Santarus shall
compensate Pharming for such loss or damage to the Commercial Finished Product by reimbursing
Pharming for its [***] for such Commercial Finished Product (including the reasonable costs of
destruction and/or disposal, if any).




     4.4 Late Delivery/Shortages and Overages. If a shipment of Finished Product ordered by
Santarus under this Agreement has not been delivered at the shipping point within [***] ([***])
Business Days after the scheduled delivery date (any delivery that is more than [***] ([***])
Business Days after the scheduled delivery date stated on the corresponding Order due to reasons
within Pharming’s reasonable control is hereinafter referred to as a “Late Shipment”), or if the
shipment received by Santarus contains less than [***]% of the quantity specified in the
corresponding Order (a “Short Shipment”), Santarus shall notify Pharming promptly upon such
discovery and, in any event, not later than [***] ([***]) days after receipt of, or failure to
receive, such ordered Finished Product. Pharming shall use its best efforts to deliver the quantity
of Finished Product it had failed to ship in the case of a Late Shipment or the quantity by which
the shipment is short of the quantity ordered in the case of a Short Shipment, as soon as possible
after notification of such shortage, by expedited means of transportation at Pharming’s expense in
respect of any difference in cost for such expedited means of transportation relative to regular
delivery costs.



     4.5 Storage of Skimmed Milk, Drug Substance, Drug Product and Finished Product. Pharming
shall store (and shall cause its Manufacturing Affiliates and Third Party Contractors to store) all
Skimmed Milk, Drug Substance, Drug Product and Finished Product (and any other related materials
and components) in compliance with cGMP, Applicable Laws and the storage requirements set forth in
the Specifications.



     4.6 Returns; Expired or Obsolete Product. Santarus (and its Affiliates and Sublicensees)
shall have the right to return or destroy damaged, expired or otherwise obsolete or unusable
Commercial Finished Product, in each case at Pharming’s direction and cost, except as further
described in this Section 4.6. In the case of a Negligence Event, Santarus shall compensate
Pharming for this loss or damage to the Commercial Finished Product by reimbursing Pharming for its
[***]for such Commercial Finished Product (including the reasonable costs of destruction and/or
disposal, if any). In addition, with regard to Commercial Finished Product that has expired other
than in connection with a Negligence Event, [***] shall [***] the expense associated with the [***]
for such expired Commercial Finished Product (including the reasonable costs of destruction and/or
disposal, if any); provided, however, that Pharming shall be solely responsible for all such costs
to the extent that the Finished Product had a shelf-life of less than [***] ([***]) months at the
time of receipt by Santarus.



     4.7 Acceptance Procedures.



     (a) Deficiency Notice. Santarus has the right to reject any portion of any shipment of
Finished Product that deviates from the warranties set forth in Section 5.1 (the “Pharming




 





	 	 	 
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Manufacturing Responsibilities”), without invalidating any remainder of such shipment. Santarus or
its agent shall visually inspect the Finished Product delivered by Pharming upon receipt thereof
and shall give Pharming written notice (a “Deficiency Notice”) of any Finished Product that
deviates from the Pharming Manufacturing Responsibilities within [***] ([***]) days after Santarus’
receipt thereof (or, in the case of any defects not reasonably susceptible to discovery upon
receipt by visual inspection of the Finished Product, including those requiring laboratory
analysis, within [***] ([***]) days after discovery thereof by Santarus, but in no event after the
expiration date of the Finished Product). Should Santarus fail to provide Pharming with the
Deficiency Notice within the applicable [***]—day period, then the delivery shall be deemed to
have been accepted by Santarus on the [***] day after delivery or discovery, as applicable.




     (b) Determination of Deficiency. Upon receipt of a Deficiency Notice, Pharming shall
have [***] ([***]) days to advise Santarus by notice in writing that it disagrees with the contents
of such Deficiency Notice. If Santarus and Pharming fail to agree within [***] ([***]) days after
Santarus’ receipt of Pharming’s notice as to whether any Finished Product identified in the
Deficiency Notice deviates from the Pharming Manufacturing Responsibilities, then the Parties shall
select a mutually agreed Independent Person (or an independent laboratory) to evaluate if the
Finished Product deviates from the Pharming Manufacturing Responsibilities. Such evaluation shall
be binding on the Parties, and if such evaluation certifies that any Finished Product deviates from
the Pharming Manufacturing Responsibilities, Santarus may reject such Finished Product in the
manner contemplated in this Section 4.7. If such evaluation does not so certify in respect of any
such Finished Product, then Santarus shall be deemed to have accepted delivery of such Finished
Product on the [***] day after delivery (or, in the case of any defects not reasonably susceptible
to discovery upon receipt by visual inspection of the Finished Product, including those requiring
laboratory analysis, on the [***] day after discovery thereof by Santarus, but in no event after
the expiration date of the Finished Product). The expenses of such expert opinion or testing shall
be borne by Pharming if the non-conformity with the Pharming Manufacturing Responsibilities is
confirmed, and otherwise by Santarus. The Parties mutually agree that they shall use Commercially
Reasonable Efforts to resolve all determinations of deficiencies as quickly as possible.



     (c) Product Replacement. In the event Santarus rejects Finished Product in accordance
with this Section 4.7 and the rejected Finished Product is determined not to conform to the
Pharming Manufacturing Responsibilities, Pharming will use its best efforts to replace such
Finished Product with conforming Finished Product as soon as reasonably possible. Further,
Pharming shall reimburse Santarus for all reasonable shipping, handling and storage charges
incurred by Santarus in association with such non-conforming Finished Product.



ARTICLE 5

STANDARDS OF MANUFACTURE



     5.1 Pharming Manufacturing Responsibilities.



     (a) Pharming hereby covenants that all Finished Product Manufactured for Santarus, its
Affiliates or its Sublicensees under this Agreement: (a) shall have been manufactured, packaged,





 




			
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tested and stored in compliance with the Specifications, cGMP, Applicable Laws and the terms and
conditions of this Agreement and the Quality Agreement; (b) shall be in compliance with all
applicable provisions of the FFDCA, the Public Health Service Act, 42 U.S.C. 262, and the
regulations promulgated thereunder; and (c) will have a shelf-life of not less than [***] months at
the time of receipt by Santarus (or such shorter shelf-life as may be approved by Santarus in
writing prior to shipment).




     (b) Pharming hereby covenants that all Drug Product Manufactured for Santarus, its Affiliates
or its Sublicensees under this Agreement: (a) shall have been manufactured, packaged, tested and
stored in compliance with the Specifications, cGMP, Applicable Laws and the terms and conditions of
this Agreement and the Quality Agreement; and (b) shall be in compliance with all applicable
provisions of the FFDCA, the Public Health Service Act, 42 U.S.C. 262, and the regulations
promulgated thereunder.



     (c) Pharming hereby covenants that all Drug Substance Manufactured for Santarus, its
Affiliates or its Sublicensees under this Agreement: (a) shall have been manufactured, packaged,
tested and stored in compliance with the Specifications, cGMP, Applicable Laws and the terms and
conditions of this Agreement and the Quality Agreement; and (b) shall be in compliance with all
applicable provisions of the FFDCA, the Public Health Service Act, 42 U.S.C. 262, and the
regulations promulgated thereunder



     (d) Pharming hereby covenants that all Skimmed Milk Manufactured for Santarus, its Affiliates
or its Sublicensees under this Agreement: (a) shall have been manufactured, packaged, tested and
stored in compliance with the Specifications, cGMP, Applicable Laws and the terms and conditions of
this Agreement and the Quality Agreement; and (b) shall be in compliance with all applicable
provisions of the FFDCA, the Public Health Service Act, 42 U.S.C. 262, and the regulations
promulgated thereunder.



     5.2 Quality Agreement. The terms of the Quality Agreement shall be incorporated herein by
reference. In cases where legal or contractual issues are duplicated in the Quality Agreement
and/or are in conflict with provisions of this Agreement, the Quality Agreement shall be superseded
by the terms and conditions set forth in this Agreement.



     5.3 Stability Studies. Pharming shall conduct (or shall cause its Manufacturing Affiliates
and Third Party Contractors to conduct) stability studies on each of the Skimmed Milk, Drug
Substance, Drug Product and Finished Product according to the Specifications therefor, as required
by the FDA or by applicable Foreign Regulatory Authorities. Pharming shall provide to Santarus a report of all analytical results and data
obtained from such stability studies as they become available for each time point set forth in the
applicable protocol.



     5.4 Drug Master Files. Pharming shall maintain (and shall cause each Manufacturing Affiliate
and Third Party Contractor to maintain) any drug master files (or comparable documents in the
jurisdiction where Skimmed Milk, Drug Substance, Drug Product and/or Finished Product, as the case
may be, is Manufactured) (“Drug Master File”) as may be necessary to support and maintain
Regulatory Approval of Licensed Products in the Territory.





 




			
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Santarus shall have a right to reference any such Drug Master Files for the purpose of
obtaining and maintaining Regulatory Approval of Licensed Products in the Territory. Pharming
shall provide Santarus with the reference numbers for any Drug Master File describing the
Manufacturing Facility and systems, as applicable, to enable Santarus to cross reference the
reference number in any of its Drug Approval Applications (or other regulatory filings) concerning
the Skimmed Milk, Drug Substance, Drug Product and/or the Finished Product in the Territory. In
addition, Pharming shall provide to Santarus appropriate CMC documentation for the Skimmed Milk,
Drug Substance, Drug Product and/or Finished Product as reasonably requested by Santarus for any
regulatory submissions by Santarus and shall otherwise provide such consulting services and support
to Santarus on Manufacturing-related regulatory issues as Santarus may reasonably request.




     5.5 Manufacturing Approvals. Pharming shall obtain and maintain (and shall cause each
Manufacturing Affiliate and Third Party Contractor to obtain and maintain) all necessary
Manufacturing Approvals, in each case at its sole cost.



     5.6 Retention/Reserves. Pharming shall retain (or shall caused to be retained) Manufacturing
samples (including intermediates and components from the Manufacturing process) in accordance with
the terms of the Quality Agreement.



     5.7 Transgene Banks. Pharming will maintain (or shall cause to be maintained) in at [***] a
Master Transgene Bank (“MTB”) and a Master Working Transgene Bank (“MWTB”) of semen. As of the
Effective Date, these locations are [***]. MTB and MWTB are maintained in accordance with good
veterinary practice for storage of semen under liquid and gas phase nitrogen and all other
Applicable Laws, and will continue to be so maintained throughout the Term. Tanks and freezers
holding the MTB and MWTB are kept under controlled conditions and are constantly monitored, and
will continue to be so kept and monitored throughout the Term. Throughout the Term, Access and
handling will be restricted to trained personnel only and semen will be subjected to regular
testing according to approved protocols contained in the applicable Specifications.



     5.8 Specification Amendments.



     (a) Required Amendments. The Parties shall cooperate with each other to amend or
supplement the Specifications to the extent necessary to comply with changes in cGMP, Applicable
Laws or other requirements of Government Authorities necessary to Commercialize in the Territory.
If an amendment to the Specifications requires FDA approval and/or the approval of a Foreign
Regulatory Authority, neither Pharming nor any Manufacturing Affiliate or Third Party Contractor
shall implement such amendment unless and until the necessary Regulatory Approvals and
Manufacturing Approvals have been obtained. In no event shall Pharming or any Manufacturing Affiliate or Third Party
Contractor implement any other modification or addition to the Specifications, including without
limitation, changes in raw materials, equipment or methods of production or testing for the Skimmed
Milk, Drug Substance, Drug Product or Finished Product, without first obtaining the appropriate





 




			
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Manufacturing Approvals and cooperating with Santarus to obtain appropriate Regulatory
Approvals.




     (b) Voluntary Amendments. Each of Pharming and Santarus shall have the right to
request other amendments or supplements to the Specifications from time to time, with the prior
written consent of the other Party, not to be unreasonably withheld.



     5.9 Records. Pharming shall maintain (and shall cause each of its Manufacturing Affiliates
and Third Party Contractors to maintain) all records necessary to comply with cGMP and Applicable
Laws relating to the Manufacturing activities hereunder. All such records shall be maintained for
such period as may be required by Applicable Laws; provided, however, that all records relating to
the manufacture, stability and quality control of each batch of Skimmed Milk, Drug Substance, Drug
Product and Finished Product shall be retained for such additional periods of time in accordance
with guidelines that the Parties shall agree upon from time to time in writing.



     5.10 Audit Rights.



     (a) Pharming and its Affiliates. Upon reasonable prior notice and at reasonable
intervals, Pharming shall allow Santarus and its representatives to inspect Pharming’s and its
Manufacturing Affiliates’ books and records relating to the Manufacture and permit Santarus to
access any Pharming Manufacturing Facilities or Pharming Testing and Storage Facilities used in the
Manufacture for the purposes of (a) making quality assurance audits of the facilities and of the
procedures and processes used in the Manufacture, and (b) confirming compliance with this
Agreement. Santarus, or its representative(s), shall conduct such audit during normal business
hours at a time on which the Parties have mutually agreed, and in such a manner that does not
unreasonably interfere with normal business activities.



     (b) Third Party Audits. Santarus shall have the right to accompany Pharming on its
audits of Third Party Manufacturing Facilities or Third Party Testing and Storage Facilities, which
audits shall occur at reasonable intervals. To the extent reasonably practicable, Pharming shall
provide Santarus with least [***] ([***]) days’ prior written notice of its intent to conduct any
such audit. Pharming shall use its best efforts to ensure that any Third Party Agreements or
quality agreements with Third Parties do not exclude Santarus from accompanying Pharming in the
exercise of Pharming’s audit rights thereunder.



     5.11 Labeling and Packaging. As between the Parties, Santarus shall be responsible for timely
providing to Pharming the approved copy (including art work) for
physician and/or patient inserts and primary and secondary packaging for Finished Product
required for Commercialization within each country within the Territory and shall be solely
responsible for ensuring that the approved content of any such labeling and packaging complies with
the applicable Regulatory Approval. Any relabeling or repackaging required as a result of a mistake
in the original approved copy materials shall be at Santarus’ sole cost; all other mistakes shall
be at Pharming’s sole cost.





 




			
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ARTICLE 6

REGULATORY MATTERS AND QUALITY CONTROL




     6.1 Compliance by Pharming. Pharming shall remain (and shall cause each Manufacturing
Affiliate and Third Party Contractor to remain) in compliance with all Applicable Laws, including
cGMP, at all times during the Term and, without limiting the generality of the foregoing, maintain
a quality control program consistent with cGMP as required by the FDA and the applicable Foreign
Regulatory Authorities.



     6.2 Manufacturing Process. If any process event occurs during the Manufacture of the Skimmed
Milk, Drug Substance, Drug Product or Finished Product, which event is likely to materially affect
the safety, efficacy or regulatory status of the Skimmed Milk, Drug Substance, Drug Product or
Finished Product, then Pharming shall promptly notify Santarus. Further, Pharming shall fully and
appropriately investigate and report to Santarus on all complaints and notices of quality issues
concerning the Skimmed Milk, Drug Substance, Drug Product or Finished Product from the FDA, any
Foreign Regulatory Authority or Government Authority of which Santarus shall have given Pharming
notice. Santarus and Pharming shall consult with each other as to the disposition of all affected
batches of Skimmed Milk, Drug Substance, Drug Product and Finished Product. Pharming shall report
to Santarus in writing any other atypical process event in accordance with the Quality Agreement.



     6.3 Communications. Each Party may communicate with the FDA or Foreign Regulatory Authority
or Government Authority regarding the Manufacturing activities hereunder if such communication is
necessary to comply with the terms of this Agreement or the requirements of any Applicable Law,
governmental order or regulation; provided, however, that Pharming shall permit Santarus to
accompany Pharming and take part in any communications with the FDA or Foreign Regulatory Authority
or Government Authority regarding the Manufacturing activities hereunder, and to receive copies of
all such communications to and from the FDA or any Foreign Regulatory Authority or Government
Authority.



     6.4 Government Inspection.



     (a) Pharming shall make (and shall cause each Manufacturing Affiliate and Third Party
Contractor to make) its internal practices, books and records relating to its Manufacturing
activities hereunder available and allow access to all Manufacturing Facilities and Testing and
Storage Facilities to the FDA, any Foreign Regulatory Authority and any other Government Authority
having jurisdiction over such activities or Commercialization of Licensed Products for the purposes of determining compliance with cGMP
and Applicable Laws.



     (b) Pharming agrees to advise Santarus by telephone, facsimile or e-mail immediately of any
proposed, announced or unannounced visit or inspection by the FDA, Foreign Regulatory Authority or
other Government Authority relating to the Manufacturing activities hereunder. Pharming shall
provide Santarus with a reasonable description in writing of each such visit or inspection promptly
(but in no event later than [***] ([***]) calendar days) thereafter, and with copies of any
letters, reports or other documents (including form 483’s) issued by any such





 




			
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authorities to which Pharming has access and that relate to the Manufacturing activities hereunder.
Santarus may review and comment upon Pharming’s and its Affiliate’s responses to any such reports
and communications prior to submission of any response to the FDA, any Foreign Regulatory Authority
or any other Government Authority. Pharming shall use its best efforts to ensure that the responses
of any Third Party can be reviewed and commented on by Santarus. In addition to any other
obligations set forth in this Agreement, in no event shall Pharming (or its Manufacturing Affiliate
or Third Party Contractor) commit to any changes to the Manufacturing process, Manufacturing
Facilities, Testing and Storage Facilities, equipment, tests and/or Specifications without first
obtaining the appropriate Manufacturing Approvals and cooperating with Santarus to obtain the
appropriate Regulatory Approvals in the Territory, including pursuant to Section 5.8 (a).




     (c) If the FDA, any Foreign Regulatory Authority or any other Government Authority conducts an
inspection of a Manufacturing Facility or a Testing and Storage Facility in circumstances that are
not related to the Manufacturing activities hereunder and issues a Form 483 observation, inspection
report or other formal or informal document in respect of such inspection which questions
Pharming’s (or its Manufacturing Affiliate’s or Third Party Contractor’s) compliance with critical
or major cGMP standards relating to operations at such Manufacturing Facility or Testing and
Storage Facility which otherwise could have an adverse impact on the Manufacturing activities
hereunder then Pharming shall notify Santarus promptly (but in no event later than [***] ([***])
calendar days) after Pharming receives a written copy of such observation, report or document.



     (d) Pharming shall keep Santarus informed of (i) any remediation plan Pharming (or any
Manufacturing Affiliate or Third Party Contractor) adopts to alleviate any concerns raised by the
FDA, any Foreign Regulatory Authority or any other Government Authority contemplated by Sections
6.4(b) or 6.4(c), (ii) progress in implementing the remediation plan and (iii) the formal responses
of the FDA, applicable Foreign Regulatory Authority or applicable other Government Authority to
such remediation plan and its implementation.



     6.5 Other Laws and Regulations. In carrying out its obligations under this Agreement,
Pharming (and each Manufacturing Affiliate and Third Party Contractor) shall comply with all
applicable environmental and health and safety laws (current or as amended or added), and shall be
solely responsible for determining how to comply with same in carrying out these obligations.
Pharming shall promptly notify Santarus of any circumstances, including the receipt of any notice,
warning, citation, finding, report or service of process or the occurrence of any release, spill,
upset, or discharge of hazardous substances (as may be defined under Applicable Laws) relating to
Pharming’s (or its Manufacturing Affiliate’s or Third Party Contractor’s) compliance with this
Section 6.5 and which relates to the Manufacturing activities hereunder.



     6.6 End-User Inquiries and Complaints. Subject to Pharming’s obligation to report certain
information on a more expedited basis as contemplated by Section 7.1 below, Pharming shall notify
and refer to Santarus, within [***] ([***]) Business Days after receipt, all





 




			
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communications from end-users of the Finished Product in the Territory (and also outside the
Territory if the circumstances related to such communications could potentially have an impact on
Finished Product in the Territory), including without limitation, inquiries regarding the Finished
Product and its uses, and complaints, comments and suggestions regarding the Finished Product and
its effects on users. Santarus shall have the sole right to respond to all such communications
from end-users of Finished Product in the Territory, and Pharming shall provide to Santarus
reasonable cooperation and assistance in effecting such responses (including conducting or causing
to be conducted investigations as may be reasonably requested by Santarus).




ARTICLE 7

PHARMACOVIGILANCE; RECALL



     7.1 Pharmacovigilance. Upon the transfer to Santarus of the IND for Licensed Product in any
indication or the transfer to Santarus of Regulatory Approval to market and sell the Licensed
Product in any indication, whichever occurs first, Santarus will be responsible for
pharmacovigilance reporting in the Territory, and Pharming will provide data and other Information
to assist with Santarus’ pharmacovigilance reporting obligations. Pharming will be responsible for
maintaining the worldwide pharmacovigilance database. Prior to such transfer of the regulatory
filing (e.g., the IND or Regulatory Approval to market and sell the Licensed Product) to Santarus,
the Parties shall enter into a separate pharmacovigilance agreement to conform with the respective
pharmacovigilance reporting obligations of Santarus in the Territory and Pharming throughout the
world.



     7.2 Notification and Recall. The handling of recalls and withdrawals of Finished Product in
the Territory shall be within the sole discretion of Santarus, unless otherwise required by
Applicable Laws. If any Government Authority issues or requests a recall or takes similar action in
connection with Finished Product, or if either Party determines that an event, incident or
circumstance has occurred which may reasonably result in the need for a recall or market withdrawal
of Finished Product in the Territory (collectively, “Recalls”), the Party shall, within [***]
([***]) hours, advise the other Party thereof by telephone or facsimile, after which the Parties
shall promptly discuss and work together to effect an appropriate course of action. Notification to
FDA (or such other Foreign Regulatory Authority or Government Authority in the Territory) and
conducting such Recall shall be the responsibility of Santarus. Pharming shall (a) cooperate fully
with Santarus in the event of any such Recall, withdrawal and/or related disposition of any
affected Finished Product in Pharming’s (or its Manufacturing Affiliates’ or Third Party
Contractors’) possession and (b) provide such assistance in connection therewith as Santarus may
reasonably request.



     7.3 Recall Expense. Pharming shall bear the full and reasonable expenses of both Parties
incurred in any Recall to the extent resulting from a failure of Pharming (or its Manufacturing
Affiliate or Third Party Contractor) to manufacture the Skimmed Milk, Drug Substance, Drug Product
or Finished Product in accordance with the Pharming Manufacturing Responsibilities. In all other
circumstances Santarus shall bear the full and reasonable expenses





 





	 	 	 
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of both Parties incurred in any Recall. Such expenses of Recall shall include, without limitation,
the expenses of notification and destruction or return of the recalled Finished Product,
distribution of replacement Finished Product and all sums paid by Third Parties for the recalled
Finished Product. Without limiting the foregoing, to the extent any Recall is caused by the
failure of Pharming (or its Manufacturing Affiliate or Third Party Contractor) to manufacture the
Skimmed Milk, Drug Substance, Drug Product or Finished Product in accordance with the Pharming
Manufacturing Responsibilities, Pharming shall further reimburse Santarus for any and all
transportation and storage charges incurred by Santarus in connection with such recalled Finished
Product.




ARTICLE 8

TERM AND TERMINATION



     8.1
Incorporation of License Agreement Provisions. The terms and provisions of Article 11 of the License Agreement shall be incorporated by reference herein.



     8.2 Technical Transfer. In addition to the incorporation of Article 11 as set forth in Section
8.1 upon termination or expiration of this Agreement, (a) Pharming shall surrender to Santarus, or,
at Santarus’ sole option and expense, Pharming shall destroy and provide Santarus with a
certificate signed by a responsible executive of Pharming attesting to the destruction of, all
copies of any Confidential Information provided by Santarus hereunder (except to the extent
required to be maintained by Pharming pursuant to Applicable Laws, the License Agreement or this
Agreement); and (b) in furtherance of Section 11.5(b)(iv) of the License Agreement or the exercise
of Santarus’ rights under the Security Agreement or the Deeds and in addition to Pharming’s
obligations under the Escrow Agreement, Pharming shall: (i) surrender to Santarus all unused
Licensed Compound, Skimmed Milk, Drug Substance, Finished Product and other raw materials ordered
or allocated separately for Santarus in anticipation of satisfaction of Santarus’ forecasted
requirements; (ii) cooperate with Santarus and assist in the transfer to Santarus of all legal and
technical documents concerning Licensed Compound, Skimmed Milk, Drug Substance and Finished
Product, including master batch records, validation reports, stability reports and relevant
manufacturer authorizations, existing retention samples and all such other documents and materials
as may be reasonably necessary or useful for Santarus to source Finished Products from other
qualified Third Parties; (iii) maintain all Regulatory Approvals and Manufacturing Approvals; and
(iv) provide, upon Santarus’ reasonable request, up to [***] of personnel support in furtherance of
the tech transfer contemplated hereunder.



     8.3 Accrued Rights, Surviving Obligations. Termination of this Agreement shall not affect any
accrued rights and remedies of either Party. The terms of Sections
2.8, 3.4, 4.6, 5.4, 5.7, 5.8, 5.9, 5.10, 6.4, 6.6 and Articles 9 and 10 of this Agreement
shall survive any termination or expiration of this Agreement. In addition, any other provisions
which are required to interpret and enforce the Parties’ rights and obligations under this
Agreement shall also survive any termination or expiration of this Agreement, but only to the
extent required for the full observation and performance of this Agreement, as well as any other
provisions of this





 




			
	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.




21









 









Agreement which survive any termination or expiration of this Agreement as described in Section
11.5 of the License Agreement.




ARTICLE 9

INDEMNIFICATION, INSURANCE AND LIMITATION ON LIABILITY



     The terms and provisions of Article 13 of the License Agreement shall be incorporated by
reference herein.



ARTICLE 10

MISCELLANEOUS



     The terms and provisions of Article 15 of the License Agreement shall be incorporated by
reference herein.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



22









 





     IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals by their
proper officers as of the Effective Date.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	SANTARUS, INC.	 	 	 	PHARMING GROUP N.V.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	By:	 	/s/ Gerald T. Proehl	 	 	 	By:	 	/s/ Sijmen de Vries	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Gerald T. Proehl
	 	 	 	 	 	Name:
	 	Sijmen de Vries	 	 
	 

	 	Title:
	 	President and Chief Executive Officer
	 	 	 	 	 	Title:
	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:	 	/s/ Bruno M.L. Giannetti	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Name:
	 	Bruno M.L. Giannetti	 	 
	 

	 	 	 	 	 	 	 	 	 	Title:
	 	Chief Operations Officer