Exhibit 10.52


 


CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED


 


ICOS CORPORATION


MANUFACTURING AGREEMENT


 


THIS
MANUFACTURING AGREEMENT (this “Agreement”) between ICOS Corporation, a
Washington corporation, having its principal offices at 22021 20th
Avenue, Bothell, WA 98021 (“ICOS”), and Protein Design Labs, Inc., a Delaware
corporation, having its principal offices at34801 Campus Drive, Fremont, CA
94555 (“PDL”), is effective as of August 29, 2003.


 


RECITALS


 


A.                                   PDL
is engaged in the discovery, development, and commercialization of new
pharmaceutical candidates;


 


B.                                     ICOS
is in the business of providing biological development and manufacturing
services; and


 


C.                                     PDL
has discussed certain of its areas of interest with ICOS and is familiar with
ICOS’s facilities and expertise and, as a result, wishes to retain ICOS to
provide certain services associated with manufacturing and/or supplying certain
quantities of specific product(s) for use in clinical trials, as more fully set
forth in various Work and Quality Statements (as defined herein) to be attached
to this Agreement, and ICOS is willing to so perform, all in accordance with
the applicable Work and Quality Statements and subject to the terms of this
Agreement.


 


NOW,
THEREFORE, the parties agree as follows:


 


AGREEMENT


 


1.                                      Definitions


 


1.1                                 “Acceptance
Criteria” means the composition, quality, purity, identity and strength of
a Product to be set forth in Work and Quality Statements and which must be met
by ICOS in Processing the Product.


 


1.2                                 “Affiliate”
means any entity that controls, is controlled by, or is under common control
with a party.  A corporation or other
entity shall be deemed to control a corporation or entity if it directly or
indirectly owns or controls at least fifty percent (50%) of the voting stock or
other ownership interest of that corporation or entity.


 


1.3                                 “CMC”
means Chemistry Manufacturing and Control information required by the FDA for
the filing of an IND, as set forth in 21 CFR 312.23(a)(7), et. seq.,
as amended or any successor information.


 


1.4                                 “Confidential
Information” means any business or
technical information, trade secrets, know-how, techniques, data or other
information, disclosed by the disclosing party to the receiving party in
writing and marked “confidential” or that is disclosed orally and confirmed in


 





















 


writing
as confidential within thirty (30) days following such disclosure.  Confidential Information shall not include
any information that is: (a) already known to the receiving party at the
time of disclosure hereunder (other than from the other party hereto) as
demonstrated by its written records; (b) now or hereafter becomes publicly
known other than through acts or omissions of the receiving party, or anyone to
whom the receiving party disclosed such information; (c) disclosed to the
receiving party on a nonconfidential basis by a third party under no obligation
of confidentiality to the disclosing party; or (d) independently developed by
the receiving party without reliance on the Confidential Information of the
disclosing party as shown by its written records.  All PDL Materials, PDL Trade Secrets, and all
results of the services shall be deemed Confidential Information of PDL, except
to the extent any such information falls within any of the categories described
in clauses (a) through (d) above.


 


1.5                                 “cGMP”
means the current Good Manufacturing Practices and General Biologics Products
Standards as promulgated under each of the following as in effect on the date
of this Agreement and as amended or revised after the date of this Agreement:


 


(a)                                  the
U.S. Food, Drug & Cosmetics Act (21 U.S.C. Sect. 301 et seq.)
and related U.S. regulations, including 21 Code of Federal Regulations
(Chapters 210, 211, 600 and 610) and other FDA regulations, policies, or
guidelines in effect at a particular time for the manufacture, testing and
quality control of investigational drugs; and


 


(b)                                 the
ICH guide Q7a, “ICH Good Manufacturing Practice Guide for Active Pharmaceutical
Ingredients,” as applied to investigational drugs (Section 19).


 


1.6                                 “PDL
Materials” means those materials supplied by PDL to ICOS (if any) pursuant
to this Agreement or a particular Work or Quality Statement, except those
materials provided by PDL to ICOS that are both (a) not proprietary to PDL and
(b) paid for by ICOS.


 


1.7                                 “PDL
Patent Rights” means patents and patent applications owned by PDL, and all
divisions, continuations, continuations-in-part, and substitutions thereof; all
foreign patent applications corresponding to the preceding applications; and
all U.S. and foreign patents issuing on any of the preceding applications, including
extensions, reissues and re-examinations (including, without limitation, all
claims and causes of action for infringement, misappropriation or violation
thereof).


 


1.8                                 “PDL
Trade Secrets” means unpatented and/or unpatentable trade-secret
information and proprietary technology of any kind or nature owned by PDL
(including, without limitation, all claims and causes of action for
infringement, misappropriation or violation thereof), which is disclosed by or
on behalf of PDL for purposes of assisting ICOS in performing the Services.


 


1.9                                 “FDA”
means the United States Food and Drug Administration, or its successor agency,
and or its European counterpart(s) (currently, the European Medicines
Evaluation Agency, or “EMEA”), as the case may be.


 


2





















 


1.10                           “IND”
means an Investigational New Drug application to begin studies of a new drug or biologic for humans that is filed with
the FDA, as set forth in 21 CFR 312.22, et. seq., as amended, or its European
counterpart(s) (currently, EMEA), as the case may be, or any successor
application.


 


1.11                           “Intellectual
Property Rights” means any patent, copyright, trademark, trade secret or
other intellectual or industrial property rights or proprietary rights arising
under the laws of any jurisdiction (including, without limitation, all claims
and causes of action for infringement, misappropriation or violation thereof
and all rights in any registrations and renewals).


 


1.12                           “Manufacture
and Release Requirements” means those specifications, methodologies,
analytical tests, process parameters, acceptance criteria, and cGMP
requirements necessary to manufacture and release to PDL the Product in
conformity with a particular set of agreed on Acceptance Criteria.  All Manufacture and Release Requirements are
set forth in the Work and Quality Statements.


 


1.13                           “Price
and Payment Terms” means the amounts, as stated in a Work Statement, that
are payable by PDL to ICOS in consideration for ICOS performing the Services
pursuant to such Work Statement.


 


1.14                           “Process,”
“Processed” or “Processing” means those activities associated with the
Product as described in the Work and Quality Statements, which ICOS will
perform for and on behalf of PDL in accordance with this Agreement.


 


1.15                           “Product”
means the Product defined in the Work and Quality Statements.


 


1.16                           “Quality
Statement” means the Quality Statement executed by the parties and attached
hereto as Appendix E, and incorporated hereing by this reference, as revised by
the written agreement of the parties from time to time, which shall describe
the regulatory and compliance roles and responsibilities of both PDL and ICOS.


 


1.17                           “Schedule”
means the estimated, target or required timeline for Processing the Product as
agreed on by the parties and set forth in a Work Statement.


 


1.18                           “Services”
means the services to be provided by ICOS for the benefit of PDL, including
Processing specific Product, pursuant to the particular Work and Quality
Statements, which services shall be performed subject to the terms and
conditions of this Agreement.


 


1.19                           “Work
Statement” means each Work Statement executed by the parties and attached
hereto as an Exhibit (including the Quality Statement described above), and
incorporated herein by this reference, as revised by the written agreement of
the parties from time to time, which shall contain at a minimum (a) a
description of all the Services to be performed, (b) a description of the
Product, Acceptance Criteria, Process, and the Manufacture and Release
Requirements, (c) the Price and Payment Terms, (d) the quantity of Product to
be delivered, and (e) an estimated Schedule.


 


3





















 


2.                                      Work
and Quality Statements


 


Except
as provided in Section 3.3, ICOS shall have no obligation to perform any
services except in accordance with any Work and Quality Statements.  From time to time with respect to the
manufacture, analysis and/or supply of the M200 Product, they will execute and
attach to this Agreement Work and Quality Statements describing the Services to
be performed and related information. 
This Agreement and each specific Work or Quality Statement, as the same
shall be completed, shall collectively, independent from any other Work or Quality
Statement, constitute the entire agreement for the specific Services identified
in such Work or Quality Statement.  No
Work or Quality Statement shall be binding unless executed by both parties.


 


Subject
to Section 3.2C, by unanimous written decision of the Project Leaders (as
defined in Section 3.5), the parties may revise the Work or Quality
Statements at any time.


 


With
respect to all services provided by ICOS from time to time that are agreed on
by the parties but are outside the scope of the Services (“Additional Services”),
PDL shall pay to ICOS [*] as
described in the Work Statement.  Such
Additional Services and PDL’s payment obligations will be governed by the terms
of this Agreement.  ICOS will invoice PDL
monthly for all Additional Services performed, with each such invoice containing
a reference to the services performed and the personnel used.  All such invoices will be payable under the
terms described in Section 7. 
Notwithstanding the foregoing, and subject to the terms of this
Agreement, ICOS must complete all the tasks necessary to complete the Services
that are within the scope of the Work and Quality Statements to ensure that the
Product is Processed in compliance with the applicable Manufacturing and
Release Requirements in all material respects, and PDL shall compensate ICOS in
performing such Services at the rate specified in the Work Statement.


 


Promptly
following conclusion of the Services, if PDL reasonably determines that further
services are required beyond the Services (as described in the Work and Quality
Statements) to permit PDL to complete the CMC section of documents
necessary to file an IND or IND Amendment with the FDA with respect to the
Product, ICOS shall consider performing any such further services provided that
(i) such further services are within ICOS’s then current manufacturing services
offerings, and (ii) ICOS has resources available (during normal working hours)
to provide such further services.  ICOS
reserves the right to request further compensation prior to agreeing to perform
such further services, considering other commercial opportunities.  Such written description of supplemental
services and compensation shall be an amendment to the pertinent Work and
Quality Statements and shall be governed by the terms of this Agreement.


 


3.                                      Scope
of Services


 


3.1                               Processing
Services


 


Subject
to the terms of this Agreement and pursuant to each Work or Quality Statement,
ICOS will perform the Services as set forth in each Work or Quality Statement
and, as applicable, use commercially reasonable best efforts (based on
biologics manufacturing industry


 


4





















 


standards) to (a) Process
the Product in accordance with the related Manufacture and Release
Requirements, including without limitation cGMP, so that when released to PDL
the Product will conform in all material respects with the applicable
Acceptance Criteria, (b) maintain all records regarding the Process and the
Product as agreed to from time to time by the parties and in conformity with
cGMP, (c) subject to the last paragraph of Section 2, provide suitable CMC
support documentation to allow PDL to file an IND or IND Amendment with the FDA
and (d) supply the Product to PDL in accordance with the applicable
Schedule.


 


The
parties agree that the Services, as described in the Work and Quality
Statements, may not be changed without both parties’ prior written
agreement.  PDL acknowledges that ICOS is
given flexibility to conduct such activities, although not expressly stated in
the Work and Quality Statements, at the time and in the manner that ICOS deems
necessary as an independent contractor to fulfill its obligations in completing
the Services.


 


3.2                               Changes
to Schedules and Specifications


 


A.                                   Due
to the unpredictable nature of the biological processes, the Schedules set down
for the performance of the Services (including without limitation the dates for
production and delivery of Product) set out in the Work Statement are best
current estimates only.  ICOS [*] shall keep PDL regularly informed of any changes to the
Schedules.  ICOS understands that any
such changes to the Schedules may have a material impact on PDL’s business and
agrees that the effect on the Schedules caused by any changes to the Schedules
will be made to the minimum extent reasonably necessary.


 


B.                                     The
Acceptance Criteria and the Manufacturing and Release Requirements may be
amended from time to time only as described in Section 3.2C or as dictated
by the FDA and applicable laws.


 


C.                                     ICOS
will not implement any Material Changes relating to any agreed on Acceptance
Criteria or Manufacture and Release Requirements without PDL’s prior written
approval of such changes.  ICOS may,
however, make non-Material Changes without PDL’s prior written approval, but
with timely notification to PDL.  For
purposes of this Section 3.2C, a “Material Change” is defined as any
variation in the written procedures currently in place that (i) impacts the
regulatory commitments for the Product, (ii) may affect the quality, purity,
identity or strength of the Product, or (iii) would necessarily result in
changing, altering or modifying the Acceptance Criteria and/or the Manufacture
and Release Requirements.


 


D.                                    With
respect to (i) amendments dictated by the FDA or applicable laws and (ii)
Material Changes, as described in this Section 3.2, PDL shall be
responsible for (a) the costs specific to the Product in making such amendments
to the Acceptance Criteria and/or Manufacturing and Release Requirements,
including without limitation capital costs specific to the Product (but excluding
[*]), (b) the costs in validating the
Process after such amendment, and (c) any increases in cost of manufacturing
the Product as a result of such amendment. 
With respect to amendments dictated by the FDA or applicable laws, the
parties will promptly meet to discuss the actions necessary to comply with such
amendments and the costs associated


 


5





















 


therewith.  ICOS shall invoice PDL in accordance with Section 7.2
for all cost that PDL is responsible to pay pursuant to this Section 3.2.D.


 


3.3                               Technical
Difficulties


 


If it
becomes apparent to either ICOS or PDL at any stage in the provision of any
Services that, as a result of scientific or technical reasons out of the
reasonable control of either party, it will not be possible to complete the
Services in the manner described in this Agreement or the applicable Work and
Quality Statements, the parties shall [*] to resolve
such problems in a commercially reasonable manner.


 


3.4                               Safety
Procedures


 


ICOS will have
responsibility for adopting and enforcing safety procedures for ICOS’s internal
handling and production of each Product, which procedures will comply in all
material respects with applicable federal, state and local environmental and
occupational safety and health requirements.


 


3.5                               Project
Leaders


 


Each
party will, within ten (10) days of signing this Agreement, select an
individual to serve as its Project Leader (collectively, the “Project Leaders”)
and inform the other party of such selection. 
Each party’s Project Leader will (a) be authorized to manage the
relationship of the parties under this Agreement, (b) oversee the performance
of the Services, (c) take the actions specifically delegated to them under
this Agreement, and (d) be the principal contact of such party for matters
relating to this Agreement.  Each party
may change its Project Leader at any time on written notice to the other
party.  The Project Leaders shall meet on
request of either party, but in any event no less frequently than monthly.  Meetings may be held by telephone conference
call and may be attended by other representatives of each party, in addition to
the Project Leader, as the applicable Project Leader may desire.  Decisions of the Project Leaders must be
unanimous.


 


3.6                               Ownership
of Products; License to Know-How


 


PDL
will own all rights, title and interest to all Products, PDL Materials, PDL
Intellectual Property Rights, PDL Patent Rights and PDL Trade Secrets
including, without limitation, all in process materials used to produce
Products and paid for by PDL, cell lines, cell banks, data, marketing plans,
product lines, product plans and records (except to the extent the data or
records contain ICOS’s Intellectual Property Rights or Confidential
Information) produced pursuant to such Work and Quality Statements and all
Intellectual Property Rights in and to all of the foregoing (collectively, “PDL
Property”); provided, however, that PDL Property will not include any right,
title or interest in or to any Intellectual Property Rights or Confidential
Information owned by ICOS, including without limitation [*].  ICOS grants to PDL a non-exclusive,
non-sublicensable (except to third parties for purposes of manufacturing as
described in the last sentence of this Section 3.6), royalty free license,
to use ICOS’s Intellectual Property Rights developed only as a result of
performing the Services for PDL under the Work and


 


6





















 


Quality Statements,
including but not limited to batch records and other such information (the “ICOS
Project Related IP”), solely for the purpose of permitting PDL to perform
clinical trials and file for an IND or an IND Amendment with the FDA.  PDL shall have the right to sublicense its
rights in ICOS Project Related IP granted pursuant to this Section 3.6 for
the sole purpose of permitting the third party sublicensees to perform
manufacturing services that are substantially similar to the Services and
related to such PDL Property, provided that each sublicensee agrees in writing
to be bound by the provisions of Section 10 to the same extent as PDL is
bound.  In the event that PDL’s license
rights granted under this Section 3.6 are terminated at any time for any
reason, all such sublicenses shall terminate. 
PDL shall include in all of its sublicense agreements granted hereunder
provisions for such termination.


 


3.7                               Assistance
with Transfer of PDL Property.


 


ICOS
agrees that during or after the term of this Agreement, PDL, at its option, may
elect to engage a third party to perform the same services or services
substantially similar to the Services at any time during or after the term of
this Agreement.  Subject to both (a) the
availability of ICOS personnel, which shall not be unreasonably or unduly
withheld, and (b) PDL compensating ICOS for its time spent in complying with
its obligations under this paragraph [*] in
connection with such obligations, ICOS agrees to provide all necessary
assistance to PDL in transferring PDL Property to such third parties that PDL
engages to perform such services.  In
addition, ICOS agrees that in connection with such transfer, PDL may [*] that is directly related to the PDL Property and
necessary for such third parties to perform manufacturing services that are
substantially similar to the Services and related to such PDL Property and the
ICOS Project Related IP licensed to PDL under Section 3.6, on behalf of
PDL under a confidentiality agreement containing provisions at least as
protective as those of Article 10, provided that PDL [*].


 


4.                                      PDL
Supply of Information


 


4.1                               Proprietary
Information to Provide Services


 


As
soon as practicable after the parties’ execution of Work and Quality
Statements, PDL shall supply to ICOS all PDL Materials and shall disclose to
ICOS all PDL Trade Secrets necessary for ICOS to perform the Services to be
provided under such Work and Quality Statements.  PDL hereby grants ICOS during the term of the
applicable Work and Quality Statements the non-exclusive right to use such PDL
Patent Rights, PDL Trade Secrets and PDL Materials as are necessary for ICOS to
perform the Services for the sole purpose of providing the related
Services.  ICOS acknowledges it may not
use any such rights, information or materials for any purpose other than as
required to perform the Services.


 


4.2                               Information
Regarding Hazards


 


PDL
shall also provide to ICOS on an ongoing basis throughout the term of this
Agreement prompt notice of any information it receives involving the PDL
Materials or Product that relates to any hazards to the health or safety of any
personnel of ICOS or the possibility of


 


7





















 


cross-contamination of
any other products being manufactured or stored by ICOS.  ICOS shall promptly notify PDL of any
information it receives relating to (a) the safety of the PDL Materials or
Product, including any confirmed or unconfirmed information on adverse,
serious, or unexpected events, including health or safety risks, associated
with the use or toxicity of the Product, or (b) the possibility that
cross-contamination has occurred with other Products manufactured or stored by
ICOS.


 


5.                                      Shipping


 


ICOS
agrees to work with PDL to deliver and transfer title to the Product in such
locations and in such a manner as directed by PDL, provided that any such
arrangement shall not materially alter ICOS’s obligations, or expose ICOS to
any additional liabilities, under or arising out of this Agreement.  Notwithstanding, all Product that ICOS
Processes pursuant to this Agreement shall be packaged and shipped FOB ICOS’s
facilities and in accordance with PDL’s written instructions and in compliance
with all applicable shipping regulations. 
The parties acknowledge that, according to the Quality Statement, ICOS
may not ship the Product to PDL until PDL has authorized such shipment.  In the event PDL does not grant such shipping
authorization within [*] following
the date that ICOS has provided notice to PDL that it is prepared to ship the
Product, the Product will be deemed to have been delivered to PDL upon the
expiration of such [*] period for
all purposes under this Agreement (including, without limitation, to determine
whether ICOS has timely delivered the Product to PDL, to begin the evaluation
period of the Product as described in Section 6.1A, and to transfer the
title and risk of loss in the Product to PDL). 
All risk in and title to the Product shall pass to PDL on delivery by
ICOS.  Unless the parties agree otherwise
in the applicable Work Statement, PDL shall designate a shipping company,
coordinate with such shipping company for the shipment of the Product, and be
billed directly by the shipping company for all related shipping costs.  Notwithstanding the foregoing, shipment may,
on agreement of the parties, be arranged by ICOS and at terms and with a
carrier reasonably acceptable to PDL.


 


6.                                      Inspection
and Acceptance


 


6.1                               Evaluation
Period


 


A.                                   All
Product shipped from ICOS to PDL shall comply in all material respects with the
applicable Acceptance Criteria and Manufacture and Release Requirements and shall
be accompanied by a certificate of analysis in a form to be agreed on by the
parties.  PDL shall have[*] from the date the Product is delivered to PDL to
evaluate the Product and reject the acceptance thereof; provided, however, that
PDL may reject any Product only if (i) ICOS fails to deliver a certificate of
analysis, (ii) the Product does not meet the Acceptance Criteria as of the date
of delivery in any material respect, (iii) the Product was not Processed
according to the Manufacture and Release Specifications in any material
respect, or (iv) the Product was not manufactured according to cGMPs in any
material respect.  In the absence of PDL
notifying ICOS of rejection within the above described [*]
period, PDL will be deemed to have accepted the Product as delivered.


 


8





















 


B.                                     In
the event that the Schedules in a particular Work Statement are estimates only,
PDL shall not be entitled to cancel any unfulfilled part of the Services or
refuse acceptance of Product related to such Work Statement on grounds of
reasonably late performance of the Services or reasonably late delivery of the
Product, as described in section 3.2.A. 
In such event, and notwithstanding Section 12, ICOS shall not be
liable for any loss, damage, costs or expenses of any nature, whether direct or
consequential, arising out of any delay in performance or delivery howsoever
caused; or arising out of any failure to produce the estimated quantities of
Product for delivery on the estimated schedule.


 


6.2                               Rejection
of Product


 


A.                                   If
PDL rejects any of the Product pursuant to Section 6.1A, PDL shall (i)
immediately provide to ICOS written notice of rejection which shall state in
reasonable detail the reasons for such rejection and (ii) provide ICOS with the
opportunity to conduct its own tests on such rejected Product.  PDL shall return all remaining unused Product
to ICOS and require that ICOS replace such rejected Product; provided, however,
that PDL may retain only that portion of the rejected Product that is then
being used for laboratory testing, and may use such retained portion solely to
complete such tests but in no event may PDL use any of the rejected Product for
any human clinical testing or trials after becoming aware of the basis for such
rejection (and PDL shall indemnify ICOS for all liabilities, costs and damages
incurred by ICOS resulting from PDL’s breach of this limitation on use).  ICOS shall replace the Product (as mutually
agreed) as soon as practicable.  In no
case shall ICOS take more than [*] to replace
such Product.


 


B.                                     Notwithstanding
the foregoing, if PDL rejects the Product for the reasons stated in Section 6.1A(ii)
or (iii) and the parties disagree on whether PDL is entitled to so reject such
Product, then (i) analysts from both parties shall promptly meet to determine
that the methods of analysis are the same and are being executed in the same
manner, (ii) carefully controlled and split samples shall be sent from one site
to another for testing in an attempt to reach agreement, and (iii) the parties
shall use good faith efforts for a period of [*]
after completing such tests to resolve whether PDL is entitled to reject such
Product.  In the event that the parties
cannot resolve their dispute in the manner described, an independent laboratory
acceptable to both parties shall be qualified and shall utilize agreed on test
methods to test the Product in dispute (“Disputed Product”).  The costs of such independent laboratory
shall be borne by the parties equally; provided, however, that the party that
is determined to be incorrect in the dispute shall be responsible for all such
costs and shall reimburse the correct party for its share of such costs
incurred.  The decision of such independent
laboratory shall be in writing and shall be binding on both ICOS and PDL.


 


C.                                     If
PDL properly rejects Product pursuant to Section 6.1A and 6.2B, or if ICOS
breaches its warranty stated in Section 10.1B subject to the time
limitation regarding notice of breach as stated therein, and ICOS cannot
replace the Product with conforming Product within the time period set forth in
Section 6.2A, then ICOS [*]; provided,
however, that ICOS will not wait for the time period in Section 6.2A to
expire before [*] if ICOS has earlier knowledge
that it will be unable to replace the Product [*].  Nothing in this Section shall permit
ICOS to cancel its remaining obligations under the Work and Quality Statements
(e.g., obligations regarding


 


9





















 


transfer of PDL Property
and confidentiality) or terminate this Agreement as it relates to other Work
Statements.  The provisions of this Section 6.2
shall be the sole remedies available to PDL with respect to Product that PDL
properly rejects.


 


7.                                      Fees
and Invoices


 


7.1                               Fees


 


In consideration for ICOS
performing the Services, PDL shall pay to ICOS such amounts as described in the
Price and Payment Terms section of the applicable Work Statement.  All fees are exclusive of sales tax or of any
other applicable taxes, levies, duties and fees of whatever nature imposed by
or under the authority of any governmental authority, which shall be paid by
PDL (other than taxes based on ICOS’s income).


 


7.2                               Invoices


 


ICOS shall invoice PDL as
provided in the Price and Payment Terms section of the applicable Work
Statement.  PDL shall pay the total
amount of each invoice within [*] of receipt
of the invoice.  If ICOS has not received
full payment prior to the expiration of such [*]
period, ICOS shall provide written notice to PDL of such non-payment.  In the event PDL fails to make payment within
[*] of the date of such notice, then
(a) all unpaid amounts shall accrue interest from the date of the applicable
invoice at a monthly rate equal to the lower of [*]
percent ([*]%) or the highest rate permitted by
law, and (b) ICOS may terminate this Agreement as set forth in Section 14.2A
upon written notice to PDL (unless PDL’s failure to pay is due to its rejection
of Product pursuant to Section 6.2A and the parties are within the dispute
resolution procedures set forth in Section 6.2B) provided that such
termination will not forgive PDL’s obligation to pay all amounts owing to ICOS.


 


8.                                      Raw
Materials


 


ICOS
will be responsible for procuring, testing, releasing and maintaining
sufficient inventory of all raw materials necessary to Process the Product in
accordance with this Agreement and the applicable Work and Quality Statements;
provided, however, that PDL shall reimburse ICOS for the purchase of unusual or
special raw materials, which are to be identified on the applicable Work
Statement as the “PDL Raw Materials,” in such amount and in the manner as
described in such Work Statement.


 


9.                                      Confidentiality


 


9.1                               Non-disclosure


 


Each
party agrees (a) to take all reasonable precautions and to use its commercially
reasonable efforts (provided such efforts shall be no less than what such party
uses to protect its own confidential information, but in no event less than
reasonable care) to maintain the confidentiality of all Confidential
Information that such party (the “Recipient”) obtains in respect to the other
party (the “Disclosing Party”) and (b) not to use or disclose to any third


 


10





















 


parties Confidential
Information of the Disclosing Party other than as permitted by Section 9.2.  The Disclosing Party’s disclosure of
Confidential Information to the Recipient shall not constitute a grant of any
license or any other rights or generate any business arrangements unless
specifically set forth herein or in another written agreement between the
parties.


 


9.2                               Permitted
Disclosures


 


A
Recipient may disclose Confidential Information of the Disclosing Party only
(a) to its employees solely for purposes of performing the Services, (b) with
the prior written consent of the Disclosing Party and subject to any
non-disclosure agreement that the Disclosing Party wishes to execute with the
third party recipient of the Confidential Information, or (c) to appropriate
regulatory authorities, attorneys and accountants and pursuant to any order of
a court, administrative agency or other governmental authority, provided that
the Disclosing Party has been provided with reasonable prior notice so that the
Disclosing Party can take actions to prevent such disclosure or mitigate the
effect of such disclosure on the Disclosing Party, and (d) to its attorneys,
advisors, investors, prospective acquirors and investors, lenders and other
financing sources, and to strategic partners or licensees of the Products,
provided that such disclosure shall be made under terms of confidentiality at
least as protective as those herein.


 


9.3                               Terms
of This Agreement


 


Except
as required by law and disclosure to each party’s respective accountants and
legal counsel, neither party shall disclose to any third party any information
about this Agreement other than the existence of this Agreement, without the
other party’s prior written consent. 
Each party shall give the other at least ten (10) business days advance
written notice, unless such number of days must be shortened to comply with a
legal request, of a disclosure required by applicable law and will cooperate
with the other party to minimize the scope and content of such disclosure.


 


9.4                               Press
Release


 


The
text and timing of any press release or other communication to be published
publicly in any manner by either party concerning the subject matter of this
Agreement shall require the prior written approval of the other party, which
shall not be unreasonably withheld.


 


10.                               Representations
and Warranties; Disclaimers


 


10.1                       ICOS


 


ICOS
represents and warrants to PDL the following:


 


A.                                   As
of the date of this Agreement, ICOS has all requisite corporate power and
authority to enter into and perform all of its obligations under this
Agreement.  The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of ICOS.  As
of the date of this Agreement, neither the execution and


 


11





















 


delivery of this
Agreement nor the performance of the transactions contemplated hereby, nor
compliance by ICOS with the provisions hereof, shall (i) conflict with or
result in a breach of any provision of the certificate of incorporation or
by-laws of ICOS, (ii)  violate any order, writ, injunction, decree,
statute, rule or regulation applicable to ICOS, or (iii)  conflict with
any obligations or agreements of ICOS to any person, contractual or otherwise;


 


B.                                     The
Product will have been manufactured in all material respects with the
Manufacturing and Release Requirements and cGMP; [*] this [*] is [*]
upon [*] giving [*] of [*]
within [*] and [*] returning all [*] to [*]
(at [*] cost) as soon as [*]; provided, however, that [*] may retain only [*] of the [*] that is then being used [*],
and may use such [*] solely to [*], but in no event may [*] use any of the [*] for [*]
after it becomes aware of [*] (and
[*] shall indemnify [*] for all liabilities, costs and damages
incurred by [*] resulting from [*] of this [*]).  Without
limitation to the foregoing [*],
the parties agree that [*] may not
[*] based on [*] of this [*] unless such [*]
results directly in [*] being
imposed on [*] by a [*] and


 


C.                                     ICOS
is not debarred and has not and, in providing the Services, will not knowingly
use in any capacity the services of any person debarred under subsections
306(a) or (b) of the Generic Drug Enforcement Act of 1992 or any comparable law
of any foreign jurisdiction, as each may be amended from time to time;


 


D.                                    EXCEPT
AS EXPRESSLY WARRANTED IN THIS SECTION 10.1, ICOS MAKES NO REPRESENTATION
OR WARRANTY WITH RESPECT TO THE SERVICES OR PRODUCT, EXPRESS OR IMPLIED, IN ANY
MANNER AND EITHER IN FACT OR BY OPERATION OF LAW, AND SPECIFICALLY DISCLAIMS
ANY AND ALL IMPLIED OR STATUTORY WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COURSE OF
DEALING, COURSE OF PERFORMANCE, USAGE OF TRADE OR NONINFRINGEMENT.  Without limiting the foregoing, PDL
acknowledges that it has not and is not relying upon any implied warranty of
any kind or upon any representation or warranty whatsoever by ICOS as to the
commercial exploitability of the Product, the prospects (financial, regulatory
or otherwise) or likelihood of commercial success of the Product after the date
of this Agreement, or the need for third party licenses to commercialize the
Product.


 


10.2                        PDL


 


PDL
represents and warrants to ICOS the following:


 


A.                                   As
of the date of this Agreement, PDL has all requisite power and authority to
enter into and perform all of its obligations under this Agreement.  The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of PDL.  Neither the execution and
delivery of this Agreement nor the performance of the transactions contemplated
hereby, nor compliance by PDL with the provisions hereof, shall (i) conflict
with or result in a breach of any provision of the certificate of incorporation
or by-laws of PDL, (ii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to


 


12





















 


PDL, or
(iii) conflict with any obligations or agreements of PDL to any person,
contractual or otherwise;


 


B.                                     PDL
is entitled to supply the applicable PDL Patent Rights, PDL Trade-Secrets and
PDL Materials to ICOS for the performance of the related Services;


 


C.                                     PDL
shall use all Product supplied by ICOS pursuant to this Agreement solely for
conducting clinical trials (and research and development activities related
thereto) for the purpose of collecting clinical data necessary to meet North
American and European regulatory filing requirements; and


 


D.                                    EXCEPT
AS EXPRESSLY WARRANTED IN THIS SECTION 10.2, PDL MAKES NO REPRESENTATION
OR WARRANTY WITH RESPECT TO THE PDL PATENT RIGHTS, PDL TRADE-SECRETS, PDL
MATERIALS OR THE PRODUCT, EXPRESS OR IMPLIED, IN ANY MANNER AND EITHER IN FACT
OR BY OPERATION OF LAW, AND SPECIFICALLY DISCLAIMS ANY AND ALL IMPLIED OR
STATUTORY WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, COURSE OF DEALING, COURSE OF
PERFORMANCE, USAGE OF TRADE OR NONINFRINGEMENT.


 


11.                               Limitation
on Liability


 


A.                                   EXCEPT
FOR BREACHES OF SECTION 9, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, PUNITIVE, CONSEQUENTIAL (INCLUDING,
WITHOUT LIMITATION, LOST PROFITS) OR SPECIAL DAMAGES OF ANY TYPE OR AMOUNT
ARISING OUT OF ITS BREACH OF ANY PROVISION IN THIS AGREEMENT (INCLUDING WITHOUT
LIMITATION, THE PERFORMANCE OR FAILURE TO PERFORM HEREUNDER) EVEN IF SUCH
DAMAGES WERE FORESEEABLE AND WHETHER SUCH DAMAGES ARISE IN TORT, IN CONTRACT OR
OTHERWISE.


 


B.                                    ICOS’s
sole liability to PDL for delivering Product that PDL is entitled to reject
pursuant to Section 6.2 or breaching its warranty made in Section 10.1B,
is to perform the obligations in accordance with Section 6.2.


 


C.                                    Without
expanding (i) PDL’s liability as described in Section 7.2 for the failure
to make timely payments as described therein or (ii) ICOSs’ liability as
described in Section 11.B for the happening of the events described
therein, each party’s liability to the other for any loss suffered by such
other party arising as a direct result of a breach of this Agreement or of any
other liability of any kind or nature, including without limitation,
misrepresentation and negligence, arising out of this Agreement shall be
limited to the payment of damages which shall not exceed in US Dollars an
amount equal to [*]; provided, however, if and
only to the extent that such damages are caused by the party’s willful or
intentional misconduct, then [*].


 


13





















 


12.                               Indemnification


 


12.1                        Indemnification
of ICOS


 


Except
to the extent any of the following Liabilities (defined as follows) are as a
result of ICOS’s negligence or willful misconduct, PDL shall defend, indemnify
and hold harmless ICOS, its officers, agents, employees and Affiliates from and
against any liabilities, damages, losses, expenses and costs (including
reasonable attorneys’ fees) (collectively “Liabilities”) as a result of any
third party claims or actions arising out of (a) PDL’s breach, violation or
nonfulfillment of any of its covenant, agreements, representations or
warranties under this Agreement, (b) PDL’s gross negligence or willful
misconduct, (c) the handling, possession, marketing and distribution, sale or
use of the Product following delivery by ICOS to PDL, including without
limitation any claim alleging breach of warranty or product liability, (d) any
claims alleging ICOS’s use of the PDL Patent Rights, PDL Trade-Secrets and PDL
Materials infringes any third party’s rights, or (e) any claim of infringement
arising out of the composition of matter of the Product, Processing of the
Product or use of the Product.


 


12.2                        Indemnification
of PDL


 


Except
to the extent any of the following Liabilities are as a result of PDL’s
negligence or willful misconduct, ICOS shall defend, indemnify and hold
harmless PDL, its officers, agents, employees and Affiliates from and against
any Liabilities (as defined in Section 12.1) as a result of any third
party claims or actions arising out of (a) ICOS’s breach, violation or
nonfulfillment of any of its covenant, agreements, representations or
warranties under this Agreement, (b) ICOS’s gross negligence or willful
misconduct, (c) ICOS’s handling, possession, or use of the Product and PDL
Materials (except for claims of infringement based on ICOS’s Processing the
Product) in ICOS’s possession and prior to delivery by ICOS to PDL, and (d)
claims alleging that ICOS’s operations constitute an infringement of third-party
proprietary rights, if infringement arises from technical information and
know-how provided by ICOS, unless developed by ICOS on PDL’s behalf.


 


12.3                        Indemnification
Procedures


 


Each
party agrees it shall give to the party that is obligated to indemnify such
party (a) prompt notice of any claim coming within the purview of the
indemnities contained in this Section 12, (b) all relevant facts in its
possession or control, (c) the right to exclusive control of the defense of any
action unless a conflict of interest exists with respect to defending such
action, and (d) its cooperation in the defense of any such action.  In addition, each party agrees that the
indemnified party will not settle any Liabilities without the prior written
consent of the indemnifying party, not to be unreasonably withheld.


 


12.4                        Product
Liability and Worker’s Compensation Insurance


 


Each
Party shall maintain, during the term of this Agreement and for a period of one
(1) year thereafter, product liability in an amount not less than [*] per occurrence and aggregate and shall maintain worker’s
compensation insurance as required under applicable laws.


 


14





















 


13.                               Term
and Termination


 


13.1                        Term


 


Unless
terminated early according to this Agreement (a) this Agreement shall continue
for a period of five (5) years from the date hereof and may be extended by the
parties’ mutual written agreement and (b) each Work or Quality Statement shall
commence on the date of execution by the parties and shall terminate on the
completion of the Services described therein. 
The termination of this Agreement for any reason shall automatically
terminate any and all Work and Quality Statements, unless the parties otherwise
agree in writing.  In any event, each
Work or Quality Statement is and shall remain subject to the terms and
conditions of this Agreement.


 


13.2                        Termination


 


PDL is
entitled to terminate this Agreement at any time and for any reason on sixty
(60) days prior written notice to ICOS, subject to the Effects of Termination
as described in Section 13.3 including, without limitation, the obligation
to make such payments to ICOS as described in Section 13.3C.


 


In
addition to the termination rights stated in foregoing paragraph and in Section 7.2,
either party may terminate this Agreement by written notice to the other party
on the occurrence of any of the following events:


 


A.                                   if
the other commits a material breach of this Agreement which (in the case of a
breach capable of remedy) is not remedied within sixty (60) days of the receipt
by the other of written notice identifying the breach with specificity and
requiring its remedy; provided, however, if the breach is as a result of
non-payment of any amounts owed, following the expiration of any applicable
grace period, the breaching party must remedy the breach within ten (10) days
after receiving such written notice; or


 


B.                                     a
petition is filed against the other party for an involuntary proceeding under
any applicable bankruptcy or other similar law, and (i) such petition has not
been dismissed within sixty (60) days of filing; or (ii) a court having
jurisdiction has appointed a receiver, liquidator, trustee or similar official
of such other party for any substantial portion of its property, or ordered the
winding up or liquidation of its affairs; or


 


C.                                     the
other party commences a voluntary proceeding under applicable bankruptcy or
other similar law, has made any general assignment for the benefit of
creditors, or has failed generally to pay its debts as they become due.


 


D.                                    ICOS
may terminate this Agreement by providing written notice to PDL if (i) PDL or
ICOS is unable to perform or is substantially impaired from performing its
respective obligations in a timely manner under this Agreement and the Work and
Quality Statements due to court rulings related to third-party claims of
intellectual property infringement against PDL covered under Section 12.1(d)
and (ii) the parties cannot reach agreement about how to proceed within twenty
(20) days of ICOS’s written notice to PDL.


 


15





















 


E.                                      PDL
may terminate this Agreement by providing written notice to ICOS if (i) PDL or
ICOS is unable to perform or is substantially impaired from performing its
respective obligations in a timely manner under this Agreement and the Work and
Quality Statements due to court rulings related to third-party claims of
intellectual property infringement against ICOS described under Section 12.2(d)
and (ii) the parties cannot reach agreement about how to proceed within twenty
(20) days of PDL’s written notice to ICOS.


 


13.3                        Effect of
Termination


 


A.                                   On
termination of this Agreement for any reason (whether due to breach of either
party or otherwise), ICOS will furnish to PDL a complete inventory of all work
in progress and an inventory of all Processed Product.


 


B.                                     By
no later than the date on which the termination of this Agreement becomes
effective, each party will return to the other all Confidential Information
that it possesses or controls that belongs to the other, except that each may
retain a copy in its law department or with its outside counsel for
record-keeping purposes.  Notwithstanding
the foregoing, the license rights granted to PDL under Sections 3.6 and 3.7
shall survive the termination of this Agreement unless this Agreement is
terminated pursuant to the events described in Section 13.3C.


 


C.                                     In
the event this Agreement is terminated (i) by PDL for any reason other than
pursuant to Section 13.2.A, B, C or E, or Section 15 or (ii) by ICOS
pursuant to Section 13.2.A, B, C or D, PDL will pay ICOS a sum equal to
one hundred percent (100%) of the full Price of all stage(s) of the scheduled
Services less all amounts already paid to ICOS for such Services, the payment
for which shall be due to ICOS on or before the date of termination of this
Agreement.  With respect to the
manufacturing capacity that would have otherwise been used to perform the
Services, in the event ICOS (i) resells any such capacity to any third party
and/or (ii) uses any such capacity for any internal manufacturing projects,
ICOS and PDL shall negotiate in good faith a reasonable refund to PDL.


 


D.                                    If
this Agreement is terminated pursuant to Section 13.2.E, ICOS shall [*].


 


E.                                      On
termination of this Agreement, neither party shall use or exploit in any manner
whatsoever any Intellectual Property Rights of any kind or nature of the other
party, except for the express rights granted in other Agreements between the
parties and in Section 3.6 of this Agreement.  Without limitation to the foregoing, on
termination of this Agreement, ICOS shall not use or exploit the PDL Patent
Rights, PDL Trade-Secrets, PDL Confidential Information or PDL Materials in any
way.


 


F.                                      Termination
of this Agreement for any reason will not relieve the parties of any obligation
accruing prior thereto.


 


G.                                     The
following Sections will survive the termination of this Agreement for whatever
reason:  3.6, 3.7, 6.2, 7, 8, 9 through
13, and 17 through 24.


 


16





















 


14.                               Facility
Inspection


 


PDL
has the right on [*] days’ notice and during
business hours to visit ICOS (i.e., person in the plant) to observe the Process
and the progress of the work and to inspect related records and data for the
purpose of making quality control inspections so as to assure compliance with
the applicable Work and Quality Statements; provided, however, that if another
party’s product is being manufactured during the time that PDL intends to
visit, such visit, as mutually agreed, (i) may be reasonably delayed until only
PDL’s Product is being manufactured or (ii) take place subject to the provision
that PDL’s representatives will not enter areas of any ICOS facility at times
when third parties’ products are being manufactured.  The form, participants and procedures of all
such inspections shall be subject to ICOS’s reasonable approval.  PDL representatives will follow such security
and facility access procedures as are reasonably designated by ICOS.  During all such inspections, PDL shall use
good faith efforts to avoid disrupting ICOS’s operations.


 


On no less than [*] days’
notice to ICOS, PDL shall also be entitled to conduct a reasonable annual
multi-day quality assurance site audit, the form, participants and procedure of
which shall be subject to ICOS’s reasonable approval.  When conducting an inspection or audit as
described, each of PDL’s representatives will (a) be subject to a nondisclosure
obligation comparable in scope to Section 9, (b) follow such security and
facility access procedures as are reasonably designated by ICOS, (c) be
accompanied by an ICOS representative, and (d) not enter areas of any ICOS
facility at times when third parties’ products are being manufactured to assure
protection of ICOS’s or a third party’s Confidential Information.


 


15.                               Force
Majeure


 


Neither
party hereto shall be liable to the other party for any delay or default in
such party’s performance hereunder if such delay or default is caused by
conditions beyond such party’s reasonable control including, but not limited
to, delays by the FDA or other governmental agency which are not due to serious
violations of law by ICOS, acts of God, war, insurrection, civil commotion,
destruction of production facilities or materials by earthquake, fire, flood or
storm, labor disturbances including strikes or lockouts or epidemic (“Force
Majeure”).  Each party hereto agrees to
promptly notify the other party of any event of Force Majeure and to employ all
reasonable efforts toward prompt resumption of its performance hereunder when possible
if such performance is delayed or interrupted by reason of such event.  If an event of Force Majeure affecting ICOS
continues for a period of sixty (60) days, ICOS shall notify PDL as to how long
ICOS expects the Force Majeure delay will last. 
If ICOS expects that the Force Majeure delay will last six (6) months or
more, PDL shall have the right to terminate this Agreement.  If ICOS expects that the Force Majeure delay
will last less than six (6) months, and after such six (6) month period ICOS can
still not perform under this Agreement, ICOS shall be in material breach of
this Agreement and PDL shall have the right to terminate this Agreement.


 


17





















 


16.                               Assignment


 


This
Agreement will be binding on and will inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, that
neither party may assign any of its rights or obligations under this Agreement
or the Work and Quality Statements to any third party without the other party’s
prior written consent, which consent will not be unreasonably withheld;
provided, however, that either party may assign its rights and obligations
hereunder without the other party’s consent to a third party that is acquiring
or merging with such party or that is purchasing all or substantially all of
such party’s assets that are the subject matter of this Agreement, provided
that the assignee assumes all of such party’s rights and obligations under this
Agreement.


 


17.                               Use
of Intellectual Property Rights


 


Except
as expressly stated in this Agreement, no Intellectual Property Rights of any
kind or nature are conveyed by this Agreement and neither party shall have any
right, title or interest in or to the other party’s Intellectual Property
Rights for any purpose whatsoever without such other party’s prior written
consent.  Neither party shall use or
disclose the name of the other in any advertising, sales, marketing or other
promotional material, without the prior written consent of the other.


 


18.                               Entire
Agreement; Amendments


 


Unless
otherwise agreed to in a writing signed by both parties, this Agreement and the
applicable Work and Quality Statements represent the entire understanding of
the parties.  There are no promises,
terms or conditions, oral or written, expressed or implied, other than those
contained in this Agreement and/or in a Work or Quality Statement.  The terms of this Agreement shall supersede
all previous and contemporaneous agreements between ICOS and PDL relating to
the subject matter contained herein.  To
the extent any terms of a Work or Quality Statement (or any Appendices attached
thereto) conflict with the terms of this Agreement, the terms of this Agreement
shall control unless the parties expressly state in the Work or Quality
Statement (or in the Appendices) that specific terms contained therein control
over the applicable conflicting terms in this Agreement.  If PDL chooses to issue a purchase order (“PO”)
for the delivery of Product, such PO should reference this Agreement and the
specific Work and Quality Statements and shall be issued solely for the
convenience of PDL and to provide subject matter description.  Except as expressly provided in this
Agreement, this Agreement and each Work or Quality Statement may be modified or
amended only by the parties’ written agreement.


 


19.                               Waiver;
Severability


 


No
delay or waiver (or single or partial exercise) on the part of either party on
any one or more occasions in exercising any right, power or privilege hereunder
will operate as a waiver thereof or of any other right, power or privilege
hereunder.  Any such waiver must be made
in writing.  If any provision of this
Agreement or any Work or Quality Statement is held to be illegal, invalid, or
unenforceable under present or future laws effective while this Agreement


 


18





















 


remains in effect, the
legality, validity and enforceability of the remaining provisions will not be
affected thereby.


 


20.                               Construction;
Headings


 


This
Agreement and all Work and Quality Statements will be deemed to have been
drafted by both PDL and ICOS and will not be construed against either party as
the draftsperson hereof.  All section titles
or headings contained in this Agreement and any Work and Quality Statements are
for convenience only, will not be deemed a part hereof or thereof and will not
affect the meaning or interpretation of this Agreement or the Work and Quality
Statements.


 


21.                               Attorneys’
Fees


 


If
either party is reasonably required to initiate legal action to enforce its
rights and the other party’s obligations under this Agreement, the prevailing
party in such action shall be entitled to recover its reasonably attorneys’
fees and costs.


 


22.                               Notices


 


Any
notices, demand, invoices, payments or statements required or permitted to be
given pursuant to this Agreement shall be in writing and shall be deemed to
have been delivered when personally delivered, when sent by fax or email (with
confirmation of delivery), or on the third business day following its mailing
by registered or certified mail (return receipt requested), to the parties at
their respective addresses stated in the opening paragraph of this Agreement,
or to such other address as designated in writing.


 


23.                               Independent
Contractor


 


The
parties hereto are independent contractors and nothing contained in this
Agreement shall be construed to place them in the relationship of partners,
principal and agent, employer/employee or joint venturer.  The parties agree that neither shall have power
or right to bind or obligate the other, nor shall either hold itself out as
having such authority.


 


24.                               Counterparts


 


This
Agreement and any Work or Quality Statements may be executed in counterparts,
each of which will be deemed an original but all of which together will
constitute a single instrument.


 


 


[signatures on following page]


 


19





















 


IN
WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the date first written above.


 


 


	
  PROTEIN
  DESIGN LABS, INC.

  	
  ICOS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By 

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title 

  	
   

  	
   

  	
  Title 

  	
   

  	
   

  
										



 


20





















 


EXHIBIT


 


WORK STATEMENT


TO MANUFACTURING AGREEMENT


BETWEEN


ICOS CORPORATION AND PROTEIN DESIGN LABS, INC.


DATED                


 


Date of Work Statement:                            


 


I.                                         Product


 


“Product”
means M200.


 


II.                                     Scope
of Services


 


Attached
as Appendix A


 


III.                                 PDL
Materials


 


 


IV.                                Manufacture
and Release Requirements


 


A.                                   Manufacturing
Procedure and Requirements


 


 


B.                                     QA/QC
Tests


 


 


C.                                     Handling
and Storage Requirements


 


 


D.                                    Packaging
Requirements


 


 


E.                                      Record
Keeping Requirements


 


21





















 


V.                                    Acceptance
Criteria


 


Attached as Appendix B.


 


VI.                                Estimated
Timeline


 


Attached as Appendix C.


 


VII.                            Price
and Payment Terms


 


Attached as Appendix D.


 


VIII.                        Quality
Statement


 


Attached
as Appendix E.


 


 


	
  PROTEIN
  DESIGN LABS, INC.

  	
  ICOS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By 

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title 

  	
   

  	
   

  	
  Title 

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  Dated:

  	
   

  	
   

  
											



 


22





















 


APPENDIX A


SCOPE OF SERVICE


 


Manufacture
of M200, a Recombinant Antibody


 


Scope of Services


 


A.
Assumptions


 


1.                                       ICOS
has maintained a Master Cell Bank (MCB), produced under prior contract,
suitable for manufacturing clinical trial lots of the M200 Product.


2.                                       The
cell line will be grown in [*]


3.                                       Six
(6) cGMP clinical lots will be manufactured that are suitable for regulatory
filings and human clinical trials.


4.                                       ICOS
will provide (bulk) Formulated Drug Substance to PDL or designee.


5.                                       ICOS
will provide [*]


 


B.
Services


 


Manufacturing
of Clinical (cGMP) Batches


Objectives


Perform six (6) cGMP production runs (six cell
culture and six purification runs). Each run is also referred to as a “lot”
herein.


Carry out in-process and Drug Substance testing to
confirm that the process is in control and that the Product from each lot meets
Product Specifications.


1.                                       Carry
out six cGMP (clinical) production runs based on the process developed
previously by ICOS for this product.


2.                                       Revise
master documents to include process corrections and improvements identified
during the previous clinical production lot.


3.                                       Carry
out manufacturing processes and testing according to approved, written
procedures.  Master documents will be
reviewed and approved by ICOS and PDL according to the Quality Statement.


4.                                       Store
solutions, process intermediates, and Formulated Drug Substance in controlled
access locations under appropriate conditions as specified in the Work
Statement.


5.                                       Test
each lot of Drug Substance by the methods described in Section D and as
specified in the Material Specifications.


6.                                       Save
a sample of EOP cells from each cGMP run.


7.                                       Perform
Lot Disposition according to the Quality Statement.


8.                                       Prepare
for PDL a summary of the results, including items such as key in-process
control data, production titers, process step yields, for the cGMP runs.


 


23





















 


9.                                       Within
[*]of delivery of Product, deliver
Product-related Records and Documentation described in Section E needed to
support the CMC section for PDL’s regulatory filings.  Additional detailed data will be provided on
specific request from PDL.


 


C.
Deliverables


 


The
following items will be delivered from ICOS Corporation to PDL.


1.                                       Six
(6) lots of (bulk) Formulated Drug Substance prepared from six cGMP clinical
production runs using the 3000L ICOS bioreactor.


2.                                       Certificates
of Analysis that include all ICOS release testing results and a notice of
disposition from ICOS Quality Assurance, delivered within [*]
following the date of product lot formulation.


3.                                       Documentation
as described in Section E and in the Quality Statement.


4.                                       The
pre-bank and Master Cell Bank(1).


5.                                       EOP
cell samples, if requested by PDL.


 










(1) If
desired, ICOS will retain a number of vials in the event that at some future
date PDL would like to request additional clinical production runs.


 


24





















 


D.
In-Process and Drug Substance Testing


 


The test methods in the table below will be performed at the indicated
process stages.


The development or performance of any other assays is out-of-scope
work.


 


	
   

  	
   

  	
  Production Scale (Clinical)

  	
   

  
	
  Method

  	
   

  	
  Harvest fluid

  	
   

  	
  Purification In-

  Process

  	
   

  	
  Formulated

  Drug Substance

  	
   

  
	
  Mycoplasma(1)

  	
   

  	
  X (EOP)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sterility(1)

  	
   

  	
  X (EOP)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MMV(1)

  	
   

  	
  X (EOP)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  In-vitro viral –
  14 day(1)

  	
   

  	
  X (EOP)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Product Titer
  (Protein A)

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bioburden

  	
   

  	
  X

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Endotoxin

  	
   

  	
  X

  	
   

  	
  X

  	
   

  	
  X

  	
   

  
	
  Product
  concentration (A280)

  	
   

  	
   

  	
   

  	
  X

  	
   

  	
  X

  	
   

  
	
  Size Exclusion
  HPLC

  	
   

  	
   

  	
   

  	
  X

  	
   

  	
  X

  	
   

  
	
  SDS-PAGE,
  unreduced

  	
   

  	
   

  	
   

  	
  X

  	
   

  	
  X

  	
   

  
	
  SDS-PAGE,
  reduced

  	
   

  	
   

  	
   

  	
  X

  	
   

  	
  X

  	
   

  
	
  Isoelectric
  Focusing

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  MALDI-MS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Silver stain,
  unreduced

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Silver stain,
  reduced

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Appearance

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Osmolality

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  PH

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Insulin

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Residual Protein
  A EIA

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Residual Host
  Cell DNA Content

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Residual Host
  protein Content

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Binding assay

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Potency assay

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Bovine IgG

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  
	
  Polysorbate 80
  concentration(2)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  X

  	
   

  



 










(1) Contracted
to an outside vendor


(2) Protocol
and necessary reagents to be transferred from PDL to ICOS


 


25





















 


E.                                      Product-related
Records and Documentation Provided to PDL


 


Drug History Record – provided for each clinical lot


•                  [*]


•                  Lot disposition notice [*]


•                  Certificate of Analysis [*]


•                  Certificate of Compliance


•                  Indented bill of materials [*]


•                  Process flowchart


 


Satellite Files


Informational copies (on request) of:


•                                    Product specific
master manufacturing batch records


•                                    Product specific
test methods


•                                    Product specific
material specifications


 


26





















 


APPENDIX B


ACCEPTANCE
CRITERIA


 


[*]


 


 


 


APPENDIX C


ESTIMATED TIMELINE


 


[*]


 


27





















 


APPENDIX D


PRICE AND PAYMENT TERMS


 


 


	
  Stage

  	
   

  	
  Terms

  	
   

  	
  Estimated Date of Payment(1)

  	
   

  	
  [*]

  	
   

  
	
  Reservation Fee

  	
   

  	
  [*]

  	
   

  	
  9/1/03

  	
   

  	
  [*]

  	
   

  
	
  Run Initiation Fee

  	
   

  	
  [*]

  	
   

  	
  1/15/04

  	
   

  	
  [*]

  	
   

  
	
  Per Lot Fee(2),(3)

  	
   

  	
  [*]

  	
   

  	
  TBD

  	
   

  	
  [*]

  	
   

  
	
  Additional Services(5)

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  [*]

  	
   

  



 










(1) The dates listed are
estimates only.  The actual payment date
is the date on which the applicable event occurs as stated in the “Terms”
column.


 


[*]


 


[*]


 


[*]


 


(5) Determined by written
agreement of the Project Leaders.


 


28





















 


APPENDIX E


QUALITY STATEMENT


 


1. Purpose


 


This Quality Statement
has been developed to define the regulatory compliance roles and
responsibilities of PDL and ICOS Corporation (ICOS, “Manufacturer”).  The Quality Statement shall constitute part
of the agreement between PDL and ICOS and may be revised from time to time when
mutually agreed in writing by the Quality Assurance contacts listed in Section 2
or their designees.  In the event of a
conflict between the provisions of the Manufacturing Agreement and Quality
Statement, the provisions of the Manufacturing Agreement shall prevail.


 


2. Quality Assurance
Contacts


 


Emergency Quality
Assurance contact names and numbers during and outside working hours at each
company:


 


PDL Quality
Assurance:


[*]


 


ICOS Quality
Assurance:


[*]


 


The PDL and ICOS Quality
Departments will jointly establish a list of Quality contacts in order to
conduct their business.


 


3. Definitions


 


“Agreement” shall mean the
Manufacturing Agreement executed between PDL and ICOS on [*]


 


“cGMP” shall mean Current Good
Manufacturing Practices as promulgated under the US Federal Food Drug and
Cosmetic Act and 21 CFR Sections 210, 211, 600 and 610 and ICH Q7A, cGMPs for
APIs


 


“Critical Deviation” shall mean
deviations where (i) [*]


 


“Party” means either PDL or ICOS


 


“Parties” means both PDL and
ICOS


 


“Products” shall mean PDL drug
products and all intermediate precursors


 


29





















 


4. Regulatory Activities


 


4.1 Roles
of the parties


 


PDL will be the holder the IND or equivalent and the
holder of the registration submission and subsequent license.  ICOS will support these submissions as a
contract manufacturer under the direction of PDL.


 


4.2
Regulatory submissions


 


PDL will be responsible for the submission of
documentation to regulatory authorities in support of the Products.  ICOS will provide PDL with the information
necessary to complete regulatory submissions in a timely and effective manner.


 


ICOS and PDL will mutually agree on responses to
questions regarding PDL submissions, which PDL will make, to FDA questions and
requests regarding facilities, production processes and Product testing
relevant to ICOS.


 


4.3
Inspections


 


PDL will inform ICOS in a timely fashion when
regulatory agencies are seeking to schedule inspections concerning the
Product at ICOS’ facilities.


 


PDL will be permitted to have [*]on
site for consultation during a PDL Product inspection but will not participate
during the inspection unless requested by ICOS or a regulatory representative.


 


ICOS will [*]PDL will [*]


 


ICOS will hold daily wrap-up discussions with PDL to
discuss any potential issues identified and corrective action plans.


 


[*]addressing manufacturing,
facility, and compliance observations. 
PDL will receive one copy of any FDA 483 appropriately purged.


 


For regulatory
observations (e.g. FDA 483 observations) that specifically involve the Product,
[*]


 


For regulatory observations (e.g. FDA483 observations)
that involve facility and system-related cGMP issues[*]


 


5. Compliance


 


5.1 Roles
of the parties


 


ICOS, in its activities under the Agreement, is
responsible for compliance with cGMP, other applicable guidelines and ICOS
SOPs.


 


30





















 


PDL, in its activities under the Agreement, is
responsible for compliance with cGMP and applicable guidelines and for
confirming ICOS’ compliance with cGMP, other applicable guidelines and ICOS
SOPs.


 


5.2
Audits


 


Upon no less than [*]notice to
ICOS, PDL shall be entitled to perform one audit of ICOS facilities,
laboratories and warehouses each year for the purposes of confirming ICOS
compliance with cGMP, applicable guidelines and ICOS SOPs in the manufacture,
testing and validation of the Product. 
The audit will be limited to [*]to occur on
mutually agreed dates.


 


[*]


 


[*]


 


At the conclusion of each audit, PDL will hold a
wrap-up meeting with ICOS and/or its subcontractors to review all significant
audit observations.


 


Within[*]of each
audit that it performs at ICOS and its subcontractors, PDL will provide ICOS
with a written report of its observations and recommendations.  Within [*]of receipt
of PDL’s audit report, ICOS and/or its subcontractors will provide a written
response to PDL including a response to all PDL observations and details
regarding corrective actions.


 


5.3
Documentation


 


ICOS is responsible for generating and maintaining
records of equipment usage, calibration, cleaning and maintenance.


 


ICOS is responsible for developing documentation to
support the manufacturing, testing and validation of the Product as defined by
the Scope of Services.


 


PDL-QA must approve documents and procedures specific
to the Product prior to implementation as listed below:


 


•                  Master Batch Records specific for the
production of the Product.


 


•                  Test Methods specific for the
production and testing of the Product.


 


•                  Product specific Material
Specifications for materials produced during the manufacture of the Product,
including the Product.


 


ICOS will provide PDL with copies of all
Product-specific documents used in the production, testing and validation of
the Product, upon request.  Documents
that are not specific to the Product are available for onsite review.


 


31





















 


Changes to documentation will be implemented according
to the Change Control section of this document.


 


ICOS is responsible for maintaining Product batch
production and testing records for the period of [*].  Written authorization from PDL-QA is required
before the destruction of Product records. 
When ICOS is no longer willing or able to store Product records, PDL may
have the records destroyed, or transferred to an alternate storage location at
PDL’s expense.


 


5.4 Product Release


 


ICOS and PDL will each identify a Quality Assurance
representative who will function as the points of contact between the companies
for the purposes of communication regarding Product release and regulatory
compliance activities.


 


ICOS will source raw materials and components to be
used in the manufacture of the Product and will ensure that approved
specifications are in place.


 


PDL will determine in-process, release and stability
specifications for the Product.  ICOS and
PDL will mutually agree on these testing specifications for the Product.  The parties will mutually agree in writing to
all changes to specification before implementation.  ICOS may subcontract some or all of the
Product testing, subject to prior written approval by PDL.


 


ICOS is responsible for control and monitoring of the
Product manufacturing process and production facility.


 


ICOS is responsible for reviewing Product lot records,
test results against specifications and determining whether to reject the lot
or issue a manufacturer’s release to PDL-QA. 
PDL-QA is responsible for the final release of each Product lot.


 


ICOS will issue a Certificate of Analysis and
Certification of Compliance to PDL for each lot that receives a manufacturer’s
release.  The Certificate of Analysis
will contain a summary of the Product test results, specifications, and date of
manufacture.  The Certificate of
Compliance will contain a statement signed by ICOS’ QA representative stating
that the lot has been manufactured and tested in compliance with cGMPs, ICOS
procedures and applicable guidelines.


 


PDL may request additional documentation to support
its review and release of Product lots, including but not limited to copies of
Batch Production Records, raw data from Product testing and in-process test
results.  Environmental monitoring data
is available for on site review.


 


PDL will make reasonable efforts to release each lot
within [*] of receipt of the Certificate of
Analysis, Certificate of Compliance and documents listed in the scope of
services.


 


32





















 


ICOS will store and ship the Product according to
written PDL instructions and in compliance with cGMP.  ICOS will ship Product only upon PDL’s
approval.


 


PDL is
responsible for retaining samples from each lot for testing in accordance with
cGMP.  ICOS will provide retain samples
to PDL as identified in the production batch records.


 


5.5 Product Complaints and Adverse Drug Events


 


PDL shall notify ICOS of all complaints related to the Products that
occur after release and transportation if the complaint is deemed to be
directly related to the manufacture of the Product including, but not limited
to, Product testing, batch record review, procedure assessment or examination
of retention samples. ICOS shall provide the necessary information to assist
any investigations required by PDL as a result of a Product complaint or
adverse event.


 


5.6 Product Recall


 


PDL is responsible for instituting and facilitating a
Product recall.


 


PDL will notify ICOS in a timely fashion when a
Product recall may be due to manufacturing of the Products.


 


In the event that a Product recall may be due to
manufacture of the Products, ICOS will provide PDL [*]ICOS
will provide this information to PDL within [*]of
receipt of the request from PDL.


 


At PDL’s request and under PDL’s direction, ICOS will
support communication with regulatory authorities.


 


5.7 Change Control


 


ICOS and PDL must mutually approve changes to
documents and procedures listed as requiring PDL approval in Section 5.3,
prior to implementation.  Administrative
changes (i.e. correcting typographical errors) do not require PDL approval.


 


5.8 Validation


 


All validation specific to the Product (as specified
in the Scope of Services) must be executed according to protocols approved
before execution by PDL.


 


ICOS will provide PDL with copies of all Product
specific validation reports.  Validation
reports which are Product related but not Product specific are available for on
site review.


 


33





















 


5.9 Investigations


 


ICOS will notify PDL of all excursions, critical
deviations, observations and investigations that could impact past, current or
future lots of the Product.


 


Laboratory investigations will be performed when an
out of specification (OOS) result is obtained during Product testing.  Resampling and/or retests may be authorized
by the ICOS Laboratory Manager during the laboratory investigation phase of an
OOS investigation as described in ICOS standard operating procedures.  ICOS will notify PDL of all Product testing
failures within [*], and before initiating
retesting and/or resampling of any sample where the laboratory investigation
did not show laboratory error to be the cause of the OOS result.


 


All critical deviation investigations concerning the
Product and conducted at ICOS will be reviewed and approved by ICOS and
reviewed by PDL after completion.


 


6.
Product Supply


 


6.1 Roles
of the parties


 


ICOS will perform manufacture, testing and validation
of the Products in its facilities as defined in the Scope of Services.


 


PDL is authorized to have [*]
present at ICOS’ manufacturing facilities during Product manufacture, testing and/or
validation.  Additional PDL
representatives may be permitted when mutually agreed with ICOS.


 


7.
Authorization of production


 


Manufacture of the Product at ICOS will be authorized
in accordance with the Agreement.


 


7.1 Lot
numbers


 


ICOS is responsible for assigning and tracking unique
identifier numbers to each lot of raw material, component, product intermediate
and Product.  From this information ICOS
will develop a trace tree for each lot of Product; ICOS will send to PDL the
trace tree for any and all Product lots upon request by PDL.


 


7.2 Dates
of production and expiration


 


The dates of manufacture will be determined by the
date of sterile filtration, and documented in the Batch Production
Records.  PDL will determine the
expiration date of the Product.


 


34





















 


8.
Dispute Resolution


 


Disputes concerning the acceptability of Product lots
or general compliance issues will be resolved by the Quality Assurance
representatives of the Parties.  If the
dispute is not resolved after [*], either
Party may upon written notification to the other request that the dispute be
resolved according to the provisions of the Agreement.


 


35