ex101to10q07380_12312009.htm


    Exhibit
10.1

     

    DRUG SUPPLY
AGREEMENT

    


    


    Les Laboratoires
Servier

    22 rue
Garnier

    92200 Neuilly sur
Seine Cedex

    France

    


    Product
Names:     [**]PCI-24781 (Pharmacyclics)

    


    


     

    
      	
              1)

            	
              Introduction

            


    

     

    [**]

    Pharmacyclics and
Servier have entered into a Collaboration Agreement, effective April 9, 2009 to
co-develop the HDAC Inhibitor identified as [**]or PCI-24781
(Pharmacyclics).  Pursuant to Section 4.3 of the Collaboration
Agreement, Pharmacyclics has agreed to use “Reasonable Efforts” (as defined in
the Collaboration Agreement) to manufacture or have manufactured quantities of
[**]for clinical use by Servier.  With this agreement (the
“Agreement”), Pharmacyclics will facilitate the manufacture of a targeted amount
of [**] cGMP quality [**]through its Third Party Manufacturing
organizations. The terms of this Agreement shall not amend the Collaboration
Agreement signed on April 9th,
2009, which specifies under Section 4.3 that a supply agreement shall be
negotiated between the parties containing terms consistent with such Section 4.3
and such other terms as are reasonable and customary for arrangements of this
type.

    


    


    


    


     

       

    

    


    


    


     

    
      	
              2)

            	
              Scope of
      Work: Deliverables, Timing,
Resources

            


    

    


    The table below has
the project divided into phases to show activities required to complete the
manufacture of a targeted amount of [**] of [**]. The table outlines the
timing and activities.

     

    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                Campaign

              	
                Activity

              	
                Timing

              
	
                Phase
      1

                [**]

              	
                 

                ·    
      [**]

                ·    
      [**]

              	
                [**])

              
	 
    	

                 

              	 
    
	
                Phase
      2

                [**]

              	
                 

                ·    
      Preparation and procurement of raw materials

                ·    
      [**] drafts batch record for pilot plant scale manufacturing of
      [**].  Timing dependent on customer review and
      approval.

                ·    
      [**]

                ·    
      QC testing and release at Pharmacyclics.

                ·    
      QA release.


              	
                [**]

                [**]

                 

                 

                 

                [**]

                [**]

                [**]

              


      

    

     

    [**], is under
contract with Pharmacyclics to manufacture [**].  For Phase 1 of this
Agreement, [**] using their pilot plant facilities.

     

    [**], is under
contract with Pharmacyclics to manufacture [**].  For Phase 2, [**]
will complete the [**]. Each batch will be performed at [**].

    


    Pharmacyclics shall
use Reasonable Efforts to ensure the Third Party Manufacturers produce the
[**]according to cGMP and deliver product according to the timeline
below.  Pharmacyclics will arrange to have a QC release testing sample
provided to Servier after a batch is manufactured.  A copy of the
completed manufacturing batch record will also be provided for Servier QA
review.; Pharmacyclics will also perform all QC release testing and provide a
certificate of analysis of [**] (as required with GMP – part 2).

    


    With the change in
product specification requested by Servier after issuance of PO [**], a
contingency plan has been established to address potential failure of the drug
substance to conform to the new specifications set forth in Section 3(b)
below.  [**] will produce the first [**]batch of drug substance as an
engineering batch under cGMP.  Successful manufacture of the
engineering batch will lead directly to manufacture of the second [**]batch of
drug substance and completion of the campaign.  Pricing for successful
manufacture of [**] batches of drug substance will be as described in Section
6.

     

    In the event the
engineering batch fails to produce drug substance conforming to specification,
[**], Pharmacyclics and Servier will discuss the necessary actions to be taken
to remedy such situation. In any event, prior to [**] initiating any additional
development work after a failed engineering batch and in conformance with
Section 7(e) below, Pharmacyclics will review the failed engineering batch with
Servier and [**] and obtain Servier’s prior approval for the planned development
work and the estimated additional costs.

     

    
      
        
          [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    


    Below is a Gantt
chart showing timing of events for manufacture of [**].  The timeline
provides a best estimate of when Third Party Manufacturers will be able to
schedule pilot plant time. Item 22 of the Gantt shall only be initiated after a
meeting between Servier, [**] and Pharmacyclics has taken place.

    


    [**]

     

    
      	
              3)

            	
              Analytical
      Methods and Specifications

            


    

    


    
      	
               
      

            	
              a.

            	
              Method
      Transfer:

            


    

    All analytical
methods necessary for manufacture have been qualified by [**], [**][**] and
Pharmacyclics.  Any testing to be performed by Servier will require
analytical method transfer from Pharmacyclics to Servier. Such method transfer
is outside the scope of this Agreement. However, such transfer is the
responsibility of Pharmacyclics as indicated in Section 4.2 “Exchange of Data”
of the Collaboration Agreement.

    


    
      	
               
      

            	
              b.

            	
              Specifications
      for [**]:

            


    

    


    [**]

    
      	 
    
	 
    
	 
    


    

    


    


    
      	
              4)

            	
              Documentation
      / Reports

            


    

    


    Upon request,
development and/or campaign reports will be provided to Servier by Pharmacyclics
no later than five (5) months after delivery of product. These reports will be
accompanied by a copy of the batch records used by [**] and [**] for the
manufacture of the DS batches

     

    
      
        
          [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

     

    
      	
              5)

            	
              Packaging/Labeling/Shipment

            


    

     

    Drug substance
shipments will be FOB – [**] (as defined by the 2000 Incoterms of the ICC) to a
destination to be provided by Servier.  Servier will be the importer
of record and will pay all taxes due in France as well as being responsible for
any and all customs requirements and payments.  Risk of loss will
transfer to Servier upon [**]’s delivery of the shipment of [**] to the
designated carrier, provided that Pharmacyclics agrees to obtain all necessary
insurance for the proper shipment of the Drug substance at Servier’s expense and
under Servier’s behalf. Pharmacyclics will invoice Servier separately for any
and all shipping and insurance costs.

    


    
      	
              6)

            	
              Pricing

            


    

    


    [**]


    


    


    
      	
              7)

            	
              Terms
      and Conditions

            


    

     

    
      	
               
      

            	
              a)

            	
              This
      Agreement will serve as the supply agreement referred to in Section 4.3 of
      the Collaboration Agreement. A purchase order has been signed and purchase
      will be made under purchase order [**]. Terms or conditions of any
      purchase order, acknowledgement, or other form given or received that are
      additional to or inconsistent with this Agreement or such purchase order
      [**] shall have no effect and such terms and conditions are hereby
      excluded.

            


    

     

    
      	
               
      

            	
              b)

            	
              The current
      estimated costs per the contracts established to produce the desired [**]
      of [**] are $[**]

            


    

    The project has
been initiated by the receipt of PO [**] from Servier.

    The PO is intended
to cover the whole project and is in the amount of $[**].

    


    i)
Pharmacyclics will invoice an initial upfront prepayment for[**]% of the project
in the amount of $[**].

    


    ii) Pharmacyclics
will invoice an additional [**]% upon completion of manufacture of
[**].

    


    iv) The remaining
balance will be invoiced on acceptance by Servier and delivery of
[**].

     

    
      
        
          [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    


    v)
PO’s and remittances (prepayments, payments, and final payments) should be sent
to the attention of:

    


    Ramses Erdtmann,
Vice President of Finance

    Pharmacyclics
Inc

    995 E. Arques
Ave.

    Sunnyvale, CA
94085

    Phone:        (408)
215-3325

    Fax:            (408)
774-0340

    Email:         rerdtmann@pcyc.com

    


    vi) Key invoicing
contacts for Servier:

    


    Stéphane
DEPIL


    


    
      	
               
      

            	
              c)

            	
              All prices
      are in US dollars.

            


    

    


    
      	
               
      

            	
              d)

            	
              This
      Agreement is effective as of the signature date of this agreement
      (“Effective Date”) and unless terminated otherwise in accordance with
      Section (i) below, shall be in effect until the first to occur of
      (i) delivery to Servier of the [**] batches of [**] as contemplated
      in Section 2 above, or (ii) termination of the Collaboration
      Agreement.

            


    

    


    
      	
               
      

            	
              e)

            	
              Pharmacyclics
      and its Third Party Manufacturer(s) will, in accordance with the
      Collaboration Agreement, apply Reasonable Efforts using the current
      synthetic route or process.  In the event that yields or
      purities obtained are contrary to those provided due to but not limited to
      difficulties of scale, chemistry inconsistencies or misrepresentation,
      Pharmacyclics and Servier will mutually agree to discuss pathways to
      proceed with the project. These discussions may potentially require scope
      changes to the program, extension of the project timeline, and additional
      monetary funds.

            


    

    


    
      	
               
      

            	
              f)

            	
              If there are
      unforeseen complications due to the nature of the project that
      significantly hinders Third Party Manufacturer’s ability to proceed with
      the completion of this project, Pharmacyclics will notify Servier of any
      such difficulties and the parties agree to act in good faith to resolve
      difficulties in an amicable manner. The project may require scope changes
      to the program, additional monetary funds and timeline extensions to
      properly proceed with the project.

            


    

     

    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    


    
      	
               
      

            	
              g)

            	
              Servier
      understands that the quantity requirement stated in the Agreement is a
      nominal target output based on conversion of appropriate amounts of
      starting materials.  Servier will purchase the material at the
      following conditions:

            


    

     

    
      	
               
      

            	
              -

            	
              [**]

            


    

     

    
      	
               
      

            	
              -

            	
              [**]

            


    

     

    
      	
               
      

            	
              -

            	
              [**].

            


    

    


    
      	
               
      

            	
              h)

            	
              Servier has
      reviewed and agrees to accept [**] that conforms to the specifications
      listed in Section 3) b. above.

            


    

    


    To ensure that the
quality of the product is met, Third Party Manufacturer will supply both
Pharmacyclics and Servier with an analytical sample from the main batch to
verify conformance to specifications.  If the product does not conform
to the specifications and investigation shows that the Third Party Manufacturer
failed to follow cGMP and/or the manufacturing process, Pharmacyclics through
it’s Third Party Manufacturer will cause a new batch of product to be produced
and Servier shall have no cost and expense with respect to the non-conforming
batch.

    


    
      	
               
      

            	
              i)

            	
              In the event
      of a party’s material breach of this Agreement, the non-breaching party
      shall have the right to provide notice of its intention to terminate this
      Agreement.  Such notice shall specify in reasonable detail the
      facts and circumstances constituting the material breach of this
      Agreement. Upon the expiration of ninety (90) days after receipt by the
      breaching party of such notice, if the breaching party has not cured such
      material breach, the non-breaching party shall have the right to terminate
      this Agreement by giving a notice of termination, which shall be effective
      on the date such notice is given.

            


    

     

    
      	
               
      

            	
              j)

            	
              In the event
      of project termination not due to a material default of Pharmacyclics or
      [**], Servier agrees to pay Pharmacyclics all direct costs incurred such
      as pass through costs associated
with:

            


    

     

    a)  All
work already completed up to the time of termination.

     

    b)  The
price of all material/capital commitments already made.

     

    c)  Payment
to cover all committed plant time. In the event that Manufacturer(s) is able to
re-schedule other projects for parts of this time, Manufacturer(s) would
reimburse Pharmacyclics at which time Pharmacyclics would reimburse Servier
accordingly.

     

    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    The pricing quoted
for this [**] order assumes that the manufacturer can scale as customary and
will not have a loss of product. Pricing for a smaller batch ([**]) is at a
significantly higher per [**] pricing. Both parties agree to pursue the
cost effective [**] route. In case, however, the scaling creates difficulties
and can not be done, Pharmacyclics will first inform Servier, and in such
unlikely event Pharmacyclics will get together with Servier and its Manufacturer
to discuss further solutions either by improving the process or reverting back
to the [**] manufacturing process.

    
      


      
        	
                8)

              	
                Warranty
      and Limitation of Liability

              


      

    

    


    
      	
               
      

            	
              A.

            	
              Pharmacyclics
      represents and warrants to Servier that  (a) it has the full
      power and right to enter into this Agreement and that there are no
      outstanding agreements, assignments, licenses, encumbrances or rights of
      any kind held by other parties, private or public, inconsistent with the
      provisions of this Agreement, (b) the services shall be performed with
      requisite care, skill and diligence, in accordance with Applicable Laws
      and industry standards, and by individuals who are appropriately trained
      and qualified.

            


    

    


    
      	
               
      

            	
              B.

            	
              Pharmacyclics
      represents and warrants to Servier that, at the time of delivery to
      Servier, the product supplied under this Agreement (a) will have been
      manufactured in accordance with cGMP and all other Applicable Laws, the
      Manufacturing Process, the applicable Quality Agreement, and
      Specifications, and (b) will not be adulterated or misbranded under the
      Food, Drug and Cosmetic Act or other Applicable Laws as the direct result
      of Pharmacyclics’ Third Party Manufacturer’s failure to manufacture in
      accordance with cGMP or the manufacturing
  process.

            


    

    


    
      	
               
      

            	
              C.

            	
              Pharmacyclics
      represents and warrants to Servier it has not used nor shall use in any
      capacity  the services of any persons employed by it’s Third
      Party Manufacturer who have been debarred under 21 U.S.C. U.S.C. § 335(a)
      or 335(b) in connection with the manufacture of the
    product.

            


    

    


    
      	
               
      

            	
              D.

            	
              Pharmacyclics
      has contracted with Third Party Manufacturers to have [**] manufactured on
      Servier's behalf. Pharmacyclics' Third Party Manufacturers' liability
      under such contracts is limited to replacement of non-conforming products;
      therefore Pharmacyclics can only provide the same limited recourse to
      Servier.  Consequently, notwithstanding anything to the contrary
      in this Agreement, Servier's sole recourse under this Supply Agreement is
      the replacement of a batch(s) by Pharmacyclics, free of
      charge.

            


    

    


    
      	
               
      

            	
              E.

            	
              This
      Agreement is subject to the disclaimer of consequential damages contained
      in Section 10.4.1 (Limitation of Liability) of the Collaboration
      Agreement

            


    

     

    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
      
        


        
          	
                  9)

                	
                  Miscellaneous.

                


        

      

       

    

    
      	
               
      

            	
              The
      relationship of the parties shall be that of independent
      contractors.  This Agreement, including its exhibits, together
      with the Collaboration Agreement, sets forth the entire agreement between
      the parties with respect to the subject matter contained herein and
      supersedes any previous understandings, commitments or agreements, whether
      oral or written.  This Agreement may only be amended with a
      writing signed by authorized representatives of both parties hereto that
      specifically and expressly refers to this Agreement.  A waiver
      by any party of any of the terms and conditions of this Agreement in any
      instance will not be deemed or construed to be a waiver of such term or
      condition for the future, or of any subsequent breach hereof. The parties
      may not assign or otherwise transfer its rights and obligations hereunder
      without the prior written approval of the other party, provided that no
      such consent shall be required for a party to transfer or assign this
      Agreement to a party that succeeds to all or substantially all of the
      assigning party’s business or assets relating to this Agreement whether by
      sale, merger, operation of law or otherwise; provided that such assignee
      or transferee promptly agrees in writing to be bound by the terms and
      conditions of this Agreement.  This Agreement may be executed in
      counterparts, each of which shall be deemed an original, but which
      together shall constitute one and the same
  document.

            


    

     

    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              PHARMACYCLICS,
      INC.

              995 E. Arques
      Avenue

              Sunnyvale,
      California  94085-4521

            	 	
              Les
      Laboratoires Servier

              22
      Rue Garnier

              92200 Neuilly
      sur Seine Cedex

              France

            
	 	 	 
	 	 	 
	 
    	 
    	
               

            
	
              By:

            	/s/ Robert W.
      Duggan	 
    	
              By:

            	/s/ Christian
      Bazantay
	 
    	
              Name:

            	Robert W.
      Duggan  	 
    	 
    	
              Name:

            	Christian
      Bazantay  
	 
    	
              Title:

            	Chairman
      & CEO	 
    	 
    	
              Title:

            	Proxy
	 	 	 
	 	 	 
	 	 	 
	
              Date: 
      18th, December 2009

            	 
    	
              Date: 
      10th December, 2009

            


    

    


    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    ADDENDUM

    


     

    
      	
              1)

            	
              Quality
      Standards

            


    

     

    This section
summarizes some of the essential quality features supporting the cGMP production
work by Pharmacyclics Third Party Manufacturers.


     

    cGMP Manufacturing
Standards - cGMP manufacture will be conducted in accordance with FDA ICH
guidelines,  as it applies to the scope of the project.

     

    
      	
               
      

            	
              i)

            	
              MATERIALS

            


    

     

    
      	
               
      

            	
              (1)

            	
              Materials
      will be ordered against defined
specifications.

            


    

     

    
      	
               
      

            	
              (2)

            	
              All raw
      materials will be received with a supplier’s Certificate of
      Analysis.  Pharmacyclics will review and approve raw material
      specifications for defined raw
materials.

            


    

     

    
      	
               
      

            	
              (3)

            	
              All raw
      material batches, for use in cGMP production, will be sampled from their
      final packaging and QC released prior to
use.

            


    

     

    
      	
               
      

            	
              (4)

            	
              All raw
      material tests and methods will be fully
  documented.

            


    

     

    
      	
               
      

            	
              (5)

            	
              The identity
      and quality status of all materials will be
  traceable.

            


    

     

    
      	
               
      

            	
              (6)

            	
              All
      materials, intermediates, and finished products will be labeled with an
      identity and test status.

            


    

     

    
      	
               
      

            	
              ii)

            	
              EQUIPMENT

            


    

     

    
      	
               
      

            	
              (1)

            	
              All equipment
      used for cGMP manufacturing will be maintained in a qualified and
      controlled state.

            


    

     

    
      	
               
      

            	
              (2)

            	
              Equipment
      will be qualified and maintained to ensure
  performance.

            


    

     

    
      	
               
      

            	
              (3)

            	
              If equipment
      is used for measurement or inspection, it will be calibrated or verified
      to ensure operation within defined
  specifications.

            


    

     

    
      	
               
      

            	
              (4)

            	
              Multi purpose
      equipment may be utilized, following Standard Operating Procedures
      including appropriately validated or verified cleaning
      procedures.

            


    

     

    
      	
               
      

            	
              iii)

            	
              Appropriately
      trained personnel will carry out
manufacture.

            


    

     

     

    
      	
              2)

            	
              QA
      / Product Release

            


    

     

    Third Party
Manufacturer(s) will ensure that manufacturing has been performed in accordance
with cGMP regulations. The following will apply:

    


    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              a)

            	
              Full details
      of all cleaning, processing, and testing will be
  recorded.

            


    

     

    
      	
               
      

            	
              b)

            	
              Product
      specific Batch Records will be used in all manufacturing operations.
      Deviations will be documented and subject to Quality Assurance
      approval.  Pharmacyclics Operations and Quality Assurance will
      review and approve Mater Batch Record and any major deviation from
      approved procedures in the Master Batch Record.  Pharmacyclics
      will approve any process changes.

            


    

     

    
      	
               
      

            	
              c)

            	
              Process
      change control will apply. All relevant observations made during the
      processing will be documented. Any deviations from the batch record will
      be documented.

            


    

     

    
      	
               
      

            	
              d)

            	
              Full batch
      record documentation will be completed and approved by Quality
      Assurance.  Pharmacyclics Chemical Operations and Quality
      Assurance will also review and approve batch history
    records.

            


    

     

    
      	
               
      

            	
              e)

            	
              Intermediate
      product(s) will be tested and the batch records reviewed by appropriate
      Third Party Manufacturer.

            


    

     

    
      	
               
      

            	
              f)

            	
              Third Party
      manufacture(s) will retain analytical samples per
  SOP.

            


    

     

    
      	
               
      

            	
              g)

            	
              Copies of
      completed batch records may be provided upon
  request.

            


    

     

    
       

      
        	
                3)

              	
                Final
      Product Specifications

              


      

       

    

    
      	
               
      

            	
              a)

            	
              Product shall
      comply with the product specifications provided by Pharmacyclics and
      Servier.

            


    

     

    
      	
               
      

            	
              b)

            	
              Additional
      test methods and/or specifications could be added, after appropriate data
      gathering, technical, and business
discussions.

            


    

    


    
      
        [**]
Certain information in this document has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

        
        

      

      
        11