Exhibit
10.32


 


Confidential
Materials omitted and filed separately with the 

Securities and Exchange Commission. 
Asterisks denote omissions.


 


COMMERCIAL
SUPPLY AND 

PROCESS VALIDATION AGREEMENT


 


THIS COMMERCIAL SUPPLY
AGREEMENT (the “Agreement”) is entered into as of this 6th day of December,
1999 by and between TRANSKARYOTIC THERAPIES, INC.,(“TKT”), a Delaware
corporation having an address at 195 Albany Street, Cambridge, MA 02139, and
CHESAPEAKE BIOLOGICAL LABORATORIES, INC., a Maryland corporation having an
address at 1111 South Paca Street, Baltimore, MD 21230 (“CBL”), with respect to
the following:


 


RECITALS


 


A.            TKT
is a development-stage biotechnology company active in the research and
development of drug products.


 


B.                                     CBL
is in the business of formulating, sterile filling, and packaging liquid
injectable drug products and medical devices.


 


C.                                     TKT
and CBL desire to enter into this Agreement in order to establish the terms and
conditions under which CBL will formulate, fill, and package Product for clinical
trial and consistency batches for FDA approval and, following FDA approval of
CBL as a formulation, fill-finish site for the Product, for commercial sale.


 


D.                                    Both
parties contemplate that additional TKT products may be included under this
Agreement, as amendments, by mutual written consent of the parties.


 


AGREEMENT


 


NOW THEREFORE, in
consideration of the premises and the mutual promises and covenants contained
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:


 


ARTICLE
I


DEFINITIONS


 


All references to
particular Exhibits and Sections shall mean the Exhibits to, and Sections of,
this Agreement, unless otherwise specified. 
For the purposes of this Agreement and the Exhibits hereto, the
following words and phrases shall have the following meanings:


 


1

















 


1.01        “Active Ingredient”
shall mean active pharmaceutical ingredient (API) of alpha-Galactosidase A as
described in Exhibit A.


 


1.02        “Affiliate” shall
mean any corporation, firm, partnership or other entity, whether de jure
or de facto, which directly or indirectly owns, is owned by or is under
common ownership with a party to this Agreement to the extent of at least fifty
percent (50%) of the equity having the power to vote on or direct the affairs
of the entity and any person, firm, partnership, corporation or other entity
actually controlled by, controlling or under common control of a party to this
Agreement.


 


1.03        “Agreement” shall
mean this Commercial Supply Agreement.


 


1.04        “Batch or Lot” shall
mean a single run of Product processed by a single execution of the
instructions specified in the Batch Production and Control Record within the
meaning of 21 CFR part 210.3(b)(2) and/or within the meaning of 21 CFR part
600.3(x), or its successor as in effect from time to time.


 


1.05        “Batch Production and Control Record” or
“Batch Record” shall mean the set of detailed
processing instructions which are to be followed by CBL to process one batch of
Product within the meaning of 21 CFR part 211.188, or its successor as in
effect from time to time.


 


1.06        “FDA” shall mean the
United States Food and Drug Administration.


 


1.07        “Formulated Bulk”
shall mean formulated Active Ingredient as described in Exhibit A.


 


1.08        “Good Manufacturing Practices”
or the letters “GMP” or “cGMP” shall mean the writings of the Code
of Federal Regulations, Part 21, Section 210 and Section 211, or other sections
so designated by the title “Good Manufacturing Practices” promulgated under the
Federal Food, Drug and Cosmetic Act, as in effect from time to time.


 


1.09        “Master Production and Control Record” or
“Master Batch Record” shall mean a written description
of the procedure to be followed for processing a batch of Product including but
not limited to a complete list of all active and inactive ingredients,
components, weights and measures, descriptions of drug product containers,
closures, packaging materials, and labeling and complete specifications for
each, within the meaning of 21 CFR part 211.186, or its successor as in effect
from time to time.


 


1.10        “Materials” shall
mean all inactive ingredients, vials, stoppers, seals, labels, inserts, folding
cartons and/or shipping cartons as are otherwise necessary to be utilized in
the Processing and to meet the Specifications, but excluding Active Ingredient.


 


1.11        “Processing” shall
mean processing Product in accordance with the Master Batch Record for the
Product.  “Processed” and “Process”
shall have comparable meanings.


 


1.12        “Product(s)” shall
mean the liquid product(s) covered by this Agreement and processed as
contemplated hereby.


 


2

















 


1.13        “Project Summary”
shall mean those documents attached to this Agreement as Exhibit A, which
provide specific details about the Product to be processed for TKT by CBL.


 


1.14        “Specifications”
shall mean the acceptance criteria for the Product as set forth in the Master
Batch Record.


 


1.15        “USP” shall mean the
United States Pharmacopeia, Vol.  23, or
any subsequent addition thereof.


 


ARTICLE
II


SUPPLY
AND PROCESSING OF MATERIALS


 


2.01        Processing.  Subject to the terms and conditions of this
Agreement, CBL agrees that it shall formulate, fill, and package the Product at
its Camden parenteral filling facility in Baltimore, MD validated in accordance
with FDA regulations, and shall process the Product in accordance with cGMP’s,
including without limitation adherence to appropriate quality assurance and quality
control practices.  CBL will permit TKT
to review all written internal CBL quality assurance and quality control
practices.  If TKT requests a change in
CBL’s practices and the parties agree that such a change is appropriate to
comply with FDA regulations then CBL will act in good faith to implement the
requested change.  CBL further agrees
that it will use reasonable and customary efforts to comply with regulations of
foreign authorities applicable to the processing of Product by CBL.  The product cannot be processed at another
facility without the written authorization of TKT.


 


2.02        Master Production Record.  Subject to the terms and conditions of this
Agreement, CBL agrees to process the Product in accordance with a Master
Production and Control Record approved in writing by TKT.  CBL further agrees that any substantive
changes to the Master Production and Control Record and the process must
receive written approval of TKT prior to implementation, provided, however,
that any approvals to be delivered by TKT shall not be unreasonably withheld
and the parties shall cooperate and act reasonably and in good faith in
connection with their respective activities under this Section.  CBL will permit TKT to review all information
in Master Production Records pertaining to individual product lots as well as,
raw material test results and the results of environmental monitoring prior to
product release by CBL but after CBL’s completion of its internal review of the
batch record.  CBL will release the
batch record within [**] of receiving TKT’s comments and proposed changes.


 


2.03        TKT Supplied Materials.  TKT, at its expense, shall deliver
sufficient quantities of Active Ingredient, any Material, or production
equipment indicated on Exhibit A hereto as to be provided by TKT, to
CBL’s plant at Baltimore, Maryland prior to the scheduled date of Processing as
indicated in Exhibit A, unless otherwise agreed to by CBL.  All such items supplied by TKT for purposes
hereof shall meet the applicable specifications therefor as set forth on Exhibit
A and the Master Production Record. 
All items so delivered shall remain the property of TKT.


 


2.04        CBL Supplied Materials.  CBL will be responsible for supplying
sufficient quantities of any Materials indicated on Exhibit A hereto as
provided by CBL, insofar as required to permit CBL to complete the Processing
and delivery of Product in accordance with


 


3

















 


the terms hereof.  All such
items purchased by CBL for purposes hereof shall meet the applicable
Specifications therefor as set forth on Exhibit A and the Master
Production and Control Record.


 


2.05        Labeling Specifications.  TKT shall be responsible for furnishing to
CBL appropriate specifications, reasonably acceptable to CBL, for the labeling
and packaging (including package inserts) to be used on or in connection with
the Processing of Product which is to bear TKT labels or other identification,
and any necessary artwork and engineering drawings related thereto.  Insofar as required of CBL pursuant to Exhibit
A hereto, CBL will label and package Product in accordance with such
specifications.  CBL shall not affix any
other labeling to the Product, except with the prior written approval of TKT.


 


2.06        Stability Testing.  TKT shall be responsible for all requisite
stability testing of the Product.


 


ARTICLE
III


PROCESS
VALIDATION


 


3.01        Process Validation.  An outline for validation of the
formulation, filling, and packaging of the Product at CBL’s facilities is
attached hereto as Exhibit B.  In
accepting its obligations under the terms of this Agreement, developing the
cost in Exhibit C, and the event and time schedule in Exhibit D,
CBL has relied upon the accuracy, completeness, and correctness of the data and
information provided by TKT and the understanding that the Product can be
processed in a stable form in accordance with typical and standard
pharmaceutical production practices. 
CBL will proceed with reasonable promptness to perform its obligations
hereunder, but the parties acknowledge that such process validation is a
demanding effort and unanticipated events beyond the control of the parties may
change the event and time schedule; and, thus, the completion date of CBL’s
performance hereunder cannot be predicted with any meaningful degree of
certainty.  CBL agrees to allow TKT to
approve product related validation protocols prior to execution by CBL.


 


3.02        CBL Responsibilities.  CBL shall provide reasonable assistance to
TKT in its efforts to obtain and maintain all necessary regulatory approvals
and permits relating to the production of Product at CBL facilities.  Accordingly, insofar as relating to Product
and CBL’s processing thereof, CBL shall permit TKT or its designees
typical and customary access to CBL’s facility, other than the filling, and
packaging areas, during the formulation and filling of Product and, upon
reasonable notice and during reasonable business hours and so long as TKT does
not interfere with CBL’s day to day operations (i) to inspect CBL’s processing
facilities, (ii) to review manufacturing and quality control records relative
to production by CBL of the Product, prior to the disposition of the Product
(iii) to audit CBL’s production efforts in respect of Product for compliance
with FDA requirements, (iv) to review CBL’s facility master file, any
correspondence, reports, or other documents from CBL to the FDA, or to any
applicable foreign regulatory authority, or from the FDA, or from any
applicable foreign regulatory authority, to CBL, related to the Product and/or
the facility as it effects the Product, (v) to approve all Product related
variances which occur during manufacture or storage of the Product, including
approval of label text after receipt of labels and prior to application, and
(vi) CBL will inform TKT as quickly as possible regarding facility related
variances and will permit TKT onsite access to all


 


4

















 


facility related variances and information for review and those which
in CBL’s judgement may affect the Product will be reviewed with TKT prior to
implementation of corrective action.


 


3.03        TKT Responsibilities.  TKT will be responsible for obtaining all
Federal and International regulatory approvals or permits necessary for the
production, processing, distribution, use, and sale of the Product.  Additionally, TKT will be responsible for
all other regulatory requirements which are not specifically assigned to CBL in
the Project Summary, including the payment of any FDA user fees or other fees
associated with the review and approval to market the Product imposed by any
regulatory agency.  TKT agrees to supply
CBL with any documents, information, and/or data specified as TKT
responsibility in the Project Summary in a timely manner so as not to impede
CBL’s ability to comply with its obligations hereunder.


 


ARTICLE
IV


ORDERS,
PRICE, & TERMS OF PAYMENT


 


4.01        Purchase Orders.  Unless otherwise specified, TKT shall submit
a purchase order to CBL at least [**] prior to the requested delivery date for
the Product set forth in such purchase order. 
CBL shall accept such purchase orders from TKT and shall notify TKT of
the processing date.  CBL must receive
from TKT any Active Ingredient and Materials to be supplied by TKT for use in
Processing at least [**] prior to the processing date.


 


4.02        Forecast.  TKT shall provide CBL in writing with
rolling [**] non-binding, good faith forecasts of TKT’s annual requirements for
Product, in quarterly periods.  Such
forecasting shall be updated in writing quarterly.


 


4.03        Cancellation and Rescheduling.  TKT may cancel or postpone a purchase order
for Product in accordance with CBL’s Cancellation and Postponement Policy as
set forth in Exhibit E.


 


4.04        Price.  The price to be paid by TKT to CBL during
the term of this Agreement for any projects or validations, and each Batch of
Product, shall be as specified in Exhibit C.  All prices are FOB CBL’s facility in Baltimore, Maryland.  Payment of all FDA fees specific to the
Product will be the responsibility of TKT. 
CBL’s price does not include any other testing, studies, Product
specific validations not presently required, or other activities, which TKT may
deem necessary but which are not required of CBL by this Agreement.


 


4.05        Invoices.  The invoice for the total amount shall be
payable by TKT to CBL within [**] days of the date of invoice, date of shipment
or date of issuance of the Certificate of Conformance referred to in Section
5.03, whichever is latest; provided that if TKT requests or causes CBL to hold
a Batch of Product for more than [**] days, TKT will be invoiced and the [**]
day payment terms would commence on the invoice date.


 


ARTICLE
V


SHIPMENTS,
INSPECTION, & ACCEPTANCE


 


5.01        Shipments.  CBL shall ship or caused to be shipped at
TKT’s expense the Product to TKT to such destination(s) as designated by TKT
except that CBL shall not be required to


 


5

















 


ship Product to any clinical trial site.  CBL’s delivery of Product to a common carrier or licensed trucker
approved by TKT shall constitute delivery to TKT, and TKT shall bear all risk
of loss, delay or damage in transit. 
CBL agrees to provide reasonable support to assist TKT to pursue any
claims it may have against carriers.


 


5.02        Inventory in Quarantine.  TKT may request in writing that CBL ship
Product from CBL’s inventory in quarantine, prior to the issuance by CBL’s
Quality Assurance Department of the appropriate release; however, TKT agrees
not to introduce any of the Product into interstate commerce until the receipt
of proper quality control release by CBL applicable to the Product.  Such a request will result in an invoice
being sent as of the shipping date and commencement upon invoice delivery of
the [**] day payment terms.  TKT shall
indemnify and hold CBL harmless from any and all losses, damages, claims, or
costs, including reasonable attorney’s fees, which CBL may suffer or incur as a
result of and arising out of the shipment or use of the Product prior to its
release by CBL’s Quality Assurance Department.


 


5.03        Certificate of Conformance.  Upon completion of filling, inspection,
packaging, and quality assurance review, CBL shall promptly provide TKT a
Certificate of Conformance for each Batch of Product shipped, certifying that
the Product has met all Specifications set forth in this Agreement.


 


5.04        Inspection.  TKT shall inspect all shipments of Product
received from CBL for proper labeling, packaging and count within [**]days of
actual receipt of shipment at its designated receiving facility.  However, any such inspection shall not
relieve CBL of its obligation and warranties under this Agreement.  If any portion of the Product received fails
to conform with any applicable Specification, TKT may, subject to the terms of
Section 5.05 hereof, reject the same within [**] days of the latter date of
actual receipt of (i) the Product; or (ii) a Certificate of Conformance.


 


5.05        Rejection.  In any case where TKT expects to reject or
otherwise make a claim against CBL with respect to damaged or otherwise
nonconforming Product, TKT shall notify CBL of such expected rejection and CBL
shall be offered a reasonable opportunity to offer proof or evidence as to why
such Product should not be rejected and to inspect and/or test such
Product.  In the event of any dispute as
to whether the Product may be rightfully rejected by TKT, such Product shall be
tested for conformance with the applicable Specifications by an independent
testing organization mutually acceptable to both parties which analysis shall
be binding on TKT and CBL solely for the purpose of determining whether such
Product may be rightfully rejected or not. 
TKT shall not under any circumstances dispose of any Product claimed by
TKT or determined by independent testing organization to be damaged or
nonconforming, without CBL’s prior written consent.  All or part of any shipment of Product determined to have been
rightfully rejected by TKT shall be held by TKT for disposition by CBL, at
CBL’s expense.


 


ARTICLE
VI


REPRESENTATIONS
& WARRANTIES


 


6.01        Warranties by CBL.  CBL warrants that all Product delivered to
TKT (or shipped to a third party at the direction of TKT) under this Agreement
shall at the time of


 


6

















 


delivery, be free of defects in material and workmanship; meet the
Specifications (except in the case of Product delivered in quarantine pursuant
to Section 5.02, in which case upon release from quarantine); and have been
processed and maintained in conformance with cGMPs and other applicable FDA
regulations.


 


6.02        Warranties by TKT.  TKT warrants that its storage, labeling
(including, without limitation any labeling, packaging and insert
specifications supplied by TKT pursuant to or as contemplated by Section 2.05
hereof), distribution, use, and sale of Product complies and will comply with
all applicable Federal, state and local laws, rules and regulations and will be
undertaken in a safe and responsible manner. 
If the Product is intended for distribution, use, and/or sale outside of
the United States, TKT further warrants that all necessary US export licenses
are in place or will be in place at the time of export and that the export,
distribution and/or sale comply with all laws, rules and regulations of the
country where the Product will be used. 
TKT represents and warrants to CBL that TKT is not aware that Product,
or the processing or distribution thereof, will violate the intellectual
property rights of any third party, and that TKT is not engaged in the theft or
misuse of any third party’s trade secret information regarding the processing
or use or distribution of Product, nor does TKT have notice of any claim of a
third party regarding any such theft or misuse.


 


6.03        Limitation on Warranties.  The warranties set forth in this Article VI
are expressly stated and in lieu of and exclude, and the parties do expressly
disclaim, all other warranties expressed or implied, arising by operation of
law or otherwise, including, on the part of CBL, any implied warranties of
fitness for a particular purpose and any representation or warranty as to the
suitability or efficacy of Product.


 


ARTICLE
VII


INDEMNITY,
LIMITATION ON LIABILITY, & RECALLS


 


7.01        Indemnification by CBL.  CBL shall defend, indemnify, and hold TKT
harmless from and against any and all claims, liability, damage, loss, cost and
expenses (including reasonable attorney’s fees) arising from any third party
claims made or brought, or any proceedings of any sort initiated against TKT
which (i) arise out of CBL’s breach of any obligations or warranty, or negligence
by CBL under this Agreement, or arise out of or are based upon any claim of
violation by CBL of any patent, trade secret or other intellectual property
rights of any person or entity, subject, however, in each case to the
limitations set forth in Section 7.05 below.


 


7.02        Indemnification by TKT.  TKT will defend, indemnify, and hold CBL
harmless from and against any and all claims, liability, damage, loss, cost and
expenses (including reasonable attorney’s fees) resulting from any third party
claims made or brought against, or proceedings of any sort initiated against
CBL which (i) arise out of TKT’s breach of any obligation, warranty or
negligence by TKT under this Agreement, (ii) arise out of the promotion,
distribution, sale or use by TKT or any third party of Product, including
without limitation any product liability claim (except to the extent CBL is at
fault or has failed to deliver or supply Product in accordance with the
Specifications), or (iii) arise out of any or are based upon any claim of violation
by TKT of any, patent, trade secret or other intellectual property rights of
any person or entity, subject, however, in each case to the limitation set
forth in Section 7.05 below.


 


7

















 


7.03        Conditions.  Each party’s indemnity obligations (the
“Indemnifying Party”) under Sections 7.01 and 7.02 are conditioned upon the
other party (the “Indemnified Party”) promptly notifying the Indemnifying Party
of any such claim or proceeding in writing, tendering to the Indemnifying Party
the opportunity to defend or settle such a claim or proceeding at its expense
and cooperating with the Indemnifying Party (at the expense of the Indemnifying
Party) in defending or settling any such claim or proceeding.  The indemnifying party should not enter into
any settlement which imposes liability on the indemnified party without the
indemnified party’s prior written consent not unreasonably withheld.


 


7.04        Recall.  Subject to the limitations set forth in
Section 7.05 below, CBL agrees to indemnify TKT against the reasonable and
necessary actual costs of managing and controlling any recall of Product,
provided that such recall is attributable to a breach by CBL of any of the
warranties provided herein, that CBL is given an adequate opportunity to
participate in any and all discussions with the FDA or otherwise concerning the
proposed recall and unless otherwise specified by the FDA, the manner and
method of a voluntary recall shall have been reasonably approved by CBL.  CBL shall not be obligated under this
Section 7.04 to indemnify TKT if the recall is due to misbranding of the
Product by TKT or is due to any other act or omission of TKT or any other third
party not controlled by CBL.


 


7.05        Limitation on Liability.  Anything herein to the contrary
notwithstanding:


 


(i)            Neither party hereto shall be liable
to the other, or the successors or permitted assigns of the other, or any other
person, for any loss of profits, loss of business or interruption of business,
or for any indirect, incidental, special or consequential damages, costs,
losses or expenses, suffered or incurred under this Agreement or otherwise,
even if advised of the possibility of such loss; and


 


(ii)           CBL’s liability for the replacement
or for the cost or value of any Active Ingredient, Materials, or production
equipment supplied to CBL hereunder by TKT, including but not limited to any
Active Ingredient, Materials, or production equipment lost or damaged or
incorporated into any single rejected or nonconforming Batch of Product, shall
be limited to the actual value thereof, up to the extent of CBL’s insurance
coverage for property of others which has a dollar value of $2.0 (two) million
dollars in the aggregate.  TKT will be
responsible to prove value of any claimed loss to CBL’s insurance carrier for
losses covered by CBL’s insurance policy. 
The parties hereto agree that the limitation on liability provided for
under the terms of this Section 7.05, excludes product liability claims and is
an integral part of the agreement of the parties as evidenced by this Agreement
and that the parties are entering into this Agreement in reliance upon the
terms and provisions of this Section 7.05, and that, but for such terms and
provisions, the parties would not be entering into this Agreement.


 


(iii)          Promptly, following the execution of
this Agreement, CBL shall furnish to TKT a certificate of insurance signed by
an authorized representative of CBL’s underwriter evidencing the insurance
coverage required by this Agreement and providing for at least [**] prior
written notice to TKT of any cancellation, termination, material change or
reduction of such insurance coverage.


 


8

















 


ARTICLE
VIII


REGULATORY


 


8.01        TKT Responsibilities.  TKT will be responsible for obtaining and
maintaining all necessary regulatory approvals for the distribution and sale of
Product.  Additionally, TKT will be
responsible for all other regulatory requirements which are not specifically
assigned to CBL in this Agreement, including the payment of any FDA user fees
or other fees associated with the review and approval to market the Product
imposed by any regulatory agency.  TKT
will be responsible for maintaining claim files and for submitting appropriate
reports to the FDA and other similar foreign regulatory agencies.  TKT will be further responsible for promptly
notifying CBL of all communications from the FDA or other regulatory agencies,
which may impact or change the production and/or testing of the Product as
performed by CBL.  TKT will notify CBL
of any consumer complaints concerning Product, which might reasonably be
attributed to CBL’s obligations and warrants, within seven (7) days of receipt
by TKT of any such complaints.  All such
information disclosed to CBL shall be considered confidential information under
Section 9 below.


 


8.02        CBL Responsibility.  So long and insofar as necessary to permit
it to perform its obligation hereunder, CBL shall maintain its Annual
Registration of Drug Establishment (form FDA 2656e) and its Annual Registration
of Device Establishment (form FDA 2891a) granted by the FDA updated and in good
order and will make the license and copies of all related documents available
to TKT and its designees for inspection, upon reasonable request.  CBL shall file and maintain a facility Master
File as required by the FDA and maintain Product complaint files pursuant to
applicable federal regulations as covered by CBL’s Standard Operating Procedure
#3075.  CBL will be further responsible
for promptly notifying TKT of all communications from the FDA or other
regulatory agencies, which may impact or change the production and/or testing
of the Product as performed by CBL.


 


8.03        CBL Assistance with Filing.  CBL will provide to TKT, at no additional
cost, copies, electronic formatted disks, of all documents, in CBL’s standard
format, for the manufacturing and control of Product at CBL’s facility, in
support of TKT’s regulatory filings for approval to market Product.  Any additional support, beyond the documents
above, requested by TKT will be charged at CBL’s standard labor rates.


 


8.04        Master File.  CBL shall maintain one or more facility
master files at the FDA and agrees to provide TKT with any requisite letters
authorizing the FDA access to CBL’s facility master file in conjunction with
regulatory review of CBL’s production of Product as set forth in this
Agreement.


 


ARTICLE
IX


CONFIDENTIALITY


 


9.01        Confidentiality.  Each party shall forever maintain in
confidence all information and materials disclosed by the other party and
marked as confidential or which the other party knows or has reason to know are
or contain trade secrets or other proprietary information of the other,
including without limitation the Specifications, Master Batch and Control
Record, Batch Production and Control Record, and other information relating to
the Product (all such


 


9

















 


information being “Confidential Information”), and shall not use such
trade secrets or proprietary information for any purpose except as permitted by
this Agreement or disclose them to anyone other than those of its employees,
consultants, agents or subcontractors as are necessary in connection with such
party’s activities as contemplated in this Agreement.  Each party shall be responsible for ensuring compliance with
these obligations by such party’s employees, consultants, agents and
subcontractors.  Each party shall take
precautions at least as strong as those which it takes to protect its own most
valuable trade secrets or proprietary information to ensure that its employees,
consultants, agents and subcontractors do not disclose or make any unauthorized
use of trade secrets or proprietary information of the other party.  Each party shall notify the other promptly
upon discovery of any unauthorized use or disclosure of the other’s trade
secrets or proprietary information.


 


9.02        Exceptions.  The foregoing restrictions on use and
disclosure shall not apply to any TKT Confidential Information or CBL
Confidential Information that:


 


(i)            was know to the receiving party
prior to its disclosure to the receiving party by the disclosing party as
evidenced by written documents predating the receiving party’s receipt of such
Information; or


 


(ii)           is public knowledge at the time of
its disclosure to the receiving party or became public knowledge after its
disclosure to the receiving party through no act or omission or on its behalf;
or


 


(iii)          is lawfully disclosed or made
available to the receiving party by a third party having no direct or indirect
obligation to the disclosing party to maintain the confidentiality of such
Information; or


 


(iv)          is independently developed by the
receiving party without the aid or benefit of Information disclosed to the
receiving party by the disclosing party.


 


Information may be disclosed by the receiving party
pursuant to a subpoena lawfully issued by a court or governmental agency
provided that the receiving party notifies the disclosing party immediately
upon receipt of any such subpoena.


 


ARTICLE
X


TERM AND
TERMINATION


 


10.01      Term.  Unless terminated in accordance with the
provisions of Section 10.02, the term of this Agreement shall commence on the
date hereof and shall continue until the second (2) yearly anniversary
of the date of FDA approval of CBL as a processor of the Product.  In the event TKT has not received FDA
approval for CBL to process the Product for commercial sale and distribution
prior to December 31, 2000 or has not placed binding purchase orders with CBL
pursuant to the terms hereof, within 180 days following such approval, this
Agreement shall be terminable by CBL upon delivery to TKT by CBL of written
notice of termination.  The term of this
Agreement may be extended by mutual written consent of both parties.


 


10.02      Termination.  This Agreement may be terminated by either
party, in the event that the other party (a) files or has filed against it a
petition under the Bankruptcy Act, makes an


 


10

















 


assignment for the benefit of creditors, has a receiver appointed for
it or a substantial part of its assets, or otherwise takes advantage of any
statute or law designed for relief of debtors or (b) fails to perform or
otherwise breaches any of its obligations hereunder, if, following the giving
of notice by the terminating party of its intent to terminate and stating the
grounds therefor, the party receiving such notice shall not have cured the
failure or breach within thirty (30) days. 
In no event, however, shall such notice or intention to terminate be
deemed to waive any rights to damages or any other remedy which the party
giving notice of breach may have as a consequence of such failure or breach.


 


10.03      Obligations and Duties Upon Termination or
Expiration.  If
this Agreement expires or is terminated pursuant to Section 10.02, both parties
shall be released from all obligations and duties imposed or assumed hereunder
to the extent so terminated, except as expressly provided to the contrary in
this Agreement.  Upon termination, both parties
shall cease any further use of, and promptly return any, confidential
information disclosed to the receiving party by the other party.  Termination of this Agreement, for whatever
reason, shall not affect the obligation of either party to make any payments
for which it is liable prior to or upon such termination.  Upon termination of this Agreement, TKT
shall purchase from CBL, at CBL’s cost, any Materials purchased for the Product
which CBL has reasonably purchased or ordered (which order cannot be canceled)
based upon TKT’s forecast.  CBL shall
immediately ship such materials to TKT in accordance with TKT’s instructions,
provided that TKT has given reasonable assurance of payment for such items.


 


ARTICLE
XI


MISCELLANEOUS


 


11.01      Exclusive Rights.  TKT and its Affiliates will purchase [**]%
of their annual worldwide requirements for the Product exclusively from CBL
pursuant to the terms hereof each year and for so long as this Agreement
remains in effect.  TKT and its
Affiliates will be relieved of this obligation in any year, in the event that
failure to purchase [**]% of their annual worldwide requirements is due to
either CBL’s (i) failure to accept a valid purchase order, (ii) late delivery
of Product, or (iii) delivery of Product not meeting the Specifications.


 


11.02      Independent Contractor.  CBL shall at all times during the term of
this Agreement be an independent contractor, maintaining sole and exclusive
control over its personnel and operation. 
It is understood that all work performed by CBL shall meet
specifications set forth in this Agreement, and the detailed manner and method
of doing the same shall be under the control of CBL.  At no time will either CBL or TKT hold itself out to be the
agent, employee, lessee, sublessee, partner, or joint venturer of the other,
and it is further understood and agreed between the parties that the full and
exclusive relationship between them is that of an independent contractor.  Nothing in this Agreement shall be construed
to create any agency, employment, partnership, joint venture or similar
relationship between the parties other than that of an independent
contractor.  Neither party shall have
any right or authority whatsoever to incur any liability or obligation (express
or implied) or otherwise act in any manner in the name or on the behalf of the
other, or to make any promise, warranty or representation binding on the
other.  CBL and TKT agree not to use or
refer to the other without prior written permission, in any public statements,
whether oral or written, related to this Agreement.  Furthermore, CBL and TKT both agree not to employ or solicit for
employment or


 


11

















 


as an independent contractor any employee of either party during the
term of this Agreement and for a period of two (2) years thereafter.


 


11.03      Insurance; Liability to Third Persons.  CBL and TKT, each at their own expense,
shall obtain and thereafter maintain workers’ compensation and comprehensive
general liability (bodily injury and property damage) insurance, with respect
to performance under this Agreement. 
Each party shall give the other or its representative immediately notice
of any suit or action filed, or prompt notice of any claim made, against them
arising out of the performance of this Agreement.


 


11.04      Product Liability.  TKT and CBL each agree at its own expense to
maintain Product Liability insurance coverage of at least $2.0 million.  TKT and CBL will provide a Certificate of
Insurance to the other upon request, and such coverage will remain in effect
indefinitely and so long as either party has product liability exposure for any
Product manufactured for TKT.  If such
Product Liability insurance is underwritten on a “claims made” basis, TKT and
CBL agree that any change in underwriters during the term of this Agreement
will require the purchase of “prior acts” coverage to ensure that coverage will
be continuous throughout the term of this Agreement.


 


11.05      Governing Law.  This Agreement shall be construed, and legal
relations between the parties hereto shall be determined, in accordance with
the laws of the State of Maryland applicable to contracts solely executed and
wholly to be performed within the State of Maryland without giving effect to
the principles of conflicts of laws.


 


11.06      Arbitration.  Any controversy or dispute by and between
the parties hereto or any of their Affiliates arising out of this Agreement
which is not resolved in good faith by the parties within sixty (60) days of
first becoming known to both parties, except with respect to resort to remedies
of injunction or other court order, shall be submitted to binding arbitration
in accordance with the Commercial Arbitration Rules then pertaining of the
American Arbitration Association, and judgment upon the award rendered thereby
may be entered in any court having jurisdiction thereof.  The place for arbitration shall be the city
of the company not bringing the request for arbitration.  The Parties to this contract shall select an
arbitrator based on mutual agreement. 
Nothing in this Agreement shall be construed or interpreted as granting
the arbitrators the power to award punitive damages as part of any award
rendered relating to this Agreement or the transactions contemplated
hereby.  The costs and expenses of such
arbitration shall be shared equally by the parties.


 


11.07      Notice.  All notices or communication required or
permitted to be given by either party hereunder shall be deemed sufficiently
given if mailed by registered mail or certified mail return receipt requested
or sent by overnight courier return receipt requested, such as Federal Express,
to the other party at its respective address set forth below or to such other
address as one party shall give notice of to the other from time to time
hereunder.  Mailed notices shall be
deemed to be received on the third business day following the date of
mailing.  Notices sent by overnight
courier shall be deemed received the following business day.


 


12

















 


	
  If to TKT:

  	
  Transkaryotic Therapies, Inc.,

  195 Albany Street

  Cambridge, MA 02139

  Attn:  President and CEO

  Tel:  617-349-0200

  Fax:  617-491-7903

  
	
   

  	
   

  
	
  With a copy to:

  	
  Hale and Dorr, LLP

  60 State Street

  Boston, MA 02109

  Attn:  Steven D. Singer

  Tel:  617-526-6000

  Fax:  617-526-5000

  
	
   

  	
   

  
	
  If to CBL:

  	
  Chesapeake Biological Laboratories, Inc.

  1111 South Paca Street

  Baltimore, MD 21230-2591

  Attn:  President

  Tel:  410-843-5000

  Fax:  410-843-4414

  



 


11.08      Compliance with All Laws.  In all activities undertaken pursuant to
this Agreement, both CBL and TKT covenant and agree that each will in all
material respects comply with such Federal, state and local laws and statutes,
as may be in effect at the time of performance and all valid rules, regulations
and orders thereof regulating such activities.


 


11.09      Successors and Assigns.  CBL shall not assign this Agreement (or any
schedule hereto) without the prior written consent of TKT, except that CBL
shall be permitted to assign its rights and obligation hereunder with such
consent to (i) one or more of its Affiliates or (ii) the purchaser of all or
substantially all of its assets, through merger, consolidation or
otherwise.  TKT may assign this
Agreement upon (x) providing prior written notice to CBL; and (y) causing the
assignee to acknowledge, in writing, that it will be bound by the terms and
conditions of this Agreement.


 


11.10      No Waivers; Severability.  No waiver of any breach of this Agreement
shall constitute a waiver of any other breach of the same or other provision of
this Agreement, and no waiver shall be effective unless made in writing.  Any provision hereof prohibited by or
unenforceable under any applicable law of any jurisdiction shall as to such
jurisdiction be deemed ineffective and deleted herefrom without affecting any
other provision of this Agreement.  It
is the desire of the parties hereto that this Agreement be enforced to the
maximum extent permitted by law, and should any provision contained herein be
held by any governmental agency or court of competent jurisdiction to be void,
illegal and unenforceable, the parties shall negotiate in good faith for a
substitute term or provision which carries out the original intent of the
parties.  If the parties cannot reach
agreement upon such a substitute term or provision within sixty (60) days after
the original term or provision is held void, illegal or unenforceable, then the
matter shall be settled by binding arbitration in accordance with Section
11.06.


 


11.11      Entire Agreement; Amendment.  TKT and CBL acknowledge that they have read
this entire Agreement and that this Agreement, including the attached Exhibits
constitutes


 


13

















 


the entire understanding and contract between the parties hereto and
supersedes any and all prior or contemporaneous oral or written communications
with respect to the subject matter hereof, all of which communications are
merged herein.  It is expressly
understood and agreed that this Agreement shall not be modified, amended or in
any way altered except by an instrument in writing signed by both of the
parties hereto.


 


11.12      Delays or Omissions.  Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party
hereto, shall impair any such right, power or remedy to such party nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence
therein, or in any similar breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing.  All remedies either under this Agreement or by law or otherwise
afforded to any party, shall be cumulative and not alternative.


 


11.13      Force Majeure.  If either party fails to fulfill its obligations
hereunder (other than an obligation for the payment of money), when such
failure is due to an act of God, or other circumstances beyond its reasonable
control, including but not limited to fire, flood, civil commotion, riot, war
(declared and undeclared), revolution, action by government including delays in
obtaining governmental approvals or embargoes, then said failure shall be
excused for the duration of such event and for such a time thereafter as is
reasonable to enable the parties to resume performance under this Agreement.


 


11.14      Further Assurances.  Each party shall, at any time, and from to
time, prior to or after the effective date of this Agreement, at reasonable
request of the other party, execute and deliver to the other such instruments
and documents and shall take such actions as may be required to more
effectively carry out the terms of this Agreement.


 


11.15      Survival.  All representations, warranties, covenants
and agreements made herein and which by their express terms or by implication
are to be performed after the execution and/or termination hereof, or are
prospective in nature, shall survive such execution and/or termination, as the
case may be.  Specifically Sections
5.03, 5.05, 10.03, and Article IX shall survive such termination and Articles
VI, VII, and XI shall survive for so long as any Product produced by CBL for
TKT remains within its expiration dating.


 


11.16      No Third Party Beneficiaries.  Nothing in this Agreement shall be construed
as giving any person, firm, corporation or other entity, other than the parties
hereto and their successors and permitted assigns, any right, remedy or claim
under or in respect of this Agreement or any provision hereof.


 


11.17      Headings.  Section headings are for convenient
reference and not a part of this Agreement. 
All Exhibits are incorporated herein by this reference.


 


14

















 


11.18      Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which when
taken together shall be deemed but one instrument.


 


11.19      No Rights.  No rights or licenses with respect to the
Product or any of either party’s intellectual property rights and granted or
deemed granted hereunder or in connection herewith, other than those rights
expressly granted in this Agreement.


 


11.20      Disclosure.  Except as TKT may be required by law or
regulation, neither party shall disclose the name of the other party, the
identity of the Product or any information with respect thereto, the existence
of this Agreement or the terms and provisions of this Agreement without the
prior written approval to the other party. 
Neither party shall use the name of the other party in any publicity or
advertising without the other party’s prior written consent.  If CBL is required in accordance with SEC or
other relevant governmental regulations to disclose TKT’s name, the existence
of this Agreement or the terms and provisions of this Agreement, CBL shall (i) give
TKT prior written notice of such disclosure, and (ii) assist TKT in any efforts
to prevent or limit such disclosure including without limitation seeking
confidential treatment of such information.


 


IN WITNESS WHEREOF, this Agreement shall take effect
as of the date first written above when it has been executed below by the duly
authorized representatives of the parties.


 


 


	
  CHESAPEAKE BIOLOGIC LABORATORIES, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
          /s/ Thomas
  P. Rice

  	
   

  
	
   

  	
  Title: 
  Thomas P. Rice, President & CEO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TRANSKARYOTIC THERAPIES, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
          /s/ Richard
  F. Seldon

  	
   

  
	
   

  	
  Title: 
  Richard F. Selden, President & CEO

  	
   

  



 


Exhibits:


Exhibit A:  Project Summary.


Exhibit B: 
Validations/Qualifications.


Exhibit C:  Price.


 


15

















 


EXHIBIT
A


 


PROJECT
SUMMARY


 


 


 


CONFIDENTIAL


 


 


1

















 


TRANSKARYOTIC
THERAPIES, INC.


PROJECT
SUMMARY


 


Transkaryotic Therapies, Inc. (TKT) desires Chesapeake Biological
Laboratories, Inc. (CBL) to formulate and aseptically fill, package and label
for clinical and commercial use the product known as (gene activated)
GA-GAL.  The active ingredient is
α-Galactosidase A, an acid hydrolase which specifically cleaves terminal
α-linked galactose residues from glycosphingolipid ceramide trihexoside
(CTH).  A


 


The Project will consist of the following parts.


 


1.        Clinical
Manufacturing Phase


a.         Technology [**]


b.         Technology [**].


c.         Acquisition and testing of [**].


d.         Preparation of [**].


e.         Production of [**].


 


2.        Validation
Phase


a.         Execution of [**].


b.         Preparation of [**].


 


3.        Consistency
Lot Manufacturing


a.         Production of [**]Production of [**]


b.         Assist TKT in [**]


 


4.             Commercial
Manufacturing (requirements to be determined)


 


*Contact at TKT is Bill Fallon: 
Phone (617) 349-0203  Fax (617)
491-7903


Program Manager at TKT is Suzanne Bruhn:  Phone (617) 503-0394  Fax
(617) 491-7903


 


2

















 


Overview of Formulation and Fill
Processes


 


Following is an outline of the formulation, filtration, aseptic
filling, QC testing, labeling, and packaging to be performed:


 


1.         TKT will supply the active pharmaceutical ingredient (API)
and text for the vial label, unit carton and package insert.


2.         CBL will supply all equipment, chemicals, and materials
required to produce and test the product.


3.         All receipt, in-process and certain release* testing will be
performed by CBL.


4.         API will be received as a frozen bulk in 2 L PETG bottles
filled to ~ 1 L.


5.         Samples of API will be tested per receipt testing
requirements.


6.         API will be thawed, formulated, filtered and aseptically
filled into 5 cc vials (3.5 cc label claim), stoppered and crimped.


7.         Drug product will be stored at 2 - 8°C.


8.         Vials containing drug product will be visually inspected, QC
tested, labeled and packaged appropriately.


 


A Certificate of Analysis and any other documentation required will be
supplied along with the API to CBL prior to the scheduled date of manufacture.


 


Each container of API will be sealed with tamper evident tape or device
and labeled with the gross and net weight and temperature storage
condition.  Each shipping container of
API should be labeled as “Store @-20°C. 
Upon arrival, CBL will inspect for tampering, weigh each container and
receive per CBL SOP’s.  The API will
then be stored until required for manufacture.


 


At the completion of all work for each lot, CBL will provide TKT with a
copy of the completed Batch Production record including a Certificate of
Analysis.


 


 


3

















 


TESTING
REQUIREMENTS


 


CBL
Testing of API Upon Receipt


 


	
  Volume
  Required

  	
   

  	
  Delivered
  To

  	
   

  	
  Assay

  	
   

  	
  Specification

  	
   

  
	
  [**]

  	
   

  	
  CBL QC-Lab

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  CBL QC-Lab

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  



 


*may be performed
by TKT if technical transfers are not complete


 


In-Process
Testing of Formulated Bulk


 


	
  PRE-FILTRATION/POST-QS

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  #
  Samples/Vol

  	
   

  	
  Delivered
  To

  	
   

  	
  Assay

  	
   

  	
  Specification

  	
   

  
	
  [**]

  	
   

  	
  CBL-Micro

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  CBL QC-Lab

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
   

  	
   

  	
  CBL-Pharm Tech

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  



 


	
  POST-FILTRATION

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Volume
  Required

  	
   

  	
  Delivered
  To

  	
   

  	
  Assay

  	
   

  	
  Specification

  	
   

  
	
  [**]

  	
   

  	
  CBL-Micro

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  CBL-Pharm Tech

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  



 


Final
Drug Product Testing


 


	
  #
  Samples/Vol

  	
   

  	
  Delivered
  To

  	
   

  	
  Assay

  	
   

  	
  Specification

  	
   

  
	
  [**]

  	
   

  	
  CBL-Micro-Lab

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  CBL Micro-Lab

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  CBL QC-Lab

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  CBL QC-Lab

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  



 


 


4

















 


DETAILED
DESCRIPTION OF FORMULATION, ASEPTIC FILLING, LABELING AND PACKAGING


 


Overview


 


Receipt of Bulk Drug Substance


 


Bulk material will be delivered to CBL at least [**] prior to
formulation.  Upon receipt, the bulk
will be stored at [**].  A sample sent
with the bulk will be tested as specified in testing requirements.  All batch record steps are performed in
accordance with Good Manufacturing Practices.


 


Preparation of Diluent


 


GA-GAL diluent is prepared within [**] of use by mixing appropriate
quantities of [**].  The composition of
GA-GAL diluent is listed in Table 4.4-1.


 


Table 4.4-1.  Composition of GA-GAL Diluent (per Liter)


 


	
  Component

  	
   

  	
  TKT Part Number

  	
   

  	
  Quantity

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  
	
  [**]

  	
   

  	
  [**]

  	
   

  	
  [**]

  	
   

  



 


The diluent is filtered [**] until required.  All filters are subjected to post-filtration
integrity testing.


 


Formulation of α-Galactosidase
A for Injection, by CBL


 


The formulation of the Product will be performed in
Class [**] conditions.


 


Only [**]% of the purified bulk will be initially used
to ensure that material is available for adjustment in the event that the
formulated bulk is too dilute.


 


Based on the volume and concentration of the bulk and
the desired concentration of GA-GAL in the final formulation, the volume of
GA-GAL diluent required for addition is determined.  An appropriate amount of diluent is added to [**]% of the target
final volume.  Then [**] is added, the
solution is pH adjusted and finally Q.C. tested for concentration and pH.


 


Sterile Filtration


 


The formulated bulk drug product is sterile filtered
through [**]  Filtration is conducted
[**] and then the filter(s) is subjected [**]. 
All filter integrity testing must be completed with acceptable results
before the material is released for further processing.  CBL maintains a stringent accountability
record on all steps of the filtration process.


 


5

















 


Aseptic Filling and Sealing


 


Filling is conducted in a Class [**] room by trained
technicians using validated processes for low volume fills.  The filling process is performed using an
[**].  The weight of fill per vial is
set and checked at the beginning of the fill. 
Additional weight checks are usually conducted at an interval of [**]
and on the last vial filled.  Weight
check vials are identified, isolated as weight checks and noted in the
accountability records.


 


During the filling process each vial is purged
[**].  Each vial is then [**].  Upon completion of the fill, a complete
product accountability is performed for the filling process.  The filled units in labeled trays are
transferred to the appropriate storage conditions (2-8°C) awaiting further
processing.


 


Inspection


 


The batch record includes a Bill of Materials,
Signature Log, and Final Product Accountability.  A 100% visual inspection is conducted using a black and white
background.  Reject samples are
classified by CBL.  Other defects are
also isolated, for example, improper crimps, container flaws, and stopper
defects.  Approved inspected units are
then made available to the labeling group, who are responsible for label
accountability, proper labeling, and packaging.


 


Storage


 


Upon completion of inspection, all passed units are
quarantined and stored at 2-8°C, awaiting final release.


 


Unit Labeling


 


The drug product vials will be labeled as follows:


 


α-Galactosidase
A 1 mg/mL Sterile


3.5 mL Lot No.:  #####


Caution:  New
Drug - Limited by Federal Law to Investigational Use


Store at 2-8°C


Transkaryotic Therapies Inc.


195 Albany Street


Cambridge, MA 02139 USA


 


Any changes in labeling text as may occur from time to
time, must be sent to the attention of CBL a minimum of 6 weeks prior to the
anticipated date of manufacture.


 


Packaging


 


GA-GAL drug product is [**].  Vials are [**].


 


The α-Gaacosidase A drug product will be bulk
packaged and shipped to TKT in a temperature-controlled, monitored
container.  If more than one shipper
container is necessary,


 


6

















 


each container will contain a temperature monitor.  The shipping containers will be labeled as
follows:


 


α
-Galactosidase A Sterile


Lot no. ####


Quantity enclosed: 
## vials


Caution:  New
Drug - Limited by Federal Law to Investigational Use


Single use vials


Refer to Clinical Protocol and Investigator’s Brochure
for administration directions


Store at 2-8°C


 


Transkaryotic Therapies Inc.


195 Albany Street


Cambridge, MA 02139 USA


 


Upon commercialization, the labeling and packaging
will be changed from bulk.  All
necessary text and specifications will be supplied by TKT prior to that time.


 


Retain
Samples


 


CBL holds retain samples for commercial products.  Retain samples will be invoiced as regular
product, but held at CBL under label storage conditions.  The number of retains will be determined by
the amount of finished product testing required.  Usual practice is to retain sufficient samples to perform all of
the testing two times.  The retained
samples will be held for one year past the expiration date of the lot and CBL
will properly dispose of such samples for TKT, or return to TKT upon request.


 


Stability
Samples


 


Stability in its entirety will be the responsibility
of TKT.  Any samples held by CBL for
stability will be subject to a separate agreement.


 


Shipping


 


Final Product to be shipped overnight to:


 


Transkaryotic Therapies, Inc.

195 Albany Street

Cambridge MA 02139


 


or another designated site as determined by TKT.


 


Manufacturing Batch Record Summary


 


All operations are governed by a CBL batch record
developed exclusively for TKT’s GA-GAL product.  The approved batch record is assigned a TKT project number and a
unique CBL lot number.  These documents
detail the preparation of materials (vials, stoppers, closures,


 


7

















 


processing materials, and equipment) used in the manufacturing
process.  The batch record has been
approved by Quality Assurance and Manufacturing at TKT along with appropriate
approvals from CBL.  CBL staff has the
responsibility to perform the aseptic processing and related processing to the
instructions detailed in the approved Batch Records.  CBL has provided TKT the opportunity to review validation data
and reports that reflect the processing of components that have intimate
contact with the product.


 


Reference to the environmental monitoring and
personnel monitoring is noted along with the actual data.  Before proceeding with manufacturing
operations, the operation room conditions are verified for temperature and
pressure.  CBL performs a [**] prior to
filtration and [**] prior to filling.


 


The batch record is designed to include all quality
control testing performed at CBL.  The
batch record references an SOP to the central sample receiving, in-processing
testing (pre and post filtration) and final product testing.  The documentation references an SOP to a
detailed sampling plan for [**].  The
final product testing section relates to tests conducted at CBL and other
contracted testing facilities approved by TKT. 
Final [**] testing at CBL includes [**].  A final Certificate of Analysis is presented along with final
review and signature by CBL Quality Assurance.


 


Batch Record Availability


 


At the completion of all work for each lot, CBL will
provide Client with a copy of the completed Batch Production Record including a
Certificate of Analysis.  The “batch
record” is normally complete within [**] after a fill date unless otherwise
agreed upon previously.  CBL will work
in good faith to reduce the time needed for completion of the batch record.


 


Disposal or Disposition of Product


 


Remaining bulk product will be refrozen and all
inspection rejects will be stored refrigerated.  All will be returned to the client.


 


8

















 


Transkaryotic
Therapies, Inc.


 


 


 


 


 


Chart


 


 


 


**Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission.**


 


 


 


9

















 


EXHIBIT
B


 


VALIDATION
PROCESSES


 


CONFIDENTIAL


 


10

















 


VALIDATION
PROCESS


 


USP Testing of Raw Materials (Europe,
Japan and USP)


 


Chemicals purchased with the “USP” or “NF” grade are
suitable for use in Pharmaceutical products. 
Under cGMP they need to undergo only identity testing in addition to
establishing the reliability of the suppliers analyses at appropriate intervals
in order to be released for use in a regulated product.  It is sometimes misunderstood by clients
that other chemical grades, such as ACS or Aldrich gold, which are perceived as
superior products by the criteria of purity and strength, are not approved for
use as parenterals in humans.  For CBL
to use non USP/NF raw materials, it is necessary to perform full USP testing on
the chemical, thereby certifying that it meets the requirements of USP/NF.


 


For those chemicals that are not compendial (US
Pharmacopoeia), appropriate tests must be identified to assess identity;
purity, quality, and strength.  At an
appropriate time, that testing must be validated according to guidelines from
“Validation of Compendial Assays”  USP
XXIII <1225>.  For concentration
(strength) the assay validations are needed for CBL to guarantee formulation
results.  For other assays, the
validation can wait until phase III production, or until it is needed for a
guarantee of conformance to specifications.


 


Assay Tech Transfer
[Qualification/Validation]


 


Evaluation of any Compendial or client supplied assay
must be made prior to CBL accepting responsibility for its quantitative
use.  Compendial assays are assumed to
be fully validated and require only a demonstration of their applicability to
the analyte as formulated. 
Client-supplied assays, for which full validation exists, may also be
used upon demonstration of congruency, usually involving the comparison of data
on a single set of samples which have been assayed in both the client’s and
CBL’s laboratories.  Non-validated
assays for use in early stage (up to early Phase II) testing will also require
a transfer of technology with direct comparison of samples between
laboratories.  Technology transfers as
described above will require demonstration of accuracy, precision, ruggedness
and linearity.  Later stages of the drug
approval process require validated assays. 
If called upon to validate an assay, CBL will follow the guidelines of
USP XXIII <1225>.  Assays for use
in stability programs must be validated regardless of stage of drug development
and must be shown to be stability indicating.


 


Assay tech transfers will be required for [**]


 


Bacteriostasis / Fungistasis (for
Product)


 


B/F is required in order to establish the potential of
the formulation to interfere with sterility assays.  B/F testing can be performed on developmental batches as long as
they are prepared with GNP material which meets specifications for incoming raw
material and have the same formulation as will the GNP batches.


 


Enhancement / Inhibition (for
Product)


 


E/I evaluates the potential for interference by the
formulation with the assay used to measure endotoxin.  A preliminary E/I determination will be required to allow quantitation
of endotoxin in developmental batches. 
Full validation of E/I is required once preparation of GNP batches
begins.  Validation involves performing
E/I on three consecutive batches.


 


 


11

















 


Filter Function/Compatibility Study


 


All materials have some affinity for filter
media.  In some instances, that affinity
is sufficient to cause concern about the ability to filter product and maintain
concentration through the process.  A
successful study is one in which no significant differences are observed when
comparing the drug product pre and post filtration.  These results help to assure the concentration of product after
filtration.  This is particularly a
problem with biological products and products with very low concentrations.


 


Cleaning Recovery Study


 


Contract manufacturers must be able to assure
themselves, their clients, and the FDA that no significant chance exists for
cross contamination to occur among products sharing equipment which may
conceivably contact product.  While the
interior of the lyophilizer (for example) is certainly not designed to be a
product contact surface, the possibility that product may reach the lyophilizes
shelves and be dried down on them does present a potential for contamination
from a dislodged fragment of some previous client’s product.  CBL requires demonstration that products are
easily removed from glass or stainless steel surfaces (as appropriate) by the
routine cleaning methods called for in CBL cleaning procedures.  The cleaning study involves spotting product
onto a stainless steel coupon or tray and simulating the method for cleaning
the inside of the lyophilizer.  Recovery
of the product from a stainless steel surface and evaluation of cleaning are
monitored by TOC (Total Organic Carbon) analysis which, while lacking the
specificity of methods such as BPLC, compensates by virtue of its
sensitivity.  The cleaning study is
expected to demonstrate removal of product from the steel surface.  While a negative result is not expected,
such a result would require additional evaluation of the data obtained and
close consultation with the Client regarding the ability of CBL to proceed.


 


Equipment Cleaning Validation


 


Three successive
successful demonstrations.


 


To validate the ability of CBL to prevent cross
contamination from Client product, three successive successful demonstrations
of effective cleaning of product contact equipment will be required.  Collection of each data set will occur after
an actual manufacturing event with GMP product.  Technicians will sample predetermined sites within the equipment
for TOC.  The most common equipment for
Cleaning Validation are tanks and Pump contact parts.  CBL attempts to use as much virgin equipment as possible in order
to reduce the need for rigorous and extensive cleaning validation.


 


Product Hold Time Studies:


 


The most efficient way to schedule formulation and
fill is to do the formulation on the day prior to the fill.  A holding study allows CBL to demonstrate
that the product will not be adversely affected by holding it for 12-48 hours
at cold room conditions with or without an initial filtration to lower
bioburden.  Bench scale batches will be
formulated, treated and stored according to a standard protocol.  Potency and other properties which might be,
affected by storage will then be analyzed.


 


 


12

















 


Filling Machine Fill Volume
Qualification


 


CBL will perform a fill volume study with the actual
product (or placebo) to assure machine process capability.  This study will set the target volume for
the fill using volume specifications or label data for the product.  Typically, a minimum alert level is set at +3
sigma from the target weight for the fill volume.  The specification is then set slightly outside of those alert
levels.


 


Filter Extractables Study


 


This is an FDA requirement for phase III.  Product is filtered and the effluent is
assayed for known extractable substances. 
For a purely aqueous product, it is normally not of any consequence.  It is typically performed by the filter
manufacturer.


 


Microbial Retention Study


 


Subcontracted to Millipore.  Laboratory testing is conducted with specific pharmaceutical
biopharmaceutical product using a standard protocol using B. diminuta grown in
saline lactose broth.  These experiments
are run at room temperature for less than 24 hours on 47 mm disk membranes with
less than 20 liters of solution. 
Microbial Retention Validation is performed to validate microbial
retention of sterilizing-grade membrane filters with specific pharmaceutical
preparation.  Microbial retention
testing was recommended by the US Food and Drug Administration’s 1987
“Guideline on Sterile Drug Products Produced by Aseptic Processing” to validate
sterilizing-grade membrane filter performance. 
Under worst case process conditions, the testing determines the ability
of a sterilizing-grade filter using scaled-down processing conditions to retain
a minimum challenge of 10 cells of B. diminuta per cm2 of filter area.  A sample of one drug product lot is
evaluated using filters from three manufacturing lots.  Initial testing determines whether the
sample drug product inhibits the microbial challenge prior to conducting the
microbial retention studies.  This
initial testing will determine the mode of the final testing, ie., whether it
is performed in the presence or absence of the product.


 


Validation Package for BLA


 


In support of product approval applications, CBL
maintains Master Files at FDA for both its Seton and Camden facilities.  Clients may request letters authorizing FDA
to review CBL’s file in support of their regulatory application (e.g., NDA,
ANDA, BLA).


 


The file contains pertinent information on building
and facilities, overall manufacturing operation flow patterns, equipment
locations, component sterilization validations (e.g. oven and autoclave loads),
action concerning product when media fills fail, details of the environmental
monitoring program (viables and non-viables), initial vial and stopper washing
validations and utility system validations such as production of water for
injection and distribution, clean steam production and distribution, and HVAC
systems validations.


 


Aseptic processing validations are supplied as a
summary sheet outlining CBL media fill history.


 


 


13

















 


Finally, the process validation package supplied for
the BLA will contain the prospective protocol and the results of the enhanced
testing program from the (recommended) three at scale conformance lots.  This enhanced testing will be used to
demonstrate control of critical manufacturing operations such as mixing
uniformity during formulation as well as conformance to production
specifications throughout the filling process.


 


14

















 


EXHIBIT
C


 


PRICING
& PAYMENT


SCHEDULE


 


 


CONFIDENTIAL


 


 


15

















 


PRICING
AND PAYMENT SCHEDULE


 


I                                            Validation Package


 


	
  Title

  	
   

  	
  Deliverable

  	
   

  	
  Price

  	
   

  
	
  [**]

  	
   

  	
  Testing Standards

  	
   

  	
  $[**] per new test

  	
   

  
	
  [**]

  	
   

  	
  Validation Report Report

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
   

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  External Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Reference Letter

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  External Report

  	
   

  	
  $[**]

  	
   

  
	
  [**]

  	
   

  	
  Report

  	
   

  	
  $[**]

  	
   

  



 


(1) This charge will not apply if the filter function study is
performed in conjunction with the process validation, listed here as
“Validation Package for BLA”.


 


(2) CBL has bracketing media fills that cover the following
vial/stopper/crimp combination


 


[**].


 


If this or any combination is used for which CBL has
existing media fills and change parts, then no special media fills will be
performed and there will be no media fill charge.


 


(3) If CBL bracketing media fills are used to support a client’s
application then this charge will apply.


 


II                                        Lot Price / Unit Price* (Includes packaging, FOB CBL’s
dock)


 


For lot sizes less than [**] units                       $[**] per unit


For lot sizes of [**] units or more                     $[**] per unit [**]


 


*Price includes an allowance of $[**]/unit [**].  Costs in excess of the allowance will be
charged at [**] %.


 


III                                    Minimum
Purchase Orders


 


The minimum annual purchase order requirement is [**].


 


 


16

















 


IV                                   Basis for Price Increase


 


Price per lot is comprised of [**].  Following FDA approval of CBL as the
manufacturer, and for the first year the prices will hold.  Thereafter the price may be increased annually
based on (i) actual increases in packaging component cost (syringes, stoppers,
crimps, labels inserts, cartons), (ii) non-component costs may be increased
based upon a weighted average factor using both the Bureau of Labor Statistics,
employment cost index series ID ECU 19002A, (ECU and the Consumer Price Index
(CPI).  [**]% of the non-component cost
of the price per lot will be subject to increases in the ECU.  The remaining [**]% of the non-component
cost price per lot will be subject to increase in the CPI adjusted annually.


 


 


17