Exhibit 10.18


 


CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY


WITH THE SECURITIES AND EXCHANGE COMMISSION.


ASTERISKS (*) DENOTE SUCH OMISSIONS.


 


LETTER AGREEMENT


 


This Letter Agreement (this “Agreement”)
dated as of January 6, 2006, is entered by and between:


 


UCB S.A., Bioproducts Division,
with registered offices at Allée de la Recherche, 60, 1070 Brussels, Belgium,
hereafter “UCB”


 


and


 


PRAECIS PHARMACEUTICALS
INCORPORATED, with registered offices at
830 Winter Street, Waltham, Massachusetts 02451, hereafter “Praecis”


 


Hereafter individually referred to as a “Party”
and jointly as the “Parties”


 


Whereas, on June 21, 2000, UCB and Amgen Inc. (“AMGEN”) executed a contract for
the development and supply of bulk API for a compound identified as Abarelix (the
“Original Agreement”), as assigned by AMGEN to Praecis effective on December 17,
2001 and as amended by Amendment No. 1
dated as of March 26, 2002 (“Amendment No. 1”) and Amendment No. 2 dated as of August 30,
2004 (“Amendment No. 2”) (the Original Agreement, as so amended by
Amendments No. 1 and 2, the “Development and Supply Agreement”); and


 


Whereas, in connection with
the Development and Supply Agreement, UCB agreed to commence certain process
development activities which are the subject of several scopes of work (the “Process
Improvements”) and Praecis agreed to pay UCB for the Process Improvements upon
completion of such activities; and


 


Whereas, pursuant to Section C.1.
of Exhibit A of the Development and Supply Agreement entitled “Supply of
Product in 2005” (which Section was added pursuant to Amendment No. 2),
Praecis committed to purchase *** of API during
2005 (the “2005 Manufacturing Campaign”), a portion of which was paid for at
the end of 2004 and the remainder of which shall be due upon the later of December 31,
2005 and the delivery by UCB of the *** to Praecis;
and


 


Whereas, Praecis is now requesting UCB, and
UCB agrees, each subject to the terms and conditions of this Letter Agreement, to suspend the
Process Improvements and the 2005 Manufacturing Campaign;


 


NOW, THEREFORE, in consideration of
the foregoing and the agreements contained herein, and intending to be legally
bound, the Parties have agreed as follows:


 

















 


ARTICLE 1 – SUSPENSION OF ACTIVITIES


 


1.1           UCB shall immediately suspend the Process Improvements
and shall issue to Praecis, within ninety (90) days of the date hereof, a
comprehensive status report on such Process Improvements.  In consideration of such suspension, Praecis
shall pay UCB, on the date hereof, one hundred and thirty thousand dollars (USD
130,000) for the work completed to date on such Process Improvements.


 


1.2           Praecis may elect to resume the Process Improvements (as
described in the previously agreed upon scopes of work relating to such Process
Improvements) at any time prior to December 31, 2007 by providing written
notice to UCB of such election. Upon completion of such Process Improvements and
release of the final development report, Praecis shall pay UCB an additional eighty
four thousand dollars (USD 84,000), representing the remaining amount due for
the Process Improvements.


 


1.3           UCB shall immediately suspend the 2005 Manufacturing
Campaign at an intermediate stage where the future quality of the product is
not jeopardized and shall store until December 31, 2007, at no charge to
Praecis, the inventory of process intermediates in appropriate GMP conditions
maintaining the quality and security of such process intermediates. UCB shall
issue to Praecis, within ninety (90) days of the date hereof, a comprehensive
status report on the 2005 Manufacturing Campaign.  In consideration of such suspension, Praecis
shall pay UCB, on the date hereof, one million five hundred thousand dollars
(USD 1,500,000) for the work completed to date on the 2005 Manufacturing
Campaign.  Upon such payment, title to
the process intermediates shall pass to Praecis.


 


1.4           Praecis may elect to resume the 2005 Manufacturing Campaign
at any time prior to December 31, 2007 by providing written notice to UCB
of such election.  Upon completion of the
2005 Manufacturing Campaign and receipt by Praecis of the certificate of
analysis and batch record in accordance with the terms of the Development and
Supply Agreement, Praecis shall pay UCB an additional six hundred thousand
dollars (USD 600,000), representing the remaining amount due for the 2005
Manufacturing Campaign.


 


1.5           For the avoidance of doubt, UCB is responsible to
ensure that there is sufficient GMP process intermediate inventory necessary to
complete the 2005 Manufacturing Campaign. 
If there are any discrepancies, both Parties, in good faith, will
reconcile the final quantity delivered to Praecis against the agreed upon
purchase price.


 


1.6           Should Praecis elect to resume either the Process
Improvements or the 2005 Manufacturing Campaign, or both programs, at any time
prior to December 31, 2007, the Parties will define together the best
possible timeline and format towards reinitiating either or both such programs.


 


1.7           If Praecis elects not to resume the Process
Improvements and/or the 2005 Manufacturing Campaign by December 31, 2007,
UCB’s shall be relieved of all further obligations with respect to such
suspended program(s).  Praecis shall, in
its discretion and at its own costs, take possession of or dispose of or have
UCB


 

















 


dispose of all process intermediates stored by UCB in
connection with the suspension of the 2005 Manufacturing Campaign.


 


1.8           Except as specifically set forth herein, all terms and
conditions of the Development and Supply Agreement shall remain in full force
and effect.


 


ARTICLE 2
- MISCELLANEOUS


 


2.1           Capitalized terms
used in this Agreement and not otherwise defined shall have the meanings
ascribed to such terms in the Development and Supply Agreement.


 


2.2           This Agreement shall
be binding on and inure to the benefit of the Parties, their subsidiaries,
affiliates, officers, directors, related companies, representatives, successors
and assigns.


 


2.3           This Agreement shall effect the modifications
to the Development and Supply Agreement provided for herein. All other provisions
of the Development and Supply Agreement not modified hereby shall remain in
full force and effect.


 


2.4           No amendment or
variation of this Agreement shall be valid and effective unless in writing and
signed by or on behalf of both Parties.


 


2.5           Each Party shall
promptly, without further consideration, execute, and take such other actions,
as the other Party may reasonably request, to carry out the transactions
contemplated by this Agreement.


 


2.6           This Agreement
contains the entire agreement and understanding of the Parties with respect to
its subject matter, and supersedes any and all other written or oral contract,
understanding, negotiation or arrangement between the Parties relating to said
subject matter.


 


2.7           This Agreement is
governed by the laws of the state of New York, U.S.A., without giving effect to
that state’s choice of law doctrine. Both Parties consent to the exclusive
jurisdiction of the Courts of New York, both state and federal.


 


2.8           This Agreement may be executed in counterparts,
each of which, when so executed and delivered, will be deemed an original and
which shall together constitute one and the same instrument.  Signatures delivered by facsimile or e-mail
shall be enforceable as originals.


 


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left blank. Signature Page Follows.]


 

















 


IN WITNESS WHEREOF, the Parties
have caused this Agreement to be signed by their duly authorized
representatives in two counterparts.


 


 


	
  UCB S.A.

  	
   

  	
   

  	
   

  	
  PRAECIS PHARMACEUTICALS

  INCORPORATED

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Alain Scarso

  	
   

  	
   

  	
   

  	
  /s/ Kevin F. McLaughlin

  	
   

  
	
  Name:

  	
   

  	
  Alain Scarso

  	
   

  	
  Name:

  	
  Kevin F. McLaughlin

  
	
  Title:

  	
  Vice President

  	
   

  	
  Title:

  	
  President and Chief

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  /s/ Andre’ Jordens

  	
   

  	
   

  	
   

  	
  /s/ Edward C. English

  	
   

  
	
  Name:

  	
   

  	
  André Jordens

  	
   

  	
  Name:

  	
  Edward C. English

  
	
  Title:

  	
   

  	
  President

  	
   

  	
  Title:

  	
  Vice President and Chief

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Financial Officer