**Exhibit 10.16**

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED INTHIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITHTHE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THESECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

 

Biological Service Agreement

 

THIS BIOLOGICAL SERVICE AGREEMENT (the “Agreement”) is made this 27 day ofJanuary 2004 between:

 

(1)                                  AVECIA LIMITED, acting through its Avecia Biotechnology business ofHexagon House, Blackley, Manchester, M9 8ZS, England (“Avecia”); and

 

(2)                                  STRESSGEN DEVELOPMENT CORPORATION, a BarbadosCorporation with headquarters at Whitepark House, White Park Road, PO Box 806E,Bridgetown, Barbados (“Stressgen”).

 

WHEREAS

 

A                                      Avecia hasexperience and knowledge with regard to process development and manufacture ofrecombinant proteins.

 

B                                        Stressgenis carrying out research and development in relation to HspE7 (as definedbelow) with a view to conducting clinical trials and commercial launch of a newdrug.

 

C                                        Stressgenwishes Avecia to carry out a programme for development of commercial process,GMP manufacture of phase III clinical supply of API (as defined below),validation of the process at scale and ancillary activities necessary tosupport [* *].

 

D                                       TheProgramme (as defined below) was commenced under the Purchase Order (as definedbelow) and it is intended that it shall be further carried out and completedunder the terms of this Agreement.

 

NOW IT IS HEREBY AGREED AS FOLLOWS:

 

**1****                                        **Definitions:

 

1.1                                 In this Agreement the followingexpressions shall have the following meanings:

 
| Affiliate                               |   | any corporation, association or other  business entity which directly or indirectly controls, is controlled by or is  under common control with Avecia or Stressgen, where “control” means the legal power to direct or cause the direction  of the general management and policies of such entity whether through the  ownership of at least 50% of voting securities or capital stock of such  business entity or any other comparable equity or ownership interest with  respect to a business entity other than a corporation. |
|-----------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Active  Pharmaceutical Ingredient (API) |   | any substance or mixture of substances  intended to be used in the manufacture of a drug (medicinal) product and  that, when used in the production of a drug, becomes an active ingredient of  such drug product (see 21CFR 210.3(b)(7) and ICH QA7).  In this document, API refers to the active  ingredient for HspE7 drug product, manufactured in compliance with GMP and  ready for processing into clinical trials supplies or commercial products.                                                                              |
|                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| Avecia  Default                         |   | failure by Avecia to use reasonable  commercial endeavours to progress the Programme (as defined below).  For the avoidance of doubt, a failure  which results from discovery of a technical factor which affects the Process  or production of the API which                                                                                                                                                                                                                                                                           |

 

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[*] = Confidential Treatment Request(ed).

 

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|                              |   | was not known and could not reasonably have  been known at the commencement of the Programme shall not be considered to be  an Avecia Default.                                                                                                                                                                                                                                                                                                                              |
|-----------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Background  Intellectual Property |   | any Intellectual Property owned by or in  the possession of a party (and to which that party has the necessary rights):                                                                                                                                                                                                                                                                                                                                                     |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                              |   | (a)           at the date of this Agreement; or                                                                                                                                                                                                                                                                                                                                                                           |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                              |   | (b)           thereafter either (i) acquired  independently of the Programme or (ii) Intellectual Property developed  independently of the Programme by any employee of that party without  reference to any of the Confidential Information disclosed by the other  party.                                                                                                                                               |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| BLA                               |   | a Biological License Application for  marketing approval filed in the United States.                                                                                                                                                                                                                                                                                                                                                                                        |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Cell Banks                        |   | the master cell bank and the working cell  bank provided by Stressgen to Avecia pursuant to the Material Transfer  Agreement dated January 9, 2004, a copy of which is attached as Schedule 1, and any additional  working cell banks produced by Avecia during the Programme.                                                                                                                                                                                    |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Cancellation  Fee                 |   | a sum calculated in accordance with Schedule 2.                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Commencement  Date                |   | January 5, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Completion                        |   | completion of the Programme as defined in  the Scope Statement.                                                                                                                                                                                                                                                                                                                                                                                                             |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Confidential  Information         |   | any technical or commercial information  relating to the Programme and any other information of a confidential nature  disclosed (whether disclosed in writing, verbally, by way of sample or by any  other means and whether directly or indirectly) by either party (“the Disclosing Party”) to the other  (“the Receiving Party”),  including and without limitation any information relating to the Disclosing  Party’s business affairs.      |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Confidentiality  Agreement        |   | the confidentiality agreement entered into  between Stressgen Biotechnologies, Inc. (covering corporate affiliates  including Stressgen) and Avecia dated July 18, 2002.                                                                                                                                                                                                                                                                                               |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Defective  API                    |   | a quantity of the API which (i) has not  been manufactured in accordance with GMP and any other Regulatory Standards,  if required pursuant to the Scope Statement, or (ii) in any case, API which  does not comply with the Specifications.                                                                                                                                                                                                                                |
|                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Force  Majeure                    |   | any cause beyond the reasonable control of  the party in question which for the avoidance of doubt and without prejudice  to the generality of the foregoing shall include governmental actions, war,  riots, terrorism, civil commotion, fire, flood, epidemic, labour disputes  (excluding labour disputes involving the work force or any part thereof of  the party in question), restraints or delays affecting shipping or carriers,  inability or delay in obtaining |

 

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[*] =Confidential Treatment Request(ed).

 

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|                       |   | supplies of adequate or suitable materials,  currency restrictions, and act of God.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|----------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| GMP                        |   | current good manufacturing practice and  standards as provided for (and as amended from time to time) in European  Community Directive 91/356/EEC (Principles and guidelines of good manufacturing  practice for medicinal products) and in the Current Good Manufacturing  Practice Regulations to the US Code of Federal Regulations Title 21 (21 CFR  210 and 21 CFR 211) in relation to the production of pharmaceutical  intermediates and active pharmaceutical ingredients, as interpreted by ICH  Harmonised Tripartite Guideline, Good Manufacturing Practice Guide for Active  Pharmaceutical Ingredients, Q7A and subject to any arrangements, additions or  clarifications agreed from time to time between the parties in the QA  Agreement. |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| HspE7                      |   | the trivial name for SGN-00101 (CAS#  295371-00-5), the fusion protein consisting of the [* *]  heat shock protein of *Mycobacterium bovis var. BCG*(Hsp65)  coupled [* *] to the E7 protein of the HPV type 16.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Intellectual  Property     |   | all know-how, inventions, discoveries,  devices, data, patents, designs, copyrights, or other industrial or  intellectual property and all applications therefor.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Latent  Defect             |   | a defect in the API delivered to Stressgen  by Avecia, the existence of which was not reasonably capable of discovery at  the point of acceptance and which indicates that such API was not  manufactured in accordance with GMP and any other Regulatory Standards, if  required pursuant to the Scope Statement.                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| New Intellectual  Property |   | Intellectual Property that is made,  conceived or reduced to practice during and as a direct result of the  Programme.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Nominated  Manufacturer    |   | any manufacturer other than Avecia,  nominated by or partnered with Stressgen to carry out manufacture of HspE7.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Process                    |   | The process for manufacture of the API.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Programme                  |   | the activities and deliverables described  in the Scope Statement (as defined below) and the QA Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Programme  Amendment Order |   | means a document in the form set out in Schedule 3 detailing changes to the  Programme agreed and signed by both parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                       |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| Programme  Management Plan |   | the document that contains the terms and  conditions by which the Programme will be managed.  The Programme Management Plan is attached as Schedule 4 hereto and hereby  incorporated into this Agreement by reference.  The Parties may modify or amend the Programme Management Plan  by execution of a Programme Amendment Order.                                                                                                                                                                                                                                                                                                                                                                                                       |

 

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[*] =Confidential Treatment Request(ed).

 

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| Programme Timeline                |   | The  estimated timeline for the conduct of the Programme, attached as Schedule 5.  The Parties may modify or amend the  Programme Timeline by execution of a Programme Amendment Order.                                                                                                          |
|-----------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |   |                                                                                                                                                                                                                                                                                                       |
| Project Steering Committee or PSC |   | the  steering committee established pursuant to Clause 2.4, with each party having  an equal say, regardless of the number of members such party has in the  committee.                                                                                                                                    |
|                              |   |                                                                                                                                                                                                                                                                                                       |
| Purchase  Order                   |   | Stressgen’s purchase order number PAD0071  dated December 19, 2003, a copy of which is attached as Schedule 6.                                                                                                                                                                              |
|                              |   |                                                                                                                                                                                                                                                                                                       |
| QA  Agreement                     |   | the document agreed by the parties setting  out: (i) the mutually agreed quality standards applicable for the manufacture  of the API; and (ii) the roles and responsibilities of each party’s personnel  in relation to quality assurance matters, a copy of which is attached as Schedule 7.        |
|                              |   |                                                                                                                                                                                                                                                                                                       |
| Regulatory Standards              |   | any standards of any governmental  authority, whether within or outside the United Kingdom, that are agreed by  the PSC or as set forth in the QA Agreement to apply to Avecia’s facilities  or Avecia’s production, storage or handling of the API.                                             |
|                              |   |                                                                                                                                                                                                                                                                                                       |
| Release                           |   | certification by Avecia that the API has  been manufactured in accordance with GMP and that the API conforms to the  Specifications based on the results of all API tests as per the QA Agreement,  as evidenced by Avecia’s issuance of signed certificates of analysis and of  compliance with GMP. |
|                              |   |                                                                                                                                                                                                                                                                                                       |
| Scope  Statement                  |   | the document attached as Schedule 8 that describes in  detail the work to be conducted and the deliverables to be provided by Avecia  in connection with the Programme.                                                                                                                               |
|                              |   |                                                                                                                                                                                                                                                                                                       |
| Specifications                    |   | with respect to the API, the specifications  to be agreed by the parties in accordance with the QA Agreement.                                                                                                                                                                                              |
|                              |   |                                                                                                                                                                                                                                                                                                       |
| Third  Party                      |   | any person other than the parties or their  respective Affiliates.                                                                                                                                                                                                                                         |

 

1.2                                 Any reference to “day” or “days” means any day otherthan a Saturday, Sunday or Bank Holiday in the United Kingdom.

 

**2             **Performance of the Programme

 

2.1                                 QA Agreement. Avecia will carry out the work as detailed in the Programme inaccordance with the terms of the QA Agreement. In order for Avecia to carry out the Programme, each party shall fulfilits responsibilities as set out in the QA Agreement.

 

2.2                                 Programme Details. Avecia shall use reasonable commercial endeavours to carry out theProgramme in accordance with the Scope Statement, the QA Agreement, theProgramme Management Plan and the Programme Timeline.

 

2.3                                 Conduct of the Programme.  Avecia will assemble and maintain a project team dedicated to theProgramme having members with appropriate training and expertise in order to

 

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[*] =Confidential Treatment Request(ed).

 

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applya sufficient full time equivalent (FTE) commitment to the conduct of theProgramme as required under this Agreement. For the avoidance of doubt, it shall not be considered a breach of thisAgreement by Avecia if an objective of the Programme is not achieved:

 

(a)                                  so long as Avecia uses reasonable commercial endeavoursto perform its obligations; or

 

(b)                                 due to delay caused or contributed to substantially byStressgen.

 

The parties acknowledge that,having regard to the fact that the work to be performed hereunder is [* *].

 

2.4                                 Information Exchange and Programme Management.  The parties shall conduct regularinformation exchanges in a manner set forth in the Programme Management Plan toenable ongoing review of the Programme and its continuation.  Pursuant to the Programme Management Plan,the parties will establish a Project Team composed of members appointed by eachParty, which will have day-to-day responsibility for the technical design andsupervision of Programme activities (including the production of deliverables),and communication and management related to the Programme.  Project Team meetings must be attended byrepresentatives from each party having sufficient decision-making authoritywith respect to the issues to be agreed upon or resolved by the Project Team.  The parties will also establish a Project SteeringCommittee having the responsibility and authority to discuss and resolve large,overarching questions or issues pertaining to the Programme; to amend ProgrammeTimelines where appropriate; to authorize the completion of milestones, and tomonitor the progress of the Programme, discuss future plans, and therelationship between the parties.

 

2.5                                 Programme Amendment Orders.  The parties may agree to vary the Programme or sums to be paidunder Clause 3, provided that such variation is made in writing in a ProgrammeAmendment Order.  The parties recognisethat, in the event that:

 

(a)                                  Stressgen requires Avecia to carry out additional ordifferent work to that specified in the Scope Statement; or

 

(b)                                 Stressgen requires additional quantities of API or HspE7;or

 

(c)                                  the outcome of any element of the Programme in realitydiffers from the assumptions at the Commencement Date as set out in section 4of the Scope Statement,

 

the work carried out under theProgramme will require changes which may cause an increase in the payments setout in Clause 3 below.  The PSC shallhave authority to execute Programme Amendment Orders having a value of up toUS$1,000,000 calculated at the US$/£ exchange rate current at the date of suchexecution.  Above this threshold, the PSCshall make recommendations relating to the execution of such ProgrammeAmendment Orders to the parties.

 

2.6                                 Technical Assistance. During the Programme, Avecia will provide assistance to Stressgen inrespect of Stressgen’s regulatory filing activities for HspE7 and the Processas indicated in the Scope Statement and the QA Agreement, and after Completion,Avecia will offer reasonable assistance to Stressgen with regard to the same,subject to payment by Stressgen of Avecia’s reasonable expenses.

 

2.7                                 Delay Due to Avecia Default.  In the event that Avecia is not able to carry out anymanufacturing run identified to be GMP-compliant in the Scope Statement inaccordance

 

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[*] =Confidential Treatment Request(ed).

 

 

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withthe Programme Timeline as a result of an Avecia Default, then the followingprovisions shall apply:

 

(a)                                  Avecia shall notify Stressgen as soon as it believesthat it will not be able to carry out such GMP manufacturing run in accordancewith the then-current Programme Timeline.

 

(b)                                 If Stressgen still wishes Avecia to carry out such GMPmanufacturing run, Avecia shall use its best commercial endeavours to carry outor complete such GMP manufacturing run as soon as reasonably practicable and atno extra cost to Stressgen.

 

(c)                                  If Stressgen does not wish Avecia to carry out orcomplete such GMP manufacturing run, Stressgen shall be entitled to terminatethis Agreement and the provisions of Clause 9.1(e) shall apply.

 

2.8                                 Delay Due to Stressgen Option.  Stressgen shall have an option to delay thecommencement of the initiation of any manufacturing run [* *] for a period of time up to [* *].  In the eventthat Stressgen decides to exercise such option, the following provisions shallapply:

 

(a)                                  Stressgen shall give written notice to Avecia of itsintention to delay the commencement of any such [* *] manufacturing run setting out the estimated length ofthe delay.

 

(b)                                 Stressgen shall pay to Avecia the Cancellation Fee.

 

(c)                                  The parties shall meet to discuss availability ofAvecia’s manufacturing facility for the delayed [* *] manufacturing run and the amount payable by Stressgento Avecia in respect of such later commencement of such [* *] manufacturing run.

 

(d)                                 Avecia shall not be obliged to carry out the delayed [* *] manufacturing run until [* *], but will use reasonable efforts to reschedule theavailability of its facility and appropriate personnel.

 

2.9                                 Commercial Supply Terms.  At any time following the initiation of the first [* *] manufacturing run for API, at Stressgen’s request, theparties will meet to negotiate in good faith the terms and conditions of a commercialsupply arrangement for the supplyof API by Avecia to Stressgen following the satisfactory completion of theProgramme.

 

**3             **Payments

 

3.1                                 Payment Schedule.

 

(a)                                  In consideration of Avecia carrying out the technicalconsultancy research and development activities pursuant to the Programme,Stressgen shall pay to Avecia such amounts, at such times as are specified inthe Scope Statement and payment schedule attached as Schedule 9 in respect thereof.

 

(b)                                 in consideration of Avecia carrying out the sale ofthe API to Stressgen, Stessgen shall pay to Avecia such amounts, at such timesas are specified in the Scope Statement and payment schedule attached as Schedule 9 in respect thereof.

 

3.2                                 Excluded Items. The sums set out in Schedule 9do not include:

 

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[*] =Confidential Treatment Request(ed).

 

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(a)                                  any costs for [* *]; or

 

(b)                                 costs actually incurred by Avecia for [* *] involvedin the non GMP and GMP production; or

 

(c)                                  costs actually incurred by Avecia associated with [**].

 

Avecia shall obtain Stressgen’sapproval in writing prior to incurring such costs in Clause 3.2 (a).  Avecia shall obtain Stressgen’s approval inwriting prior to incurring such costs in Clause 3.2 (b) and (c) if suchcosts are anticipated to exceed [* *]. If such approval is given, the provisions of Clause 3.3 will apply.

 

3.3                                 Further Consideration.  Avecia shall invoice Stressgen for a further amount for technicalconsultancy research and development work to cover management, administrationand quality control activities.  Thisamount shall equal the actual cost which Avecia incurs in respect of [* *] underClauses 3.2(b) and (c), plus the actual cost of [* *] under Clause 3.2(a) which will be [* *] and areasonable allocation of the actual cost of [* *] under Clause 3.2(a) that may be used [* *], plus[* *].

 

3.4                                 Issue of Invoices. Avecia shall issue monthly invoices for authorized work completed duringsuch time period and for sums arising under Clause 3.3 as such sums fall due,including with such invoices appropriate documentation for pass-through costsdescribed in Clause 3.2.  Stressgenshall pay such sums within 30 days of the date of Stressgen’s receipt of therelevant invoice.

 

3.5                                 Bank Account Details. All amounts payable to Avecia under this Agreement shall be paid inPounds Sterling, without deduction, by authenticated and value dated Swift telegraphictransfer to:

 

[* *] Bank, London

SWIFT:  [* *]

Sort Code:             [* *]

Account No:         [* *]

Account:               Avecia Ltd

IBAN [* *].

 

3.6                                 Value Added Tax. All sums payable under this Agreement are stated exclusive of any VATwhich may be payable and which shall be for the account of Stressgen.  Subject to Clause 4.3(d), the partiesanticipate that supply oftechnical consultancy and sale of API made by Avecia to Stressgen pursuant tothis Agreement [* *].  Avecia will use reasonable efforts to ensure thatsuch VAT treatment is afforded to supply of technical consultancy and sale of API made underthis Agreement, and to inform Stressgen of the VAT liability [* *] so thatStressgen may obtain a United Kingdom VAT registration or take otherappropriate steps.

 

**4****                                        **Delivery of API and CellBanks

 

4.1                                 Delivery of Material. Subject to Clauses 4.3 and 4.4, delivery of all material, including theAPI and the Cell Banks, will be made EXW Avecia’s Billingham facility (Incoterms 2000).

 

4.2                                 Packing and Shipping. Avecia shall arrange for packing of any of the material to be deliveredunder Clause 4.1 at Stressgen’s expense, shall comply with the QA Agreement inpacking the API, and shall meet all reasonable requirements of Stressgen inpacking the Cell Banks at such time as they are returned to Stressgen under theprovisions of the

 

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[*] =Confidential Treatment Request(ed).

 

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[* *] agreement described in Clause 4.4.  Risk and title in respect of all material supplied to Stressgenunder this Agreement shall pass on delivery at Avecia’s Billingham facility,except as otherwise provided herein. Subject to Clause 4.3, Stressgen agrees to export the API promptly fromthe United Kingdom.

 

4.3                                 [* *] of the API. Avecia shall [* *] the API in accordance with the QA Agreement, subjectto written agreement on the terms of such [* *], including fees and liabilityfor such [* *], provided that:

 

(a)                                  [* *] shall be at Stressgen’s expense under [* *] tobe agreed in writing; and

 

(b)                                 [* *] shall be at Avecia’s risk, unless, despite [* *]in accordance with the conditions agreed under Clause 4.3(a), the API [* *]from its condition at the start of such [* *]; and

 

(c)                                  risk of loss in the API shall pass in the event ofdelivery to Stressgen under Clause 4.1 but title will pass on the later of (i)Avecia’s notification that the API has passed the quality assurance releaseprotocols set out in the QA Agreement or (ii) agreement between the partiesthat Avecia will [* *] the API;

 

(d)                                 Stressgen recognises that [* *] of the API at Aveciafor a period of [* *] to Stressgen.

 

In the absence of agreement onthe terms of such [* *], Avecia shall not be obliged to [* *] the API and shalldeliver it to Stressgen subject to the provisions of Clauses 4.1 and 4.2.

 

4.4                                 [* *] of Cell Banks. On completion of the Programme, Avecia will [* *] the Cell Bankspursuant to the [* *] terms substantially in the form attached as Schedule 10.

 

4.5                                 Process SpecificEquipment.  At Stressgen’s request, anyprocess specific equipment dedicated solely to the Programme under Clause 3.3shall be sold to Stressgen for consideration of [* *] on Completion.

 

**5             **Intellectual Property

 

5.1                                 Ownership of Background Intellectual Property.  Nothing in this Agreement shall affect theownership by either party of its Background Intellectual Property.  In addition, Stressgen shall retain allright, title and interest in and to the Cell Banks pursuant to the MaterialTransfer Agreement.

 

5.2                                 Licence to Intellectual Property for theProgramme.  Stressgen grants to Avecia anon-exclusive, royalty-free licence to use Stressgen’s Background IntellectualProperty and Stressgen’s New Intellectual Property whilst this Agreementremains in force for the sole purpose of carrying out the Programme.

 

5.3                                 New Intellectual Property.  Each party shall promptly disclose to the other any NewIntellectual Property.  New IntellectualProperty shall be owned by:

 

(a)                                  Stressgen if it relates primarily to [* *]; and

 

(b)                                 Avecia if it relates to primarily to [* *].

 

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[*] =Confidential Treatment Request(ed).

 

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5.4                                 New Intellectual Property - Not Clearly Within Scopeof Clauses 5.3 (a) or (b).  In respectof New Intellectual Property not clearly falling within the scope of either ofClauses 5.3 (a) or (b), such New Intellectual Property shall be jointly ownedby the parties unless the Project Steering Committee through negotiations ingood faith determines the ownership of such New Intellectual Property on thebasis that such New Intellectual Property shall be owned by the party whoseBackground Intellectual Property is most directly related to the NewIntellectual Property. With regardto any jointly owned New Intellectual Property, the parties shall jointlydetermine whether to seek patent protection for such New Intellectual Propertyand if both parties wish to seek patent protection, the parties shall jointlyand collaboratively prepare, file and maintain any patents and patentapplications, using mutually agreed attorneys, with expenses sharedequally.  Should either party elect notto pay its share of expenses related to such preparation, filing, ormaintenance of any such patent or patent application, it will promptly notifythe other party in writing, and the other party shall have the right, but notthe obligation, to prepare, file or maintain such patent application or patent,at its sole expense.  In that case, theparty electing not to pay its share of expenses related to such preparation,filing, or maintenance of such patent or patent application shall promptlyassign, deliver, convey and transfer to the other party, its successors andassigns, without reservation, all of its right, title and interests in, to andunder such New Intellectual Property. If the parties mutually agree that either or both party(ies) will useits in-house attorneys to obtain or maintain any registered intellectualproperty rights in respect of New Intellectual Property, neither the party(ies)using its in-house attorneys (“the relevant party”) nor any of its employees,servants or agents shall be liable for any damage or loss suffered by the otherparty as a result of any mutually agreed action or inaction on the part of therelevant party or its employees, servants or agents in the course of thefiling, prosecution or maintenance of any patent or patent application withrespect to such New Intellectual Property. Each party shall have the right to license and otherwise commerciallyexploit jointly owned New Intellectual Property without the consent of theother party, provided that Avecia shall not be entitled to exercise its rightsunder jointly owned New Intellectual Property to make, use, sell, offer forsale, import, keep and otherwise deal in any [* *] or license any third party to do so. Neither party shall owe the other party any consideration in respect oflicensing or commercial exploitation of jointly owned New IntellectualProperty.  Each party may assign ortransfer its share of jointly owned New Intellectual Property without theconsent of the other party, subject to the terms hereof.

 

5.5                                 Further Assistance. Each party shall, and shall ensure that its employees shall, at theexpense of the party owning the New Intellectual Property, perform all acts andexecute all instruments, including assignments, necessary to obtain and vest inthe owning party (as determined under Clauses 5.3 and 5.4) all rights, titleand interest in the New Intellectual Property together with all patents andpatent applications or otherwise for such New Intellectual Property.  All fees, costs and expenses connected withthe filing, prosecution and maintenance of a patent or other protection shallbe borne and paid by the party owning such Intellectual Property.  The responsibility and authority for filing,prosecution and maintenance of a patent or other protection for jointly-ownedNew Intellectual Property shall be determined by the Project SteeringCommittee.

 

5.6                                 Provision of Technical Assistanceand Access to Avecia’s Background Intellectual Property.  If:

 

(a)                                  following Completion or following termination of thisAgreement for any reason, Stressgen or a Nominated Manufacturer requiresAvecia’s technical assistance; and/or

 

(b)                                 at any time while this Agreement is in effect,Stressgen requires a licence under Avecia’s Background Intellectual Property;and/or

 

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[*] =Confidential Treatment Request(ed).

 

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(c)                                  following Completion or following termination of thisAgreement for any reason Stressgen or a Nominated Manufacturer requires alicence under Avecia’s Background Intellectual Property,

 

to operate the Process, thensuch assistance and/or access shall be provided to Stressgen or such NominatedManufacturer by Avecia subject to agreement of reasonable commercial termsbetween Stressgen and Avecia.  Any suchnegotiations shall be carried out between the parties in good faith.

 

5.7                                 Licence under New IntellectualProperty.

 

(a)                                  Stressgen hereby grants to Avecia a royalty-free,irrevocable, perpetual, non-exclusive, world-wide licence, with power tosublicense, under New Intellectual Property owned by Stressgen under Clauses5.3(a) or 5.4 to make, use, sell, offer for sale, import, keep andotherwise deal in products other than [* *].

 

(b)                                 Avecia hereby grants to Stressgen a royalty-free,irrevocable, perpetual, world-wide licence, with power to sublicense, under NewIntellectual Property owned by Avecia under Clauses 5.3(b) or 5.4 for anypurpose.  Such licence shall beexclusive to make, use, sell, offer for sale, import, keep and otherwise dealin [* *]  and non-exclusive otherwise.

 

**6             **Warranties, Liability and Indemnity

 

6.1                                 General Warranty. Each party warrants to the other that:

 

(a)                                  it has the necessary right and authority to enter intothis Agreement and that to the best of its knowledge at the date of thisAgreement it is the rightful owner or licensee of all of its BackgroundIntellectual Property; and

 

(b)                                 to the best of its knowledge at the date of thisAgreement, the use of Background Intellectual Property made available by it tothe other party pursuant to this Agreement for the purposes set out in thisAgreement will not infringe the Intellectual Property of a Third Party.

 

6.2                                 Intellectual Property Indemnity.  Each party (“the First Party”) shall be liable for and indemnify the other (“the Second Party”) against anyliability, loss, claim, damage, proceedings and costs whatsoever arising out of anyactual or suspected infringement of any Third Party Intellectual Property (an “IP Infringement”) as a result of theSecond Party’s use in its performance of this Agreement of the BackgroundIntellectual Property provided by the First Party, provided that the SecondParty:

 

(a)                                  gives the First Party the sole conduct of the defenceto any claim or action in respect of the IP Infringement and does not at anytime admit liability or otherwise settle or compromise or attempt to settle orcompromise the said claim or action except upon the express instructions of theFirst Party; and

 

(b)                                 acts in accordance with the reasonable instructions ofthe First Party and gives the First Party such assistance as it shallreasonably require in respect of the conduct of such defence.

 

Notwithstanding the foregoingprovisions of this Clause 6.2, the First Party’s liability to indemnify theSecond Party shall cease in respect of continuing use by the Second Party

 

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[*] =Confidential Treatment Request(ed).

 

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of the Background IntellectualProperty which is the subject of the IP Infringement following either:

 

(i)                                     notification (which shall be given promptly) by theFirst Party to the Second Party that the Background Intellectual Propertyprovided by the First Party is actually or is believed by the First Party to bethe subject of an IP Infringement; or

 

(ii)                                  the Second Party becoming aware that the BackgroundIntellectual Property provided by the First Party is the subject of an IPInfringement.

 

6.3                                 Liability for the API

 

(a)                                  Avecia warrants to Stressgen that the API delivered toStressgen pursuant to this Agreement: (i) will [* *]; (ii) will [* *]; and (iii) will betransferred free and clear of any liens or encumbrances of any kind to theextent arising through or as a result of the acts or omissions of Avecia, itsAffiliates or their respective agents. Each shipment of API from Avecia to Stressgen shall contain such qualitycontrol certificates as are necessary to show that the API is [* *] and wasmanufactured [* *].

 

(b)                                 Avecia shall be liable to either (1) [* *], or (2) [**] lost, damaged, or destroyed API [* *],unless in each case, despite [* *] in accordance with the conditions agreedunder Clause 4.3(a), the API [* *] from its condition at the start of such [**].

 

(c)                                  In the event that either party discovers [* *] at anytime following delivery, the discovering party shall notify the other partypromptly.  If [* *] causes the API to be[* *], and if the discovery of the [* *] occurs within [* *] of Release of the API, the provisions of Clause 6.3(g)shall apply.

 

(d)                                 Stressgen shall notify Avecia of any [* *] within [* *] of Release of a shipment of the API.  If Stressgen fails to so notify Avecia,Stressgen will be deemed to have accepted the API in a satisfactory conditionand in all respects in accordance with [* *] for purposes of this Agreement,subject to any subsequently discovered [* *].  If Stressgen so notifies Avecia and Avecia accepts that the API is a [**], the provisions of Clause 6.3(g) shall apply.

 

(e)                                  If Stressgen and Avecia dispute whether API is a [**], whether due to an [* *] or [* *], then the provisions of section 6 of theQA Agreement shall apply.  The fees andexpenses of the independent QA expert referred to in section 6 of the QAAgreement shall be borne [* *].  In the event that the independent QA expertdetermines that the API is not a [* *], Stressgen will be deemed to haveaccepted the API in a satisfactory condition and in all respects in accordancewith the [* *] for the purposes of this Agreement.  In the event that the independent QA expert determines that theAPI is a [* *], provided that Stressgen notified Avecia of the [* *] within [* *] of Release or a [* *] in the API was discovered within[* *] of Release, the provisions of Clause 6.3(g) shallapply.

 

(f)                                    Stressgen shall not use any API in humans unless anduntil it has been accepted.

 

(g)                                 In the circumstances described in Clause 6.3(c), (d)or (e) related to an Avecia Default or Avecia’s failure to perform inaccordance with the QA Agreement, Avecia shall use reasonable commercialefforts to either (1) [* *], or (2) manufacture [* *].  In addition, Avecia shall [* *] it incurs inconnection with the [* *],

 

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[*] =Confidential Treatment Request(ed).

 

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provided that Avecia’s liability to [* *] Stressgen shall be limited toa [* *] as appropriate.

 

(h)                                 If the API is [* *] and Clause 6.3(g) does not apply,the parties shall meet to discuss availability of Avecia’s Advanced BiologicsCentre for [* *], or manufacture of [* *] and, subject to Clause 2.5,agree on a revised period during such [* *] or manufacture of [* *] will takeplace and the amount payable by Stressgen to Avecia in respect of such [* *].

 

(i)                                     Subject to and except to the extent of anyindemnification from Avecia pursuant to Clause 6.3(j) below, Stressgenshall indemnify, defend and hold harmless Avecia against all claims, suits,actions, demands, liabilities, expenses and/or losses (including reasonablelegal fees) (collectively, “Liabilities”)brought or made by a Third Party against Avecia, its Affiliates, directors,officers or employees, to the extent such Liabilities arise out of or resultfrom the [* *].

 

(j)                                     Subject to and except to the extent of anyindemnification from Stressgen pursuant to Clause 6.3(i) above and 6.4below, Avecia shall indemnify, defend and hold harmless Stressgen against anyLiabilities brought or made by a Third Party against Stressgen, its Affiliates,directors, officers or employees to the extent such Liabilities arise out of orresult from:  (i) [* *] under thisAgreement; (ii) [* *] provided to Avecia; (iii) Avecia’s failure toensure that the Programme is conducted in accordance with [* *]; or(iv) Avecia’s [* *] or intentional misconduct.

 

6.4                                 Liability for the [* *].  Liability in respect of [* *], by or on behalf of Stressgen shallrest solely on Stressgen, except to the extent that Avecia is required to indemnify Stressgen inaccordance with Clause 6.3 above or except to the extent that suchliability arises from a Third Party claim for property damage or personalinjury arising from Avecia’s failure to [* *] in accordance with [* *].  Stressgen shall indemnify Avecia against anyliability, loss, damages, costs, legal costs, professional and other expenseswhatsoever incurred or suffered by Avecia arising out of or in respect of [* *]by or on behalf of Stressgen except to the extent that Avecia is required toindemnify Stressgen in accordance with Clause 6.3 above or except to the extentthat such loss, damages, costs, legal costs, professional and other expensesarise from a Third Party claim for property damage or personal injury arisingfrom Avecia’s failure to [* *].

 

6.5                                 IndemnificationProcedure.  In the event that eitherparty seeks indemnification under the terms of this Clause 6, it shallinform the other party of the claim [* *] after it receives notice thereof,shall permit the other party, [* *], to assume direction and control of thedefense of the claim, and shall co-operate as requested ([* *]), in the defenseof the claim.  The indemnifying partyshall not admit fault on the part of the indemnified party without its priorwritten consent.

 

6.6                                 Limitation on Liability.  Except where [* *] described in Clauses 2.7(b), 6.3(b), 6.3(g) orSection 4(b) of Schedule 10, but in each case subject to the provisions ofClause 6.7, Avecia’s totalliability (whether for breach of contract, negligence, breach of statutory dutyand/or other tort, or otherwise) in connection with or as a result of the work carriedout under this Agreement shall be limited to [* *]. Notwithstanding the foregoing, the [* *] in respect of Avecia’sobligation under Clause 6.3(j) to indemnify, defend and hold harmless Stressgenagainst any Liabilities brought or made by a Third Party against Stressgen, itsAffiliates, directors, officers or employees to the extent such Liabilitiesarise out of or result from [* *].

 

6.7                                 No Liability for Indirect Losses.  Except for violations of Clause 7 belowand amounts finally awarded for indemnification for Third Party liabilitiesunder Clause 6 above, neither

 

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[*] =Confidential Treatment Request(ed).

 

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party shall be liable to the other for any indirect, consequential orspecial loss, loss of profits or damage suffered by the other howsoeverarising.

 

6.8                                 Insurance. Each party shall secure and maintain in full force and effect during theterm of this Agreement policies of insurance providing coverage for(a) Workmen’s Compensation or Employer’s Liability, (b) GeneralLiability or Public and Products Liability, and(c) Automobile Liability or Motor Liability having policy limits, deductibles and other termsappropriate to the conduct of that party’s business.  Evidence of such insurance in the form of a broker’sletter will be madeavailable for examination upon request of the other party.

 

6.9                                 Representation, Warrantyand Covenants Regarding Debarment. Avecia represents and warrants that neither it, its employees, nor anyother person retained by it to perform the Programme pursuant to thisAgreement, (i) is under investigation by the FDA for debarment action or ispresently debarred pursuant to the Generic Drug Enforcement Act of 1992, asamended (21 U.S.C. §301 et seq), or (ii) has a disqualification hearing pendingor has been disqualified by the FDA pursuant to 21 CFR Section 312.70 or itssuccessor provisions.  In addition,Avecia represents and warrants that it has not engaged in any conduct oractivity which could lead to any of the above mentioned disqualification ordebarment actions. If during the term of this Agreement Avecia or any personemployed or retained by it to perform the Programme (i) comes underinvestigation by FDA for debarment action or disqualification, (ii) is debarredor disqualified, or (iii) engages in any conduct or activity which could leadto any of the above mentioned disqualification or debarment actions, Aveciashall immediately notify Stressgen of such event and address the issue asmutually agreed by the Parties, such address to include immediate removal ofany such debarred or disqualified person from performance of Programmeactivities.  At the reasonable requestof Stressgen, Avecia will provide a certification to the effect of this Clause6.9 to support Stressgen’s submissions to applicable regulatory authorities,including the FDA.

 

**7****                                        **Confidentiality

 

7.1                                 Maintenance of Confidentiality.  In consideration of the Disclosing Partydisclosing the Confidential Information to the Receiving Party, the ReceivingParty hereby undertakes to maintain confidential all such Confidential Informationand it will accordingly not directly or indirectly use any of the ConfidentialInformation in whole or in part save for the purposes envisaged in thisAgreement or disclose any of the Confidential Information to any Third Partyother than under and in accordance with the terms of Clauses 7.4, 7.5 or 7.6.

 

7.2                                 Exceptions. The foregoing restrictions on the Receiving Party shall not apply to anyConfidential Information which:

 

(a)                                  the Receiving Party can prove was already in itspossession and at its free disposal before the disclosure hereunder to it;

 

(b)                                 is hereafter disclosed to, purchased or otherwiselegally acquired by the Receiving Party by or from a Third Party who has notderived it directly or indirectly from the Disclosing Party under an obligationof confidentiality;

 

(c)                                  is or becomes available to the public whether inprinted publications or otherwise through no act or default on the part of theReceiving Party; or

 

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[*] =Confidential Treatment Request(ed).

 

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(d)                                 the Receiving Party can prove to the reasonablesatisfaction of the Disclosing Party has been developed independently of theProgramme by the Receiving Party without reference to any of the ConfidentialInformation disclosed by the Disclosing Party.

 

7.3                                 Exercise of Reasonable Precautions.  In order to secure the obligations set outin this Clause 7 the Receiving Party agrees to exercise every reasonableprecaution to prevent and restrain the unauthorised disclosure and use of informationsubject to confidentiality, including restricting access to such information tosuch of its employees as are bound to keep such information confidential andneed to have such access for the purpose of this Agreement.

 

7.4                                 Disclosure to Nominated Manufacturer.  Stressgen shall not be entitled to revealConfidential Information of Avecia to a Nominated Manufacturer unless Stressgeneither:

 

(a)                                  makes such disclosure under confidentialityobligations no less restrictive than those contained in this Clause 7; or

 

(b)                                 procures the entry of such the Nominated Manufacturerinto a confidentiality agreement with Avecia directly.

 

7.5                                 Disclosure to Affiliates.  Either party may disclose Confidential Information to or via anAffiliate, provided that the party making any such disclosure shall, prior tosuch disclosure, ensure each Affiliate to which Confidential Information is tobe disclosed is made aware of the obligations contained in this Agreement andagrees to be subject to confidentiality obligations no less onerous than thosecontained in this Agreement.  Anybreaches of the obligations of confidentiality contained in this agreement bysuch Affiliate shall be treated as a breach of such obligations by the partymaking the disclosure to the Affiliate.

 

7.6                                 Disclosure to Courts or by Law or Other Rules.  Nothing in this Clause 7 shall precludedisclosure of any Confidential Information required by any court entitled bylaw to disclosure of the same, or which is required by applicable law, rule orregulation to be disclosed, provided that the Receiving Party promptly notifiesthe Disclosing Party when such requirement to disclose has arisen, to enablethe Disclosing Party to seek an appropriate protective order and to make knownto the said court or governmental authority the proprietary nature of theConfidential Information and to make any applicable claim of confidentiality inrespect thereof.  The Receiving Partyagrees to co-operate in any appropriate action which the Disclosing Party maydecide to take.  If the Receiving Partyis advised to make a disclosure in accordance with this Clause 7.6 it shallonly make a disclosure to the extent to which it is obliged.

 

7.7                                 Survival of Obligations.  The provisions of this Clause 7 shall survive termination orexpiry of this Agreement and shall continue for a period of [* *] from the dateof that termination or expiry.

 

7.8                                 Continuation of the Confidentiality Agreement.  The parties shall remain bound by theobligations in the Confidentiality Agreement, but in the event of any conflictbetween the terms of the Confidentiality Agreement and the terms of thisAgreement, the Agreement shall prevail.

 

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[*] =Confidential Treatment Request(ed).

 

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**8****                                        **Duration and Termination

 

8.1                                 Duration.  ThisAgreement shall be deemed to have commenced on the Commencement Date and shallcontinue until Completion unless terminated in accordance with the provisionsof Clause 8.2.

 

8.2                                 Termination. Subject to Clause 9, this Agreement may be terminated in the following ways:

 

(a)                                  by mutual agreement at any time prior to Completion inthe event that both parties agree that [* *];

 

(b)                                 by either party at any time by giving written noticeto the other;

 

(c)                                  by either party forthwith if the other is in breach ofthis Agreement and does not rectify such breach within 30 days of receipt ofwritten notice from the first party requiring rectification of the breach,provided that it is intended that the parties will discuss any alleged breachand its remediation as soon as it is known; or

 

(d)                                 by either party forthwith upon written notice if theother has a liquidator, receiver, manager receiver or administrator appointed,or ceases to continue trading or is unable to pay debts as defined in Section227 of the Insolvency Act 1986 (England and Wales) or the equivalent occurs inany jurisdiction in which the other is resident or carried on business.

 

**9****                                        **Consequences of Termination

 

9.1                                 Consequences. In the event of termination under Clause 8.2 above:

 

(a)                                  If the termination is by mutual agreement pursuant toClause 8.2(a), then:

 

(i)                                     Stressgen shall pay to Avecia all sums payable forwork completed up to the date of termination but not yet paid, but shall not beliable for any amounts for any work identified in the Scope Statement, but notyet initiated; and

 

(ii)                                  Avecia shall assist Stressgen with the transfer of theProcess and all technical information generated during the course of theProgramme to a Third Party designated by Stressgen, at Stressgen’s option andcost.

 

(b)                                 if Stressgen terminates on notice under Clause 8.2(b),Stressgen shall pay to Avecia:

 

(i)                                     all sums payable for work completed up to the date oftermination but not yet paid, but shall not be liable for any amounts for anywork identified in the Scope Statement, but not yet initiated;

 

(ii)                                  all reasonable costs incurred by Avecia relating tothe wind-down of the Programme after termination which could not be cancelledor reasonably avoided; and

 

(iii)                               the Cancellation Fee.

 

(c)                                  if Avecia terminates on notice under Clause 8.2(b),then:

 

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[*] =Confidential Treatment Request(ed).

 

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(i)                                     Stressgen shall pay to Avecia all sums payable for workcompleted up to the date of termination but not yet paid, but shall not beliable for any amounts for any work identified in the Scope Statement, but notyet initiated; and

 

(ii)                                  Avecia shall [* *] at thetime of Avecia’s termination.

 

(d)                                 if Avecia terminates for Stressgen’s unremedied breachor insolvency under Clauses 8.2(c) or (d), then Stressgen shall pay to Avecia:

 

(i)                                     all sums payable for work completed up to the date oftermination but not yet paid, but shall not be liable for any amounts for anywork identified in the Scope Statement, but not yet initiated;

 

(ii)                                  all reasonable costs incurred by Avecia relating tothe wind-down of the Programme after termination which could not be cancelledor reasonably avoided; and

 

(iii)                               the Cancellation Fee.

 

(e)                                  if Stressgen terminates for delay due to an AveciaDefault under Clause 2.7(c) or for Avecia’s unremedied breach or insolvencyunder Clauses 8.2(c) or (d), then:

 

(i)                                     Stressgen shall pay to Avecia all sums payable forwork completed up to the date of termination but not yet paid, but shall not beliable for any amounts for any work identified in the Scope Statement, but notyet initiated;

 

(ii)                                  Avecia shall refund to Stressgen any monies paid toAvecia, less an agreed sum in respect of work done by Avecia and not affectedby the breach, and in the absence of agreement upon such sum the provisions ofClause 19 shall apply; and

 

(iii)                               Avecia shall [* *]  at the time of Avecia’s termination.

 

9.2                                 Acquired Rights. Termination or expiry of this Agreement, for whatever reason, shall notprejudice the acquired rights of either party, including the right to payment for theProgramme pursuant to Clause 3 (subject to Clause 9.1).

 

9.3                                 Survival.  Theprovisions of Clauses 3, 5, 6, 7, 9, 10, 11, 13 - 17 and 19 shall survive thetermination or expiry of this Agreement.

 

**10****                                 **Independent Contractor

 

Nothingin this Agreement shall create, or be deemed to create, a partnership or therelationship of principal and agent or employer and employee between theparties.  Each party agrees to performunder this Agreement solely as an independent contractor.

 

**11****                                 **Entire Agreement

 

ThisAgreement, including the Schedules attached hereto, together with theConfidentiality Agreement and the Material Transfer Agreement, contains theentire agreement between the

 

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[*] =Confidential Treatment Request(ed).

 

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partiesand supersedes any previous agreements relating to the Programme and anyunderstandings between the parties with respect thereto.

 

**12****                                 **Announcements And Publicity

 

Stressgenand Avecia will jointly discuss and agree in writing on any statement to thepublic regarding this Agreement or their business relationship, unlessdisclosure is otherwise required by law, regulation or any listing or tradingagreement concerning such parties’ publicly traded securities, as determined ingood faith by the releasing party.  Whena party elects to make a public statement relating to the other party, thereleasing party will give the other party at least five (5) days notice so itcan agree on such statement, except in the event more immediate disclosure isrequired pursuant to the securities requirements set forth above, in which casethe releasing party will give the other party as much notice as is practicable.

 

**13****                                 **Assignment andSubcontracting

 

13.1                           ThisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective legal successors but shall not otherwise be assignable byeither party, without the prior written consent of the other party, whichconsent shall not be unreasonably withheld, provided that either party mayassign this Agreement without consent by notice in writing to the other partyto a purchaser of the whole or part of the business to which this Agreementrelates.

 

13.2                           Avecia shall beentitled to subcontract certain analytical work under the Programme, subject toinclusion in such subcontract of confidentiality and intellectual propertyprovisions no less onerous than those contained herein and provided that Aveciashall be liable for any acts or omissions of any subcontractor as if such actsor omissions were Avecia’s own.

 

**14****                                 **Variation

 

Novariation or amendment of this Agreement shall bind either party unless made inwriting in the English language and agreed to in writing by duly authorisedofficers of both parties.

 

**15****                                 **Illegality

 

If anyprovision of this Agreement is agreed by the parties to be illegal, void orunenforceable under any law that is applicable hereto or if any court of competentjurisdiction in a final decision so determines, this Agreement shall continuein force save that such provision shall be deemed to be excised herefrom witheffect from the date of such agreement or decision or such earlier date as theparties may agree.

 

**16****                                 **Waiver

 

Afailure by either party hereto to exercise or enforce any rights conferred uponit by this Agreement shall not be deemed to be a waiver of any such rights oroperate so as to bar the exercise or enforcement thereof at any subsequent timeor times.

 

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[*] =Confidential Treatment Request(ed).

 

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**17****                                 **Notices and Communications

 

17.1                           Formal Notices. Any formal notice required or permitted under this Agreement shall be inwriting which may take the form of a letter or facsimile and shall be sentby prepaid post, facsimile, or hand delivery (including messengerservice).  The addresses for any suchnotice or other communication shall be those stated on the first page of thisAgreement.

 

17.2                           Other Communications. In addition to the methods set out in Clause 17.1, any othercommunications between the parties may be made by telephone or by email.

 

17.3                           Change of Address. Any party may, at any time by written notice to the other parties, changethe address or the facsimile numbers to which notices or other communicationsshall be sent.  All notices and other communications shall havebeen duly given or made (i) when delivered by hand (including by messengerservice) upon delivery or (ii) when delivered by post upon delivery or (iii)when faxed upon receipt of a legible copy by recipient and production of asatisfactory transmission report by sender confirming transmission of the faxin full to the appropriate number by the fax machine which sent the fax.

 

**18****                                 **Force Majeure

 

Neitherparty shall be liable to the other party in any manner whatsoever for anyfailure or delay in performing its obligations under this Agreement if and tothe extent, and for the duration, that such is due to Force Majeure.  Without prejudice to Clause 8, any saidfailure or delay shall not give either party the right to terminate thisAgreement except, and to the extent that such Force Majeure continues for aperiod exceeding [* *].  Termination asa result of Force Majeure shall take effect as if the Agreement had beenterminated by mutual agreement under Clause 8.2(a).  Stressgen shall not be entitled to relief under this Clause 18for any delay or failure in performing any of its payment obligations underthis Agreement, or in the event of failure of HspE7 in clinical trials orfailure of HspE7 to gain regulatory approval.

 

**19****                                 **Law and Jurisdiction

 

19.1                           Governing Law. This Agreement is governed by and shall be construed and interpreted inaccordance with the laws of the State of Delaware.  Any proceedings between the parties shall be conducted in the Englishlanguage.

 

19.2                           Reference to Parties’ Senior Representatives.  Prior to any dispute, difference ordisagreement concerning this Agreement proceeding to litigation to arbitrationor through the courts the parties shall seek to resolve the matter withinthirty days by referring it to the Senior Vice-President, Avecia Biotechnologyand the CEO of Stressgen.

 

19.3                           Arbitration. Any matter or dispute arising out of or in connection with thisAgreement which is not able to be resolved pursuant to Clause 19.2 shall be finally settled bycommercial arbitration to be held in the State of Delaware.  In appointing arbitrators, the parties shallconsider the appointment of an arbitrator or arbitrators capable of makingdecisions on the technical aspects of the Programme.

 

19.4                           Interim Steps. Neither of the parties shall be deemed to be precluded from taking suchinterim formal steps as may be considered necessary to protect such party’sposition while the procedures referred to in Clauses 19.2 and 19.3 are pursued.

 

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19.5                           Other Proceedings. In the event that the matter or dispute remains unresolved by suchcommercial arbitration within thirty days of commencement of such procedure,then the parties shall be at liberty to take such other proceedings (as definedbelow) as they think fit.

 

19.6                           Jurisdiction. Except as provided for in Clauses 19.2, 19.3 and 19.4, in relation toany legal action or proceedings to enforce this Agreement or arising out of inconnection with this Agreement (“proceedings”) each of the parties irrevocably submitsto the exclusive jurisdiction of the Courts of Delaware.

 

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INWITNESS WHEREOF, the authorised representatives of the parties have executedthis Agreement on the date written at the top of this Agreement.

 

For andon behalf of AVECIA LIMITED

 

 
| Signature | /s/  Kevin Cox  |   |
|-----------|-----------------|--------|
|      |            |
|      |            |
| Name      | Kevin  Cox      |
|      |            |
|      |            |
| Position  | Vice  President |

 

 

For andon behalf of STRESSGEN DEVELOPMENTCORPORATION

 

 
| Signature | /s/  Mary Ellen Borque |   |
|-----------|------------------------|--------|
|      |                   |
|      |                   |
| Name      | Mary  Ellen Borque     |
|      |                   |
|      |                   |
| Position  | Assistant  Secretary   |

 

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[*] =Confidential Treatment Request(ed).

 

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Schedule 1

 

Material Transfer Agreement

 

*Copy Agreement Attached (4 pages)*

 

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[*] =Confidential Treatment Request(ed).

 

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Certain confidential information contained inthis document, marked by brackets, has been omitted and filed separately withthe Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, asAmended.

 

**MATERIAL TRANSFER AGREEMENT**

 

THIS MATERIAL TRANSFER AGREEMENT (this“Agreement”) dated as of January 9, 2004 (the “Effective Date”), is enteredinto between Stressgen Biotechnologies, Inc. (“Stressgen”), having a principalplace of business at 10241 Wateridge Circle, Suite C200, San Diego, California92121 and Avecia Limited, acting through its Avecia Biotechnology (“Avecia”)(the “Recipient”), having a place of business at business of Hexagon House,Blackley, Manchester, M9 8ZS, England. The parties agree as follows:

 

1.             Stressgenshall provide the Recipient with the materials described on Exhibit Aand certain information regarding such materials and their use (together withall progeny, derivatives and parts thereof, collectively, the “Materials”)solely for the use by the Recipient for the development and manufacturing onbehalf of Stressgen of HspE7 (a recombinant DNA-derived fusion proteincontaining (a) a human papilloma virus (HPV) type-16 E7 antigen, antigenicfragment or conjugate thereof and (b) a bacterial stress protein, includingwithout limitation, a bacterial stress protein derived from the [* *] heatshock protein of Mycobacterium bovis var. BCG (Hsp65), where such bacterialstress protein is [* *] the E7 protein of the HPV type 16), but not for sale,license or other commercial exploitation of either the Materials or anyprogeny, products, cell lines, materials, organisms, derivatives or othermanifestations thereof which are produced or derived by Recipient.

 

2.             TheRecipient hereby acknowledges that, as between Stressgen and the Recipient,Stressgen is the sole owner or licensee of the Materials.  The Recipient shall use the Materials, andany information and other materials directly or indirectly derived therefrom,solely for the limited purpose of performing agreed product developmentservices on behalf of Stressgen.  TheRecipient shall not use the Materials, or any information or other materialsdirectly or indirectly derived therefrom, for any other purpose.  The Recipient shall not (and shall notattempt or purport to) file or prosecute in any country any patent applicationwhich claims or uses or purports to claim or use the Materials or their use,without the prior express written consent of Stressgen.  THE RECIPIENT UNDERSTANDS THAT MATERIALS AREPROVIDED SOLELY FOR CERTAIN RESEARCH USE ONLY AND HAVE NOT BEEN APPROVED FORHUMAN USE.  THE RECIPIENT SHALL NOTADMINISTER THE MATERIALS TO HUMANS IN ANY MANNER OR FORM.

 

3.             TheRecipient shall not transfer the Materials, or any information or othermaterials directly or indirectly derived therefrom, to any third party withoutthe prior express written consent of Stressgen.  The Recipient shall limit transfer and disclosure of the Materials,and any information or other materials directly or indirectly derivedtherefrom, on a need to know basis, as reasonably necessary, to its directors,officers and employees who are bound by written agreements with the Recipientto hold in confidence and not to make use of the Materials, and suchinformation and other materials, for any purpose other than those permitted bythis Agreement.  The Recipient shallnotify Stressgen promptly upon discovery of any unauthorized use or disclosurethereof.  Promptly after the request ofStressgen, the Recipient promptly shall return all remaining Materials toStressgen.

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

1

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4.             Ifthe Recipient’s use of the Materials results in any invention, discovery orderivative cell bank that is derived directly or indirectly from the Materials,such invention or discovery shall be owned solely by Stressgen.  The Recipient shall promptly disclose eachsuch invention or discovery to Stressgen. The Recipient hereby assigns to Stressgen all right, title and interestin all such inventions and discoveries and all intellectual property rightstherein. The Recipient shall not (and shall not attempt or purport to) file orprosecute in any country any patent application which claims or uses orpurports to claim or use any invention or discovery that is derived directly orindirectly from the Materials or their use, without the prior express writtenconsent of Stressgen.

 

5.             TheRecipient hereby acknowledges that the Materials are experimental in nature andthat it is provided “AS IS.”  STRESSGENMAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THEMATERIALS OR THE USE THEREOF.  STRESSGENDISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION ANY WARRANTY OFMERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT.

 

6.             TheRecipient shall comply with all laws and governmental rules, regulations andguidelines which are applicable to the Materials or the use thereof, includingbiosafety procedures, and with any safety precautions accompanying theMaterials.

 

7.             ThisAgreement shall not be construed to grant any license or other rights to theRecipient in any patent rights or other intellectual property rights ofStressgen.

 

8.             ThisAgreement shall be binding upon and inure to the benefit of the parties heretoand their respective legal successors but shall not otherwise be assignable byeither party, without the prior written consent of the other party, whichconsent shall not be unreasonably withheld, provided that either party mayassign this Agreement without consent by notice in writing to the other partyto a purchaser of the whole or part of the business to which this Agreementrelates.

 

9.             ThisAgreement and the Confidentiality Agreement between Stressgen BiotechnologiesCorporation (the parent of Stressgen) and the Recipient dated July 18, 2002represent the entire agreement between the parties regarding the subject matterhereof and shall supersede all previous communications, representations,understandings and agreements, whether oral or written, by or between theparties with respect to the subject matter hereof.  The Recipient acknowledges that the Materials constituteConfidential Information under the Confidentiality Agreement.

 

10.           Nochange, modification, extension, termination or waiver of this Agreement, orany of the provisions herein contained, shall be valid unless made in writingand signed by duly authorized representatives of the parties.

 

11.           ThisAgreement shall be governed by and construed in accordance with the laws of theState of Delaware, without regard to the conflicts of law principles thereof.

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

2

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

 
|   | STRESSGEN BIOTECHNOLOGIES, INC. |
|--------|---------------------------------|
|   |                            |
|   | By:                             | /s/ Marvin Siegel |   |
|   |                            |   |
|   | Title:                          | Executive V.P. Research & Development |
|   |                            |   |
|   |                            |   |
|   |                            | 1/12/04 |   |
|   |                            |
|   |                            |
|   | AVECIA LIMITED                  |
|   |                            |
|   | By:                             | /s/ S.C. Taylor |   |
|   |                            |   |
|   | Title:                          | Business General Manager |   |
|   |                            |   |
|   |                            |   |
|   |                            | 9 January 2004 |   |

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

3

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**EXHIBIT A**

 

Materials

 

Master Cell Bank vials for SGN-00101 (HspE7)

 

Working Cell Bank vials for SGN-00101 (HspE7)

 

Vials of SGN-00101 Drug Product produced by “Process A” (For researchpurpose only – not for human use).

 

Vials of SGN-00101 Drug Product produced by “Process B” (For researchpurpose only – not for human use).

 

Samples of SGN-00101 Drug Substance produced by “Process A” (Forresearch purpose only – not for human use).

 

Samples of SGN-00101 Drug Substance produced by “Process B”  (For research purpose only – not for humanuse).

 

Samples of SGN-00101 Drug Substance produced by “Roche Process” (Forresearch purpose only – not for human use).

 

Samples of fermentation cell pastes containing SGN-00101 (For researchpurpose only – not for human use).

 

Vials of [* *] cells

 

Anti HspE7 antisera

 

Anti-Hsp65 antisera

 

Anti-E7 antisera

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

4

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Schedule 2

 

The Cancellation Fee

 

TheCancellation Fee shall be as follows:

 

(i)                                     IfStressgen gives notice of its intention to cancel or delay the GMP manufactureof API [* *] before the date specified in the Programme Timeline, Stressgenshall pay to Avecia [* *].

 

(ii)                                  If Stressgen gives notice of its intention to cancel or delay the GMPmanufacture of API [* *] before the date specified in the Programme Timeline, Stressgenshall pay to Avecia an amount determined by reference to the table below:

 
| **Period of notice**                |   | **[* *] fee payable**for GMP manufacture for the  relevant year set out in Schedule 9 |
|-------------------------------------|--------|---------------------------------------------------------------------------------------|
| Less than [* *] but more than [* *] |   | [* *]                                                                                 |
| Less than [* *] but more than [* *] |   | [* *]                                                                                 |
| Less than [* *] but more than [* *] |   | [* *]                                                                                 |
| Less than [* *] but more than [* *] |   | [* *]                                                                                 |
| Less than [* *] but more than [* *] |   | [* *]                                                                                 |
| Less than [* *]                     |   | [* *]                                                                                 |

 

IfStressgen gives notice of its intention to cancel or delay the GMP manufactureof API due to take place [* *] at any time prior to [* *], then theCancellation Fee payable in respect of such delayed GMP manufacture shall be [**].

 

Aveciashall [* *] but for the termination of the Agreement by Stressgen under Clause9.1(b) or Avecia under Clauses 9.1(c) or (d), or exercise of Stressgen’s option to delay the commencement ofthe initiation of [* *] in the Scope Statement pursuant to Clause2.8.  Avecia shall [* *] up to [**].  In this context, [* *] but shallnot mean [* *] work.

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

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Schedule 3

 

Programme Amendment Order

 
| (1)           Project  Title & Number                                     | (2)           Date  Project Started | (3)           P.A.O.  Number |
|---------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|--------------------------------------------------------------------------------|
|                                                                                                                            |                                                                                  |                                                                           |
| (4)           Reason  for P.A.O.

 

 

                       |
| (5)           Amendment  required and new milestones

 

 

   |
| (6)           Impact  on price, time frame, resources

 

 

  |
| (7)           Amended  payment schedule (if required)

 

 

  |
| Authorisation

 

 

                                                                                            |
|                                                                                                                            |                                                                                  |                                                                           |   |
| for  Avecia                                                                                                                     | for  customer                                                                         |
|                                                                                                                                 |                                                                                       |                                                                                |  |  |  |

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

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Schedule 4

 

# **ProgrammeManagement Plan**

 

     Program ManagementPlan for the Process Development, Validation and cGMP manufacture of Drugsubstance    (HspE7)intended for Pivotal Clinical Studies andLaunched Drug Product.

 

Avecia andStressgen will jointly develop and maintain a Program Management Plan.  The plan will include the composition andresponsibilities of a Steering committee, Program management team and atechnical project team.

 

This documentoutlines the process by which this program will be managed.

 

#### **Project Steering Team**

 

Composition: Will consist of members from Avecia and fromStressgen.

 

Frequency: Meets monthly or as required, making use ofteleconf or videoconf facilities as appropriate.

 

Responsibilities:

 

•                  Resolve issues that cannot beresolved by the program management team

•                  Authorize completion of milestones

 

Program Management Team

 

Composition: Avecia team consisting of representatives ofall the major functions involved in the delivery of the overall program,Program Man, Process Development, Quality Assurance, Quality Control,Manufacturing Technology, Manufacturing operations, Supply Chain (whenappropriate), Commercial and Finance.

 

Frequency:  Meetsweekly or as appropriate.

 

Outputs:

 

•                  Minutes

•                  Actions lists

•                  Program Risk Registers

•                  Updated Project plans and progressdata.

•                  Monthly status update

 

Responsibilities:

 

•                  Manages the overall shape anddelivery of the program

•                  Co-ordinates the activities of thevarious contributing individuals and functions.

•                  Informs customer and steering team asto progress and issues.

 

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Technical Project Team

 

Composition: Team of technical scientists with particularskills in the area of fermentation, down stream processing and analyticaldevelopment.

 

Frequency:  Meetsfortnightly

 

Outputs:

 

•                  Minutes

•                  Data summaries

•                  Technical plans and reports

•                  Sample registers.

 

Responsibilities:

 

•                  Detailed planning of technicalprogram

•                  Delivery of technical program

•                  Supervision and overview of projecttasks and technical program

 

 

ResponsiblePersons

 

The followingtables list the responsible individuals and their roles within Stressgen andwithin Avecia. These nominated individuals may be changed in the light ofchanging circumstances. In this eventuality details of the new contact personswill be provided to the other party.

 

#### **StressgenRepresentatives**

 
| **Name** |   | **Function**       |   | **Role**                    |   | **Phone** |   | **e-mail** |
|----------|--------|--------------------|--------|-----------------------------|--------|-----------|--------|------------|
| [* *]    |   | Executive Sponsor  |   | Approvals                   |   | [* *]     |   | [* *]      |
| [* *]    |   | Project Leader     |   | Tech. Expert                |   | [* *]     |   | [* *]      |
| [* *]    |   | Quality Leader     |   | QA                          |   | [* *]     |   | [* *]      |
| [* *]    |   | Project Manager    |   | Communication and contracts |   | [* *]     |   | [* *]      |
| [* *]    |   | Controller         |   | Invoicing                   |   | [* *]     |   | [* *]      |
| [* *]    |   | Biological testing |   | Biological testing          |   | [* *]     |   | [* *]      |

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

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#### **Avecia Representatives**

 
| **Name** |   | **Function**           |   | **Role**                      |   | **Phone** |   | **e-mail** |
|----------|--------|------------------------|--------|-------------------------------|--------|-----------|--------|------------|
| [* *]    |   | General Manager        |   | Approvals                     |   | [* *]     |   | [* *]      |
| [* *]    |   | R&D Manager        |   | Technical review              |   | [* *]     |   | [* *]      |
| [* *]    |   | Quality                |   | Quality Compliance            |   | [* *]     |   | [* *]      |
|     |   |                   |   |                          |   |      |   |       |
| [* *]    |   | R&D                |   | Tech Project Leader           |   | [* *]     |   | [* *]      |
| [* *]    |   | Program Manager        |   | Planning, communication       |   | [* *]     |   | [* *]      |
| [* *]    |   | QA                     |   | QA compliance                 |   | [* *]     |   | [* *]      |
| [* *]    |   | QC                     |   | Product testing and protocols |   | [* *]     |   | [* *]      |
| [* *]    |   | Analytical Development |   | Analytical methods.           |   | [* *]     |   | [* *]      |
| [* *]    |   | MTG                    |   | Tech transfer to plant        |   | [* *]     |   | [* *]      |
| [* *]    |   | Operations             |   | CGMP Manufacture of product   |   | [* *]     |   | [* *]      |
| [* *]    |   | Finance                |   | Finance control and invoicing |   | [* *]     |   | [* *]      |
| [* *]    |   | Commercial             |   | Account Manager               |   | [* *]     |   | [* *]      |

 

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** **

**SCHEDULE 5**

** **

**PROGRAMME TIMELINE**

 
| **Scope  Doc No.** |   |                                          |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   | **[*]** |   |   |   |   |   |   |   |   |   |   |   |
|--------------------|--------|-----------------------------------------------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|               |   |                                          |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
| 6                  |   | Tech Transfer                                 |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 7                  |   | Feasibility                                   |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 8                  |   | [* *] development                             |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 8.3.2.4            |   | [* *] HspE7  [* *]                            |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 8.5.2.5.           |   | [* *] report comparing HspE7 with  [* *]      |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 9.1                |   | GMP pre-production                            |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 9.2                |   | GMP fermentation production                   |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 9.2.2.8            |   | [* *]                                         |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 9.3                |   | API batches — Pivotal Clinical supply    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
| 9.4                |   | GMP Drug substance characterization report    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   |   |   |   |   |   |   |   |   |   |   |
|               |   |                                          |   | [* *]   |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
|               |   |                                          |   | [* *]   |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
|               |   |                                          |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
|               |   |                                          |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
| 10.1               |   | Validation Master Plan                        |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
| 10.1.2.1           |   | Laboratory Performance Characterisation study |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
| 10.2               |   | Analytical Method Validation                  |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
| 10.3               |   | API Validation Batch Pre-production           |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
| 10.4/10.5          |   | Fermentation and API Validation Batches       |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
| 10.5.2.5           |   | Fermentation/ API Validation batches release  |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
| 10.5.2.3           |   | Validation reports                            |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |
| 11.1               |   | IND amendment                                 |   |    |   |    |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]     |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   | [*]    |   |

 

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[*]– CONFIDENTIAL TREATMENT REQUEST(ED).

 

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| 11.3 |   | Mock audits                     |   |   |   |   |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   |
|------|--------|---------------------------------|--------|--------|--------|--------|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|-----|--------|
| 11.4 |   | Pre-Approval Inspection Support |   |   |   |   |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   | [*] |   |

 

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[*]= CONFIDENTIAL TREATMENT REQUEST(ED).

 

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|                                                                                                                                                                                            | Schedule 6                                                                                                                                                                                                                                                                                                                                         |                                                                   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|
|                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                               |                                                                   |
| [Stressgen logo]                                                                                                                                                                                | Stressgen  BIOTECHNOLOGIES                                                                                                                                                                                                                                                                                                                         | PO#**PAD0071**                                                         |
|                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                               |                                                                   |
|                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                               | This  number must appear on all packages invoices & correspondence |
|                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                               |                                                                   |
| SUPPLIER  NAME AND ADDRESS:**Avecia Limited  PO Box 43  Hexagon House  Blackley, Manchester M9 972  England  Fax #: [* *]  Phone #: [* *]  Acct #:  302 477-8275  Vendor #: 302-477-8102** | SHIP  TO:**Stressgen Biotechnologies Inc.  409 2nd Avenue Suite 201  Collegeville, PA  19426  Attn:  PO# PAD0071  Phone:  [* *]  Fax: [* *]**

INVOICE  TO:

**Stressgen Biotechnologies Inc.  10241 Wateridge Circle Suite C200  San Diego, CA 92121  Attn:  PO# PAD0071  Phone:  (858) 202-4900  Fax: [* *]** | ***For Internal  Use Only:***

Name of employee submitting PO:  [* *]  |
| To  be invoiced:                                                                                                                                                                                | o                                                                                                                                                                                                                                                                                                                                                  |
| Cheque  required:                                                                                                                                                                               | o                                                                                                                                                                                                                                                                                                                                                  |
| • Return to User                                                                                                                                                                           | o                                                                                                                                                                                                                                                                                                                                                  |
| • Mail with application                                                                                                                                                                    | o                                                                                                                                                                                                                                                                                                                                                  |
| • Fed Ex                                                                                                                       | o                                                                                                                                                                                                                                                                                                                                                  |
| • by Purchasing Dept                                                                                                                                                                       | o                                                                                                                                                                                                                                                                                                                                                  |
| • by User                                                                                                                                                                                  | o                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                            |
|                                                                                                                                                                                            |

 

**COMMENTS**

 
| DATE  ORDERED      |                                                                                                                                                                                                                                                                                      | DATE  REQUIRED      |                  | ESTIMATED  ARRIVAL DATE |         | TAX  I.D. NO.      |   | TERMS                                                                                                                                                                                                                                                                                                 |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------|-----------------------|-------------------------|--------------|--------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| December  18, 2003 |                                                                                                                                                                                                                                                                                      | ASAP                |                  |                    |         | 124387457          |   | —                                                                                                                                                                                                                                                                                                |
| SHIPPED  VIA:      |                                                                                                                                                                                                                                                                                      | CURRENCY:  USD |                  | PPD.   ̈       |         | COLL.   ̈ |
| **ACCT CODE**      |                                                                                                                                                                                                                                                                                      | **USER**            |                  | **QTY**                 |         | **CAT#**           |   | **DESCRIPTION**                                                                                                                                                                                                                                                                                       |   | **UNIT PRICE** |   | **AMOUNT** |
|               |                                                                                                                                                                                                                                                                                      |                |                  |                    |         |               |   |                                                                                                                                                                                                                                                                                                  |   |   |   |   |
| 420-5640           |                                                                                                                                                                                                                                                                                      | LBOUK               |                  | 1                       |         | Manufacturing      |   | 1.  Avecia Limited (“Avecia”) and Stressgen  Biotechnologies Inc. (“Stressgen”) agree to negotiate in good faith for an  agreement to cover certain work to be carried out by Avecia on behalf of  Stressgen, with the aim of executing such agreement by 23rd January 2004. |   | $ | [*  *] |   | $ | [*  *] |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | 2.  Certain work (set out below) will be commenced prior to execution of the  equipment following acceptance of this purchase order:                                                                                                                                                                  |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | (i)  Transfer of information and materials to allow the project to start.  This will include proceeds and safety  details, available standards, reagents and assay methodology.                                                                                                                  |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | (ii)  Agreed definition of the process to be operated to demonstrate Avecia [* *]                                                                                                                                                                                                                     |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | (iii)  Establish as a minimum, a priority list of assays at Avecia and establish  other assays as time permits.                                                                                                                                                                                       |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | (iv)  Operation of the agreed process at laboratory scale and assay for the product  to establish activity.                                                                                                                                                                                           |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | In  consideration for Avecia carrying out the technical consultancy work detailed  above, Stressgen shall pay to Avecia on acceptance of this purchase order the  sum of US$[* *], being an amount equal to the technology transfer fee.                                                              |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | —                                                                                                                                                                                                                                                                                                |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | —                                                                                                                                                                                                                                                                                                |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | —                                                                                                                                                                                                                                                                                                |   | — |   | $ | — |
| —             |                                                                                                                                                                                                                                                                                      | —              |                  | —                  |         | —             |   | —                                                                                                                                                                                                                                                                                                |   | — |   | $ | — |
|               | **CONDITIONS OF PURCHASE ORDER.   THIS**                                                                                                                                                                                                                                             |                |                  |                    | SUB TOTAL    |               | $      | [* *]                                                                                                                                                                                                                                                                                                 |
|               | **ORDER IS SUBJECT TO ALL OF THE TERMS**                                                                                                                                                                                                                                                  |                |                  |                    | SHIPPING     |               | $      | 0.00                                                                                                                                                                                                                                                                                                  |
|               | **AND CONDITIONS STATED ON BOTH PAGES**                                                                                                                                                                                                                                                   |                |                  |                    | DUTIES/TAXES |               | $      | 0.00                                                                                                                                                                                                                                                                                                  |
|               | **OF THIS ORDER FORM.  IF ANY  TERMS**                                                                                                                                                                                                                                               |                |                  |                    | Sales Tax    |               |   |                                                                                                                                                                                                                                                                                                  |
|               | **CONTAINED IN SUPPLIER’S ACCEPTANCE OF THIS ORDER OR THE SUPPLIER’S  INVOICES ARE AT VARIANCE WITH THE TERMS OF THIS ORDER, THIS ORDER SHALL  GOVERN NO ORAL AGREEMENT OR OTHER UNDERSTANDING SHALL IN ANY WAY MODIFY OR  CHANGE THE TERMS OF THIS ORDER UNLESS AGREED TO IN** |                | /s/ D.L.  Korpolinski |                    |         |               |   |                                                                                                                                                                                                                                                                                                  |   |
|               | **WRITING AND SIGNED BY STRESSGEN**                                                                                                                                                                                                                                                       |                | AUTHORIZED BY         |                    | **TOTAL**    |               | $      | [* *]                                                                                                                                                                                                                                                                                                 |
|                    |                                                                                                                                                                                                                                                                                           |                     |                       |                         |              |                    |        |                                                                                                                                                                                                                                                                                                       |  |  |  |  |  |  |  |  |

 

 

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Certain confidential information contained inthis document, marked by brackets, has been omitted and filed separately withthe Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, asAmended.

 

#### **Schedule 7**

 

#### **QUALITYAGREEMENT**

 

 

**Avecia Biotechnology**

###### **Biologics Business**

**Billingham**

**UK**

 

**And**

 

###### **Stressgen Development Corporation**

 

 
| Approved by:-                     | Approved by:-                          |
|-----------------------------------|----------------------------------------|
|                              |                                   |
|                              |                                   |
| /s/ H. Holden                     |                                   | /s/ K. Neurohr |   |
| H. Holden                         | K. Neurohr                             |
| Vice President                    | Head of Quality and Regulatory Affairs |
| Regulatory Affairs and Compliance | Avecia Biologics Business              |
| Stressgen Biotechnologies Inc     | 19 January 2004                        |
| 19 January 2004                   |                                   |
|                                   |                                        |  |  |

 

 

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**Index**

 
| 1.     |   | Quality Agreement             |   |
|--------|--------|-------------------------------|--------|
|   |   |                          |   |
| 2.     |   | Manufacturing cGMP Compliance |   |
|   |   |                          |   |
| 3.     |   | Quality Control               |   |
|   |   |                          |   |
| 4.     |   | Stability                     |   |
|   |   |                          |   |
| 5.     |   | Quality Assurance             |   |
|   |   |                          |   |
| 6.     |   | Dispute Resolution            |   |
|   |   |                          |   |
| 7.     |   | Validation                    |   |

 
| Appendix I   | -      | Responsibilities                   |   |
|--------------|--------|------------------------------------|--------|
|         |   |                               |   |
| Appendix II  | -      | List of Contacts                   |   |
|         |   |                               |   |
| Appendix III | -      | Glossary of Terms                  |   |
|         |   |                               |   |
| Appendix IV  | -      | List of Jointly Approved Documents |   |

 

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**1.****                                    ****Quality Agreement**

 

1.1                                 Purpose

 

1.1.1                        This agreementdefines the roles and responsibilities for both Avecia and Stressgen QA

1.1.2                     This agreementalso defines how Avecia Quality Unit and Stressgen  Quality Unit will interact with each other over Quality relatedissues

1.1.3                     This agreementshall be incorporated with and constitute a part of the  Biological Service Agreement (BSA) between the two companies.

1.1.4                        This QualityAgreement between Stressgen and Avecia defines Quality Responsibilities as theyare related to the manufacturing of the Stressgen Active Pharmaceutical Ingredient(API) in accordance with the terms of the BSA to be entered into between thetwo parties.  It is the intention of theparties that the Quality Agreement is read in conjunction with the BSA.

 

1.2                               Duration of Agreement

 

1.2.1                      The agreement will be effectiveas of the Effective Dates of the BSA and will expire with the termination ofthe BSA.

 

1.3                             Product

 

1.3.1                      Avecia will manufacture a [**] Biologic API in accordance with cGMP regulations.

 

1.4                               Regulatory Compliance

 

1.4.1                    Avecia will manufacture the API in compliancewith [* *].

 

1.4.2                      Avecia will manufacture theAPI’s in compliance with [* *].

 

**2.****                                    ****Manufacturing cGMPCompliance**

 

2.1                             Materials

 

2.1.1                     Avecia will use rawmaterials, packaging and labelling components that are acceptable to StressgenQA and sampled, tested via validated methods and stored in accordance withAvecia documentation and procedures.

 

2.1.2                     Avecia QC and Stressgen QAwill jointly approve the key tests to be performed for incoming raw materialspackaging and labelling.

 

2.1.3                       Avecia is responsible forensuring that all materials procured by Avecia for use in the API are incompliance with pre-determined specifications. Raw materials are given an expiration date upon the satisfactory completionof all initial tests.  Avecia will holdthe relevant Certificates of Analysis for the materials.

 

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2.1.4                       Avecia QA will informStressgen QA of any non-conforming raw materials within [* *].

 

2.1.5        Aveciawill only purchase raw materials from Avecia approved suppliers.

 

2.2                             Documentation

 

2.2.1                       Avecia will prepare thenecessary documentation for each lot of API in its standard format as evidencethat the API was manufactured in compliance with current GMP.

 

2.2.2                       Avecia will retain batchdocumentation for at least [* *] after the expiry date of the batch or for [**] after the distribution of the batch whichever is the longer.  Avecia will give advanced warning of [* *]to Stressgen QA prior to destruction.

 

2.2.3                     Avecia will store the APIunder conditions approved by Stressgen QA. Avecia will hold records of storage conditions according to the AveciaStandard Procedure.

 

2.2.4                     Avecia and Stressgen QA willagree storage conditions, containers and delivery configuration.  Avecia is responsible for packaging, andlabelling; Avecia will co-operate with Stressgen QA for transit arrangements.

 

2.2.5                       Delivery of API -  Stressgen QA will authorise Avecia todeliver upon submission of a Stressgen QA delivery request form.  Only released, finished API will bedelivered by Avecia to a location designated by Stressgen QA.  The same applies to any samples requested byStressgen QA.  Delivery records etc willbe documented in a Dispatch Batch Record.

 

2.2.6                       Avecia will deliver samplesupon the submission of a Stressgen QA sample request form and Avecia willco-operate with Stressgen QA for transit arrangements.

 

2.2.7        Aveciawill upon request deliver samples ahead of QA batch release.

 

**3.****                                    ****Quality Control**

 

3.1                               The testing activities forthe API that are to be performed by Avecia QC will be in accordance with thespecifications defined in the QC Document. Avecia QA/QC and Stressgen QA will jointly approve both test methods andspecifications.  Stressgen is responsiblefor the specification from safety or regulatory suitability perspectives andAvecia is responsible for the specification from a technical feasibilityperspective.  Avecia will not subcontract any testing without prior approval to Stressgen QA.  All sub contractors analytical laboratorieswill be audited by Avecia.

 

3.2                                 Avecia will notify StressgenQA of any investigations and OOS results related to the in process testing andfinal testing of the API within [* *].

 

3.3                               Avecia QC will retain sufficientsamples of raw materials and the API from each batch to permit at least [* *]specification analysis excluding [* *].

 

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3.4                                 Avecia QC will retainsamples for at least [* *] after the expiration date of the last lot of drugproduct containing the API.  StressgenQA will inform Avecia of this date and give advanced warning of expiration of[* *].

 

3.5                                 Avecia QA/QC and StressgenQA will (if required) agree an abbreviated Certificate of Analysis to allowdelivery.  These key tests will coverIdentity, Purity and Safety.

 

3.6                                 Avecia QC will produce aCertificate of Analysis for each batch of API confirming that the API has beentested via validated methods in accordance with the Specification in thejointly approved QC document.

 

**4.****                                    ****Stability**

 

4.1                                 Avecia QA/QC and StressgenQA, where appropriate, are jointly responsible to ensure that a routinestability monitoring programme is implemented.

 

4.2                                 Avecia will provideStressgen QA with stability samples within [* *] of the manufacture.

 

**5.****                                    ****Quality Assurance**

 

5.1                                 Documentation

 

5.1.1                      Avecia QA are responsiblefor ensuring creation of the Stressgen API specific manufacturing masterdocumentation.  Avecia QA and StressgenQA will approve the batch documentation before commencement of manufacturing.

 

5.1.2                      Avecia QA will approveStandard Procedures required for the manufacture of the API.

 

5.1.3                      Avecia QA will informStressgen QA of any critical/major deviations generated during the manufactureof each batch of API within [* *].

 

5.1.4                      Avecia QA will informStressgen QA of any critical/major changes to the master batch records, billsof materials specification and equipment.

 

5.2                                 Batch Disposition

 

5.2.1                        For each batch of API AveciaQA will provide to Stressgen QA copies of the release, executed batch record,Certificate of Analysis, Certificate of Conformance, any deviation/changecontrol reports, and copies of supporting Analytical Raw Data.

 

5.2.2                      Avecia QA is responsible forensuring that the API has been manufactured according to the Specifications,Procedures and Master Batch Records and cGMP.

 

5.2.3                      The release of the API fordelivery to Stressgen is the responsibility of Avecia QA.

 

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5.2.4                      It is the responsibility ofAvecia QA Manager in conjunction with Stressgen QA to review and decide on thedisposition of potentially Non Conforming Materials.

 

5.2.5                      Avecia QA will carry out aProduct Quality Review at the end of each campaign of manufacture and indicatethe findings to Stressgen QA in a summary report.

 

5.3                                 Reprocess/Rework

 

5.3.1                      Avecia QA will notinternally authorise any rework/reprocessing without written prior approvalfrom Stressgen QA.

 

5.4                                 Internal Audits

 

5.4.1                      Avecia QA will carry outroutine internal audits for GMP compliance according to approved schedulesdeveloped as part of the Avecia Quality System.  Avecia QA will inform Stressgen QA of any major observations thatmay impact the Stressgen Process.

 

5.5                                 Audits by the Customer

 

5.5.1                      Avecia will allow one auditfor a maximum of two representatives from Stressgen QA to have access for amaximum of [* *] to Avecia’s facilities associated with the manufacturing andtesting of Stressgen QA API.  Aveciarequire [* *] prior notice of a Stressgen QA audit.

 

5.5.2                       Avecia will permit StressgenQA to conduct audits to address significant API Quality or Safety issues asdiscovered through API failures or complaints related to Avecia manufacturingof the API.  Avecia will require priornotice of [* *] from Stressgen QA.

 

5.5.3                       Avecia will provideStressgen with a response to audit observations with [* *] after an audit.  Avecia will provide Stressgen with a planfor resolution of audit findings within [* *] after the audit.  The plan shall be mutually agreed by bothparties.  Avecia will provide [* *]updates to Stressgen on the status of the other observations until they areresolved.

 

5.6                                 Customer Technical Support

 

Aveciaand Stressgen will jointly agree the availability on site of StressgenTechnical Support and Quality Personnel. Stressgen Personnel (1) will be allowed by exception access to cleanrooms for a major quality and/or process issue.

 

5.7                                 Regulatory Actions

 

5.7.1                      Avecia QA will provideStressgen QA information and support for any Stressgen QA regulatory submission(eg CMC) upon request. Stressgen QA will supply Avecia with copies of thesubmitted information.

 

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5.7.2                      Stressgen QA will informAvecia QA of any pertinent changes in the CMC section of its regulatorydocument.

 

5.7.3                      Avecia QA will informStressgen QA of any change that may impact Stressgen QA regulatory submissions.Stressgen QA will provide written prior approval of the change within [* *].

 

5.7.4                      Avecia QA will provideStressgen QA of advanced notice of any FDA/MHRA regulatory Inspection.

 

5.7.5                      Avecia will notify Stressgenwithin [* *] of the notification of an inspection or within [* *] of anunannounced arrival of a health authority investigator, of any inspections oractions by regulatory agencies or other enforcement bodies which couldpotentially impact Stressgen API

 

5.7.6                      Avecia QA will informStressgen of any observations (from a Regulatory Inspection) that may affectthe Stressgen Process.

 

5.7.7                      PAI Activities: Avecia willcooperate with Stressgen in preparing for pre-approval inspections (PAI) byhealth authorities.  This includes PAIpreparation and mock PAI.  Stressgenwill perform mock PAI.  Avecia will takethe lead during PAI by health authorities and Stressgen will be on site toprovide support.

 

**6.****                                    ****Dispute Resolution**

 

Inthe event that a dispute arises between Avecia and Stressgen QA relating toconformity of a batch of API with cGMP or with the specifications defined inthe Commercial Contract, such dispute shall be resolved in the followingmanner.  The parties’ Quality Unitsshall promptly discuss the dispute in good faith to attempt to reach agreementon whether there has been a non-conformity in the batch of API and, if so, whatcourse of action shall be taken to address it. In the event that the parties’ Quality Units fail to reach such agreement,the matter shall be referred to an independent expert nominated by agreement ofthe parties and both parties will abide by the decision of the independent QAexpert. Such referral shall be solely for the purpose of establishing whetheror not there is any non-conformity in the batch of API.  The decision of such independent expertshall be binding upon the parties.

 

**7.****                                    ****Validation**

 

Aveciaand Stressgen QA will jointly agree the Validation Master Plan.

 

7.1                                 Equipment Computer Facilityand Utility Qualification

 

7.1.1                       Avecia is responsible forensuring that equipment, computer, facility, utility and support system for themanufacture of Stressgen API are qualified according to regulatoryrequirements.

 

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7.2                                 Laboratory Qualification

 

7.2.1                       Avecia is responsible forensuring that all QC laboratories are in compliance with cGMP’s and arequalified in all of the methodology associated with Stressgen API.

 

7.2.2                       Avecia and Stressgen QA willagree responsibility for Validation Methodology.  Validation methodology will be developed in compliance with ICHQ2A test on Validation of Analytical Procedures and ICH Q2B Validation ofAnalytical Procedures.  If Stressgen QAprovide Avecia with validated method then Avecia will only need to verify themethods.

 

7.3                                 CleaningVerification/Validation

 

7.3.1                      Avecia is responsible forensuring that adequate cleaning verification of product contact parts used inthe manufacture of Stressgen QA API is carried out between batches of differentproducts to prevent cross-contamination.

 

7.3.2                       Stressgen QA will provideinformation (solubility, toxicity, dose etc.) to establish cleaning limits.

 

7.4                                 Process Validation

 

Avecia and Stressgen QA will agree the ProcessValidation Strategy.

 

7.4.1                       When required, Avecia isresponsible for ensuring that the manufacturing process is validated.  The validation should ensure that theprocess is capable of consistently achieving the API acceptance specification.Avecia will provide adequate resources to execute process validations as permutually approved protocols.

 

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**Appendix I****  -  Responsibilities**

 
| **Responsibility**                                    |   | **Avecia** |   | **Stressgen  QA** |   |
|-------------------------------------------------------|--------|------------|--------|-------------------|--------|
| Master Batch Record Approval                          |   | [* *]      |   | [* *]             |   |
| Formula                                               |   | [* *]      |   | [* *]             |   |
| Production Method                                     |   | [* *]      |   | [* *]             |   |
| Scale-up Procedure                                    |   | [* *]      |   | [* *]             |   |
| Validation Procedures                                 |   | [* *]      |   | [* *]             |   |
| Stability Programme                                   |   | [* *]      |   | [* *]             |   |
| Raw Material Selection/Review                         |   | [* *]      |   | [* *]             |   |
| Documentation for TSE risk                            |   | [* *]      |   | [* *]             |   |
| Specific Product Information (safety,  transport etc) |   | [* *]      |   | [* *]             |   |
| Product Delivery                                      |   | [* *]      |   | [* *]             |   |
| API Storage                                           |   | [* *]      |   | [* *]             |   |
| API Specification – Technical Feasibility        |   | [* *]      |   | [* *]             |   |
| API Specification – Safety and Regulatory        |   | [* *]      |   | [* *]             |   |
| Method of Analysis                                    |   | [* *]      |   | [* *]             |   |
| Method of Analysis Validation                         |   | [* *]      |   | [* *]             |   |
| Analysis + Release                                    |   | [* *]      |   | [* *]             |   |
| Storage of API QC Samples                             |   | [* *]      |   | [* *]             |   |
| Stability Programme                                   |   | [* *]      |   | [* *]             |   |
| Manufacture of API                                    |   | [* *]      |   | [* *]             |   |
| Batch Number Assignment                               |   | [* *]      |   | [* *]             |   |
| Expiry Date Assignment                                |   | [* *]      |   | [* *]             |   |
| Manufacturing Documentation                           |   | [* *]      |   | [* *]             |   |
| In Process Controls                                   |   | [* *]      |   | [* *]             |   |
| Expiry Date Assignment                                |   | [* *]      |   | [* *]             |   |
| Audit of API Manufacturer                             |   | [* *]      |   | [* *]             |   |
| Deviation Management                                  |   | [* *]      |   | [* *]             |   |
| Change Management                                     |   | [* *]      |   | [* *]             |   |
| Retention of Records                                  |   | [* *]      |   | [* *]             |   |
| Validation Master Plan Approval                       |   | [* *]      |   | [* *]             |   |
| API Release to Stressgen QA                           |   | [* *]      |   | [* *]             |   |
| Stressgen QA API Release to Fill Finish               |   | [* *]      |   | [* *]             |   |

 

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**Appendix II****-****List ofContacts**

 
| **Area of Responsibility** |   | **AVECIA  Main Fax:  [* *]** |   | **Stressgen  QA  Main Fax:** |   |
|----------------------------|--------|------------------------------|--------|------------------------------|--------|
| QA                         |   | [* *]                        |   | [* *]                        |   |
| QC                         |   | [* *]                        |   | [* *]                        |   |
| Regulatory Manager         |   | [* *]                        |   | [* *]                        |   |

 

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**AppendixIII****- Glossary of Terms**

 

CriticalDeviation

 

Adeparture from an approved instruction or established standard that will have adirect impact on product quality.

 

MajorDeviation

Adeparture from an approved instruction or established standard that has apotential to impact on product quality.

 

ValidationMaster Plan

Ahigh level document to summarise the key elements of the validation programmefor a Customer Project.

 

MasterBatch Record

Amanufacturing instruction jointly approved by Avecia QA and Stressgen QA.

 

Quality

 

Safety,identity, purity, strength and potency requirements for API.

 

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**Appendix IV****- List of Jointly Approved Documents**

 

QualityAgreement

 

MasterBatch Records

 

QualityControl Document

 

QualityControl Test Methods

 

ProcessDescription

 

ValidationMaster Plan

 

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Schedule 8

 

Scope Statement

 

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Certain confidential information contained inthis document, marked by brackets, has been omitted and filed separately withthe Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, asAmended.

 

CONFIDENTIAL

 

**Schedule 8**

 

**Scope Statement**

 

 

**Scope Statementfor Process Development, Validation and cGMP Manufacturing of Drug Substanceintended for use in Pivotal Clinical Studies and Marketed Drug Product.**

 

 
| **STRESSGEN:** | Stressgen Biotechnologies, Inc. |
|----------------|---------------------------------|
|           | 409 2nd Avenue, Suite 201       |
|           | Collegeville, PA 19426-2655     |

 

 

**Date:**  January 23, 2004

 

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**Table of Contents**

 
| **1**  | **PURPOSE**                                        |   |
|--------|----------------------------------------------------|--------|
| **2**  | **PROGRAM  DEFINITIONS**                           |   |
| **3**  | **ACRONYMS**                                       |   |
| **4**  | **SCOPE CONSTRAINTS AND  ASSUMPTIONS**             |   |
| **5**  | **STRESSGEN’S  RESPONSIBILITIES**             |   |
| **6**  | **TECHNOLOGY TRANSFER STAGE**                      |   |
| 6.1    | Fermentation Process  Transfer                     |   |
| 6.2    | Downstream Process Transfer                        |   |
| 6.3    | Formulation Process  Transfer                      |   |
| 6.4    | Analytical Methods Transfer                        |   |
| 6.5    | Technology Transfer Report                         |   |
| **7**  | **[* *] STUDY  STAGE**                             |   |
| 7.1    | [* *]  Study                                       |   |
| 7.2    | [* *]  Study                                       |   |
| 7.3    | [* *]  Study                                       |   |
| 7.4    | [* *]  Study                                       |   |
| 7.5    | [* *]  Study                                       |   |
| 7.6    | Feasibility Report  and Development Authorization  |   |
| **8**  | **[* *] STAGE**                                    |   |
| 8.1    | [* *]                                              |   |
| 8.2    | Cell Paste [* *]                                   |   |
| 8.3    | [* *]                                              |   |
| 8.4    | API Formulation  [* *]                             |   |
| 8.5    | [* *]                                              |   |
| 8.6    | Report and Process  Description                    |   |
| **9**  | **API  Production: Pivotal Clinical Trial Supply** |   |
| 9.1    | GMP Pre-production  Deliverables                   |   |
| 9.2    | GMP Fermentation Production                        |   |
| 9.3    | API Batches:  Pivotal Clinical Trial Supply        |   |
| 9.4    | GMP  Drug Substance Characterization Report (IND)  |   |
| **10** | **Validation  Stage**                              |   |
| 10.1   | Validation Master Plan                             |   |
| 10.2   | Analytical Method  Validation                      |   |
| 10.3   | API Validation  Batch Pre-production               |   |
| 10.4   | Fermentation  Validation Batch Manufacturing       |   |
| 10.5   | API Validation Batches                             |   |
| **11** | **Regulatory  Support**                            |   |
| 11.1   | IND [* *] CMC Process)                             |   |
| 11.2   | Marketing Applications                             |   |
| 11.3   | Mock Audits                                        |   |
| 11.4   | Pre-Approval Inspection  Support                   |   |
| **12** | **Program  Management**                            |   |
|        |                                                    |        |  |

 

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**1      PURPOSE**

 

This Scope Statement isincorporated into the Biological Service Agreement dated January 23, 2004by and between Stressgen and Avecia (for the purposes of this Scope Statement,the “**BSA**”).  This Scope Statement is based on Avecia’sProposal 2346.04 and describes in further detail the services and deliverablesto be performed and provided by Avecia for the development of commercialprocess, cGMP manufacture of phase III clinical supply of the API, validationof the process at scale and ancillary activities necessary to support a BLAfiling with the FDA.  If any item inthis Scope Statement is inconsistent with the BSA, the terms of this ScopeStatement will control, but only with respect to the services to be performedunder this Scope Statement.  Allcapitalized terms used and not expressly defined in this Scope Statement willhave the meanings given to them in the Agreement.  No Changes to this Scope Statement will be effective unless madein writing pursuant to a mutually agreed Programme Amendment Order (as definedin the BSA) signed by both parties.

 

The work will be conducted on atime and materials basis in [* *] distinct stages.  The initial stage was commenced under Stressgen PO# PAD0071 datedDecember 19, 2003.  Stressgen must [* *]prior to any further billable work by Avecia. Planning for each stage will be [* *] overseen by the Project Team.

 

**2      PROGRAM DEFINITIONS**

 

The definitions listed below reflect termsused in this document.

 
| API                        |   | See  “Drug Substance”                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|----------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Avecia                     |   | Avecia Limited, acting through  its Avecia Biotechnology business of Hexagon House, Blackley, Manchester, M9  8ZS, England.                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| Batch                      |   | Output from the fermentation  or Purification activities (e.g., Drug Substance Batch). The working volumes  of the fermenters [* *].                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| BSA                        |   | The Biological Service  Agreement between Stressgen and Avecia dated January 23, 2004, setting  forth the terms and conditions governing the conduct of the Programme.                                                                                                                                                                                                                                                                                                                                                                                                        |
| Cell Paste:                |   | Bulk recovered cells from the  production fermenter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| cGMP:                      |   | Current  Good Manufacturing Practice as described in: Guidance for Industry Q7A Good  Manufacturing Practice Guidance for Active Pharmaceutical Ingredients, and 21  Code of Federal Regulations, Parts 210 and 211.                                                                                                                                                                                                                                                                                                                                                               |
| Common  Technical Document |   | Common  Technical Document as defined by ICH guidelines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| [*  *]                     |   | [*  *]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Development  Run:          |   | A  non-GMP run at manufacturing scale intended to show that the process and  resulting bulk meets all specifications.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Drug  Product:             |   | The  dosage form in the final immediate packaging intended for clinical use or  commercial sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Drug  Substance:           |   | Any  substance or mixture of substances intended to be used in the manufacture of  a drug (medicinal) product and that, when used in the production of a drug,  becomes an active ingredient of the Drug Product.  Such substances are intended to furnish pharmacological  activity or other direct effect in the diagnosis, cure, mitigation,  treatment, or prevention of disease or to affect the structure and function  of the body. In this document, Drug Substance refers to HspE7 manufactured in  compliance with cGMP and ready for processing into Drug Product. |

 

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| Fermentation                |   | All unit operations involved  in the fermentation step of the process.                                                                                                                                                                                                                                                                             |
|-----------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Formulation  Process        |   | All  unit operations involved in final processing of HspE7 and filling it into the  bulk containers.                                                                                                                                                                                                                                               |
| HspE7                       |   | Stressgen’s  target protein molecule (SGN-00101). Also used to refer to material or  samples not made under cGMP (i.e., not Drug Substance).                                                                                                                                                                                                  |
| Interim  Reference Standard |   | Reference  Standard qualified from HspE7 taken from a Development Batch.                                                                                                                                                                                                                                                                           |
| Lot                         |   | Output from finish/fill  activities (e.g., Drug Product Lot).                                                                                                                                                                                                                                                                                      |
| MiniPrep                    |   | Bench-scale purification of  material for [* *]testing.                                                                                                                                                                                                                                                                                            |
| Process A                   |   | The original downstream  process as described [* *].                                                                                                                                                                                                                                                                                               |
| Process B                   |   | A redeveloped downstream  process that [* *]                                                                                                                                                                                                                                                                                                       |
| Process  Consumables:       |   | Materials  used as an aid in the manufacture of an intermediate or Drug Substance that  do not themselves participate in a chemical or biological reaction.  For example: resins, raw materials,  filters, membranes, disposable analytical test kits, disposable bags.                                                                       |
| Program:                    |   | The services performed by  Avecia under this Agreement.                                                                                                                                                                                                                                                                                            |
| Purification:               |   | All unit operations involved  in the purification of the Drug Substance.                                                                                                                                                                                                                                                                           |
| Recovery:                   |   | All unit operations which  yield Cell Paste from the fermentation broth.                                                                                                                                                                                                                                                                           |
| Reference Standard          |   | A substance that has been  shown by an extensive set of analytical tests to be authentic material that  should be of high purity.  This  standard can be (1) [* *]; (2) [* *]; (3) [* *] or (4) [* *].                                                                                                                                        |
| Research Batch:             |   | A non-cGMP run intended to execute  the series of unit operations at reduced scale, in the specified order, to  demonstrate [* *] in its entirety.                                                                                                                                                                                                 |
| Scope Statement:            |   | This schedule to the BSA,  which represents the statement of work by Avecia for the Programme and  specifies the design, information desired, estimated duration of the  Programme and all other matters pertinent to the conduct and completion of  the Programme.  The Scope Statement  will be used to define the [* *] for the Programme. |
| Stressgen:                  |   | Stressgen Biotechnologies,  Inc.: Contract and Program Management performed at the offices located at 409  2nd Avenue, Suite 201Collegeville, PA 19426-2655                                                                                                                                                                                        |
| [* *]                       |   | Assay used to determine [* *] of API.                                                                                                                                                                                                                                                                                                         |
| Up Stream Process:          |   | Up Stream Processing  operations to include seed fermentation through Cell Paste recovery                                                                                                                                                                                                                                                          |
| Validation Master Plan:     |   | The outline of activities  relating to the validation aspects of a manufacturing process.                                                                                                                                                                                                                                                          |
| Work Breakdown Structure    |   | A hierarchical organization of  deliverables due from a project. Forms the outline of the Scope Statement and  Statement of Work. Addition of durations and dependences to the work elements  leads to a project schedule (usually depicted as a Gantt chart).                                                                                     |

 

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**3      ACRONYMS**

 
| BSA    | Biological Services Agreement             |
|--------|-------------------------------------------|
| C of A | Certificate of Analysis                   |
| C of C | Certificate of Compliance                 |
| CMC    | Chemistry, Manufacturing and  Controls    |
| EOP    | End Of Production                         |
| ETP    | Engineering Test Plan                     |
| FDA    | Food and Drug Administration              |
| GMP    | Good Manufacturing Practices              |
| [* *]  | [* *]                                     |
| ICH    | International Committee on  Harmonization |
| IPC    | In-Process Control                        |
| MCB    | Master Cell Bank                          |
| MWCB   | Manufacturing Working Cell  Bank          |
| PTP    | Process Transfer Package                  |
| QA     | Quality Assurance                         |
| QC     | Quality Control                           |
| [* *]  | [* *]                                     |
| SOP    | Standard Operating Procedure              |
| STM    | Standard Test Method                      |
| USP    | United States Pharmacopoeia               |
| WBS    | Work Breakdown Structure                  |

 

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**4        SCOPE CONSTRAINTS AND ASSUMPTIONS**

 

The following constraints define the limits of theProgram’s scope. The deliverables must fall within these constraints;conversely, work outside these constraints would require a scope changeapproval mutually agreed upon by the parties.

1)              Process Consumables used inmanufacturing must meet [* *] regulatory standards, where applicable andmaterials are available.

2)              Avecia will select onlyProcess Consumables for which [* *], where possible.

3)              Drug Product testing willbe [* *].

4)              All work outputs (e.g. reportson the Program, and cGMP documentation) will be prepared using Avecia’sstandard format(s)unlessotherwise specified in the Scope Statement. Avecia will supply alldocumentation in electronic format compatible with regulatory guidelines onsubmissions, where possible.

5)              The final process designwill be suitable for a commercial supply of Drug Substance at a batch size of[* *].

6)              The minimum number ofsuccessful validation batches to meet [* *] requirements is stipulated to be [**].

7)              Third parties contracted byAvecia or Stressgen must not adversely impact the timeline.

8)              Existing assays that willbe transferred to Avecia can be modified, if necessary, but no totally newassays will be developed, unless otherwise specified in this Scope Statement.

9)              All specifications for IPCand release [* *]. Stressgen is responsible for the appropriateness of anyspecification from [* *], Avecia will be responsible for the appropriateness ofany specification from [* *].

10)        The following assumptionshave been used by Avecia in preparing the Proposal and estimating costs:

10.1   [* *]development:

10.1.1                  The process flow sheet [**] for the technology transfer, feasibility and development activities;

10.1.2                  The above flow sheet willgive figures for [* *];

10.1.3                  Product from [* *]specifications;

10.1.4                  The feasibility study willindicate that the variables that require optimization are [* *] the requiredspecification value by [* *];

10.1.5                  If [* *] for productmanufacture;

10.1.6                  If [* *] is acceptable to[* *] and they [* *] will [* *];

10.1.7                  The potential for a method[* *] within the current scope of the program;

10.1.8                  [* *] API formulation [**].

10.2                        Manufacture

10.2.1                  Processing [* *] would beexpected to deliver [* *] product

10.2.2                  [* *] delivers product thatmeets [* *] for the product

10.2.3                  The overall process takes[* *]and involves [* *] major unit operations or as defined in 10.1.1

10.2.4                  Avecia will manufacture [**]  batches during the validation stage.

 

**5      STRESSGEN’S RESPONSIBILITIES**

 

This section lists the information and materialsthat will be provided by Stressgen as applicable to facilitate the Program(“Stressgen Deliverables”) and Stressgen’s responsibilities under the Program.

 

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1)              Provide diligent and timelydirection on the overall program strategy and objectives, and will fullycollaborate on the scientific, technical, and managerial aspects of theprogram.

2)              Support andcooperate with the execution of the Program and shall not knowingly engage inany act or omission, which may reasonably be expected to prevent or delay thesuccessful execution of the Program.

3)              Provide timely review andapproval of all documents from Avecia such as: batch records, client-specificSTMs, bill of materials and other applicable documentation.  Turn around time from Stressgen will be [**].

4)              Facilitate support from [**] to coordinate final [* *].

5)              Supply appropriate materialfor [* *].

6)              Provide [* *] by Avecia.

7)              Provide [* *] that could beused [* *] at Avecia’s discretion, [* *].

8)              Submission of regulatoryfilings.

9)              Development and manufactureof Drug Product, and any associated activities requiring work by Avecia [* *].

10)         Author the non-CMCsubmissions for IND and BLA.

11)        Comply with Avecia’s SOPregarding visitor conduct while at Avecia’s site.

 

**6      TECHNOLOGY TRANSFER STAGE**

 

## ***6.1  Fermentation Process Transfer***

 

*6.1.1  Objective*

 

Pursuant to Stressgen PO# PAD0071 dated December19, 2003, Stressgen will transfer information about and samples from [* *] to[* *]. Stressgen and Avecia will agree to a [* *] that Avecia will perform todemonstrate capability. Avecia will produce [* *] for further processing andanalysis, and report results to Stressgen.

 

*6.1.2       Stressgen Input*

#### **6.1.2.1        Fermentation process description**

#### **6.1.2.2        Fermentation batch record**

#### **6.1.2.3        [* *] report**

#### **6.1.2.4        [* *] vials**

#### **6.1.2.5        [* *] stability and characterizationreports**

#### **6.1.2.6        [* *] method**

#### **6.1.2.7        Samples of [* *]**

 

*6.1.3       Avecia Deliverables*

#### **6.1.3.1        [* *] report, including Avecia analysisof previous work:**

•                  Master and executed batch records

•                  [* *] reports ([* *], etc.)

•                  [* *]

•                  [* *] report

•                  [* *] report

•                  [* *] reports

 

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•                  Draft [* *]

 

#### **6.1.3.2        Established cell banks**

6.1.3.2.1  [* *] Storageprotocols and records

6.1.3.2.2  [* *] safety report,if required.

#### ** **

#### **6.1.3.3        [* *]**

#### **6.1.3.4        Plan for [* *] activities during [* *]stage.**

## ** **

## ***6.2  Downstream Process Transfer***

 

*6.2.1       Objective*

 

Stressgen will transfer information about andsamples from [* *]. Stressgen and Avecia will agree to [* *] that Avecia willperform to demonstrate capability. Avecia will produce [* *] HspE7 at [* *],plus another [* *], for analysis, and report results to Stressgen.

 

*6.2.2       Stressgen Input*

•                  [* *]Description

•                  [* *] BatchRecords

•                  [* *]Development Report including updated info for [* *]

•                  Samples ofHspE7 and process intermediates.

•                  Cell Pasteused previously to produce acceptable HspE7 batches for comparison

 

*6.2.3       Avecia Deliverables*

6.2.3.1        [* *] report,including Avecia analysis of previous work:

•                  Master and executed batch records

•                  [* *]

•                  [* *]

#### **6.2.3.2        [* *] API [* *]**

#### **6.2.3.3        Analysis of [* *] API**

#### **6.2.3.4        Plan for [* *] during [* *] stage**

 

## ***6.3  Formulation Process Transfer***

 

*6.3.1       Objective*

 

Stressgen will transfer information about andsamples from [* *] to facilitate [* *]. Avecia will review this information andprovide [* *].

 

*6.3.2       Stressgen Input*

•                  Report on [**].

•                  [* *] report.

•                  Containerclosure system descriptions for bulk Drug Substance and Drug Product.

•                  Data onstability of Drug Substance and Drug Product.

 

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•                  Samples ofDrug Substance and Drug Product

 

*6.3.3       Avecia Deliverables*

#### **6.3.3.1        [* *] transfer report, including Aveciareview of previous work:**

•                  API Container closure system suitability

•                  API Stability data and stability programdesign

•                  [* *] API formulation process

 

#### **6.3.3.2        Plan for [* *] work during [* *] stage(in conjunction with Stressgen [* *])**

#### **6.3.3.3        Formulated [* *] API batches**

 

## ***6.4  Analytical Methods Transfer***

 

*6.4.1       Objective*

 

Stressgenwill transfer information about [* *] to facilitate Avecia’s ability to [* *].Avecia will review this information, provide [* *]. Stressgen and Avecia willagree to [* *].

 

*6.4.2       Stressgen Input*

#### **6.4.2.1        List of [* *]**

#### **6.4.2.2        List of [* *]**

#### **6.4.2.3        List of [* *] specifications**

#### **6.4.2.4        Test methods for above**

#### **6.4.2.5        List of [* *]**

#### **6.4.2.6        List of assays to be performed duringtransfer stage**

#### **6.4.2.7        [* *] Methods and related assays, [* *]**

#### ** **

*6.4.3       Avecia Deliverables*

#### **6.4.3.1        [* *] transfer report; includinganalysis of:**

•      [* *] assays

•      Assays requiring [* *]

•      [* *] developed

•      Avecia’s [* *] development

#### **6.4.3.2        Plan for analytical work [* *]**

#### ** **

## ***6.5  Technology Transfer Report***

## ** **

*6.5.1       Objective*

 

Avecia to summarize the individual unitoperations reviews listed above and report readiness to proceed to feasibilitystage.

 

*6.5.2       Avecia Deliverables*

•      Meeting minutes, action items, andcompleted transfer summary report

 

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**7  [* *] STUDYSTAGE**

 

## ***7.1****       [**] Study*

## ** **

*7.1.1       Objective*

 

To screen the [* *] during the transfer stage toidentify [* *] for commercial manufacture, recommend [* *], and plan the [* *]activities.

 

*7.1.2       Avecia Deliverables*

 

*7.1.2.1       Experiments to:*

•      [* *]

•      [* *]

•      [* *] extract

•      [* *] stability [* *]

7.1.2.2        [* *] report,including plan for [* *] work during [* *] stage.

 

## ***7.2****  [* *] Study*

## ** **

*7.2.1       Objective*

 

To screen [* *]design(s)[* *]for commercial manufacture, recommend [* *],and plan the [* *]activities.

 

*7.2.2       Avecia Deliverables*

7.2.2.1        Experiments to:

•      Characterize [* *]

•      Determine [* *] — Cell Paste storage data

•      Evaluate [* *]  vs.[* *] phase

•      Characterize [* *] scales and steps

•      Determine [* *] strategy

7.2.2.2        [* *] report,including plan for [* *] stage.

 

## ***7.3****  [* *] Study*

## ** **

*7.3.1       Objective*

 

To screen [* *]forcommercial manufacture, recommend [* *], and plan the [* *]activities.

 

*7.3.2       Avecia Deliverables*

7.3.2.1        Experiments toinvestigate:

•      Initial [* *]

•      [* *]

•      [* *]

•      [* *] HspE7

•      [* *]

•      Final overall HspE7 [* *]

•      [* *]

 

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7.3.2.2        [* *] report,including plan for [* *] during [* *] stage.

 

## ***7.4****  [* *] Study*

## ** **

*7.4.1       Objective*

 

To screen API [* *]toidentify [* *]commercialmanufacture, recommend [* *], and plan the [* *]activities.This work will be done [* *],to the extent possible, will recommend an API formulation [* *]Drug Product; however, [* *]thefinal API formulation will be Avecia’s responsibility.

 

*7.4.2       Avecia Deliverables*

7.4.2.1        Experiments to:

•      [* *]

•      [* *]

•      [* *] of HspE7

•      [* *]  ofthe formulated API

7.4.2.2        [* *] reportincluding plans for [* *] work during [* *] stage.

#### ** **

## ***7.5****  [* *] Study*

## ** **

*7.5.1       Objective*

 

To screen [* *], select and qualify [* *] purposes,and plan the [* *]stage activities.

 

*7.5.2       Avecia Deliverables*

7.5.2.1        Experiments to:

•      [* *]  methods [* *]

•      [* *] assays as required, e.g.,

•      [* *] need

•      [* *]

•      Review [* *] for entire process

•      [* *] batch release and stability assays

 

7.5.2.2        [* *] report,including objectives for further [* *].

#### ** **

***7.6  [* *]Report and Development Authorization***

## ** **

*7.6.1       Objective*

 

Avecia to summarize [* *]reports listed above, and report readinessto proceed.

 

*7.6.2       Stressgen Input*

•      Review of [* *]

•      Approval to [* *]stage

 

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### *7.6.3       Avecia Deliverables*

7.6.3.1        Summary [* *]Report, including [* *]  plans and goalsfor [* *] stage.

 

**8  [**] STAGE**

 

Upon Stressgen’s approval to proceed with [* *],Avecia will execute the [* *]fromthe [* *]stage in order to develop [* *]. Avecia willparallel track its work to the extent possible, and will resource the workadequately to allow [* *], particularly on [* *]. This stage will [* *]the final [* *]for the pivotalclinical trial supply and commercial manufacture, and produce pilot batches atscale.

 

## ***8.1       [* *]***

## ** **

*8.1.1       [* *] Objectives*

 

Avecia will execute the [* *]approved during the [* *]stageto [* *]process for future commercial scale, andproduce pilot batches of Cell Paste. Criteria for completion of development include [* *]process:

 

•      [* *]

•      Produces at least [* *]HspE7 batches (not for clinical use)

•      Generates HspE7 with [* *].

 

*8.1.2       [* *]  Deliverables*

8.1.2.1        [* *] report

8.1.2.2        Draft [* *] recordsand any [* *] control automation code

8.1.2.3        [* *] acceptableHspE7 Cell Paste batches at the [* *] scale

8.1.2.4        Cell Paste samplesfor testing

8.1.2.5        Cellcharacterization analysis

8.1.2.6        Draft [* *] batchrecords

8.1.2.7        Draft sampletesting plan

8.1.2.8        Draft GMP transferpackage for the [* *] process

 

## ***8.2  Cell Paste[* *]***

 

*8.2.1       [* *] Objectives*

 

Avecia will execute the [* *] approved during the [* *]stage to [* *]for futurecommercial scale, and produce pilot batches of Cell Paste.  Criteria for completion of developmentinclude evidence that the [* *]:

 

•      [* *]

•      Produces acceptable CellPaste batches at the scales tested in section 8.1.2  (notfor clinical use)

 

*8.2.2       [* *] Deliverables*

8.2.2.1        Draft [* *] batchrecords, including [* *] for Cell Paste

8.2.2.2        Cell Paste samplesfor testing

 

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8.2.2.3        Draft sampletesting plan

8.2.2.4        Draft GMP transferpackage for the [* *] process

 

## ***8.3  [* *]***

 

*8.3.1       Objective*

 

Avecia will execute the [* *]approved during the [* *]thedownstream purification process for future commercial scale, and produce pilotbatches of API. Avecia will [* *], demonstrating process robustness and reproducibility

 

Specific objectives are that the process [* *]HspE7 with:

 

•      [* *] material.

•      [* *]

•      [* *] as determined by [* *].

•      [* *] similar to the [* *]  reference material, as measured by the [* *]  bioassay.

•      Overall quality that allowsfor release of an Interim Reference Standard batch that can be qualified forrelease of the Drug Substance for pivotal clinical trial supplies.

 

*8.3.2       Avecia Deliverables*

8.3.2.1        Updated TechnicalSummary Report

8.3.2.2        [* *]

8.3.2.3        HspE7 samples fortesting

8.3.2.4        [* *] acceptablebatches of HspE7 at [* *]

8.3.2.5        Draft batch records

8.3.2.6        Draft sample testplan.

 

## ***8.4  APIFormulation [* *]***

 

*8.4.1       Formulation [* *]Objectives*

 

Avecia will [* *]bulkDrug Substance formulation that [* *]acommercial manufacturing process. Avecia will collaborate with the [* *] to ensure compatibility of the [**]with the [* *]tothe extent possible, but responsibility for the [* *] for the API lies withAvecia.

 

Specific objectives are that the bulk formulationprocess:

 

•      [* *]

•      Be stable at [* *]

•      Has components that [* *]assays

•      [* *] Drug Product formulation that can belyophilized

•      Generates samples thatStressgen can use for lyophilization [* *]

 

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*8.4.2       API Formulation [* *]Deliverables*

8.4.2.1        [* *] samples (lessthan [* *]) for testing ([* *], etc.)

8.4.2.2        Report on API [* *]formulation process [* *].

8.4.2.3        API Formulationmaterial [* *]

8.4.2.4        API Stability report([* *])

8.4.2.5        API Containerclosure system specifications for bulk Drug Substance.

8.4.2.6        Report evaluatingstability of Drug Substance to [* *]

8.4.2.7        Draft APIformulation records

#### ** **

## ***8.5  [* *]***

## ** **

*8.5.1       [* *] Objectives*

 

[* *]methodsfor

 

•      [* *] testing,

•      demonstration of [* *],

•      Batch release,

•      Characterization of HspE7,

•      Stability studies, including[* *] stability indicatingassays from forced degradation and/or accelerated studies.

 

*8.5.2       [* *] Deliverables*

 

*[* *]* listed in the following table, which isindicative and will be reviewed during *[* *]*.

 
| **Assay** |   | **[* *]** |   | **[* *]** |   | **[* *]** |   | **Safety** |   | **Purity** |   | **Identity** |   | **Stability** |   | **Strength** |   | **IPC** |   | **[* *]** |
|-----------|--------|-----------|--------|-----------|--------|-----------|--------|------------|--------|------------|--------|--------------|--------|---------------|--------|--------------|--------|---------|--------|-----------|
| [* *]     |   |      |   | X         |   |      |   | X          |   |       |   |         |   |          |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   | X         |   |      |   | X          |   |       |   |         |   |          |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   | X         |   | X         |   |       |   | X          |   | X            |   | X             |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   |      |   | X         |   |       |   |       |   |         |   | X             |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   |      |   | X         |   |       |   | X          |   | [* *]        |   | X             |   | [* *]        |   | [* *]   |   | [* *]     |
| [* *]     |   |      |   |      |   | X         |   |       |   | X          |   |         |   | X             |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   | X         |   | X         |   |       |   |       |   | X            |   | X             |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   |      |   | X         |   |       |   |       |   |         |   | X             |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   | X         |   | X         |   |       |   | X          |   |         |   |          |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   | X         |   |      |   |       |   |       |   |         |   |          |   | X            |   | X       |   | [* *]     |
| [* *]     |   |      |   | X         |   |      |   |       |   |       |   |         |   | X             |   |         |   | X       |   | [* *]     |
| [* *]     |   |      |   |      |   |      |   |       |   |       |   |         |   | X             |   |         |   | X       |   | [* *]     |
| [* *]     |   |      |   | X         |   |      |   | X          |   |       |   |         |   |          |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   |      |   | X         |   |       |   |       |   |         |   |          |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   |      |   | X         |   |       |   |       |   |         |   |          |   |         |   |    |   | [* *]     |
| [* *]     |   |      |   |      |   | X         |   |       |   |       |   |         |   |          |   |         |   |    |   | [* *]     |

 

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| [* *] |   | X      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | [* *] |
|-------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------|
| [* *] |   | X      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | [* *] |
| [* *] |   | X      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | [* *] |
| [* *] |   | X      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | [* *] |
| [* *] |   | X      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | [* *] |
| [* *] |   |   |   |   |   | X      |   |   |   | X      |   |   |   |   |   |   |   |   |   | [* *] |
| [* *] |   |   |   | X      |   |   |   |   |   |   |   | X      |   |   |   |   |   |   |   | [* *] |

 

----

* if necessary

 

8.5.2.1        Assays requiringspecial attention

•      [* *] assay for Cell Paste strength, identity, andstability

•      [* *], or a summary reportdocumenting the work done and data produced and [* *]. The report will includedata generated from [* *] testing.

•      At least [* *] assays for [* *]

•      A [* *] assay, or a summary report documenting thework done and data produced and the reasons [* *].  The report will include the data generated from [* *]  results using [* *] standardcommercial kit methods, and estimates of [* *]  by other methods.

 

8.5.2.2        [* *] report,including reports on any assays that were [* *]  is available

8.5.2.3        Draft [* *]

8.5.2.4        [* *] ReferenceStandard qualification report

8.5.2.5        Characterizationreport comparing HspE7 [* *]

8.5.2.6        Pilot stabilitystudy protocols and initiated studies

8.5.2.7        Pilot stabilitystudy interim data report

8.5.2.8        Draft stabilityprotocols for Drug Substance

8.5.2.9        HspE7 batchreleased with a Certificate of Fill for fill/finish processing andqualification as the [* *] Reference Standard for release of pivotal clinicaltrial supplies (could be part of 8.3.2.4)

 

## ***8.6       [**] Report and Process Description***

## ** **

*8.6.1       Objective*

 

Avecia to summarize the individual reportslisted above, and document the rationale for the overall process design.

 

*8.6.2       Stressgen Input*

•      Review of individual development reports

 

*8.6.3       Stressgen Deliverabl*e

•      Approval to proceed to Phase III GMPcampaign

 

----

[*] = Confidential Treatment Request(ed).

 

15

----

 

*8.6.4       Avecia Deliverables*

8.6.4.1        Development Report

8.6.4.2        API ProcessDescription.

 

**9  API Production: Pivotal Clinical TrialSupply**

 

Upon Stressgen’s approval of the successfulcompletion of the [* *] stage, Avecia will manufacture, and release API forprocessing into Drug Product for use in pivotal clinical trials.

 

## ***9.1       GMP Pre-production Deliverables***

## ** **

*9.1.1       GMP Pre-ProductionObjectives*

 

Avecia will complete a detailed study of thereadiness of the process to fit into the cGMP facilities and the suitability ofthe available equipment and utilities for the process design. Requiredalterations to [* *] will be identified and implemented in advance of thecampaign so that the [* *] is not delayed.

 

*9.1.2       GMP Pre-ProductionDeliverables*

9.1.2.1        Released rawmaterials

9.1.2.2        Approved equipmentlist, utilities and automation codes

9.1.2.3        Approved batchrecords

9.1.2.4        Approved ETP

9.1.2.5        Approved STM

9.1.2.6        Approved PTP forthe fermentation process, through Cell Paste recovery

9.1.2.7        Approved PTP forPurification and Formulation Processes, including final formulation

9.1.2.8        Approved StabilityProtocols for Cell Paste and Drug Substance

9.1.2.9        Updated developmentreports (as needed)

9.1.2.10      Approved GMP CampaignPlan

 

## ***9.2       GMP Fermentation Production***

## ** **

*9.2.1       FermentationProduction Objectives*

 

Produce at least [* *]ofCell Paste at the [* *] scale for use in the manufactureof Drug Substance at the [* *]scalefor use in pivotal clinical trials. Produce [* *]ofCell Paste at the [* *]scale to confirmthe process [* *].

 

----

[*] = Confidential Treatment Request(ed).

 

16

----

 

*9.2.2       Deliverables*

 

9.2.2.1     Updated technical summary reports from the Cell Pasteproduction.

#### **9.2.2.2     Executed and reviewed batch documentation.**

#### **9.2.2.3     cGMP Cell Paste for subsequent DrugSubstance batches, suitable for pivotal clinical trials.**

#### **9.2.2.4     Cell Paste stability studies initiated**

#### **9.2.2.5     Cleaning summary report.**

#### **9.2.2.6     EOP testing**

•      Approved Protocol

•      Execute EOP sampling.

•      Approved EOP report

 

9.2.2.7     [* *]  HspE7 Cell Pastebatches at the [* *]  scale

9.2.2.8     Purification of [* *]equivalent fermentation scale aliquot of cell paste from a [* *] fermentationunder non-GMP conditions.

#### ** **

## ***9.3       API Batches: Pivotal Clinical TrialSupply***

## ** **

*9.3.1       Objective*

Produce [* *]scalebatches of API for processing into Drug Product for pivotal clinical trials.

 

*9.3.2       Deliverables*

9.3.2.1        Updated technicalsummary reports from the API production.

9.3.2.2        Executed andreviewed batch records.

9.3.2.3        At least [* *]successful engineering batches at the [* *] scale

9.3.2.4        [* *] batches atthe [* *] scale of cGMP Drug Substance

9.3.2.5        [* *] for the DrugSubstance batches.

9.3.2.6        Drug Substancestability studies initiated.

9.3.2.7        Cleaning summaryreport.

 

## ***9.4       GMP Drug Substance CharacterizationReport (IND)***

## ** **

*9.4.1       CharacterizationObjective*

Avecia will characterize the [* *]and [* *] and [* *] cGMP clinical batches to support StressgenIND Amendment filing.

 

----

[*] = Confidential Treatment Request(ed).

 

17

----

 

*9.4.2       CharacterizationDeliverables*

9.4.2.1        Characterizationprotocol

9.4.2.2        CharacterizationSummary report

9.4.2.3        Reference Standardqualification protocol

9.4.2.4        Reference Standardqualification report

9.4.2.5        Qualified referencestandard.

 

**10  ValidationStage**

 

## ***10.1     Validation Master Plan***

## ** **

*10.1.1                     Objective*

Determine the acceptable operating ranges for theprocess and Drug Substance specifications, to provide assurance that the DrugSubstance manufacturing process and testing methods will reliably andreproducibly perform their intended purpose in the manufacture of a commercialDrug Product.

 

*10.1.2                     Deliverables*

10.1.2.1      LaboratoryPerformance Characterization Study

10.1.2.2      Draft VMP

10.1.2.3      Draft Protocols forprocess validation.

10.1.2.4      Draft protocols forcleaning method validation

10.1.2.5      Draft ETP (asneeded)

 

## ***10.2     Analytical Method Validation***

 

*10.2.1                     AnalyticalMethod Validation Objectives*

 

Avecia will generate data demonstrating the:

 

•      Complete [* *] HspE7 related [* *].

•      Limits of [* *].

•      Completion of methodvalidation for [* *] testsprior to validation batch manufacturing.

 

*10.2.2                     Deliverables*

10.2.2.1      Validation Summary

 

Report for each method identified in the tablebelow, which is indicative and will be reviewed during development:

 

| **Assay** |   | **[* *]** |   | **[* *]** |   | **Safety** |   | **Purity** |   | **Identity** |   | **Stability** |   | **Strength** |   | **IPC** |   | **[* *]** |
|-----------|--------|-----------|--------|-----------|--------|------------|--------|------------|--------|--------------|--------|---------------|--------|--------------|--------|---------|--------|-----------|
| [* *]     |   | X         |   |      |   | X          |   |       |   |         |   |          |   |         |   |    |   | X         |
| [* *]     |   | X         |   |      |   | X          |   |       |   |         |   |          |   |         |   |    |   | X         |
| [* *]     |   | X         |   | X         |   |       |   | X          |   | X            |   | X             |   |         |   |    |   | X         |

 

----

[*] = Confidential Treatment Request(ed).

 

18

----

 

| [* *] |   |   |   | X      |   |   |   |   |   |   |   | X      |   |   |   |   |   | X      |
|-------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| [* *] |   |   |   | X      |   |   |   | X      |   |   |   | X      |   |   |   |   |   |   |
| [* *] |   |   |   | X      |   |   |   | X      |   |   |   | X      |   |   |   |   |   | X      |
| [* *] |   | X      |   | X      |   |   |   |   |   | X      |   | X      |   |   |   |   |   | X      |
| [* *] |   |   |   | X      |   |   |   |   |   |   |   | X      |   |   |   |   |   |   |
| [* *] |   | X      |   | X      |   |   |   | X      |   |   |   |   |   |   |   |   |   | X      |
| [* *] |   | X      |   |   |   |   |   |   |   |   |   |   |   | X      |   | X      |   | X      |
| [* *] |   | X      |   |   |   |   |   |   |   |   |   |   |   |   |   | X      |   | X      |
| [* *] |   |   |   |   |   |   |   |   |   |   |   | X      |   |   |   | X      |   | X      |
| [* *] |   | X      |   |   |   | X      |   |   |   |   |   |   |   |   |   |   |   | X      |
| [* *] |   | X      |   |   |   |   |   |   |   | X      |   |   |   |   |   |   |   | X      |

 

## ***10.3     API Validation Batch Pre-production***

## ** **

*10.3.1                     Objective*

 

Prepare Avecia facilities and processdocumentation for validation batch manufacturing.

 

*10.3.2                     Deliverables*

10.3.2.1 Updated Process documentation

10.3.2.2 Approved PQ batch validation protocols

10.3.2.3 Approved cleaning validation protocols

 

## ***10.4     Fermentation Validation Batch Manufacturing***

 

*10.4.1                     Objective*

 

Produce [* *] batches of Cell Paste to support process validation.

 

*10.4.2                     Deliverables*

10.4.2.1      [* *] batches tosupport [* *] filing (scales to be determined)

10.4.2.2      Executed Protocols.

10.4.2.3      Process validationreports from fermentation and Cell Paste recovery.

10.4.2.4      Cleaning validationreports.

10.4.2.5      Executed andreviewed batch records.

10.4.2.6      Cell Paste storedfor future manufacturing [* *]

10.4.2.7      Cell Paste onstability

#### ** **

## ***10.5     API Validation Batches***

## ** **

*10.5.1                     Objective*

Produce [* *]batches of Drug Substance processvalidation.

 

----

[*] = Confidential Treatment Request(ed).

 

19

----

 

*10.5.2                     Deliverables*

10.5.2.1      [* *] to support [**] filing(design scale)

10.5.2.2      Executed Protocols.

10.5.2.3      Process validationreports from the Downstream Process.

10.5.2.4      Cleaning validationreports.

10.5.2.5      Executed andreviewed batch records.

10.5.2.6      Drug Substancestored [* *]

10.5.2.7      Drug Substance fromall [* *] batches on stability.

10.5.2.8      [* *] for the DrugSubstances.

10.5.2.9      Characterizationreport on API from validation batches: comparison to each other and pivotal [**] batch

 

**11  Regulatory Support**

# ** **

## ***11.1     IND [* *] CMC Process)***

## ** **

*11.1.1                     RegulatorySupport Objective*

 

Support Stressgen’s regulatory filing by assemblingdata, documentation and information from work performed at Avecia into the CMCsection of an IND [* *] process in preparation for pivotal clinical trials.

 

*11.1.2                     Stressgen’sInput*

11.1.2.1      Regulatory strategy

11.1.2.2      Editorialsupervision of CMC section

11.1.2.3      Submission of IND [**]

 

*11.1.3                     AveciaDeliverables*

11.1.3.1      Copies of data anddocuments as requed for regulatory submission support.

11.1.3.2      Characterizationreport (from section 8.5.2.5)

11.1.3.3      Completed, [* *] forIND [* *], formatted in Word or PDF.

#### ** **

## ***11.2     Marketing Applications***

 

*11.2.1                     Objective*

 

Provide Stressgen with the written CMC section tosupport BLA filing in [* *], in accordance with the [* *].

 

----

[*] = Confidential Treatment Request(ed).

 

20

----

 

*11.2.2                     Stressgen’sInput*

11.2.2.1      Regulatory strategy

11.2.2.2      Editorialsupervision of CMC section

11.2.2.3      Submission ofmarketing applications to [* *]

 

*11.2.3                     AveciaDeliverables*

11.2.3.1      QA’d CMC sectionformatted in Word or PDF, ready for BLA filing in [* *].

11.2.3.2      Supporting documentsfor CMC section

 

## ***11.3     Mock Audits***

 

*11.3.1                     Objective*

 

Support [* *]mock Pre-Approval Inspection audits, [* *].

 

### *11.3.2     Deliverables*

11.3.2.1      Audit Observationreport and any associated corrective actions for each mock audit.

11.3.2.2      Other objects to bedetermined

 

## ***11.4     Pre-Approval Inspection Support***

 

*11.4.1     Objective*

 

Support Stressgen readiness for inspectionsfrom [* *]regulatoryauthorities in anticipation of Drug Product approval.

 

*11.4.2     Deliverables*

11.4.2.1      To be determined.

 

**12  Program Management**

 

*12.1.1     Objective*

 

Stressgen and Avecia will jointly develop andmaintain a Project Management Plan. The plan will include the composition andresponsibilities of a Steering Committee, a Project Team, and the communicationplan and change control process for the project.

 

*12.1.2     Deliverables*

 

12.1.2.1      Scope Statement

•      This document, supported by detailed workplansfor each unit operation. Modified by means ofapproved Programme Amendment Orders only. Updated monthly.

 

12.1.2.2      Programme CostSchedule

•      The estimated Programme budget, organizedaccording to the [* *]. Updated monthly.

 

12.1.2.3      Programme Timeline

•      Timeline of events, [* *]. Updatedmonthly.

 

----

[*] = Confidential Treatment Request(ed).

 

21

----

 

12.1.2.4      Project team minutesand other documentation

12.1.2.5      Monthly projectstatus report:

•      Project metrics

•      Milestone status (current andnext quarter)

•      Current activities update and[* *]

•      Meeting calendar

•      Current and incipient riskevents and mitigation plans

•      Issues log

•      Change requests and changecontrol log.

 

----

[*] = Confidential Treatment Request(ed).

 

22

----

 

Schedule 9

 

Programme Budget and Payment Schedule

 

*See Attached (2 pages)*

 

----

[*] = Confidential Treatment Request(ed).

 

----

 
| **ID** |     | **Invoice  Trigger  Scope Reference** |   | **Task Name**                                                                      |   | **Total  £’000** |   |
|--------|----------|---------------------------------------|--------|------------------------------------------------------------------------------------|--------|----------------------------|--------|
| 1      |     | 6                                     |   | Technology  transfer                                                               |   | [*  *]                     |   |
| 2      |     | 7                                     |   | Feasibility  study                                                                 |   | [*  *]                     |   |
| 3      |     | 8  except below                       |   | [*  *] development                                                                 |   | [*  *]                     |   |
| 4      |     | 8.3.2.4                               |   | [*  *] batches HspE7 at [* *] scale                                                |   | [*  *]                     |   |
| 5      |     | 8.5.2.5                               |   | Characteristion  report comparing HspE7 with [* *]                                 |   | [*  *]                     |   |
|   |     |                                  |   | **API production Pivotal Clinical trial supply**                                   |   |                       |   |
| 6      | **[**]** |                                  |   | GMP  pre-payment                                                                   |   | [*  *]                     |   |
| 7      |     | 9.1                                   |   | GMP  Pre- production deliverables                                                  |   | [*  *]                     |   |
| 8      | **[**]** | 9.2                                   |   | GMP  Fermentation Production                                                       |   | [*  *]                     |   |
| 9      |     | 9.2.2.8                               |   | Non-GMP  purification from [* *]                                                   |   | [*  *]                     |   |
| 10     | **[**]** | 9.3                                   |   | API  batches - Pivotal clinical trial supply - Release                             |   | [*  *]                     |   |
| 11     |     |                                  |   | API  batches - Receipt of shipment instruction for final delivery                  |   | [*  *]                     |   |
| 12     |     | 9.4                                   |   | Drug  substance characterisation report                                            |   | [*  *]                     |   |
|   |     |                                  |   | **Validation Stage**                                                               |   |                       |   |
| 13     |     | 10.1                                  |   | Validation  Master Plan                                                            |   | [*  *]                     |   |
| 14     |     | 10.1.2.1                              |   | Laboratory  Performance Characterisation Study                                     |   | [*  *]                     |   |
| 15     |     | 10.2                                  |   | Analytical  Method Validation                                                      |   | [*  *]                     |   |
| 16     | **[**]** |                                  |   | GMP  pre-payment                                                                   |   | [*  *]                     |   |
| 17     | **[**]** | 10.5.2.1  by batch                    |   | Fermentation/API  validation batches                                               |   | [*  *]                     |   |
| 18     |     |                                  |   | 1                                                                                  |   |                       |   |
| 19     |     |                                  |   | 2                                                                                  |   |                       |   |
| 20     |     |                                  |   | 3                                                                                  |   |                       |   |
| 21     |     |                                  |   | 4                                                                                  |   |                       |   |
| 22     |     |                                  |   | 5                                                                                  |   |                       |   |
| 23     | **[**]** | 10.5.2.5                              |   | Fermentation/API  validation  -  Release                                 |   | [*  *]                     |   |
| 24     |     |                                  |   | API  validation  -  Receipt of shipment instruction for final  delivery  |   | [*  *]                     |   |
| 25     |     | 10.5.2.2  by batcf                    |   | Execution  of Validation Plan                                                      |   | [*  *]                     |   |
| 26     |     | 10.5.2.3                              |   | Validation  reports                                                                |   | [*  *]                     |   |
| 27     |     | 11.1                                  |   | CMC  section                                                                       |   | [*  *]                     |   |
| 28     |     | 11.3                                  |   | Mock  PAI [* *]                                                                    |   | [*  *]                     |   |
| 29     |     | 11.4                                  |   | PAI  [* *]                                                                         |   | [*  *]                     |   |
| 30     |     |                                  |   | Raw  materials (total estimate)                                                    |   | TBA                        |   |
| 31     |     |                                  |   | **Stability program (to be defined)**                                              |   | Split  tba            |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   | **Total Budget**                                                                   |   | **[* *]**                  |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   | **GMP Manufacture [* *]**                                                          |   |                       |   |
| 6      |     |                                  |   | GMP  pre-payment                                                                   |   | [*  *]                     |   |
| 8      |     | 9.2                                   |   | GMP  Fermentation Production                                                       |   | [*  *]                     |   |
| 10     |     | 9.3                                   |   | API  batches - Pivotal clinical trial supply - Release                             |   | [*  *]                     |   |
| 11     |     |                                  |   | API  batches - Receipt of shipment instruction for final delivery                  |   | [*  *]                     |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   | **GMP Manufacture [* *]**                                                          |   |                       |   |
| 16     |     |                                  |   | GMP  pre-payment                                                                   |   | [*  *]                     |   |
| 17     |     | 10.5.2.1  by batch                    |   | Fermentation/API  validation batches                                               |   | [*  *]                     |   |
| 23     |     | 10.5.2.5                              |   | Fermentation/API  validation  -  Release                                 |   | [*  *]                     |   |
| 24     |     |                                  |   | API  validation  -  Receipt of shipment instruction for final  delivery  |   | [*  *]                     |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   | Total  consideration for sale of API                                               |   |                       |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   | Total consideration for technical consultancy  research and development activities |   | [*  *]                     |   |
|   |     |                                  |   |                                                                               |   |                       |   |
|   |     |                                  |   | Total  Budget Estimate                                                             |   | [*  *]                     |   |

 

----

 
| **Budgeted Cost of Work Scheduled** |      |                |                |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |
|-------------------------------------|-----------|---------------------|---------------------|---------------|----------------------------------------------------------------------------------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|-----------|
| BASELINE-REV 1.0  Oct 31, 2003 |      | 1                   |                | 2             |                                                                             | 3         |      | 4         |      | 5         |      | 6         |      | 7         |      | 8         |      | 9         |      | 10        |      | 11        |      | 12        |      | 13        |      | 14        |      | 15        |      | 16        |      | 17        |      | 18        |      |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                | **Invoice Trigger** |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| **ID**                              |      | **Scope Reference** |                | **Task Name** |                                                                             | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      |      |      |      |      |      |      |      |      |   |   |   |   |
| 1                                   |      |                | 6                   |          | Technology transfer                                                              |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 2                                   |      |                | 7                   |          | Feasibility study                                                                |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 3                                   |      |                | 8 except below      |          | [* *] development                                                                |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 4                                   |      |                | 8.3.2.4             |          | [* *] batches HspE7 at [* *] scale                                               |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 5                                   |      |                | 8.5.2.5             |          | Characteristion report comparing HspE7 with  [* *]                               |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | **API production Pivotal  Clinical trial supply**                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 6                                   | **[* *]** |                |                |          | GMP pre-payment                                                                  |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 7                                   |      |                | 9.1                 |          | GMP Pre- production deliverables                                                 |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 8                                   | **[* *]** |                | 9.2                 |          | GMP Fermentation Production                                                      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      | [* *]     |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 9                                   |      |                | 9.2.2.8             |          | Non-GMP purification from [* *]                                                  |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 10                                  | **[* *]** |                | 9.3                 |          | API batches - Pivotal clinical trial supply  - Release                           |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 11                                  |      |                |                |          | API batches - Receipt of shipment  instruction for final delivery                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 12                                  |      |                | 9.4                 |          | Drug substance characterisation report                                           |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | **Validation Stage**                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 13                                  |      |                | 10.1                |          | Validation Master Plan                                                           |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 14                                  |      |                | 10.1.2.1            |          | Laboratory Performance Characterisation  Study                                   |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 15                                  |      |                | 10.2                |          | Analytical Method Validation                                                     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 16                                  | **[* *]** |                |                |          | GMP pre-payment                                                                  |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 17                                  | **[* *]** |                | 10.5.2.1 by batch   |          | Fermentation/API validation batches                                              |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 18                                  |      |                |                |          | 1                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 19                                  |      |                |                |          | 2                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 20                                  |      |                |                |          | 3                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 21                                  |      |                |                |          | 4                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 22                                  |      |                |                |          | 5                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 23                                  | **[* *]** |                | 10.5.2.5            |          | Fermentation/API validation  -  Release                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 24                                  |      |                |                |          | API validation  -  Receipt of shipment  instruction for final delivery |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 25                                  |      |                | 10.5.2.2 by batcf   |          | Execution of Validation Plan                                                     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 26                                  |      |                | 10.5.2.3            |          | Validation reports                                                               |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 27                                  |      |                | 11.1                |          | CMC section                                                                      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 28                                  |      |                | 11.3                |          | Mock PAI [* *]                                                                   |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 29                                  |      |                | 11.4                |          | PAI [* *]                                                                        |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 30                                  |      |                |                |          | Raw materials (total estimate)                                                   |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 31                                  |      |                |                |          | **Stability program (to be  defined)**                                           |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | **Total Budget**                                                                 |      | **[* *]** |      |      |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | **Cumulative Budget**                                                            |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | **CANCELLATION**                                                                 |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | Prepaid                                                                          |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | Additional                                                                       |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      | 1[* *]    |      | 1[* *]    |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | Cancellation                                                                     |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                | **Invoice Trigger** |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| **ID**                              |      | **Scope Reference** |                | **Task Name** |                                                                             | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |   | **Total** |   |
| 1                                   |      |                | 6                   |          | **Technology transfer**                                                          |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 2                                   |      |                | 7                   |          | **Feasibility study**                                                            |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 3                                   |      |                | 8 except below      |          | **Process development**                                                          |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 4                                   |      |                | 8.3.2.4             |          | [* *] batches HspE7 at [* *] scale                                               |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 5                                   |      |                | 8.5.2.5             |          | Characteristion report comparing HspE7 with  [* *]                               |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
|                                |      |                |                |          | **API production Pivotal  Clinical trial supply**                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 6                                   | **[* *]** |                |                |          | GMP pre-payment                                                                  |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 7                                   |      |                | 9.1                 |          | GMP Pre- production deliverables                                                 |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 8                                   | **[* *]** |                | 9.2                 |          | GMP Fermentation Production                                                      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 9                                   |      |                | 9.2.2.8             |          | Non-GMP purification from [* *]                                                  |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 10                                  | **[* *]** |                | 9.3                 |          | API batches - Pivotal clinical trial supply  - Release                           |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 11                                  |      |                |                |          | API batches - Receipt of shipment  instruction for final delivery                |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 12                                  |      |                | 9.4                 |          | Drug substance characterisation report                                           |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
|                                |      |                |                |          | **Validation Stage**                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 13                                  |      |                | 10.1                |          | Validation Master Plan                                                           |      |      |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 14                                  |      |                | 10.1.2.1            |          | Laboratory Performance Characterisation  Study                                   |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 15                                  |      |                | 10.2                |          | Analytical Method Validation                                                     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 16                                  | **[* *]** |                |                |          | GMP pre-payment                                                                  |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 17                                  | **[* *]** |                | 10.5.2.1 by batch   |          | Fermentation/API validation batches                                              |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 18                                  |      |                |                |          | 1                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 19                                  |      |                |                |          | 2                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 20                                  |      |                |                |          | 3                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 21                                  |      |                |                |          | 4                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 22                                  |      |                |                |          | 5                                                                                |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 23                                  | **[* *]** |                | 10.5.2.5            |          | Fermentation/API validation  -   Release                               |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 24                                  |      |                |                |          | PI validation  -  Receipt of shipment  instruction for final delivery  |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 25                                  |      |                | 10.5.2.2 by batcf   |          | Execution of Validation Plan                                                     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |   |   |   | [* *] |   |
| 26                                  |      |                | 10.5.2.3            |          | Validation reports                                                               |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |      |      |   |   |   | [* *] |   |
| 27                                  |      |                | 11.1                |          | CMC section                                                                      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |      |      |   |   |   | [* *] |   |
| 28                                  |      |                | 11.3                |          | Mock PAI [* *]                                                                   |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      |      |   |   |   | [* *] |   |
| 29                                  |      |                | 11.4                |          | PAI ([* *]                                                                       |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |   |   |   | [* *] |   |
| 30                                  |      |                |                |          | Raw materials (total estimate)                                                   |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
| 31                                  |      |                |                |          | **Stability program (to be  defined)**                                           |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | **Total Budget**                                                                 |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |   |   |   | **[* *]** |   |
|                                |      |                |                |          | **Cumulative Budget**                                                            |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |      | **[* *]** |   | **[* *]** |   |   |   |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | **CANCELLATION**                                                                 |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | Prepaid                                                                          |      |      |      |      |      |      |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | Additional                                                                       |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | 1[* *]    |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          | Cancellation                                                                     |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |
|                                |      |                |                |          |                                                                             |      |      |      |      |      |      |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      | [* *]     |      |      |      |      |      |      |      |      |      |      |      |      |      |      |   |   |   |   |   |

 

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Schedule 10

 

[* *] **Terms**

 

1.                                       [* *] Services.  Avecia shall provide [* *] of (a) the master cell bankand the working cell bank provided by Stressgen to Avecia pursuant to theMaterial Transfer Agreement dated January 9, 2004, (b) any additional workingcell banks produced by Avecia during the term of the Agreement and, if agreed,(c) the API (collectively, the “Materials”). Avecia shall not [**] the Materials from the address set forth above without the expresswritten consent of Stressgen.  WhileAvecia is [* *] the Materialshereunder, Stressgen may visit, view or audit Avecia’s records or [* *] systems at any time duringnormal business hours.

 

2.                                       Scope ofCustody.  Notwithstanding the [* *] of the Materials by Avecia,Avecia acknowledges and agrees that it does not have, and shall not acquire orclaim, any title or ownership interest in the Materials by virtue of thisAgreement.   This Agreement shall not beconstrued to grant any license or other rights to the Recipient in any patentrights or other intellectual property rights of Stressgen.

 

3.                                       Termof Services.  Avecia shall provide the [* *] services hereunder fromthe time contemplated in the BSA until the later of (a) [* *] or (b) one yearafter the acceptance by [* *] of Stressgen’s application to market HspE7,unless Stressgen terminates this Agreement in agreement prior to such date byproviding written instructions as to the [* *] of the Materials. In the event Avecia wishes to terminate this Agreement, Avecia mustprovide Stressgen with [* *] written notice to provide Stressgen with areasonable opportunity to [**] for the Materials. Notwithstanding the foregoing, Avecia may terminate this Agreement on 30days written notice to Stressgen in the event of non-payment of invoicespursuant to Clause 4.  The fee for [* *] services not renderedfor a full calendar year will be prorated monthly.  Stressgen will be billed for the cost of return or destruction ofthe Materials.

 

4.                                       Risk, Insuranceand Title.

 

(a)                                  In the event of failure by Avecia to [* *] theMaterials under agreed conditions, Avecia shall [* *].

 

(b)                                 The obligation to insure the Materials against anyrisks other than those attributable to the fault of Avecia, shall rest withStressgen.

 

(c)                                  Title in Materials not owned by Stressgen under theterms of the Material Transfer Agreement will pass to Stressgen on Avecia’sRelease of the API.

 

5.                                       Payment.  Avecia shall submit annual invoices toStressgen for technical consultancy services to cover management, administration and qualitycontrol activities.  The cost ofsuch technical consultancy services for the year 2004 shall equal the cost ofitems set out in the table below:

 

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[*] = Confidential Treatment Request(ed).

 

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| **CELL [* *]**                                                                                       |   | **PRICE**                |
|------------------------------------------------------------------------------------------------------|--------|--------------------------|
| [* *] Biological  Materials in [* *]:                                                                |   | Market rate to be agreed |
| [* *] for a single year or any portion thereof.  Each additional [* *] group or any portion thereof. |   | Market rate to be agreed |
|                                                                                                 |   |                     |
| [* *] fees  per request: (Limited to [* *] or less)                                                  |   | Market rate to be agreed |
|                                                                                                 |   |                     |
| Includes [* *]; Letter of [* *] required at time of  request                                         |   |                     |
|                                                                                                 |   |                     |
| Inventory fees per request:                                                                          |   |                     |
|                                                                                                 |   |                     |
| Inventory reconciliation can be performed  upon request.  Hourly fee applied                    |   |                     |
|                                                                                                 |   |                     |
| [* *] fees  per [* *] (Includes  [* *]):                                                             |   |                     |
| Europe                                                                                               |   | Market rate to be agreed |
| US Locations                                                                                         |   | Market rate to be agreed |

 

No later than 1stNovember in each year, the parties shall meet to agree pricing for technicalconsultancy services for the following year, taking into consideration anydocumented increases in the Avecia’s costs for providing such services.  If the parties are unable to reach agreementon pricing by 30th November in any year, the price shall beincreased by reference to:

National Statistics - MonthlyDigest of Statistics (ISSN 0308-6666)

Section 18.11 Prices and WagesAverage Earnings Index - all employee jobs (not seasonally adjusted) -excluding bonuses Industry Sector - Chemicals and man-made fibres.

 

Stressgenshall pay invoices in accordance with the provisions of the Agreement.

 

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[*] = Confidential Treatment Request(ed).

 

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