**Exhibit 10.26**

 

*Confidential Treatment has been requested forportions of this exhibit. The copy filed herewith omits the information subjectto the confidentiality request. Omissions are designed as[*] . A completeversion of this exhibit has been filed separately with the Securities andExchange Commission.*

 

**MANUFACTURINGAND SUPPLY AGREEMENT**

 

This Manufacturing and Supply Agreement (“Agreement”)is entered into as of the date signed by the last party to sign this Agreement,and with an effective date of May 4, 2005 (the “Effective Date”) by andbetween Hyaluron Inc., with its principal place of business at 99 S. BedfordStreet, Suite 2, Burlington, MA 01803, (“Hyaluron”) and NeoRx, a Washington corporation, having itsprincipal place of business at 300 Elliott Avenue West, Suite 500,Seattle, Wa 98119-4114. Hyaluron and NeoRx may be referred to herein as a “Party”or, collectively, as the “Parties”.

 

**WHEREAS**, NeoRx is engaged in the business of developing therapeuticproduct(s); and

 

**WHEREAS**, Hyaluron is in the business of developing, manufacturing, testing andpackaging sterile pharmaceutical products; and

 

**WHEREAS**, NeoRx desires to utilize Hyaluron to develop, manufacture, test,and/or package supplies of the product(s) as designated by NeoRx:

 

**NOW, THEREFORE**, the Parties agree as follows:

 

Definitions. As used herein the following terms willhave the following meanings:

 

“API” means the raw material components of theProduct, as specified and provided to Hyaluron by NeoRx.

 

“Batch” means the entire amount of Product yieldedfrom a manufacturing event using a specific quantity of APIs, Excipients, andcomponents processed in accordance with the Master Batch Record and theManufacturing Standards.

 

“Batch Record” means the document created as andafter each Batch is Processed and Packaged. Each Batch Record will reflect andincorporate all aspects of the Master Batch Record, the applicable Certificateof Analysis, and any Manufacturing Variance Reports issued with respect to suchBatch.

 

“Batch Release” means the final sign-off by a party’squality department marking the culmination of the quality process through whicha batch of Product is shown to conform to all aspects of the ManufacturingStandards.

 

“Bulk” means the bulk API for formulation.

 

“Compounded Bulk” means the API and Excipients whichhave been compounded but not filled or packaged or finished into a final dosagepresentation.

 

“Certificate of Analysis” means a certificate thataccompanies each shipment of APIs or Product certifying that the APIs orProduct meets the specifications as defined in the Manufacturing Standards.

 

“Date of Manufacture” means the date of sterilefiltration and/or filling of the Compounded Bulk.

 

“Excipient” means any substance other than the APIused in formulating the Compounded Bulk.

 

“API Reference Standard” means a quantity of APIswith a known assay, supplied by NeoRx, with which Hyaluron may performcomparative analysis to API samples having an unknown assay.

 

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“API Specifications” means the specifications withrespect to the APIs as set forth in the Master Batch Record.

 

 “ManufacturingStandards” means the specifications for Processing, Packaging, and storing theProduct set forth in the Specifications, the Master Batch Record, CGMPs (asdefined below), MSDSs, the QA Schedule and all applicable U.S. laws andregulations, to the extent such terms and conditions are not inconsistent withthis Agreement.

 

“Manufacturing Variance Report” means a writtenreport indicating any significant variance in the Processing or Packaging of aBatch from the procedures set forth in the Master Batch Record.

 

“Master Batch Record” means the document, as may beamended from time to time, specifying: (i) the API Specifications, (ii) theprocedures for testing and releasing the APIs, (iii) the Excipients, (iv) thePrimary Components, (v) Secondary Packaging, (vi) the Specifications,(vii) the formula (listing the APIs and the Excipients for the Product),and (viii) the procedures for manufacturing the Product (listing the APIs,the Excipients, the Primary Components, and the Secondary Packaging).

 

“To Package” and “Packaging” means the act ofinspecting, labeling, and packing the Product into units.

 

“Primary Components” means the vial/syringe,stopper, and seal as identified in the Master Batch Record.

 

“Process” or “Processing” means the manufacturingprocedures, or any part thereof, involved in manufacturing the Product inaccordance with the Manufacturing Standards.

 

“Product” means finished product in final dosagepresentation.

 

“Specifications” means the specifications for theAPIs, the Excipients, the Primary Components, the Secondary Packaging, and thein-process and release specifications for the Product, as set forth initiallyin the applicable Statement or Work and, subsequently in the Master BatchRecord. Revisions to Specifications may be made by the Parties from time totime and such changes will be reflected in the Master Batch Record.

 

“Qualified Supplier” means a supplier of materialsor components that has been audited and/or assessed by Hyaluron and has passedHyaluron’s quality assurance standards.

 

“Secondary Packaging” means any component other thanPrimary Components used to convert primary units into units.

 

“Shipping Components” means the packaging, boxes,and shipping containers into which the Product is placed for shipment to NeoRx.

 

“Variance” or “Deviation” means a departure from anestablished quality standard (e.g., CGMP standard operating procedure, MasterBatch Record or Specifications,, analytical control procedure, water monitoringprocedure, environmental monitoring specification, equipment maintenanceschedule, or any unusual occurrence), which may be either anticipated orunanticipated departures from established quality standards and may have thepotential to affect the safety, identity, strength, quality or purity of theProduct or Compounded Bulk.

 

1.                                       **Quotation**. Hyaluron will provide toNeoRx the manufacturing and related services (the “Services”) as described inthe applicable Quotation (the****“Quotation”),a form of which is attached hereto as Exhibit A and incorporated herein byreference. The Parties will mutually agree to the contents of each Quotationand any amendments thereto. Each Quotation will, in addition to other matters,address the quality assurance and control procedures. The Quotation may specifythat NeoRx will provide certain materials to Hyaluron or require that Hyaluronacquire certain materials from a particular source. If NeoRx provides materialsto Hyaluron, title in and risk of loss of such materials will remain withNeoRx,

 

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unless such loss occurs due to negligence by Hyaluron. In the eventNeoRx requests additional services relating to this Agreement, the Parties maymutually agree upon such services and the costs related thereto in a separatewritten agreement, which must be signed by authorized representatives of bothParties before any such costs are incurred.

 

2.                                       **Compensation for Services**. Compensation for the Services will be asspecified in the Quotation. Hyaluron will bill NeoRx for the Services asspecified in the applicable Purchase Order. Such invoices will be payable uponreceipt by NeoRx. All pricing, payments, credits, allowances or other monetaryadjustments under this Agreement will be in U.S. Dollars.

 

3.                                       **Advance Notice For Services**. NeoRx agreesto give Hyaluron 60 daysadvance written notice prior to the required date of manufacture for eachProduct Order under the terms of this Agreement.

 

4.                                      **Services**.

 

(a)                                  All Services will be conducted in accordancewith the applicable Quotation and Hyaluron’s internal Standard OperatingProcedures (“SOPs”), copies of which will be available for inspection by NeoRxor its designated representatives at Hyaluron upon reasonable notice.Notwithstanding the foregoing, unless otherwise specified in the applicablePurchase Order, the manufacturing of the Product will be conducted in accordancewith Current Good Manufacturing Practices (“CGMPs”) as described in therelevant United States Food and Drug Administration (“FDA”) regulations andguidelines for the manufacture, control and storage of human pharmaceuticalproducts, including, without limitation, the FDA’s guidance for industry titled“Sterile Drug Products Produced by Aseptic Processing – Current GoodManufacturing Practice”, dated September  2004.

 

(b) Hyaluron willfollow CGMP standards to manufacture for NeoRx clinical Batches of a finisheddosage form of the Product per the Manufacturing Standards, and as may befurther developed by Hyaluron, using the APIs, components and Excipientsspecified. In accordance with CGMP and during the term of this Agreement,Hyaluron will utilize validated cleaning and changeover procedures prior tomanufacturing any Product for NeoRx. Both Parties will promptly notify eachother of any new instructions or specifications required by CGMP. Hyaluron willtimely provide NeoRx with (a) a written description of any actions takento comply with new or revised CGMPs that affect the Product and/or (b) copiesof Hyaluron’s manufacturing records, including its Batch Records regarding theProduct, for the purposes of assuring product quality and compliance with agreed-uponmanufacturing procedures.

 

(c) Hyaluron willadhere to the Specifications and requirements, as detailed in the Master BatchRecord, the Manufacturing Standards and mutually agreed upon protocols, wheresuch specifications are in compliance and agreement with FDA and otherapplicable regulatory agency guidelines. Hyaluron will obtain NeoRx’s priorapproval before it implements any change in the materials, equipment, processor procedures used to manufacture the Product that would constitute a significantDeviation under CGMP. Hyaluron will disclose all proposed changes in suchmanufacturing materials, equipment, process or procedure to NeoRx.

 

(d) In the event thatthe Bulk fails to meet in-process or release specifications, NeoRx mayauthorize a Deviation from the Batch Record in an attempt to salvage the Batch.NeoRx assumes responsibility for all costs associated with batch failure(s)until such time as Hyaluron has validated the filling line for the Product,unless such batch failure(s) result(s) from negligence by Hyaluron. Hyaluronwill assume responsibility for Excipient costs for batch failures occurringsubsequent to product fill line validation, unless such batch failures resultfrom negligence by NeoRx. At no time will Hyaluron be responsible for API costsresulting from batch failure.

 

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(e) Hyaluron willobtain materials and components for production from Qualified Suppliers.

 

(f) Hyaluron and NeoRxwill mutually develop a Master Batch Record for the Product following thetechnical specifications, methods and know-how provided by NeoRx.

 

(g) NeoRx will transferto Hyaluron appropriate methods and in process assays for manufacturing theProduct. Such methods and in process assays will be confirmed, or if requested,validated by Hyaluron for their application to the finished Product.

 

(h) Hyaluron will provide NeoRx with copies ofexecuted Batch Records, process deviations and analytical data showing that theSpecifications have been met, following completion of the manufacture of theProduct. NeoRx will have the right to review and approve Master Batch Records,to approve planned process deviations and to receive prompt notice of unplannedprocess deviations. Hyaluron will retain original documents relating to themanufacture of NeoRx Products and store these documents in accordance with CGMPand Hyaluron’s internal quality assurance SOPs. Subject to the foregoingHyaluron will notify NeoRx before disposing of any of this Productdocumentation. In such case, NeoRx may request, within seven days, to have thedocuments shipped to NeoRx in accordance with NeoRx’s instructions and at NeoRx’sexpense.

 

(i) In the event that NeoRx proposes anysignificant change to the Specifications or manufacturing Process, NeoRx willdeliver written notice to Hyaluron describing such Change. Hyaluron willrespond to any such notice within 15 days after Hyaluron’s receipt thereof;provided, however, that the Specifications or Process will not be supplemented,modified or amended in any respect without the prior written agreement of theParties. If any change in the Primary Components, Secondary Packaging, ShippingComponents, Processes or Product testing Specifications materially increasesHyaluron’s cost to manufacture, test, or package the Product, Hyaluron reservesthe right to make reasonable pricing adjustments if needed to accommodate suchchanges. Prior to initiating any work, Hyaluron will provide a scope of workand cost proposal. New pricing will be effective upon implementation of the newspecifications or process.

 

(j) Hyaluron will provide NeoRx with all documentsNeoRx reasonably requests regarding its manufacturing processes and proceduresfor the Product. Hyaluron further agrees to use reasonable commercial effortsto assist NeoRx in obtaining FDA approval of a New Drug Application (NDA) withrespect to the Product. Where practicable, Hyaluron will assist NeoRx inobtaining approvals from other government or regulatory agencies which may berequired for the conduct of clinical trials of the Product in other countries.Hyaluron specifically agrees to cooperate with the FDA or other regulatoryagencies, including but not limited to any inspection prior to approval of anyproduct.

 

 (k) Labelingand packaging will be approved by NeoRx, and all labels and package insertswill be developed in accordance with Hyaluron’s guidelines with regard tophysical dimensions and handling procedures.

 

(l) Hyaluron will have the right to sample andretest Product or to have an outside laboratory sample and retest Product ifNeoRx claims that such Product does not conform to the Manufacturing Standards.Disputes between the Parties as to whether any Product rejected by NeoRxconforms to the Manufacturing Standards will be resolved by a mutuallyacceptable third party testing laboratory.

 

(m) In the event that a batch of Compounded Bulk isfound not to conform to the bulk release specification set forth in theManufacturing Standards prior to initiation of the fill, Hyaluron willundertake one or more remedial steps in an attempt to bring the Compounded Bulkinto specification.

 

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Should these remedial steps fail to bring the Compounded Bulk intospecification NeoRx may direct Hyaluron to terminate the manufacturing processat this stage.

 

(n) Hyaluron will ship Product to the destinationspecified by NeoRx in accordance with the applicable NeoRx instructions andwill store the Product in compliance with CGMP at Hyaluron’s facilities untildelivery. All shipping costs will be the responsibility of NeoRx. Title to andrisk of loss of the Product shall pass to NeoRx as the Product is deliveredF.O.B. via a common carrier. Completion of the task will be deemed to occur atthe time Hyaluron informs NeoRx that the Batch Record is signed off and theCertificate of Analysis has been issued. NeoRx will be deemed to have accepteddelivery of Batch of Product if no Notice of Rejection/Nonconformance isreceived by Hyaluron within 30 days after completion of the task. If NeoRxrequests Hyaluron to store Product longer than 2 weeks past the release date,there will be a storage charge applied which will be proportional to thequantity stored.

 

(o) Hyaluron will retain and store samples ofProduct in accordance with CGMPs and Hyaluron’s internal quality assuranceSOPs. Subject to the foregoing, Hyaluron will notify NeoRx before disposing ofany retention samples of manufacturing lots of intermediates or the Product. Insuch case, NeoRx may request, within seven days, to have the samples shipped toNeoRx in accordance with NeoRx’s instructions and at NeoRx’s expense.

 

(p) Hyaluron will dispose of all waste in accordancewith applicable local and federal regulations at NeoRx’s expense.

 

4.                                       **Representations, Warrantiesand Covenants**.

 

(a)                                  Hyaluron represents and warrants to NeoRxthat:

 

(i)                                       All Product furnished pursuant to thisAgreement will conform to the relevant Specifications except in case ofvariance or deviation of which NeoRx has been notified by Hyaluron;

 

(ii)                                    All Product furnished pursuant to thisAgreement will be manufactured and stored in accordance with, and all packagingand labeling operations will be conducted in compliance with, CGMPs and otherapplicable FDA and other governmental laws and regulations and all otherrequirements set forth in the applicable Purchase Order;

 

(iii)                               All manufacturing under this Agreement will be performed with thedegree of skill and diligence normally employed by a contract manufacturerperforming the same or similar services; and

 

(iv)                              Hyaluron’s application of any intellectual property, otherthan that provided to Hyaluron by NeoRx, in the performance of the Serviceswill not infringe any third party intellectual property rights.

 

(v)                                 Hyaluron represents as of the date of this Agreementand continuously during the term of this Agreement that, to the best of itsknowledge, it and its employees, affiliates, contractors, and agents have neverbeen (i) debarred or (ii) convicted of a crime for which a person canbe debarred, under Section 335(a) or 335(b) of the Federal Food,Drug, and Cosmetic Act (the “Act”). Hyaluron represents that it has never beenand, to the best of its knowledge, none of its employees, affiliates,contractors, or agents has ever been (i) threatened to be debarred underthe Act or (ii) indicted for a crime or otherwise engaged in conduct forwhich a person can be debarred under the Act. Hyaluron agrees that it willpromptly notify NeoRx in the event it receives notification of any suchdebarment, conviction, threat or indictment.

 

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(b)                                 NeoRx represents and warrants to Hyaluronthat Hyaluron’s application of any intellectual property providedto Hyaluron by NeoRx in the performance of the Services will not infringe anythird party intellectual property rights.

 

(c)                                  Each of NeoRx and Hyaluron represent andwarrant to the other that:

 

(i)                                     it is duly organized and validly existingunder the laws of the jurisdiction of its incorporation and has full corporatepower and authority to enter into this Agreement and to carry out theprovisions hereof;

 

(ii)                                  this Agreement is a legal and validobligation of it, binding upon it and enforceable against it in accordance withthe terms of this Agreement;

 

(iii)                               the execution, delivery and performance of this Agreement by it doesnot conflict with any agreement, instrument or understanding, oral or written,to which it is a party or by which such may be bound, and does not violate anylaw or regulation of any court, governmental body or administrative or other agencyhaving authority over it; and

 

(iv)                              it has not done any act or knowingly omitted to do any act, and, to thebest of its knowledge, after due inquiry, no event has occurred, in each caseduring the period between the Effective Date and the date this Agreement isentered into, that would (1) constitute a breach by it of any provision ofthis Agreement, (2) cause the other party to incur any material liabilityother than as to obligations to perform work and make payments in accordancewith this Agreement or (3) render any of its representations and/orwarranties untrue.

 

5.                                       **Records**. Hyaluron will maintain adequate andaccurate records covering the manufacture, quality control testing and releaseof the Product and all other Services provided hereunder in accordance withCGMPs and Hyaluron’s QA SOPs.

 

6.                                      **Inspections**. NeoRx will have the right to schedule siteinspections/compliance audits as needed, provided reasonable advance notice isgiven to schedule such audits and such audits are carried out during normalbusiness hours. All inspections/audits will be performed in such a manner asnot to unduly delay the performance of the Services. NeoRx will be permitted toattend any FDA or other regulatory inspections relating to the Servicesspecific to NeoRx’s product(s). Routine audits in excess of one audit day percalendar year will be billed to NeoRx at Hyaluron’s prevailing daily auditcharge rate. Audits related to FDA compliance of NeoRx’s product(s) or failuresin product quality may be conducted by NeoRx without charge by Hyaluron.

 

7.                                       **Confidentiality**.

 

7.1                                 **NeoRx ConfidentialInformation**

 

(a) Hyaluron agrees during the term of thisAgreement and for five (5) years thereafter that it will take all stepsreasonably necessary to: (i) hold NeoRx Confidential Information in trustand confidence. “NeoRx Confidential Information” means (A) this Agreementand any schedules and attachments hereto, (B) the Product, and (C) anyother information disclosed by NeoRx to Hyaluron. Notwithstanding the otherprovisions of this Agreement, nothing received by Hyaluron will be consideredto be NeoRx Confidential Information if Hyaluron can establish by competentproof that (A) such information has been published or is otherwise readilyavailable to the public other than by a breach of this Agreement; (B) suchinformation has been rightfully received by Hyaluron from a third party withoutconfidential

 

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limitations; (C) such information has been independently developedfor Hyaluron by personnel or agents; or (D)  such information was known toHyaluron prior to its first receipt from NeoRx. Hyaluron may only discloseNeoRx Confidential Information to those employees of Hyaluron who are requiredto have the information in order to perform its obligations under thisAgreement and third parties who are bound by confidentiality restrictions noless stringent than those contained in this Agreement. Notwithstanding theforegoing limitations on disclosure, Hyaluron may disclose such information asis required by any law, rule, regulation, order, decision, decree, subpoena orother legal process to be disclosed. If such disclosure is requested by legalprocess, Hyaluron will notify NeoRx of this request promptly prior to anydisclosure to permit NeoRx to oppose such disclosure by appropriate legalaction.

 

(b) ****Hyaluronagrees that it will take all reasonable measures to protect the secrecy of andavoid disclosure and unauthorized use of NeoRx Confidential Information.Without limiting the foregoing, Hyaluron will take at least those measures thatit takes to protect its own confidential information; however, in no event,will less than a reasonable standard of care be used. Hyaluron will make copiesof NeoRx Confidential Information solely as necessary to perform itsobligations under this Agreement. Hyaluron will immediately notify NeoRx in theevent of any unauthorized use or disclosure of NeoRx Confidential Informationof which Hyaluron is or becomes aware.

 

7.2                                                         **Hyaluron ConfidentialInformation**

 

(a) NeoRx agrees during the term of thisAgreement and for five (5) years thereafter that it will take all stepsreasonably necessary to (i) hold Hyaluron Confidential Information intrust and confidence, (ii) not use Hyaluron Confidential Information inany manner or for any purpose not expressly set forth in this Agreement, and (iii) notdisclose any such Hyaluron Confidential Information to any third party withoutfirst obtaining Hyaluron’s express written consent on a case-by-case basis.Notwithstanding the other provisions of this Agreement, nothing received byNeoRx will be considered to be Hyaluron Confidential Information if NeoRx canestablish by competent proof that (A)  such information has been publishedor is otherwise readily available to the public other than by a breach of thisAgreement; (B) such information has been rightfully received by NeoRx froma third party without confidential limitations; (C) such information hasbeen independently developed for NeoRx by personnel or agents without use of orreference to the Hyaluron Confidential Information; or (D) suchinformation was known to NeoRx prior to its first receipt from Hyaluron. NeoRxmay only disclose Hyaluron Confidential Information to those employees orindependent contractors of NeoRx who have a need to know the information inorder to perform their duties at NeoRx and who are bound by confidentialityrestrictions no less stringent than those contained in this Agreement.Notwithstanding the foregoing limitations on disclosure, NeoRx may disclosesuch information as is required by any law, rule, regulation, order, decision, decree,subpoena or other legal process to be disclosed. If such disclosure isrequested by legal process, NeoRx will notify Hyaluron of this request promptlyprior to any disclosure to permit Hyaluron to oppose such disclosure byappropriate legal action.

 

(b) NeoRx agrees that it will take reasonablemeasures to protect the secrecy of and avoid disclosure and unauthorized use ofthe Hyaluron Confidential Information. Without limiting the foregoing, NeoRxwill take at least those measures that it takes to protect its own confidentialinformation; however, in no event, will less than a reasonable standard of carebe used. NeoRx will immediately notify Hyaluron in the event of anyunauthorized use or disclosure of the Hyaluron Confidential Information of whichNeoRx is or becomes aware.

 

8.                                       **Intellectual Property**.

 

Hyaluronagrees that NeoRx has and will retain sole and exclusive rights of ownership inand to any

 

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NeoRx Confidential Information. NeoRx agrees that Hyaluron has and willretain sole and exclusive rights of ownership in and to any Hyaluron ConfidentialInformation. The parties do not plan to jointly develop any devices orprocesses. The parties agree, however, if a device or process is jointlydeveloped, they will jointly own such device or process.

 

9.                                      **Term and Termination**.

 

(a)                                  This Agreement will continue until April 15,2010. Notwithstanding the foregoing, this Agreement may be extended by writtenagreement of both of the parties. Termination of this Agreement will not affectany right or obligations of the parties that arose prior to such termination.

 

(b)                                 This Agreement may be terminated by NeoRx ifHyaluron materially breaches this Agreement and Hyaluron fails to cure suchbreach within 30 days from the receipt of prior written notice from NeoRx. ThisAgreement may be terminated by Hyaluron if NeoRx materially breaches thisAgreement and NeoRx fails to cure such breach within 30 days from the receiptof prior written notice from Hyaluron. In the event of termination by Hyaluronor by NeoRx, Hyaluron will be entitled to payment for any portion of theServices completed and for any noncancellable expenses incurred prior to thedate of notification of termination pursuant to this Agreement. Payment is uponthe date of receipt by NeoRx of the final invoice and receipt by NeoRx of allitems specified in this Section 10(b).

 

(c)                                  This Agreement may be terminated by eitherparty if the other party enters into liquidation whether compulsory orvoluntarily otherwise than for the purpose of amalgamation or reconstruction,or a petition in bankruptcy is filed by or against either party in anycompetent court and the same is not dismissed within 120 days or if the otherparty is adjudicated bankrupt or insolvent or if the other ceases to dobusiness, or otherwise terminates its business operations.

 

(d)                                 This Agreement may be terminated by NeoRx ifNeoRx decides to no longer continue manufacturing or distributing the Product.

 

(e)                                  In the event of termination for any reason,Hyaluron will return to NeoRx all materials NeoRx provided to Hyaluronhereunder, and, upon NeoRx’s request, work completed or in progress by Hyaluronpursuant to this Agreement, including any reports and other documentation.

 

10.                                 **Indemnification**.

 

(a)                                  NeoRx agrees to defend, indemnify and holdharmless Hyaluron, its affiliates, officers, directors, employees and agents(collectively, the “Hyaluron Parties”) from and against any and all costs(including reasonable legal fees), damages, expenses, losses, suits, claims anddemands, in any manner caused by, resulting from or arising out of third partyclaims or suits related to: (i) activities to be carried out by NeoRxpursuant to this Agreement;****(ii) thedistribution of the Product or its use in clinical trials; and (iii) aclaim by a third party that Hyaluron’s use in the Services of intellectual propertyprovided to Hyaluron by NeoRx infringes such third party’s intellectualproperty rights; provided, however, that the foregoing indemnification will notapply to the extent such costs, damages, expenses, losses, suits, claims ordemands result from:

 

i.                  the negligence or willful misconduct of anyHyaluron Party;

 

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ii.               any breach of this Agreement by Hyaluron, orany act by Hyaluron outside the scope of this Agreement; or

 

iii.            Hyaluron’s failure to comply with applicableFDA or other governmental laws and regulations.

 

(b)                                 Hyaluron agrees to defend, indemnify and holdharmless NeoRx, its affiliates, officers, directors, employees and agents(collectively, the “NeoRx Parties”) from and against any and all costs,(including reasonable legal fees), damages, expenses, losses, suits, claims anddemands, in any manner caused by, resulting from or arising out of third partyclaims or suits related to: (i) the negligence or willful misconduct ofany Hyaluron Party; (ii) any breach of this Agreement by Hyaluron, or anyact by a Hyaluron Party outside the scope of this Agreement; (iii)Hyaluron’sfailure to comply with applicable FDA or other governmental laws andregulations; or (iv) a claim by a third party that Hyaluron’s use in theServices of intellectual property, other than that provided to Hyaluron byNeoRx, infringes such third party’s intellectual property rights; provided,however, that the foregoing indemnification will not apply to the extent suchcosts, damages, expenses, losses, suits, claims or demands result from:

 

i.                  the negligence or willful misconduct of anyNeoRx Party;

 

ii.               any breach of this Agreement by NeoRx; or

 

iii.            NeoRx’s failure to comply with applicable FDAor other governmental laws and regulations.

 

(c)                                  In the event that either party seeksindemnification under the terms of this Section 10 (“the Indemnified Party”),it will inform the other party (the “Indemnifying Party”) of the claim as soonas reasonably practicable after it receives notice thereof (but in any eventwithin 15 days of receipt of notice of such claim). The Indemnifying Party willhave the right, but not the obligation to, at the Indemnifying Party’s cost, toassume direction and control of the defense of the claim, and will cooperate asrequested (at the expense of the Indemnifying Party), in the defense of theclaim. The Indemnifying Party will not settle or otherwise compromise any claimor suit in any manner which requires the Indemnified Party to provide anyconsideration, admit fault or take any other action that would be binding onsuch Indemnified Party without the prior written consent of the IndemnifiedParty.

 

11.                                 **Limitation of Liability**.

 

(a) In no event will either party be liable tothe other party for lost profits, loss of use, loss of business, businessinterruption, loss of data, cost of cover or any indirect, special,consequential or incidental damages of any nature whatsoever, however causedand under any theory of liability whether based in contract, warranty, tort(including without limitation, negligence), strict liability, statutory orotherwise, arising out of or in connection with this Agreement even if theother party has been advised of the possibility of such damages.

 

(b) Notwithstanding anything to the contraryherein, any limitations on liability will not be applicable to liabilities tothe extent arising from the violations of law, recklessness or willfulmisconduct of a party.

 

(c)  This Section 11 shall not preclude aparty from seeking indemnification for damages as defined in Section 10.

 

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12.                                                                                 **Miscellaneous**.

 

(a)                                  Changes to this Agreement must be in writingand require the signature of authorized officers of NeoRx and Hyaluron,provided, however that changes involving additional services will be handled inaccordance with Section 1.

 

(b)                                 Hyaluron agrees to perform all the work underthis Agreement as an independent contractor. Hyaluron is not an employee,partner, representative or joint venture of or with NeoRx, and nothing in thisAgreement will be construed to create such a relationship. Neither party willhave the power or right to bind or obligate the other.

 

(c)                                 Notices under this Agreement will be inwriting and delivered personally or by United States mail, certified mail orcourier to the following individuals:

 

ToNeoRx:

KarenAuditore-Hargreaves

President &COO

300Elliott Avenue West, Suite 500

Seattle,WA 98119-4114

 

ToHyaluron:

Dr. ShawnD. Kinney

President

Hyaluron Inc.

99 South Bedford St.

Burlington, MA 01803

 

(d)                                 This Agreement will be governed and construedin accordance with the laws of the state of Massachusetts, excluding any choiceof law rules that may direct the application of the laws of anotherjurisdiction.

 

(e)                                  If any provision of this Agreement is orbecomes or is deemed to be invalid, illegal, or unenforceable in anyjurisdiction, such provision will be deemed amended to conform to theapplicable laws of such jurisdiction so as to be valid and enforceable. If theoffending provision cannot be so amended without materially altering theintention of the Parties: (i) it will be stricken; (ii) the validity,legality and enforceability of such provision will not in any way be affectedor impaired in any other jurisdiction; and (iii) the remainder of thisAgreement will remain in full force and effect.

 

(f)                                    This Agreement contains the entireunderstanding of the Parties with respect to the subject matter hereof andsupercede all previous agreements (oral and written). Any form containing otherterms and conditions of sale will not have the effect of modifying the termsand conditions of this Agreement unless this Agreement is specifically amendedas provided herein. This Agreement will be binding upon and inure to thebenefit of the Parties and their successors and permitted assigns.

 

(g)                                 Hyaluron, on behalf of itself and itsemployees, agents, subcontractors and affiliates, agrees not to use the name ofNeoRx or any of its employees, agents or affiliates, or reference any of theirproducts, in any publicity, advertising or other publication without NeoRx’sprior written approval. Results and services provided by Hyaluron do notconstitute an endorsement of the Product or NeoRx’s scientific conclusions.NeoRx agrees not to use Hyaluron’s name in a manner that could reasonably be

 

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construed as such an endorsement or in any other publicity oradvertising without Hyaluron’s prior written approval.

 

(h)                                 Neither party’s failure to exercise, or delayin exercising any privileges, powers, rights or remedies under this Agreementwill operate as a waiver thereof, nor will any single or partial exercise ofany right or remedy under this Agreement preclude further exercise of any otherright or remedy hereunder. The rights and remedies of the Parties provided inthis Agreement will not be exclusive and are in addition to any other rightsand remedies at law or in equity.

 

(i)                                     Neither party will beliable to the other party in any manner whatsoever for any failure or delay inperforming its obligations under this Agreement if and to the extent, and forthe duration, that such is due to Force Majeure. Without prejudice to Section 10,any said failure or delay will not give either party the right to terminatethis Agreement except, and to the extent that such Force Majeure continues fora period exceeding three (3) months. Hyaluron will be entitled to payment for any portion of the Servicescompleted and for any noncancellable expenses incurred prior to the date ofnotification of termination pursuant to this Agreement and Hyaluron will returnto NeoRx all materials NeoRx provided to Hyaluron hereunder, and, upon NeoRx’srequest, work completed or in progress by Hyaluron pursuant to this Agreement,including any reports and other documentation. For the purposes of this Section 13(j),“Force Majeure” means any cause beyond the reasonable control of theparty in question which for the avoidance of doubt and without prejudice to thegenerality of the foregoing will include governmental actions, war, riots,terrorism, civil commotion, fire, flood, epidemic, labor disputes (excluding labor disputes involvingthe work force or any part thereof of the party in question.

 

(j)                                     During the term of this Agreement, Hyaluronand NeoRx will each maintain separate insurance coverage as follows: (1) ProductLiability in amounts of at least US$2,000,000.00; (2) General Liability inamounts of at least US$2,000,000.00; (3) Workers compensation or foreignemployer liability in amounts in accordance with local and national statute;and (4) Property in an amount of at least US$500,000.00 in accordance withlocal and national statute. All insurance amounts may be obtained by full,individual primary policy amount; a primary amount of less than minimumrequirement enhanced by a blanket excess umbrella policy; or a combination ofeither. As an alternative to such insurance minimums, a party may provideevidence of adequate financing, for purposes of self-insurance, as certified byan independent actuary. The Parties will provide a certificate of insuranceupon request by the other. The Parties will provide each other with at least 30days prior written notice of any material change, cancellation or expiration ofthe above-required insurance.

 

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[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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INWITNESS WHEREOF, this Agreement has been signed by an authorized corporate officerof each party as of the date first above written.

 

 
| **Hyaluron Inc.** |
|-------------------|
|              |   |
| By:               | s/Shawn D. Kinney |   |
|              | Shawn D. Kinney, Ph.D. |
|              | President |
| Date:             | 4-26-05 |
|              |   |
|              |   |
| **NeoRx:**        |
|              |   |
| By:               | s/Karen Auditore-Hargreaves |   |
|              | Karen Auditore-Hargreaves |
|              | President & COO |
| Date:             | 5-4-05 |
|              |   |
|              | s/Susan D. Berland, CFO |   |
|                   |  |  |  |  |

 

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[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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**NEORX CORPORATION AND SUBSIDIARY**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)**

 

**Exhibit A**

 
| **QUOTATION** |                                |   |
|---------------|-------------------------------------|--------|
| To:           | Mr. Erik D. Laursen            |   | Bid/Project#: 163 | Date: 7/28/2005 |
|          | Sr. Dir. Manufacturing              |   | Rev#: 02 |
|          | NeoRx Corp.                         |   | *Project  Title: Manufacture of NX 473 for Phase II* |
|          | 300 Elliott Ave. W., Suite 500 |   | *Studies* |
|          | Seattle, WA 98119                   |   |   |
|          | Tel: 206-286-2504                   |   |   |
|          | Fax: 206-286-2537                   |   |   |

 

Detailedproject proposal attached.

 

PaymentSchedule:          Pleaserefer to attached project proposal

 

PaymentTerms:           All payments due upon receipt of invoice

 

CONFIDENTIAL:          Thisdocument is protected in full by our confidentiality agreement and should notbe shared with any individual or company not named in the agreement without theprior written approval of Hyaluron Inc.

 

Preparedby:

 
| s/Andrea Wagner                      |   |
|--------------------------------------|--------|
| Andrea Wagner, Ph.D.                 |
| Vice President, Business Development |

 

Client: Pleasecomplete the following and return one original to the attention of AndreaWagner, Hyaluron Inc., 99 S. Bedford Street, Burlington, MA  01803.

 
| I agree to the terms and conditions of this quotation and its  attached project proposal: | PO#:                                       |
|-------------------------------------------------------------------------------------------|--------------------------------------------|
|                                                                                      | Billing Address (if different from above): |
| Authorized Signature: s/Karen Auditore-Hargreaves                                         |                                       |
| Title: Pres/COO                                                                           |                                       |
| Date: 5/4/05                                                                              |                                       |

 

Pleasedirect any questions concerning this proposal to Andrea Wagner, CustomerRepresentative. This quotation is valid for 30 days.

 

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## **PROJECT PROPOSAL: 163**

### RevisionNumber: 02

###  Issued: April 26, 2005

## **PROJECT TITLE: Manufacture of NX 473 for Phase II Studies**

## HyaluronCustomer Service Contact: Dr. Andrea Wagner

##  

**OBJECTIVE:**                                                                                                                      Hyaluron Inc. will:

 

•                  Provide aseptic filling, labeling andpackaging for Phase II Studies.

 

Thisquote is offered with the assumptions that:

 

1.                                       There will be initial start up costs relatedto the purchase of   equipment.

2.                                       All analytical methods are not known atHyaluron and some will be transferred to Hyaluron with current SOPs developedand validated or verified at Hyaluron.

 

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[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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**TASK 1:****                       ****BATCH RECORD/DOCUMENTATIONPACKAGE**

 

Hyaluronwill prepare a documentation package for manufacturing of client’s product.This will include preparation of documentation for material specifications,incoming inspection, in process testing, final product release tests andresults and manufacturing directions. One copy of this documentation will beprovided to client.

 

**COST**

**$[*]**

----

*****Includes one client review/comment of documentation, additionalrevisions will require additional fees.

 

**TASK 2:****                       ****ANALYTICAL TESTING TRANSFER,DEVELOPMENT AND VALIDATION**

 

Hyaluronwill work with NeoRx Corp. to obtain release testing via outside testing groupsdesignated by NeoRx Corp. NeoRx Corp. will transfer the UV assay to Hyaluronfor validation to perform the cleaning validation of the filling area.Additionally, this test will be used to release the formulation for filling andunderstand the concentration of the API in the product formulation. The assaywill be incorporated into Hyaluron’s quality system with a copy sent to NeoRxCorp. for review.

 

**COST**

**$[*]***

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*Doesnot include cost of materials or outsourced testing which will be billed toclient at Hyaluron’s cost plus **[*]**%.

 

**TASK 3:****                       ****FORMULATION TRANSFER**

 

Hyaluron(HY) will work with NeoRx Corp., to verify the proposed product and processrequirements, and confirm all design goals such as:

 

A.                                   Batch Sizes (Input from NeoRx Corp. (NRC))

B.                                     Aseptic requirements (Nitrogen overlay/needlesparging/vacuum) (HY & NRC)

C.                                     Formulation and storage conditions for API –need to formulate heated between **[*]**(HY)

D.                                    Homogeneity specifications – some sensitivityto stainless steel – use polypropylene system (NRC)

E.                                      Fill size specifications and fillingrequirements (Very large fill volume need to do media fills for hand or semiautomated filling of **[*]**bottle)(NRC)

F.                                      Final Product container, labeling andpackaging (NRC)

 

Hyaluronwill transfer the formulation and run one engineering (10% of full scale) run.Through this engineering run draft manufacturing directions will be finalized.The material will used to finalize assay development, transfer and validationif required.

 

**COST**

**$[*]***

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*Doesnot include any client specific equipment costs or product components, whichwill be billed at Hyaluron’s cost plus **[*]**%.

 

[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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**TASK 4:****                       ****CLEANING VERIFICATION**

 

Hyaluronwill perform the follow tasks to verify cleaning effectiveness:

 

A.           Develop a cleaning specification for NeoRx Corp.’s product.

B.             Determine the most effective product samplingprogram to use for the detection of residual product or cleaning agents (e.g.,direct surface sampling and rinse samples).

C.             Establish limits for analytical detection ofproduct and cleaning agents (if applicable), as well as recommendedmethodologies (TOC, product specific assays, HPLC, etc.)

D.            Perform verification studies to demonstratethat remaining product residues are within established acceptance criteria whencleaned by standard operating procedures.

 

**COST**

**$[*]***

 

**TASK 5:****                       ****EQUIPMENT REQUIRED**

 

Thefollowing equipment will be required to conduct the validations andmanufacturing of commercial product:

 

2-Fill Needles estimated $**[*]**/each

1- Mixing bags/levitron bags estimated at $**[*]**

StainlessSteel Trays for vials estimated at $**[*]**

Changeparts for capper estimated at $**[*]**

 

**TOTAL ESTIMATED COST**

**$[*]***

 

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*Costis Hyaluron’s cost plus **[*]**%.

 

**TASK 6:****                       ****ASEPTIC FILLING VALIDATION**

 

Hyaluronwill perform aseptic media validation simulating the aseptic handling of NeoRxCorp.’s product during filling operations. Sterilization validation of allproduct contact parts, such as pumps, needles, tubing and any vessels, must beperformed prior to the initiation of the media fills. Hyaluron will fill up to **[*]** of the selected vials with the highestvolume desired (up to **[*]**) ofmedia, stopper and incubate. This will be performed in triplicate with a 2-weekincubation occurring after each fill. The filling validation will be performedin compliance with ISO 13408-1 and the FDA 2004 Guideline on Sterile DrugsProducts Produced by Aseptic Processing.

 

**Cost**

**$[*]/run***

 

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*Doesnot include the cost of bottles, stoppers or caps – requirement of **[*]** units to complete the validation.

 

[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

4

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**TASK 7:****                       ****STERILIZATION VALIDATION OFVIALS AND STOPPERS**

 

Theobjective of this task is to validate the steam autoclave cycle used tosterilize the equipment (stoppers, transfer tubing and filling equipment) forthe aseptic filling. The depyrogenation cycle will also be validated for thesterilization of the **[*]** ml vials.Each validation will be performed with an overkill approach using appropriatetemperature monitoring and biological indicators. The validation results willbe included in a summary report upon completion of the validation, which willbe forwarded to NeoRx Corp.

 

**COST**

**$[*]***

 

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*Doesnot include the cost of the vials or stoppers used in each validation. Alloutside testing will be charged to NeoRx Corp. at Hyaluron’s cost plus **[*]**%.

 

**TASK 8:****                       ****EH&S EVALUATION**

 

Hyaluronwill evaluate the product toxicity for handling purposes. Disposal, handlingduring lab analysis, formulation and filling will be evaluated and a protocolwritten to train operators on overall handling of the material. Operatortraining on toxic substance handling as it relates to the product will beconducted to ensure safety in the handling of the product. Additionally, spillcontainment and clean-up training in the case that a spill or breach incontainment occurs with the product will be conducted with all personnelexposed to the product. Standard operating procedures for disposal and handlingwill be written.

 

**Cost**

**$[*]**

 

**TASK 9:****                       ****FILL DEVELOPMENT**

 

Hyaluronwill evaluate the filling process and develop a method to fill the NX 473solution on the SV-122 filler that will be validated and employ handstoppering. The material will be transferred to the West Capper for cappingafter filling. The equipment will be retro-fitted to accommodate the large vialsize and ensure high volume filling and capping.

 

**Cost**

**$[*]**

 

**TASK 10:****                ****PHASE II STUDY LOTPRODUCTION**

 

Hyaluronwill provide NeoRx Corp. with production of a **[*]**ml of the NX 473 solution with **[*]**gram volume into **[*]** ml vial inaccordance with approved manufacturing directions. Hyaluron will sterile filterbulk solution formulated from drug substance API and excipients by Hyaluron andaseptically fill by semi-automatic method, and send out post fill testing tothe laboratory of NeoRx’s choice, inspect, label, and package vials and ship toNeoRx Corp or a designated storage facility.

 

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[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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| **Stability Production**     | ** ** | **Cost***       |
|------------------------------|------------|-----------------|
| **[*] ml Bottles**           |       |            |
| 2000 units                   |       | $ [*]      |
| **Cost of Additional Units** | ** ** | ** **      |
| Up to 4000                   |       | $ [*]/each |

 

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 *Cost of bottle, stopper, cap, and outsourcedwashing at estimated $**[*]**/vial isnot included in the above cost, if actual costs exceed this estimate thenclient will be billed the additional. The product will be labeled, packed andsent to NeoRx Corp at NeoRx expense. Minimum order quantity is 2000 units.

 

NeoRxand Hyaluron will use best efforts, within commercial reasonableness to releasethe product before the end of Q3 2005.

 

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[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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**GENERAL PROVISIONS FOR THE PROJECT**

**Hyaluron Inc. will not**:

•                  Modify the objectives without clientapproval.

•                  Delete or modify any agreed specificationwithout client approval.

•                  Ship any supplies without expressed writtenclient approval.

 

**The Client will:**

•                  Provide raw materials in sufficient quantityon the agreed upon date

•                  Provide to Hyaluron Inc. any informationpertinent to the project that may be known to the client.

•                  Provide safety and toxicology data andinformation (both known and suspected, including a MSDS) for any compound priorto project initiation as well as updates as information becomes available.

•**                 **The client agrees that, if any document submission to the FDA, domesticor international regulatory agencies, contains a description of work performedby Hyaluron Inc., the content of which has not been previously submitted to theagency, that description of work will be provided to Hyaluron Inc. after thesubmission.

 

**Audits**:

HyaluronInc. allows the client an annual one-day audit with a one-time allowance of upto three audit days given on the first year, and one visit to the facilityduring development and during the fill. The visitation limitation does notinclude technology transfer issues that may arise and cause additional visits.Additional audits or visits will be charged to the client at a rate of $**[*]** per day. Audits and visits will be scheduledin advance at a reasonable time.

 

**Liability:**

Hyaluronshall not be liable for damages for, nor shall this agreement be terminable byreason of, any delay or default in Hyaluron’s performance hereunder if such adelay or default is caused by conditions beyond Hyaluron’s control including,but not limited to, acts of God, regulation or law or other action ofgovernment or any agency thereof, war, insurrection, civil commotiondestruction of production facilities or materials by earthquakes, fire, flood orstorm, labor disturbances, epidemic, or failure of suppliers, public utilitiesor common carriers. Hyaluron agrees to promptly notify the client of anyinterruptions of supply as described above and to employ all reasonable effortstoward prompt resumption of its performance when possible if such performanceis delayed or interrupted by reason of such event.

 

**Supplies:**

Unlessotherwise specified in the proposal, the client will be invoiced for the costplus **[*]**% of all excipients,supplies and capital items necessary to complete the project (such as vials,stoppers, seals, labels, etc.).

 

**Shipping:**

Allshipping, packaging materials and handling charges will be billed to theclient.

 

**Waste Disposal:**

Hyaluronwill be responsible for all waste disposal related to product production. NeoRxwill be charged Hyaluron’s cost plus **[*]**%.

 

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[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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**Variables and Additions:**

Theparties recognize that this is a development project leading to a commercialproduction and supply, and that, as such, unusual, unique and unexpectedproblems, requirements, or developments may arise which require additionalunanticipated work such as additional analytical work due to customer request,out of specification results and/or analysis of samples placed on hold.

 

Inthe event any of these variables or others exist or occur, Hyaluron Inc will promptlyidentify them, and notify the client such that mutually agreeable terms can bereached. The additional work will proceed when agreement has been reached.Hyaluron will supply regulatory and other support for as requested at abillable rate of $**[*]**/hour.

 

**Cancellations and Rescheduling:**

Allcancellation and rescheduling requests must be submitted in writing.

 

Cancellationor rescheduling of clinical runs will incur the following fees:

 
| **Number of days before scheduled  run** | ** ** | **Rescheduling Fee (if rescheduled  within 30 days of initial)** | ** ** | **Cancellation Fee**                 |
|------------------------------------------|------------|------------------------------------------------------------------|------------|--------------------------------------|
| 16 – 30 days                        | ** ** | **[*]**% of Manufacturing Task Price                             | ** ** | **[*]**% of Manufacturing Task Price |
| 8 – 15 days                         | ** ** | **[*]**% of Manufacturing Task Price                             | ** ** | **[*]**% of Manufacturing Task Price |
| 0 – 7 days                          | ** ** | **[*]**% of Manufacturing Task Price                             | ** ** | **[*]**% of Manufacturing Task Price |

 

Whencanceling an entire project, the client forfeits the initial deposit paid atthe beginning of the project and is responsible for project costs incurred upto the date of receipt of the cancellation notice as well as any associatedcosts to close down the project.

 

**Terms of Payment:**

**[*]**% of each task’s cost is due upon acceptance of the task; the remainderis due upon completion of the task. All equipment costs are due prior toHyaluron’s placement of a P.O. for purchase. All invoices are due andpayable upon receipt and past due after thirty (30) days from the date ofinvoice. All amounts past due shall incur interest at the rate of 1.5% permonth or the highest rate permitted by law (whichever is less). All paymentsshall be made to Hyaluron Inc. at the address specified on the front of theinvoice.

 

Theclient assumes all responsibility for all reasonable legal fees and otherreasonable collection costs made necessary by wrongful default in payment.

 

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[*] designates portions of this document that have been omittedpursuant to a request for confidential treatment filed separately with theCommission.

 

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