Blueprint





 






Exhibit
10.38


***
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION


CONFIDENTIAL
TREATMENT REQUESTED UNDER 17 C.F.R. SECTION 240.24b-2



MANUFACTURING PREPARATION AND SERVICES AGREEMENT


(“Agreement”)


effective
as of this 10th day of June 2016
(the “Effective
Date”), by and between


 



PALATIN TECHNOLOGIES, INC.


4-B
Cedar Brook Drive


Cranbury,
New Jersey 08512


U.S.A.


 


(“Palatin”)


 


 


and


 



CATALENT BELGIUM S.A.


Rue
Font. St. Landry


10 Parc
Mercator B-1120


Neder
over Heembeek


Belgium


 


(“Catalent”)


 


WHEREAS, Palatin is engaged in the
development, marketing and sales of pharmaceutical
products;


WHEREAS, Catalent is a company engaged
in the processing and supply of pharmaceutical products holding the
necessary manufacturing licenses and permits in this
respect;


WHEREAS, it is necessary for Catalent
(itself or through its Affiliates) to upgrade its manufacturing
capacity and infrastructure to provide certain services in relation
to the manufacture of the Product (as further defined herein)
subject to this Agreement and to reserve certain manufacturing
capacity on its upgraded facilities;


WHEREAS, Palatin also wishes to entrust
Catalent (itself or through its Affiliates) to perform certain
Services (as further defined herein) in relation to the Product and
Catalent agrees to perform such Services in accordance with the
terms of this Agreement;


WHEREAS, Catalent and Palatin have
entered into that certain Binding Terms for Incorporation into a
Capital and a Commercial Supply Agreement, dated April 1, 2016 (the
“Binding
Terms”), which Binding Terms shall be superseded in
its entirety by this Agreement and the Supply Agreement (as defined
hereafter).


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



 

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1.

DEFINITIONS
AND GENERAL








1.1

The following terms
shall, unless the context otherwise requires, have the respective
meanings set out below and grammatical variations of such terms
shall have corresponding meanings:






“Affiliate” means (a) with respect
to Palatin, any corporation or other business entity that, directly
or indirectly, is controlled by, controls, or is under common
control with Palatin; and (b) with respect to Catalent, Catalent,
Inc. and any corporation or other business entity controlled,
directly or indirectly, by Catalent Pharma Solutions, Inc. For such
purposes, “control” means the direct or
indirect ownership of at least fifty percent (50%) of the voting
interest in such corporation or other entity or the power in fact
to control the management directions of such entity.


“Catalent CAPEX Expenditures” has
the meaning set forth in Section
3.1.


“Change of Control” means, with
respect to a party: (a) any merger, reorganization, consolidation,
or other business combination of such party with a third party that
results in the voting securities of such party outstanding
immediately prior thereto ceasing to represent at least fifty
percent (50%) of the combined voting power of the surviving entity
immediately after such merger, reorganization, consolidation, or
other business combination; (b) a third party becoming the
beneficial owner of fifty percent (50%) or more of the combined
voting power of such party in a single transaction or series of
related transactions; or (c) the sale, transfer, exchange or other
disposition to a third party of all or substantially all of a
party’s assets or business relating to this Agreement
(whether alone or in connection with a sale, transfer, exchange or
other disposition of other assets or businesses of such
party).


“Facility” means Catalent’s
facility in Brussels, Belgium or such other Catalent facility as
mutually agreed by the parties.


“GMP Space Reservation Fee” means
the amount owed by Palatin to Catalent for access to
Catalent’s *** resources *** and for reservation of the
applicable part of the Facility space pursuant to the terms of this
Agreement, which amount shall total ***.


“Manufacturing Preparation” has the
meaning given in Section
2.1.


“Manufacturing Preparation Plan”
means the plan as detailed in ANNEX
1.


“Product” means the
proprietary Palatin product containing the active pharmaceutical
ingredient, bremelanotide.


“Supply Agreement” means
that certain agreement covering the commercial manufacturing and
supply of the Product between Catalent and Palatin of even date
herewith.


“Services” has the meaning given in
Section 2.2.


“Term” has the meaning given in
Section 4.1.




1.2

All monetary
amounts are expressed in this Agreement in Euros (EUR), the
official currency of the euro area with the exception of the amount
set forth in Section
3.4(iii), which amount is expressed in United States
Dollars.








1.3

The division of
this Agreement into sections, subsections and Annexes and the
insertion of headings are for convenience of reference only and
shall not affect the interpretation of this Agreement. Unless
otherwise indicated, any reference in this Agreement to a section
or an annex refers to the specified Section or ANNEX to this
Agreement. In this Agreement, the terms “this
Agreement”, “hereof”, “herein”,
“hereunder” and similar expressions refer to this
Agreement.







 

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1.4

Except as otherwise
expressly provided herein or unless the context otherwise requires,
all references to the singular shall include the plural and vice
versa.








1.5

Any reference
herein to a “day” (including “week”) shall
be references to a business day, excluding any Saturday, Sunday or
public holiday (in the country or countries in which Palatin or
Catalent or the Facility are physically located).








1.6

Catalent may
delegate certain activities hereunder to its Affiliates and Palatin
hereby agrees to such delegation subject to the following sentence:
Catalent hereby agrees that regardless of such delegation, Catalent
shall remain fully liable for the performance of its obligations
under this Agreement by its Affiliate(s) to the same extent as if
Catalent had performed or failed to perform its obligations under
this Agreement.








2.

MANUFACTURING
PREPARATION AND SERVICES








2.1

Catalent shall have
available all necessary manufacturing equipment and infrastructure
at the Facility (collectively, “Manufacturing Preparation”) in
accordance with the Manufacturing Preparation Plan as set out in
ANNEX 1 to manufacture and
supply the Product to Palatin pursuant to the terms of the Supply
Agreement.








2.2

Catalent shall take
all actions necessary to make available the Manufacturing
Preparation for the Products at the Facility in accordance with the
Manufacturing Preparation Plan (the “Services”). Catalent shall provide
the Services in a timely manner in accordance with the estimated
timelines set forth in ANNEX
1 or such other timelines as the parties agree upon in
writing. If either party anticipates that certain timelines of the
Manufacturing Preparation Plan may not be met, then it shall notify
the other party as soon as reasonably practicable. Within *** of
receipt of such notice, the parties shall meet to discuss in good
faith and find an appropriate course of action to remedy the
situation.






Catalent shall
provide the Services in conformance with that level of care and
skill ordinarily exercised by other professionals in similar
circumstances and in compliance with all applicable laws and
regulations.




2.3

Catalent shall have
sole legal title to the Facility and any improvements thereto and
the Manufacturing Preparation and the right to use it for any other
purposes and customers at its own discretion, subject to the right
of Palatin and its Affiliates to have priority for the use of the
Manufacturing Preparation pursuant to the terms of the Supply
Agreement, and provided that Catalent supplies Palatin with Product
as set out in the Supply Agreement. Catalent shall be solely
responsible for maintenance and repair of the Manufacturing
Preparation, if and as needed.








2.4

Catalent shall send
to Palatin a written *** report describing the progress of each
event of the Manufacturing Preparation Plan set forth in
ANNEX 1. Catalent shall
inform Palatin about significant accomplished phases and completed
equipment and infrastructure build-outs of the Manufacturing
Preparation Plan.








2.5

Catalent shall at
all times use its commercially reasonable efforts to minimize the
costs associated with the implementation of the Manufacturing
Preparation. Catalent will provide an initial cost overview as set
forth in ANNEX 1. In case
such cost overview shows significant variations (more than ***)
from the cost anticipated by both parties for the implementation of
the Manufacturing Preparation as set forth in the initial cost
overview in ANNEX 1, the
parties shall agree in good faith on the allocation of such cost
variation.







 

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2.6

Catalent shall
perform the Services in a transparent manner and provide Palatin
such information regarding the Services and the Manufacturing
Preparation as Palatin may reasonably request from time to time,
including providing copies of relevant documentation with respect
to the Manufacturing Preparation set up and the fees and costs
associated therewith. Palatin shall have the right to inspect the
Facility, subject to any confidentiality obligations that Catalent
has in relation to other customers, and the activities being
performed in connection with the Services and/or the Manufacturing
Preparation Plan upon giving reasonable prior written notice and
during normal business hours.








2.7

If this Agreement
expires or is terminated for any reason in accordance with
Article 4, Catalent shall,
to the extent possible and as soon as reasonably feasible, cancel
any purchase orders placed in relation to any equipment or costs
incurred in connection with the infrastructure upgrade that
Catalent agreed to implement as part of the Manufacturing
Preparation under this Agreement. Catalent shall also use its
reasonable efforts to minimize the costs incurred associated with
any such equipment or infrastructure upgrade including mitigating
any commitments towards its suppliers, and shall not enter into any
applicable further purchasing commitments.








3.

PAYMENTS;
LIMITATION OF LIABILITY








3.1

Catalent shall make
all payments to any vendors and suppliers with respect to the
Manufacturing Preparation (the total amount of such payments by
Catalent, the “Catalent CAPEX Expenditures”). Catalent
shall provide written reports to Palatin on a *** basis, by ***,
reflecting up-to-date Catalent CAPEX Expenditures (each, a
“CAPEX Report”),
and Palatin shall have the right, upon giving reasonable prior
written notice and during normal business hours, to review the
actual costs and supporting documents with respect
thereto.








3.2

Catalent shall
reserve GMP space within the Facility for the period beginning ***
and continuing throughout the Term of this Agreement. Palatin shall
pay to Catalent the GMP Space Reservation Fee in *** installments.
***. The *** last installment ***. Catalent shall issue to Palatin
an invoice for the first installment of the GMP Space Reservation
Fee ***. Catalent shall issue to Palatin an invoice for each
succeeding installment *** thereafter until the GMP Space
Reservation Fee has been paid in full. Each payment shall be due
*** after the date of the applicable invoice.








3.3

Palatin shall
promptly notify Catalent if Palatin enters into a marketing and/or
licensing agreement with a third party pursuant to which agreement
such third party acquires the right to market, sell and have sold
the Product (i) within North America (comprising at least the
United States of America) or (ii) worldwide. Upon receiving such
notice, ***. For the avoidance of doubt, neither this Agreement nor
the Supply Agreement shall terminate upon such event.








3.4

In the event of a
Change of Control of Palatin, then within *** after the actual
effective date of such Change of Control, ***. For the avoidance of
doubt, neither this Agreement nor the Supply Agreement shall
terminate upon such event.








3.5

The limitation of
liability of Catalent and Palatin under this Agreement shall be as
set forth in Article 14 of
the Supply Agreement.








4.

TERM
AND TERMINATION








4.1

This Agreement
shall come into force on the Effective Date and continue in full
force and effect until completion of each party’s obligations
hereunder or until such other date as the parties may mutually
agree upon in writing (“Term”). In the case of Catalent,
such obligations shall be completed upon such date as the
Manufacturing Preparation has been built, installed and
qualified.








4.2

Either party may
terminate this Agreement immediately at any time by written notice
to the other party if:








(a)

an event where the
other party materially breaches a provision of this Agreement and
fails or is unable to remedy such breach within *** of receipt of
notice in writing specifying the breach and requiring it to be
remedied; or








(b)

steps are taken by
or against the other party for the appointment of a liquidator, an
administrator, a receiver, administrative receiver, manager,
interim receiver, trustee, trustee in bankruptcy, nominee or
supervisor or the other party proposes or enters into an agreement
or arrangement with its creditors generally or makes an assignment
for the benefit of its creditors generally, or otherwise suffers or
permits the taking of any steps for adjudicating it to be bankrupt
or insolvent and any such process, if reasonably shown to be
warranted, frivolous or vexatious, is not withdrawn, dismissed or
discharges within ***, or any equivalent or similar action to the
above in consequence of the insolvency of that party is taken in
any jurisdiction and is not withdrawn, dismissed or discharged in
the circumstances described above.







 

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4.3

Palatin shall have
the right to terminate this Agreement in whole or in part at its
own convenience at any time upon *** prior written notice. In the
event of such termination, within *** after the effective date of
such termination Palatin shall pay to Catalent ***.








4.4

Termination of this
Agreement shall be without prejudice to any claim or right of
action of either party against the other party for any prior breach
of this Agreement.








4.5

Upon termination of
this Agreement by either party or expiration of this Agreement,
each party shall return to the other party or such party’s
designee (as such party shall in its sole discretion direct) any
materials or documents that have been supplied by such party to the
other party under this Agreement.








4.6

Any termination or
expiry of the Supply Agreement shall be without prejudice to the
validity of this Agreement or any claim or right of action of
either party against the other party arising out of this
Agreement.








5.

CONFIDENTIALITY








5.1

Neither party shall
disclose to any third party nor use for any purpose outside of the
scope of this Agreement any information which is not in the public
domain (“Confidential
Information”) and which was disclosed in connection
with this Agreement by: (a) a party or any of its Affiliates; or
(b) any unaffiliated third party at the request of a party
((a) and/or (b) the “Disclosing Party”). The party
receiving the Confidential Information (the “Receiving Party”) may only provide
the Disclosing Party’s Confidential Information to its and
its Affiliates’ directors, officers, employees, advisors, and
consultants (“Representatives”) who are informed
of the confidential nature of the Confidential Information and who
are bound by obligations of confidentiality and non-use no less
restrictive than those contained herein and provided that the
Receiving Party shall be responsible for any breach of this
Agreement by its Representatives, which shall be considered a
breach by the Receiving Party. The obligations of confidentiality
and non-use shall expire for Confidential Information
which:








(a)

is or becomes part
of the public domain without a violation of this
Agreement;








(b)

was already in the
possession of the Receiving Party at the time of receipt from the
Disclosing Party, as shown by documentary evidence; or








(c)

after the date of
this Agreement is received by the Receiving Party, without a
confidentiality obligation, from a third party whose direct or
indirect source is not the Disclosing Party.








5.2

The Receiving Party
may disclose the Disclosing Party’s Confidential Information
to the extent required under applicable laws or by the rules of any
stock exchange on which the securities of the Disclosing Party are
listed in each case upon the reasonable advice of the Receiving
Party’s legal counsel; provided, that prior to making any such
legally required disclosure, the Receiving Party shall give the
Disclosing Party as much prior notice of the requirement for and
contents of such disclosure as is practicable under the
circumstances and shall use reasonable efforts to limit the scope
of any such disclosure and to obtain confidential treatment of all
Confidential Information disclosed pursuant to such requirement.
Any such disclosure, however, shall not relieve the Receiving Party
of its confidentiality obligations as set forth in Section 5.1.







 

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5.3

The obligations of confidentiality and non-use
contained in this Section 5 will terminate *** after the expiry or termination
of this Agreement, except with respect to trade secrets, for which
the obligations of confidentiality and non-use contained in this
Clause will continue for so long as such information remains a
trade secret under applicable law.








5.4

Upon expiration or
termination of this Agreement, the Receiving Party will (and will cause
its Affiliates and its and their respective Representatives to)
cease its use and, upon written request, within *** either return
or destroy (and certify as to such destruction) all Confidential
Information of the Disclosing Party, including any copies thereof,
except for a single copy which may be retained for the sole purpose
of ascertaining compliance with its obligations under this
Agreement and any copies remaining on the Receiving Party’s
standard computer back-up devices.








6.

DISPUTE
RESOLUTION








6.1

Governing Law. This Agreement and the
legal relations between the parties in connection herewith shall be
governed by, and construed in accordance with, the laws of the
State of New Jersey, USA, without regard to the conflict of law
principles thereof. The United Nations Convention on Contracts for
the International Sale of Goods shall not apply to this
Agreement.








6.2

Alternative Dispute Resolution. Any
dispute that arises between the parties in connection with this
Agreement shall first be presented to the senior executives of the
parties for consideration and resolution. If such executives cannot
reach a resolution of the dispute within a reasonable time, not to
exceed thirty (30) days unless otherwise agreed by the parties in
writing, then such dispute shall be submitted to arbitration by the
International Institute for Conflict Prevention and Resolution, 575
Lexington Avenue, 21st Floor, New York, NY  10022
(“CPR”) by one
arbitrator mutually agreed upon by the Parties. If no agreement can
be reached within thirty (30) days after names of potential
arbitrators have been proposed by the CPR, then the CPR will choose
one arbitrator having reasonable experience in commercial
transactions of the type provided for in this Agreement. The
arbitration shall take place in the English language in New York
City, New York, in accordance with the CPR administered arbitration
rules then in effect, and judgment upon any award rendered in such
arbitration will be binding and may be entered in any court having
jurisdiction thereof. Unless otherwise agreed to by the parties in
writing, the arbitration shall commence within sixty (60) days of
the date on which a written demand for arbitration is filed. The
arbitrator’s decision shall set forth a reasoned basis for
any award of damages or finding of liability. The arbitrator shall
not have power to award damages in excess of actual compensatory
damages and shall not multiply actual damages or award punitive
damages.








6.3

Remedy for Breach. The parties
understand and agree that monetary damages may not be sufficient
remedy for breach of this Agreement and that the injured party will
be entitled to seek equitable relief, including injunction and
specific performance, for any such breach.








7.

MISCELLANEOUS








7.1

Relationship of the Parties.
For the purposes of this Agreement,
each party shall be an independent contractor and not an agent or
employee of the other party. Neither party shall have authority or
power to make any statements, representations or commitments of any
kind, or to take any action which is binding on the other
party, unless expressly so authorized to do so by an instrument in writing signed by
authorized representatives of such other party.








7.2

Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given: (a) when delivered personally or by hand; (b) when delivered
by facsimile transmission (receipt verified); (c) when received or
refused, if sent by registered or certified or recorded post
(return receipt requested), postage prepaid; or (d) when delivered
by courier service; in each case, to the parties at the following
addresses (or at such other address for a party as shall be
specified by like notice; provided, that notices of a change of
address shall be effective only upon receipt thereof):







 

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Catalent


Catalent Belgium
S.A.


Rue
Font. St. Landry


10 Parc
Mercator B-1120


Neder
over Heembeek


Belgium


Attn:
General Manager


Fax:
32-2-788-39-59


 



With a copy to:


Catalent Pharma
Solutions


14
Schoolhouse Road


Somerset, NJ
08873


USA


Attn:
General Counsel (Legal Department)


Email :
GenCouns@catalent.com


 


 


Palatin
Technologies, Inc.


4-B
Cedar Brook Drive


Cranbury, New
Jersey 08512


U.S.A.


Attn:
Chief Financial Officer


Fax:
(609) 495-2202


 



With a copy to:


Thompson Hine
LLP


335
Madison Avenue, 12th Floor


New
York, New York 10017 USA


Attn:
Faith Charles, Esq.


Facsimile: (212)
344-6101


 




7.3

Annexes. All Annexes (and any amendments to such Annexes)
and their enclosures form an integral part of this Agreement and
are incorporated herein by reference. This Agreement shall
govern if there is any conflict
between the terms of such Annexes and the terms of this
Agreement.








7.4

Entire Agreement. This Agreement
(including the Annexes hereto) and the Supply Agreement constitute
the entire agreement between the parties related to the subject
matter covered by this Agreement, shall supersede and prevail over
any other prior or contemporaneous arrangements regarding this
subject matter, whether written or oral, including without
limitation the Binding Terms (as defined in the Recitals hereto),
and is binding upon the parties hereto and their successors and
permitted assigns. For the avoidance of doubt, this Agreement does
not supersede any existing generally applicable confidentiality
agreement between the parties as it relates to time periods prior
to the date hereof or to business dealings not covered by this
Agreement. No term of this Agreement may be amended except upon
written agreement of both parties, unless otherwise expressly
provided in this Agreement.








7.5

Assignment. Neither party may assign
this Agreement, in whole or in part, without the prior written
consent of the other party; provided, however, that either party may, without
the other party’s consent, assign this Agreement in its
entirety to an Affiliate or to a successor to substantially all of
the business or assets of the assigning party or the assigning
party’s business unit responsible for performance under this
Agreement.








7.6

Severability. If any term of this
Agreement is declared invalid or unenforceable by a court or other
body of competent jurisdiction, the remaining terms of this
Agreement will continue in full force and effect.







 

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7.7

No Waiver. In no event shall any delay,
failure or omission (in whole or in part) in enforcing, exercising
or pursuing any right, power, privilege, claim or remedy conferred
by or arising under this Agreement or by law, be deemed to be or
construed as a waiver of that or any other right, power, privilege,
claim or remedy in respect of the circumstances in question, or
operate so as to bar the enforcement of that, or any other right,
power, privilege, claim or remedy, in any other instance at any
time or times subsequently.








7.8

Counterparts. This Agreement (and any
Annexes and amendments hereto) may be executed in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
Delivery of an executed counterpart of this Agreement by fax or
e-mail in an image format (e.g., .pdf file) shall be as effective
as delivery of a manually executed counterpart of this
Agreement.






(signature
page follows)


 


 



 

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The
parties have caused their respective duly authorized
representatives to execute this Agreement effective as of the
Effective Date.


 


 


	
Palatin
Technologies, Inc.

	

 

	

 

	
Catalent
Belgium S.A.

	

 


	
/s/
Stephen
T. Wills 


	

 

	

 

	
/s/
Eric
Kummer


	

 


	
Name:
Stephen
T. Wills 


	

 

	

 

	
Name:
Eric
Kummer


	

 


	
Title:
CFO/COO 


	

 

	

 

	
Title:
General
Manager 


	

 


	
Date:
June
20, 2016 


	

 

	

 

	
Date:
June
14, 2016   


	

 


	
 

	

 

	

 

	
 

	

 







 


 



 

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ANNEX 1



MANUFACTURING PREPARATION PLAN


***


 



 

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INITIAL COST OVERVIEW FOR THE MANUFACTURING
PREPARATION


***


 


 


 



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