**Exhibit 10.5**

 

**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY**

**WITH THE SECURITIES AND EXCHANGE COMMISSION.**

**ASTERISKS (*) DENOTE SUCH OMISSIONS.**

 

**AMENDMENT NO. 2 dated as of August 30, 2004 (this “Amendment”) TOTHE DEVELOPMENT AND SUPPLY AGREEMENT concluded between UCB S.A. and AMGEN INC.(thereafter assigned to PRAECIS PHARMACEUTICALS INCORPORATED) dated June 21,2000**

 

 
| **BETWEEN** | ** ** | **UCB S.A.**, acting in its own name and on behalf of its  affiliated companies, with registered offices at Allée de la Recherche 60,  B-1070 Brussels, Belgium, hereinafter **“UCB”**, on the  one hand, |
|-------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |       |                                                                                                                                                                                                                     |
| **AND**     | ** ** | **PRAECIS PHARMACEUTICALS  INCORPORATED**,  with registered office at 830 Winter Street, Waltham, Massachusetts 02451,  hereinafter **“Praecis”,**                                                             |

 

 

**WHEREAS,** by agreement dated June 21, 2000 UCB andAmgen Inc., hereinafter **“Amgen”**,entered into a contract (the “Original Agreement”) for the development andsupply of bulk API for a compound identified as abarelix; and

 

**WHEREAS**, effective as of December 17, 2001, Amgenassigned to Praecis, and Praecis accepted such assignment and assumed, all ofAmgen’s rights, interests, and obligations under the Original Agreement (the “Assignment”); and

 

**WHEREAS,** further to Amgen’s forecasts made prior to theAssignment, UCB had reasonably anticipated further purchase of API by Amgenunder the Original Agreement and had therefore purchased a significant amountof Raw Materials (as defined below); which further to the Assignment did remainin UCB’s inventory; and

 

**WHEREAS,** following the Assignment, UCB and Praecisamended the Original Agreement as of March 26, 2002 to replace certainexhibits thereto (the Original Agreement, as so amended, the “Agreement”); and

 

**WHEREAS**, UCB and Praecis desire to further amend theAgreement to provide for the purchase by Praecis of a certain quantity of APIproduced using the Raw Materials and to make certain other modifications to therights and obligations of the Parties thereunder;

 

**NOW, THEREFORE** in consideration ofthe foregoing and the agreements contained herein, and intending to be legallybound, the Parties have agreed asfollows:

 

**1.****                                    ****Amendment of Article One - Definitions.** Article One of the Agreement is herebyamended to add the following definitions:

 

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“New Process” shall mean a new ******* manufacturing process for API being developed by theParties, involving a ******* process.

 

“Raw Materials” shall mean certain excessabarelix-specific amino acid derivatives currently in UCB’s inventory in suchquantities as detailed separately by UCB to Praecis.  UCB shall provide periodic reports to Praecisupdating the amount of such Raw Materials remaining in its inventory.  All Raw Materials shall be stored at UCB atno cost to Praecis.  UCB shall ensure thatthe Raw Materials meet UCB’s abarelix raw material specifications for cGMPmanufacture at the specific time(s) of API manufacture in accordance with theProduction Schedule specified in Section C.2. of Exhibit A hereto.

 

Capitalized terms used in this Amendment andnot otherwise defined shall have the meanings ascribed to such terms in theAgreement.

 

**2.****                                    ****Amendment of Exhibit A****.**  ExhibitA of the Agreement is hereby amended by adding the following Sections C. andD.:

 

“**C.****                           **Notwithstanding the provisions of Sections 4.2(a)(ii) and 4.3 of theAgreement and Section B of this Exhibit A, the Parties agree that as of August 30,2004, the following terms and conditions shall be in effect with respect to allpurchases of API by Praecis under the Agreement until the earlier of (i) thepurchase by Praecis of ******* of APIproduced by UCB using the Raw Materials; and (ii) the purchase by Praecis ofall Raw Materials remaining in UCB’s inventory:

 

**1.****                                    ****Supply of Product in 2005**

 

Praecis commits to issue on August 30,2004 a purchase order for the delivery in 2005 of *******of API (the “Initial Purchase”) at an agreed upon unit price of USD *******.  UCB shallproduce the API according to the ******* Synthesisprocess, using a portion of the Raw Materials.

 

Praecis shall execute prior to the end of2004 the initial milestone payment of USD 1,800,000, representing payment forthe production of ******* which willbe used in the manufacture of the Initial Purchase.

 

Praecis agrees to pay to UCB the secondmilestone payment of [*******] USD2,100,000, representing the remaining amount due for the Initial Purchase, nolater than December 31, 2005, provided, however, that such secondmilestone payment shall not be due unless and until UCB delivers the ******* of API to Praecis.

 

**2.****                                    ****Option to Purchase remaining ***of API in lieu of Raw Materials**

 

Following the Initial Purchase, Praecisundertakes to purchase the remaining inventory of Raw Materials, representingan outstanding amount of USD 3,339,000. In lieu of purchasing the remaining inventory of Raw Materials, Praecismay elect to exercise, in whole or in part, the option hereby granted by UCB(the “Option”) to purchase up to a total additional amount of ******* of API (which will consume all the remaining RawMaterials), in accordance with the production schedule set forth below(the “Production Schedule”).  Except asprovided in Section D. below, purchases under the Option shall be made atan agreed upon unit price of USD *** and shall be manufactured according to the******* Synthesis process.

 

**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPERATELY WITHTHE SECURITIES AND EXCHANGE COMMISSION.**

**ASTERISKS (*) DENOTE SUCH OMMISSIONS.**

 

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For each year following 2005, Praecis mayexercise this Option by the issuance of a purchase order for the minimum amountof API set forth below for the applicable year. The purchase order for each year must be issued by Praecis no later thanthe end of the first quarter of the preceding year (i.e., by March 31,2005 for the 2006 delivery of *******, etc.):

 

Production Schedule:

 

> 2006 :          ******* of API

> 2007 :          ******* of API

> 2008 :          ******* of API

> 2009 :          ******* of API

 

The deliveries of such ordered quantitieswill be made during the corresponding calendar year according to a schedule mutuallyagreed upon by the Parties.

 

With respect to any given year, Praecis mayin its sole discretion order in excess of the minimum amounts set forth in theProduction Schedule (up to an aggregate maximum of *******).  UCB shall use its reasonable efforts toproduce and deliver such increased quantity during the corresponding calendaryear.

 

In the event that Praecis exercises thisOption in full by, at the latest, March 31, 2008, Praecis shall have nofurther obligations with respect to the Raw Materials, as all Raw Materialswill then have been used in the manufacture of the *******of API.

 

However, each year in which the minimumvolume set forth in the Production Schedule above is not ordered byPraecis, the cost of Raw Materials corresponding to such order shortfall willbe paid by Praecis to UCB, up to the following annual maximum:

 

> 2006 :          USD   600,000

> 2007 :          USD   800,000

> 2008 :          USD1,000,000

> 2009 :          USD1,000,000

 

Notwithstanding the foregoing, in no eventshall Praecis be required to purchase Raw Materials, or API produced with RawMaterials, that do not meet the UCB abarelix raw material specifications forcGMP production.

 

**3.****                                    ****New Process**

 

*******

 

**D.**                                  Should Praecis and UCB mutually agree to moveto the New Process following its successful development and qualification, themaximum price for all future API purchases under the Agreement, includingamounts not yet purchased pursuant to the Option discussed in Section Chereof, shall be ******* to USD *******.

 

**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPERATELY WITHTHE SECURITIES AND EXCHANGE COMMISSION.**

**ASTERISKS (*) DENOTE SUCH OMMISSIONS.**

 

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To the extent that Praecis is required topurchase Raw Materials due to an order shortfall in any given year under theOption, and provided such Raw Materials are later used in the manufacture ofAPI in excess of the yearly production of the following year under theProduction Schedule set forth in Subsection C.2. hereof, Praecisshall receive a credit of ******* from UCBfor each kg of API manufactured using the******* Synthesisprocess and ******* from UCB for each kg of APImanufactured using the New Process.  Forthe avoidance of doubt, the following example of the calculation of such creditis provided:

 

*******

 

**3.****                                    ****Partiesin Interest; No Other Modification****.**  This Amendmentshall be binding upon and inure solely to the benefit of each Party hereto andits respective successors and assigns. Nothing in this Amendment, express or implied, is intended to or shallconfer upon any other person any rights, benefits or remedies of any naturewhatsoever under or by reason of this Amendment.  This Amendment shall effect the modificationsto the Agreement provided for herein. All other provisions of the Agreement notmodified hereby shall remain in full force and effect.

 

**4.****                                    ****Counterparts****.** This Amendment may be executed in counterparts, each of which, when soexecuted and delivered, will be deemed an original and which shall togetherconstitute one and the same instrument.

 

**5.****                                    ****Effect ofthis Amendment****.**  Except as set forth herein, all terms andconditions of the Agreement remain in full force and effect.

 

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**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPERATELY WITHTHE SECURITIES AND EXCHANGE COMMISSION.**

**ASTERISKS (*) DENOTE SUCH OMMISSIONS.**

 

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**IN WITNESS WHEREOF, the partieshereto have caused this Amendment to be executed by affixing their signaturesbelow.**

 

Done in two copies, each party havingreceived its copy.

 

 
| UCB SA                                         | PRAECIS PHARMACEUTICALS  INCORPORATED |
|------------------------------------------------|---------------------------------------|
|                                           |                                  |
|                                           |                                  |
| By                                             | /s/ Vincent Bille                     |   | By | /s/ Kevin F. McLaughlin |   |
| Name: Vincent Bille                            | Name: Kevin F. McLaughlin             |
| Title:   Peptide B.V. Manager        | Title:                                | Executive Vice President and  Chief Financial Officer |
|                                           |                                  |
|                                           |                                  |
| UCB Legal Affairs                              |                                  |
| Sw/vc/c-pharma/amend/Praecis addendnr1-10308-2 |                                  |
| 28/7/2004                                      |                                  |
|                                           |                                  |
| /s/ A. Jordens                                 |                                  |   |
| A. Jordens                                     |                                  |
| President UCB-Bioproducts                      |                                  |
|                                                |                                       |  |  |  |  |  |  |

 

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