**Exhibit 10.18**

 

**CONFIDENTIAL INFORMATION OMITTED AND FILED SEPARATELY**

**WITH THE SECURITIES AND EXCHANGE COMMISSION.**

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

 

**LETTER AGREEMENT**

 

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

 

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

 

and

 

**PRAECIS PHARMACEUTICALSINCORPORATED**, with registered offices at830 Winter Street, Waltham, Massachusetts 02451, hereafter **“****Praecis”**

 

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

 

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

 

**Whereas,**in connection withthe Development and Supply Agreement, UCB agreed to commence certain processdevelopment activities which are the subject of several scopes of work (the “ProcessImprovements”) and Praecis agreed to pay UCB for the Process Improvements uponcompletion of such activities; and

 

**Whereas,**pursuant to Section C.1.of Exhibit A of the Development and Supply Agreement entitled “Supply ofProduct in 2005” (which Section was added pursuant to Amendment No. 2),Praecis committed to purchase ******* of API during2005 (the “2005 Manufacturing Campaign”), a portion of which was paid for atthe end of 2004 and the remainder of which shall be due upon the later of December 31,2005 and the delivery by UCB of the ******* to Praecis;and

 

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

 

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

 

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**ARTICLE 1****– SUSPENSION OF ACTIVITIES**

 

1.1           UCB shall immediately suspend the Process Improvementsand shall issue to Praecis, within ninety (90) days of the date hereof, acomprehensive status report on such Process Improvements.  In consideration of such suspension, Praecisshall pay UCB, on the date hereof, one hundred and thirty thousand dollars (USD130,000) for the work completed to date on such Process Improvements.

 

1.2           Praecis may elect to resume the Process Improvements (asdescribed in the previously agreed upon scopes of work relating to such ProcessImprovements) at any time prior to December 31, 2007 by providing writtennotice to UCB of such election. Upon completion of such Process Improvements andrelease of the final development report, Praecis shall pay UCB an additional eightyfour thousand dollars (USD 84,000), representing the remaining amount due forthe Process Improvements.

 

1.3           UCB shall immediately suspend the 2005 ManufacturingCampaign at an intermediate stage where the future quality of the product isnot jeopardized and shall store until December 31, 2007, at no charge toPraecis, the inventory of process intermediates in appropriate GMP conditionsmaintaining the quality and security of such process intermediates. UCB shallissue to Praecis, within ninety (90) days of the date hereof, a comprehensivestatus report on the 2005 Manufacturing Campaign.  In consideration of such suspension, Praecisshall pay UCB, on the date hereof, one million five hundred thousand dollars(USD 1,500,000) for the work completed to date on the 2005 ManufacturingCampaign.  Upon such payment, title tothe process intermediates shall pass to Praecis.

 

1.4           Praecis may elect to resume the 2005 Manufacturing Campaignat any time prior to December 31, 2007 by providing written notice to UCBof such election.  Upon completion of the2005 Manufacturing Campaign and receipt by Praecis of the certificate ofanalysis and batch record in accordance with the terms of the Development andSupply Agreement, Praecis shall pay UCB an additional six hundred thousanddollars (USD 600,000), representing the remaining amount due for the 2005Manufacturing Campaign.

 

1.5           For the avoidance of doubt, UCB is responsible toensure that there is sufficient GMP process intermediate inventory necessary tocomplete the 2005 Manufacturing Campaign. If there are any discrepancies, both Parties, in good faith, willreconcile the final quantity delivered to Praecis against the agreed uponpurchase price.

 

1.6           Should Praecis elect to resume either the ProcessImprovements or the 2005 Manufacturing Campaign, or both programs, at any timeprior to December 31, 2007, the Parties will define together the bestpossible timeline and format towards reinitiating either or both such programs.

 

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

 

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

 

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

 

**ARTICLE 2- MISCELLANEOUS**

 

2.1           Capitalized termsused in this Agreement and not otherwise defined shall have the meaningsascribed to such terms in the Development and Supply Agreement.

 

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

 

2.3           This Agreement shall effect the modificationsto the Development and Supply Agreement provided for herein. All other provisionsof the Development and Supply Agreement not modified hereby shall remain infull force and effect.

 

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

 

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

 

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

 

2.7           This Agreement isgoverned by the laws of the state of New York, U.S.A., without giving effect tothat state’s choice of law doctrine. Both Parties consent to the exclusivejurisdiction of the Courts of New York, both state and federal.

 

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

 

**[Remainder of this page intentionallyleft blank. Signature Page Follows.]**

 

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**IN WITNESS WHEREOF**, the Partieshave caused this Agreement to be signed by their duly authorizedrepresentatives in two counterparts.

 

 
| **UCB S.A.**            | ** **     |               |   | **PRAECIS PHARMACEUTICALS**

**INCORPORATED** |
|-------------------------|----------------|--------------------|--------|-----------------------------------------------|
|                    |           |               |   |                                          |
|                    |           |               |   |                                          |
| /s/ Alain Scarso        |           |               |   | /s/ Kevin F. McLaughlin                       |   |
| Name:                   |           | Alain Scarso       |   | Name:                                         | Kevin F. McLaughlin |
| Title:                  | Vice President |               | Title: | President and Chief                           |
|                    |           |               |   |                                          | Executive Officer |
|                    |           |               |   |                                          |
|                    |           |               |   |                                          |
| /s/ Andre’ Jordens |           |               |   | /s/ Edward C. English                         |   |
| Name:                   |           | André Jordens |   | Name:                                         | Edward C. English |
| Title:                  |           | President          |   | Title:                                        | Vice President and Chief |
|                    |           |               |   |                                          | Financial Officer |
|                         |                |                    |        |                                               |  |  |  |  |

 

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