exv10w1



 





Exhibit 10.1




CONNETICS CORPORATION




and




PIERRE FABRE DERMATOLOGIE




LICENSE AGREEMENT




Clobetasol Propionate Mousse




CONFIDENTIAL




 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	1.	 	 	DEFINITIONS	 	 	1	 
	

	 	 	1.1	 	 	Definitions
	 	 	1	 
	

	 	 	1.2	 	 	Interpretation
	 	 	4	 
	2.	 	 	GRANT OF LICENSE	 	 	5	 
	

	 	 	2.1	 	 	License to Know-how and Intellectual Property
	 	 	5	 
	

	 	 	2.2	 	 	No License to Trademarks
	 	 	6	 
	

	 	 	2.3	 	 	Exclusivity
	 	 	6	 
	

	 	 	2.4	 	 	Restrictions on Licensee — European Union
	 	 	6	 
	

	 	 	2.5	 	 	Restrictions on Licensee – Other Countries
	 	 	6	 
	

	 	 	2.6	 	 	Sales Inquiries
	 	 	6	 
	3.	 	 	TERM OF LICENSE; ASSIGNMENT	 	 	7	 
	

	 	 	3.1	 	 	Term
	 	 	7	 
	

	 	 	3.2	 	 	Assignment by PFD
	 	 	7	 
	

	 	 	3.3	 	 	Assignment by Connetics
	 	 	7	 
	

	 	 	3.4	 	 	Sublicenses
	 	 	7	 
	4.	 	 	CONSIDERATION	 	 	8	 
	

	 	 	4.1	 	 	Provision of Data and Regulatory Approvals Transfer
	 	 	8	 
	

	 	 	4.2	 	 	Non-refundable; Non-creditable
	 	 	10	 
	

	 	 	4.3	 	 	Sublicensing Revenue Payment to Connetics
	 	 	10	 
	

	 	 	4.4	 	 	Royalties
	 	 	10	 
	

	 	 	4.5	 	 	Records
	 	 	12	 
	

	 	 	4.6	 	 	Audit
	 	 	12	 
	

	 	 	4.7	 	 	Commencement of Commercial Sales
	 	 	13	 
	5.	 	 	LICENSE TO HAVE PRODUCT MANUFACTURED AND SUPPLY OF PRODUCT	 	 	13	 
	

	 	 	5.1	 	 	Terms of Product Manufacture – Know-how and Technology Transfer
	 	 	13	 
	

	 	 	5.2	 	 	Supply of Product and Connetics’ Know-how and Technology
	 	 	13	 
	6.	 	 	WARRANTIES AND INDEMNITIES	 	 	14	 
	

	 	 	6.1	 	 	Representations and Warranties of Connetics
	 	 	14	 
	

	 	 	6.2	 	 	Representations and Warranties of PFD
	 	 	15	 
	

	 	 	6.3	 	 	Manufacture of Product
	 	 	15	 
	

	 	 	6.4	 	 	Disclaimer of Warranties
	 	 	16	 
	

	 	 	6.5	 	 	Indemnification of PFD
	 	 	16	 
	

	 	 	6.6	 	 	Indemnification of Connetics
	 	 	16	 
	

	 	 	6.7	 	 	Indemnification Procedure
	 	 	17	 







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	7.	 	 	COVENANTS	 	 	18	 
	

	 	 	7.1	 	 	Connetics’ Covenants to PFD
	 	 	18	 
	

	 	 	7.2	 	 	PFD’s Covenants to Connetics
	 	 	19	 
	8.	 	 	PRODUCT DEVELOPMENT AND REGULATORY APPROVAL	 	 	23	 
	

	 	 	8.1	 	 	PFD Developments
	 	 	24	 
	

	 	 	8.2	 	 	License to PFD Developments
	 	 	24	 
	

	 	 	8.3	 	 	License to Connetics Developments
	 	 	24	 
	

	 	 	8.4	 	 	Regulatory Filings
	 	 	24	 
	

	 	 	8.5	 	 	Continuing Obligations for National Regulatory Approval Granted

Via the European Mutual Recognition Procedure (MRP)
	 	 	24	 
	

	 	 	8.6	 	 	Technical Documentation Maintenance
	 	 	25	 
	9.	 	 	INTELLECTUAL PROPERTY	 	 	25	 
	

	 	 	9.1	 	 	Improvements
	 	 	25	 
	

	 	 	9.2	 	 	Patent Infringement
	 	 	26	 
	

	 	 	9.3	 	 	Trademark and Patent Labeling
	 	 	26	 
	10.	 	 	REGULATORY COMPLIANCE AND REPORTING	 	 	27	 
	

	 	 	10.1	 	 	Government Inspection
	 	 	27	 
	

	 	 	10.2	 	 	Adverse Events
	 	 	27	 
	

	 	 	10.3	 	 	Notification and Recall
	 	 	28	 
	

	 	 	10.4	 	 	Recall Expense
	 	 	29	 
	11.	 	 	CONFIDENTIALITY AND PUBLICITY	 	 	29	 
	

	 	 	11.1	 	 	Public Relations and Announcements
	 	 	29	 
	

	 	 	11.2	 	 	Confidentiality
	 	 	30	 
	

	 	 	11.3	 	 	Remedy
	 	 	30	 
	

	 	 	11.4	 	 	Agreement Terms
	 	 	30	 
	12.	 	 	EXPORT CONTROLS	 	 	31	 
	

	 	 	12.1	 	 	Export Controls
	 	 	31	 
	

	 	 	12.2	 	 	Ethical Business Conduct
	 	 	31	 
	13.	 	 	PIERRE FABRE TECHNOLOGY	 	 	32	 
	

	 	 	13.1	 	 	Right of Refusal
	 	 	32	 
	

	 	 	13.2	 	 	Connetics’ Rights
	 	 	32	 
	

	 	 	13.3	 	 	Sole Rights
	 	 	33	 
	

	 	 	13.4	 	 	Alternative Technology
	 	 	33	 
	

	 	 	13.5	 	 	Term of Right of Refusal
	 	 	33	 
	14.	 	 	TERMINATION	 	 	33	 
	

	 	 	14.1	 	 	Termination
	 	 	33	 
	

	 	 	14.2	 	 	Effect of Termination
	 	 	34	 
	15.	 	 	GENERAL	 	 	36	 







ii









 






	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	15.1	 	 	Severance
	 	 	36	 
	

	 	 	15.2	 	 	Waiver
	 	 	36	 
	

	 	 	15.3	 	 	Governing Law
	 	 	36	 
	

	 	 	15.4	 	 	Dispute Resolution
	 	 	36	 
	

	 	 	15.5	 	 	Force Majeure
	 	 	37	 
	

	 	 	15.6	 	 	Entire Agreement
	 	 	37	 
	

	 	 	15.7	 	 	Amendment
	 	 	37	 
	

	 	 	15.8	 	 	Notices
	 	 	38	 
	

	 	 	15.9	 	 	Payments
	 	 	38	 
	

	 	 	15.10	 	 	Independent Contractor
	 	 	38	 
	

	 	 	15.11	 	 	Language; Interpretation
	 	 	39	 
	

	 	 	15.12	 	 	Counterparts
	 	 	39	 







List of Exhibits




	 	 	 
	Exhibit A

	 	Permitted Use
	 
	 	 
	Exhibit B

	 	Intellectual Property
	 
	 	 
	Exhibit C

	 	Third Party License
	 
	 	 
	Exhibit D

	 	Minimum Annual Sales
	 
	 	 
	Exhibit E

	 	Adverse Event Reporting Procedure
	 
	 	 
	Exhibit F

	 	Listed Manufacturers
	 
	 	 
	Exhibit G

	 	Terms for Inclusion in Contract with Listed Manufacturer








iii









 





     This LICENSE AGREEMENT (the “Agreement”), effective as of September 29,
2004 (“Effective Date”) is made by and between:



     CONNETICS CORPORATION, a Delaware corporation, having its principal place
of business at 3290 West Bayshore Road, Palo Alto, California, U.S.A. 94303
(who together with its subsidiary, Connetics Australia Pty Ltd., is referred to
as “Connetics”);



     and



     PIERRE FABRE DERMATOLOGIE, a Société par Actions Simplifiée incorporated
in France, having its principal place of business at 45, place Abel Gance 92100
Boulogne (France) (referred to as “PFD”).



     Connetics and PFD are sometimes referred to individually as a “Party” and
collectively as the “Parties.”



BACKGROUND





	A.	 	Connetics is the licensee of worldwide rights to an aerosol quick-break
foam product containing 0.05% clobetasol propionate (“Product”) with right
to sublicense, and possesses certain trade secrets, know-how and other
intellectual property rights pertaining to the Product as defined in this
Agreement.






	B.	 	PFD has requested that Connetics grant PFD an exclusive license under the
Connetics’ license and Know-how (as defined below), with right to
sublicense, to enable PFD to market, have manufactured, sell and use the
Product for the treatment or prevention of skin dermatoses in humans in
all countries comprising the Territory (as defined in this Agreement).






	C.	 	The Parties have executed on December 5, 2003 a Term Sheet setting forth
the basis on which the Parties intend to conclude an agreement for PFD to
license the Product in the Territory (hereinafter the “Term Sheet”).





NOW, THEREFORE, IN CONSIDERATION of the premises and the mutual covenants and
agreement contained in this Agreement, the Parties agree as follows:




1 DEFINITIONS




1.1 Definitions




     In this Agreement, unless the subject or context otherwise requires the
following capitalized terms shall have the meanings set forth below:



     “ADE” shall mean adverse drug event as set forth in Section 10.2 of this
Agreement.



     “Affiliate” means any corporation or other business entity controlled by,
controlling or under common control with a Party to this Agreement. For this
purpose “control” shall mean (i)



1









 





direct or indirect beneficial ownership of fifty percent (50%) or more of
the voting stock, or (ii) a fifty percent (50%) or more interest in the income
of such corporation or other business entity or (iii) direct or indirect power
to direct or cause the direction of the management and policies by any means
whatsoever.




     “Application for Marketing Approval” means application by PFD or its
Affiliate for any approvals or registrations required by any country or state
in the Territory for the purposes of enabling the sale of the Product in that
country or state.



     “Associated Person” means any officer or director of PFD, any Affiliate of
PFD or any person having the power to exercise or control the exercise of the
voting power of any other person to thereby affect directly or indirectly the
ownership of the outstanding shares or securities (representing the right to
vote for the election of directors or other managing authority) of such
Affiliate.



     “Business Day” means any day on which banks are open for business in
California, U.S.A. and in Paris, France.



     “Commencement of Commercial Sales” means the first arm’s length sale of
the Product by PFD, its Affiliates or a permitted sublicensee of PFD to a third
party forming part of a continuous program or campaign designed to market the
Product in any country or state in the Territory.



     “Confidential Information” includes the Know-how, the terms of this
Agreement, and all and any information relating directly or indirectly to the
Product including, but without limitation, the identity and composition of
ingredients for producing or manufacturing the Product, formulae for the
Product, methods of producing or manufacturing the Product and costs of
manufacturing the Product, information relating to the packaging, selling and
marketing of the Product including the cost thereof and pricing information,
whether such information is provided orally or in writing or by means of
photographs, computer disks, computer tapes, or any other form, manner or mode
but does not include:




	(a)	 	Any written information relating to the Product which PFD can
prove beyond reasonable doubt was held by PFD before Connetics
disclosed it;






	(b)	 	Information relating to the Product which was generally
available to the public without restriction or was in the public
domain before Connetics disclosed it; or






	(c)	 	Information relating to the Product which other than as a
result of any wrongful act by any person becomes generally available
to the public without restriction or comes into the public domain
after the date Connetics discloses it to PFD.





     “Fee” shall have the meaning set forth in Section 4.1.1.



     “Field” means the treatment or prevention of skin dermatoses in humans.



     “Intellectual Property” means the Patents (as further defined below).



2









 





     “Improvements” means and includes, but is not limited to, any and all
additions, modifications, enhancements, or adaptations to the Product, or use
of the Product which claim priority to the Patents and are not included as of
the Effective Date in the Product, whether or not such Improvement is
patentable or otherwise capable of a registrable proprietary interest.



     “Know-how” means all data and results of clinical and other trials and
investigations relating to the Product, including regulatory status and
information, together with all other information relating to the specifications
of the Product and information relating to the testing (including quality
control standards, assay methods and stability studies), storage and use of the
Product owned by Connetics now or at any time during the Term of this
Agreement.



     “Listed Manufacturer” means the manufacturer or manufacturers of the
Product listed in Exhibit F to this Agreement which pursuant to this Agreement
PFD and its sublicensees may use to manufacture and supply the Product.



     “Patents” means the patents and patent applications as they relate to the
Product and as set forth in Exhibit B to this Agreement.



     “Permitted Use” means use of a Product for the treatment set forth in
Exhibit A.



     “Product” means the aerosol hydroethanolic quick-break clobetasol
propionate mousse referred to in Exhibit A, as that Exhibit may be amended from
time to time, and including any Improvements. Exhibit A is incorporated in
this definition by this reference as though fully set forth here.



     “Quarter Date” means any one of 30 September, 31 December, 31 March or 30
June.



     “Quarter” means each period of three (3) consecutive months during the
term of this Agreement ending on a Quarter Date provided that:




	(a)	 	The period from the Effective Date until the first Quarter
Date thereafter is deemed to be a Quarter; and
	 
	(b)	 	The period from the last Quarter Date prior to termination,
through the termination date, of this Agreement is deemed to be a
Quarter.





     “Regulatory Approval” means all registration and variation approvals,
including pricing approvals for reimbursement purposes, from the appropriate
Regulatory Authorities in each country in the Territory that are required to
manufacture, promote and market the Product in the relevant country.



     “Regulatory Authority” means governmental or regulatory agencies in the
Territory or in any country in the Territory whose approvals are required to
manufacture, market and/or sell the Product in the Territory or any state in
the Territory.



     “Regulatory Filings” means all activities relating to the filing for and
procurement of Regulatory Approval for the Product in the Territory, including
but not limited to price reimbursement approval for the marketing and sale of
the Product from the relevant Regulatory Authorities and marketing
authorization for the Product in effect as of the Effective Date.



3









 





     “Supply Agreement” shall have the meaning set forth in Section 4.1.1 of
this Agreement.



     “Technology” shall have the meaning set forth in Section 5.1 of this
Agreement.



     “Term” shall have the meaning set forth in Section 3.1 of this Agreement.



     “Territory” means Europe, meaning Germany, Austria, Belgium, Denmark,
Spain, Finland, France, Greece, Luxembourg, The Netherlands, Portugal, Sweden,
Cyprus, Estonia, Hungary, Latvia (Lettonia), Lithuania, Malta, Poland, Czech
Republic, Switzerland, Slovakia, Slovenia, United Kingdom and Eire; and
Morocco, Algeria, Tunisia, Gabon, Camaroon, Ivory Coast, Benin, Burkina-Faso,
Central African Republic, Chad, Comores Island, The Democratic Republic of
Congo, The Republic of Congo, Guinea, Mali, Mauritania, Niger, Republic of
Madagascar, Republic of Djibouti, Senegal, Togo, and Lebanon; and, on a
semi-exclusive basis, Brazil and Argentina. The countries of the Territory
which are to be exclusively licensed and the countries of the Territory which
are to be semi-exclusively licensed shall be collectively referred to in the
defined term “Territory.”



     “Third Party(ies)” means any person or entity other than Connetics, PFD,
or an Affiliate of Connetics or PFD.



     “Third Party Licenses” means the licenses to Third Party intellectual
property rights including, without limitation, patents, patent applications,
trade secrets, and/or know-how covering the Product, under which Connetics has
a right to grant a sublicense to PFD. A list of Third Party Licenses as of the
Effective Date is attached to this Agreement as Exhibit C.



1.2 Interpretation




     In this Agreement, unless the subject or the context otherwise requires:




	(a)	 	words importing the singular include the plural and vice
versa;
	 
	(b)	 	words importing one gender include all genders;
	 
	(c)	 	a reference to any Party or other person includes that
person’s successors and permitted assigns;
	 
	(d)	 	a reference to this or any other document includes a
reference to that document as amended, supplemented, novated or
replaced from time to time;
	 
	(e)	 	a reference to a recital or clause is a reference to a
recital or clause of this Agreement;
	 
	(f)	 	a reference to writing includes all means of reproducing
words in a tangible and permanently visible form;
	 
	(g)	 	any reference to a person includes a natural person, company,
corporation, partnership, trust, estate, joint venture, sole
proprietorship, government (including




4









 






	 	 	any branch or subdivision thereof), governmental or municipal
agency, association, co-operative and any other entity or person
whatsoever;






	(h)	 	the headings in this Agreement do not affect its
interpretation;
	 
	(i)	 	the recitals form part of this Agreement; and
	 
	(j)	 	the expressions “secret” and “substantial” have the same
meaning as in European Commission Regulation 240/96/EC as amended.





2. GRANT OF LICENSE




2.1 License to Know-how and Intellectual Property




     2.1.1 Connetics grants to PFD an exclusive license to:



     (a) use the Know-how and Intellectual Property; and



     (b) use, market, have manufactured, offer to sell, sell and
import the Product;
during the Term of this Agreement in the Field in the Territory. PFD
shall have no right to sublicense its rights under this Agreement without first
obtaining Connetics’ prior written consent to sublicense, which shall not be
unreasonably withheld. Connetics’ consent will not be required for any
sublicense to be granted by PFD to any Affiliate of PFD.



     2.1.2 PFD agrees that this license is semi-exclusive for Brazil and
Argentina.



     2.1.3 PFD acknowledges and agrees that the license to have Product
manufactured extends only to those manufacturers listed on Exhibit F to this
Agreement, as it may be amended from time to time.



     2.1.4 To the extent necessary due to the fact that the Listed
Manufacturers are located outside the Territory, Connetics hereby authorizes
PFD to use a Listed Manufacturer to manufacture the Product.



     2.1.5 PFD agrees that the licensed Know-how and Intellectual Property will
be used by PFD and it sublicensees solely for the Product and that the use of
the Know-how and Intellectual Property for any product other than the Product
must be in accordance with the terms of a separate license to be negotiated
with Connetics or its nominee.



2.2 No License to Trademarks




     Except as expressly permitted in this Agreement, Connetics has not granted
any right or license to PFD to use Connetics’ name or any trademarks or trade
names of Connetics in advertising, publicity or other promotional activities
without the express written approval of Connetics.



5









 





2.3 Exclusivity




     Except for Brazil and Argentina, Connetics shall not sell the Product in
the Territory or authorize any other person to sell the Product in the
Territory during the Term of this Agreement.



2.4 Restrictions on Licensee - European Union




     2.4.1 PFD agrees that it will not do any of the following during the Term
of this Agreement for so long as the Know-how remains secret and proprietary to
Connetics:




	(a)	 	implement an active sales policy for the Product outside the
Territory or, in particular, promote, canvass prospects, set up
branches or subsidiaries, or manage product depots outside the
Territory in respect of the Product;






	(b)	 	exploit the Know-how other than for the Permitted Use in the
Field; or






	(c)	 	exploit the Know-how in any country outside the Territory.





     2.4.2 In the event PFD, its Affiliates or sublicensees receive an order
for the Product to be supplied outside the Territory, PFD shall refer such
order to Connetics or Connetics’ licensee for the country or territory where
the Product is to be supplied.



2.5 Restrictions on Licensee – Other Countries




     Except as otherwise provided in Section 2.1.4, PFD agrees not to use,
manufacture, have manufactured, sell the Product or offer the Product for sale
outside the Territory and agrees not to permit any person to use, manufacture,
have manufactured, sell or offer to sell the Product outside the Territory.
PFD further agrees not to sell the Product to any person which PFD or Connetics
knows or reasonably believes will resell the Product in any country outside the
Territory without Connetics’ prior written consent which will not be
unreasonably withheld. Any written notification by Connetics to PFD given in
good faith to the effect that Connetics knows or reasonably believes that a
person will so resell the Product is binding on PFD.



2.6 Sales Inquiries




     Connetics agrees to promptly inform PFD of any inquiries it receives for
purchase of the Product in the Territory (including PFD’s market for sales and
distribution in Brazil and Argentina). PFD agrees to promptly inform Connetics
of any inquiries it receives for purchase of the Product outside the Territory.



3. TERM OF LICENSE; ASSIGNMENT




3.1 Term




     This Agreement and license shall commence on the Effective Date and,
subject to Article 14, continue in full force and effect until the later of (i)
Fifteen (15) years after the Commencement of Commercial Sales of the Product in
the Territory or (ii) the expiration of the last to expire of any Patent
anywhere in the Territory (the “Term”), after which time the license granted
under this Agreement shall become non-exclusive and fully paid-up.



6









 





3.2 Assignment by PFD




     PFD shall have no right or authority to assign this Agreement or any
portion of this Agreement, to sublet or subcontract in whole or in part, or
otherwise delegate its performance under this Agreement, without Connetics’
prior written consent which shall not be unreasonably withheld.
Notwithstanding the foregoing, nothing in this Agreement shall prohibit PFD
from assigning this Agreement to any Affiliate of PFD. No such assignment
shall relieve PFD of primary liability for the performance of its obligations
under this Agreement, and all the terms and conditions of this Agreement shall
apply between such assignee of PFD and Connetics with the same force and effect
as if this Agreement had been made between Connetics and the assignee in the
first instance.



3.3 Assignment by Connetics




     Connetics may assign this Agreement to any third party or Affiliate
without PFD’s written consent. PFD agrees that if Connetics assigns this
Agreement to any Third Party or Affiliate, all the terms and conditions of this
Agreement shall apply between such Third Party or Affiliate and PFD with the
same force and effect as if the Agreement had been made between PFD and such
Third Party or Affiliate in the first instance.



3.4 Sublicenses




     PFD shall have the right to grant sublicenses or to conclude co-marketing
agreements under this license and to use Affiliates and Third Parties in
connection with the performance of its obligations under this Agreement,
provided that




	(a)	 	the execution of a sublicense, a co-marketing agreement or a
sub-contract shall not in any way diminish, reduce or eliminate any
of PFD’s obligations under this Agreement, and PFD shall remain
primarily liable for such obligations,
	 
	(b)	 	PFD shall obtain Connetics’ written consent (which shall not
be unreasonably withheld) before entering into such a sublicense,
co-marketing agreement or agreement with Third Parties,
	 
	(c)	 	PFD shall only grant a sublicense to any Affiliate or Third
Party or conclude a co-marketing agreement with an Affiliate or
Third Party which undertakes to perform the obligations of this
Agreement relevant to such sublicense and co-marketing agreement,
including specifically the obligation under Article 12, and
undertakes to be bound by the confidentiality provisions set forth
in this Agreement and to provide such access to its records for the
purpose of ascertaining amounts payable as Connetics may from time
to time reasonably require, and
	 
	(d)	 	PFD shall not in any sublicense purport or attempt to grant
the right to manufacture the Product or have the Product
manufactured by a Third Party.




7









 











4. CONSIDERATION




4.1 Provision of Data and Regulatory Approvals Transfer




     4.1.1 PFD will pay to Connetics a one-time fee of THREE HUNDRED AND FIFTY
THOUSAND U.S. DOLLARS (US$350,000) (“Fee”) for the provision of data and
transfer of Regulatory Approvals relating to the Product as follows:




	(a)	 	TWO HUNDRED AND FIFTY THOUSAND U.S. DOLLARS (US$250,000) upon
execution of this Agreement by both Parties; and,
	 
	(b)	 	ONE HUNDRED THOUSAND U.S. DOLLARS (US$100,000) on the earlier
of December 30, 2004 or upon completion of (i), (ii) and (iii) as
set forth below to both Parties’ reasonable satisfaction:






	(i)	 	the transfer of Regulatory Approvals existing as
of the Effective Date to and into the name of PFD and
provision to PFD of data files relating to the Product which
are in Connetics’ name and possession as of the Effective
Date, so as to allow PFD to obtain Regulatory Approvals;
	 
	(ii)	 	execution of a supply agreement by PFD with a
Listed Manufacturer (“Supply Agreement”) dealing with the
conditions under which the Product shall be supplied to PFD.
PFD anticipates such conditions to include that the Listed
Manufacturer supply price for the Product to PFD shall enable
PFD to enjoy a supply price for the Product of:






	(A)	 	a maximum of 40% of Pierre Fabre’s
selling price of the Product calculated quarterly on a
country-by-country basis as the weighted average selling
price of the Product after deducting for returns, or
	 
	(B)	 	The Listed Manufacturer’s fully
burdened manufacturing cost of the Product plus 25%; and






	(iii)	 	approval of the Listed Manufacturer in the
Supply Agreement by the Regulatory Authorities having issued a
Regulatory Approval relative to the Product.





4.1.2 If the payment of [**] U.S. dollars [**] in Section 4.1.1(b) is not made
by December 30, 2004, this Agreement shall automatically terminate on such date
without further notice and Connetics shall be entitled to retain the amount of
[**] paid by PFD to Connetics pursuant to Section 4.1.1(a).




4.1.3 Subject to Section 4.1.2, if the conditions set forth in Section
4.1.1(b)(i) through (iii) have not been met by May 31, 2005, or by such other
date as the Parties may from time to time agree, this Agreement shall
automatically terminate on such date, or such other agreed date or










	**      Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.




8









 










dates for completion of such items, without further notice. Notwithstanding
the termination of this Agreement by operation of this Section 4.1.3, Connetics
shall be entitled to retain the amount of THREE HUNDRED AND FIFTY THOUSAND U.S.
DOLLARS (US$350,000) paid by PFD pursuant to Section 4.1.1 above.




4.1.4 Non-refundable




     PFD agrees that upon payment to Connetics, the Fee is not refundable in
whole or in part unless (i) prior to the Commencement of Commercial Sales,
Connetics commits a material breach of this Agreement as described in Section
14.1.2, (ii) PFD notifies Connetics of the material breach prior to or on the
date of the Commencement of Commercial Sales and, (iii) notwithstanding the
provisions of Section 14.1.2, Connetics has not remedied the material breach on
the date of the Commencement of Commercial Sales.



4.1.5 Non-creditable




     PFD agrees that the Fee is not creditable in whole or in part against any
other payment(s) due from PFD to Connetics under this Agreement.



4.1.6 Milestone Payments




     In consideration of Connetics granting the license to PFD as set out in
this Agreement, PFD will pay Connetics each of the following milestone payments
(“Milestone Payment”):




	(a)	 	[**] U.S. DOLLARS [**] as follows:






	(i)	 	[**] U.S DOLLARS [**] upon the Commencement of
Commercial Sales in any state or country of the Territory or,
if earlier, on December 31, 2005 (California, U.S.A. time);
provided however, such payment shall be reduced to [**]
DOLLARS [**] if on or before such date The European Agency for
the Evaluation of Medicinal Products (“EMEA”) has permanently
banned the use, sale and supply of pharmaceutical products
containing propane/Isobutane/N-butane as a propellant gas in
the European Union; and
	 
	(ii)	 	[**] U.S DOLLARS [**] on December 31, 2006
(California, U.S.A. time); provided however, such payment
shall be reduced to [**] DOLLARS [**] if on or before such
date the EMEA has permanently banned the use, sale and supply
of pharmaceutical products containing
propane/Isobutane/N-butane as propellant gas in the European
Union; and






	(b)	 	[**] U.S. DOLLARS [**] upon the first anniversary of the
Commencement of Commercial Sales in either Belgium, Germany or
Spain; provided however, such payment shall be reduced to [**]
DOLLARS [**] if on or before such anniversary date the EMEA has
permanently banned the use, sale and supply of











	**      Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.




9









 









	 	 	pharmaceutical products containing propane/Isobutane/N-butane as
propellant gas in the European Union.





4.2 Non-refundable; Non-creditable




     PFD agrees that the Milestone Payments when paid are non-refundable and
non-creditable against any other payments due and payable to Connetics during
the Term; provided however, Connetics agrees the fee paid by PFD to Connetics
in the amount of U.S. [**] in connection with the Term Sheet, shall be
creditable against the Milestone Payment set forth in Section 4.1.6(b) above.



4.3 Sublicensing Revenue Payment to Connetics




     4.3.1 In further consideration of Connetics granting the license to PFD as
set out in this Agreement, PFD will pay to Connetics [**] PERCENT [**] of any
revenues (or monetized amount in the event it is not cash or equivalent) PFD
receives in connection with a sublicense of the Product, including but not
limited to Product launch milestones, Product sales milestones or similar
lump-sum payment received from a sublicensee in connection with or relating to
the Product (“Sublicense Revenue Payment”). The Sublicense Revenue Payment
obligation shall not apply to royalties on invoiced amounts by PFD’s
sublicensees on net sales of Product that is subject to the terms of Section
4.4 below. The obligation of PFD to make the Sublicense Revenue Payment(s)
shall be in addition to the royalty obligation of PFD set forth in Section 4.4
below.



     4.3.2 PFD agrees that any Sublicense Revenue Payment when paid to
Connetics shall be non-refundable and non-creditable against any other payments
due and payable to Connetics during the Term.



4.3.3 Payment Terms




     The Sublicense Revenue Payment(s) will be paid in United States Dollars
within sixty (60) days after the end of the Quarter during which PFD receives
the revenues upon which the Sublicense Revenue Payment(s) are payable. Each
payment will be accompanied by a statement that sets out (i) the revenue (or
monetized amount in the event it is not cash or equivalent) received by PFD
upon which the Sublicense Revenue Payment(s) has been calculated during the
Quarter in question, and (ii) the Sublicense Revenue Payment due on such
revenue.



4.4 Royalties




     In further consideration of Connetics granting the license to PFD as set
out in this Agreement, PFD will pay to Connetics a royalty equal to [**]
percent [**] of Net Sales (as defined below) of the Product invoiced by PFD or
its sublicensees in the Territory (“Royalty”).









	**      Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.




10









 










4.4.1 Payment of Royalties




     The Royalty payable on Net Sales by PFD and its sublicensees during the
Term will be paid in United States dollars within sixty (60) days after the end
of the Quarter during which the Net Sales are invoiced. For purposes of this
Agreement the term “Net Sales” means the sales of the Product actually invoiced
by PFD or its sublicensees to any client less:




	(a)	 	trade, quantity and cash discounts actually allowed and
taken;
	 
	(b)	 	credits actually allowed on account of the rejection or
return or billing error relating to any Product previously billed
and paid;
	 
	(c)	 	freight, other transportation and insurance costs;
	 
	(d)	 	taxes imposed on account of such sale (including, without
limitation, sales, value added, goods and services and distribution
taxes); and
	 
	(e)	 	rebates and adjustments.





4.4.2 Royalty Reduction




     4.4.2.1 In consideration of PFD assuming responsibility for any and all
costs associated with (a) the effecting of variations to Regulatory Approval
after the Effective Date and (b) the qualification of the Listed Manufacturer
for the production of the Product, Connetics agrees that (i) for the first
year measured from the Commencement of Commercial Sales and (ii) for the second
year measured from the Commencement of Commercial Sales, PFD is entitled to
reduce its Royalty payments by [**] percent [**], up to a maximum reduction of
[** ] U.S. Dollars [**].



     4.4.2.2 The right of Royalty reduction set forth above shall terminate at
either (i) the end of the second year measured from the Commencement of
Commercial Sales or (ii) at such time as the cumulative Royalty reduction taken
equals [**], whichever occurs first.



4.4.3 Royalty Reports




     No later than thirty (30) days after each Quarter Date, PFD shall furnish
to Connetics at such place as Connetics may from time to time advise a written
statement in English that sets out the (i) Net Sales (including details of
amounts deducted from the proceeds invoiced for the purpose of calculating Net
Sales) during the Quarter in question, and (ii) the royalties payable on such
Net Sales pursuant to this Agreement. PFD shall then pay the Royalties due
within sixty (60) days after the end of the Quarter in which the Net Sales are
invoiced. Each Quarter, PFD shall furnish to Connetics a report in English
representing cumulative monthly sales of units of the Product.









	**      Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.




11









 










4.5 Records




     PFD will keep and will cause its sublicensees to keep good and accurate
records in sufficient detail to permit accurate calculation of any (i)
reduction in Royalty payment taken by PFD pursuant to Section 4.4.2 above, (ii)
Royalty, and (iii) Sublicense Revenue Payment(s) payable for each Quarter
during the Term, and to permit a proper audit of such records and payments.
Such records will be retained by PFD and its sublicensees for a period of seven
(7) years after the end of the relevant Quarter.



4.6 Audit




     4.6.1 Right to Audit



     Connetics has the right to nominate an independent firm of certified
public accountants or chartered accountants to audit the records of PFD and the
records of the sublicensees of PFD with respect to the Product during normal
business hours at least once:




	(a)	 	during each calendar year during the Term;
	 
	(b)	 	during the period of twelve (12) months following termination
of this Agreement.





4.6.2 Non-disclosure; Audit Cost




     The accountants appointed under this Section 4.6 are not authorized to
disclose to Connetics any information other than the accuracy or inaccuracy of
the items to be verified. Connetics will bear the costs of such audit unless
the audit discloses under-reporting by PFD or its sublicensees of more than
[**] percent [**] of revenues subject to the Royalty or Sublicense Revenue
Payment(s) in any Quarter falling during the period being audited (in which
case PFD will bear the costs). If the audit reveals that PFD or its
sublicensees have under-reported for any Quarter during the period of the
audit, PFD must immediately, subject to Section 4.4.2 above, remit to Connetics
any balance of the Royalty or Sublicense Revenue Payment owing, together with
interest on the balance accruing from the date that the original payment was
due through the date of payment. Interest shall be calculated at the rate of
four percent (4%) per annum over the United States of America 10 year Treasury
bond rate at the completion of the audit, and shall accrue from the date that
the original payment was due through the date of payment.



4.6.3 Audit Conditions




     4.6.3.1 PFD and its sublicensees will supply all records to Connetics and
its auditors in the English language and such records will be collated, indexed
or otherwise mapped and made available for review in a well-lighted,
climate-controlled facility in a location of Connetics’ election.



     4.6.3.2 PFD agrees that all records relating to this Agreement subject to
audit will be maintained and presented by English speaking personnel within
PFD’s organization who have authority and responsibility for such records.









	**      Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.




12









 










4.7 Commencement of Commercial Sales




     4.7.1 If PFD or its Affiliate fails to initiate Commencement of Commercial
Sales within the first two (2) Quarters following Regulatory Approval in the
relevant country or state of the Territory, then the Parties shall meet to
discuss the reasons for such failure and agree to a new time period in which
Commencement of Commercial Sales of the Product will be initiated in the
relevant state or country.



     4.7.2 If PFD fails to initiate Commencement of Commercial Sales in
Germany, Spain and Belgium within four (4) Quarters following the Regulatory
Approval in each such country, then Connetics shall consider such failure a
material breach of this Agreement and grounds to terminate this Agreement
pursuant to Section 14.1.3.



5. LICENSE TO HAVE PRODUCT MANUFACTURED AND SUPPLY OF PRODUCT




     5.1 Terms of Product Manufacture – Know-How and Technology Transfer



     5.1.1 PFD shall not contract with any manufacturer other than a Listed
Manufacturer and on terms acceptable to Connetics regarding protection of
Connetics’ Know-how and technology associated with the manufacture and supply
of the Product (“Technology”). PFD acknowledges and agrees that as a condition
of obtaining Connetics’ consent, the contract with the Listed Manufacturer
shall include the provisions set forth in Exhibit G to this Agreement.



     5.1.2 PFD agrees that the right to manufacture the Product or have the
Product manufactured by a Third Party shall not be included in any sublicense.



     5.1.3 PFD shall return the documents listed in Exhibit G to Connetics
following termination of this Agreement.



     5.2 Supply of Product and Connetics’ Know-how and Technology



     5.2.1 Connetics will retain responsibility for transferring the Know-How
and the Technology at Connetics’ expense to the PFD-designated Listed
Manufacturer to allow PFD to be supplied with the Product, all in accordance
with the Regulatory Approvals and any variation thereof and more generally in
accordance with the terms of this Agreement.



     5.2.2 PFD shall be responsible for ensuring that the PFD-designated Listed
Manufacturer treats all transferred Know-how and Technology as secret and
confidential. PFD will retain responsibility for assuring that Connetics’
Technology and Know-how is treated by PFD’s sublicensees as secret and
confidential, including but not limited to responsibility for the prosecution
of violations (either actual or as Connetics may from time to time advise) in
PFD’s name and at PFD’s expense.



     5.2.3 In order to assist PFD with and to effect the transfer of Technology
and Regulatory Approval required for the supply of the Product, Connetics will
provide support at no



13









 





cost to PFD for up to a maximum of [**] person hours. PFD will reimburse
Connetics for all reasonable out of pocket expenses incurred by Connetics or
its Affiliate in providing such assistance within thirty (30) days after
submission of an invoice. Connetics’ assistance for the transfer of the
Technology and Regulatory Approval is only required to be provided if it is
within Connetics’ existing knowledge or expertise at the time it is requested
by PFD.




     5.2.4 As from the date of execution of the Supply Agreement, PFD shall
purchase its full requirement for the Product throughout the Term from the
PFD-designated Listed Manufacturer. Product purchased by PFD will be
manufactured and supplied by the Listed Manufacturer in accordance with all
relevant legislation and regulations and will comply with all applicable
Regulatory Approvals. PFD shall agree with the Listed Manufacturer all aspects
relating to supply of the Product including the price for the Product to be
paid by PFD to the Listed Manufacturer.



     5.2.5 PFD agrees to be responsible for ensuring that the PFD-designated
Listed Manufacturer has received Regulatory Approval from the Regulatory
Authority to manufacture and supply the Product to PFD and its sublicensees.
Subject to Section 4.4.2 above, PFD will be responsible for any and all costs
and expenses associated with ensuring that the PFD-designated Listed
Manufacturer receives such Regulatory Approval and agrees to hold Connetics
harmless from and against any such costs and expenses.



6. WARRANTIES AND INDEMNITIES




6.1 Representations and Warranties of Connetics


Connetics represents and warrants to PFD as follows:




6.1.1 Organization; Standing




     Connetics is duly organized, validly existing and in good standing and has
the corporate power and authority to execute and deliver this Agreement and any
other agreements contemplated by this Agreement.



6.1.2 No Conflicts




     The execution, delivery and performance of this Agreement have been
validly authorized by Connetics. Neither the execution and delivery of, nor
the performance of its obligations under, this Agreement (i) conflicts with, or
contravenes or constitutes any default under, any agreement, instrument or
understanding, oral or written, to which it is a party, including without
limitation its certificate of incorporation or bylaws, or (ii) violates any
applicable laws, rules or regulations, or any judgment, injunction, order or
decree of any governmental authority having jurisdiction over it.









	**      Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.




14









 










6.1.3 Rights to Patents and to Know-how




     As of the Effective Date, Connetics owns, controls, or otherwise has the
right to use the Patents and Know-how required to develop, manufacture and sell
the Product; and further, Connetics has the right to grant to PFD the rights
and licenses as set forth in this Agreement.



6.1.4 Third Party Rights




     The exercise by PFD of the rights and licenses granted to PFD by Connetics
under this Agreement will not violate any agreement between Connetics and any
Third Party (including without limitation the licensors under the Third Party
Licenses).



     6.1.5 No Encumbrances



     As of the Effective Date, Connetics controls or otherwise is entitled to
use throughout the Territory all rights in, to and under the Patent free and
clear of any lien, claim, charge, encumbrance or right of any Third Party
(other than as set forth in Third Party Licenses).



6.1.6 No Other Agreements




     As of the Effective Date, no other agreement or understanding, verbal or
written, exists to which Connetics is legally bound regarding the intellectual
property rights granted to PFD by Connetics pursuant to this Agreement. The
Third Party Licenses represent the complete and entire understanding of
Connetics with respect to the intellectual property rights granted to PFD by
Connetics pursuant to this Agreement.



6.1.7 Information




     All information relating to the Product delivered to PFD by Connetics, its
officers, directors, representatives or agents, was when delivered and is as of
the date of this Agreement in all material respects accurate and correct, and
Connetics is not aware of any information which would be required to be
disclosed to make any such information not misleading.



6.2 Representation and Warranties of PFD


PFD represents and warrants to Connetics as follows:




6.2.1 Organization; Standing




     PFD is duly organized, validly existing and in good standing and has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement and the other agreements
contemplated by this Agreement.



6.2.2 No Conflicts




     The execution, delivery and performance of the Agreement have been validly
authorized by PFD. Neither the execution and delivery of, nor the performance
of its obligations under this Agreement (i) conflicts with, or contravenes or
constitutes any default under, any agreement,



15









 





instrument or understanding, oral or written, to which it is a party,
including without limitation its certificate of incorporation or bylaws, or
(ii) violates applicable laws, rules or regulations, or any judgment,
injunction, order or decree of any governmental authority having jurisdiction
over it.




     6.3 Manufacture of Product



     The Product will be manufactured by a Listed Manufacturer in accordance
with such Regulatory Approval from the Regulatory Authority as may from time to
time during the Term be in effect.



6.4 Disclaimer of Warranties




     EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR BY ANY
APPLICABLE LAW, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY
TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT,
AND EACH PARTY HEREBY DISCLAIMS ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS
OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED
WARRANTIES OF PERFORMANCE, MERCHANTABILITY, SATISFACTORY QUALITY, FITNESS FOR A
PARTICULAR PURPOSE, AND NON-INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY
RIGHTS,.



6.5 Indemnification of PFD




     Connetics shall indemnify PFD, its Affiliates and their respective
directors, officers, employees and agents, and defend and save each of them
harmless, from and against any and all suits, losses, actions, demands,
investigations, claims, damages, liabilities, costs and expenses (including,
without limitation, reasonable attorneys’ fees and expenses) (collectively,
“Losses”) brought by Third Parties arising from or occurring as a result of (a)
any breach (or alleged breach) by Connetics of its representations, warranties
or obligations under this Agreement, except to the extent caused by the
negligence or willful misconduct of PFD or its officers, agents, employees,
Affiliates, sublicensees or customers; and (b) the negligence or willful
misconduct of Connetics or its officers, agents, employees or Affiliates.



6.6 Indemnification of Connetics




     PFD shall indemnify Connetics, its Affiliates and their respective
directors, officers, employees and agents, and defend and save each of them
harmless, from and against any and all Losses brought by Third Parties arising
from or occurring as a result of (a) any breach (or alleged breach) by PFD of
its representations, warranties, or obligations under this Agreement; (b) the
manufacture, transportation, distribution or storage of the Product by PFD, its
Affiliates or their respective contractors, all except to the extent caused by
the negligence or willful misconduct of Connetics or its officers, agents,
employees or Affiliates; and (c) the use or consumption of the Product in the
Territory.



16









 





6.7 Indemnification Procedure




6.7.1 Notice




     Each indemnified party (the “Indemnitee”) agrees to give the indemnifying
party (the “Indemnitor”) prompt written notice of any Losses or discovery of
fact upon which such Indemnitee intends to base a request for indemnification
under Section 6.5 or 6.6. Notwithstanding the foregoing, the failure to give
timely notice to the Indemnitor shall not release the Indemnitor from any
liability to the Indemnitee to the extent the Indemnitor is not prejudiced by
such failure.



6.7.2 Copies




     The Indemnitee shall furnish promptly to the Indemnitor copies of all
papers and official documents in the Indemnitee’s possession or control which
relate to any Losses; provided, however, that if the Indemnitee defends or
participates in the defense of any Losses, then the Indemnitor shall also
provide such papers and documents to the Indemnitee. The Indemnitee shall
cooperate with the Indemnitor in providing witnesses and records necessary in
the defense against any Losses.



6.7.3 Participation




     The Indemnitor shall have the right, by prompt notice to the Indemnitee,
to participate in the defense of any third party claim forming the basis of any
Losses, using counsel reasonably satisfactory to the Indemnitee, and at the
sole cost of the Indemnitor, so long as (a) the Indemnitor promptly notifies
the Indemnitee in writing (but in no event more than sixty (60) days after it
receives notice of the claim) that it will indemnify the Indemnitee from and
against any Losses the Indemnitee may suffer arising out of the claim, and (b)
the Indemnitor diligently participates the defense of the claim.



6.7.4 Control of Defense




     If the Indemnitor participates in the defense of the claim as provided
above, the Indemnitee may at its option relinquish total control to the
Indemnitor or participate in such joint defense with its own counsel who shall
be retained at the Indemnitee’s sole cost and expense; provided, however, that
neither the Indemnitee nor the Indemnitor shall consent to the entry of any
judgment or enter into any settlement with respect to the claim without the
prior written consent of the other party, which consent shall not be reasonably
withheld or delayed. If the Indemnitee withholds consent in respect of a
judgment or settlement involving only the payment of money and which would not
involve any stipulation or admission of liability or result in the Indemnitee
becoming subject to injunctive relief or other relief, the Indemnitor shall
have the right, upon notice to the Indemnitee within five (5) Business Days
after receipt of the Indemnitee’s written denial of consent, to pay to the
Indemnitee the full amount of such proposed judgment or settlement, including
all interest, costs or other charges relating thereto, and shall pay all
attorneys’ fees incurred to such date for which the Indemnitor is obligated
under this Agreement, if any, at which time the Indemnitor’s rights and
obligations and duty to indemnify the Indemnitee with respect to the claim
shall cease.




17










 





6.7.5 Settlement




          If the Indemnitor does not participate in the defense of a claim, the
Indemnitee may conduct such defense with counsel of its choice and at the sole
cost of the Indemnitor and may settle such case (for monetary damages only) as
it shall determine in the exercise of its reasonable discretion. Except as
provided in this Section 6.7.5, the Indemnitor shall not be liable for any
settlement or other disposition of a Loss by the Indemnitee which is reached
without the written consent of the Indemnitor.



6.7.6 Costs and Expenses




          Except as provided in this Section 6.7, the costs and expenses, including
fees and disbursements of counsel, incurred by any Indemnitee in connection
with any claim shall be reimbursed on a calendar quarter basis by the
Indemnitor, without prejudice to the Indemnitor’s right to contest the
Indemnitee’s right to indemnification and subject to refund in the event the
Indemnitor is ultimately held not to be obliged to indemnify the Indemnitee.



6.7.7 Limitation of Liability




          EXCEPT FOR ANY LOSS, LIABILITY, DAMAGE OR OBLIGATION ARISING OUT OF OR
RELATING TO THE DISCLOSURE OF CONFIDENTIAL INFORMATION PURSUANT TO SECTION 11.2
OR AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, IN NO EVENT SHALL EITHER
PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY FOR ANY LOST OPPORTUNITY
OR PROFITS, COSTS OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY
INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES ARISING OUT OF
A BREACH OF THIS AGREEMENT (EXCLUDING WILLFUL MISCONDUCT AND NEGLIGENCE) , AND
WHETHER OR NOT SUCH PARTY TO THIS AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGE. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.



7 COVENANTS




7.1 Connetics’ Covenants to PFD




          Connetics covenants to PFD as follows:



7.1.1 Permits; Licenses




          Connetics will maintain in effect all governmental permits, licenses,
orders, applications and Regulatory Approvals, if applicable, necessary to
manufacture, supply and sell Product in the United States.



18









 





7.1.2 Adequate Workforce




          Connetics maintains and shall maintain throughout the Term of this
Agreement a work force suitably qualified and trained, and facilities and
equipment sufficient, to enable Connetics to perform its obligations as
constituted from time to time under this Agreement.



7.1.3 Future Patents




          Connetics will promptly disclose to PFD any knowledge it acquires during
the Term relating to any patents or patent applications required for the
production, manufacture or commercialization of Products in the Field.



7.1.4 Insurance



During the Term, Connetics shall obtain, pay for and maintain insurance
sufficient to cover its indemnity obligations under this Agreement. PFD shall
be designated as an “additional insured” under all such insurance policies




7.1.5 Regulatory Approvals




          Connetics will use all reasonable efforts to transfer, or cause to be
transferred, into PFD’s name or into the name of PFD’s Affiliates as the case
may be, all Regulatory Approvals in Connetics’ name or in the name of a Third
Party, to enable the sale of the Product in the Territory.



7.1.6 Development Diligence




          In the event the EMEA permanently bans in the European Union the use, sale
and supply of pharmaceutical products containing propane/Isobutane/N-butane as
propellant gas, Connetics will discuss the terms of such ban with PFD in an
attempt to find an alternative solution to enable PFD to exploit the Product in
the European Union under the terms and conditions as laid down in this
Agreement. Such obligation will apply for any country or state of the
Territory where a similar decision from any Regulatory Authority would prevent
PFD from distributing and selling the Product containing
propane/Isobutane/N-butane as a propellant gas.



7.2 PFD’s Covenants to Connetics




          PFD covenants to Connetics as follows:



7.2.1 Commercialization




          PFD shall use its best efforts to develop and commercialize the Product in
each state and country in the Territory where a Regulatory Approval has been
granted by the appropriate Regulatory Authority. For countries in the
Territory where such a Regulatory Approval is not in effect as of the Effective
Date, PFD shall use its best endeavors to ensure that all such Regulatory
Approvals are obtained to initiate the Commencement of Sales in accordance with
Section 7.2.8.



19









 





7.2.2 Permits; Licenses




          7.2.2.1 PFD will maintain in effect in the Territory all governmental
permits, licenses, orders, applications and Regulatory Approvals, if
applicable, necessary to supply and sell the Product in the Territory, and will
ensure that the Product will be manufactured in accordance with such
governmental permits, licenses, orders, applications, and Regulatory Approvals.



          7.2.2.2 In the event PFD desires to file a variation to a Regulatory
Approval, PFD agrees to contact Connetics to discuss the terms of such
variation and PFD agrees that it will not file any variation to a Regulatory
Approval without the express prior written consent of Connetics, such consent
not to be unreasonably withheld.



7.2.3 Adequate Workforce




          PFD directly or through its Affiliates or sublicensees, currently
maintains and shall maintain throughout the Term of this Agreement a work force
suitably qualified and trained, and facilities and equipment sufficient, to
enable PFD to perform its obligations as constituted from time to time under
this Agreement.



7.2.4 Sales




          PFD will provide for and maintain a sales organization and marketing
program reasonably adequate and competent to promote, sell and stimulate
interest in the Product effectively in each state and country in the Territory.



7.2.5 Future Patents




          PFD will promptly disclose to Connetics any knowledge it acquires during
the Term relating to any patents or patent applications required for the
production, manufacture or commercialization of Product in the Field.



7.2.6 Distribution




          PFD will use its best endeavors to manage all aspects of the supply chain
for the distribution of the Product in the Territory.



7.2.7 Non-compete




          During the Term and in the Territory, PFD and its Affiliates will not
directly or indirectly manufacture, develop or commercialize an aerosol foam or
mousse product, or license from Third Parties rights to any such products, that
contains a corticosteroid from Class I or Class II (classified according to
Goodman and Gillman).



7.2.8 Development Diligence




          PFD will use its best endeavors to:



20









 






	(a)	 	obtain Regulatory Approval in Spain and Germany within six
(6) months after the date of transfer to PFD of the Product dossier
and relevant authorizations to interact with Regulatory Authorities
with respect to the Product;
	 
	(b)	 	initiate Commencement of Commercial Sales in Spain and
Germany within six (6) months after receiving Regulatory Approval in
Spain and Germany;
	 
	(c)	 	initiate Commencement of Commercial Sales in all states and
countries in the Territory within twelve (12) months after receiving
Regulatory Approval in such state or country;
	 
	(d)	 	initiate Commencement of Commercial Sales in all states and
countries in the Territory where reimbursement price approval is not
required within eighteen (18) months after Regulatory Approval of
the Product in such state or country.





          If PFD fails to initiate Commencement of Commercial Sales as set forth in
this Section 7.2.8, then at Connetics’ option the license granted under this
Agreement shall become a non-exclusive license for the concerned territory or
state of the Territory.



          7.2.9 Insurance



          7.2.9.1 During the Term, and thereafter during any period when liability
may occur to PFD, its Affiliates or its sublicensee or to Connetics or its
Affiliates, PFD shall obtain, pay for and maintain insurance to cover the
indemnity obligations under this Agreement, including specifically product
liability insurance in the amount of at least FIVE MILLION EUROS
(€5,000,000) in the name of PFD, its Affiliates and, if appropriate, its
sublicensees. PFD shall and duly and punctually pay all premiums in respect of
such insurance.



          7.2.9.2 PFD’s insurance shall name Connetics as an additional insured.
PFD shall provide certificates or such other evidence of PFD’s insurance and
payment of premiums as set forth in Section 7.2.9.1 above, to Connetics or its
agents when so requested.



7.2.10 Product Representations




          Without the prior knowledge and written consent of Connetics, PFD, its
Affiliates and sublicensees will not make any representation in respect of the
quality or content of the Product which might result in any successful claim
being made by any person against PFD, its Affiliates or sublicensees or
Connetics or its Affiliates in respect of the Product.



7.2.11 Pledge of Credit




          PFD will not pledge the credit of Connetics or its Affiliates in any way
or purport to enter into any contractual or other relationship whatsoever that
is intended to or may bind Connetics or its Affiliates (other than this
Agreement).



21









 





7.2.12 Independent Contractor




          PFD will conduct its business as an independent business and not as a
partner, associate, assistant, representative, agent, servant, consultant or
employee of Connetics or its Affiliates and at all times during the conduct of
its business will ensure that its business is known to be conducted as an
independent business.



7.2.13 Good Character




          PFD shall at all times during the Term conduct its business in a proper
and business like manner so as to ensure the continuing good character and
reputation of PFD and its Affiliates.



7.2.14 Customer Service




          PFD and its sublicensees will provide such services to its customers as
may be agreed from time to time by Connetics and PFD.



7.2.15 No Re-export




          During the Term and except for response to unsolicited orders within the
European Union, but outside the Territory (which shall be addressed in
accordance with Section 2.6), neither PFD nor its Affiliates or sublicensees
will re-export the Product outside of the Territory.



          7.2.16 Limit of Supply



          PFD will limit the supply of the Product to any state or country in the
Territory where PFD knows, or has reason to know, that the Product being
supplied to such state or country is being sold or otherwise transferred
outside such state or country to states or countries outside of the Territory.



7.2.17 Tax Matters




          PFD will co-operate with and assist Connetics and its Affiliates regarding
any and all tax matters that may from time to time occur to ensure that
Connetics and its Affiliates receive all payments and in such amounts as
contemplated by this Agreement.



7.2.18 Registration of License




          If required in any state or country of the Territory, PFD will at its own
cost and expense register this Agreement in each such state and country in the
Territory and will provide to Connetics evidence of such registration
translated into English, if required.



          7.2.19 Minimum Annual Sales



          7.2.19.1 PFD will sell a minimum amount of Product per year in each
Country listed in Exhibit D (“Core Country”) calculated as [**] percent [**] of
successive three (3) years sales







** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.




22









 







forecasts in units for the Product as set forth in Exhibit D (“Minimum
Annual Sales”). Minimum Annual Sales shall be subject to adjustment by mutual
agreement of the Parties taking into account the economic (notably, but not
exclusively, prices and refunding levels granted by the Regulatory Authorities
of the Territory), regulatory (Health Authorities requirements) and competitive
(competitive products actually marketed) environment in effect at the time
either Party requests an adjustment of the Minimum Annual Sales. If the
Parties are unable to agree on revised Minimum Annual Sales, the matter will be
subject to binding arbitration under Section 15.4 of this Agreement. Each
Party agrees that a request to review the Minimum Annual Sales shall not be
made before completion of two (2) years of the three (3) year sales forecast.




          7.2.19.2 Throughout the Term, PFD will supply in the Quarter before each
three (3) year forecast term expires, a Product sales performance forecast for
the next successive three (3) year period.



          7.2.19.3 If PFD does not meet the Minimum Annual Sales of the Product as
set forth in Exhibit D for two (2) or more successive years then Connetics
shall have the remedy of converting this license to a non-exclusive license for
each Core Country in which such Minimum Annual Sales have not been achieved.



7.2.20 Patent Opposition




          PFD will not (i) institute an opposition, nullity or invalidity action
against the Intellectual Property, (ii) participate in supporting an
opposition, nullity or invalidity action against the Intellectual Property, or
(iii) without reasonable justification acceptable to Connetics (a) refuse or
decline to support and participate in the defense of any opposition, nullity or
invalidity action brought by any Third Party against the Intellectual Property,
as Connetics may from time to time reasonably request, or (b) refuse or decline
to support and participate in an action brought by Connetics against the patent
of a Third Party which in any way relates to a Patent as described in the
Intellectual Property.



7.2.21 Sublicenses




          PFD will not appoint any Third Party to sell the Product on its behalf,
whether as an independent contractor, agent, sublicensee or otherwise, unless
such Third Party is reputable and solvent and unless such person enters into an
agreement with PFD. PFD will supply all such agreements to Connetics in English
for approval before PFD enters into any such agreement.



8 PRODUCT DEVELOPMENT AND REGULATORY APPROVAL




8.1 PFD Developments




          8.1.1 Unless otherwise instructed by Connetics, PFD shall undertake to
perform any and all developments of the Product as may be required from time to
time to commercialize the Product in the Territory (“PFD
Developments”).



          8.1.2 PFD shall bear any and all costs relating to the PFD Developments in
the Territory.



23









 





8.2 License to PFD Developments




          8.2.1 PFD hereby grants to Connetics and its Affiliates an exclusive,
royalty-free license in the Field, with the right to sublicense, to PFD
Developments in all territories of the world excluding the Territory for use in
connection with the development, manufacture and sale of the Product.



          8.2.2 PFD shall notify Connetics of the details of any PFD Developments.



          8.3 License to Connetics Developments



          8.3.1 Connetics hereby grants to PFD and its Affiliates without any
additional payment an exclusive license consistent with the grant of license
provided under Section 2.1 to any and all incremental developments in
connection with changes to the manufacture process or procedures of the Product
as Connetics may from time to time develop (“Connetics
Developments”).



          8.3.2 Without prejudice to any Connetics obligations under this Agreement,
to the extent any Connetics Developments do not relate exclusively to the
Products and Know-how, Connetics shall have the right to use or license such
Connetics Developments for any purpose inside the Territory. Connetics shall
have no duty to notify PFD of the details of any Connetics Developments to the
extent that such disclosure may adversely affect the patentability of the
matters disclosed.



          8.4 Regulatory Filings



          PFD shall be responsible for all Regulatory Filings for the Product in all
countries of the Territory with the exception of countries of the European
Union where Regulatory Filings (to the extent that such Regulatory Filings are
fully sufficient to procure Regulatory Approval) have been already performed by
Connetics and/or its Affiliates and/or any Third Party under Connetics
authority.



          8.5 Continuing Obligations for National Regulatory Approval Granted via
the European Mutual Recognition Procedure (MRP)



          Regulatory Approvals granted via the MRP must be maintained in an
identical state across all involved countries. PFD acknowledges and agrees
that any and all post Regulatory Approval variations must be carried out
through the MRP and in consultation with the Joint Regulatory Working Group
referred to in Section 8.5.1 below. PFD agrees it will not, and will ensure
that its sublicensees will not, initiate or pursue individual variations to
national Regulatory Approval without the prior written consent of Connetics as
set forth in Section 7.2.2.2. PFD agrees that it will have the sole
responsibility for complying with all continuing obligations for national
Regulatory Approval after the Effective Date, as required by the Regulatory
Authority. PFD shall be solely responsible for any and all costs and expenses
associated with such continuing obligations for national Regulatory Approval
and agrees to hold Connetics harmless from and against any liability for such
costs and expenses.



24









 





8.5.1 Joint Regulatory Working Group




          8.5.1.1 Within sixty (60) days after the Effective Date of this Agreement
the Parties shall establish a Joint Regulatory Working Group (JRWC) for the
purpose of coordinating any regulatory activities and questions in relation to
the Product such as but not limited to Regulatory Filings, variation to
Regulatory Approvals if any, and Adverse Events reports. The JRWC will
coordinate under Connetics’ supervision and responsibility regulatory
activities of any other licensee of Connetics to optimize the Regulatory
Filings and variation to Regulatory Approvals especially in the European Union
all in accordance with regulations then in force.



          8.5.1.2 The JRWC shall consist of two (2) representatives appointed by
Connetics and two (2) representatives appointed by PFD.



          8.5.1.3 The JRWC shall meet when requested by any Party but at least
every three (3) months. Meetings may be held via conference call. The quorum
for meetings of the JRWC shall be two (2) members, one from Connetics and one
from PFD. The JRWC shall take minutes of each meeting, whether in person or
via conference call, which minutes shall be co-signed by each of the JRWC
members in attendance at such meeting and circulated to the management of each
party within thirty (30) days of such meeting.



          8.6 Technical Documentation Maintenance



          8.6.1 Connetics is responsible for:




	•	 	updating the technical dossier for the Product according to the
state of science/regulation (e.g.: compliance with last edition /
update of the European pharmacopoeia), and
	 
	•	 	informing PFD of any variation, and
	 
	•	 	supplying the corresponding data package.





          No variation will be implemented before an official agreement is duly
obtained from relevant Regulatory Authority.



          8.6.2 PFD will be responsible for any and all costs and expenses
associated with the maintenance and/or updating of the technical dossier for
the Product as may from time to time be required by the Regulatory Authority.
PFD shall provide ninety (90) days prior written notice to Connetics of any
technical documentation required by PFD for the maintenance and/or updating of
the technical dossier for the Product.



9. INTELLECTUAL PROPERTY




9.1 Improvements




          9.1.1 If during the Term Connetics, its officers, servants, agents or
Affiliates make any Improvement, the same shall be deemed part of the Know-How
for purposes of this Agreement, shall be disclosed to PFD and shall be included
within the license granted by Connetics to PFD under Section 2.1 without any
additional payment from PFD to Connetics.



25









 





          9.1.2 Any Improvement made solely by PFD, its officers, servants, agents
or Affiliates during the Term shall be the property of PFD and shall be
promptly disclosed to Connetics in writing. Connetics shall be deemed to have
a non-exclusive, royalty-free, irrevocable license in and for all purposes of
its business to any such Improvement outside the Territory. Connetics shall be
deemed to have a non-exclusive, royalty-free irrevocable license in and for all
purposes of its business to any such Improvement inside the Territory upon
expiry or termination of the Agreement.



          9.1.3 Any Improvement which is developed jointly by the Parties shall not
be claimed exclusively by either Party. The Parties agree to meet to consider
whether the Improvement should be developed and if so, the terms of a joint
development agreement. Such agreement will address (inter alia) the following
terms:




	•	 	use of such Improvement for internal purposes,
	 
	•	 	grant and terms of license to Third Parties, and
	 
	•	 	patent application, if any, patent maintenance and sharing of costs
associated with the patent application and any resulting patents.





9.2 Patent Infringement




          9.2.1 Within six (6) months after receipt of written notice from PFD
containing (i) documented evidence of an infringement by a competitor of PFD of
any letters patent granted from the Patents, and (ii) written documentation
confirming that such infringement has resulted in a significant loss of market
share within the Territory by PFD; then Connetics will promptly undertake to
evaluate the situation and notify PFD whether Connetics will undertake
commercially reasonable efforts to prevent such infringement including, if in
Connetics’ sole determination it is warranted, instituting such legal
proceedings as may be necessary.



          9.2.2 Connetics does not warrant or undertake in any way that any Patent,
if applied for, will be granted.



9.3 Trademark and Patent Labeling




          9.3.1 PFD shall market and sell the Product in the Territory as PFD’s
product under a trademark or trademarks selected and owned or controlled by PFD
or its Affiliates, except that PFD shall not use any trademark owned by or
licensed to Connetics without Connetics’ prior written consent.



          9.3.2 PFD will select and register the trademark or trademarks selected
pursuant to Section 9.3.1 at its own expense and Connetics shall have no claim
to the use of such trademark.



          9.3.3 Each Product marketed and sold by PFD, its Affiliates or
sublicensees shall be marked on both the primary package and any outer
packaging with all written indications as required by regulatory standards in
force in each country of the Territory (a) with a notice that such Product is
sold under a license from Connetics Corporation, and (b) containing notice of
either the appropriate and applicable patent numbers or, as applicable, with
the words “patent



26









 




pending” and with any other patent or other intellectual property notices
relating to the licensed Intellectual Property as may be required by applicable
law in each state and country in the Territory.




10 REGULATORY COMPLIANCE AND REPORTING




10.1 Government Inspection




          PFD agrees to advise Connetics by telephone and facsimile immediately of
any proposed or announced visit or inspection, and as soon as possible but in
any case within twenty-four (24) hours after any unannounced visit or
inspection by any Regulatory Authority of any facilities used by PFD in
connection with the manufacture of Product pursuant to this Agreement. PFD
shall provide Connetics with a reasonable description of each such visit or
inspection promptly (but in no event later than five (5) Business days)
thereafter, and with copies of any letters, reports or other documents
(including FDA Form 483’s) issued by any such authorities that relate to the
Product, or such facilities, processes or procedures. Connetics may review
PFD’s responses to any such reports and communications, and if practicable,
and, insofar as timely received, Connetics’ reasonable views and requests shall
be taken into account before such reports and communications are submitted to
the relevant Regulatory Authority.



10.2 Adverse Events



10.2.1 PFD and Connetics shall keep each other informed on all reports of
adverse drug events (including publications in journals or other media) (“ADE”)
coming to either Party’s knowledge in any way related to the Product,
regardless of the origin of such ADE. Each Party will be responsible for
maintaining a safety database of such reports within their respective
territorial markets for the Product.



10.2.2 Reports on ADE’s which according to the informing Party’s professional
evaluation may negatively affect the benefit-risk ratio of the Product or may
have consequences regarding the Product information (e.g. literature, data
sheets, package inserts) or may require immediate safety measures (such as
special information / warnings to the medical profession, patients, authorities
or withdrawal of Product) shall be forwarded to the other Party without delay
after it becomes known. The same shall apply in case of all reports on ADE’s
that are both serious and unexpected. Information on all other ADE’s reported
shall be transmitted as provided in the procedure described in Exhibit E to
this Agreement and made a part of this Agreement by this reference. The
informing Party may, and is invited to, give its professional evaluation of
such reports, in particular with regard to suspected causality (according to
the valuation method regularly used professionally, and identified in JAMA,
Vol. 234, N° 12, Pages 1238-1258), either together with such information or at
a later date.




27









 







10.2.3 The ADE reports shall be addressed to:




in case of PFD:



PIERRE FABRE DERMATOLOGIE – Pharmacovigilance

Attn : Mr. Jean-Paul DEMAREZ

45, place Abel Gance

92654 BOULOGNE (France)

Phone : (33).01.49.10.80.00

Fax : (33).01.49.10.80.90



in case of Connetics:



CONNETICS CORPORATION

Attn :Product Safety

3290 West Bayshore Rd

Palo Alto, California

94303

Phone : (650) 843-2986

Fax : (650) 843 – 2881

e-mail: product-safety.connetics.com


or to such other address as either Party may provide to the other Party in
accordance with these notice provisions.



10.2.4 In addition to the mutual exchange of ADE information, via e-mail or
fax, meetings will be held upon mutual agreement of the Parties for purposes of
discussing ADE reporting issues (such as regarding the mutual exchange of ADE
information as defined in agreed procedures to be agreed by Connetics and PFD).
PFD shall forward an agenda of any such meetings to Connetics one (1) month
prior to the date of such meetings.



10.2.5 For the avoidance of doubt, the Parties agree that this Section 10.2 is
not intended to refer to product complaints other than medical and safety
complaints. As between the Parties, PFD agrees to be solely responsible for
the receipt of, response to and, to the extent possible, rectification of, all
complaints related to the manufacture, sale and distribution of the Product.




10.3 Notification and Recall




          If any Regulatory Authority issues or requests a recall or takes similar
action in connection with the Product, or if either Party determines that an
event, incident or circumstance has occurred which may result in the need for a
recall or market withdrawal, the Party notified of or wishing to initiate such
recall or similar action shall, within twenty-four (24) hours, advise the other
Party of notification or its determination by telephone or facsimile, after
which the Parties shall promptly discuss and work together to effect an
appropriate course of action; provided, however, that either Party may initiate
a recall or market withdrawal after such notification and discussion if it
deems such action necessary or appropriate. Connetics shall be responsible for
notification to FDA (or such other applicable Regulatory Authority with respect
to countries



28









 




other than in the Territory) and compliance with applicable laws outside
the Territory in conducting such recall. PFD shall be responsible for
notification to the applicable Regulatory Authority with respect to countries
in the Territory and compliance with applicable laws in the Territory in
conducting such recall of the Product.




10.4 Recall Expense




          10.4.1 If a recall of the Product results from the breach of a Party’s
warranties or obligations under this Agreement, the breaching Party shall bear
the full expense of both Parties incurred in any such recall.



          10.4.2 The Parties agree that expenses of a Product recall shall include,
without limitation, the expenses of notification and destruction or return of
the recalled Product and the amount paid for the recalled Product.



          10.4.3 If a recall of the Product is partially caused by Connetics’
actions or omissions and partially caused by PFD’s actions or omissions, then
each Party shall be responsible for its proportionate share of the Product
recall expenses based on its proportionate share of causation.



11 CONFIDENTIALITY AND PUBLICITY




11.1 Public Relations and Announcements




          11.1.1 The Parties shall agree upon and issue a press release upon the
signing of this Agreement. The Parties shall endeavor to provide courtesy
copies of any public announcements concerning the relationship created by this
Agreement.



          11.1.2 Neither Party shall make any representations concerning the other
without prior consent from the other Party.



          11.1.3 Except for such disclosure as is required by applicable law and/or
stock exchange regulation, neither Party shall make any announcement, news
release, public statement, publication or presentation relating to the
existence of this Agreement or the arrangements referred to in this Agreement
without the other Party’s prior written consent, which consent will not be
unreasonably withheld. The Parties agree to coordinate the initial
announcement and/or press release relating to this Agreement. Notwithstanding
the foregoing, each Party consents to references to it in reports or documents
or other disclosures sent to stockholders or filed with or submitted to any
governmental authority or stock exchange. However, to the extent practicable,
the Party making such references shall afford the other Party the prior
opportunity to review the text of any such report, document or other disclosure
the first time it is made and shall use reasonable efforts to comply with the
other Party’s reasonable requests regarding changes.



          11.1.4 The Parties agree that once approval for disclosure of information
has been obtained in accordance with the provisions of this Section 11.1, the
Party that requested such approval shall be entitled to use such information
without any obligation to seek further approval.



29









 





11.2 Confidentiality



11.2.1 The Parties acknowledge that by reason of their relationship to each
other under this Agreement, each will have access to certain information and
materials concerning Confidential Information, the other’s business, plans,
trade secrets, customers (including, but not limited to, customer lists of both
Parties), technology, and/or products that is confidential and of substantial
value to that Party, which value would be impaired if such information were
disclosed to Third Parties.




          11.2.2 Each Party agrees that it will not use in any way other than
expressly authorized or contemplated under this Agreement, nor disclose to any
Third Party, any Confidential Information revealed to it by the other Party
(except that Confidential Information may be disclosed, as required for the
purposes of this Agreement, to any Regulatory Authority, an Affiliate,
assignee, distributor, consultant or Third Party contractor or research and
development organization under similar written obligations of non-disclosure
and non-use), and will take every reasonable precaution to protect the
confidentiality of such information and with no less restrictive precautions
than it takes to protect its own confidential information. If Confidential
Information is required to be disclosed in response to a valid order by a
court, regulatory authority or other government body of competent jurisdiction,
or if otherwise required to be disclosed by law, or if necessary to establish
the rights of either Party under this Agreement, the receiving Party shall use
commercially reasonable efforts to provide the disclosing Party with advance
notice of such required disclosure to give the disclosing Party sufficient time
to seek a protective order or other protective measures, if any are available,
for such Confidential Information



11.3 Remedy




          If either Party breaches any of its obligations with respect to this
Article 11, or if such a breach is likely to occur, the other Party shall be
entitled to seek equitable relief, including specific performance or an
injunction, in addition to any other rights or remedies, including money
damages, provided by law, without posting a bond. PFD agrees that
notwithstanding Section 15.4, PFD agrees to submit to the exclusive
jurisdiction of the Courts of England in the event Connetics seeks any
injunctive or other equitable relief to prevent the disclosure of the
Confidential Information.



11.4 Agreement Terms




          Subject to Section 11.1, the Parties shall treat the terms and conditions
of this Agreement as Confidential Information; provided, however, after written
notification to the other Party, each Party may disclose the existence of this
Agreement and the material terms and conditions of this Agreement under
circumstances that reasonably ensure the confidentiality thereof to: (a) any
government or regulatory authorities, including without limitation the United
States Security and Exchange Commission pursuant to applicable law (excluding,
to the extent legally permitted, disclosure of financial terms in any publicly
available versions of information so disclosed), (b) its legal representatives,
advisors and prospective investors, and (c) Connetics’ licensors to the extent
required for compliance with Connetics’ obligations under the Third Party
Licenses.



30









 





12 EXPORT CONTROLS




12.1 Export Controls




          PFD understands and acknowledges that Connetics Australia Pty Ltd
(“Connetics Australia”), as a wholly owned subsidiary of Connetics, a U.S.
company, and Connetics are subject to regulation by agencies of the U.S.
government, including the U.S. Department of Commerce, which prohibit export or
diversion of certain products and technology to certain countries. Any and all
obligations of Connetics Australia and Connetics to provide the Know-how,
Developments and Improvements, and Technology to PFD, and PFD’s obligation to
provide the Product, shall be subject in all respects to such United States
laws and regulations as shall from time to time govern the license and delivery
of technology and products abroad by persons subject to the jurisdiction of the
United States, including the Export Administration Act of 1979 as amended, any
successor legislation, and the Export Administration Regulations, Bureau of
Export Administration.



12.2 Ethical Business Conduct




          12.2.1 PFD hereby represents and warrants that:




	(a)	 	in carrying out its responsibilities under this Agreement,
PFD and its owners, officers, directors, employees, and agents have
not and will not pay, offer or promise to pay, or authorize the
payment directly or indirectly, of any money, gift, or anything of
value to any government official in the Territory or employee or any
political party or candidate for political office in the Territory
for the purpose of influencing any act or decision of such official
or of the government to obtain or retain business, or direct
business to any person (any such payment is a “Prohibited
Payment”).
A Prohibited Payment does not include (i) modest facilitating
payments to low-level government employees for the purpose of
expediting or securing a routine administration action ordinarily
performed by such employees, provided that the recipient of such
service or action is entitled to receive such service or action and
the payment is customary and appropriate in the Territory; or (ii)
payment for reasonable and bona fide expenditures, such as travel
and lodging expenses, which are directly related to the promotion,
demonstration or explanation of products or services, or the
execution or performance of a contract with a foreign government or
agency of a foreign government; provided that such payments are
permissible under local law and customer guidelines.
	 
	(b)	 	No owner, partner, officers, directors or employees of PFD or
any Affiliate of PFD is or will become an official or employee of
any government in the Territory during the Term without the prior
approval of Connetics, which approval will not be unreasonably
withheld; provided that it shall not be deemed unreasonable for
Connetics to withhold such approval if Connetics determines that the
effect of such owner, partner, officers, directors or employees
becoming an official or employee of such government may result or is
likely to result in a contravention, either in whole or in part, of
the provisions of this Section 12.2.




31









 






	(c)	 	PFD recognizes that Connetics and Connetics Australia are not
fully familiar with the laws, rules, orders, regulations, policies
and customs of the Territory and that Connetics and Connetics
Australia have entered into this Agreement on the material reliance
of PFD’s representation and warranty that this Agreement and the
relationship created between Connetics, Connetics Australia and PFD
does not violate any law, rule or regulation of the Territory,
including laws regulating elections. PFD further represents and
warrants that neither the receipt or payment of fees under this
Agreement nor performance of any services under this Agreement is in
any respect a violation of the laws, rules, orders, prohibitions,
regulations or policies of the Territory.
	 
	(d)	 	If either Connetics or Connetics Australia has reason to
believe that a breach of any of the representations and warranties
of this Section 12.2 has occurred or may occur, Connetics Australia
and/or Connetics may withhold any payments they might owe to PFD
until such time as they, or either of them, have received
confirmation to their satisfaction that no breach has occurred or
will occur. Neither Connetics nor Connetics Australia shall be
liable to PFD or any Affiliate of PFD for any claim, losses, or
damage whatsoever related to the decision of Connetics or Connetics
Australia, or either of them, to withhold payments under this
provision.





13 PIERRE FABRE TECHNOLOGY




13.1 Right of Refusal




          In further consideration of the license granted to PFD under this
Agreement, PFD HEREBY GRANTS to Connetics, or Connetics’ nominee, an exclusive
right of first and last refusal to negotiate and enter into an exclusive
license in the United States of America, with right to sublicense, to any and
all patents, know-how, technology and any other intellectual property
associated either in whole or in part with onychomycosis technology either
owned, developed and/or licensed or assigned to PFD and/or its Affiliates (“PFD
Rights”). Terms and conditions of exercise of such right of first and last
refusal will be detailed in the offer issued by PFD in accordance with this
Section 13, such offer to be issued within forty five (45) days of Connetics’
written request.



          13.2 Connetics’ Rights



          The Parties agree that Connetics may exercise its right of first and last
refusal (“Connetics’ Rights”) at any time during the Term. Any such exercise
of Connetics’ Rights shall be in writing. PFD agrees that if Connetics
exercises the Connetics’ Rights, PFD will not offer PFD Rights to any third
party during the period of the offer of PFD Rights to Connetics and until a
license is entered into between Connetics and PFD with regard to such PFD
Rights after good faith negotiations not to last more than sixty (60) days.
Connetics shall have ninety (90) days to respond to the offer of PFD Rights and
PFD agrees that Connetics is entitled to offer terms in response to the offer
of PFD Rights.



32









 





13.3 Sole Rights




          PFD and Connetics agree that the terms of the exclusive license to PFD
Rights shall be interpreted to mean that Connetics, or its nominee, shall have
exclusive rights, together with PFD or PFD’s U.S. subsidiary, to market any and
all products developed which in whole or in part contain PFD Rights.



13.4 Alternative Technology




          PFD agrees that if the PFD Rights do not result in the development of a
product, then in such event, PFD shall use its best endeavors to propose at no
cost to Connetics another technology from PFD’s dermatology product development
portfolio. But, for the avoidance of any doubt, the Parties agree that the
terms of any agreement eventually arising from such a proposal may involve
payments to be made by Connetics to have access to such PFD’s alternative
technology.



13.5 Term of Right of Refusal




          PFD agrees that the term of the rights granted in this Article 13 shall
remain in full force and effect for the Term.



14 TERMINATION




14.1 Termination




          In addition to and notwithstanding the termination rights stated elsewhere
in this Agreement, this Agreement may be terminated as follows:



14.1.2 For Breach by Connetics




          If Connetics fails to comply with any of its material obligations
contained in this Agreement (“Connetics Breach”), PFD shall be entitled to give
Connetics notice specifying the nature of the Connetics Breach and stating its
intent to terminate this Agreement if the Connetics Breach is not cured. This
Agreement shall terminate forty-five (45) Business Days after Connetics
receives such notice if Connetics does not cure or commence action to cure the
Connetics Breach to the reasonable satisfaction of PFD.



          14.1.3 For Breach by PFD



          Upon failure by PFD to comply with any of its material obligations
contained in this Agreement, including the failure to timely render undisputed
payments to Connetics of any amounts due under this Agreement
(“PFD Breach”),
Connetics shall be entitled to give PFD notice specifying the nature of the
PFD Breach and stating its intent to terminate this Agreement if the PFD Breach
is not cured. This Agreement shall terminate forty-five (45) Business Days
after PFD receives such notice if PFD does not cure or commence action to cure
the PFD Breach to the reasonable satisfaction of Connetics.



33









 





14.1.4 Termination by PFD




          PFD shall have the right to terminate this Agreement by giving one hundred
eighty (180) Business Days prior written notice to Connetics for any reason or
no reason; provided that Connetics may elect at its sole discretion to continue
development of the Product in the Territory. PFD agrees that in the event PFD
terminates this Agreement without cause, any such termination shall be without
prejudice to Connetics’ right to enter into an exclusive license for the PFD
Rights in terms of Section 13 of this Agreement for any Connetics’ Rights
exercised by Connetics on or before the effective date of termination of this
Agreement pursuant to this Section 14.1.4.



14.1.5 Termination for Insolvency




          Either Party may terminate this Agreement immediately upon delivery of
written notice to the other Party (a) upon the institution by or against the
other Party of insolvency, receivership or bankruptcy proceedings or any other
proceedings for the settlement of the other Party’s debts, provided, however
with respect to involuntary proceedings, that such proceedings are not
dismissed within one hundred and twenty (120) Business Days; (b) upon the other
Party’s making an assignment for the benefit of creditors; (c) upon the other
Party’s dissolution or ceasing to do business; or (d) upon the appointment of a
receiver or receiver and manager, trustee, administrator or official manager or
agent of a secured or unsecured creditor to any of the other Party’s property.



          14.1.6 PFD Compliance Failure



          PFD agrees that Connetics shall be entitled to terminate this Agreement
and the license granted under this Agreement upon twenty–four (24) hours
written notice to PFD in the event PFD, its Affiliates or its sublicensees are
in breach of the provisions relating to Export Controls and Ethical Business
Conduct contained in Section 12.



14.2 Effect of Termination




14.2.1 Effect on License




          Upon the expiration or earlier termination of this Agreement, the rights
licensed under this Agreement shall be treated as follows:




	(a)	 	Upon the expiration of the Term, PFD shall have a fully
paid-up, perpetual, irrevocable, royalty-free, transferable,
worldwide, non-exclusive right and license under the licensed
Know-how and Intellectual Property existing as of the date of such
expiration to make, have made, use, offer to sell, and sell Products
in the Territory.
	 
	(b)	 	Upon termination pursuant to Sections 14.1.3, 14.1.5 or
14.1.6 all rights to the Product (except to PFD’s trademarks) in the
Territory shall revert to Connetics; provided however, any license
in effect relating to PFD Rights as set forth in Section 13 above
shall remain in full force and effect.




34









 






	(c)	 	Upon termination by PFD pursuant to Section 14.1.2, or
pursuant to Section 14.1.5 due to Connetics’ insolvency, the license
granted to PFD pursuant to this Agreement shall become a fully paid
up, perpetual, irrevocable, royalty-free, transferable, exclusive as
to the Territory, license under the licensed Know-how and
Intellectual Property existing as of the date of such termination,
to have made, use, offer to sell, and sell Products in the
Territory, with the right to sublicense.





14.2.2 Ongoing Obligations




          14.2.2.1 Except as expressly provided in this Agreement, termination of
this Agreement pursuant to Article 14 shall not relieve the Parties of any
right or obligation, including but not limited to any payment obligations,
accrued prior to or upon such expiration or termination.



          14.2.2.2 Upon expiration or termination of this Agreement for any reason,
each Party shall immediately return to the other Party or destroy any
Confidential Information disclosed by the other Party, except that each Party
may retain one copy of such Confidential Information marked and used for legal
archival purposes only. In particular, if this Agreement is terminated
pursuant to Section 4.1.3 or by Connetics in accordance with Article 14, PFD
shall, and shall ensure that the PFD-designated Listed Manufacturer and PFD’s
sublicensees shall, return to Connetics all Know-how and Technology and such
other Connetics’ confidential and proprietary information transferred to PFD or
such Listed Manufacturer



          14.2.2.3 The provisions of Sections 4.1, 4.1.2, 4.1.3, 4.3, 4.4.1, 4.4.2,
4.4.3, 4.5, 4.6, 7.2.17, 14.1.4, and Article 11 shall survive the expiration or
termination of this Agreement.



14.2.3 Inventory




          Notwithstanding the foregoing, if this Agreement is terminated pursuant to
Sections 14.1.3, or 14.1.6 or if Connetics terminates this Agreement pursuant
to Section 14.1.5, PFD shall return the Product in its inventory at PFD’s sole
cost and expense and Connetics shall re-imburse PFD for such returned Product
at the price paid by PFD for the Product, such payment due upon Connetics’
receipt of the returned inventory. Furthermore, upon termination of this
Agreement pursuant to Section 14.1.5, PFD shall have the right to continue to
sell Product in its inventory, but shall have no right to continue to have
Product manufactured.



14.2.4 Assignment of Regulatory Approvals




          If this Agreement is terminated pursuant to Sections 4.1.2, 4.1.3, 14.1.3,
or 14.1.6 or if Connetics terminates this Agreement pursuant to Section 14.1.5,
PFD shall before the effective date of such termination assign and deliver to
Connetics or Connetics’ nominee any and all Regulatory Approvals PFD has to
manufacture, distribute, use, offer to sell and sell the Product in the
Territory.



15 GENERAL




15.1 Severance




          If any provision of this Agreement is held to be invalid, illegal, or
unenforceable by a court of competent jurisdiction, then: (a) such provision
will be deemed amended to conform to



35









 




applicable laws of such jurisdiction so as to be valid and enforceable,
or, if it cannot be so amended without materially altering the intention of the
Parties, it will be stricken; (b) the validity, legality and enforceability of
such provision will not in any way be affected or impaired thereby in any other
jurisdiction; and (c) the remaining provisions of this Agreement will remain in
full force and effect.




15.2 Waiver




          No term or condition of this Agreement is considered waived unless reduced
to writing and duly executed by an officer of the waiving Party and any waiver
by any Party of a breach of any term or condition of this Agreement is not
considered as a waiver of any subsequent breach of the same or any other term
or condition.



15.3 Governing Law




          This Agreement shall be governed, controlled, interpreted and defined by
and under the laws of the State of California and the United States without
regard to that body of law known as conflicts of law; provided that issues
relating to the validity and enforcement of patents shall be governed by the
laws of the jurisdiction by which such patent was granted. The Parties
specifically disclaim application to this Agreement of the Convention on
Contracts for the International Sale of Goods.



15.4 Dispute Resolution




          15.4.1 The Parties shall endeavor to resolve in good faith any disputes or
conflicts arising from or relating to the subject matter of this Agreement,
failing which either Party shall submit such conflict for resolution to the
Chief Executive Officers of Connetics and PFD. If the Chief Executive Officers
of Connetics and PFD are unable to resolve such conflict within thirty (30)
Business Days after such conflict is submitted to them for resolution, such
conflict may be submitted to arbitration in accordance with the rules of
arbitration of the International Chamber of Commerce and heard before a panel
of three (3) arbitrators. Such arbitration will be held in London, England,
and conducted in the English language.



          15.4.2 All submissions shall be made in English or with an English
translation.



          15.4.3 Witnesses may provide testimony in a language other than English,
provided that a simultaneous English translation is provided.



          15.4.4 Each Party shall bear its own translation costs.



15.5 Force Majeure



15.5.1 The Parties will not be responsible towards each other for any delay if
they cannot perform their respective contractual obligations under this
Agreement due to any cause of Force Majeure (“Force
Majeure”), i.e. any cause,
unavoidable and insurmountable with reasonable efforts such as but not limited
to:




36









 









	•	 	natural disasters such as earthquake, flood, abnormal atmospheric
conditions, epidemics;
	 
	•	 	state of war, declared or not;
	 
	•	 	public disorders such as insurrections, revolts, strikes,
lock-outs, and other labor disputes of any nature and public and social
demonstrations, riots;
	 
	•	 	binding decisions of one Party’s Government or any international
body such as embargo, prohibitions or limitations of any kind;
	 
	•	 	any other event beyond one Party’s reasonable control.




In such a case, the Party claiming Force Majeure will notify the other Party
without undue delay of the causes of any delay and the necessary extension of
performance of time-limits.




          15.5.2 The onus to establish the occurrence of Force Majeure lies with the
Party who is seeking the invocation of this Article by means of producing the
documentary evidence to that effect.


15.5.3 Any delay due to Force Majeure will not be a sufficient reason to obtain
an early termination of this Agreement in whole or in part.



15.5.4 The Party unable to perform under the Agreement as a result of Force
Majeure shall use its best efforts to eliminate the cause giving rise to the
inability to perform as soon as possible and continue performance, when such
cause is removed.



15.5.5 However, should such non-performance as a result of Force Majeure extend
beyond a six (6) months’ period, the Parties may then consider the means by
which this Agreement may be terminated in whole or in part subject to a mutual
agreement.



15.6 Entire Agreement




          This Agreement sets forth the entire agreement and understanding between
the Parties with respect to the subject matter of this Agreement and supersedes
all prior agreements, understandings and representations including the Term
Sheet.



15.7 Amendment




          No part of this Agreement may be amended or modified unless reduced to
writing making specific reference to this Agreement and signed by the
authorized representatives of the Parties.



37









 





          15.8 Notices



          Any
notice, demand or other communication (“Notice”) to be given or
required to be made pursuant to this Agreement is to be in writing and is to be
given by international air courier, facsimile or hand to a Party at the Party’s
address following:



	 	 	 
	To:

	 	General Counsel
	

	 	Connetics Corporation
	

	 	3290 West Bayshore Road
	

	 	Palo Alto, California 94303
	

	 	Facsimile No. +650-494-0172
	 
	 	 
	To:

	 	Pierre Fabre Dermatologie,
	

	 	General Counsel
	

	 	Les Cauquillous
	

	 	BP 100
	

	 	81 506 LAVAUR Cedex (France)
	

	 	Fax : (33) 5 63 58 86 68







          or at such other address or facsimile number as is notified in writing by
one Party to the other Party. A Notice is deemed to be given or served:




	(a)	 	when sent by international air courier on the second Business
Day following the day on which it was posted;
	 
	(b)	 	when transmitted by facsimile during normal business hours on
a Business Day on that day, or in any other case of transmission by
facsimile on the Business Day following the day of transmission;
	 
	(c)	 	when delivered by hand during normal business hours on a
Business Day on that day, or in any other case of hand delivery on
the Business Day following the day of delivery.





15.9 Payments




          All payments to be made under this Agreement will, unless otherwise
agreed, be made in United States Dollars currency to Connetics’ address set
forth at the beginning of this Agreement or such other address as Connetics may
notify PFD in writing and will be paid free of exchange but subject to
deduction of any withholding tax established by the French Government, which
rate as of the Effective Date shall not exceed Five percent (5%) as the reduced
rate of the withholding tax established by the Treaty between the United States
and France for the avoidance of double taxation.



15.10 Independent Contractor




          Each Party is and shall be considered to be an independent contractor of
the other Party. Neither Party shall be the legal agent of the other for any
purpose whatsoever and neither Party



38









 




has any right or authority to make or underwrite any promise, warranty or
representation, to execute any contract or otherwise to assume any obligation
or responsibility in the name of or on behalf of the other Party. Neither
Party shall be bound by, or liable to any third persons due to, any act or for
any obligation or debt incurred by the other toward such third party, except to
the extent that the Party so to be bound specifically agrees in writing.




15.11 Language; Interpretation




          The Parties agree that English shall be the governing language of this Agreement.



15.12 Counterparts




          This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
agreement.



[Balance of Page is Intentionally Blank – Signature Page Follows]




39









 








EXECUTION




IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement in
duplicate originals by their duly authorized officers and representatives on
the respective dates shown below, but effective as of the Effective Date.



SIGNED for and on behalf of CONNETICS CORPORATION by:




SIGNATURE: /s/ Thomas G. Wiggans




PRINT NAME: Thomas G. Wiggans




TITLE: President and Chief Executive Officer




DATE: September 29, 2004




SIGNED for an on behalf of PIERRE FABRE DERMATOLOGIE a duly authorized officer




SIGNATURE: /s/ P.A. Poier




PRINT NAME: P.A. Poier




TITLE: General Counsel - Company Secretary




DATE: September 28, 2004





40










 





EXHIBIT A




PERMITTED USE




Clobetasol Propionate




	 	 	 
	Product/Active Ingredient

	 	Clobetasol propionate (0.05%)
	Formulation

	 	Hydroethanolic quick-break mousse
	Permitted Use

	 	Topical applications for Skin dermatoses in

humans
	Specifications

	 	To be provided to PFD separately







A-1









 





EXHIBIT B




INTELLECTUAL PROPERTY



PATENT SCHEDULE



Title: Corticosteroid – Containing Pharmaceutical Composition



Priority Application Date: 3rd March 1995



Earliest Publication Date/No: 12th September 1996/WO96/27376




	 	 	 	 	 	 	 	 	 
	Territory
	 	Application Date
	 	Application No.
	 	Patent No.
	 	Expiry Date

	[**]

	 	[**]
	 	[**]	 	 	 	 
	[**]

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	*[**]

	 	[**]
	 	[**]	 	 	 	 
	[**]

	 	[**]
	 	[**]	 	 	 	 
	[**]

	 	[**]
	 	[**]
	 	[**]
	 	[**]
	[**]

	 	[**]
	 	[**]	 	 	 	 







     • includes: Austria, Belgium, Denmark, France, Germany, Greece,
Luxembourg, Netherlands, Portugal, Spain, Sweden, Switzerland











	**	 	Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.





B-1









 





EXHIBIT C




THIRD PARTY LICENSES




[**]











	**	 	Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.





C-1









 





EXHIBIT D




MINIMUM ANNUAL SALES




Unitary sales forecast —  OLUX 100 G / Pierre Fabre Dermatologie



Work hypothesis



Foam formulation: 0.05 %
Clobetasol propionate — Class I dermocorticoid

Indication for Europe: scalp corticosensitive dermatosis —
limited indication

Content: 100 g.



Sales forecast core countries:




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Spain
	 	Portugal
	 	Germany
	 	Belgium
	 	Switzerland
	 	Greece

	Forecast in units
	 	 	 	 	 	 	 	 	 	 	 	 
	(x 000)
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Y1(year 1)
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
Y1: [**]

	 	 	 	 	 	 	 	 	 	 	 	 
	Forecast in units
	 	 	 	 	 	 	 	 	 	 	 	 
	(x 000)
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Y2(year 2)
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
Y2:[**]
	 	 	 	 	 	 	 	 	 	 	 	 
	Forecast in units
	 	 	 	 	 	 	 	 	 	 	 	 
	(x 000)
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Y3(year 3)
	 	 	 	 	 	 	 	 	 	 	 	 
	Total
Y3: [**]

	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	 	[**]
	Total Y1 + Y2 + Y3

	 	 	 	 	 	 	 	 	 	 	 	 
	per country

	 	 	 	 	 	 	 	 	 	 	 	 






TOTAL = [**] UNITS












	**	 	Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.





D-1









 





EXHIBIT E

ADVERSE EVENT REPORTING PROCEDURE




STANDARD OPERATING PROCEDURE

TO BE USED IN THE INFORMATION EXCHANGES RELATED TO

SAFETY AND TOLERABILITY OF MEDICINAL PRODUCTS




SUMMARY



1 – APPLICABILITY




2 – LANGUAGE – CONTACT PEOPLE




3 – TRANSMISSION DURING MARKETING (except clinical trial)




     3.1 Principles



     3.2 Report frequency




3.2.1 Serious adverse reactions (SADRs)




3.2.2 Non serious adverse reactions




3.2.3 Periodic safety update reports (PSUR)




3.2.4 Modifications of the SPC safety-related paragraphs



4 – TRANSMISSIONS DURING CLINICAL TRIALS



5 – OTHER TRANSMISSIONS OF INFORMATION




6 — reportable adverse reaction – minimum information




7 — product labelling activities




8 – APPENDICES




     8.1 DEFINITIONS



     8.2 PLANNING OF PSURs



     8.3 LIST OF CONTACT PEOPLE



     The purpose of this Adverse Event Reporting Procedure (“Procedure) is to
allow the best transmission of the data related to tolerability and safety of
the medicinal product listed below between the parties signatory to the license
agreement for the product listed below (“License”):



Clobetasol propionate foam (0.05%)




     The Procedure relates to the exchanges between the parties’
pharmacovigilance structures, during either clinical trials or product
marketing.



E-1









 




The Procedure is not intended to describe the methods of collection and
transmission of information inside each party, organized by specific S.O.P.



The Procedure is strictly limited to pharmacovigilance activities, without
prejudice to any decisions likely to occur as a result of information exchanges
involving other structures than the pharmacovigilance departments. The
Procedure does not take into account the requirements imposed by the
regulations of the competent regulatory authorities to the Pharmacovigilance
department of each party; this is particularly pertinent to the time frame of
data transmission subjected to reporting. Each party is responsible for the
expedited reporting to the appropriate health authorities.



1 – APPLICABILITY



This Procedure describes the information transmission methods, related to the
safety and tolerability of the medicinal product concerned by the License,
resulting from spontaneous notifications made between the parties’
pharmacovigilance structures during the therapeutic use, through either
periodic reports or notifications of serious adverse events during clinical
trials, whatever the origin.



2 – LANGUAGE – CONTACT PEOPLE



The transmitted documents must be drafted in English. The technical terms used
correspond to the meaning specified in Appendix 8.1 (Definitions).



A list with the details of all professionals working with each party who are
responsible for the implementation of this Procedure is provided in Appendix
8.3. Each party must spontaneously update this list in the event of any
modification (and specify its date).



3 – TRANSMISSION DURING MARKETING (except clinical trial)



3.1 Principles



This provision relates to adverse reactions which are notified spontaneously to
the parties by health-care professionals or patients, reported by the health
authorities or described in the literature and which are supposed to be related
to the medicinal product.



In the case of drug marketed under different names by each party in the same
country, each party takes into account the information relating to the adverse
reactions of their own product. The INN notifications are the responsibility
of PFD.



For adverse reactions described in the literature, each party takes into
account the information related to the adverse reactions of its own product.
The INN publications are the party’s responsibility operating in the country of
origin of the publication (or in the country where the review has its first
address if this information is not specified). Case reports from the
literature are sent together with a copy of the publication which does not need
a translation in English (if the latter is not written in this common
language).




E-2









 




The parties can request precise details or further information concerning the
current files at any time.



3.2 Report frequency






	3.2.1	 	Serious Adverse Drug Reactions (SADRs)
	 
	 	 	The SADRs are sent by fax or e-mail to the party using either MedWatch
forms or CIOMS form, as appropriate, within ten calendar days following
their notification.
This time is reduced to five calendar days following notification of a
fatal or life threatening event.
	 
	 	 	The follow-up information of these SADRs, including fatal information, is
faxed within ten calendar days upon reception. Partners can request
precise details or further information concerning the current files at
any time.
	 
	3.2.2	 	Non serious adverse reactions
	 
	 	 	Adverse reactions not considered to be serious are the subject of
information from the party on a quarterly basis, as a summary table (line
listing). The party can request precise details or further information
concerning the current files at any time.
	 
	3.2.3.	 	Periodic safety update reports (PSUR)
	 
	 	 	Within the framework of the License between the parties, the PSUR
periodicity must be dealt with and a calendar must be set up,
anticipating notably the possible integration of international Global
PSURs and national PSURs of the medicinal product, according to its
definition.
	 
	 	 	According to this calendar provisions (taking into account the regulatory
periodicities) each party, as either the Marketing Authorisation holder
or the national licensee, addresses a copy of the report to the other
party at the time of sending it to the appropriate health authorities.
	 
	 	 	The PSUR calendar between both parties is revised if Marketing
Authorisation modifications can justify a new periodicity.
	 
	 	 	The PSUR calender is attached to the Procedure (Appendix 8.2)
	 
	 	 	Additional regulatory reports required by a health authority are also
transmitted to the party at the same time that they are sent to the
requiring health authority.
	 
	3.2.4.	 	Modifications of the SPC safety-related paragraphs
	 
	 	 	The parties will inform each other about any modification made to the
safety-related paragraphs in the SPC of the medicinal product concerned
by this convention. This information is made prior to draft the
regulatory report of the modification, in order to make them coordinated,
if necessary.





4 – TRANSMISSIONS DURING CLINICAL TRIALS



E-3









 




Each party will inform by e-mail the other party of any serious adverse event
(SAE) occurring during a clinical trial carried out with the medicinal product
or the product under development concerned by this convention and of which a
party is the sponsor.



This information will be sent using either a MedWatch form or a CIOMS form or
even a SAE report form (as may be appropriate) within ten calendar days upon
reception of the information by the pharmacovigilance department.



The follow-up reports are exchanged according to the same procedures, and the
evolution is documented until the concerned patient’s recovery or stabilization
or until the end of the clinical trial, as appropriate.



SAE information is sent without systematically breaking the blind.



Any information related to the result of a possible breaking of the blind is
sent to the partner.



The case reports, after breaking the blind at the end of the study, are sent to
the partner according to a list of attribution.



The party’s pharmacovigilance department may send the final clinical trial
report to the other party, as soon as available, if the latter requests it.



Should any questions be raised by the authorities, they will be answered by the
party identified as the trial sponsor.



5 – OTHER TRANSMISSIONS OF INFORMATION



The pharmacovigilance team can agree to communicate significant documents such
as expert reports, updated investigator brochure, scientific documentations,
etc. even if this is not necessarily envisaged by this document.



It is up to the pharmacovigilance departments of the respective parties to
discuss at any moment about the exchanged information.



6 – REPORTABLE ADVERSE REACTION – MINIMUM INFORMATION



A reportable adverse drug reaction (ADR) requires the following minimum
information:






	 	a)	 	an identifiable reporter – the reporter can identify by
either name or initial, or address or qualification (e.g,.
physician, dentist, pharmacist, nurse)
	 
	 	b)	 	an identified patient – the patient can be identified by
initials or patient number, or date of birth (or age information if
date of birth is not available) or sex. The information should be
as complete as possible.
	 
	 	c)	 	at least one suspected substance/medicinal product
	 
	 	d)	 	at least one suspected adverse reaction





E-4









 




The minimum information is the smallest amount of information required for the
submission of a report and every effort should be made to obtain and submit
further information when it becomes available.



7 – PRODUCT LABELLING ACTIVITIES



Each party will be responsible for writing and maintaining its own local
information for the medicinal product in its respective territory and will
inform each other of any significant safety changes. Connetics will provide
PFD with a copy of the current labelling or Company Core Safety Information for
clobetasol propionate foam (0.05%) as of the effective date of the License, and
each party will furnish the other party with copies of any revised labelling in
a timely manner following regulatory approval of the revisions.



8 – APPENDICES



8.1 DEFINITIONS



8.1.1 Reference



Volume 9 of the Rules Governing Medicinal Products in the European Union
Standard terminology; ICH and FDA standard terminology as may be in effect from
time to time.



8.1.2 Adverse Event (or adverse experience) (AE)



An undesirable experience occurring following administration of a medicinal
product. An adverse event does not necessarily have a causal relationship with
the treatment.



8.1.3 Adverse Reaction / Adverse Drug Reaction (ADR)



Adverse reaction means a response to a medicinal product which is noxious and
unintended and which occurs at doses normally used in man for the prophylaxis,
diagnosis or therapy of disease or for the restoration, correction or
modification of physiological function. Adverse drug reaction in this context
is considered as synonymous with adverse reaction and suspected adverse drug
reaction.



A reaction, contrary to an event, is characterised by the fact that a causal
relationship between the drug and the occurrence is suspected, i.e. judged
possible by the reporting or a reviewing health-care professional. If a
reaction is spontaneously reported by a health-care professional, this usually
implies a positive judgement from the reporter unless the reporter explicitly
gives a negative judgement on the causal relationship.



8.1.4 Unexpected Adverse Reaction



Unexpected Adverse Reaction means an adverse reaction, the nature, severity or
outcome of which is not consistent with the Summary of Product Characteristics.
It also includes class-related reactions which are mentioned in the SPC but
which are not specifically described as occurring with the product.




E-5









 




For products authorized nationally, the relevant SPC is that approved by the
competent authority in the member state to which the reaction is being
reported.



For centrally authorized products, the relevant SPC is the SPC authorized by
the European Commission.



8.1.5 Listed Adverse Drug Reaction



An adverse reaction whose nature, severity, specificity and outcome are
consistent with the information in the company core safety information (CCSI).



8.1.6 Unlisted Adverse Drug Reaction



An adverse reaction which is not specifically included as a suspected adverse
effect in the company core safety information (CCSI). This includes an adverse
reaction whose nature, severity, specificity or outcome is not consistent with
the information in the CCSI. It also includes class-related reactions which
are mentioned in the CCSI but which are not specifically described as occurring
with this product.



8.1.7 SUSARs :



Suspected unexpected serious adverse reactions.



8.1.8 Serious Adverse Drug Reaction (SADR)



Serious adverse reaction means an adverse reaction which results in death, is
life-threatening, requires inpatient hospitalization, or prolongation of
existing hospitalization, results in persistent or significant disability or
incapacity, or is a congenital anomaly/birth defect.



It also includes serious adverse clinical consequences as described above
associated with use outside the terms of the Summary of Product Characteristics
(SPC) (including, for example, prescribed doses higher than those recommended),
overdoses or abuse.



Medical judgement should be exercised in deciding whether a reaction is serious
in other situations. Important adverse reactions that are not immediately
life-threatening or do not result in death or hospitalization but may
jeopardise the patient should be considered as serious.



8.1.9 Spontaneous Report or Spontaneous Notification



A communication to a company, regulatory authority or other organization that
describes a suspected adverse drug reaction in a patient given one or more
medicinal products and which does not derive from a study.



8.1.10 Company Core Safety Information (CCSI)



All relevant safety information prepared by Connetics and which the Connetics
requires to be listed in all countries where the company markets the drug,
except when the local




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regulatory authority specifically requires a modification. It is the reference
information by which listed and unlisted are determined for the purpose of
periodic reporting for marketed products, but not by which expected and
unexpected are determined for expedited reporting.




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8.1.11 International Birth date (IBD)



The date of the first marketing authorisation for a medicinal product granted
to the marketing authorisation holder (MAH) in any country in the world. The
International Birth Date for clobetasol propionate foam (0.05%) is the United
States Approval date of 26 May 2000.



8.1.12 Medicinal product



Any medicine prepared in advance, marketed under a specific denomination and
with a particular packaging.



8.1.13 Imputability



Valuation of the relationship between an adverse event (or adverse experience)
and a medicinal product.



They can be valued using different scales according to the country. Pierre
Fabre Médicament uses a 6-degree scale: I4 highly
probable, I3 Probable, I2
Possible, I1 Doubtful, I0 not related, I9 Unknown/not available



The adverse reactions concerned by the present procedure are those whose
relationship corresponds to one of the 4 degrees above-mentioned:
I1, I2, I3,
I4.



8.1.14 Periodic Safety Update Report (PSUR)



Report drafted by a pharmaceutical firm, as the MAH holder and\or PFD,
concerning a marketed medicinal product. This report analyses the information
obtained on the product relating to its safety in human in a place and a period
of time determined by the regulations. The PSURs are drafted according to a
typical plan detailed in the ICH or FDA procedures as may be in effect from
time to time.



8.2 PLANNING OF PSURs



*****To be provided*****



8.3 LIST OF CONTACT PEOPLE



*****To be provided*****




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EXHIBIT F




LISTED MANUFACTURERS




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[**]




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	**	 	Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.





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EXHIBIT G




TERMS FOR INCLUSION IN CONTRACT

WITH LISTED MANUFACTURER



In accordance with the provisions of Section 5.1.1, PFD agrees to incorporate
in the agreement to have the Product manufactured by a Listed Manufacturer the
following provisions:



[**]












	**	 	Certain information on this page has been omitted and filed separately
with the Commission. Confidential treatment has been requested with respect to
the omitted portions.






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