**Exhibit10.32**

 

**ConfidentialMaterials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions.**

 

**COMMERCIALSUPPLY AND PROCESS VALIDATION AGREEMENT**

 

THIS COMMERCIAL SUPPLYAGREEMENT (the “Agreement”) is entered into as of this 6th day of December,1999 by and between TRANSKARYOTIC THERAPIES, INC.,(“TKT”), a Delawarecorporation having an address at 195 Albany Street, Cambridge, MA 02139, andCHESAPEAKE BIOLOGICAL LABORATORIES, INC., a Maryland corporation having anaddress at 1111 South Paca Street, Baltimore, MD 21230 (“CBL”), with respect tothe following:

 

**RECITALS**

 

A.            TKTis a development-stage biotechnology company active in the research anddevelopment of drug products.

 

B.                                     CBLis in the business of formulating, sterile filling, and packaging liquidinjectable drug products and medical devices.

 

C.                                     TKTand CBL desire to enter into this Agreement in order to establish the terms andconditions under which CBL will formulate, fill, and package Product for clinicaltrial and consistency batches for FDA approval and, following FDA approval ofCBL as a formulation, fill-finish site for the Product, for commercial sale.

 

D.                                    Bothparties contemplate that additional TKT products may be included under thisAgreement, as amendments, by mutual written consent of the parties.

 

**AGREEMENT**

 

NOW THEREFORE, inconsideration of the premises and the mutual promises and covenants containedin this Agreement, and for other good and valuable consideration, the receiptand sufficiency of which is hereby acknowledged, the parties hereto agree asfollows:

 

**ARTICLEI**

**DEFINITIONS**

 

All references toparticular Exhibits and Sections shall mean the Exhibits to, and Sections of,this Agreement, unless otherwise specified. For the purposes of this Agreement and the Exhibits hereto, thefollowing words and phrases shall have the following meanings:

 

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**1.01        “Active Ingredient”**shall mean active pharmaceutical ingredient (API) of alpha-Galactosidase A asdescribed in Exhibit A.

 

**1.02        “Affiliate”** shallmean any corporation, firm, partnership or other entity, whether de jureor de facto, which directly or indirectly owns, is owned by or is undercommon ownership with a party to this Agreement to the extent of at least fiftypercent (50%) of the equity having the power to vote on or direct the affairsof the entity and any person, firm, partnership, corporation or other entityactually controlled by, controlling or under common control of a party to thisAgreement.

 

**1.03        “Agreement”** shallmean this Commercial Supply Agreement.

 

**1.04        “Batch or Lot”** shallmean a single run of Product processed by a single execution of theinstructions specified in the Batch Production and Control Record within themeaning of 21 CFR part 210.3(b)(2) and/or within the meaning of 21 CFR part600.3(x), or its successor as in effect from time to time.

 

**1.05        “Batch Production and Control Record” or“Batch Record”** shall mean the set of detailedprocessing instructions which are to be followed by CBL to process one batch ofProduct within the meaning of 21 CFR part 211.188, or its successor as ineffect from time to time.

 

**1.06        “FDA”** shall mean theUnited States Food and Drug Administration.

 

**1.07        “Formulated Bulk”**shall mean formulated Active Ingredient as described in Exhibit A.

 

**1.08        “Good Manufacturing Practices”**or the letters **“GMP”** or **“cGMP”** shall mean the writings of the Codeof Federal Regulations, Part 21, Section 210 and Section 211, or other sectionsso designated by the title “Good Manufacturing Practices” promulgated under theFederal Food, Drug and Cosmetic Act, as in effect from time to time.

 

**1.09        “Master Production and Control Record” or“Master Batch Record”** shall mean a written descriptionof the procedure to be followed for processing a batch of Product including butnot limited to a complete list of all active and inactive ingredients,components, weights and measures, descriptions of drug product containers,closures, packaging materials, and labeling and complete specifications foreach, within the meaning of 21 CFR part 211.186, or its successor as in effectfrom time to time.

 

**1.10        “Materials”** shallmean all inactive ingredients, vials, stoppers, seals, labels, inserts, foldingcartons and/or shipping cartons as are otherwise necessary to be utilized inthe Processing and to meet the Specifications, but excluding Active Ingredient.

 

**1.11        “Processing”** shallmean processing Product in accordance with the Master Batch Record for theProduct.  “Processed” and “Process”shall have comparable meanings.

 

**1.12        “Product(s)”** shallmean the liquid product(s) covered by this Agreement and processed ascontemplated hereby.

 

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**1.13        “Project Summary”**shall mean those documents attached to this Agreement as Exhibit A, whichprovide specific details about the Product to be processed for TKT by CBL.

 

**1.14        “Specifications”**shall mean the acceptance criteria for the Product as set forth in the MasterBatch Record.

 

**1.15        “USP”** shall mean theUnited States Pharmacopeia, Vol.  23, orany subsequent addition thereof.

 

**ARTICLEII**

**SUPPLYAND PROCESSING OF MATERIALS**

 

**2.01        Processing.**  Subject to the terms and conditions of thisAgreement, CBL agrees that it shall formulate, fill, and package the Product atits Camden parenteral filling facility in Baltimore, MD validated in accordancewith FDA regulations, and shall process the Product in accordance with cGMP’s,including without limitation adherence to appropriate quality assurance and qualitycontrol practices.  CBL will permit TKTto review all written internal CBL quality assurance and quality controlpractices.  If TKT requests a change inCBL’s practices and the parties agree that such a change is appropriate tocomply with FDA regulations then CBL will act in good faith to implement therequested change.  CBL further agreesthat it will use reasonable and customary efforts to comply with regulations offoreign authorities applicable to the processing of Product by CBL.  The product cannot be processed at anotherfacility without the written authorization of TKT.

 

**2.02        Master Production Record.**  Subject to the terms and conditions of thisAgreement, CBL agrees to process the Product in accordance with a MasterProduction and Control Record approved in writing by TKT.  CBL further agrees that any substantivechanges to the Master Production and Control Record and the process mustreceive written approval of TKT prior to implementation, provided, however,that any approvals to be delivered by TKT shall not be unreasonably withheldand the parties shall cooperate and act reasonably and in good faith inconnection with their respective activities under this Section.  CBL will permit TKT to review all informationin Master Production Records pertaining to individual product lots as well as,raw material test results and the results of environmental monitoring prior toproduct release by CBL but after CBL’s completion of its internal review of thebatch record.  CBL will release thebatch record within [**] of receiving TKT’s comments and proposed changes.

 

**2.03        TKT Supplied Materials.**  TKT, at its expense, shall deliversufficient quantities of Active Ingredient, any Material, or productionequipment indicated on Exhibit A hereto as to be provided by TKT, toCBL’s plant at Baltimore, Maryland prior to the scheduled date of Processing asindicated in Exhibit A, unless otherwise agreed to by CBL.  All such items supplied by TKT for purposeshereof shall meet the applicable specifications therefor as set forth on ExhibitA and the Master Production Record. All items so delivered shall remain the property of TKT.

 

**2.04        CBL Supplied Materials.**  CBL will be responsible for supplyingsufficient quantities of any Materials indicated on Exhibit A hereto asprovided by CBL, insofar as required to permit CBL to complete the Processingand delivery of Product in accordance with

 

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the terms hereof.  All suchitems purchased by CBL for purposes hereof shall meet the applicableSpecifications therefor as set forth on Exhibit A and the MasterProduction and Control Record.

 

**2.05        Labeling Specifications.**  TKT shall be responsible for furnishing toCBL appropriate specifications, reasonably acceptable to CBL, for the labelingand packaging (including package inserts) to be used on or in connection withthe Processing of Product which is to bear TKT labels or other identification,and any necessary artwork and engineering drawings related thereto.  Insofar as required of CBL pursuant to ExhibitA hereto, CBL will label and package Product in accordance with suchspecifications.  CBL shall not affix anyother labeling to the Product, except with the prior written approval of TKT.

 

**2.06        Stability Testing.**  TKT shall be responsible for all requisitestability testing of the Product.

 

**ARTICLEIII**

**PROCESSVALIDATION**

 

**3.01        Process Validation.**  An outline for validation of theformulation, filling, and packaging of the Product at CBL’s facilities isattached hereto as Exhibit B.  Inaccepting its obligations under the terms of this Agreement, developing thecost in Exhibit C, and the event and time schedule in Exhibit D,CBL has relied upon the accuracy, completeness, and correctness of the data andinformation provided by TKT and the understanding that the Product can beprocessed in a stable form in accordance with typical and standardpharmaceutical production practices. CBL will proceed with reasonable promptness to perform its obligationshereunder, but the parties acknowledge that such process validation is ademanding effort and unanticipated events beyond the control of the parties maychange the event and time schedule; and, thus, the completion date of CBL’sperformance hereunder cannot be predicted with any meaningful degree ofcertainty.  CBL agrees to allow TKT toapprove product related validation protocols prior to execution by CBL.

 

**3.02        CBL Responsibilities.**  CBL shall provide reasonable assistance toTKT in its efforts to obtain and maintain all necessary regulatory approvalsand permits relating to the production of Product at CBL facilities.  Accordingly, insofar as relating to Productand CBL’s processing thereof, CBL shall permit TKT or its designeestypical and customary access to CBL’s facility, other than the filling, andpackaging areas, during the formulation and filling of Product and, uponreasonable notice and during reasonable business hours and so long as TKT doesnot interfere with CBL’s day to day operations (i) to inspect CBL’s processingfacilities, (ii) to review manufacturing and quality control records relativeto production by CBL of the Product, prior to the disposition of the Product(iii) to audit CBL’s production efforts in respect of Product for compliancewith FDA requirements, (iv) to review CBL’s facility master file, anycorrespondence, reports, or other documents from CBL to the FDA, or to anyapplicable foreign regulatory authority, or from the FDA, or from anyapplicable foreign regulatory authority, to CBL, related to the Product and/orthe facility as it effects the Product, (v) to approve all Product relatedvariances which occur during manufacture or storage of the Product, includingapproval of label text after receipt of labels and prior to application, and(vi) CBL will inform TKT as quickly as possible regarding facility relatedvariances and will permit TKT onsite access to all

 

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facility related variances and information for review and those whichin CBL’s judgement may affect the Product will be reviewed with TKT prior toimplementation of corrective action.

 

**3.03        TKT Responsibilities.**  TKT will be responsible for obtaining allFederal and International regulatory approvals or permits necessary for theproduction, processing, distribution, use, and sale of the Product.  Additionally, TKT will be responsible forall other regulatory requirements which are not specifically assigned to CBL inthe Project Summary, including the payment of any FDA user fees or other feesassociated with the review and approval to market the Product imposed by anyregulatory agency.  TKT agrees to supplyCBL with any documents, information, and/or data specified as TKTresponsibility in the Project Summary in a timely manner so as not to impedeCBL’s ability to comply with its obligations hereunder.

 

**ARTICLEIV**

**ORDERS,PRICE, & TERMS OF PAYMENT**

 

**4.01        Purchase Orders.**  Unless otherwise specified, TKT shall submita purchase order to CBL at least [**] prior to the requested delivery date forthe Product set forth in such purchase order. CBL shall accept such purchase orders from TKT and shall notify TKT ofthe processing date.  CBL must receivefrom TKT any Active Ingredient and Materials to be supplied by TKT for use inProcessing at least [**] prior to the processing date.

 

**4.02        Forecast.**  TKT shall provide CBL in writing withrolling [**] non-binding, good faith forecasts of TKT’s annual requirements forProduct, in quarterly periods.  Suchforecasting shall be updated in writing quarterly.

 

**4.03        Cancellation and Rescheduling.**  TKT may cancel or postpone a purchase orderfor Product in accordance with CBL’s Cancellation and Postponement Policy asset forth in Exhibit E.

 

**4.04        Price.**  The price to be paid by TKT to CBL duringthe term of this Agreement for any projects or validations, and each Batch ofProduct, shall be as specified in Exhibit C.  All prices are FOB CBL’s facility in Baltimore, Maryland.  Payment of all FDA fees specific to theProduct will be the responsibility of TKT. CBL’s price does not include any other testing, studies, Productspecific validations not presently required, or other activities, which TKT maydeem necessary but which are not required of CBL by this Agreement.

 

**4.05        Invoices.**  The invoice for the total amount shall bepayable by TKT to CBL within [**] days of the date of invoice, date of shipmentor date of issuance of the Certificate of Conformance referred to in Section5.03, whichever is latest; provided that if TKT requests or causes CBL to holda Batch of Product for more than [**] days, TKT will be invoiced and the [**]day payment terms would commence on the invoice date.

 

**ARTICLEV**

**SHIPMENTS,INSPECTION, & ACCEPTANCE**

 

**5.01        Shipments.**  CBL shall ship or caused to be shipped atTKT’s expense the Product to TKT to such destination(s) as designated by TKTexcept that CBL shall not be required to

 

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ship Product to any clinical trial site.  CBL’s delivery of Product to a common carrier or licensed truckerapproved by TKT shall constitute delivery to TKT, and TKT shall bear all riskof loss, delay or damage in transit. CBL agrees to provide reasonable support to assist TKT to pursue anyclaims it may have against carriers.

 

**5.02        Inventory in Quarantine.**  TKT may request in writing that CBL shipProduct from CBL’s inventory in quarantine, prior to the issuance by CBL’sQuality Assurance Department of the appropriate release; however, TKT agreesnot to introduce any of the Product into interstate commerce until the receiptof proper quality control release by CBL applicable to the Product.  Such a request will result in an invoicebeing sent as of the shipping date and commencement upon invoice delivery ofthe [**] day payment terms.  TKT shallindemnify and hold CBL harmless from any and all losses, damages, claims, orcosts, including reasonable attorney’s fees, which CBL may suffer or incur as aresult of and arising out of the shipment or use of the Product prior to itsrelease by CBL’s Quality Assurance Department.

 

**5.03        Certificate of Conformance.**  Upon completion of filling, inspection,packaging, and quality assurance review, CBL shall promptly provide TKT aCertificate of Conformance for each Batch of Product shipped, certifying thatthe Product has met all Specifications set forth in this Agreement.

 

**5.04        Inspection.**  TKT shall inspect all shipments of Productreceived from CBL for proper labeling, packaging and count within [**]days ofactual receipt of shipment at its designated receiving facility.  However, any such inspection shall notrelieve CBL of its obligation and warranties under this Agreement.  If any portion of the Product received failsto conform with any applicable Specification, TKT may, subject to the terms ofSection 5.05 hereof, reject the same within [**] days of the latter date ofactual receipt of (i) the Product; or (ii) a Certificate of Conformance.

 

**5.05        Rejection.**  In any case where TKT expects to reject orotherwise make a claim against CBL with respect to damaged or otherwisenonconforming Product, TKT shall notify CBL of such expected rejection and CBLshall be offered a reasonable opportunity to offer proof or evidence as to whysuch Product should not be rejected and to inspect and/or test suchProduct.  In the event of any dispute asto whether the Product may be rightfully rejected by TKT, such Product shall betested for conformance with the applicable Specifications by an independenttesting organization mutually acceptable to both parties which analysis shallbe binding on TKT and CBL solely for the purpose of determining whether suchProduct may be rightfully rejected or not. TKT shall not under any circumstances dispose of any Product claimed byTKT or determined by independent testing organization to be damaged ornonconforming, without CBL’s prior written consent.  All or part of any shipment of Product determined to have beenrightfully rejected by TKT shall be held by TKT for disposition by CBL, atCBL’s expense.

 

**ARTICLEVI**

**REPRESENTATIONS& WARRANTIES**

 

**6.01        Warranties by CBL.**  CBL warrants that all Product delivered toTKT (or shipped to a third party at the direction of TKT) under this Agreementshall at the time of

 

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delivery, be free of defects in material and workmanship; meet theSpecifications (except in the case of Product delivered in quarantine pursuantto Section 5.02, in which case upon release from quarantine); and have beenprocessed and maintained in conformance with cGMPs and other applicable FDAregulations.

 

**6.02        Warranties by TKT.**  TKT warrants that its storage, labeling(including, without limitation any labeling, packaging and insertspecifications supplied by TKT pursuant to or as contemplated by Section 2.05hereof), distribution, use, and sale of Product complies and will comply withall applicable Federal, state and local laws, rules and regulations and will beundertaken in a safe and responsible manner. If the Product is intended for distribution, use, and/or sale outside ofthe United States, TKT further warrants that all necessary US export licensesare in place or will be in place at the time of export and that the export,distribution and/or sale comply with all laws, rules and regulations of thecountry where the Product will be used. TKT represents and warrants to CBL that TKT is not aware that Product,or the processing or distribution thereof, will violate the intellectualproperty rights of any third party, and that TKT is not engaged in the theft ormisuse of any third party’s trade secret information regarding the processingor use or distribution of Product, nor does TKT have notice of any claim of athird party regarding any such theft or misuse.

 

**6.03        Limitation on Warranties.**  The warranties set forth in this Article VIare expressly stated and in lieu of and exclude, and the parties do expresslydisclaim, all other warranties expressed or implied, arising by operation oflaw or otherwise, including, on the part of CBL, any implied warranties offitness for a particular purpose and any representation or warranty as to thesuitability or efficacy of Product.

 

**ARTICLEVII**

**INDEMNITY,LIMITATION ON LIABILITY, & RECALLS**

 

**7.01        Indemnification by CBL.**  CBL shall defend, indemnify, and hold TKTharmless from and against any and all claims, liability, damage, loss, cost andexpenses (including reasonable attorney’s fees) arising from any third partyclaims made or brought, or any proceedings of any sort initiated against TKTwhich (i) arise out of CBL’s breach of any obligations or warranty, or negligenceby CBL under this Agreement, or arise out of or are based upon any claim ofviolation by CBL of any patent, trade secret or other intellectual propertyrights of any person or entity, subject, however, in each case to thelimitations set forth in Section 7.05 below.

 

**7.02        Indemnification by TKT.**  TKT will defend, indemnify, and hold CBLharmless from and against any and all claims, liability, damage, loss, cost andexpenses (including reasonable attorney’s fees) resulting from any third partyclaims made or brought against, or proceedings of any sort initiated againstCBL which (i) arise out of TKT’s breach of any obligation, warranty ornegligence by TKT under this Agreement, (ii) arise out of the promotion,distribution, sale or use by TKT or any third party of Product, includingwithout limitation any product liability claim (except to the extent CBL is atfault or has failed to deliver or supply Product in accordance with theSpecifications), or (iii) arise out of any or are based upon any claim of violationby TKT of any, patent, trade secret or other intellectual property rights ofany person or entity, subject, however, in each case to the limitation setforth in Section 7.05 below.

 

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**7.03        Conditions.**  Each party’s indemnity obligations (the“Indemnifying Party”) under Sections 7.01 and 7.02 are conditioned upon theother party (the “Indemnified Party”) promptly notifying the Indemnifying Partyof any such claim or proceeding in writing, tendering to the Indemnifying Partythe opportunity to defend or settle such a claim or proceeding at its expenseand cooperating with the Indemnifying Party (at the expense of the IndemnifyingParty) in defending or settling any such claim or proceeding.  The indemnifying party should not enter intoany settlement which imposes liability on the indemnified party without theindemnified party’s prior written consent not unreasonably withheld.

 

**7.04        Recall.**  Subject to the limitations set forth inSection 7.05 below, CBL agrees to indemnify TKT against the reasonable andnecessary actual costs of managing and controlling any recall of Product,provided that such recall is attributable to a breach by CBL of any of thewarranties provided herein, that CBL is given an adequate opportunity toparticipate in any and all discussions with the FDA or otherwise concerning theproposed recall and unless otherwise specified by the FDA, the manner andmethod of a voluntary recall shall have been reasonably approved by CBL.  CBL shall not be obligated under thisSection 7.04 to indemnify TKT if the recall is due to misbranding of theProduct by TKT or is due to any other act or omission of TKT or any other thirdparty not controlled by CBL.

 

**7.05        Limitation on Liability.**  Anything herein to the contrarynotwithstanding:

 

(i)            Neither party hereto shall be liableto the other, or the successors or permitted assigns of the other, or any otherperson, for any loss of profits, loss of business or interruption of business,or for any indirect, incidental, special or consequential damages, costs,losses or expenses, suffered or incurred under this Agreement or otherwise,even if advised of the possibility of such loss; and

 

(ii)           CBL’s liability for the replacementor for the cost or value of any Active Ingredient, Materials, or productionequipment supplied to CBL hereunder by TKT, including but not limited to anyActive Ingredient, Materials, or production equipment lost or damaged orincorporated into any single rejected or nonconforming Batch of Product, shallbe limited to the actual value thereof, up to the extent of CBL’s insurancecoverage for property of others which has a dollar value of $2.0 (two) milliondollars in the aggregate.  TKT will beresponsible to prove value of any claimed loss to CBL’s insurance carrier forlosses covered by CBL’s insurance policy. The parties hereto agree that the limitation on liability provided forunder the terms of this Section 7.05, excludes product liability claims and isan integral part of the agreement of the parties as evidenced by this Agreementand that the parties are entering into this Agreement in reliance upon theterms and provisions of this Section 7.05, and that, but for such terms andprovisions, the parties would not be entering into this Agreement.

 

(iii)          Promptly, following the execution ofthis Agreement, CBL shall furnish to TKT a certificate of insurance signed byan authorized representative of CBL’s underwriter evidencing the insurancecoverage required by this Agreement and providing for at least [**] priorwritten notice to TKT of any cancellation, termination, material change orreduction of such insurance coverage.

 

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**ARTICLEVIII**

**REGULATORY**

 

**8.01        TKT Responsibilities.**  TKT will be responsible for obtaining andmaintaining all necessary regulatory approvals for the distribution and sale ofProduct.  Additionally, TKT will beresponsible for all other regulatory requirements which are not specificallyassigned to CBL in this Agreement, including the payment of any FDA user feesor other fees associated with the review and approval to market the Productimposed by any regulatory agency.  TKTwill be responsible for maintaining claim files and for submitting appropriatereports to the FDA and other similar foreign regulatory agencies.  TKT will be further responsible for promptlynotifying CBL of all communications from the FDA or other regulatory agencies,which may impact or change the production and/or testing of the Product asperformed by CBL.  TKT will notify CBLof any consumer complaints concerning Product, which might reasonably beattributed to CBL’s obligations and warrants, within seven (7) days of receiptby TKT of any such complaints.  All suchinformation disclosed to CBL shall be considered confidential information underSection 9 below.

 

**8.02        CBL Responsibility.**  So long and insofar as necessary to permitit to perform its obligation hereunder, CBL shall maintain its AnnualRegistration of Drug Establishment (form FDA 2656e) and its Annual Registrationof Device Establishment (form FDA 2891a) granted by the FDA updated and in goodorder and will make the license and copies of all related documents availableto TKT and its designees for inspection, upon reasonable request.  CBL shall file and maintain a facility MasterFile as required by the FDA and maintain Product complaint files pursuant toapplicable federal regulations as covered by CBL’s Standard Operating Procedure#3075.  CBL will be further responsiblefor promptly notifying TKT of all communications from the FDA or otherregulatory agencies, which may impact or change the production and/or testingof the Product as performed by CBL.

 

**8.03        CBL Assistance with Filing.**  CBL will provide to TKT, at no additionalcost, copies, electronic formatted disks, of all documents, in CBL’s standardformat, for the manufacturing and control of Product at CBL’s facility, insupport of TKT’s regulatory filings for approval to market Product.  Any additional support, beyond the documentsabove, requested by TKT will be charged at CBL’s standard labor rates.

 

**8.04        Master File.**  CBL shall maintain one or more facilitymaster files at the FDA and agrees to provide TKT with any requisite lettersauthorizing the FDA access to CBL’s facility master file in conjunction withregulatory review of CBL’s production of Product as set forth in thisAgreement.

 

**ARTICLEIX**

**CONFIDENTIALITY**

 

**9.01        Confidentiality.**  Each party shall forever maintain inconfidence all information and materials disclosed by the other party andmarked as confidential or which the other party knows or has reason to know areor contain trade secrets or other proprietary information of the other,including without limitation the Specifications, Master Batch and ControlRecord, Batch Production and Control Record, and other information relating tothe Product (all such

 

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information being “Confidential Information”), and shall not use suchtrade secrets or proprietary information for any purpose except as permitted bythis Agreement or disclose them to anyone other than those of its employees,consultants, agents or subcontractors as are necessary in connection with suchparty’s activities as contemplated in this Agreement.  Each party shall be responsible for ensuring compliance withthese obligations by such party’s employees, consultants, agents andsubcontractors.  Each party shall takeprecautions at least as strong as those which it takes to protect its own mostvaluable trade secrets or proprietary information to ensure that its employees,consultants, agents and subcontractors do not disclose or make any unauthorizeduse of trade secrets or proprietary information of the other party.  Each party shall notify the other promptlyupon discovery of any unauthorized use or disclosure of the other’s tradesecrets or proprietary information.

 

**9.02        Exceptions.**  The foregoing restrictions on use anddisclosure shall not apply to any TKT Confidential Information or CBLConfidential Information that:

 

(i)            was know to the receiving partyprior to its disclosure to the receiving party by the disclosing party asevidenced by written documents predating the receiving party’s receipt of suchInformation; or

 

(ii)           is public knowledge at the time ofits disclosure to the receiving party or became public knowledge after itsdisclosure to the receiving party through no act or omission or on its behalf;or

 

(iii)          is lawfully disclosed or madeavailable to the receiving party by a third party having no direct or indirectobligation to the disclosing party to maintain the confidentiality of suchInformation; or

 

(iv)          is independently developed by thereceiving party without the aid or benefit of Information disclosed to thereceiving party by the disclosing party.

 

Information may be disclosed by the receiving partypursuant to a subpoena lawfully issued by a court or governmental agencyprovided that the receiving party notifies the disclosing party immediatelyupon receipt of any such subpoena.

 

**ARTICLEX**

**TERM ANDTERMINATION**

 

**10.01      Term.**  Unless terminated in accordance with theprovisions of Section 10.02, the term of this Agreement shall commence on thedate hereof and shall continue until the second (2) yearly anniversaryof the date of FDA approval of CBL as a processor of the Product.  In the event TKT has not received FDAapproval for CBL to process the Product for commercial sale and distributionprior to December 31, 2000 or has not placed binding purchase orders with CBLpursuant to the terms hereof, within 180 days following such approval, thisAgreement shall be terminable by CBL upon delivery to TKT by CBL of writtennotice of termination.  The term of thisAgreement may be extended by mutual written consent of both parties.

 

**10.02      Termination.**  This Agreement may be terminated by eitherparty, in the event that the other party (a) files or has filed against it apetition under the Bankruptcy Act, makes an

 

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assignment for the benefit of creditors, has a receiver appointed forit or a substantial part of its assets, or otherwise takes advantage of anystatute or law designed for relief of debtors or (b) fails to perform orotherwise breaches any of its obligations hereunder, if, following the givingof notice by the terminating party of its intent to terminate and stating thegrounds therefor, the party receiving such notice shall not have cured thefailure or breach within thirty (30) days. In no event, however, shall such notice or intention to terminate bedeemed to waive any rights to damages or any other remedy which the partygiving notice of breach may have as a consequence of such failure or breach.

 

**10.03      Obligations and Duties Upon Termination orExpiration.**  Ifthis Agreement expires or is terminated pursuant to Section 10.02, both partiesshall be released from all obligations and duties imposed or assumed hereunderto the extent so terminated, except as expressly provided to the contrary inthis Agreement.  Upon termination, both partiesshall cease any further use of, and promptly return any, confidentialinformation disclosed to the receiving party by the other party.  Termination of this Agreement, for whateverreason, shall not affect the obligation of either party to make any paymentsfor which it is liable prior to or upon such termination.  Upon termination of this Agreement, TKTshall purchase from CBL, at CBL’s cost, any Materials purchased for the Productwhich CBL has reasonably purchased or ordered (which order cannot be canceled)based upon TKT’s forecast.  CBL shallimmediately ship such materials to TKT in accordance with TKT’s instructions,provided that TKT has given reasonable assurance of payment for such items.

 

**ARTICLEXI**

**MISCELLANEOUS**

 

**11.01      Exclusive Rights.**  TKT and its Affiliates will purchase [**]%of their annual worldwide requirements for the Product exclusively from CBLpursuant to the terms hereof each year and for so long as this Agreementremains in effect.  TKT and itsAffiliates will be relieved of this obligation in any year, in the event thatfailure to purchase [**]% of their annual worldwide requirements is due toeither CBL’s (i) failure to accept a valid purchase order, (ii) late deliveryof Product, or (iii) delivery of Product not meeting the Specifications.

 

**11.02      Independent Contractor.**  CBL shall at all times during the term ofthis Agreement be an independent contractor, maintaining sole and exclusivecontrol over its personnel and operation. It is understood that all work performed by CBL shall meetspecifications set forth in this Agreement, and the detailed manner and methodof doing the same shall be under the control of CBL.  At no time will either CBL or TKT hold itself out to be theagent, employee, lessee, sublessee, partner, or joint venturer of the other,and it is further understood and agreed between the parties that the full andexclusive relationship between them is that of an independent contractor.  Nothing in this Agreement shall be construedto create any agency, employment, partnership, joint venture or similarrelationship between the parties other than that of an independentcontractor.  Neither party shall haveany right or authority whatsoever to incur any liability or obligation (expressor implied) or otherwise act in any manner in the name or on the behalf of theother, or to make any promise, warranty or representation binding on theother.  CBL and TKT agree not to use orrefer to the other without prior written permission, in any public statements,whether oral or written, related to this Agreement.  Furthermore, CBL and TKT both agree not to employ or solicit foremployment or

 

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as an independent contractor any employee of either party during theterm of this Agreement and for a period of two (2) years thereafter.

 

**11.03      Insurance; Liability to Third Persons.**  CBL and TKT, each at their own expense,shall obtain and thereafter maintain workers’ compensation and comprehensivegeneral liability (bodily injury and property damage) insurance, with respectto performance under this Agreement. Each party shall give the other or its representative immediately noticeof any suit or action filed, or prompt notice of any claim made, against themarising out of the performance of this Agreement.

 

**11.04      Product Liability.**  TKT and CBL each agree at its own expense tomaintain Product Liability insurance coverage of at least $2.0 million.  TKT and CBL will provide a Certificate ofInsurance to the other upon request, and such coverage will remain in effectindefinitely and so long as either party has product liability exposure for anyProduct manufactured for TKT.  If suchProduct Liability insurance is underwritten on a “claims made” basis, TKT andCBL agree that any change in underwriters during the term of this Agreementwill require the purchase of “prior acts” coverage to ensure that coverage willbe continuous throughout the term of this Agreement.

 

**11.05      Governing Law.**  This Agreement shall be construed, and legalrelations between the parties hereto shall be determined, in accordance withthe laws of the State of Maryland applicable to contracts solely executed andwholly to be performed within the State of Maryland without giving effect tothe principles of conflicts of laws.

 

**11.06      Arbitration.**  Any controversy or dispute by and betweenthe parties hereto or any of their Affiliates arising out of this Agreementwhich is not resolved in good faith by the parties within sixty (60) days offirst becoming known to both parties, except with respect to resort to remediesof injunction or other court order, shall be submitted to binding arbitrationin accordance with the Commercial Arbitration Rules then pertaining of theAmerican Arbitration Association, and judgment upon the award rendered therebymay be entered in any court having jurisdiction thereof.  The place for arbitration shall be the cityof the company not bringing the request for arbitration.  The Parties to this contract shall select anarbitrator based on mutual agreement. Nothing in this Agreement shall be construed or interpreted as grantingthe arbitrators the power to award punitive damages as part of any awardrendered relating to this Agreement or the transactions contemplatedhereby.  The costs and expenses of sucharbitration shall be shared equally by the parties.

 

**11.07      Notice.**  All notices or communication required orpermitted to be given by either party hereunder shall be deemed sufficientlygiven if mailed by registered mail or certified mail return receipt requestedor sent by overnight courier return receipt requested, such as Federal Express,to the other party at its respective address set forth below or to such otheraddress as one party shall give notice of to the other from time to timehereunder.  Mailed notices shall bedeemed to be received on the third business day following the date ofmailing.  Notices sent by overnightcourier shall be deemed received the following business day.

 

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| If to TKT:      | Transkaryotic Therapies, Inc.,  195 Albany Street  Cambridge, MA 02139  Attn:  President and CEO  Tel:  617-349-0200  Fax:  617-491-7903             |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |                                                                                                                                                                |
| With a copy to: | Hale and Dorr, LLP  60 State Street  Boston, MA 02109  Attn:  Steven D. Singer  Tel:  617-526-6000  Fax:  617-526-5000                               |
|            |                                                                                                                                                                |
| If to CBL:      | Chesapeake Biological Laboratories, Inc.  1111 South Paca Street  Baltimore, MD 21230-2591  Attn:  President  Tel:  410-843-5000  Fax:  410-843-4414 |

 

**11.08      Compliance with All Laws.**  In all activities undertaken pursuant tothis Agreement, both CBL and TKT covenant and agree that each will in allmaterial respects comply with such Federal, state and local laws and statutes,as may be in effect at the time of performance and all valid rules, regulationsand orders thereof regulating such activities.

 

**11.09      Successors and Assigns.**  CBL shall not assign this Agreement (or anyschedule hereto) without the prior written consent of TKT, except that CBLshall be permitted to assign its rights and obligation hereunder with suchconsent to (i) one or more of its Affiliates or (ii) the purchaser of all orsubstantially all of its assets, through merger, consolidation orotherwise.  TKT may assign thisAgreement upon (x) providing prior written notice to CBL; and (y) causing theassignee to acknowledge, in writing, that it will be bound by the terms andconditions of this Agreement.

 

**11.10      No Waivers; Severability.**  No waiver of any breach of this Agreementshall constitute a waiver of any other breach of the same or other provision ofthis Agreement, and no waiver shall be effective unless made in writing.  Any provision hereof prohibited by orunenforceable under any applicable law of any jurisdiction shall as to suchjurisdiction be deemed ineffective and deleted herefrom without affecting anyother provision of this Agreement.  Itis the desire of the parties hereto that this Agreement be enforced to themaximum extent permitted by law, and should any provision contained herein beheld by any governmental agency or court of competent jurisdiction to be void,illegal and unenforceable, the parties shall negotiate in good faith for asubstitute term or provision which carries out the original intent of theparties.  If the parties cannot reachagreement upon such a substitute term or provision within sixty (60) days afterthe original term or provision is held void, illegal or unenforceable, then thematter shall be settled by binding arbitration in accordance with Section11.06.

 

**11.11      Entire Agreement; Amendment.**  TKT and CBL acknowledge that they have readthis entire Agreement and that this Agreement, including the attached Exhibitsconstitutes

 

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the entire understanding and contract between the parties hereto andsupersedes any and all prior or contemporaneous oral or written communicationswith respect to the subject matter hereof, all of which communications aremerged herein.  It is expresslyunderstood and agreed that this Agreement shall not be modified, amended or inany way altered except by an instrument in writing signed by both of theparties hereto.

 

**11.12      Delays or Omissions.**  Except as expressly provided herein, nodelay or omission to exercise any right, power or remedy accruing to any partyhereto, shall impair any such right, power or remedy to such party nor shall itbe construed to be a waiver of any such breach or default, or an acquiescencetherein, or in any similar breach or default be deemed a waiver of any otherbreach or default theretofore or thereafter occurring.  Any waiver, permit, consent or approval ofany kind or character on the part of any party of any breach or default underthis Agreement, or any waiver on the part of any party of any provisions orconditions of this Agreement, must be in writing and shall be effective only tothe extent specifically set forth in such writing.  All remedies either under this Agreement or by law or otherwiseafforded to any party, shall be cumulative and not alternative.

 

**11.13      Force Majeure.**  If either party fails to fulfill its obligationshereunder (other than an obligation for the payment of money), when suchfailure is due to an act of God, or other circumstances beyond its reasonablecontrol, including but not limited to fire, flood, civil commotion, riot, war(declared and undeclared), revolution, action by government including delays inobtaining governmental approvals or embargoes, then said failure shall beexcused for the duration of such event and for such a time thereafter as isreasonable to enable the parties to resume performance under this Agreement.

 

**11.14      Further Assurances.**  Each party shall, at any time, and from totime, prior to or after the effective date of this Agreement, at reasonablerequest of the other party, execute and deliver to the other such instrumentsand documents and shall take such actions as may be required to moreeffectively carry out the terms of this Agreement.

 

**11.15      Survival.**  All representations, warranties, covenantsand agreements made herein and which by their express terms or by implicationare to be performed after the execution and/or termination hereof, or areprospective in nature, shall survive such execution and/or termination, as thecase may be.  Specifically Sections5.03, 5.05, 10.03, and Article IX shall survive such termination and ArticlesVI, VII, and XI shall survive for so long as any Product produced by CBL forTKT remains within its expiration dating.

 

**11.16      No Third Party Beneficiaries.**  Nothing in this Agreement shall be construedas giving any person, firm, corporation or other entity, other than the partieshereto and their successors and permitted assigns, any right, remedy or claimunder or in respect of this Agreement or any provision hereof.

 

**11.17      Headings.**  Section headings are for convenientreference and not a part of this Agreement. All Exhibits are incorporated herein by this reference.

 

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**11.18      Counterparts.**  This Agreement may be executed incounterparts, each of which shall be deemed an original and all of which whentaken together shall be deemed but one instrument.

 

**11.19      No Rights.**  No rights or licenses with respect to theProduct or any of either party’s intellectual property rights and granted ordeemed granted hereunder or in connection herewith, other than those rightsexpressly granted in this Agreement.

 

**11.20      Disclosure.**  Except as TKT may be required by law orregulation, neither party shall disclose the name of the other party, theidentity of the Product or any information with respect thereto, the existenceof this Agreement or the terms and provisions of this Agreement without theprior written approval to the other party. Neither party shall use the name of the other party in any publicity oradvertising without the other party’s prior written consent.  If CBL is required in accordance with SEC orother relevant governmental regulations to disclose TKT’s name, the existenceof this Agreement or the terms and provisions of this Agreement, CBL shall (i) giveTKT prior written notice of such disclosure, and (ii) assist TKT in any effortsto prevent or limit such disclosure including without limitation seekingconfidential treatment of such information.

 

IN WITNESS WHEREOF, this Agreement shall take effectas of the date first written above when it has been executed below by the dulyauthorized representatives of the parties.

 

 
| CHESAPEAKE BIOLOGIC LABORATORIES, INC. |                                                                        |
|----------------------------------------|-----------------------------------------------------------------------------|
|                                   |                                                                        |
|                                   |                                                                        |
| By:                                    |         /s/ Thomas  P. Rice    |   |
|                                   | Title:   Thomas P. Rice, President & CEO                           |   |
|                                   |                                                                        |
|                                   |                                                                        |
| TRANSKARYOTIC THERAPIES, INC.          |                                                                        |
|                                   |                                                                        |
|                                   |                                                                        |
| By:                                    |         /s/ Richard  F. Seldon |   |
|                                   | Title:   Richard F. Selden, President & CEO                        |   |

 

Exhibits:

Exhibit A:  Project Summary.

Exhibit B: Validations/Qualifications.

Exhibit C:  Price.

 

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**EXHIBITA**

 

**PROJECTSUMMARY**

 

 

 

CONFIDENTIAL

 

 

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**TRANSKARYOTICTHERAPIES, INC.**

**PROJECTSUMMARY**

 

Transkaryotic Therapies, Inc. (TKT) desires Chesapeake BiologicalLaboratories, Inc. (CBL) to formulate and aseptically fill, package and labelfor clinical and commercial use the product known as (gene activated)GA-GAL.  The active ingredient isα-Galactosidase A, an acid hydrolase which specifically cleaves terminalα-linked galactose residues from glycosphingolipid ceramide trihexoside(CTH).  A

 

The Project will consist of the following parts.

 

1.        ClinicalManufacturing Phase

a.         Technology [**]

b.         Technology [**].

c.         Acquisition and testing of [**].

d.         Preparation of [**].

e.         Production of [**].

 

2.        ValidationPhase

a.         Execution of [**].

b.         Preparation of [**].

 

3.        ConsistencyLot Manufacturing

a.         Production of [**]Production of [**]

b.         Assist TKT in [**]

 

4.             CommercialManufacturing (requirements to be determined)

 

*Contact at TKT is Bill Fallon: Phone (617) 349-0203  Fax (617)491-7903

Program Manager at TKT is Suzanne Bruhn:  Phone (617) 503-0394  Fax(617) 491-7903

 

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**Overview of Formulation and FillProcesses**

 

Following is an outline of the formulation, filtration, asepticfilling, QC testing, labeling, and packaging to be performed:

 

1.         TKT will supply the active pharmaceutical ingredient (API)and text for the vial label, unit carton and package insert.

2.         CBL will supply all equipment, chemicals, and materialsrequired to produce and test the product.

3.         All receipt, in-process and certain release* testing will beperformed by CBL.

4.         API will be received as a frozen bulk in 2 L PETG bottlesfilled to ~ 1 L.

5.         Samples of API will be tested per receipt testingrequirements.

6.         API will be thawed, formulated, filtered and asepticallyfilled into 5 cc vials (3.5 cc label claim), stoppered and crimped.

7.         Drug product will be stored at 2 - 8°C.

8.         Vials containing drug product will be visually inspected, QCtested, labeled and packaged appropriately.

 

A Certificate of Analysis and any other documentation required will besupplied along with the API to CBL prior to the scheduled date of manufacture.

 

Each container of API will be sealed with tamper evident tape or deviceand labeled with the gross and net weight and temperature storagecondition.  Each shipping container ofAPI should be labeled as “Store @-20°C. Upon arrival, CBL will inspect for tampering, weigh each container andreceive per CBL SOP’s.  The API willthen be stored until required for manufacture.

 

At the completion of all work for each lot, CBL will provide TKT with acopy of the completed Batch Production record including a Certificate ofAnalysis.

 

 

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**TESTINGREQUIREMENTS**

 

**CBLTesting of API Upon Receipt**

 
| **Volume  Required** |   | **Delivered  To** |   | **Assay** |   | **Specification** |   |
|----------------------|--------|-------------------|--------|-----------|--------|-------------------|--------|
| [**]                 |   | CBL QC-Lab        |   | [**]      |   | [**]              |   |
| [**]                 |   | CBL QC-Lab        |   | [**]      |   | [**]              |   |

 

*may be performedby TKT if technical transfers are not complete

 

**In-ProcessTesting of Formulated Bulk**

 
| **PRE-FILTRATION/POST-QS** |   |              |   |      |   |              |   |
|----------------------------|--------|-------------------|--------|-----------|--------|-------------------|--------|
| **#  Samples/Vol**         |   | **Delivered  To** |   | **Assay** |   | **Specification** |   |
| [**]                       |   | CBL-Micro         |   | [**]      |   | [**]              |   |
| [**]                       |   | CBL QC-Lab        |   | [**]      |   | [**]              |   |
|                       |   | CBL-Pharm Tech    |   | [**]      |   | [**]              |   |

 
| **POST-FILTRATION**  |   |              |   |      |   |              |   |
|----------------------|--------|-------------------|--------|-----------|--------|-------------------|--------|
| **Volume  Required** |   | **Delivered  To** |   | **Assay** |   | **Specification** |   |
| [**]                 |   | CBL-Micro         |   | [**]      |   | [**]              |   |
| [**]                 |   | CBL-Pharm Tech    |   | [**]      |   | [**]              |   |

 

**FinalDrug Product Testing**

 
| **#  Samples/Vol** |   | **Delivered  To** |   | **Assay** |   | **Specification** |   |
|--------------------|--------|-------------------|--------|-----------|--------|-------------------|--------|
| [**]               |   | CBL-Micro-Lab     |   | [**]      |   | [**]              |   |
| [**]               |   | CBL Micro-Lab     |   | [**]      |   | [**]              |   |
| [**]               |   | CBL QC-Lab        |   | [**]      |   | [**]              |   |
| [**]               |   | CBL QC-Lab        |   | [**]      |   | [**]              |   |

 

 

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**DETAILEDDESCRIPTION OF FORMULATION, ASEPTIC FILLING, LABELING AND PACKAGING**

 

**Overview**

 

**Receipt of Bulk Drug Substance**

 

Bulk material will be delivered to CBL at least [**] prior toformulation.  Upon receipt, the bulkwill be stored at [**].  A sample sentwith the bulk will be tested as specified in testing requirements.  All batch record steps are performed inaccordance with Good Manufacturing Practices.

 

**Preparation of Diluent**

 

GA-GAL diluent is prepared within [**] of use by mixing appropriatequantities of [**].  The composition ofGA-GAL diluent is listed in Table 4.4-1.

 

**Table 4.4-1.  Composition of GA-GAL Diluent (per Liter)**

 
| **Component** |   | **TKT Part Number** |   | **Quantity** |   |
|---------------|--------|---------------------|--------|--------------|--------|
| [**]          |   | [**]                |   | [**]         |   |
| [**]          |   | [**]                |   | [**]         |   |
| [**]          |   | [**]                |   | [**]         |   |
| [**]          |   | [**]                |   | [**]         |   |

 

The diluent is filtered [**] until required.  All filters are subjected to post-filtrationintegrity testing.

 

**Formulation of****α-GalactosidaseA for Injection, by CBL**

 

The formulation of the Product will be performed inClass [**] conditions.

 

Only [**]% of the purified bulk will be initially usedto ensure that material is available for adjustment in the event that theformulated bulk is too dilute.

 

Based on the volume and concentration of the bulk andthe desired concentration of GA-GAL in the final formulation, the volume ofGA-GAL diluent required for addition is determined.  An appropriate amount of diluent is added to [**]% of the targetfinal volume.  Then [**] is added, thesolution is pH adjusted and finally Q.C. tested for concentration and pH.

 

**Sterile Filtration**

 

The formulated bulk drug product is sterile filteredthrough [**]  Filtration is conducted[**] and then the filter(s) is subjected [**]. All filter integrity testing must be completed with acceptable resultsbefore the material is released for further processing.  CBL maintains a stringent accountabilityrecord on all steps of the filtration process.

 

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**Aseptic Filling and Sealing**

 

Filling is conducted in a Class [**] room by trainedtechnicians using validated processes for low volume fills.  The filling process is performed using an[**].  The weight of fill per vial isset and checked at the beginning of the fill. Additional weight checks are usually conducted at an interval of [**]and on the last vial filled.  Weightcheck vials are identified, isolated as weight checks and noted in theaccountability records.

 

During the filling process each vial is purged[**].  Each vial is then [**].  Upon completion of the fill, a completeproduct accountability is performed for the filling process.  The filled units in labeled trays aretransferred to the appropriate storage conditions (2-8°C) awaiting furtherprocessing.

 

**Inspection**

 

The batch record includes a Bill of Materials,Signature Log, and Final Product Accountability.  A 100% visual inspection is conducted using a black and whitebackground.  Reject samples areclassified by CBL.  Other defects arealso isolated, for example, improper crimps, container flaws, and stopperdefects.  Approved inspected units arethen made available to the labeling group, who are responsible for labelaccountability, proper labeling, and packaging.

 

**Storage**

 

Upon completion of inspection, all passed units arequarantined and stored at 2-8°C, awaiting final release.

 

**Unit Labeling**

 

The drug product vials will be labeled as follows:

 

α-GalactosidaseA 1 mg/mL Sterile

3.5 mL Lot No.:  #####

Caution:  NewDrug - Limited by Federal Law to Investigational Use

Store at 2-8°C

Transkaryotic Therapies Inc.

195 Albany Street

Cambridge, MA 02139 USA

 

Any changes in labeling text as may occur from time totime, must be sent to the attention of CBL a minimum of 6 weeks prior to theanticipated date of manufacture.

 

**Packaging**

 

GA-GAL drug product is [**].  Vials are [**].

 

The α-Gaacosidase A drug product will be bulkpackaged and shipped to TKT in a temperature-controlled, monitoredcontainer.  If more than one shippercontainer is necessary,

 

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each container will contain a temperature monitor.  The shipping containers will be labeled asfollows:

 

α-Galactosidase A Sterile

Lot no. ####

Quantity enclosed: ## vials

Caution:  NewDrug - Limited by Federal Law to Investigational Use

Single use vials

Refer to Clinical Protocol and Investigator’s Brochurefor administration directions

Store at 2-8°C

 

Transkaryotic Therapies Inc.

195 Albany Street

Cambridge, MA 02139 USA

 

Upon commercialization, the labeling and packagingwill be changed from bulk.  Allnecessary text and specifications will be supplied by TKT prior to that time.

 

**RetainSamples**

 

CBL holds retain samples for commercial products.  Retain samples will be invoiced as regularproduct, but held at CBL under label storage conditions.  The number of retains will be determined bythe amount of finished product testing required.  Usual practice is to retain sufficient samples to perform all ofthe testing two times.  The retainedsamples will be held for one year past the expiration date of the lot and CBLwill properly dispose of such samples for TKT, or return to TKT upon request.

 

**StabilitySamples**

 

Stability in its entirety will be the responsibilityof TKT.  Any samples held by CBL forstability will be subject to a separate agreement.

 

**Shipping**

 

Final Product to be shipped overnight to:

 

Transkaryotic Therapies, Inc.195 Albany StreetCambridge MA 02139

 

or another designated site as determined by TKT.

 

**Manufacturing Batch Record Summary**

 

All operations are governed by a CBL batch recorddeveloped exclusively for TKT’s GA-GAL product.  The approved batch record is assigned a TKT project number and aunique CBL lot number.  These documentsdetail the preparation of materials (vials, stoppers, closures,

 

7

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processing materials, and equipment) used in the manufacturingprocess.  The batch record has beenapproved by Quality Assurance and Manufacturing at TKT along with appropriateapprovals from CBL.  CBL staff has theresponsibility to perform the aseptic processing and related processing to theinstructions detailed in the approved Batch Records.  CBL has provided TKT the opportunity to review validation dataand reports that reflect the processing of components that have intimatecontact with the product.

 

Reference to the environmental monitoring andpersonnel monitoring is noted along with the actual data.  Before proceeding with manufacturingoperations, the operation room conditions are verified for temperature andpressure.  CBL performs a [**] prior tofiltration and [**] prior to filling.

 

The batch record is designed to include all qualitycontrol testing performed at CBL.  Thebatch record references an SOP to the central sample receiving, in-processingtesting (pre and post filtration) and final product testing.  The documentation references an SOP to adetailed sampling plan for [**].  Thefinal product testing section relates to tests conducted at CBL and othercontracted testing facilities approved by TKT. Final [**] testing at CBL includes [**].  A final Certificate of Analysis is presented along with finalreview and signature by CBL Quality Assurance.

 

**Batch Record Availability**

 

At the completion of all work for each lot, CBL willprovide Client with a copy of the completed Batch Production Record including aCertificate of Analysis.  The “batchrecord” is normally complete within [**] after a fill date unless otherwiseagreed upon previously.  CBL will workin good faith to reduce the time needed for completion of the batch record.

 

**Disposal or Disposition of Product**

 

Remaining bulk product will be refrozen and allinspection rejects will be stored refrigerated.  All will be returned to the client.

 

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**TranskaryoticTherapies, Inc.**

 

 

 

 

 

**Chart**

 

 

 

 

 

 

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**EXHIBITB**

 

**VALIDATIONPROCESSES**

 

CONFIDENTIAL

 

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**VALIDATIONPROCESS**

 

**USP Testing of Raw Materials (Europe,Japan and USP)**

 

Chemicals purchased with the “USP” or “NF” grade aresuitable for use in Pharmaceutical products. Under cGMP they need to undergo only identity testing in addition toestablishing the reliability of the suppliers analyses at appropriate intervalsin order to be released for use in a regulated product.  It is sometimes misunderstood by clientsthat other chemical grades, such as ACS or Aldrich gold, which are perceived assuperior products by the criteria of purity and strength, are not approved foruse as parenterals in humans.  For CBLto use non USP/NF raw materials, it is necessary to perform full USP testing onthe chemical, thereby certifying that it meets the requirements of USP/NF.

 

For those chemicals that are not compendial (USPharmacopoeia), appropriate tests must be identified to assess identity;purity, quality, and strength.  At anappropriate time, that testing must be validated according to guidelines from“Validation of Compendial Assays”  USPXXIII <1225>.  For concentration(strength) the assay validations are needed for CBL to guarantee formulationresults.  For other assays, thevalidation can wait until phase III production, or until it is needed for aguarantee of conformance to specifications.

 

**Assay Tech Transfer[Qualification/Validation]**

 

Evaluation of any Compendial or client supplied assaymust be made prior to CBL accepting responsibility for its quantitativeuse.  Compendial assays are assumed tobe fully validated and require only a demonstration of their applicability tothe analyte as formulated. Client-supplied assays, for which full validation exists, may also beused upon demonstration of congruency, usually involving the comparison of dataon a single set of samples which have been assayed in both the client’s andCBL’s laboratories.  Non-validatedassays for use in early stage (up to early Phase II) testing will also requirea transfer of technology with direct comparison of samples betweenlaboratories.  Technology transfers asdescribed above will require demonstration of accuracy, precision, ruggednessand linearity.  Later stages of the drugapproval process require validated assays. If called upon to validate an assay, CBL will follow the guidelines ofUSP XXIII <1225>.  Assays for usein stability programs must be validated regardless of stage of drug developmentand must be shown to be stability indicating.

 

Assay tech transfers will be required for [**]

** **

**Bacteriostasis / Fungistasis (forProduct)**

 

B/F is required in order to establish the potential ofthe formulation to interfere with sterility assays.  B/F testing can be performed on developmental batches as long asthey are prepared with GNP material which meets specifications for incoming rawmaterial and have the same formulation as will the GNP batches.

 

**Enhancement / Inhibition (forProduct)**

 

E/I evaluates the potential for interference by theformulation with the assay used to measure endotoxin.  A preliminary E/I determination will be required to allowquantitation of endotoxin in developmental batches.  Full validation of E/I is required once preparation of GNPbatches begins.  Validation involvesperforming E/I on three consecutive batches.

 

 

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**Filter Function/Compatibility Study**

 

All materials have some affinity for filtermedia.  In some instances, that affinityis sufficient to cause concern about the ability to filter product and maintainconcentration through the process.  Asuccessful study is one in which no significant differences are observed whencomparing the drug product pre and post filtration.  These results help to assure the concentration of product afterfiltration.  This is particularly aproblem with biological products and products with very low concentrations.

 

**Cleaning Recovery Study**

 

Contract manufacturers must be able to assure themselves,their clients, and the FDA that no significant chance exists for crosscontamination to occur among products sharing equipment which may conceivablycontact product.  While the interior ofthe lyophilizer (for example) is certainly not designed to be a product contactsurface, the possibility that product may reach the lyophilizes shelves and bedried down on them does present a potential for contamination from a dislodgedfragment of some previous client’s product. CBL requires demonstration that products are easily removed from glassor stainless steel surfaces (as appropriate) by the routine cleaning methodscalled for in CBL cleaning procedures. The cleaning study involves spotting product onto a stainless steelcoupon or tray and simulating the method for cleaning the inside of thelyophilizer.  Recovery of the productfrom a stainless steel surface and evaluation of cleaning are monitored by TOC(Total Organic Carbon) analysis which, while lacking the specificity of methodssuch as BPLC, compensates by virtue of its sensitivity.  The cleaning study is expected todemonstrate removal of product from the steel surface.  While a negative result is not expected,such a result would require additional evaluation of the data obtained andclose consultation with the Client regarding the ability of CBL to proceed.

 

**Equipment Cleaning Validation**

 

*Three successivesuccessful demonstrations.*

 

To validate the ability of CBL to prevent crosscontamination from Client product, three successive successful demonstrationsof effective cleaning of product contact equipment will be required.  Collection of each data set will occur afteran actual manufacturing event with GMP product.  Technicians will sample predetermined sites within the equipmentfor TOC.  The most common equipment forCleaning Validation are tanks and Pump contact parts.  CBL attempts to use as much virgin equipment as possible in orderto reduce the need for rigorous and extensive cleaning validation.

 

**Product Hold Time Studies:**

 

The most efficient way to schedule formulation andfill is to do the formulation on the day prior to the fill.  A holding study allows CBL to demonstratethat the product will not be adversely affected by holding it for 12-48 hoursat cold room conditions with or without an initial filtration to lowerbioburden.  Bench scale batches will beformulated, treated and stored according to a standard protocol.  Potency and other properties which might be,affected by storage will then be analyzed.

 

 

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**Filling Machine Fill VolumeQualification**

 

CBL will perform a fill volume study with the actualproduct (or placebo) to assure machine process capability.  This study will set the target volume forthe fill using volume specifications or label data for the product.  Typically, a minimum alert level is set at +3sigma from the target weight for the fill volume.  The specification is then set slightly outside of those alertlevels.

 

**Filter Extractables Study**

 

This is an FDA requirement for phase III.  Product is filtered and the effluent isassayed for known extractable substances. For a purely aqueous product, it is normally not of any consequence.  It is typically performed by the filtermanufacturer.

 

**Microbial Retention Study**

 

Subcontracted to Millipore.  Laboratory testing is conducted with specific pharmaceuticalbiopharmaceutical product using a standard protocol using B. diminuta grown insaline lactose broth.  These experimentsare run at room temperature for less than 24 hours on 47 mm disk membranes withless than 20 liters of solution. Microbial Retention Validation is performed to validate microbialretention of sterilizing-grade membrane filters with specific pharmaceuticalpreparation.  Microbial retentiontesting was recommended by the US Food and Drug Administration’s 1987“Guideline on Sterile Drug Products Produced by Aseptic Processing” to validatesterilizing-grade membrane filter performance. Under worst case process conditions, the testing determines the abilityof a sterilizing-grade filter using scaled-down processing conditions to retaina minimum challenge of 10 cells of B. diminuta per cm2 of filter area.  A sample of one drug product lot isevaluated using filters from three manufacturing lots.  Initial testing determines whether thesample drug product inhibits the microbial challenge prior to conducting themicrobial retention studies.  Thisinitial testing will determine the mode of the final testing, ie., whether itis performed in the presence or absence of the product.

 

**Validation Package for BLA**

 

In support of product approval applications, CBLmaintains Master Files at FDA for both its Seton and Camden facilities.  Clients may request letters authorizing FDAto review CBL’s file in support of their regulatory application (e.g., NDA,ANDA, BLA).

 

The file contains pertinent information on buildingand facilities, overall manufacturing operation flow patterns, equipmentlocations, component sterilization validations (e.g. oven and autoclave loads),action concerning product when media fills fail, details of the environmentalmonitoring program (viables and non-viables), initial vial and stopper washingvalidations and utility system validations such as production of water forinjection and distribution, clean steam production and distribution, and HVACsystems validations.

 

Aseptic processing validations are supplied as asummary sheet outlining CBL media fill history.

 

 

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Finally, the process validation package supplied forthe BLA will contain the prospective protocol and the results of the enhancedtesting program from the (recommended) three at scale conformance lots.  This enhanced testing will be used todemonstrate control of critical manufacturing operations such as mixinguniformity during formulation as well as conformance to productionspecifications throughout the filling process.

 

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**EXHIBITC**

 

**PRICING& PAYMENT**

**SCHEDULE**

 

 

CONFIDENTIAL

 

 

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**PRICINGAND PAYMENT SCHEDULE**

 

**I**                                            **Validation Package**

 
| **Title** |   | **Deliverable**          |   | **Price**          |   |
|-----------|--------|--------------------------|--------|--------------------|--------|
| [**]      |   | Testing Standards        |   | $[**] per new test |   |
| [**]      |   | Validation Report Report |   |               |   |
|      |   | Report                   |   | $[**]              |   |
|      |   | Report                   |   | $[**]              |   |
| [**]      |   | Report                   |   | $[**]              |   |
| [**]      |   | Report                   |   | $[**]              |   |
| [**]      |   | Report                   |   | $[**]              |   |
| [**]      |   | Report                   |   | $[**]              |   |
| [**]      |   | Report                   |   | $[**]              |   |
| [**]      |   | External Report          |   | $[**]              |   |
| [**]      |   | Report                   |   | $[**]              |   |
| [**]      |   | Reference Letter         |   | $[**]              |   |
| [**]      |   | External Report          |   | $[**]              |   |
| [**]      |   | Report                   |   | $[**]              |   |

 

(1) This charge will not apply if the filter function study isperformed in conjunction with the process validation, listed here as“Validation Package for BLA”.

 

(2) CBL has bracketing media fills that cover the followingvial/stopper/crimp combination

 

[**].

 

If this or any combination is used for which CBL hasexisting media fills and change parts, then no special media fills will beperformed and there will be no media fill charge.

 

(3) If CBL bracketing media fills are used to support a client’sapplication then this charge will apply.

 

**II**                                        **Lot Price / Unit Price* (Includes packaging, FOB CBL’sdock)**

 

For lot sizes less than [**] units                       $[**] per unit

For lot sizes of [**] units or more                     $[**] per unit [**]

 

*Price includes an allowance of $[**]/unit [**].  Costs in excess of the allowance will becharged at [**] %.

 

**III****                                    MinimumPurchase Orders**

 

The minimum annual purchase order requirement is [**].

 

 

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**IV**                                   **Basis for Price Increase**

 

Price per lot is comprised of [**].  Following FDA approval of CBL as themanufacturer, and for the first year the prices will hold.  Thereafter the price may be increasedannually based on (i) actual increases in packaging component cost (syringes,stoppers, crimps, labels inserts, cartons), (ii) non-component costs may beincreased based upon a weighted average factor using both the Bureau of LaborStatistics, employment cost index series ID ECU 19002A, (ECU and the ConsumerPrice Index (CPI).  [**]% of the non-componentcost of the price per lot will be subject to increases in the ECU.  The remaining [**]% of the non-componentcost price per lot will be subject to increase in the CPI adjusted annually.

 

 

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