Document:

Revised Research and Development Proposal

 Exhibit 10.1 
 

 
                     6309 Highway 187 • Anderson, South Carolina 29625 • Telephone 864-646-8544 • Fax
864-646-8547                     
 R&D Labs: 51 Technology Drive • Anderson, South Carolina 29625 • Telephone 864-328-0008 • Fax 864-328-0013 
 Absorbable Endoureteral Stent: 
 A Poly-Med, Inc., Revised R&D Proposal 
 Prepared for Valera Pharmaceuticals, Inc. 
 April 27, 2005 
 This document provides a 10-month R&D proposal that entails (A) Program Objectives; (B) Basic System
Design and Rationale; (C) R&D Strategy and Experimental Plans; (D) Major Milestones and Timing; (E) Proposed Budget and Disbursement Schedule; (F) Program Monitoring and Review; and (G) Intellectual Property Protection
and Licensing. 
 A. Objective - The objective of this proposal is to develop an absorbable/disintegratable endoureteral stent that retains at least
50 percent of its mechanical properties, remains functional for 4 to 8 weeks without causing blockage, and essentially exhibits no physical presence by 6 months at the application site. 
 B. Basic System Design and Rationale - Two basic designs will be explored at this phase of the study. One of these will be selected as the primary and the second will be treated as a back-up system. The first
design, D-1, is based on an absorbable/disintegratable endoureteral stent comprising a fiber-reinforced, multicomponent polymeric tube with elbow-like ends, as depicted in Figure 4 of Attachment 2. However, the I.D. of the stent, O.D. of the stent,
and O.D. of the applicator will be reduced to about 1, 3, and 4.7 mm, respectively. The I.D. of the corresponding applicator will be about 3.2 mm to allow a facile insertion and delivery of the stent. The end of the stent will be constructed to be
sufficiently resilient to allow its insertion and transport in a tubular applicator, with a plunger, and recover its original shape after extrusion therefrom. The components of the endosteal stent (E-stent) consist of a highly elastomeric,
water-swellable matrix reinforced with a rigid spring wherein (1) said spring comprising a multicomponent, high modulus, absorbable polymer; (2) the spring exhibiting a nominal diameter that is at least 10 percent less than that of the
ureter ID; (3) the elastomeric matrix component of the stent is made of a crosslinked (chemically or physically) absorbable copolymer that is asymmetrically placed to have more than 20 percent of its mass covering the outer surface of the
spring; and (4) the elastomeric matrix component is capable of swelling in the biological environment to result in at least a 10 percent increase in thickness and a highly compliant surface interfacing with the lumen of the ureter. 

The second design, D-2, is based on an absorbable/disintegratable E-stent comprising a fiber-reinforced polymeric multicomponent tube with similar composition to that
described above for D-1. However, the general shape of the E-stent will be similar to that design shown in Figure 6 of Attachment 2, with the exception of having (1) the central main component having an I.D. of the stent, and O.D. of the stent
about 1 and 3 mm, respectively and (2) the position-retaining ends being more tapered, inverted cones that are properly angled and shaped to be in line with the central tube, and when axially folded can be inserted into an applicator having an
I.D. of about 3.2 mm that allows a facile insertion and delivery of the E-stent. The corresponding O.D. of the applicator is expected to be about 4.7 mm. 
 In both designs, (1) the reinforcing fiber is made of highly drawn, spirally wound high modulus monofilament comprising a microcomposite, or molecular composite; (2) the matrix is made of pseudo- or 

			
	Valera Proposal	 	April 27, 2005

  
 
covalently crosslinked, highly compliant elastomer; and (3) at least one component of the reinforced stent is swellable in the biological environment.

 Both designs (1) are baaed on proprietary, FDA approvable materials, which are, in turn, made from safe monomers and intermediates; (2) call for
the use of a transient, amphiphilic, lubricous coating for applicator and/or the stent; and (3) provide stents that can undergo swelling during the first 24 hours after placement in the ureter. Both designs also (1) allow the insertion
into the biological site without requiring a forced expansion of the ureter; (2) permit an easy passage of stent and applicator by virtue of the transient coating; (3) permit timely expansion into a diameter that is slightly smaller than
that of the ureter I.D.; and (4) make it possible for the inserted stent to undergo slow swelling in the aqueous environment at pH 4-6 to increase the surface compliance, which minimizes the mechanical incompatibility associated with the
increase in the stent diameter and resistance to migrate, while permitting liquid transport in the space between the stent lumen of the ureter. Provisions will be made to include a radiopaque marker at the proper location of the E-stent. The
opacifier will be selected from the group represented by micronized barium sulfate, zirconium oxide, and basic bismuth carbonate, depending on the selected part of the E-stent where radiopacity is needed. The radiopaque part can be the entire spring
with the opacifier dispersed therein, or a thin circular disc adhering to the matrix covering the central tube, or the position-retaining ends. 
 C.
R&D Strategy and Experimental Plans - The strategy is based on (1) using safe, intermediate, easy-to-prepare, approvable, absorbable, crystalline, fiber-forming polymers that are processable into rigid/resilient, reinforcing
monofilaments, elastomeric matrix, and an amphiphilic surface coating capable of meeting the design and physical property requirements outlined in Section B; (2) preparing the stent applicator made of rigid, non-absorbable polymer; and
(3) developing an in vitro method for assessing the feasibility of the stent insertion and its expected functional performance. 
 In concert
with the basic design and R&D strategy, the experimental plans will consist of six (6) segments. 
 Segment I - Preparation of
Candidate Absorbable Polymers 
 This will consist primarily of the preparation and characterization of at least eight (8) polymeric
materials, a number of which can undergo physical and/or covalent crosslinking. 
 Segment II - Melt-processing of Absorbable Polymers

 A selected number of the polymers described in Segment I and certain melt-blends thereof will be melt-extruded and oriented into
monofilaments exhibiting desirable diameter for use in stent formation. The monofilaments will be characterized and their mechanical properties will be evaluated. 
 Segment III - Preparation of Amphiphilic, Non-ionic Coating and Surface Treatment of the Stents and Applicator 
 An absorbable amphiphilic coating will be prepared. The surface coating of the stent and applicator will be conducted by solution dipping followed by air drying. Optionally, the coating may contain an antimicrobial
agent. 
 Segment IV - Preparation of Candidate Composite Tubular Devices D-l and D-2 
 A typical method of producing the stents entails (1) winding the highly drawn monofilament onto a Teflon rod, a highly polished stainless steel rod,
or a Teflon-coated stainless steel rod with the desired outside diameter to yield the nominal internal diameter of the final device; (2) dip-coating the wound 

  

 2 

			
	Valera Proposal	 	April 27, 2005

  
 
monofilament with pseudo-crosslinkable segmented polymer or a curable polyaxial polymer that contains a free-radical initiator; (3) adjust the coating
thickness to provide the required outside diameter of the device after curing/drying; and (4) heating of the assembled composite to achieve matrix curing. 
 Segment V - Production and Pilot Testing of the E-stent Applicator Assembly 
 The applicator design is
based on (1) and flexible, non-absorbable catheter with an O.D. of about 4.7 mm and an I.D. that is mechanically compatible with the E-stent (D-l and D-2) O.D.s, and (2) a plunger with solid, cylindrical head having an O.D. matching the
E-stent O.D. and flexible, yet firm, guiding tail. The catheter will be chosen from commercially available, non-absorbable polymeric ones, which are known to be safe and biocompatible. Both components of the plunger can be made of stainless steel.
Alternatively, the plunger head can be made of a biocompatible, non-absorbable polymer, while the guiding tail can be made of a stainless steel wire. 
 The
selected applicator material will be pilot-tested with both types of the E-stents. This will typically entail (1) coating the external wall of the E-stent (D-1 and D-2) with an absorbable surfactant (to be selected from those noted in Section
C, Segment III); (2) adjust the shape of the position-retaining ends of the E-stent (i.e., bending those of D-l or radially compressing the cones of D-2); (3) inserting the E-stent into the distal end of the applicator; (4) coating
the outside wall of the applicator with an absorbable surfactant (from Section C, Segment III); placing the assembled device in a hermetically sealable foil pack (under dry nitrogen) that comprises a dry cellulose applicator holder and a solid
plunger (for discharging the device at the biological site); (6) sterilizing the E-stent and the applicator according to an accepted protocol; (7) removing the sterilized device and testing the sterility of components; and
(8) verifying the facile insertion and discharge of the E-stent. 
 Segment VI - In vitro Evaluation of the
Functional Performance of Candidate Devices 
 This will be conducted using two applicators with catheters having comparable outside
diameter to the lumen of a typical human ureter. Of the candidate devices tested, one will be selected from designs D-l and D-2 for animal evaluation, using a miniaturized device, in the subsequent phase of the project. 
 D. Major Milestones and Timing 
  

			
	 Segment
	  	Target Date for
Completion from the
Start (Months)
	 I & II
	  	4
	 III
	  	6
	 IV
	  	8
	 V & VI
	  	10

 E. Proposed Budget and Disbursement Schedule - The total main program budget (including material, labor and
overhead) is $110,000; $30,000 to be paid upon acceptance of the revised plans of the proposal and $20,000 at 4,6, 8, and 10 months. 
 F. Program
Monitoring and Review - Summary reports will be issued at the conclusion of the 4- and 8-month periods, which will be used for discussion during a teleconference. In-person review meetings will be conducted at the 6- and 10-month periods, using
interim and final reports. 
  

 3 

			
	Valera Proposal	 	April 27, 2005

  
 G. Intellectual Property Protection
and Licensing Agreement - A broad-based provisional patent application was filed prior to submitting the original proposal. A second provisional application, addressing specifically the device design, was filed in November 2004. Poly-Med will be
responsible for all United States and possibly PCT filings and maintenance of issued patents. At the conclusion of this phase of the program, Poly-Med and Valera Pharmaceuticals will complete a worldwide exclusive licensing agreement to use and sell
the endoureteral stent that will be manufactured in bulk quantities by Poly-Med and sold at an agreed-upon price to Valera Pharmaceuticals for packaging and marketing. The licensing agreement may be associated with a royalty of four percent (4 %).

  

					
	This R&D Proposal is accepted by:	 		 	
			
	Poly-Med, Inc.	 		 	Valera Pharmaceuticals, Inc.
			
	/s/ S.W. Shalaby	 		 	/s/ Matthew Rue
	Signature	 		 	Signature
			
	S.W. Shalaby	 		 	Matthew Rue
	Print name	 		 	Print name
			
	President and Director of R&D	 		 	VP Marketing
	Title	 		 	Title
			
	April 27, 2005	 		 	April 27, 2005
	Date	 		 	Date

  

 4Advanced Development and Pilot Production

 Exhibit 10.2 
 Absorbable Endoureteral Stent 
 Advanced Development and Pilot Production: 
 A 12-Month Program Agreement Outline 
 Prepared for Valera Pharmaceuticals, Inc. 
 Issued: March 24, 2006 
 Revised: April 10, 2006 
 This document entails
(1) background and specific aims of the 12-month program; (2) an outline of major experimental segments; (3) target dates for completion of program segments; (4) program monitoring and review, (5) program budget and
disbursement schedule; (6) licensing and manufacturing agreements; and (7) contingency plans. 
 I. Background and Specific Aims of the 12-Month
Program—This section provides an outline of the 12-month program consisting of two parts, which will be pursued simultaneously for the first 3-month period of the program. The first part is a 3-month fast-track advanced development on the
fast-absorbing EUB-Mk stent for which the exploratory studies were commenced on February 28, 2006. The specific aims of this part are (1) to develop the EUB-Mk stent to allow its use for the animal study (planned to commence by May 8,
2006), along with the moderately absorbing radiopaque EUB stent (as noted in the final report of March 23, 2006, and agreed upon during the March 10, 2006, joint meeting and action items of March 18, 2006), and to prepare reproducibly
using a validated process, the sterilized EUB and EUB-Mk stent needed for the animal studies; and (2) to validate the polymer synthesis, fibers processing (spinning, knitting, and coiling), lab-scale stent assembling process, and Et-O
sterilization/packaging , prepare SOPs thereof, and use these SOPs for preparing the stents for the animal studies. The second part of the program deals primarily with scale-up and pilot production which was initiated on March 13, 2006, and
will continue to February 27, 2007. The specific aims of the second segment are to (1) implement any changes in stent composition and design which are deemed necessary as per the results of the animal study; (2) develop needed
equipment for up-scaled assembly of the EUB and EUB-Mk stents; (3) validate the up-scaled assembling process for EUB and EUB-Mk and demonstrate equivalence to those assembled on a laboratory scale; (4) implement any needed changes of any
of the processes throughout the study; (5) purchase needed equipment for pilot production, complete the IQ/OQ/PQ for each newly installed piece of equipment for the initial production scheme; and (6) prepare stent on a pilot production
scale as per specifications. 
 II. Outline of Major Experimental Segments: 
 Segment One—This consists of (1) preparing selected EUB-Mk polymers and processing to 2-component stents (elastomeric film reinforced
with knitted monofilament); (2) selecting one composition for pursuing process validation of all steps leading to lab-scale assembling, packaging, and sterilization; (3) preparing the SOPs for all processes; and (4) preparing the
EUB-Mk stents needed for the animal study as per the respective SOPs. 
 Segment Two—This pertains to the 3-component EUB stent
(elastomeric film reinforced with a combination of a coiled monofilament and knitted multifilament yarns). The experimental plans required to date for this segment are the same as those described in items 2 and 4 of Segment One. 

 Segment Three—This consists of (1) preparation of tentative specifications for EUB and
EUB-Mk stents and use to release of devices geared for use in the animal studies; (2) shipment of packaged (using a Poly-Med prototype design) sterile stents to designated animal facilities; and (3) initiation of informal stability study
at 4, 25, and 50°C on packaged sets of both stents. 
 Segment Four – This deals with (1) developing in-house equipment
for mechanical winding and thermoforming the coil component of the EUB; (2) confirming the reproducibility of the coil preparation of item 1; (3) validating the coil preparation scheme and preparing an SOP therefor; and (4) assembling
a number of EUB stents using the coil made as per the SOP of item 3 and verifying equivalence to those based on the hand-wound coil of Segment Two. 
 Segment Five—This consists of (1) identifying critical composition, design, and package features as per the results of the animal studies (pilot and/or main); (2) implementing needed optimization at the respective
steps of the finished stent; and (3) determining that the implemented changes do not require repeating parts or all of the animal studies. 
 Segment Six—This deals with scale-up of all processes beyond polymer synthesis and spinning and entails (1) purchasing additional knitting equipment and verifying suitability for producing needed constructs;
(2) developing up-scaled, multiple film casting stations and verifying their suitability for use in stent assembling; (3) purchasing new Et-O sterilizers and validating their use for multiple station sterilization of stents;
(4) optimizing the primary packaging and purchasing up-scaled equipment and verifying their equivalence to those used in Segment Three; (5) purchasing and developing up-scaled packaging equipment and validating its use for producing
packaged devices; (6) developing a consistent packaging scheme; (7) purchasing needed labeling equipment and developing a consistent labeling and shipping scheme; (8) establishing a Q.C. system; and (9) supporting Valera
Pharmaceuticals’ efforts in securing regulatory approval. 
 Segment Seven—This is to (1) complete needed IQ/OQ/PQ of
newly purchased equipment; (2) establish final product release specifications; (3) prepare first pilot lot of stents as per established product specifications; and (4) pilot testing the established Q.C. system. 
 III. Target Dates for Completion of Program Segments 
  

							
	 Program Segment
	  	Target date for
Completion	  	Program Segment	  	Target Date for
Completion
	 One
	  	5/5/2006	  	Five	  	9/15/2006
	 Two
	  	5/5/2006	  	Six	  	12/15/2006
	 Three
	  	6/12/2006	  	Seven	  	2/27/2007
	 Four
	  	8/11/2006	  		  	

 IV. Program Monitoring and Review—A brief activity report will be issued after the completion of each
segment, which will be used in a discussion to be held during a teleconference shortly after the report distribution. In-person review meetings will be conducted 

 
during the 2nd and
4th quarter of 2006 and 1st quarter of 2007. A brief report will be issued shortly after the completion of the program. 
 V. Program
Budget and Disbursement Schedule—The basic total program budget (including materials, labor, and overhead) is $220,600, $20,600 to be paid upon acceptance of the proposed program followed by five equal payments of $40,000 following the
completion of Segments Three, Four, Five, Six, and Seven, respectively. 
 In the event of my unexpected but justifiable reason Valera
Pharmaceuticals decides to abandon the program at any milestone, Valera Pharmaceuticals, Inc., will only pay the scheduled payment for the succeeding milestone. 
 This budget will be reviewed following the completion of Segment Five to determine the need for increasing it to accommodate any unexpected increase in cost of completing the program beyond this segment. 

VI. Licensing and Manufacturing Agreement—After reviewing the key Poly-Med patent applications, forwarded to Dr. Kuzma on March 16 (SHA-64 CIP
and SHA-75), by Valera Pharmaceuticals legal consultant, arrangements will be made to formalize a mutually acceptable licensing agreement. This will be in concert with the primary elements of the agreement included in the approved April 27,
2005 revised proposal. Shortly after the successful conclusion of Segment Three, a formal manufacturing/supply agreement will be completed. It is understood that Poly-Med’s attorney will handle the Poly-Med intellectual properties matters
related to this program. It is also understood that Poly-Med will be responsible for U S. filing, legal, and maintenance fees for pending (our files SHA-64, SHA-64 CIP, SHA-75, and SHA-79) and future applications associated with the program.
Meanwhile Valera Pharmaceuticals will be responsible for the corresponding expenses associated with foreign filings if it wishes to secure patent protection in foreign countries. 
 VII. Contingency Plans—Outline below are the contingency plans to address any unexpected complications at critical segments of the program. 
 A. First Potential Complication: Unavailability of an animal facility to conduct the pilot study in a timely manner. 
 Contingency Plans—Using Dr. Chew’s draft for the pilot study protocol, Poly-Med, with the assistance of Godley-Snell Research Center (G-SRC) staff of Clemson University, have prepared a formal
protocol. This will be submitted to the University Animal Research Committee on March 29, 2006 for review on April 12, 2006. If approved, the pilot study may be conducted at G-SRC by Dr. Chew and Poly-Med/G-SRC staff. 
 B. Second Potential Complication: Results of the pilot study uncover undesirable deployment, functional and/or fragmentation features. 
 Contingency Plans—The advanced development studies are designed to allow implementing needed composition and/or design changes within an
eight-week period. This may result in an eight-week delay in completing Segment Six. However, more effort will be allocated to Segment Seven to complete the overall plans with only a four-week delay. 

 C. Contingency Terms Pending Results of Animal Pilot Study: 
 In the event that results of the pilot animal study, that is to be completed by June 12, 2006, do not provide sufficient confidence for Valera
Pharmaceuticals to continue its support of the 12-month program, Valera Pharmaceuticals supported activities will be suspended in concert with the term of Section V of this Agreement. More specifically, Valera Pharmaceuticals will pay Poly-Med
$20,600 upon signing this Agreement and two equal payments of $40,000 on June 12 and August 11, 2006. Upon meeting these terms, Valera Pharmaceuticals will have no financial obligation to Poly-Med, signaling the automatic termination of
this Program Agreement following the August 11, 2006 payment. 
  

					
	This R&D Proposal is accepted by:	 		 	
			
	Poly-Med, Inc.	 		 	Valera Pharmaceuticals, Inc.
			
	/s/ S.W. Shalaby	 		 	/s/ Peter Kuzma
	Signature	 		 	Signature
			
	S. W. Shalaby	 		 	Peter Kuzma
	Print name	 		 	Print name
			
	President and Director of R&D	 		 	VP, R&D
	Title	 		 	Title
			
	April 10, 2006	 		 	April 21, 2006
	Date	 		 	Date

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