Document:

Exhibit 10.1

 

	
  

  	
  

  

 

April 09, 2009

 

Eli Lilly and Company

Lilly Corporate Center

Indianapolis, IN 46285

Attention:  Bryce Carmine

 

	
  Re:

  	
  Collaboration Agreement between
  Eli Lilly and Company (“Lilly”) and Amylin Pharmaceuticals, Inc.
  (“Amylin”), dated September 19, 2002, as amended to date (the
  “Collaboration Agreement”)

  

 

Dear Bryce:

 

This letter confirms our
understanding with respect to certain amendments to the Collaboration Agreement
and the co-location of certain Lilly personnel at Amylin’s facilities in
furtherance of Amylin’s and Lilly’s efforts under the Collaboration Agreement
to operate efficiently and effectively. 
Capitalized terms used but not defined herein have the meanings given to
them in the Collaboration Agreement.

 

1.             The last sentence of Section 12.3(c) of the
Collaboration Agreement is hereby amended and restated to read as follows: “If
such termination occurs after Product Launch, such termination shall be
effective one (1) year after the date of Amylin’s receipt of written
notice from Lilly.  Within 60 days of
Lilly’s notice, the parties will negotiate in good faith, and Alliance Steering
Committee will approve, a mutually agreeable termination transition plan.”

 

2.             As of April 1, 2009, notwithstanding any term of
the Collaboration Agreement to the contrary, including but not limited to the
definition of the term “FTE” or the term “Reimbursable Marketing Expenses,”
each Party’s internal costs, including headcount, that are specifically
attributable to the Development or Commercialization of Product (e.g. specific
finance/accounting support, managed care contracting, etc.) as mutually
determined and agreed by the Alliance Steering Committee shall be reimbursed in
accordance with each Party’s respective standard cost accounting procedures.  The ASC will be responsible for approving the
methodology, plan and rates for these previously unshared expenses.  Each Party shall insure that such internal
costs are not unfairly allocated to the Development or Commercialization of
Product, and that headcount is allocated based on actual time spent on the
Product similar to the procedures specified in Section 1.48 of the
Collaboration Agreement.  Such internal
costs shall be reimbursed in accordance with each Party’s standard cost
accounting procedures.  For purposes of
clarification, such internal Reimbursable Marketing Expenses shall include
internal marketing costs, whether incurred by Amylin or Lilly, including
internal expenses of the types describes in clauses (i) through (xviii) of
Section 1.100 of the Collaboration Agreement, even if incurred internally
by the Parties.

 

3.             With regard to certain Lilly employees to be co-located
at Amylin’s facilities in furtherance of the efforts between Lilly and Amylin
to operate efficiently and effectively (the “Co-located Lilly Employees”), the
Parties shall agree upon a set of operating and human resources principles (the
“Principles”) to be agreed to by April 16, 2009 and approved by the
Alliance Steering Committee.  Those
Principles will address matters deemed necessary for the operation of the
Alliance business and the co-location of employees including, without
limitation the items set forth on Exhibit A hereto.

 

 

Page
2 of 3

 

If this letter correctly
reflects our agreement as to the foregoing matters, please sign in the space
provided below and return a signed copy of this letter to me.  Unless otherwise set forth in this letter,
the terms of the Collaboration Agreement remain unmodified and in full force
and effect.

 

Regards,

 

	
  /s/ Mark J. Gergen

  	
   

  	
   

  
	
  Mark J. Gergen

  	
   

  
	
  Senior Vice President,
  Corporate Development

  	
   

  

 

Acknowledged and Agreed:

 

Eli
Lilly and Company

 

	
  By: 

  	
  /s/ Bryce D. Carmine

  	
   

  	
   

  
	
  Name: Bryce D. Carmine

  	
   

  	
   

  
	
  Title: Executive V.P.
  Global Marketing & Sales

  	
   

  	
   

  
	
   

  	
   

  	
   

  

Date Signed:  April 9, 2009

 

2

 

Page
3 of 3

 

EXHIBIT A

 

The Operating and Human
Resources Principles shall address, without limitation, the following needs, as
well as addressing other operating and human resource matters as the parties
deem advisable or necessary:

 

·                  Co-located Lilly Employees located at Amylin will be
required to sign a confidentiality agreement reasonably acceptable to Amylin
and Lilly to cover the potential inadvertent exposure to Amylin confidential
information not related to the Alliance.

 

·                  Amylin may restrict access of Co-located Lilly
Employees to information and facilities not related to exenatide or not
necessary to fulfill their obligations to the Alliance.

 

·                  Each party shall be responsible for severance costs
for their displaced employees, if any.

 

·                  Co-located Lilly Employees shall remain Lilly
employees and not be deemed to be employees of Amylin.  Similarly, those Amylin employees co-located
with the Co-located Lilly Employees shall remain Amylin employees and not be
deemed to be employees of Lilly.

 

·                  Amylin shall not incur any liability for any act or
failure to act of any Co-located Lilly Employee.  Lilly shall not incur any liability for any
act or failure to act of any Amylin employee. Lilly shall indemnify and defend
Amylin against any claim brought by or on behalf of a Co-located Lilly Employee
to the extent caused by any negligent act or omission by Lilly.  Amylin shall indemnify and defend Lilly
against any claim brought by or on behalf of an Amylin employee to the extent
caused by any negligent act or omission of Amylin.

 

3EXHIBIT
10.2

 

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Commission.  Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

COST ALLOCATION AGREEMENT

 

This COST ALLOCATION AGREEMENT
(this “Agreement”) is entered into
and effective as of May 4, 2009 by and between ELI LILLY
AND COMPANY, a corporation organized and existing under the laws of
the State of Indiana, whose principal place of business is Lilly Corporate
Center, Indianapolis, Indiana, 46285, United States of America (“Lilly”) and AMYLIN
PHARMACEUTICALS, INC., a corporation organized and existing under
the laws of Delaware, whose principal place of business is 9360 Towne
Centre Drive, San Diego, California 92121, United States of America (“Amylin”).  Unless otherwise designated, capitalized
terms used but not otherwise defined herein shall have the meanings provided in
the Collaboration Agreement (defined below).

 

WHEREAS, Lilly and Amylin are parties to several
agreements, including:  (i) that
certain Collaboration Agreement, dated September 19, 2002, as amended to
date (the “Collaboration Agreement”)
(including by the Amendment to Collaboration Agreement, dated October 31,
2006 (the “Amendment”)) and (ii) that
certain Exenatide Once Weekly Supply Agreement, dated October 16, 2008
(the “EQW Agreement” and together with
the Collaboration Agreement, the “Impacted Agreements”);

 

WHEREAS, each of the Impacted Agreements provide that the
Parties will share certain costs related to the collaboration;

 

WHEREAS, the Parties have had on-going discussions regarding
the proper allocation of global Development and Commercialization Costs under
the Collaboration Agreement; and

 

WHEREAS, the Parties now wish to enter into this Agreement to (i) set
forth the terms upon which all Development Costs, Commercialization Costs, and
EQW Manufacturing Development Costs, incurred from and after January 1,
2009 in connection with the Impacted Agreements, will be shared by the parties,
and (ii) adjust the royalties paid to Amylin in connection with sales of
Products outside the United States from and after January 1, 2009.

 

NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lilly and Amylin
agree as follows:

 

1.                                      Cost Sharing.  Except as otherwise set forth below, effective
as of and after January 1, 2009, all Development Costs, Commercialization
Costs, and EQW Manufacturing Development Costs (as defined in the EQW
Agreement) which are subject to cost-sharing provisions in the Impacted
Agreements shall be shared by the Parties as follows:

 

(a)                                US Costs. 
Notwithstanding anything to the contrary in the Impacted Agreements,
Lilly shall pay 50% and Amylin shall pay 50% of the Development Costs and/or
Commercialization Costs associated with activities undertaken with the
expectation of generating utility predominantly in the United States (“US Costs”), regardless of the
degree of utility actually realized in the Territory outside the United States
(“OUS”), including by way of example
and without limitation,  Study GWCO
costs, Amylin-Lilly Grant Office (“ALGO”) costs, US sales force costs, and US
marketing and commercialization expenses.

 

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***Text
Omitted and Filed Separately with the Securities and Exchange

Commission.  Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(b)                                OUS Costs. 
Notwithstanding anything to the contrary in the Impacted Agreements,
Lilly shall pay 100% of the Development Costs and/or Commercialization Costs
associated with activities undertaken with the expectation of generating
utility predominantly OUS (“OUS Costs”),
including by way of example and without limitation, , Study GWCL costs, Study
GWCK costs, the UK Detemir study costs, OUS BID Development Trial Costs, OUS
BID Commercialization Trial Costs, OUS Non-BID Development Trial Costs, OUS Non-BID
Commercialization Trial Costs and OUS BID Product Development Costs (each as
defined in the Amendment).

 

(c)                                Global
Costs.  Notwithstanding anything to the
contrary in the Impacted Agreements, Lilly shall pay 53% of Global Costs and
Amylin shall pay 47% of Global Costs.  “Global Costs” are Development Costs
and Commercialization Costs associated with activities undertaken with the
expectation of generating utility in both the U.S. and OUS, including by way of
example and without limitation, the CV Outcomes Trial costs, costs associated
with the 2009 development program for transdermal, Study 108 costs, Study GWCH
costs, and costs associated with developing the RTU formulation.  The parties specifically agree that EQW
Manufacturing Development Costs, including EQW pen manufacturing development
costs, shall be Global Costs.  The
parties specifically agree that the costs of Dual Use Studies (as defined in
the Amendment) shall be Global Costs; provided, however,
that the costs of Dual Use Studies shall not be Global Costs before April 1,
2009, and the costs of such Dual Use Studies shall continue to be shared by the
parties pursuant to the Dual Use Cost Allocation set forth in paragraph
3(c)(ii)b of the Amendment until and including March 31, 2009.

 

For
the avoidance of doubt, Commercialization Costs, as such term is used in this
Agreement, includes Reimbursable Marketing Expenses.

 

(d)                                Designation of Costs.

 

(i)                                    Development Costs and Commercialization
Costs shall be designated “Global”, “US”, or “OUS,” in good faith, by the
relevant Alliance committee, which shall include, if appropriate, the Exenatide
Leadership Team (the “ELT”), and
approved by the Alliance Steering Committee (“ASC”)
at the time plans applicable thereto are made. 
If the Parties cannot agree in good faith on the designation of a
particular cost, the Parties reserve their respective rights under the dispute
resolution provisions of the Collaboration Agreement.  For costs associated with activities that are
underway as of the date of this Agreement, the ASC shall, in good faith,
designate such costs as “Global”, “US”, or “OUS” at the next ASC Meeting after
the date of this Agreement and, if the Parties cannot agree in good faith on
the designation of a particular cost, the Parties reserve their respective
rights under the dispute resolution provisions of the Collaboration Agreement.

 

(ii)                                Once a cost or expense has been
designated as any of “Global”, “US”, or “OUS”, then such designation shall not
be subject to revision unless agreed to by the ASC; provided, however, that
while this provision shall in no way eliminate the recharacterization procedure
described in Section 3(c) of the Amendment, such recharacterization
procedure shall require the approval of any successor committee to the GDCC (as
defined in the Amendment).

 

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***Text
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Commission.  Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(iii)                            This Section 1(d) shall
supersede any grant of authority to designate costs as US Costs or OUS Costs
pursuant to either Section 3.1 of the EQW Agreement or Section 4.3(a) (iii) of
the Collaboration Agreement.

 

(e)                                Other Costs. 
The responsibility for the following costs and expenses shall not be
altered, changed or otherwise affected by this Agreement:

 

(i)                                    “Actual Manufacturing Costs” As defined
in Section 1.2 of the EQW Agreement;

 

(ii)                                The costs of the studies referenced in
paragraph 2 of that certain letter agreement, dated May 23, 2007, between
Lilly and Amylin;

 

(iii)                            “costs of recall” referenced in Section 7.1
of the EQW Agreement;

 

(iv)                               “wind down costs” referenced in Section 11.4(b) of
the EQW Agreement;

 

(v)                                   costs incurred in connection with a
Technology Transfer (as defined in Section 11.4(e)(2) of the EQW
Agreement);

 

(vi)                               “costs or expenses associated with or
related to NovaQuest” referenced in Section 3.4 of the Addendum to September 19,
2002 U.S. Co-Promotion Agreement, between the Parties, and effective May 8,
2008;

 

(vii)                           costs of “equipment and other capital
expenditures” incurred in the conduct of Commercialization activities as
described in the last sentence of Section 4.4(b) of the Collaboration
Agreement and in the conduct of research and Development activities as
described in the last sentence of Section 4.3(b) of the Collaboration
Agreement; and

 

(viii)                       costs of Audits pursuant to Section 4.9(e) of
the Collaboration Agreement.

 

For
avoidance of doubt, that certain Device Development and Manufacturing Agreement
between the Parties, dated July 1, 2003, and the cost sharing provisions
therein, is not amended or otherwise impacted by this Agreement.

 

2.                                      Allocation of Global Costs to
U.S. Operating Profit/Loss.  Section 4.5(a) of
the Collaboration Agreement is hereby amended and restated in its entirety as
follows:

 

“(a)                           Profit/Loss Share in the US. 
[***], Amylin will prepare an Operating Profit/(Loss) report related to
the U.S. Operating Profit/(Loss) which will equal Net Sales less Cost of
Product Sold less Development Costs less Commercialization Costs.  Development Costs and Commercialization Costs
which the Parties are sharing as Global Costs and US Costs (as defined in that
certain Cost Allocation Agreement dated May 4, 2009 between the Parties)
shall be added back to the Operating Profit or Loss to arrive at the Adjusted
US Operating Profit/Loss (“Adjusted US Operating Profit”).  The Adjusted U.S. Operating Profit report
shall be completed within [***].

 

The Adjusted U.S. Operating Profits or Losses in the U.S. shall be
allocated 50% to Lilly and 50% to Amylin.”

 

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Commission.  Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

3.                                      OUS Royalties. 
Effective for royalties payable to Amylin based on the aggregate annual
Gross Margin (OUS) for calendar year 2009 and all future calendar years, the
royalty rates provided for in Section 2 of the Amendment (the “Royalty Rates”), are hereby amended
such that references to [***]% shall be replaced with [***]% and references to
[***]% shall be replaced with [***]%.

 

4.                                      Cost Settlement Procedure for Q1
2009.  Costs incurred by the parties from January 1,
2009 through the execution of this Agreement shall be compiled by Amylin and
settled in accordance with the Status Quo Agreement for Q1 2009.  These expenses will then be adjusted in
accordance with this Agreement and included as a true-up in the Q2 2009
settlement.

 

5.                                      Conforming Changes.

 

(a)                                Section 8.1(c) of the
Collaboration Agreement is hereby amended to read in its entirety as follows:

 

“In the event of any product
liability or other Third Party claim in which both Parties are asserted to be
liable and neither is entitled to indemnification hereunder, the Parties shall
treat such Damages as (i) US Costs (as defined in that certain Cost
Allocation Agreement dated May 4, 2009 between the Parties) if such claim
relates predominantly to the U.S.; (ii) OUS Costs (as defined in that
certain Cost Allocation Agreement dated May 4, 2009 between the Parties)
if such claim relates predominantly to the Territory outside the U.S.; or (iii) Global
Costs (as defined in that certain Cost Allocation Agreement dated May 4,
2009 between the Parties) if such claim relates both to the US and to the
Territory outside the U.S.  In the case
of any such claim relating to the Territory outside the U.S.,(i) any
amounts owed to Lilly pursuant to this Section 8.1(c) shall be paid
as part of the periodic settlement process contemplated under Section 4.9(a) of
the Agreement and (ii) in the event such amount is due to Lilly at anytime
prior to the  expiration of one year from
the date of the first Product Launch in the first country outside the U.S., the
amount due to Lilly shall initially be treated as a credit against royalties
due from Lilly hereunder for such first year, and thereafter any remaining
amount due shall be paid through the periodic settlement process for the first
Calendar Quarters immediately following such first year.”

 

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Commission.  Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(b)                                The last sentence of the introductory
paragraph in Section 4.4 of the EQW Agreement shall be amended and
restated in its entirety to read as follows: “Prior to any approved change in
the Manufacturing process or Specifications, the Parties shall identify, and,
if needed, allocate between Global, U.S. and O.U.S., all costs and risks,
including development costs, resulting from the changes, and a timeline for
implementing the changes.”

 

(c)                                The composite reports called for in
Sections 4.3(b) and 4.4(b) of the Collaboration Agreement will
separately itemize costs incurred related to the Product that are US Costs, OUS
Costs and Global Costs and will compute the net amount of costs due to Lilly or
to Amylin using the cost-sharing percentages provided for in this Agreement.

 

6.                                      Settlement of Existing
Cross-Charging Corrections and Procedure for Future Settlement of
Cross-Charging Corrections. In the event either Amylin or Lilly discover the need
for a correction in calculating, either for purposes of Section 4.5 of the
Collaboration Agreement or for any agreement between the Parties which utilizes
Section 4.5 of the Collaboration Agreement as the process to settle
payments between the Parties, the amount of Development Costs,
Commercialization Costs, or EQW Manufacturing Development Costs incurred by
such Party during any previous [***], it will promptly notify the other Party
of such discovery.  The Parties will then
meet to discuss the validity and appropriateness of the correction.  If the Parties agree that such correction
should be settled and collectively verify the amounts to be corrected, then
such corrected amounts shall be included in the following [***] settlement
between the Parties pursuant to Section 4.5 of the Collaboration Agreement
for the [***] in which the Parties agree the correction should be included;
provided, however, that only corrections for expenses that have occurred within
the previous [***] prior to the date of the notice described in the first
sentence of this paragraph shall be eligible for correction.  Section 4.9(e) of the Collaboration
Agreement shall continue to apply for a Party to audit the books and records of
the other Party.  If the parties do not
agree on the validity and appropriateness of the requested correction, the
dispute resolution process as set forth in the Collaboration Agreement shall
apply.

 

7.                                      Disputed Charges.  In the event of a dispute concerning charges
associated with the ongoing [***] settlement process, neither Party has the
right to withhold payment of submitted expenses unless the withheld charges
have been the subject of a discussion between the Parties’ most senior representatives
to the ASC.

 

8.                                      Entire Agreement. 
This Agreement and the Impacted Agreements (as amended hereby) together
constitute the full and entire understanding and agreement between the Parties
with regard to the subject matter hereof. 
The undersigned parties who are parties to the Impacted Agreements
hereby agree, as evidenced by their signatures hereto, that any provisions with
respect to (i) the Royalty Rates and (ii) the parties’ respective
responsibilities for Development Costs and Commercialization Costs under the
Impacted Agreements which are contrary to the provisions of this Agreement are
hereby superseded in their entirety by this Agreement and shall have no further
force or effect whatsoever.  In the case
of a conflict between this Agreement and any of the Impacted Agreements, this
Agreement shall control.  Except as
amended by this Agreement, the terms and conditions of the Impacted Agreements
shall remain in full force and effect.

 

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Commission.  Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

9.                                      Amendment and Waiver. 
Any provision of this Agreement may be amended only with the written
consent of each of the Parties.  The
waiver by either Party hereto of any right hereunder, or the failure to
perform, or a breach, by the other Party, will not be deemed a waiver of any
other right hereunder, or of any other breach or failure by said other Party,
whether of a similar nature or otherwise.

 

10.                               Term. 
This Agreement shall terminate upon the termination of the Collaboration
Agreement.

 

11.                               Governing Law.  This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York, excluding its conflicts of laws principles.

 

12.                               Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original document, and all of
which, together with this writing, shall be deemed one instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties hereto have
duly executed this Cost Allocation Agreement as of the date first set forth
above.

 

 

	
  ELI
  LILLY AND COMPANY

  	
   

  	
  AMYLIN
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  John C. Lechleiter

  	
   

  	
  By:

  	
  /s/
  Mark J. Gergen

  
	
   

  	
   

  	
   

  
	
  Name:

  	
  John
  C. Lechleiter

  	
   

  	
  Name:

  	
  Mark
  J. Gergen

  
	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman,
  President and CEO

  	
   

  	
  Title:

  	
  SVP
  Corp. Development

  

 

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