Document:

alks_Ex_10-4-2

		
			Exhibit 10.4.2
		

		
			 
		

		
			ADDENDUM TO MANUFACTURING AND SUPPLY AGREEMENT
		

		
			 
		

		
			This Addendum to Manufacturing and Supply Agreement (this “Addendum”), dated as of the 1 day of August, 2001 (the “Effective Date”) is by and between JPI PHARMACEUTICA INTERNATIONAL, a division of Cilag AG International Zug, a company duly organized and existing under the laws of Switzerland, having its principal office in CH- 6300 Zug, Kollerstrasse 38, Switzerland (“JPI”) and JANSSEN PHARMACEUTICA Inc., 1125 Trenton-Harbourton Road, Titusville, NJ 08560, USA (“Janssen US” and, together with JPI, “Janssen”) on the one hand and Alkermes Controlled Therapeutics Inc. II, a company organized and existing under the laws of the Commonwealth of Pennsylvania, having its principal office at 64 Sidney Street, Cambridge MA 02139-4136, USA (“ACTII”) on the other hand.
		

		
			 
		

		
			WHEREAS, Janssen and ACTII have been collaborating for the development of a Risperidone depot formulation incorporating ACTII’s proprietary technology concerning bioabsorbable polymer technologies and have entered into a Development Agreement and two License Agreements related thereto; and
		

		
			 
		

		
			WHEREAS, Janssen and ACTII entered into that certain Manufacturing and Supply Agreement, dated August 6, 1997 (the  “Supply Agreement”), with-respect to the commercial manufacture and supply of such Risperidone depot formulation to Janssen; and
		

		
			 
		

		
			WHEREAS, Janssen and ACTII desire to enter into this Addendum regarding the expansion of ACTII’s manufacturing facilities, and the financial responsibilities of each of the parties in connection with such expansion, in order to support the increased sales forecasts for such Risperidone depot formulation; and
		

		
			 
		

		
			WHEREAS, Janssen and ACTII further desire to enter into this Addendum to formally provide for a collaborative effort to develop the manufacturing facility and commercial supply of Product.
		

		
			 
		

		
			NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth below, and intending to be legally bound hereby, the parties agree as follows:
		

		
			 
		

		
			ARTICLE 1 - DEFINITIONS
		

		
			 
		

		
			Section 1.1.         Unless provided otherwise, any capitalized terms used in this Addendum and not defined herein or below, shall have the meaning set forth in the Supply Agreement.
		

		
			 
		

		
			1.1.1.     “Regulatory Approval” shall mean either (i) the approval of a New Drug Application, or a comparable application, for the Product by the United States Food and Drug Administration (“FDA”), or (ii) regulatory approval in two (2) of the Major EU Member States (for the purpose hereof, “Major EU Member States” means Germany, UK, France, Spain and Italy), together in each case with satisfaction of any related regulatory and notification requirements of the FDA or such other regulatory authority.
		

		
			 
		

		
			
		

		
			

		 

		

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ARTICLE 2 - EXPANSION PROJECT
		

		
			 
		

		
			Section 2.1.         The Project. ACTII will retain the services of an engineering firm to develop plans to expand ACTII’s manufacturing facility located in Wilmington, Ohio (the “Project”), including detailed timelines for completion of the Project. The Project shall include the following elements:
		

		
			 
		

		
			2.1.1.     The expansion to the current facility will be a detached addition on the same campus as the original facility in Wilmington, Ohio (such detached addition, including the equipment to be fitted therein, are referred to herein as the “Expansion”);
		

		
			 
		

		
			2.1.2.     The Expansion will include the utilities for a second and third wet process line and a second filling line;
		

		
			 
		

		
			2.1.3.     Only the equipment for the second wet process line will be installed as part of the Project; and
		

		
			 
		

		
			2.1.4.     The Project is expected to be completed by early August 2003 and cost approximately twelve million dollars ($12,000,000), all according to the preliminary budget and timetable set forth on Schedule A attached hereto.
		

		
			 
		

		
			2.1.5.     The underlying assumption of the terms agreed in this Addendum is that the Expansion will be dedicated to the manufacturing of the Product. Notwithstanding the above, ACTII shall have the right to manufacture other products in the Expansion, provided that ACTII shall notify Janssen at least ninety (90) days before any such other product is manufactured in the Expansion and shall discuss such intended manufacturing activities with the Global Supply Team. Any such notification and discussion shall be subject to ACTII’s obligations of confidentiality (if any) to its collaborative partner for the product(s) to be manufactured in the Expansion. ACTII shall be entitled to proceed with such intended manufacturing activities, provided that the Global Supply Team is satisfied, in its reasonable judgment, that such activities will not affect the quality (including GMP guidelines), the supply chain or capacity requirements for the Product. In the event that ACTII proceeds with its intended manufacturing activities, ACTII and Janssen will negotiate in good faith the impact (if any) of such activities on the Minimum Revenues and/or the Guarantee provided in this Addendum and modify it accordingly.
		

		
			 
		

		
			Section 2.2.         The Project Plan. Upon completion of the work by the engineering firm, which is expected to be completed prior to July 31, 2001, Janssen and ACTII shall meet to review the plans, budget and timetable for completion of the Project, determine the actions to be taken by each of the parties and to finalize the plans, budget and timetable for the Project (the “Project Plan”). The Project Plan, including the budget, must be amended by mutual agreement of the parties (after consultation with the Global Supply Team (defined in Section 5.2)) if the change impacts the timeline, capacity or budget with respect to the Product. At any time the parties amend the budget included in the Project Plan, a corresponding amendment to the Guarantee Cap (defined in Section 3.2) shall also be made.
		

		
			 
		

		
			Section 2.3.         Contractors and Construction. Upon approval by both parties of the Project Plan, ACTII shall engage the services of any contractors necessary to begin and complete
		

		
			 
		

		
			
		

		
			

		 

		

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actual construction of the Project and shall oversee such construction. ACTII shall cause the timetable for completion of the Project that is part of the Project Plan to be incorporated into all contracts and agreements with such contractors.
		

		
			 
		

		
			ARTICLE 3- FINANCIAL RESPONSIBILITY FOR THE PROJECT
		

		
			 
		

		
			Section 3.1.         ACTII’s Responsibility. ACTII shall be responsible for payment of all costs and expenses related to construction of the Project, including the design of and engineering services related to the Project, subject to the Guarantee and Minimum Revenues (each as defined in Sections 3.2 and 3.4, respectively).
		

		
			 
		

		
			Section 3.2.         The Guarantee. In the event that Janssen terminates development of the Product prior to commercial launch or Janssen terminates the Project, Janssen will reimburse ACTII for all cumulative out-of-pocket expenses made or actually and irrevocably committed by ACTII for the Project through the date of ACTII’s receipt of written notice of such termination (such reimbursement payment referred to herein as the “Guarantee”). The Guarantee shall not exceed twelve million dollars ($12,000,000) (the “Guarantee Cap”), unless the parties have mutually agreed to amend the budget and the Guarantee Cap pursuant to Section 2.2.
		

		
			 
		

		
			Section 3.3.         Refund of the Guarantee. If Janssen pays to ACTII the Guarantee due to Janssen’s termination of the Project and if the Expansion is utilized by ACTII for another· product with another corporate partner within three (3) years of Janssen’s termination of the Project, then ACTII shall refund that portion of the Guarantee that is proportional to the actual utilization of the Expansion during the 3-year period which shall be paid to Janssen in installments over the months remaining in the 3-year period and so long as the utilization continues.
		

		
			 
		

		
			Section 3.4.         Minimum Revenues. For a period often (10) calendar years, Janssen shall guarantee a certain minimum amount of revenues to ACTII from Janssen from the purchase of Product under the Supply Agreement (the “Minimum Revenues”), unless Janssen realizes the cumulative Minimum Revenues prior to the expansion of such 10-year period, all in accordance with this Section 3.4 and the subsections below.
		

		
			 
		

		
			3.4.1.     Upon completion of the work by the engineering firm, which is expected to be completed prior to July 31, 2001, Janssen and ACTII shall meet to review the Project cost. If the aggregate Project cost is ten million dollars ($10,000,000) or more, but less than twelve million dollars ($12,000,000), the Minimum Revenues shall be:
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    

					
					
						Scenario 1 : Detached Plant without filling line

				
	
					
						Calendar Year

					
					
						 

					
					
						Capital Cost: $ 12.0 million

				
	
					
						of Minimum

					
					
						 

					
					
						Minimum Revenue for Alkermes

				
	
					
						Revenues

					
					
						 

					
					
						$ million

				
	
					
						Year 1

					
					
						 

					
					
						$

					
					
						11.0 m

				
	
					
						Year 2

					
					
						 

					
					
						$

					
					
						14.25 m

				
	
					
						Year 3-10

					
					
						 

					
					
						$

					
					
						15.75 m

				

		
			 
		

		
			
		

		
			

		 

		

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3.4.2.     If the aggregate Project cost is less than ten million dollars ($10,000,000) or greater than twelve million dollars ($12,000,000), then Janssen and ACTII shall re-calculate the Minimum Revenue amounts based on the Project cost and assumptions and preliminary Minimum Revenue amounts set forth below.
		

		
			 
		

		
			(a)     The Minimum Revenues are intended to derive a minimum revenue that drives a net present value of zero (0) using a twelve and one-half percent (12.5%) discount rate for ACTII’s manufacturing facility investment.
		

		
			 
		

		
			(b)     For the purpose of calculating the Minimum Revenues under this Section 3.4, the Project cost shall not exceed twelve million dollars ($12,000,000), unless the parties have mutually agreed to amend the budget pursuant to Section 2.2.
		

		
			 
		

		
			(c)     The Minimum Revenues under this Section 3.4.2 shall be calculated in substantially the same way as the Minimum Revenues under Section 3 .4.1 were calculated as shown on Schedule C.
		

		
			 
		

		
			3.4.3.     First Calendar Year. The first calendar year in which Minimum Revenues shall be guaranteed, shall begin on the earlier of (a) the January 1 immediately following Regulatory Approval or (b) January 1, 2004, unless the parties agree otherwise.
		

		
			 
		

		
			3.4.4.     Excess. If the aggregate amount of Product purchased by Janssen under the Supply Agreement in any one calendar year (an “Actual Purchase Amount”) exceeds the Minimum Revenue amount for such calendar year, then such excess (the “Excess Credit”) shall be credited against any future calendar year in which Janssen’s Actual Purchase Amount is less than the Minimum Revenue amount for such calendar year.
		

		
			 
		

		
			3.4.5.     Shortfall. If an Actual Purchase Amount is less than the Minimum Revenue amount for the relevant calendar year, then any available Excess Credit shall be added to the Actual Purchase Amount for such calendar year. If the sum of Actual Purchase Amount plus any such Excess Credit are less than the Minimum Revenue amount for such calendar year, then Janssen shall pay to ACTII the difference between the Minimum Revenue and the sum of the Actual Purchase Amount plus such Excess Credit (if any). A portion of an Excess Credit may be used if only a portion is necessary to bring the sum of the Actual Purchase Amount plus the Excess Credit up to the Minimum Revenue amount for the relevant calendar year, in which case the balance of the Excess Credit can be used for another future calendar year; provided, however, that the aggregate amount of Excess Credit may only be added to an Actual Purchase Amount once.
		

		
			 
		

		
			3.4.6.     Reporting. Within seventy-five (75) days of the end of each calendar year after Regulatory Approval, ACTII shall prepare and deliver to Janssen a report showing (a) the Actual Purchase Amount and the Minimum Revenue amount for such calendar year, (b) any Excess Credit added to the Actual Purchase Amount, (c) any Excess Credit from a prior or the current calendar year available but not added to the Actual Purchase Amount, and (d) any amount due to ACTII under Section 3.4.5.
		

		
			 
		

		
			3.4.7.     Prepayment. If (i) sales of Product are such that Janssen determines that the expanded facility will not be utilized or (ii) Janssen ceases to sell Product or terminates the
		

		
			 
		

		
			
		

		
			

		 

		

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Supply Agreement after Regulatory Approval but before all Minimum Revenues have been achieved, then Janssen may, in its discretion, (a) prepay the Minimum Revenues in a lump sum that is the then net present value of the Minimum Revenues not yet achieved or (b) continue to pay any shortfall under Minimum Revenues over time as provided in this Section 3.4. If Janssen prepays the Minimum Revenues in a lump sum under this Section 3.4.7 and if the Expansion is utilized by ACTII for another product incorporating its bioabsorbable polymer technology with another corporate partner within three (3) years of such prepayment, then ACTII shall refund that portion of the lump sum payment that is proportional to the actual utilization of the Expansion during the 3-year period which shall be paid to Janssen in installments over the months remaining in the 3-year period and so long as the utilization continues.
		

		
			 
		

		
			ARTICLE 4- SECOND FILLING LINE AND FUTURE EXPANSIONS
		

		
			 
		

		
			Section 4.1.         Second Filling Line. The parties may mutually determine that a second filling line needs to be added to the manufacturing facility. If such a determination is made, it is anticipated that the cost of adding a second filling line will be approximately eleven million dollars ($11,000,000). Janssen and ACTII shall amend the Guarantee Cap and the Minimum Revenues to take into account such additional cost, taking into consideration the assumptions set forth in Section 3.4 (including the subsections) and the subsections below.
		

		
			 
		

		
			4.1.1.     Upon completion of the work by the engineering firm with regard to the Project, including the second filling line, Janssen and ACTII shall meet to review the Project cost. If the aggregate Project cost is twenty-one million dollars ($21,000,000) or more, but less than twenty-three million dollars ($23,000,000), the Minimum Revenues, if a second filling line is included, shall be:
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    

					
					
						Scenario 2:

				
	
					
						 

					
					
						 

					
					
						Detached Plant filling line

				
	
					
						Calendar Year

					
					
						 

					
					
						Capital Cost: $ 22 million

				
	
					
						of Minimum

					
					
						 

					
					
						Minimum Revenue for Alkermes

				
	
					
						Revenues

					
					
						 

					
					
						$ million

				
	
					
						Year 1

					
					
						 

					
					
						$

					
					
						12.0 m

				
	
					
						Year 2

					
					
						 

					
					
						$

					
					
						18.0 m

				
	
					
						Year 3-10

					
					
						 

					
					
						$

					
					
						19.0 m

				

		
			 
		

		
			4.1.2.     If the aggregate Project cost, including a second filling line, is less than twenty-one million dollars ($21,000,000), or greater than twenty-three million dollars ($23,000,000), then Janssen and ACTII shall re-calculate the Minimum Revenue amounts based on the Project cost, including the second filling line, and assumptions and preliminary Minimum Revenue amounts set forth below.
		

		
			 
		

		
			(a)     The Minimum Revenues are intended to derive a minimum revenue that drives a net present value of zero (0) using a twelve and one-half percent (12.5%) discount rate for ACTII’s manufacturing facility investment.
		

		
			 
		

		
			
		

		
			

		 

		

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(b)     For the purpose of calculating the Minimum Revenues under this Section 4.1.2, the Project cost shall not exceed twenty-three million dollars ($23,000,000), unless the parties have mutually agreed to amend the budget pursuant to Section 2.2.
		

		
			 
		

		
			(c)     The Minimum Revenues under this Section 4.1.2 shall be calculated in substantially the same way as the Minimum Revenues under Section 4.1.1 were calculated as shown on Schedule C.
		

		
			 
		

		
			Section 4.2.         Reimbursement of Incremental Capital Cost. In the event that the parties determine to include a second filling line (the “2nd Line”) in the Project, Janssen shall reimburse ACTII for the financial cost of the incremental capital associated with the 2nd Line. To that end, Janssen shall pay to ACTII, on a quarterly basis, an amount equal to the Prime Rate times the capital expenses associated with the 2nd Line in excess of the capital expenses associated with the Project excluding the 2nd Line. For purposes hereof, “Prime Rate” shall be the prime rate as reported in the eastern edition of The Wall Street Journal on the first day of the relevant calendar quarter on which The Wall Street Journal is published. Janssen’s obligation under this Section 4.2 shall terminate upon the occurrence of both of the following two conditions: (a) Product delivered by ACTII to Janssen under the Supply Agreement meets or exceeds five million (5,000,000) vials in any twelve (12)-month period and (b) Janssen’s  twenty-four (24)-month supply forecast for Product to be delivered by ACTII under the Supply Agreement exceeds the vial filling capacity of the existing filling line in any twelve (12)-month period in such twenty-four (24)-month forecast.
		

		
			 
		

		
			Section 4.3.         Future Expansions. If the Global Supply Team determines that an additional process line is required, then such additional line will be included in the Project under conditions to be negotiated by Janssen and ACTII at the time of such determination.
		

		
			 
		

		
			ARTICLE 5 - MANAGEMENT OF PROJECT AND COMMERCIAL SUPPLY
		

		
			 
		

		
			Section 5.1.         Collaborative Efforts. Both parties acknowledge and agree that the management of the commercial supply chain of Product is of critical importance, as is (i) the timely expansion of the capacity for the manufacturing of the bulk Product and the vial filling, (ii) the transition of the current activities to a continuous commercial manufacturing and supply process and (iii) the eventual commercial supply and logistics chain. Therefore, the parties shall actively collaborate with each other, including a free exchange of expertise and knowledge, with the following goals: (a) the timelines of expansion and supply are respected, (b) a robust manufacturing and supply process is developed, (c) Product will comply with all relevant quality and regulatory requirements and (d) a continued supply of Product in accordance with current forecasts is achieved.
		

		
			 
		

		
			Section 5.2.         Global Supply Team. ACTII shall be responsible for the operation and management of the Project and the manufacture and supply of Product. Notwithstanding the foregoing, a Global Supply Team shall be established under this Section 5.2 whose goal will be to enhance and facilitate the collaborative effort described in Section 5.1.
		

		
			 
		

		
			5.2.1.         Formation and Make-Up. Within thirty (30) days after the Effective Date, the parties shall form the Global Supply Team. The Global Supply Team shall consist of an
		

		
			 
		

		
			
		

		
			

		 

		

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equal number of representatives of each party. The Global Supply Team may delegate its responsibilities and authority to one or more Sub-Teams. The members of the Global Supply Team and any Sub-Teams shall have expertise in the functional disciplines that either party believes should be represented at the team or sub-team. The representatives of a party may be changed from time to time at the discretion of that party upon written notification by the party making such change to the other.
		

		
			 
		

		
			5.2.2.     Oversight of the Project and Commercial Supply. The Global Supply Team shall be responsible for recommending actions to ACTII and Alkermes management following periodic reviews of the Project and the commercial supply process. Within fifteen (15) days after the receipt of the Project Plan, or any amendment or supplement to the Project Plan, the Global Supply Team or the appropriate Sub-Team shall meet to evaluate the Project Plan, amendment or supplement and recommend actions. The Global Supply Team or the appropriate Sub-Team shall periodically review the Project Plan and the progress of the activities called for under the plan. ACTII and Alkermes management shall keep the Global Supply Team and any Sub-Teams informed on a periodic basis of issues and decisions affecting the commercial supply chain and the construction of the Project and shall consult with it on such issues before making decisions whenever possible.
		

		
			 
		

		
			5.2.3.     Meetings. The Global Supply Team and any Sub-Teams shall meet from time to time as determined by the team members. It is expected that the teams shall meet in person at least once in each calendar quarter. The location of team meetings shall alternate between ACTII’s and Janssen’s offices unless otherwise agreed by the parties, with the first meeting being held at ACTII’s Ohio office. Consultants and non-member employees of the parties may attend team meetings as required to further the team’s goals. Minutes of all meetings setting forth decisions of the Global Supply Team or Sub-Team will be prepared and circulated by the party hosting the meeting within thirty (30) days of such meeting. Such minutes will become official when agreed to by all team members. Each party will bear all expenses associated with attendance of its employees and consultants at such meetings. If the team members all agree, a meeting may be held by means of telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear each other.
		

		
			 
		

		
			5.2.4.     Decisions. Recommendations of the Global Supply Team or Sub-Teams shall be made by unanimous vote, with the representatives of each party having one collective vote. If the Global Supply Team or a Sub-Team is unable to reach a unanimous vote on any issue, then the issue shall be referred to the President of Alkermes (or successor position) and the Senior Vice President of Manufacturing of Janssen (or successor position) for further discussion and resolution. These individuals shall, as soon as practicable, attempt in good faith to resolve the dispute and, thereby, make the recommendation on behalf of the Global Supply Team or Sub-Team. These individuals may obtain the advice of other employees as they deem necessary or advisable in order to make the recommendation. If such issue (a) is not resolved within thirty (30) days after it has been referred to such persons for resolution, (b) would cause a serious interruption of the manufacturing and supply chain and (c) is related to the Logistic Systems, Quality System, Control of Change, Validation, timelines of the Project Plan or commercialization ramp-up, the issue shall be resolved in accordance with the views of the Senior Vice President of Manufacturing of Janssen. Any issue related to the budget for the
		

		
			 
		

		
			
		

		
			

		 

		

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Project shall be discussed in good faith to determine the appropriate modification or outcome and shall be agreed to by the parties in good faith. Also, in the event ACTII is reasonably of the opinion that Janssen’s standpoint on any of the above issues could adversely affect its obligations under the Supply Agreement, it will raise such issue and the parties will duly consider it and its ramifications in resolving the issue at hand. In the event Janssen nevertheless decides to proceed in accordance with its standpoint, the parties will in good faith discuss the modifications that may be warranted in relation to the other obligations with respect to which ACTII had raised concerns.
		

		
			 
		

		
			Section 5.3.         Janssen Representative at the Project. In order to implement the collaborative effort set forth under Section 5.1, Janssen will have the right to have one or more Janssen representatives visit the Project and/or the entire manufacturing facility in Wilmington, Ohio for short or extended periods of time. Any such visits shall be at Janssen’s expense; provided that ACTII shall provide some accommodation at the site upon reasonable request and provided that there is no disruption to the course of business at the site. In the event that there is any dispute under this Section 5.3 or either party has a concern related to the Janssen representative(s) at the manufacturing facility, the Global Supply Team shall attempt to resolve such dispute or address such concern.
		

		
			 
		

		
			Section 5.4.         Janssen Support. At ACTII’s request, Janssen shall reasonably assist ACTII in its contacts with manufacturing and supply contractors and shall support ACTII in connection with its vendor relations.
		

		
			 
		

		
			ARTICLE 6 - MISCELLANEOUS
		

		
			 
		

		
			Section 6.1.         Change in Control of Alkermes, Inc. or ACTII. For purposes of this Section 6.1, “Change in Control” shall mean the acquisition, directly or indirectly, by any person, entity or “group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (excluding Alkermes, Inc., its subsidiaries, and any employee benefit plan of Alkermes, Inc. or its subsidiaries which acquires beneficial ownership of voting securities of Alkermes, Inc.) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 40% of the combined voting power of Alkermes, Inc.’s or ACTII’s then outstanding voting securities entitled to vote generally in the election of directors. In the event of a Change in Control of Alkermes, Inc. or ACTII, Alkermes, Inc. and ACTII will use reasonable efforts to notify Janssen as soon as possible, legally and in accordance with any confidentiality obligations related to the Change in Control transaction, in advance of any Change of Control, and upon the announcement thereof. As soon as possible after giving such notice, ACTII (or any successor) and Janssen will meet to discuss what effect, if any, the Change in Control will have on ACTII’s (or any successor’s) performance under the Supply Agreement, including this Addendum. The parties shall then determine what, if any, actions need be taken in light of the effects of the Change in Control. ACTII and/or Alkermes shall use reasonable efforts to (a) cooperate with Janssen to provide continuity of supply of Product, (b) cause the assignment of all of the obligations of ACTII under the Supply Agreement to any successor entity upon consummation of such Change in Control and, (c) ensure the confidentiality of the proprietary technology of Janssen vis-  á-vis the controlling entity of ACTII upon consummation of such Change in Control, including the use of “fire walls”, if appropriate or reasonably requested by Janssen. Promptly following the consummation of the
		

		
			 
		

		
			
		

		
			

		 

		

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Change of Control, Act II (or any successor) shall provide to Janssen a written confirmation that AGTII (or any successor) shall comply with all obligations under the Supply Agreement, including this Addendum.
		

		
			 
		

		
			Section 6.2.         Bankruptcy provisions. In the event ACTII or Alkermes, Inc. files a petition in bankruptcy, insolvency or reorganization for the benefit of its creditors or if a receiver or trustee is appointed as provided for in Section 10.2.3 of the Supply Agreement, ACTII shall, unless and until the Supply Agreement would be rejected by the bankruptcy trustee in accordance with the relevant bankruptcy codes, continue to perform all its obligations under the Supply Agreement, including this Addendum, unless and until Janssen elects to terminate the Supply Agreement in accordance with Section 10.2.3 of the Supply Agreement. By October 31, 2001, ACTII shall submit to a neutral escrow agent mutually agreeable to the parties, such as DSI Technology Escrow Services, Inc. (the “Escrow Agent”), to hold in escrow all of the standard operating procedures and batch records, which shall contain detailed descriptions of all steps and operations involved in the approved Manufacturing Process (the “Escrow Documents”). ACTII shall update the Escrow Documents annually. In the event that Janssen terminates the Agreement under Section 10.2.3 of the Supply Agreement, Janssen shall be free to access the Escrow Documents. Janssen, ACTII and the Escrow Agent shall execute an escrow agreement which will control the deposit, possession and release of the Escrow Documents and any conflict between this Addendum and such escrow agreement shall be controlled by the escrow agreement. Janssen, as a licensee of intellectual property rights granted under the License Agreement dated February 13, 1996, by and between Janssen US and ACT II and the License dated February 21, 1996, by and between JPI and ACT II, shall in addition to any rights or remedies expressly provided herein, retain any and all of its rights under the bankruptcy code to resort to other remedies as may now or hereafter exist at law or in equity in such event.
		

		
			 
		

		
			Section 6.3.         Amendments to the Supply Agreement. To the extent that the provisions of this Addendum are in conflict with Sections 2.2 and 2.9 of the Supply Agreement, Sections 2.2 and 2.9 shall be deemed to be amended by this Addendum. The provision regarding Minimum Revenues in this Addendum shall supersede the provisions for minimum number of Product to be purchased by Janssen pursuant to Section 2.11 of the Supply Agreement for the ten (10) calendar years following Regulatory Approval of Product. Except as provided in the foregoing two sentences, all of the provisions of the Supply Agreement shall remain in full force and effect.
		

		
			 
		

		
			Section 6.4.         Prior Agreements. The parties hereto acknowledge that this Addendum and the Supply Agreement contain the entire agreement between the parties pertaining to the manufacture and supply of Product in Territory and terminates and supersedes all prior agreements, understandings, letters or other instruments whatsoever, whether written or oral, between the parties or any of their affiliates with respect to such matters.
		

		
			 
		

		
			
		

		
			

		 

		

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IN WITNESS WHEREOF, JPI, Janssen US and ACTII have caused this Addendum to Manufacturing and Supply Agreement to be executed by their respective duly authorized officers on the date first set forth above.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						JANSSEN PHARMACEUTICA

				
	
					
						 

					
					
						INTERNATIONAL represented by CILAG AG

				
	
					
						 

					
					
						INTERNATIONAL

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Erik Rombouts

				
	
					
						 

					
					
						 

					
					
						Name:  Erik Rombouts

				
	
					
						 

					
					
						 

					
					
						Title: Vice President

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						JANSSEN PHARMACEUTICA INC.

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  David Y. Norton

				
	
					
						 

					
					
						 

					
					
						Name:  David Y. Norton

				
	
					
						 

					
					
						 

					
					
						Title: President

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						ALKERMES CONTROLLED THERAPEUTICS INC. II

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						By:

					
					
						/s/  Robert A. Breyer

				
	
					
						 

					
					
						 

					
					
						Name:  Robert A. Breyer

				
	
					
						 

					
					
						 

					
					
						Title:

				

		
			 
		

		
			

		 

		

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Schedule A
		

		
			Preliminary Timetable and Budget
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    

					
					
						 

					
					
						    

					
					
						Plant expansion
With 2nd wet process train

					
					
						    

					
					
						Plant expansion with 2nd
process train and 2nd
filling line

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						Capital

					
					
						 

					
					
						 

					
					
						 

					
					
						Capital

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Quarter

					
					
						 

					
					
						Key event

					
					
						 

					
					
						Expenditures

					
					
						    

					
					
						Cumulative

					
					
						 

					
					
						Expenditures

					
					
						    

					
					
						Cumulative

					
					
						 

				
	
					
						4Q/00

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						0.1 m

					
					
						 

					
					
						$

					
					
						0.1 m

					
					
						 

					
					
						$

					
					
						0.1 m

					
					
						 

					
					
						$

					
					
						0.1 m

					
					
						 

				
	
					
						1Q/01

					
					
						 

					
					
						Phase 3 topline results

					
					
						 

					
					
						$

					
					
						0.6 m

					
					
						 

					
					
						$

					
					
						0.7 m

					
					
						 

					
					
						$

					
					
						1.0 m

					
					
						 

					
					
						$

					
					
						1.1 m

					
					
						 

				
	
					
						2Q/01

					
					
						 

					
					
						Tox results

					
					
						 

					
					
						$

					
					
						1.2m

					
					
						 

					
					
						$

					
					
						1.9m

					
					
						 

					
					
						$

					
					
						2.1 m

					
					
						 

					
					
						$

					
					
						3.2m

					
					
						 

				
	
					
						3Q/01

					
					
						 

					
					
						NDA ready

					
					
						 

					
					
						$

					
					
						2.4 m

					
					
						 

					
					
						$

					
					
						4.3 m

					
					
						 

					
					
						$

					
					
						5.3 m

					
					
						 

					
					
						$

					
					
						8.5 m

					
					
						 

				
	
					
						4Q/01

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						2.4 m

					
					
						 

					
					
						$

					
					
						6.7 m

					
					
						 

					
					
						$

					
					
						4.1 m

					
					
						 

					
					
						$

					
					
						12.6 m

					
					
						 

				
	
					
						1Q/02

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						1.2m

					
					
						 

					
					
						$

					
					
						7.8m

					
					
						 

					
					
						$

					
					
						2.4m

					
					
						 

					
					
						$

					
					
						15.0 m

					
					
						 

				
	
					
						2Q/02

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						1.2 m

					
					
						 

					
					
						$

					
					
						9.0 m

					
					
						 

					
					
						$

					
					
						2.3 m

					
					
						 

					
					
						$

					
					
						17.3 m

					
					
						 

				
	
					
						3Q/02

					
					
						 

					
					
						Regulatory Approval

					
					
						 

					
					
						$

					
					
						0.6m

					
					
						 

					
					
						$

					
					
						9.6m

					
					
						 

					
					
						$

					
					
						1.2m

					
					
						 

					
					
						$

					
					
						18.4m

					
					
						 

				
	
					
						4Q/02

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						1.2 m

					
					
						 

					
					
						$

					
					
						10.8 m

					
					
						 

					
					
						$

					
					
						2.3 m

					
					
						 

					
					
						$

					
					
						20.7 m

					
					
						 

				
	
					
						1Q/03

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						1.2 m

					
					
						 

					
					
						$

					
					
						12.0 m

					
					
						 

					
					
						$

					
					
						2.3 m

					
					
						 

					
					
						$

					
					
						23.0 m

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						12.0 m

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						23.0 m

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			

		 

		

			11

		

 

Schedule B
		

		
			Sales Forecasts as of the Effective Date
		

		
			As of June 2001
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    

					
					
						 

					
					
						    

					
					
						2002

					
					
						    

					
					
						2003

					
					
						    

					
					
						2004

					
					
						    

					
					
						2005

					
					
						    

					
					
						2006

					
					
						    

					
					
						2007

					
					
						    

					
					
						2008

					
					
						    

					
					
						2009

					
					
						    

					
					
						2010

					
					
						    

					
					
						2011

					
					
						    

					
					
						2012

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Sales of Microspheres

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
33.6 
					
					
						 

					
					
						$

					
336.5 
					
					
						 

					
					
						$

					
665.8 
					
					
						 

					
					
						$

					
879.7 
					
					
						 

					
					
						$

					
1,028.6 
					
					
						 

					
					
						$

					
1,173.8 
					
					
						 

					
					
						$

					
1,249.2 
					
					
						 

					
					
						$

					
1,214.1 
					
					
						 

					
					
						$

					
1,180.1 
					
					
						 

					
					
						$

					
1,118.2 
					
					
						 

					
					
						$

					
1,023.7 
					
					
						 

				
	
					
						( US$ millions )

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Sales Forecast Vials-000's

					
					
						 

					
					
						25.0 mg

					
					
						 

					
					
						 

					
213 
					
					
						 

					
					
						 

					
1,639 
					
					
						 

					
					
						 

					
3,204 
					
					
						 

					
					
						 

					
4,463 
					
					
						 

					
					
						 

					
5,308 
					
					
						 

					
					
						 

					
6,149 
					
					
						 

					
					
						 

					
6,554 
					
					
						 

					
					
						 

					
6,255 
					
					
						 

					
					
						 

					
5,973 
					
					
						 

					
					
						 

					
5,600 
					
					
						 

					
					
						 

					
5,262 
					
					
						 

				
	
					
						June 19 Approved Forecast

					
					
						 

					
					
						37.5 mg

					
					
						 

					
					
						 

					
119 
					
					
						 

					
					
						 

					
1,168 
					
					
						 

					
					
						 

					
2,305 
					
					
						 

					
					
						 

					
3,223 
					
					
						 

					
					
						 

					
3,798 
					
					
						 

					
					
						 

					
4,335 
					
					
						 

					
					
						 

					
4,611 
					
					
						 

					
					
						 

					
4,501 
					
					
						 

					
					
						 

					
4,393 
					
					
						 

					
					
						 

					
4,163 
					
					
						 

					
					
						 

					
3,954 
					
					
						 

				
	
					
						 

					
					
						 

					
					
						50.0 mg

					
					
						 

					
					
						 

					
192 
					
					
						 

					
					
						 

					
1,748 
					
					
						 

					
					
						 

					
3,418 
					
					
						 

					
					
						 

					
5,007 
					
					
						 

					
					
						 

					
6,117 
					
					
						 

					
					
						 

					
7,123 
					
					
						 

					
					
						 

					
7,683 
					
					
						 

					
					
						 

					
7,634 
					
					
						 

					
					
						 

					
7,571 
					
					
						 

					
					
						 

					
7,117 
					
					
						 

					
					
						 

					
6,704 
					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Total

					
					
						 

					
					
						 

					
524 
					
					
						 

					
					
						 

					
4,554 
					
					
						 

					
					
						 

					
8,927 
					
					
						 

					
					
						 

					
12,693 
					
					
						 

					
					
						 

					
15,223 
					
					
						 

					
					
						 

					
17,607 
					
					
						 

					
					
						 

					
18,849 
					
					
						 

					
					
						 

					
18,390 
					
					
						 

					
					
						 

					
17,937 
					
					
						 

					
					
						 

					
16,881 
					
					
						 

					
					
						 

					
15,920 
					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Purchase Forecast Vials- 000's

					
					
						 

					
					
						25.0 mg

					
					
						 

					
					
						 

					
555 
					
					
						 

					
					
						 

					
1,965 
					
					
						 

					
					
						 

					
3,466 
					
					
						 

					
					
						 

					
4,639 
					
					
						 

					
					
						 

					
5,483 
					
					
						 

					
					
						 

					
6,233 
					
					
						 

					
					
						 

					
6,492 
					
					
						 

					
					
						 

					
6,196 
					
					
						 

					
					
						 

					
5,895 
					
					
						 

					
					
						 

					
5,530 
					
					
						 

					
					
						 

					
4,165 
					
					
						 

				
	
					
						 

					
					
						 

					
					
						37.5 mg

					
					
						 

					
					
						 

					
362 
					
					
						 

					
					
						 

					
1,405 
					
					
						 

					
					
						 

					
2,496 
					
					
						 

					
					
						 

					
3,343 
					
					
						 

					
					
						 

					
3,910 
					
					
						 

					
					
						 

					
4,392 
					
					
						 

					
					
						 

					
4,588 
					
					
						 

					
					
						 

					
4,479 
					
					
						 

					
					
						 

					
4,345 
					
					
						 

					
					
						 

					
4,120 
					
					
						 

					
					
						 

					
3,130 
					
					
						 

				
	
					
						Inventory Level 

					
					
						 

					
					
						50.0 mg

					
					
						 

					
					
						 

					
556 
					
					
						 

					
					
						 

					
2,096 
					
					
						 

					
					
						 

					
3,749 
					
					
						 

					
					
						 

					
5,238 
					
					
						 

					
					
						 

					
6,327 
					
					
						 

					
					
						 

					
7,240 
					
					
						 

					
					
						 

					
7,673 
					
					
						 

					
					
						 

					
7,621 
					
					
						 

					
					
						 

					
7,476 
					
					
						 

					
					
						 

					
7,031 
					
					
						 

					
					
						 

					
5,307 
					
					
						 

				
	
					
						2.5 months

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						Total

					
					
						 

					
					
						 

					
1,473 
					
					
						 

					
					
						 

					
5,465 
					
					
						 

					
					
						 

					
9,711 
					
					
						 

					
					
						 

					
13,220 
					
					
						 

					
					
						 

					
15,720 
					
					
						 

					
					
						 

					
17,866 
					
					
						 

					
					
						 

					
18,753 
					
					
						 

					
					
						 

					
18,296 
					
					
						 

					
					
						 

					
17,717 
					
					
						 

					
					
						 

					
16,681 
					
					
						 

					
					
						 

					
12,603 
					
					
						 

				

		
			 
		

		
			
		

		
			

		 

		

			12

		

 

 
		

		
			Schedule C
		

		
			Calculation of Minimum Revenues
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Alkermes Capital Expenditures:

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						 

				
	
					
						Current Plant:

					
					
						 

					
					
						$

					
9,000 
					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						New Plant + 2nd Process Line:

					
					
						 

					
					
						$

					
12,000 
					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Total Capital Expenditures:

					
					
						 

					
					
						$

					
21,000 
					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						2002

					
					
						 

					
					
						2003

					
					
						 

					
					
						2004

					
					
						 

					
					
						2005

					
					
						 

					
					
						2006

					
					
						 

					
					
						2007

					
					
						 

					
					
						2008

					
					
						 

					
					
						2009

					
					
						 

					
					
						2010

					
					
						 

					
					
						2011

					
					
						 

				
	
					
						Minimum Revenues:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
0 
					
					
						 

					
					
						$

					
11,000 
					
					
						 

					
					
						$

					
14,500 
					
					
						 

					
					
						$

					
15,750 
					
					
						 

					
					
						$

					
15,750 
					
					
						 

					
					
						$

					
15,750 
					
					
						 

					
					
						$

					
15,750 
					
					
						 

					
					
						$

					
15,750 
					
					
						 

					
					
						$

					
15,746 
					
					
						 

					
					
						$

					
15,750 
					
					
						 

				
	
					
						NPV Calculation:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Manufacture by Alkermes

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						2001

					
					
						 

					
					
						2002

					
					
						 

					
					
						2003

					
					
						 

					
					
						2004

					
					
						 

					
					
						2005

					
					
						 

					
					
						2006

					
					
						 

					
					
						2007

					
					
						 

					
					
						2008

					
					
						 

					
					
						2009

					
					
						 

					
					
						2010

					
					
						 

					
					
						2011

					
					
						 

				
	
					
						(+) Mfg Profit

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						-6,189

					
					
						 

					
					
						$

					
3,845 
					
					
						 

					
					
						$

					
4,178 
					
					
						 

					
					
						$

					
5,014 
					
					
						 

					
					
						$

					
5,014 
					
					
						 

					
					
						$

					
5,014 
					
					
						 

					
					
						$

					
5,014 
					
					
						 

					
					
						$

					
5,014 
					
					
						 

					
					
						$

					
5,010 
					
					
						 

					
					
						$

					
4,898 
					
					
						 

				
	
					
						(-) Capital

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
15,600 
					
					
						 

					
					
						$

					
4,200 
					
					
						 

					
					
						$

					
1,200 
					
					
						 

					
					
						$

					
0 
					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						(-) Tax

					
					
						 

					
					
						 

					
30 
					
					
						%  

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						-1,857

					
					
						 

					
					
						$

					
1,154 
					
					
						 

					
					
						$

					
1,253 
					
					
						 

					
					
						$

					
1,504 
					
					
						 

					
					
						$

					
1,504 
					
					
						 

					
					
						$

					
1,504 
					
					
						 

					
					
						$

					
1,504 
					
					
						 

					
					
						$

					
1,504 
					
					
						 

					
					
						$

					
1,503 
					
					
						 

					
					
						$

					
1,469 
					
					
						 

				
	
					
						(+) Deprec

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
900 
					
					
						 

					
					
						$

					
900 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

					
					
						$

					
2,400 
					
					
						 

				
	
					
						Cash Flow

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						-15,600

					
					
						 

					
					
						$

					
					
						-7,633

					
					
						 

					
					
						$

					
2,392 
					
					
						 

					
					
						$

					
5,325 
					
					
						 

					
					
						$

					
5,910 
					
					
						 

					
					
						$

					
5,910 
					
					
						 

					
					
						$

					
5,910 
					
					
						 

					
					
						$

					
5,910 
					
					
						 

					
					
						$

					
5,910 
					
					
						 

					
					
						$

					
5,907 
					
					
						 

					
					
						$

					
0 
					
					
						 

				

		
			 
		

		
			Disc Rate   NPV=
		

		
			12.5%           $63
		

		
			 
		

		
			
		

		
			

		 

		

			13

		

 

 
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Alkermes Capital

					
						Expenditures:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Current Plant:

					
					
						    

					
					
						$

					
9,000 
					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						    

					
					
						 

					
					
						    

					
					
						 

				
	
					
						New Plant + 2nd

					
					
						 

					
					
						$

					
22,000 
					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Process Line + 2nd Fill

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Line:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Total Capital

					
					
						 

					
					
						$

					
31,000 
					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Expenditures:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						2002

					
					
						 

					
					
						2003

					
					
						 

					
					
						2004

					
					
						 

					
					
						2005

					
					
						 

					
					
						2006

					
					
						 

					
					
						2007

					
					
						 

					
					
						2008

					
					
						 

					
					
						2009

					
					
						 

					
					
						2010

					
					
						 

					
					
						2011

					
					
						 

				
	
					
						Minimum Revenues:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
0 
					
					
						 

					
					
						$

					
11,000 
					
					
						 

					
					
						$

					
14,500 
					
					
						 

					
					
						$

					
19,000 
					
					
						 

					
					
						$

					
19,000 
					
					
						 

					
					
						$

					
19,000 
					
					
						 

					
					
						$

					
19,000 
					
					
						 

					
					
						$

					
19,000 
					
					
						 

					
					
						$

					
19,000 
					
					
						 

					
					
						$

					
19,000 
					
					
						 

				
	
					
						NPV Calculation:

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Manufacture by

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						2001

					
					
						 

					
					
						2002

					
					
						 

					
					
						2003

					
					
						 

					
					
						2004

					
					
						 

					
					
						2005

					
					
						 

					
					
						2006

					
					
						 

					
					
						2007

					
					
						 

					
					
						2008

					
					
						 

					
					
						2009

					
					
						 

					
					
						2010

					
					
						 

					
					
						2011

					
					
						 

				
	
					
						Alkermes

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						(+) Mfg Profit

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						-6,189

					
					
						 

					
					
						$

					
3,845 
					
					
						 

					
					
						$

					
2,928 
					
					
						 

					
					
						$

					
6,564 
					
					
						 

					
					
						$

					
6,564 
					
					
						 

					
					
						$

					
6,564 
					
					
						 

					
					
						$

					
6,564 
					
					
						 

					
					
						$

					
6,564 
					
					
						 

					
					
						$

					
6,564 
					
					
						 

					
					
						$

					
6,452 
					
					
						 

				
	
					
						(-) Capital

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
21,100 
					
					
						 

					
					
						$

					
7,700 
					
					
						 

					
					
						$

					
2,200 
					
					
						 

					
					
						$

					
0 
					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						(-) Tax

					
					
						 

					
					
						 

					
30 
					
					
						%  

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						-1,857

					
					
						 

					
					
						$

					
1,154 
					
					
						 

					
					
						$

					
878 
					
					
						 

					
					
						$

					
1,969 
					
					
						 

					
					
						$

					
1,969 
					
					
						 

					
					
						$

					
1,969 
					
					
						 

					
					
						$

					
1,969 
					
					
						 

					
					
						$

					
1,969 
					
					
						 

					
					
						$

					
1,969 
					
					
						 

					
					
						$

					
1,935 
					
					
						 

				
	
					
						(+) Deprec

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
900 
					
					
						 

					
					
						$

					
900 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

					
					
						$

					
3,650 
					
					
						 

				
	
					
						Cash Flow

					
					
						 

					
					
						 

					
					
						 

					
					
						 

					
					
						$

					
					
						-21,100

					
					
						 

					
					
						$

					
					
						-11,133

					
					
						 

					
					
						$

					
1,392 
					
					
						 

					
					
						$

					
5,700 
					
					
						 

					
					
						$

					
8,245 
					
					
						 

					
					
						$

					
8,245 
					
					
						 

					
					
						$

					
8,245 
					
					
						 

					
					
						$

					
8,245 
					
					
						 

					
					
						$

					
8,245 
					
					
						 

					
					
						$

					
8,245 
					
					
						 

					
					
						$

					
8,166 
					
					
						 

				

		
			 
		

		
			Disc Rate   NPV=
		

		
			12.5%           $85
		

		
			 
		

		 

		

			14alks_Ex_10-4-3

		

			 

		

		
			Exhibit 10.4.3
		

		
			 
		

		
			Alkermes Controlled Therapeutics Inc. II
		

		
			64 Sidney Street
		

		
			Cambridge, MA 02139 USA
		

		
			 
		

		
			February 1, 2002
		

		
			 
		

		
			JPI Pharmaceutica International,
		

		
			a division of Cilag AG International Zug
		

		
			CH-6300 Zug
		

		
			Kollerstrasse 38
		

		
			Switzerland
		

		
			 
		

		
			Janssen Pharmaceutica Inc.
		

		
			11125 Trenton-Harbourton Road
		

		
			Titusville, NJ 08560 USA
		

		
			 
		

		
			Re:    Exhibits to Manufacturing and Supply Agreement, dated August 6, 1997
		

		
			 
		

		
			Gentlemen:
		

		
			 
		

		
			Pursuant to that certain Manufacturing and Supply Agreement (the “Agreement”), dated August 6, 1997, among Alkermes Controlled Therapeutics Inc. II (“ACT II”), JPI Pharmaceutica International, a division of Cilag AG International Zug, a company organized under the laws of Switzerland (“JPI”), and Janssen Pharmaceutica Inc. (“Janssen US”) (JPI and Janssen US collectively referred to herein as “Janssen”), as supplemented by that certain Addendum to Manufacturing and Supply Agreement (the “Addendum”), dated August 1, 2001, among ACT II, JPI and Janssen, certain exhibits referred to in the Agreement would be agreed to by the parties in the future. Those exhibits are Exhibits A, B, E, F, G and H. This letter sets forth the agreement by the parties as to such Exhibits.
		

		
			 
		

			
	
			
				 1.
			

			
	
			
			Exhibit A (Specifications) shall be in the form attached hereto as Exhibit A.

		
			 
		

			
	
			
				 2.
			

			
	
			
			Exhibit B (Equipment: Capital Items) is, at the current time, intentionally left blank because there are no capital items owned by Janssen.

		
			 
		

			
	
			
				 3.
			

			
	
			
			Exhibit E (Forecast mechanism) shall be in the form attached hereto as Exhibit E.

		
			 
		

			
	
			
				 4.
			

			
	
			
			Exhibit F (Specification of Compound) shall be in the form attached hereto as Exhibit F.

		
			 
		

			
	
			
				 5.
			

			
	
			
			Exhibit G (Average Loss of Compound further to Article 2.7) shall be in the form attached hereto as Exhibit G.

		
			 
		

		
			
		

		 

		

			 

		

 

		

			 

		

			
	
			
				 6.
			

			
	
			
			Exhibit H (Manufacturing Readiness Plan) shall cease to apply from December 1, 2001 in view of the commencement of the commercial manufacture of Product.

		
			 
		

		
			To the extent that the provisions of Exhibit E are in conflict with Sections 2.3, 2.4, 2.11 or 4.1 of the Agreement, such Sections shall be deemed to be amended by Exhibit E. To the extent that the provisions of Exhibit G are in conflict with Sections 2.7 or 4.2 of the Agreement, such Sections shall be deemed to be amended by Exhibit G.
		

		
			 
		

		
			If you are in agreement with the foregoing, please have this letter agreement executed by a duly authorized officer and return one fully executed copy to me.
		

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						    

					
					
						Sincerely,

				
	
					
						 

					
					
						 

					
					
						ALKERMES CONTROLLED

				
	
					
						 

					
					
						 

					
					
						THERAPEUTICS INC. II

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						By:

					
					
						/s/ Michael Landine

				
	
					
						 

					
					
						 

					
					
						Name:

					
					
						Michael Landine

				
	
					
						 

					
					
						 

					
					
						Title:

					
					
						Vice President

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						Agreed to:

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						JPI PHARMACEUTICA INTERNATIONAL,

					
					
						 

					
					
						 

				
	
					
						A DIVISION OF CILAG AG INTERNATIONAL ZUG

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ Erik Rombouts

					
					
						 

					
					
						/s/ Heinz Schmid

				
	
					
						Name:

					
					
						Erik Rombouts

					
					
						 

					
					
						Heinz Schmid

				
	
					
						Title:

					
					
						Vice President Alliance Management

					
					
						 

					
					
						General Manager

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						JANSSEN PHARMACEUTICA INC.

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						 

					
					
						 

					
					
						 

				
	
					
						By:

					
					
						/s/ Alex Gorsky

					
					
						 

					
					
						 

				
	
					
						Name:

					
					
						Alex Gorsky

					
					
						 

					
					
						 

				
	
					
						Title:

					
					
						President

					
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		
			

		 

		

			 

		

 

		

			 

		

Exhibit A
		

		
			Specifications
		

		
			 
		

		
			The specifications for “RISPERDAL CONSTA(tm)” as found in NDA # 21-346 submitted by Janssen on August 31, 2001, all applicable MAA filings, all applicable supplements to the filings and all subsequent revisions to these specifications.
		

		
			 
		

		
			 
		

		
			

		 

		

			A-

		

 

		

			 

		

Exhibit E
		

		
			Forecast Mechanism
		

		
			 
		

			
	
			
				 1.
			

			
	
			
			Effective Time of this Exhibit. This Exhibit E (Forecast Mechanism) shall only be ineffect until December 31, 2002 at which time the parties shall review and modify (if needed) the forecast mechanism, which shall then be in effect for the remainder of the term of the Agreement, unless the parties agree otherwise.

		
			 
		

			
	
			
				 2.
			

			
	
			
			Definitions. For purposes of this Exhibit E, the following terms shall have the following meanings. Any capitalized term not defined below shall have the meaning set forth in the Manufacturing and Supply Agreement to which this Exhibit is appended (the "Agreement").

		
			 
		

			
	
			
				 (a)
			

			
	
			
			“Batch” shall mean the quantity produced from one operation of the emulsion phase of the manufacturing process.

		
			 
		

			
	
			
				 (b)
			

			
	
			
			“Dose” shall mean the amount of active ingredient included in each Vial of Product. There shall only be three Dose sizes: 25 mg, 37.5 mg and 50 mg.

		
			 
		

			
	
			
				 (c)
			

			
	
			
			For purposes of this Exhibit E only, “Janssen” shall include any designee of Janssen.

		
			 
		

			
	
			
				 (d)
			

			
	
			
			“Region” shall mean the geographic region in which certain Vials are to be distributed and sold. There shall only be two Regions: (i) the United States and (ii) the rest of the world.

		
			 
		

			
	
			
				 (e)
			

			
	
			
			“Vial” shall mean the primary container filled with finished Product in a single dosage form. Vials will be the final Product to be shipped by ACT II to Janssen for final packaging into a kit before distribution and sale.

		
			 
		

			
	
			
				 3.
			

			
	
			
			Full Batches. ACT II shall Manufacture Product and prepare Vials for shipment only in Batches and not in less than a full Batch size.

		
			 
		

			
	
			
				 4.
			

			
	
			
			Forecasts. On or before the 25th calendar day of each month, Janssen will provide to ACT II a rolling forecast of Product for the eighteen (18) months following the month in which such forecast is submitted. Each forecast shall include the quantity of Vials forecasted in Batch quantity amounts based on the estimated Vials per Batch set forth below. The forecast shall also state the quantities of Vials by Dose and Region and the estimated Batch quantities (by Dose and Region) needed to produce such Vials based on the estimated Vials per Batch set forth below.

		
			 
		

			
					
						 

					
					
						 

					
					
						 

					
					
						 

				
	
					
						Dose Size:

					
					
						25 mg

					
					
						37.5 mg

					
					
						50 mg

				
	
					
						Estimated Yield of Vials per Batch

					
					
						136,000

					
					
						92,000

					
					
						69,000

				

		
			 
		

		
			
		

		
			

		 

		

			E-

		

 

		

			 

		

 
		

			
	
			
				 5.
			

			
	
			
			Binding Forecasts; Semi-Firm Forecasts. Months one through and including four (the “Firm Months”) of each forecast shall be binding on Janssen and shall constitute a firm order. Months five through and including nine (the “Semi-Firm Months”) of each forecast shall not be binding, but shall be semi-firm, meaning that in any subsequent forecast, Janssen may only increase the Batches forecasted in the Semi-Firm Months within the limits set forth below, provided, however, that ACT II shall use commercially reasonable efforts to meet Janssen's requirements for Product. For the avoidance of doubt, Janssen shall be entitled to decrease its forecast for the Semi-Firm Months in an unlimited fashion. Months ten through eighteen of each forecast shall be neither binding nor semi-firm, but shall be good faith estimates of Janssen's anticipated requirements for Product.

		
			 
		

			
					
						 

					
					
						 

					
					
						 

				
	
					
						Previously
Forecasted Batch Quantity

					
					
						Allowable Monthly
Increase

					
					
						Allowable Monthly
Forecasted Batch Quantity

				
	
					
						0

					
					
						2

					
					
						2

				
	
					
						1

					
					
						1

					
					
						2

				
	
					
						2

					
					
						1

					
					
						3

				
	
					
						3

					
					
						1

					
					
						4

				
	
					
						4

					
					
						0

					
					
						4

				

		
			 
		

			
	
			
				 6.
			

			
	
			
			Purchase Orders. JPI and Janssen US may issue to ACT II formal purchase orders for the Regions they are responsible for; provided that the aggregate of purchase orders submitted by JPI and Janssen US shall not exceed the amount forecasted for the applicable period, unless specifically allowed hereunder or agreed by the parties. Even in the absence of one or more purchase orders, ACT II may Manufacture and prepare for shipment the quantity of Vials, in Doses and for the Regions, called for in the forecast for any Firm Month.

		
			 
		

			
	
			
				 7.
			

			
	
			
			Monthly Forecast Maximum; Manufacturing Shut-Downs. No forecast may require the Manufacture of more than one (1) Batch per week. ACT II will be allowed up to two (2) manufacturing shut-downs each year and each manufacturing shut-down shall last not longer than two (2) weeks. ACT II shall provide to Janssen the schedule for manufacturing shut-downs at the beginning of each calendar year. The parties will work together to schedule delivery of Product in accordance with both the forecasts and scheduled shut-downs.

		
			 
		

			
	
			
				 8.
			

			
	
			
			Diligence to Meet Forecast. ACT II will use commercially reasonable efforts to Manufacture and prepare for shipment Product in the Vial quantities, in the Doses, for the Regions and in the time periods forecasted by Janssen.

		
			 
		

			
	
			
				 9.
			

			
	
			
			Shortfalls. There shall be a shortfall at any time that the cumulative amount of Vials for any Dose or Region actually prepared for shipment in any six (6) month period falls below eighty percent (80%) of the amount of Vials forecasted by Janssen for such Dose or Region for such six (6) month period (the difference between the amount of such Vials prepared for shipment and eighty percent (80%) of the forecasted amount of such Vials

		
			
		

		
			

		 

		

			E-

		

 

		

			 

		

shall be the “Shortfall”). Notwithstanding the foregoing, there shall not be a Shortfall if Janssen submits a forecast in which the amount of Vials for a Firm Month are greater than what was forecasted in the same Firm Month in a previous forecast or the amount of Vials for a Firm Month or a Semi-Firm Month are greater than the allowable increase over what was forecasted in the same Semi-Firm Month in a previous forecast. In the event of a Shortfall, Janssen shall notify ACT II that a Shortfall has occurred, stating in what Dose or Region the Shortfall occurred and requesting that ACT II cure such Shortfall. Upon receipt of such notice from Janssen, ACT II will use commercially reasonable efforts to Manufacture and prepare for shipment an amount of Vials in the particular Dose or Region in order to cure such Shortfall in the month following receipt of such notice.
		

		
			 
		

			
	
			
				 10.
			

			
	
			
			No Breach. ACT II shall not be considered to be in breach of its obligations to supply the requested quantities of Product under the Agreement (including the provisions in this Exhibit E) if:

		
			 
		

			
	
			
				 (a)
			

			
	
			
			there is any Shortfall during the initial five (5) months of commercial Manufacture of Product under the Agreement;

		
			 
		

			
	
			
				 (b)
			

			
	
			
			there is a Shortfall after the initial five (5) months of commercial Manufacture of Product under the Agreement, Janssen requests that ACT II cure such Shortfall and ACT II uses or is using Commercially Reasonable Efforts to cure such Shortfall, all in accordance with Section 9 hereof; or

		
			 
		

			
	
			
				 (c)
			

			
	
			
			a delay in the Manufacture of Product, preparation for shipment or actual delivery of Vials is caused by Janssen (for example, due to a failure or delay in the supply of bulk Compound, testing of Product by Janssen, validation by Janssen of shipping containers, receipt of test results, protocols, reports or approvals from Janssen required under the Quality Agreement for Manufacture or shipment of Product, receipt of delivery instructions from Janssen, release of Product by Janssen, etc.);

		
			 
		

		
			provided that, in each case, ACT II is using commercially reasonable efforts to Manufacture and prepare for shipment Vials in accordance with the forecast.
		

		
			 
		

			
	
			
				 11.
			

			
	
			
			Inventory; Shelf Life of Product Delivered. ACT II may, at its option, Manufacture and hold Product in inventory. All Product, including any Product that may have been held in inventory, delivered by ACT II to Janssen in accordance with Section 4.1 of the Agreement shall have a remaining shelf life of at least eighteen (18) months at the time it is so delivered by ACT II, unless otherwise agreed on an ad hoc basis. Notwithstanding the foregoing, ACT II shall not be held responsible for, and Janssen shall be obligated to purchase (if otherwise meeting Specifications), Product whose remaining shelf-life is less than eighteen (18) months at the time of such delivery, if the delivery of Product has been delayed by more than 4 months from the time that the Product was filled into Vials if such delay is caused by Janssen (for example, due to a failure or delay in the testing of

		
			
		

		
			

		 

		

			E-

		

 

		

			 

		

Product by Janssen, validation by Janssen of shipping containers, receipt of test results, protocols, reports or approvals from Janssen required under the Quality Agreement for shipment of Product, receipt of delivery instructions from Janssen, release of Product by Janssen, etc.). This Section 11 shall be reviewed and modified (if needed) by the parties at the end of calendar year 2002.
		

		
			
		

		
			

		 

		

			E-

		

 

		

			 

		

 
		

		
			
		

		
			

		 

		

			E-

		

 

		

			 

		

Exhibit F
		

		
			Specification of Compound
		

		
			 
		

		
			The specifications for “Risperidone Drug Substance” as found in NDA # 21-346 submitted by Janssen on August 31, 2001, all applicable MAA filings, all applicable supplements to the filings and all subsequent revisions to these specifications.
		

		
			 
		

		
			 
		

		
			

		 

		

			E-

		

 

		

			 

		

Exhibit G
		

		
			Average Loss of Compound
		

		
			 
		

			
	
			
				 1.
			

			
	
			
			Effective Time of this Exhibit. This Exhibit G (Average Loss of Compound) shall only be in effect until December 31, 2002 at which time the parties shall review and modify (if needed) the assumptions or calculations set forth herein. Thereafter, this Exhibit G will be reviewed and modified (if needed) to reflect actual performance on an annual basis.

		
			 
		

			
	
			
				 2.
			

			
	
			
			Timing of Penalty/Yield Calculation and Payment, if any. On or before January 31of each calendar year, ACT II shall calculate whether any penalty is due pursuant to the yield calculation set forth in this Exhibit G and, if due, shall pay such penalty to Janssen. In any event, ACT II shall submit to Janssen its yield calculation, either with any such penalty payment or without payment if no penalty is due.

		
			 
		

			
	
			
				 3.
			

			
	
			
			Calculation of a Penalty, if any, for Unacceptable Yield. The calculation of how much penalty is due, if any, for unacceptable yield shall be as follows:

		
			 
		

		
			Penalty = $10,000 X [Input — Output]
(No payment by either party if a negative answer)
		

		
			 
		

		
			where
		

		
			 
		

		
			Output = A + B + 10.125 +C and Input = [D X 8.1] + [E X 4.05]
		

		
			 
		

		
			where
		

		
			 
		

		
			A = [(F X G) / 1,000,000] + [(H X I) / 1,000,000] + [(J X K) / 1,000,000], where F equals the number of vials of dose size 25 mg that were actually shipped by ACT II in the previous calendar year; G equals the Compound Usage per Vial (mg) for the 25 mg dose size pursuant to the chart under Section 4(a)(i) of this Exhibit G; H equals the number of vials of dose size 37.5 mg that were actually shipped by ACT II in the previous calendar year; I equals the Compound Usage per Vial (mg) for the 37.5 mg dose size pursuant to the chart under Section 4(a)(i) of this Exhibit G; J equals the number of vials of dose size 50 mg that were actually shipped by ACT II in the previous calendar year; and K equals the Compound Usage per Vial (mg) for the 50 mg dose size pursuant to the chart under Section 4(a)(i) of this Exhibit G.
		

		
			 
		

		
			B = 10%XA
		

		
			 
		

		
			C = the documented loss in kilograms due to filling if more than 1 dose size was filled from a singe batch.
		

		
			 
		

		
			D = the total number of batches actually shipped by ACT II in the previous calendar year.
		

		
			 
		

		
			
		

		
			

		 

		

			E-

		

 

		

			 

		

E = the total number of actual failed batches in the previous calendar year.
		

		
			 
		

		
			Certain factors in the calculation set forth above shall be reviewed and modified, if necessary, on an annual basis, all as set forth below in Section 4 of this Exhibit G.
		

		
			 
		

			
	
			
				 4.
			

			
	
			
			Explanation of Calculation of Penalty.

		
			 
		

		
			(a)         Explanation of Output Calculation.
		

		
			 
		

		
			(i)           The following chart shows the current standard number of vials from each batch of Product for each dose size (the “Standard Batch Vial Yield”). Based on such number of vials per dose size and the amount of Compound (bulk active drug product) used for each batch, the Compound usage for each vial (the “Compound Usage/Vial”) is calculated and then also shown in the chart. The “Standard Batch Vial Yield” and corresponding “Compound Usage/Vial” will be re-calculated on an annual basis based on the performance of the prior calendar year. The corresponding numbers in this chart will then be adjusted (on an annual basis). The “Compound Usage/Batch” shall not change unless the Specifications, including the Manufacturing processes, change.
		

		
			 
		

			
					
						Dose Size

					
25 
					
37.5 
					
50 
				
	
					
						Standard Batch Vial Yield (000's)

					
136 
					
92 
					
69 
				
	
					
						Compound Usage / Batch (kg)

					
8.1 
					
8.1 
					
8.1 
				
	
					
						Compound Usage / Vial (mg)

					
59.6 
					
88.0 
					
117.4 
				

		
			 
		

		
			(ii)          Certain “Buffers” are added to the Output calculation.
		

		
			 
		

			
	
			
				 (1)
			

			
	
			
			There is expected to be a successful batch yield variability of 10% of the Compound that will be used in Manufacturing.

		
			 
		

			
	
			
				 (2)
			

			
	
			
			The parties have agreed to share in the anticipated batch failures based on the previous calendar year performance. The number of failed batches to be shared will be adjusted on an annual basis. For the initial fifteen month period, the failed batch sharing allotment shall be 10.125 kg of Compound, which is based on 2.5 failed batches times the 4.05 kg allotment of Compound per failed batch.

		
			 
		

			
	
			
				 (3)
			

			
	
			
			The parties acknowledge that there will be losses of Product during the filling process in the event that ACT II must fill more than one dose size in a single batch. Therefore, such loss can be added to

		
			
		

		
			

		 

		

			E-

		

 

		

			 

		

the Output calculation provided that ACT II can document the actual loss resulting from the filling process.
		

		
			 
		

			
	
			
				 (b)
			

			
	
			
			Explanation of Input calculation. The total number of batches actually shipped by ACT II in a calendar year shall not include work in process or batches that were Manufactured but held in inventory (and not shipped) by ACT II.

		
			 
		

			
	
			
				 (c)
			

			
	
			
			Example. The following example of a calculation under this Exhibit G is provided for clarification purposes only.

		
			 
		

		
			(i)           Assumption of Facts:
		

		
			 
		

		
			20 batches manufactured by Alkermes
		

		
			19 batches shipped to Janssen (1 failed batch)
		

		
			1  batch split into 2 dose sizes (documented loss is 1 kg)
		

		
			 
		

		
			(ii)         Output.
		

		
			 
		

		
			(1)Calculation of A.
		

		
			 
		

		
			Sum total vials per dose size actually shipped (19 batches):
		

		
			-                   25 mg dose:                 748,000 vials
		

		
			-                   37.5 mg dose:              506,000 vials
		

		
			-                   50 mg dose:                 552,000 vials
		

		
			 
		

		
			Multiply vials per dose by the Compound Usage per Vial:
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						-     25 mg dose:

					
					
						[748,000 vials X 59.6 mg/vial] / 1,000,000 = 44.58 kg

				
	
					
						-     37.5 mg dose:

					
					
						[506,000 vials X 88.0 mg/vial] / 1,000,000 = 44.53 kg

				
	
					
						-     50 mg dose:

					
					
						[552,000 vials X 117.4 mg/vial] / 1,000,000 = 64.81 kg

				

		
			 
		

		
			Total: 44.58 + 44.53 + 64.81 = 153.92 kg
		

		
			 
		

			
	
			
				 (2)
			

			
	
			
			Calculation of  B (Successful batch variability). 

		
			 
		

		
			10% X 153.92 = 15.39 kg
		

		
			 
		

			
	
			
				 (3)
			

			
	
			
			Calculation of.C (Documented Filling Loss) = 1.00 kg

		
			 
		

			
	
			
				 (4)
			

			
	
			
			Output = 153.92 + 15.39 + 10.125 + 1.00 = 180.435 kg

		
			 
		

			
	
			
				 (iii)
			

			
	
			
			Input = [19 X 8.1] + [1 X 4.05] = 157.95 kg

		
			 
		

			
	
			
				 (iv)
			

			
	
			
			Penalty = $10,000 X [157.95 — 180.435] = -$224,850 

		
			NO penalty since the result is a negative number
		

		
			 
		

		
			 
		

		
			

		 

		

			E-

		

 

		

			 

		

Exhibit H
		

		
			Manufacturing Readiness Plan
		

		
			 
		

		 

		

			E-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00254-of-00352.parquet"}]]