I prefer to read the binding contracts, not just the press releases. For those of you who like to do the same, here is what I found on the Revenue-Sharing Contract with Palladin for Canada/Mexico/South-Africa.
The definitive "License, Development and Supply Agreement" is found on Sedar, filed on Aug 06, 2013 under "Other Material Contract(s)". It replaces the "Binding Summary" of the agreement filed in Sedar on June 11, 2013 under "Material Documents". It sounds like they put the Canada licensing/partnership agreement together in a hurry and left the drafting of the actual document until later.
Here are the highlights:
- Bioniche submits the applications for regulatory approval. Palladin assists. (In the previous summary, Palladin was responsible for submitting the applications.)
- Bioniche completes "at its expense, any clinical trials required to obtain a Regulatory Approval in Canada". It says "Canada". It does not say "Territory" which would mean Canada/Mexico/South America. Therefore it does not intend to do a clinical trial to satisfy Mexico or SA application requirements. Bioniche has to use Commercially Reasonable Efforts. If no pharma company in their right mind would do a whole clinical trial just for the Canadian marketplace, given its small size, then I assume work-arounds would be acceptable, such as using actual efficacy results based on US sales if/when approved in the US.
- There are milestone payments by Palladin to Bioniche, details of which are redacted. However, clarifying words are not redacted and imply that milestones are revenue clip levels.
- There is "Additional Consideration" paid by Palladin every year of the agreement (15 years plus 5 year renewal periods). This used to be called Revenue Sharing in the initial summary document.
- Bioniche supplies the product at zero cost to Palladin (because Bioniche gets a share of the revenue to pay for manufacturing costs.)
- Palladin gets to deduct 3% of gross sales for distribution and logistics costs, when determining net revenue for the sharing calculation. Palladin takes care of all the sales administration and collection. Palladin provides the revenue accounting.
- There is a non-compete clause. Palladin or affiliated parties cannot sell a competing product into the "Territory" (Canada/Mexico/SA), which means Endo cannot sell Valrubicin in that territory. However, since Valrubicin is only approved in the US, that shouldn't be a problem.
- Cross-border sales are also forbidden. Palladin cannot sell into the US.
- In the event of default, either party can terminate the agreement. If this happens, all data and rights revert to Bioniche. No other payments are specified (probably since Palladin didn't really put any up-front money into the deal, so there is nothing to recover upon dissolution.)
- Any financial claim arising from breach or termination has to be negotiated first, but as a last resort can be sent to binding arbitration in Toronto. Then there is no appeal. However, if a party will suffer "Irreparable Harm" they can divert the dispute into the Ontario Commercial Court system instead of arbitration. I don't see how Endo could claim Irreparable Harm, since they are so big.
- There are no timelines or deadlines mentioned in the contract. Each party has to use "Commercially Reasonable Efforts" to execute their roles. That is defined to be "not less than the efforts that a third party developer of pharmaceutical product devotes" ... to a ... "product of its own having similar market potential" ... "taking into account relevant commercial conditions then prevailing."
Anyone who has a question about what any of this means should read the whole document for themselves. It means exactly what it says. (The judge spend lots of time discussing the meaning of individual words
in the contract if it ends up in court.)