Post by yossarian on Sept 28, 2015 12:21:17 GMT -5
Here is a link to the Mannkind/Sanofi insulin supply agreement www.sec.gov/Archives/edgar/data/899460/000119312514406347/d783199dex102.htm
Here is what it says, in part, about payments:
ARTICLE 4
PAYMENT TERMS
4.1 Price.
(a) Paid Price, Estimated COGS and COGS Cap. No later than October 2 of each Calendar Year during the Term, the JAC shall determine the price to be paid by Sanofi to MannKind for each unit (i.e., each cartridge) of Product supplied by MannKind to Sanofi during the subsequent Calendar Year (the “Paid Price”), which price shall equal the lower of the Estimated COGS per unit for that year and the COGS Cap per unit, in each case, at the Estimated Annual Volume. The Paid Price shall subsequently be subject to true-up as described in Section 4.1(c). For purposes of this Agreement:
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(i) “Estimated COGS” shall mean the estimated Cost of Goods for Product to be supplied by MannKind to Sanofi or its Affiliates or sublicensees under this Agreement for a specified annual volume of cartridges and at the estimated weighted average Insulin price for a Calendar Year, as adjusted pursuant to Section 4.1(b). The Parties agree that the Estimated COGS for the period from the Effective Date to December 31, 2015, shall be as set forth in SCHEDULE A to this Agreement; and
(ii) “COGS Cap” shall be the maximum price for Product, for a specified annual volume of cartridges and at the weighted average Insulin price determined in accordance with Section 4.1(b)(i), which (A) for the period from the Effective Date until December 31, 2019, shall be as set forth in SCHEDULE B, subject to adjustment in accordance with Section 4.1(b); and (B) for the Calendar Year starting January 1, 2020 and all subsequent Calendar Years during the Term, shall be determined by the JAC for each five-year period prior to the commencement of each such five-year period and shall be subject to adjustment in accordance with Section 4.1(b); in each case, provided that there shall be no COGS Caps from and after qualification of the Sanofi Site.
(b) Adjustments. On January 1, 2016 and at the beginning of each Calendar Year thereafter, the COGS Cap shall be adjusted in accordance with any increase or decrease in the U.S. Consumer Price Index for Prescription Drugs (seasonally adjusted) published by the U.S. Bureau of Labor Statistics (“CPI”) during the previous Calendar Year up to a maximum increase of five percent (5%) per Calendar Year. The Parties acknowledge and agree that unless mutually agreed by the Parties in writing, the COGS Cap shall be calculated in accordance with the values, model and methodology set forth on SCHEDULE B and as exemplified in SCHEDULE C to this Agreement, except that the values reflecting the prices for Insulin and critical Raw Materials (other than Insulin) may be adjusted in accordance with Sections 4.1(b)(i) and 4.1(b)(ii), respectively.
(i) Insulin. The Parties acknowledge and agree that the COGS Cap set forth in SCHEDULE B shall assume the following prices paid by MannKind for Insulin supply: (A) for […***…] an Insulin price of $[…***…]/gram, (B) for […***…], subject to Section 4.1(b), an Insulin price of $[…***…]/gram, and (C) for […***…], subject to Section 4.1(b), […***…], an Insulin price of $[…***…]/gram.
(ii) Hardship. If, due to any reason or cause beyond MannKind’s reasonable control (including market shortage, market embargo, etc.) (a “Hardship”), MannKind is prevented from procuring any critical Raw Material (other than Insulin) at a price reasonably equivalent to that used to calculate the applicable COGS Cap, then MannKind shall promptly inform Sanofi of such Hardship and Parties shall meet to discuss appropriate means, if any, to adjust the values for such critical Raw Material used in the calculation of the COGS Cap to alleviate or mitigate the effects of such Hardship. If the Parties cannot agree upon an appropriate adjustment, the matter shall be referred to the JAC, which shall determine whether to adjust the COGS Cap during the period of such Hardship (and if so, the terms and conditions of such
***Confidential Treatment Requested
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modification). For the avoidance of doubt, “Hardship” shall not include MannKind’s mere failure to negotiate or execute a supply agreement with its Raw Material suppliers.
(c) True-Up. Within forty-five (45) days after the end of the Calendar Year in which First Commercial Sale of Product occurs and each subsequent Calendar Year of the Term (each, a “Sales Period”), the Parties shall calculate an annual true-up payment as follows:
(i) The Parties shall compute (A) the cumulative Paid Price for all Product supplied by MannKind in such Sales Period (the “Cumulative Price Paid”); and (B) the lower of (x) the actual cumulative Cost of Goods for all Product supplied by MannKind in such Sales Period, and (y) the COGS Cap determined on the basis of the total annual volume for such Sales Period (such lower amount, the “Cumulative COGS”); provided, however, that if in any Calendar Year the actual cumulative Cost of Goods exceeds the applicable COGS Cap (such difference, the “Overage”), and in the immediately following Calendar Year the actual cumulative Cost of Goods is less than the applicable COGS Cap, then MannKind shall be entitled to add to the Cumulative COGS, for such successive Calendar Year only, an amount equal to the Overage up to, but not exceeding, the COGS Cap.
(ii) (A) If the Cumulative COGS exceeds the Cumulative Price Paid, Sanofi shall pay the difference to MannKind no later than forty-five (45) days after calculation of the true-up payment is due; and (B) if the Cumulative COGS is lower than the Cumulative Price Paid, the difference shall be, at Sanofi’s option, either (1) a credit to be applied against any or all subsequent purchases of Product hereunder or (2) reimbursed to Sanofi no later than forty-five (45) days after calculation of the true-up payment is due.
(d) True-Up Estimates. Within thirty (30) days of each Quarter, MannKind shall provide to Sanofi with MannKind’s then-current estimates of the total true-up amount that MannKind expects to be paid to or by Sanofi at the end of such Calendar Year pursuant to Section 4.1(c).
4.2 Taxes. All payments payable hereunder shall be paid without any reduction or offset for taxes. MannKind shall pay any and all U.S. federal, state, and local income taxes levied on payments to MannKind hereunder and Sanofi shall, in addition to amounts payable pursuant to Section 4.1, pay all other taxes levied on amounts payable hereunder. The Parties acknowledge and agree that it is their mutual objective and intent to minimize, to the extent feasible, taxes payable with respect to their collaborative efforts under this Agreement and that they shall use their reasonable efforts to cooperate and coordinate with each other to achieve such objective as allowed under Applicable Laws. Each Party shall cooperate with the other to the extent reasonably requested for the purpose of filing any tax returns relating sales, use, transfer, stamp, VAT, withholding, or similar taxes, if any, levied on amounts payable hereunder.
4.3 Invoices; Method of Payments.
(a) MannKind shall invoice Sanofi for the aggregate Estimated COGS or COGS Cap, as applicable, of each shipment of Product at the time of such delivery.
(b) All payments due hereunder to MannKind shall be paid to MannKind in U.S. Dollars not later than forty-five (45) days following the date of receipt of the applicable
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invoice but not earlier than the date of delivery (the “Due Date”), unless such shipment of Product is rejected in accordance with the provisions of Section 5.3. All payments under this Agreement shall be made by bank wire transfer in immediately available funds to a U.S. account designated in writing by MannKind or by other mutually acceptable means. Payments hereunder will be considered to be made as of the day on which they are received by MannKind’s designated bank.
Here is what it says, in part, about payments:
ARTICLE 4
PAYMENT TERMS
4.1 Price.
(a) Paid Price, Estimated COGS and COGS Cap. No later than October 2 of each Calendar Year during the Term, the JAC shall determine the price to be paid by Sanofi to MannKind for each unit (i.e., each cartridge) of Product supplied by MannKind to Sanofi during the subsequent Calendar Year (the “Paid Price”), which price shall equal the lower of the Estimated COGS per unit for that year and the COGS Cap per unit, in each case, at the Estimated Annual Volume. The Paid Price shall subsequently be subject to true-up as described in Section 4.1(c). For purposes of this Agreement:
10.
(i) “Estimated COGS” shall mean the estimated Cost of Goods for Product to be supplied by MannKind to Sanofi or its Affiliates or sublicensees under this Agreement for a specified annual volume of cartridges and at the estimated weighted average Insulin price for a Calendar Year, as adjusted pursuant to Section 4.1(b). The Parties agree that the Estimated COGS for the period from the Effective Date to December 31, 2015, shall be as set forth in SCHEDULE A to this Agreement; and
(ii) “COGS Cap” shall be the maximum price for Product, for a specified annual volume of cartridges and at the weighted average Insulin price determined in accordance with Section 4.1(b)(i), which (A) for the period from the Effective Date until December 31, 2019, shall be as set forth in SCHEDULE B, subject to adjustment in accordance with Section 4.1(b); and (B) for the Calendar Year starting January 1, 2020 and all subsequent Calendar Years during the Term, shall be determined by the JAC for each five-year period prior to the commencement of each such five-year period and shall be subject to adjustment in accordance with Section 4.1(b); in each case, provided that there shall be no COGS Caps from and after qualification of the Sanofi Site.
(b) Adjustments. On January 1, 2016 and at the beginning of each Calendar Year thereafter, the COGS Cap shall be adjusted in accordance with any increase or decrease in the U.S. Consumer Price Index for Prescription Drugs (seasonally adjusted) published by the U.S. Bureau of Labor Statistics (“CPI”) during the previous Calendar Year up to a maximum increase of five percent (5%) per Calendar Year. The Parties acknowledge and agree that unless mutually agreed by the Parties in writing, the COGS Cap shall be calculated in accordance with the values, model and methodology set forth on SCHEDULE B and as exemplified in SCHEDULE C to this Agreement, except that the values reflecting the prices for Insulin and critical Raw Materials (other than Insulin) may be adjusted in accordance with Sections 4.1(b)(i) and 4.1(b)(ii), respectively.
(i) Insulin. The Parties acknowledge and agree that the COGS Cap set forth in SCHEDULE B shall assume the following prices paid by MannKind for Insulin supply: (A) for […***…] an Insulin price of $[…***…]/gram, (B) for […***…], subject to Section 4.1(b), an Insulin price of $[…***…]/gram, and (C) for […***…], subject to Section 4.1(b), […***…], an Insulin price of $[…***…]/gram.
(ii) Hardship. If, due to any reason or cause beyond MannKind’s reasonable control (including market shortage, market embargo, etc.) (a “Hardship”), MannKind is prevented from procuring any critical Raw Material (other than Insulin) at a price reasonably equivalent to that used to calculate the applicable COGS Cap, then MannKind shall promptly inform Sanofi of such Hardship and Parties shall meet to discuss appropriate means, if any, to adjust the values for such critical Raw Material used in the calculation of the COGS Cap to alleviate or mitigate the effects of such Hardship. If the Parties cannot agree upon an appropriate adjustment, the matter shall be referred to the JAC, which shall determine whether to adjust the COGS Cap during the period of such Hardship (and if so, the terms and conditions of such
***Confidential Treatment Requested
11.
modification). For the avoidance of doubt, “Hardship” shall not include MannKind’s mere failure to negotiate or execute a supply agreement with its Raw Material suppliers.
(c) True-Up. Within forty-five (45) days after the end of the Calendar Year in which First Commercial Sale of Product occurs and each subsequent Calendar Year of the Term (each, a “Sales Period”), the Parties shall calculate an annual true-up payment as follows:
(i) The Parties shall compute (A) the cumulative Paid Price for all Product supplied by MannKind in such Sales Period (the “Cumulative Price Paid”); and (B) the lower of (x) the actual cumulative Cost of Goods for all Product supplied by MannKind in such Sales Period, and (y) the COGS Cap determined on the basis of the total annual volume for such Sales Period (such lower amount, the “Cumulative COGS”); provided, however, that if in any Calendar Year the actual cumulative Cost of Goods exceeds the applicable COGS Cap (such difference, the “Overage”), and in the immediately following Calendar Year the actual cumulative Cost of Goods is less than the applicable COGS Cap, then MannKind shall be entitled to add to the Cumulative COGS, for such successive Calendar Year only, an amount equal to the Overage up to, but not exceeding, the COGS Cap.
(ii) (A) If the Cumulative COGS exceeds the Cumulative Price Paid, Sanofi shall pay the difference to MannKind no later than forty-five (45) days after calculation of the true-up payment is due; and (B) if the Cumulative COGS is lower than the Cumulative Price Paid, the difference shall be, at Sanofi’s option, either (1) a credit to be applied against any or all subsequent purchases of Product hereunder or (2) reimbursed to Sanofi no later than forty-five (45) days after calculation of the true-up payment is due.
(d) True-Up Estimates. Within thirty (30) days of each Quarter, MannKind shall provide to Sanofi with MannKind’s then-current estimates of the total true-up amount that MannKind expects to be paid to or by Sanofi at the end of such Calendar Year pursuant to Section 4.1(c).
4.2 Taxes. All payments payable hereunder shall be paid without any reduction or offset for taxes. MannKind shall pay any and all U.S. federal, state, and local income taxes levied on payments to MannKind hereunder and Sanofi shall, in addition to amounts payable pursuant to Section 4.1, pay all other taxes levied on amounts payable hereunder. The Parties acknowledge and agree that it is their mutual objective and intent to minimize, to the extent feasible, taxes payable with respect to their collaborative efforts under this Agreement and that they shall use their reasonable efforts to cooperate and coordinate with each other to achieve such objective as allowed under Applicable Laws. Each Party shall cooperate with the other to the extent reasonably requested for the purpose of filing any tax returns relating sales, use, transfer, stamp, VAT, withholding, or similar taxes, if any, levied on amounts payable hereunder.
4.3 Invoices; Method of Payments.
(a) MannKind shall invoice Sanofi for the aggregate Estimated COGS or COGS Cap, as applicable, of each shipment of Product at the time of such delivery.
(b) All payments due hereunder to MannKind shall be paid to MannKind in U.S. Dollars not later than forty-five (45) days following the date of receipt of the applicable
12.
invoice but not earlier than the date of delivery (the “Due Date”), unless such shipment of Product is rejected in accordance with the provisions of Section 5.3. All payments under this Agreement shall be made by bank wire transfer in immediately available funds to a U.S. account designated in writing by MannKind or by other mutually acceptable means. Payments hereunder will be considered to be made as of the day on which they are received by MannKind’s designated bank.
