On September 12, 2014, Zogenix (NASDAQ: ZGNX) and Daravita Limited entered into a third amendment to the License Agreement, dated November 27, 2007, by and between Zogenix and Daravita. Under the License Agreement, Daravita granted to Zogenix an exclusive license in the United States and its possessions and territories to certain intellectual property rights related to oral controlled release formulations of hydrocodone bitartrate and related compounds, including the Company’s Zohydro ER product. Under a separate commercial manufacturing and supply agreement entered into by the Company and Daravita on November 2, 2012, Daravita is the exclusive manufacturer and supplier to Zogenix of Zohydro ER, subject to certain exceptions, and the Company generally must purchase all of its requirements of Zohydro ER from Daravita.
Pursuant to the Third Amendment, Zogenix may exercise its option to obtain an exclusive license to certain abuse-deterrent technology and know-how from Altus Formulation Inc. (“Altus”) (pursuant to that certain Development and Option Agreement, dated November 1, 2013, by and between Zogenix and Altus). Following such exercise and the first commercial sale by Zogenix, its affiliates or any of its permitted sublicensees of any extended-release formulations of hydrocodone using Altus’ abuse-deterrent technology (“Altus Product”), Daravita will be entitled to receive from Zogenix a royalty on net sales of Altus Product through the date that is 15 years following the first commercial sale of the Altus Product in the United States and its possessions and territories. Prior to December 31, 2019, such royalty will be (i) in the mid single-digits if Daravita or an affiliate is the manufacturer of the Altus Product and (ii) in the low twenty-percent-range if Daravita or an affiliate is not the manufacturer of the Altus Product. After December 31, 2019, such royalty will be in the high single digits, regardless of whether Daravita or an affiliate is the manufacturer. Neither Zogenix nor Daravita shall be obligated to have Daravita or an affiliate manufacture commercial supplies of Altus Product for Zogenix.
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