I. Scope of the Project Agreement
I.3 Prototype Project, Milestones, and Pricing Assumptions and Conditions
Milestones/Payments. One hundred million Regimens of Ad26.COV2.S vaccine will be provided by Janssen to the Government on a Firm Fixed Price (“FFP”) per Regimen basis in accordance with the Milestone Payment Schedule. Due to variances in fill/finish yield, Janssen shall invoice for and the Government, through the CMF, shall pay for actual quantities delivered, at a rate of $10.00 per Regimen. Janssen shall use its reasonably diligent efforts to provide the Government the full 100M Regimens on or before the final delivery date. The Government will be under no obligation to receive or pay for any Regimens that are not made available for delivery according to the schedule defined in Table 1–1, except that (a) deliveries will be considered to be timely made according to the schedule to the extent that they are made up to 30 calendar days after the applicable delivery date, due to delays related to manufacturing, testing, or release, and (b) the Government will be obligated to accept and pay for Regimens that are not timely delivered by an initially applicable delivery date or within the alternative delivery windows identified in this paragraph, to the extent that any delay in delivery is solely attributable to an Excusable Delay Event as defined in Article IX, Section 4 of this Project Agreement. The Government will, at its discretion, have unilateral authority to extend future delivery dates before they have passed to the extent that any of the 100M Regimens are not expected to be delivered according to the schedule defined in Table 1–1; however, Janssen will be under no obligation to deliver Regimens after December 31, 2021, unless mutually agreed to by both Janssen and the Government. For the avoidance of doubt, to the extent there is a shortfall in the amount of Regimens delivered by any given delivery date, which is not excused or extended by the terms of this paragraph, then Janssen shall be free to dispose of such shortfall in its sole discretion.
Janssen’s current production plan contemplates 100% of release of finished Regimens in 2020 and January and February of 2021 will occur in the US. If Janssen changes this plan in any substantial way, it will discuss with the Government adjustments to this Project Agreement that are consistent with the principles established in this section.
On a month–by–month basis, for any Regimen that Janssen manufactures and releases in the United States in excess of the number of Regimens that Janssen planned to release in the United States for delivery under this Project Agreement from January through June 2021 (irrespective of the source of drug substance), the Government will have an option: (i) for the months of January and February 2021, to purchase 100 percent of such excess; and (ii) for all remaining months, to purchase 20 percent of such excess Regimens at a price of, in each case, $10/Regimen and agrees that Janssen may allocate or sell the remaining amount of such excess at Janssen’s sole discretion. For each delivery month identified in Table 1–1, Janssen will notify the Government about any such excess Regimens on or before the 15th of that month, and the Government will have 5 working days after receiving such notice in which to exercise its option. If the Government exercises its option, Janssen will provide the ordered excess Regimens by the delivery date identified in Table 1–1 for the month in which Janssen provided its notice. Any excess Regimens that are delivered in a particular month will be subtracted from the number of Regimens that Janssen would otherwise be required to deliver in the last month of scheduled deliveries as reflected in Table 1–1. In the event that, as the result of the purchase of excess Regimens as contemplated under this paragraph, no delivery is due in the last month of scheduled deliveries as reflected in Table 1–1, any excess Regimens that are delivered in a particular month will be subtracted from the number of Regimens that Janssen would be required to deliver in what would then be the final month in which deliveries under this Project Agreement will take place. Notwithstanding the foregoing, the Government’s option may not be exercised in a way that would require Janssen to deliver more than 100 million Regimens under this Project Agreement.
In the event that Janssen is able to commence delivery of Regimens manufactured and released in the United States prior to January of 2021, the Government shall have a right of first refusal to purchase such Regimens as set forth in this Paragraph. The Government’s right shall cover hundred (100) percent of such Regimens. Janssen will notify the Government about the availability of such Regimens within fifteen (15) calendar days after learning of their availability. The Government will then have five (5) working days after receiving such notice in which to exercise its right of first refusal. Janssen may allocate or sell any Regimens that the Government does not elect to purchase in its sole discretion. Any purchased Regimens shall be subtracted from the quantity of Regimens Janssen is required to deliver in the last month of scheduled deliveries as reflected in Table 1–1. In the event that any such subtraction results in Janssen being required to deliver no Regimens in the last month of deliveries as reflected in Table 1–1, any additional or subsequent early deliveries will be subtracted from what would then be the final month in which deliveries under this Project Agreement will take place. Notwithstanding the foregoing, the Government’s rights may not be exercised in such a way that would require Janssen to deliver more than 100 million Regimens under this Project Agreement.
Janssen is currently pursuing external validation of its not–for–profit calculation approach for the pricing of its Regimens to ensure it meets its commitment to make the Regimens available on a not–for–profit basis for use in the emergency pandemic, and Janssen is developing a framework under which any profit would be returned to purchasers of the Regimens. The Parties agree that the Government will benefit from the application of these procedures. This Project Agreement will not be closed out until at least one external validation is complete such that an appropriate credit can be completed if the final not for–profit price per Regimen is determined to be less than $10. In no case shall the price per Regimen exceed $10.
I.6 Follow–on Production. This Project Agreement/Statement of Work hereby is eligible for the award of a follow–on production contract for Ad26.COV2.S subject to the requirements of 10 U.S.C. § 2371b (f)(2)(A) and (B) and (f)(3). In accordance with 10 U.S.C. § 2371b(f), and upon successful demonstration of the Prototype Project or at the accomplishment of particularly favorable or unexpected results that would justify transitioning to production (e.g., EUA or BLA), additional production of up to 200M Regimens, may be awarded to partially or completely meet the USG objective of supplying a safe and effective Ad26.COV2.S to the entire US population. This Project Agreement includes options that are priced at Janssen’s global not–for–profit price of $10/Regimen as described in Article I, Section 3 above, for follow–on production, not to exceed 200 million Regimens. During the performance of the Project Agreement, the Government and Janssen will finalize the scope of production. If the Prototype Project is successful, as described in this Article I, Section 6, the Government may then enter into follow–on production by executing these options through a separate stand–alone production agreement.
V. Obligation and Payment
V.4 Payments and Payment Instructions
d. The Parties hereby agree that reasonable delays in performance of this Project Agreement/Statement of Work shall not be considered nonconforming work, as defined above. The Parties hereby further agree that Janssen has provided timelines based on its best estimates in accordance with the Government’s accelerated timeframes and that the nature of vaccine production/manufacturing is inherently complex and in order to ensure appropriate quality, safety and efficacy standards are met, some delays are unavoidable and these delays will be addressed by the Parties under the Governance structure of Article III of this Project Agreement/Statement of Work, as the circumstances dictate at that time. Each delivery identified in Table 1–1 will be made independent of the other deliveries, and a failure to make one or more deliveries will not impact the Parties’ obligations with respect to the other deliveries as long as Janssen continues to make reasonably diligent efforts to make each delivery under this Project Agreement.
Pricing Assumptions and Conditions. 1) Short–term storage not to exceed 30 days and delivery to no more than 10 sites in the continental United States, are included in the $10/Regimen pricing. 2) At the discretion of the Government, Janssen shall provide the Government with up to twelve (12) months storage of up to 100M Regimens of Ad26.COV2.S (Milestone Number 7), (b) (4) (b) (2) The Government shall pay Janssen the full FFP amount, as identified in Table 1–1, distributed evenly across each month ordered for long–term storage capacity, with payment for each month due at the end of the applicable month. As applicable, Janssen will invoice the Government less per month for storage to the extent necessary to reflect Janssen storage vendor charges that are lower than expected for each month.
IX. Patent Rights
IX.8 March–in Rights. Janssen agrees that, with respect to any Subject Invention in which it has acquired title, the Government may request Janssen, an assignee, or exclusive licensee of a Subject Invention to grant a non-exclusive license, within the Field of use to a responsible US-based third party licensee, upon terms that are reasonable under the circumstances. If Janssen, assignee, or exclusive licensee initially refuses such a request, the Government may obligate Janssen to grant such a license subject to Article IX, Section 8(c) below if the Government determines that: […]
b. Such action is necessary to alleviate the following urgent health or safety needs not reasonably satisfied by the contractor that affect the United States and that are not reasonably satisfied by Janssen, assignee, or their licensees:
(i) declaration for Public Health Emergency by the Secretary of the Government;
(ii) determination that there is a significant potential for a public Health emergency that has a significant potential to affect the national security or public health of U.S. citizens as determined by the Secretary of the Government; or
(iii) declaration by WHO Director General of a public health emergency of international concern.