CONFIDENTIAL Letter of Agreement between SmithKline Beecham Corporation And Quest Diagnostics Incorporated

EX-10.40 9 c52267_ex10-40.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 10.40

CONFIDENTIAL

Letter of Agreement between
SmithKline Beecham Corporation
And
Quest Diagnostics Incorporated

This Letter of Agreement (“LOA”), effective as of January 1, 2008, is made between SmithKline Beecham Corporation d/b/a GlaxoSmithKline with a primary address at 2301 Renaissance Blvd, King of Prussia, PA 19406 USA, together with its affiliates (“GlaxoSmithKline” or “GSK”) and Quest Diagnostics Incorporated, with a primary address at 3 Giralda Farms, Madison, NJ 07940 together with its affiliates (“Quest Diagnostics”) together “the Parties”, to revise the relationship previously established in the Amended and Restated Global Clinical Trials Agreement dated December 19, 2002 (hereinafter “Previous Agreement”). “Affiliates” for purposes of this LOA shall include any corporation or non-corporate entity which controls, is controlled by, or is under common control with a Party to this LOA.

1.      The Parties agree that Quest Diagnostics shall continue to provide services (hereinafter “Services” as defined in the Previous Agreement) in accordance with the terms of the Previous Agreement and as supplemented by the new business terms covered in Exhibit A, attached hereto, while the Parties, in good faith, draft and negotiate a comprehensive new Global Clinical Trials Agreement (“Agreement”).

2.      This LOA is not intended to take the place of the Agreement, but to implement the business terms contained on Exhibit A while the Agreement is negotiated and executed. This LOA shall remain in effect until the earlier of (i) the execution of the Agreement by the Parties or (ii) March 31, 2008, which date may be extended by the mutual agreement of the Parties. Upon its full execution, the Agreement shall supersede this LOA and the Previous Agreement.

3.      During the term of this LOA, should any dispute arise between the Parties involving conflict or interpretation of a term or condition of the Previous Agreement and a term or condition of this LOA, the disputing party shall promptly notify the other party of the disputed term and the Parties shall negotiate in good faith to resolve the dispute. Notice of the dispute shall be in writing to the following individuals:

For Quest Diagnostics:
Daniel P. Megronigle
3 Giralda Farms
Madison, NJ 07940
Phone ###-###-####

For GlaxoSmithKline:
Paula M. Russella
2301 Renaissance Blvd., #510, RN0410
King of Prussia, PA 19406
Phone: 610 ###-###-####

 

 

 

 

SMITHKLINE BEECHAM CORPORATION

 

QUEST DIAGNOSTICS INCORPORATED

 

 

 

By:

 

By:

 

 

 

 

Name Printed:

 

Name Printed:

 

 

 

 

Title:

 

Title:

 

 

 

 

Date:

 

Date:

 
     
Letter of Agreement    
GlaxoSmithKline and Quest Diagnostics Incorporated    
     



Page 1 of 11

EXHIBIT A

I.     

Term of Agreement
 
 

It is agreed by the Parties that the Agreement shall be effective January 1, 2008 and shall continue through December 31, 2014.
 
II.     

Compensation
 
 

The Parties agree that the “Most Favored Nations (MFN”) pricing status provisions [established under Section XV(1) and XV(1)(i)] from the Previous Agreement shall be of no further force or effect as of January 1, 2008. Any references to the MFN status shall be void.
 
 

Further, Section # XV of the Previous Agreement shall be of no further force or effect for any studies contracted after December 31, 2007. However, items #4 through #15 of Section XV of the Previous Agreement shall continue to apply to any studies contracted before December 31, 2007.
 
 

1.      Billing and Payment Terms. Quest Diagnostics will provide a proposal to GlaxoSmithKline based on the Fee Schedule attached hereto as Attachment #1. Quest Diagnostics will bill GlaxoSmithKline for Services once per month. Charges will be billed at the rates agreed to in the applicable Task Description, subject to any adjustments for inflation and exchange rates permitted under the Task Description or this LOA. Laboratory testing services requested by GlaxoSmithKline that are not included in Attachment #1 shall be billed at Quest Diagnostics’ then-current general fee schedule, subject to any applicable discounts (*) from Quest Diagnostics current list prices, unless otherwise agreed in writing by the Parties. It is a MATERIAL TERM of this Agreement that GlaxoSmithKline shall pay all undisputed invoiced amounts within thirty (30) days of receipt of an invoice for Services.
 
  2.     

Payments:
 
  

2.1       US payments shall be made by wire transfer or check payable to Quest Diagnostics Incorporated, Tax ID Number ###-###-####:
 

 

 

If payment by check:

  

If payment is by Bank Transfer/Wire Transfer:

  

Quest Diagnostics Incorporated

Send to: Bank of America

Clinical Trials USA

ABA Routing Number:

13747 Collection Center Drive

Account Number:

Chicago, IL 60693

Swift Number

 

Telex Number:

 

*Please identify the invoice numbers being paid.

  2.2  UK payments shall be made in the currency agreed to by the parties by check or bank transfer (check payable to Quest
   

 

 Diagnostics Limited, VAT Registration Number GB ###-###-#### 39):
 

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 2 of 11

      If payment is by Cheque:
 
      If payment is by Bank Transfer:
 
Non US Dollar currencies:   HSBC Bank  
Quest Diagnostics Ltd   City of London Corporate Office
Unit B-1 – Parkway West   8 Canada Square, London
Cranford Lane   E14 5XL, United Kingdom
Heston Middlesex      
England TW5 9QA   Swift Code:  
 
US Dollars:   Non US Dollar and Non Euro Deposits:
Quest Diagnostics Limited              Account: Quest Diagnostics Limited
PO Box 13318              Sort Code:
Number:
Newark              IBAN#  
NJ 07101-3318      
USA   Euro Deposits:  
               Account: Quest Diagnostics Limited
               Sort Code:
Number:
               IBAN#  
 
    US Dollar Deposits:
               Account: Quest Diagnostics Limited
               Sort Code:
Number:
               IBAN#  

3. Fee Increases. Quest Diagnostics may increase fees for its Services provided hereunder * to offset any increased costs of operations by providing written notice to GlaxoSmithKline.

Any such increase shall not exceed *.       .

4. *. The * is designed to provide GlaxoSmithKline with * in *. The * shall apply to all studies contracted by the Parties as of *. Quest Diagnostics will offer a * to current studies . This * will apply to * and excludes * by Quest Diagnostics Laboratory or any of its affiliates. The * shall be applied as a * on each invoice for testing services rendered during the preceding month.

5. *. GlaxoSmithKline shall earn * of * following adjustment for *. The * shall exclude *.

The * is as follows:

* *
* *
* *

The * shall be payable by March 31 of the following calendar year.

The * will continue through the term of the Agreement, although the Parties will negotiate in good faith * to adjust the * for calendar years *. Until the parties reach such agreement, the * shall apply.

6. *: A total of * is available to apply against * for the period *, reduced by any * earned in *, provided the following criteria are met:


Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 3 of 11

• In any single calendar year (between * and *) if the * (*) is above *, GSK can apply * of the * as defined above as a * by March 31 of the following calendar year.

The* of * in aggregate will be reduced by the total amount of * earned by GSK in *. e.g. If the * amounts to * in * and * in *, the total * available for the period will be * in aggregate *.


III. Exclusivity Clause

The Parties agree that the Exclusivity Clause [Section III(1)-(4)] and the Exclusivity Audits [section XVI(3)] of the Previous Agreement shall be of no further force or effect. As of the Effective Date, Quest Diagnostics shall be a “Principal Provider” of global central laboratory services for GSK. As Principal Provider, Quest Diagnostics shall support all of GSK’s annual global central laboratory needs and shall be awarded all laboratory testing in connection with *, with the exception of GSK clinical studies in the following specific areas:

*

However, as a Principal Provider GlaxoSmithKline shall provide Quest Diagnostics *, and GSK shall have the absolute right to *.

  • If * cause the * to fall below *, Quest Diagnostics reserves the right to *.

  • * applies only to new studies that have not already been * by Quest Diagnostics.

IV. Miscellaneous. The following are some of the additional terms discussed by the Parties that will be further negotiated for inclusion in the Agreement. Other terms may also be included by agreement of the Parties:

    a) Relationship Management:

         (i) Relationship Metrics. In addition to Operational Metrics, Quest Diagnostics and GSK will mutually agree to a Scorecard of Relationship Metrics inclusive of financial, development economics and operational satisfaction measures. Attachment #2 hereto contains Potential Key Performance Metrics. The Parties shall mutually agree to a maximum of 12 metrics from this list as well as agree to the frequency of the metrics.

         (ii) Steering Committee. In support of the Strategic relationship between the Parties a Business Steering Committee shall be established to foster best practices, creative alternatives and forward thinking. This committee will be charged with and responsible for the periodic review of all aspects of the Strategic Relationship to ensure business goals and objectives are achieved.

    b) Quest Diagnostics Strategic Investments:

                Quest Diagnostics is in the planning phases of * into a * which will be targeted to open in the *.

                     • Quest Diagnostics is willing to establish a joint team with GSK to identify and review mutually beneficial collaboration opportunities to drive growth.

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 4 of 11

     • Quest Diagnostics will establish a new laboratory facility in India no later than the second quarter of 2008 to begin to support GSK off-shore operations.

     • Quest Diagnostics will enhance the quality of its Information Technology and sample management services pursuant to Quest Diagnostics’ June 4, 2007 proposal.

Quest Diagnostics will restructure its existing * through key performance indicators agreed upon with GSK, including * and improvements to process flow and communications.

 

 

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________

* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 5 of 11

Attachment #1

2008 Fee Schedule

 
Proposed RoW
Proposed Americas

Test

 

 

 

  

 

 

 
11-DEHYDROTHROMBOXANE-B2 *   *   *   *
ACTH, PLASMA *   *   *   *
ADIPONECTIN *   *   *   *
ALBUMIN CREATININE RATIO *   *   *   *
ALCOHOL (ETHYL), URINE *   *   *   *
ALDOLASE *   *   *   *
ALPHA-1-ACID GLYCOPROTEIN *   *   *   *
AMMONIA, PLASMA *   *   *   *
AMYLASE, SERUM *   *   *   *
ANA TITER & PATTERN *   *   *   *
APOLIPOPROTEIN A1 *   *   *   *
APOLIPOPROTEIN B *   *   *   *
APOLIPOPROTEIN C3 *   *   *   *
APPT/PROTHROMBIN TIME WITH INR *   *   *   *
BETA-2 MICROGLOBULIN *   *   *   *
BONE ALKALINE PHOSOPHATASE *   *   *   *
BRAIN NATRIURETIC PEPTIDE *   *   *   *
CA 19-9 *   *   *   *
CARDIO CRP *   *   *   *
CD40L, SOLUBLE *   *   *   *
CHEMISTRY ANALYTE *   *   *   *
CHEMISTRY PANEL *   *   *   *
CHEMZYME PLUS *   *   *   *
CHLAMYDIA TRACHOMATIS PCR *   *   *   *
CHORIONIC GONADOTROPIN, QUALITATIVE *   *   *   *
CK-MB *   *   *   *
CMV IGM ANTIBODY *   *   *   *
COMPLEMENT COMPONENT C3 *   *   *   *
COMPLEMENT COMPONENT C4 *   *   *   *
COMPLETE BLOOD COUNT *   *   *   *
CORTISOL, SERUM (immunoassay) *   *   *   *
CORTISOL,FREE, 24HR URINE (immunoassay) *   *   *   *
C-PEPTIDE *   *   *   *
C-REACTIVE PROTEIN *   *   *   *
CREATININE *   *   *   *
CREATININE CLEARANCE *   *   *   *
CREATININE, RANDOM URINE *   *   *   *
CREATININE, URINE *   *   *   *
CYSTATIN C, SERUM *   *   *   *

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________
* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 6 of 11

 
Proposed RoW
Proposed Americas
  *   *  
*
  *
               
Test        
   
DERMATAN SULFATE *   *  
*
  *
DIGOXIN *   *  
*
  *
DIHYDROTESTOSTERONE *   *  
*
  *
DNA (DS) ANTIBODIES *   *  
*
  *
DNA EXTRACTION/AUTOPREP *   *  
*
  *
DRUG ABUSE W/ALCOHOL *   *  
*
  *
EGFR, ELISA *   *  
*
  *
ESTRADIOL *   *  
*
  *
FATTY ACIDS, FREE *   *  
*
  *
FERRITIN *   *  
*
  *
FIBRINOGEN *   *  
*
  *
FOLATE, SERUM *   *  
*
  *
FREE KAPPA & LAMBDA LIGHT CHAINS *   *  
*
  *
FRUCTOSAMINE *   *  
*
  *
FSH *   *  
*
  *
GAD ANTIBODIES *   *  
*
  *
GLUCOSE, PLASMA *   *  
*
  *
GLUCOSE, URINE RANDOM *   *  
*
  *
H. PYLORI ANTIBODY (IGG) *   *  
*
  *
H. PYLORI ANTIBODY (IGM) *   *  
*
  *
HAPTOGLOBIN *   *  
*
  *
HCV RNA QUANT, PCR *   *  
*
  *
HDL CHOLESTEROL *   *  
*
  *
HDL SUBCLASSES *   *  
*
  *
HELICOBACTER PYLORI ANTIBODY (IGA) *   *  
*
  *
HEMATOCRIT *   *  
*
  *
HEMOGLOBIN *   *  
*
  *
HEMOGLOBIN A1C *   *  
*
  *
HEMOGRAM *   *  
*
  *
HEPATITIS A AB TOTAL *   *  
*
  *
HEPATITIS A IGM ANTIBODY *   *  
*
  *
HEPATITIS B CORE AB *   *  
*
  *
HEPATITIS B CORE IGM *   *  
*
  *
HEPATITIS B SURFACE AB *   *  
*
  *
HEPATITIS B SURFACE ANTIGEN W/ *   *  
*
  *
CONFIRMATION        
   
HEPATITIS BE AB *   *  
*
  *
HEPATITIS BE AG *   *  
*
  *
HEPATITIS C ANTIBODY *   *  
*
  *
HER2, ELISA *   *  
*
  *
HER-2/NEU FISH *   *  
*
  *
HETEROPHILE, MONO SCREEN *   *  
*
  *
HIV-1 AB WESTERN BLT *   *  
*
  *
HIV-1 RNA 1.5 ULTRA *   *  
*
  *

Letter of Agreement
GlaxoSmithKline and Quest Diagnostics Incorporated

____________________________________
* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 7 of 11

 
Proposed RoW
Proposed Americas
  *   *   *   *
Test              
               
HIV-1 RNA BY PCR (1.5) QUANT *   *   *   *
HIV-1/HIV-2 AB SCREEN *   *   *   *
HIV-2 ANTIBODY WB *   *   *   *
HPV DNA (HIGH RISK) *   *   *   *
HTLV I/II ANTIBODY *   *   *   *
IGE, SERUM *   *   *   *
IMMUNOFIXATION, SERUM *   *   *   *
IMMUNOFIXATION, URINE *   *   *   *
IMMUNOGLOBULIN A *   *   *   *
IMMUNOGLOBULIN AP *   *   *   *
IMMUNOGLOBULIN G *   *   *   *
IMMUNOGLOBULIN M *   *   *   *
IMMUNOGLOBULIN Mp *   *   *   *
IMMUNOGLOBULIN SERUM *   *   *   *
IMMUNOREACTIVE INSULIN (LINCO RIA) *   *   *   *
INSULIN (IMMULITE) *   *   *   *
INTERLEUKIN-6 HIGHLY SENSITIVE *   *   *   *
IRON, TOTAL, IBC & SATURATION *   *   *   *
LACTATE DEHYDROGENASE ISOENZYMES *   *   *   *
LDL Calculation *   *   *   *
LIPASE SERUM (when ordered with a Chem panel) *   *   *   *
LIPID PANEL *   *   *   *
LIPID PANEL (BETA QUANT) *   *   *   *
LIPOPROTEIN (A) *   *   *   *
LITHIUM *   *   *   *
Lp-PLA2 ACTIVITY, COLORIMETRIC - GSK ONLY *   *   *   *
LUTEINIZING HORMONE *   *   *   *
LYMPHOCYTE SUBSET PANEL 2 (CD4/CD8) *   *   *   *
LYMPHOCYTE SUBSET PANEL 3 *   *   *   *
MICROALBUMIN, RANDOM URINE *   *   *   *
MMP-9 EIA (TOTAL) *   *   *   *
MULTISPOT HIV 1/2 *   *   *   *
NEISSERIA GONORRHOEAE PCR *   *   *   *
N-TELOPEPTIDE (U) *   *   *   *
PAP, LIQUID-BASED *   *   *   *
PARATHYROID HORMONE *   *   *   *
PARTIAL THROMBOPLASTIN TIME, ACTIVATED *   *   *   *
PEPSINOGEN I *   *   *   *
PHENYTOIN *   *   *   *
POTASSIUM, URINE *   *   *   *
PROGESTERONE *   *   *   *
PROINSULIN *   *   *   *
PROLACTIN *   *   *   *

GlaxoSmithKline –Letter of Agreement
Date: January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 8 of 11

 
Proposed RoW
Proposed Americas
  *   *   *   *
               
Test              
PROTEIN ELECTROPHORESIS, SERUM (SERUM *   *   *   *
PEP)              
PROTEIN ELECTROPHORESIS, URINE (URINE PEP) *   *   *   *
PROTEIN TOTAL, URINE *   *   *   *
PROTEIN/CREATININE RATIO, URINE *   *   *   *
PROTHROMBIN TIME WITH INR *   *   *   *
PSA FREE & TOTAL *   *   *   *
PSA, TOTAL (Centaur) *   *   *   *
RECOMBIGEN HIV-1 *   *   *   *
RETICULOCYTE CELL COUNT *   *   *   *
RHEUMATOID FACTOR *   *   *   *
RPR (MONITOR) *   *   *   *
SALICYLATE *   *   *   *
T-3 UPTAKE *   *   *   *
T-4 (THYROXINE) TOTAL *   *   *   *
T-4 (THYROXINE), FREE *   *   *   *
TESTOSTERONE, TOTAL *   *   *   *
THEOPHYLLINE *   *   *   *
THYROID STIMULATING HORMONE *   *   *   *
TRIGLYCERIDES *   *   *   *
TRIIODOTHYRONINE, FREE *   *   *   *
TRIIODOTHYRONINE, TOTAL *   *   *   *
TROPONIN I *   *   *   *
URINALYSIS W/UROBILINOGEN *   *   *   *
URINALYSIS, MACROSCOPIC *   *   *   *
URINALYSIS, MICROSCOPIC *   *   *   *
URINALYSIS, ROUTINE *   *   *   *
VALPROIC ACID *   *   *   *
VITAMIN B12 *   *   *   *
VITAMIN B12/FOLIC ACID *   *   *   *

GlaxoSmithKline –Letter of
Agreement Date: January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 9 of 11

Other Fees        
 
 * Fees   RoW                                Americas
  2008 Quest 2009 Quest 2008Quest 2009 Quest
  Proposal Proposal Proposal Proposal
 Project Management *        * * *
 Data Management *        * * *
 Logistics *        * * *
 Management        
                                           Total *        * * *
 
 * Fees        
  Quest
Quest Proposal
   
  Proposal      
 Project Management *        *    
 Data Management *        *    
 Logistics *        *    
 
 
 
 Kits        
  RoW Americas    
  2008 Quest 2009 Quest    
  Proposal Proposal    
 *-* components *        *    
 *-* components *        *    
 <* components *        *    
 
 
 Quest *        
 (Americas only) Americas Americas    
 * *        *    
 
 
 
 Storage        
  RoW Americas    
 In *        *    
 Maintenance *        *    
 Pull *        *    

GlaxoSmithKline –Letter of
Agreement Date: January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 10 of 11




Attachment #2
                 
        Potential Key Performance Metrics        
         
 
Implementation
Category
  
Performance Metric
  
Qualifier
  
Target
   Status
Protocol   Approval of CLW within    Percentage of studies that   100 % *
Initiation   agreed specified    receive CLW approval by date        
    timeline in CLW    specified in CLW        
                 
Site Initiation   On-time study start    Percentage of kits to first site per   100 % *
         study delivered on time        
                 
Site Support   Data query turn-    Percentage within 24 hours: time   100 % *
                 
Services   around-time    of receipt of data query to date        
       
 closed on database
        
                 
Lab Operations   Turn-around-time for    Percentage of samples received   100 % *
    sample receipt    in lab within 36 hours of        
         collection time.        
                 
Lab Operations   Percentage of test    The elapsed time from when the   100 % *
    reported within    specimen is received in the        
    expected turn around    laboratory until the analytical        
    time    result is approved and released        
         into TopCat and available for        
         reporting to the Investigator site.        
                 
Lab Operations   Percentage of tests not    Percentage of tests not   0 % *
    performed/not    performed/not reportable by        
    reportable    reason        
                 
Lab Operations   Percentage of    Percentage of samples shipped   100 % *
    shipments/samples    on time as per defined timelines        
    shipped on time to third            
    party            
                 
Lab Operations   Number of lost    Number of lost samples   0   *
    samples    (internally and externally) by        
         reason        
                 
Data   Complete Data Set    Percentage of data   95 % *
Management   delivered on time and    transmissions delivered on time        
    defect free    error free (number of        
         resubmissions)        
                 
Financial   Budget reconciliation to    Variance between budgeted vs   95 % *
Management   plan    actual costs        
                 
Financial   Comparison of    Variance between budgeted vs   95 % *
Management   budgeted to actual    actual costs        
    transportation costs            
                 
Financial   Days sales outstanding    Percentage of invoices paid   100 % *
Management        within 30 days        

GlaxoSmithKline –Letter of Agreement Date:
January 1, 2008

_____________________________________
* Confidential treatment has been requested. The redacted material has been separately filed with the Commission.

Page 11 of 11