UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 16, 2011
AMAG PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-10865 |
|
04-2742593 |
(Commission File Number) |
|
(IRS Employer Identification No.) |
|
|
|
100 Hayden Avenue |
|
|
Lexington, Massachusetts |
|
02421 |
(Address of principal executive offices) |
|
(Zip Code) |
(617) 498-3300
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into A Material Definitive Agreement.
On December 21, 2011, AMAG Pharmaceuticals, Inc., or the Company, entered into a Second Amendment to Commercial Outsourcing Services Agreement, or the ICS Second Amendment, with Integrated Commercialization Services, Inc., or ICS, which became effective as of December 1, 2011. The Commercial Outsourcing Services Agreement with ICS dated October 29, 2008, as amended by the First Amendment dated April 14, 2011, or collectively the Agreement, was amended by the ICS Second Amendment to, among other things, extend the term of the Agreement until January 31, 2014 and provide revised pricing terms for the extension period of the Agreement.
The foregoing description of the ICS Second Amendment contained in this Item 1.01 does not purport to be a complete description of the rights and obligations of the parties thereunder and is qualified in its entirety by reference to the full text of the ICS Second Amendment that is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference. Certain portions of the ICS Second Amendment have been omitted from this Current Report on Form 8-K and the version of the ICS Second Amendment attached as Exhibit 10.1 hereto pursuant to a Confidential Treatment Request that the Company filed with the Securities and Exchange Commission at the time of filing this Current Report on Form 8-K.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On December 16, 2011, Ron Zwanziger notified the Company of his resignation from the Board of Directors of the Company effective immediately. Mr. Zwanziger had also served as Chairman of the Nominating and Corporate Governance Committee of the Board of Directors, or the Nominating Committee. Davey Scoon, an existing member of the Board of Directors and the Nominating Committee, was appointed to serve as Chairman of the Nominating Committee. Lesley Russell, an existing member of the Board of Directors, was also appointed to serve on the Nominating Committee.
On December 19, 2011, the Companys Board of Directors appointed Scott A. Holmes, age 37, currently the Companys Vice President of Finance and Controller, to serve as the Companys Chief Accounting Officer, effective immediately. Mr. Holmes joined the Company in September 2011. In his current position, Mr. Holmes is primarily responsible for the Companys accounting, financial and tax reporting functions. Prior to joining the Company, Mr. Holmes served as Vice President of Finance and Treasurer of Molecular Biometrics Inc., a commercial stage medical diagnostics company from June 2010 to September 2011. From August 2009 to June 2010, Mr. Holmes was Vice President of Finance & Administration of On-Q-ity Inc., an oncology diagnostics company. Prior to On-Q-ity Inc., Mr. Holmes served as a consultant with Altman & Company, a consulting firm, from January 2009 to August 2009. Prior to 2009, he spent five years at Dynogen Pharmaceuticals, Inc., a privately held pharmaceutical company, where he was Vice President Finance & Administration and Treasurer. Mr. Holmes also served as the Controller at Keryx Biopharmaceuticals, Inc., a publically held biotechnology company. Mr. Holmes holds a dual Master of Science/Masters of Business Administration degree from Northeastern University Graduate School of Business Administration as well as a Bachelor in History from Middlebury College.
Mr. Holmes current base salary is $225,000, and he is eligible to receive an annual performance bonus of up to 35% of his base salary. There were no amendments to Mr. Holmes salary, bonus eligibility or benefits as a result of the appointment as Chief Accounting Officer. In addition, Mr. Holmes is a party to a retention arrangement with the Company under which he is eligible to receive a retention bonus upon the achievement of certain company goals and certain severance payments in the event he is terminated without cause.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The Company hereby files the following exhibit:
10.1 |
|
Second Amendment to Commercial Outsourcing Services Agreement, dated December 21, 2011, by and between the Company and Integrated Commercialization Services, Inc. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
AMAG PHARMACEUTICALS, INC. | |
|
| |
|
| |
|
By: |
/s/ Joseph L. Farmer |
|
|
Joseph L. Farmer |
|
|
General Counsel and Senior Vice |
|
|
President of Legal Affairs |
|
| |
|
| |
|
Date: December 22, 2011 |
EXHIBIT INDEX
Exhibit Number |
|
Description |
|
|
|
10.1 |
|
Second Amendment to Commercial Outsourcing Services Agreement, dated December 21, 2011, by and between the Company and Integrated Commercialization Services, Inc. (Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission.) |
Exhibit 10.1
SECOND AMENDMENT TO
COMMERCIAL OUTSOURCING SERVICES AGREEMENT
This Second Amendment to the Commercial Outsourcing Services Agreement (this Amendment) is between AMAG Pharmaceuticals, Inc. (the Company) and Integrated Commercialization Solutions, Inc. (ICS). This Amendment is effective as of December 1, 2011 (the Amendment Effective Date).
RECITALS
A. The Company and ICS are parties to a Commercial Outsourcing Services Agreement dated October 29, 2008, as amended by the First Amendment dated April 14, 2011 (collectively, the Agreement);
B. Pursuant to the Agreement, among other things, the Company engaged ICS to perform commercialization services for certain pharmaceutical products; and
C. The parties now wish to amend the Agreement in certain respects.
AMENDMENT
NOW THEREFORE, the parties agree as follows:
1. Defined Terms. Capitalized terms in this Amendment that are not defined in this Amendment have the meanings given to them in the Agreement. If there is any conflict between the Agreement and any provision of this Amendment, this Amendment will control.
2. New Section 3.4. A new Section 3.4 is added to the Agreement as follows:
3.4. Consumer Price Index Changes. The fees set forth on Schedule B that are expressed in dollars (but not percentages) shall be adjusted annually to reflect increases in the Consumer Price Index for All Urban Consumers, U.S. City Average, for Merchant Wholesalers, nondurable goods, published by the United States Department of Labor on its website at http://www.bls.gov/cpi (the CPI-U). The adjustment shall be effective on the first day of the month following the publication by the United States Department of Labor after each one year anniversary of the Effective Date and shall not exceed [***] percent ([***]%). By way of example only, if the Effective Date is January 1, 2011, the adjustment would effective on February 1, 2012 following publication of the CPI-U on or about January 15, 2012. Each of the fees set forth on Schedule B shall be multiplied by the percent increase in the CPI-U, Merchant Wholesalers, nondurable goods during each prior twelve-month period (for purposes of such calculation, the fees shall be the fees set forth on a revised Schedule B provided to the Company on an annual basis). An example
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
of the calculation of the increase is set forth on Schedule J. If publication of the CPI-U ceases, or if the CPI-U otherwise becomes unavailable or is altered in such a way as to be unusable, the parties shall agree on the use of an appropriate substitute index published by the Bureau or any successor agency.
3. Term. Section 4.1 of the Agreement is deleted in its entirety and replaced with the following:
Term. This Agreement will be effective as of the Effective Date and will continue until January 31, 2014 (the Term), unless sooner terminated. The Term may be extended upon written mutual agreement of the parties, such extension to be negotiated in good faith six (6) months prior to the expiration of the Term.
4. Schedule B. The parties agree that Schedule B to the Agreement is hereby deleted in its entirety and replaced with the attached Revised Schedule B.
5. Schedule J. The parties agree that attached Schedule J to the Agreement is hereby added to this Agreement.
6. No Other Changes. Except as otherwise provided in this Amendment, the terms and conditions of the Agreement will continue in full force.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the Amendment Effective Date.
Integrated Commercialization Solutions, Inc. |
AMAG Pharmaceuticals, Inc. | |||
|
| |||
|
| |||
By: |
/s/ Doug Cook |
|
By: |
/s/ Frank Thomas |
|
|
|
|
|
Name: |
Doug Cook |
|
Name: |
Frank Thomas |
|
|
|
|
|
Title: |
VP, General Manager |
|
Title: |
CEO |
SCHEDULE B
SUMMARY OF FEES
Assumptions:
· AMAG will ship to wholesalers, specialty distributors, large clinics and hospitals and specialty pharmacies
· 852/867 Reporting included in Monthly Management Fee for ABC, McKesson and Cardinal. Any additional reporting may require additional management and development fees
· Standard operation procedures will be followed for all processes. If any custom work instructions are required, the fees listed may be impacted
Fee |
|
Amount |
|
Description |
3PL Services |
|
|
|
|
Monthly Management Fee |
|
|
|
|
Customer Service
Warehouse & Distribution
Returns Management
Finance
Contract & Chargeback Management
Information Technology & Reporting
852/867 Reporting ABC, MCK, CAH
|
|
$[***]/month |
|
Address customer inquiries as AMAG
Manage Customer Relationship
Account Set Up
License Verification
Order Processing
Returns
Product Inquiries
Inventory pick, pack and ship from ICS distribution center
AMAG-Branded Packing Slips
Daily Cycle Counts
One Physical Inventory Count per annum
Inventory Management
Invoicing as AMAG
Establish Credit Limits
Process Returns
Call Triage
Accounts Receivable Management
Collections
Maintenance of government and non-government reports
Process chargeback requests from wholesalers
Debit memo processing
Reconciliation reporting
Maintenance of AMAG specific DataMart and web reporting tool
Maintenance of Crystal Enterprise for web reporting
Future upgrades to ICS software
Includes two licenses to Crystal Enterprise reporting tool |
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Fee |
|
Amount |
|
Description |
Dual Distribution/disaster recovery from Reno Facility |
|
$[***]/month |
|
Management fee for dual distribution and/or disaster recovery from the Reno Facility |
Customer Service Fees | ||||
Order Processing Fee |
|
$[***]/order |
|
Order is defined as a shipment to a unique address that leaves the distribution center, regardless of the number of cartons or packages that constitute that shipment and/or the number of inbound requests for said Order.
|
|
|
$[***]/order |
|
Electronic orders are those that are imported into the system automatically without manual intervention from customer service. |
Customer Setup Fee |
|
$[***]/account |
|
Assessed for every new account setup completed for an authorized AMAG customer. This includes license receipt and verification after initial launch setup. |
Drop Shipment Surcharge |
|
$[***]/order |
|
Assessed in addition to Per Order fees outlined above, when drop shipments are requested. Drop Shipments are defined as shipments that are shipped directly to an end customer of the wholesaler, and invoiced directly to the wholesaler. |
Allocation Fee |
|
$[***]/week |
|
Order allocations encompass any inbound orders to ICS that needs to have original conditions revised and/or altered (i.e. manual intervention) as opposed to allowing the order to automatically flow through the order process system. An example of an allocation would be a backorder situation. |
Rush Order |
|
$[***]/order |
|
Orders that are received and processed between 3pm and 5pm Eastern Time, at the request of the AMAG. |
Emergency Order |
|
$[***]/order |
|
Emergency shipments are defined as any order received outside of scheduled working hours (currently M-F 8am to 5pm Eastern Time) requiring ICS staff to return to the ICS facility to process the order within the same day. |
International Order |
|
$[***]/order |
|
Fee applied in addition to any order processing fees. |
Warehouse & Distribution Fees | ||||
Product Storage |
|
$[***]/pallet (ambient/marketing materials)
|
|
Monthly fee for controlled room temperature pallet storage. |
|
|
$[***]/pallet (premium ambient/marketing materials storage |
|
Monthly fee for controlled room temperature pallet storage in Reno. |
Order Processing Fees |
|
$[***]/order |
|
Order is defined as a shipment to a unique address that leaves the distribution center, regardless of the number of cartons or packages that constitute that shipment and/or the number of inbound requests for said Order. |
|
|
$[***]/unit |
|
This fee is in addition to the per order fee for each additional unit that is shipped in the order. |
Hazardous Material Fee |
|
$[***]/order |
|
Fee in addition to the per order fee for each order that requires hazardous shipping documentation. |
Case Break Fee |
|
$[***]/order |
|
Fee in addition to the per order fee for each order shipped at the |
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Fee |
|
Amount |
|
Description |
Bulk Shipment Fee |
|
$[***]/case |
|
vial/bottle level. Bulk shipments incur an additional surcharge per case. |
Packing Supplies |
|
[***] |
|
Any packing materials that ICS must provide for the AMAG to ship Commercial and Non-Commercial Products. |
Freight |
|
[***] |
|
ICS will share AmerisourceBergen Corporation (ABC) discounted rates with AMAG with a mark-up of 10%. |
Finance | ||||
Invoice Processing |
|
$[***]/invoice |
|
Fee for sending invoice (electronic or paper) to customer, collection efforts and cash posting. |
Credit/Rebill Transactions |
|
$[***]/each |
|
Any AMAG requested credit or rebill transactions keyed in the system. |
Credit Verification Reports Dun & Bradstreet |
|
$[***]/report |
|
Any AMAG requested credit report. Dun & Bradstreet (D&B) typically tracks information for corporate customers. |
Credit Verification Reports Experian |
|
$[***]/report |
|
Any AMAG requested credit report. Experian typically tracks information for individual customers such as physicians. |
Returns Management | ||||
RGA Initiation |
|
$[***]/RGA |
|
RGA: Returned Goods Authorization.
Fee for processing return request from customer and sending the customer an RGA. |
Return Processing |
|
$[***]/unit |
|
Receipt of physical return at the distribution center. Fee includes itemizing contents of the return |
Return Processing |
|
$[***]/line |
|
Fee applied in addition to Return Processing fee for handling and counting additional lines. |
Returns Storage |
|
$[***]/pallet |
|
Monthly fee for controlled room temperature pallet storage. |
Contract and Chargeback Management | ||||
Chargeback Processing Manual |
|
$[***]/line |
|
Each SKU is considered a line. If customers cannot send information electronically, they will mail information for manual processing. ICS and Customer must have copies of contracts in order to process chargebacks without manual intervention. |
Chargeback Processing Electronic |
|
$[***]/line |
|
Each SKU is considered a line. Customers will typically send chargebacks electronically according to HDMA standards. |
Information Technology and Reporting | ||||
Custom Reports |
|
$[***]/hour |
|
Fee for reports created that are not part of the standard reports provided by ICS. Hourly report creation fees assessed for initial report creation but not thereafter for running the same report. |
Custom Development Services |
|
$[***]/hour |
|
Fee for customized processes developed at the request of AMAG. Hourly fees will be assessed and approved by AMAG before development work is to begin. |
Additional Fees | ||||
Product Destruction |
|
[***] |
|
Destruction of product per AMAGs request and instruction. |
FedEx/UPS/Postage Expenses |
|
[***] |
|
Freight expenses for shipments of documents or any other shipments related to daily operations on behalf of AMAG. |
Pre-Approved Assessorial Labor Charge - Warehouse |
|
$[***]/hour |
|
This fee will be assessed for work that is completed outside the scope of the agreed upon services outlined in the Services |
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
Fee |
|
Amount |
|
Description |
|
|
$[***]/hour overtime |
|
Agreement. AMAG must provide prior approval before assessorial labor takes place. |
Pre-Approved Assessorial Labor Charge Office Staff |
|
$[***]/hour |
|
This fee will be assessed for work that is completed outside the scope of the agreed upon services outlined in the Services Agreement. AMAG must provide prior approval before assessorial labor takes place. |
Pre-Approved Assessorial Labor Charge QC, Management |
|
$[***]/hour |
|
This fee will be assessed for work that is completed outside the scope of the agreed upon services outlined in the Services Agreement. AMAG must provide prior approval before assessorial labor takes place. |
ICS Travel |
|
[***] |
|
This is for AMAG requested travel. AMAG must provide prior approval before travel takes place. |
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
SCHEDULE J
EXAMPLE OF PRICE ADJUSTMENT CALCULATION
Effective Date: |
January 1, 2011 |
CPI-U for Merchant Wholesaler, nondurable goods |
January 2009: [***] |
CPI-U for Merchant Wholesaler, nondurable goods |
January 2010: [***] |
(published on or about January 15, 2012) |
|
|
|
Change in CPI-U: |
[***] |
Percentage change in CPI-U: |
[***] |
|
|
[***] |
|
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.