Exhibit 10.3

 

License Option Agreement

 

 

This Agreement made this day of May 15, 2016 by and between Immune
Pharmaceuticals Inc. (“Immune”) with a principal place of business at 430 East
29th Street, Suite 940, New York, NY 10016 and Novel Pain Therapeutics LLC
(“NPT”), a newly formed limited liability company with an office at 52 East End
Avenue #12A New York, NY 10028

 

Whereas Immune has intellectual property rights pertaining to its product
AmiKet™ and Amiket™ Nano, which are proprietary combinations of amitriptyline
and ketamine in topical formulations to treat neuropathic pain, and related
product formulations, technical information, clinical data, know-how, patents
and patent applications, and trademarks (“Product”).

 

Whereas, NPT wishes to obtain, and Immune is willing to provide NPT with, an
option to negotiate an exclusive license for rights to Product, during the Term
set forth below;

 

1.License Option

 

1.1Immune hereby grants NPT an exclusive option to negotiate an exclusive
worldwide royalty-bearing license (the “License”), including the right to grant
sublicenses, to make, use, sell, offer for sale and import products under all
Immune’s right, title and interest in Product. Such right shall apply during the
“Term” beginning from the day of signing of this Agreement by both Parties and
extending for 60 days unless otherwise extended by the Parties in writing.

 

1.2Immune hereby represents and warrants that Immune has good title to all
rights pertaining to the Product, free and clear of all liens, encumbrances and
adverse claims, subject to the terms of any license agreements pertaining
thereto, which Immune represents and warrants are in full force and effect and
as to which there are no breaches or defaults thereunder.

 

1.3During the Term of the Agreement, beginning on May 15, 2016 and extending for
60 days unless otherwise extended in writing by the Parties:

 

1.3.1Immune shall continue to conduct ongoing Product research and development;

.

1.3.2Immune shall not enter into any other contract that would affect NPT
potential rights to the Product or take any action that would interfere in any
material respect with Immune’s ability to perform any of its obligations
hereunder;

 

1.3.3NPT shall diligently pursue obtaining equity funding to be used to conduct
initial Product development and commercialization as described below; and

 

1.3.4The Parties shall negotiate in good faith a license agreement with material
terms as outlined in Exhibit A (the “License Agreement”). In the event the
Parties have not executed a License Agreement by the end of the Option Period,
the Agreement shall terminate and the Parties shall have no further obligation
to each other in connection with the negotiation and execution of a License
Agreement.

 

1.3.5Immune shall provide NPT with full access to all material information,
documents and data pertaining to the Product, including without limitation
copies of all license agreements, patent applications and submissions to and
responses from each patent office, trademark registrations, clinical data and
reports, submissions to and responses from each regulatory authority, including
the US Food and Drug Administration, and market studies and surveys, research
reports, and a schedule of Product costs incurred,

 

1.4In consideration for Immune’s grant of the option to NPT, NPT shall within 15
days prior to the expiration of the Option Period (the “Escrow Due Date”)
establish a $500,000 escrow account to be held during the Term, unless
terminated prior to the Escrow Due Date by NPT. The escrow balance shall be paid
to NPT should the Parties fail to execute a License Agreement during the Term or
to Immune at execution of the License Agreement as provided in the License
Agreement.

 

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2.General Terms and Conditions

 

2.1Any Immune information that is marked “Confidential” or, if oral, confirmed
in writing within a reasonable period of time following initial disclosure,
shall not be disclosed by NPT and shall not be used for any purposes other than
in connection with and as contemplated by this Agreement and shall be subject to
the same terms of confidentiality and nondisclosure as set forth in the
Confidentiality Agreement executed by NPT and Immune on May 10, 2016. Until the
second anniversary of the date hereof, Immune, without NPT’s consent, shall not
solicit funds for Immune or any of its affiliates (other than NPT) from, or
enter into any agreement with, any potential investor in NPT introduced by the
principals of NPT (and with whom Immune does not have a prior relationship).

 

2.2Any notices permitted or required pursuant to this Agreement shall be deemed
effective if made in writing and sent, postage prepaid, return receipt
requested, or by overnight delivery, as follows:

 

  If to Immune: Immune Pharmaceuticals Inc.     430 East 29th Street, Suite 940
    New York, NY 10016     Attn.:  Daniel Teper, CEO

 

  If to NPT : Novel Pain Pharmaceuticals LLC     c/o 52 East End Avenue #12A    
New York, NY 10028     Attn.:  Mark S. Fawer

 

Or such other or additional address as may be notified from time to time to the
other Party. Notices shall be deemed given as of the date sent.

 

2.3This Agreement embodies the entire understanding of the Parties and
supersedes any other agreement or understanding between the Parties relating to
its subject matter. No waiver, amendment or modification of this Agreement shall
be valid or binding upon the Parties unless made in writing and signed on behalf
of each Party by its respective officers who are duly authorized to do so.

 

2.4This Agreement shall in all respects be interpreted and construed in
accordance with the laws of the State of New York.

 

2.5Either Party may terminate this Agreement in the event of a material breach
by the other Party; provided only, that the offending Party is given notice of
the breach a reasonable time, not to exceed thirty (30) days, in which to cure
such breach.

 

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed
by its duly authorized representative.

 

Novel Pain Therapeutics LLC   Immune Pharmaceuticals, Inc.                    
By: Mark S. Fawer   By: Daniel G. Teper           Title: Authorized Signatory  
Title: CEO           Date: May 15, 2016   Date: May 15, 2016

 

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EXHIBIT A

 

License agreement terms

 

Parties Immune Pharmaceuticals Inc. and/or its affiliates (“Immune”) and Novel
Pain Therapeutics LLC (“NPT”), individually “Party” and together “Parties”).
Licensed Product AmiKet™ and AmiKet™ Nano, which are proprietary combinations of
amitriptyline and ketamine in topical formulations to treat neuropathic pain,
and related product formulations, technical information, clinical data,
know-how, patents and patent applications, and trademarks (“Product”). License
Immune shall grant NPT an exclusive license to all patents, know-how, trademarks
and other intellectual property owned by Immune necessary or useful to develop,
make, have made, use, offer for sale, sell, import, export or otherwise
commercialize Product in the Field and in the Territory with rights to
sub-license as provided below. Field of Use Topical treatment of neuropathic
pain. Territory Worldwide. Term · Perpetual Responsibilities of The Parties

Both Parties: The Parties shall agree to use commercially reasonable efforts to
perform their respective responsibilities under the Initial Product development
plan that shall be attached as an exhibit to the License Agreement and shall
reflect the commitment to initiate a clinical trial of Product within 12 months.

 

NPT: NPT shall use reasonable commercial efforts to develop, obtain regulatory
approval for, and market the Product in the Territory (including arranging for
manufacturing and supply of Product) subject to the responsibilities of Immune
outlined below.

 

NPT will be responsible for raising at least $20M of capital in the first 12
months following the license agreement from its investor network as well a
broader group of investors which will be secured through an investment bank to
be selected by both parties. In addition, NPT shall use reasonable efforts to
become publicly traded on a national stock exchange within 18 months of the
effective date of the License Agreement.

 

Immune: Immune shall have responsibility for participating and/or completing but
not financing all Product development activities as provided in the initial
development plan after execution of the License Agreement. Immune shall promptly
provide documents and materials related to Product and reasonable assistance in
the transition of know-how to NPT and such other assistance as NPT may
reasonably request. 

Governance

The Parties shall establish a joint steering committee comprised of senior
executives of the Parties to oversee development and commercialization efforts
(“JSC”). Each Party shall be entitled to designate two representatives to the
JSC, which shall meet at least once every 6 months to review the development
plan as it may be revised from time to time and NPT’s written report setting
forth material development and commercialization activities. 

  

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Governance 

(Cont’d)

 

NPT shall consult with the JSC regarding significant decisions but, for the
avoidance of doubt, the JSC shall be a forum for the exchange of information
between the Parties and shall act only in an advisory capacity and shall not
have decision-making powers.

 

Immune shall have the right to nominate one board member to the board of
directors of NPT and shall have veto rights on specific board decisions to be
mutually agreed by the Parties. 

Sub-License Rights NPT shall have the right to sub-license its rights under the
License Agreement subject to Immune’s prior written approval which shall not be
unreasonably withheld, provided the sublicensee agrees to assume all
responsibilities of NPT and be bound by the terms of the License Agreement.  
Termination

NPT shall have the right to terminate the License Agreement upon 180-days prior
written notice plus other usual and reasonable termination provisions including
material breach, and bankruptcy of either Party and failure to diligently pursue
the product development plan as mutually agreed will be considered.

 

Upon termination of the License Agreement, NPT’s right to Product and related
intellectual property shall immediately terminate. NPT shall promptly provide
Immune copies of any Product related intellectual property developed by NPT and
shall execute documents, if any, necessary to perfect Immune’s ownership of any
IND’s, NDA’s, patents and patent applications or other Product related
intellectual property and, where applicable, insure orderly transition of sales
of Product.

 

NPT will be responsible for all payments due according to the Licensing
Agreement until the effective termination date.

 

In the event NPT does not raise $20M within one year, Immune may take the
leadership for further financing of NPT or alternatively elect to terminate the
License . In the latter case, Immune will have to offer to other NPT investors
registered Immune shares of stock in Immune at the then market value deemed paid
by the sum paid on account of the NPT shares purchased. 

Immune Access to PainNewCo IP Immune shall have the right to use any Product
related intellectual property developed by NPT during the term of the License
Agreement including but not limited to pre-clinical and clinical data and
regulatory filings, provided such use is not competitive with the Product.  

Compensation

Compensation shall be in the form of reimbursement of Immune’s Product Research
and Development (“R&D”) Costs, Equity, Development and Commercial Milestone
Payments, Royalties, and Sublicense Fees as provided below.

 

R&D Costs: NPT shall make minimum payments for external Product R&D costs and
for Immune Product R&D support costs (both external costs plus internal
administrative expenses equal to 150% of Immune’s cost of direct FTE personnel)
incurred in accordance with the initial development plan attached in appendix of
the License Agreement as follows: 

 

 

· At Execution of License Agreement

 

· 60 days of Execution of License Agreement

 

· Monthly thereafter until $10M raised

 

· Once the company has raised at least $10M

 

$0.5 Million

 

no less than $0.5 Million

 

no less than $0.5 Million  

 

according to development plan

  The initial $500,000 payment shall result from the disbursement of funds from
the escrow account established in connection with the Option Agreement. All
funding as described above will be made available according to the development
plan to either NPT or Immune the first of each month. All sums paid on account
of R&D Costs in accordance with this paragraph shall be credited against the
first $10 M to be raised. 

  

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Compensation 

(cont’d)

 

Equity: Immune will be granted shares of common stock in NPT equivalent to 33%
of the common stock of NPT at a pre-money valuation of no less than $30 M, with
no dilution in NPT for sums raised up to $15 M.

 

Development Milestone Payments: Upon achievement of development milestones by
NPT payments shall be made in NPT shares valued at the then market price as
follows: 

 

 

· Successful completion of initial P3 clinical trial 

 

· NDA Filing

 

· FDA approval

 

$5 Million

 

$10 Million

 

$10 Million

 

Commercial Milestone Payments: Upon first achievement of trailing 12-month Net
Sales of Product by NPT (and not any sublicensee(s)) as follows, payable in cash
or equivalent shares of NPT valued at then then market price at election:

 

 

· $250 Million or more of Net Sales

 

· $500 Million or more of Net Sales 

 

· $750 Million or more of Net Sales 

 

· $1 Billion or more of Net Sales 

 

$10 Million  

 

$25 Million 

 

$35 Million 

 

$50 Million

 

Royalties: Tiered royalties based on Net Sales of Product by NPT(and not any
sub-licensee(s)) as follows:

 

 

· Annual Net Sales up to and including $250 Million

 

· Annual Net Sales over $250 Million

 

7.5%

 

10%

 

Sublicense Fees: Immune shall receive fees based on sub-license revenue received
by NPT from one or more sublicensees, including but not limited to milestone
payments and royalties on net sales of Product by the sublicensees, but
excluding any direct equity financing at market value or reimbursement of R&D
costs actually expended by NPT. The Sublicense Fee percentage shall be based on
the level of equity raised by NPT as follows: 

 

 

· Equity of less than $10 Million

 

· Equity of $10 Million to less than $20 Million

 

· Equity of $20 Million or more

 

50%  

 

35% 

 

25%

  For the avoidance of doubt, Immune shall only receive Development and
Commercial Milestone Payments and Royalties to the extent that NPT (not its
sublicensee) achieves the applicable milestone and/or records the net sales. 

Other

Other terms and conditions customary for agreements of this nature negotiated
between arm’s length parties, including, without limitation, clauses relating to
definitions, representations and warranties, indemnification and
confidentiality. 

 

 

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