Exhibit 10.3

 

FIRST AMENDMENT TO SPONSORED RESEARCH AGREEMENT

 

This FIRST AMENDMENT TO SPONSORED RESEARCH AGREEMENT (the “Amendment”) is
entered into effective as of May 28, 2009 (“Amendment Date”), by and between AVI
BioPharma, Inc., an Oregon corporation having offices at 4575 SW Research Way,
Suite 200, Corvallis, OR 97333 (the “Company”), and Charley's Fund, Inc., a
501(c)(3) tax-exempt public non-profit organization with a mailing address of
P.O. Box 297, South Egremont, MA 01258 (the “Sponsor”) (each a “Party” and
together the “Parties”), and amends that certain SPONSORED RESEARCH AGREEMENT,
effective as of October 12, 2007, by and between the Parties (the “Agreement”),
as follows.

 

RECITALS

 

WHEREAS, the Parties acknowledge that additional funding is necessary to
complete the Research Project (as that term is defined in the Agreement), and
therefore desire to amend the Agreement to increase the amount of the Project
Funds (as that term is defined in the Agreement) to be provided to the Company
by the Sponsor;

 

WHEREAS, the Parties desire to revise certain terms under the Agreement as they
relate to payments to be made by the Company to the Sponsor, and

 

WHEREAS, the Parties desire to revise and update the description of the Research
Project and the milestones contemplated therein,

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties hereto agree as follows:

 

1.Section 1.11 is amended and restated in its entirety as follows:

 

''Net Sales” means the gross amount invoiced for sales of Research Products by
(i) for purposes of Section 9 hereof, Sponsor, its Affiliates, and sublicensees
or (ii) for purposes of Section 4.3.1 hereof, Company, its Affiliates and
licensees, in any case to an independent third party in an arms-length
transaction, less:

(a)Trade, quantity and cash discounts allowed;

(b)Discounts, refunds, rebates, chargebacks, retroactive price adjustments, and
any other allowances which effectively reduce the net selling price;

(c)Credits for actual Research Product returns; and

(d)Any tax imposed on the production, sale, delivery or use of the Research
Product, including, without limitation, sales, use, excise, or value added
taxes.

 

2.Section 4.1 is amended and restated in its entirety as follows:

 

Subject to the terms and conditions of this Agreement including the repayment
rights provided for in Section 4.3, the Sponsor shall pay the Company a total
amount of Five Million Dollars ($5,000,000.00) which amount is inclusive of all
direct costs of Research Project activities (the “Project Funds”) as follows:

(a)The parties acknowledge and agree that Two Million Dollars ($2,000,000.00) of
the Project Funds have been paid to the Company as of May 26, 2009 of which
approximately One Million Three Hundred Fifty Thousand Dollars ($1,350,000.00)
have been spent and earned by the Company hereunder. The parties further
acknowledge and agree that, as of such date, the Company has completed each of
Aim 1, Aim 2, Aim 3 and Aim 5 as set forth in the Study Protocol. The remaining
Six Hundred Fifty Thousand Dollars ($650,000.00) of unspent, but received
Project Funds shall be allocated as follows: (a) approximately Three Hundred
Thousand Dollars ($300,000.00) shall be spent connection with the NHP multi dose
confirmation study (as further described in the Study Protocol), and (b)
approximately Three Hundred Fifty Thousand

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Dollars ($350,000.00) shall be spent in connection with cGMP manufacture of drug
product, AVI-5038 (as further described in the Study Protocol), and, in both
cases, such funds shall be recognized as earned upon the initiation of these
studies.

 

(b)The Sponsor shall pay the remaining Three Million Dollars ($3,000,000.00) of
the Project Funds to the Company in accordance with the following schedule of
events (each, as further described in the Study Protocol):

(i) One Hundred Thousand Dollars ($100,000.00) upon initiation of GLO
genotoxicity study;

(ii)Six Hundred Fifty Thousand Dollars ($650,000.00) upon initiation of the OLP
toxicology study in mdx mice;

(iii)One Million Six Hundred Twenty-five Thousand Dollars ($1,625,000.00) upon
initiation of the GLP NHP toxicology study;

(iv)Three Hundred Thousand Dollars ($300,000.00) upon initiation of the GLP
safety pharmacology study; and

(v)Three Hundred Twenty-five Thousand Dollars ($325,000.00) upon submission of
an IND.

 

Besides the direct costs for the above studies, allowable costs include the
costs for the stability testing, and fill/finish of drug product, which are
taken into account in the above figures.

 

The Sponsor shall not be obligated to make any payments to the Company in
addition to those set forth in this Section 4.1 unless the parties otherwise
mutually agree in writing.

3.Section 4.3.1 is amended and restated in its entirety as follows:

A total royalty of 5% of Net Sales shall be paid to the Sponsor by the Company,
less any portion of the Project Funds already repaid to the Sponsor by the
Company. In no event shall royalties payable to the Sponsor exceed the total
amount of Project Funds actually provided by the Sponsor to the Company. Such
royalty shall be payable on a calendar quarter basis, within 45 days after the
end of each quarter.

 

4.Section 4.3.2 is deleted.

 

5.Section 4.3.3 is deleted.

 

6.Section 4.3.5 is amended and restated in its entirety as follows:

 

Without limiting the foregoing, in the event that the full amount of the Project
Funds have not been repaid to the Sponsor at first commercial sale into a Major
Market of the Research Product via the payment mechanisms of Section 4.3.4, the
Company shall make payments to the Sponsor as provided for in Section 4.3.1.

 

7.Each of Appendix A and Appendix B is amended and restated in its entirety as
set forth on Schedule I and Schedule II, respectively, attached to the
Amendment.

 

8.The Parties acknowledge and agree that Dr. Steven Shrewsbury, CMO, is
currently serving as the Principal Investigator.

 

9.All capitalized terms not defined herein shall have the meanings ascribed to
them in the Agreement. This Amendment is hereby incorporated into the Agreement.
Except as specifically modified herein, the Agreement remains in full force and
effect without further modification.

 

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IN WITNESS WHEREOF, the Parties hereto have entered into this Amendment as of
the date first written above.

 

AVI BIOPHARMA, INC.

 

CHARLEY’S FUND, INC.

 

 

 

 

 

 

By:

/s/ Leslie Hudson

 

By:

/s/ Benjamin D. Seckler

Name:

Leslie Hudson

 

Name:

Benjamin D. Seckler

Title:

CEO President

 

Title:

President

 

 

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SCHEDULE I

 

Study Protocol

 

In addition to being subject to change as may be agreed upon by the parties, the
Study Protocol described below may be modified by AVI as is scientifically
appropriate and otherwise reasonable based on results obtained or additional
information that becomes available during its execution.

 

GLP Toxicology Plan

 

12-month toxicology study in mdx mice

o

mdx mice do not express dystrophin, eliminating “on-target” issues

o

mdx mice have pathology, but vehicle arm should be sufficient control

 

•  Increased CK, muscle pathology etc.

 

o  Regimen: To achieve adequate total exposure

o

Dose range: 1.5 log range (top dose ~48 mg/kg)

o

3-Month take out to enable IND

 

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12-month toxicology study in healthy cynomolgus monkey

•

Regimen: To achieve adequate total exposure

•

Dose range: 1 log range (top dose ~20 mg/kg)

•

3-Month take out to enable IND

 

[g20180503185048030254.jpg]

 

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Genotoxicity

o

Ames Assay

o

Chromosomal Aberration Assay

o

Mouse Micronucleus Test

 

Safety Pharmacology

o

Cynomolgus monkey and mouse

o

3 i.v. doses - Low, medium, high

 

Prepare and File IND

 

Based on preclinical safety and efficacy results, an IND will be prepared to
support initial human clinical testing of the exon 50 drug candidate. It is
anticipated that this will occur in or about May, 2010.

 

 

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SCHEDULE II

 

Because the parties acknowledge that sufficient financial detail is provided
directly in the text of the First Amendment to the Agreement, this schedule has
been intentionally left blank.

 

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