Exhibit 10.3

NOVARTIS INSTITUTES FOR BIOMEDICAL RESEARCH, INC.
250 Massachusetts Ave.
Cambridge, MA 02139

September 30, 2015

XOMA (US) LLC
2910 Seventh Street
Berkeley, California  94710

Attention:  

Re:  Secured Note Agreement

Ladies and Gentlemen:

Reference is made to that certain Secured Note Agreement, dated May 26, 2005, as
amended (the “Note”), between XOMA (US) LLC, a Delaware limited liability
company (“XOMA”), and Novartis Vaccines and Diagnostics, Inc. (f/k/a Chiron
Corporation), a Delaware corporation (“NVDI”), which was assigned by NVDI to
Novartis Institutes for BioMedical Research, Inc. (“NIBR”) with XOMA’s consent
immediately prior to the execution of this letter agreement.

 

XOMA and NIBR hereby agree to the terms of this letter agreement as an amendment
to the Note.  Capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned to them in the Note, unless the context
requires otherwise.  

XOMA and NIBR hereby acknowledge and agree that as of June 30, 2015, the
outstanding principal amount of the Loans, together with all accrued and unpaid
interest thereon, is US$13,524,698.62.

Section 2(e) of the Note is hereby amended and restated to read in its entirety
as follows:

“(e) Maturity Date.  Unless earlier accelerated by the reason of the occurrence
of an Event of Default (as provided in Section 5 below), any unpaid principal
amount of any Loan owed by the Company to the Lender, together with all accrued
and unpaid interest thereon, shall be due and payable in full on September 30,
2020.”

 

Section 4(e) of the Note is hereby deleted in its entirety.

 

A new Section 4(g) is hereby added to the Note and shall read as follows:

 

“4(g) Loan Reduction. Upon the achievement of Development and Regulatory
Milestone Number 2 (i.e., Dosing of the first patient in the first Phase II
Clinical Trial) (as such terms are defined under that certain License Agreement
entered into between Company and Novartis International Pharmaceutical Ltd.,
dated September 30, 2015), the amount of the then-

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outstanding principal and accrued and unpaid interest on the Note shall be
reduced by US$7,300,000, but in no event to an amount less than zero.”

 

Section 8(a) of the Note is hereby amended and restated to read as follows:

 

“(a) If to the Lender, to:

 

Novartis Institutes for BioMedical Research, Inc.

250 Massachusetts Ave.

Cambridge, MA 02139

Facsimile: (617) 871-5786

Attention: General Counsel”

 

The definition of “Security Agreement” contained in the Note is hereby amended
to refer to that certain Security Agreement dated as of May 26, 2005, as
amended, restated, supplemented or otherwise modified from time to time.

 

Except as expressly stated herein, provisions of the Note remain in full force
and effect.

 

This letter agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same agreement.

 

Please confirm that the foregoing is in accordance with your understanding by
acknowledging your agreement in the space provided below.

 

Very truly yours,

 

NOVARTIS INSTITUTES FOR BIOMEDICAL RESEARCH, INC.

By:  /s/ Christian Klee
Name:Christian Klee
Title:VP+CFO

 

XOMA (US) LLC

 

By:/s/ Jim R. Neal
Name: Jim R. Neal
Title:VP Business Development

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