Exhibit 10.21

MANUFACTURING AND DISTRIBUTION AGREEMENT

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

THIS MANUFACTURING AND DISTRIBUTION AGREEMENT (hereinafter, this ‘Agreement’) is
made effective as of the 14th day of November, 2013.

BETWEEN

 

(1) RXi PHARMACEUTICALS, CORP., a Delaware corporation with offices at 1500 West
Park Drive, Suite 210, Westborough, MA 01581 (‘RXi’); and

 

(2) ETHICOR PHARMACEUTICALS LTD, a company registered in England with number
7984924, whose registered office is at 1st Floor, 24/25 New Bond Street,
Mayfair, London, W1S 2RR, United Kingdom (‘Ethicor’),

(each a ‘Party’ and together the ‘Parties’).

RECITALS:

WHEREAS, Ethicor is in the business of distributing Unlicensed Medicines (as
defined below) in accordance with applicable laws regarding the distribution of
such products;

WHEREAS, RXi is seeking to develop and make available a number of medicinal
products which would be suitable for sales and distribution through Ethicor; and

WHEREAS, Ethicor wishes to distribute the Products (as defined below) in the
Territory (as defined below) as Unlicensed Medicines, in accordance with
applicable laws regarding the distribution of such Products, and RXi wishes to
provide such Products to Ethicor, all subject to and in accordance with the
terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the various promises and undertakings set
forth herein, and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows:

TERMS AND CONDITIONS

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 Definitions. In this Agreement the following words shall have the following
meanings:

1.1.1 ‘Applicable Laws’ means all legislation, laws, codes and guidance notes
directly or indirectly applicable to the performance of the Agreement or the
development, manufacture or distribution of the Products in or for the
Territory, as may be updated from time to time;

1.1.2 ‘Active Pharmaceutical Ingredient’ or ‘API’ means any active
pharmaceutical ingredient or combination thereof in a Product which exerts a
pharmacological or therapeutic effect.

 

1

--------------------------------------------------------------------------------

1.1.3 ‘Assembly Contractor’ means a third party Product supplier engaged by
Ethicor.

1.1.4 ‘Business Day’ means a day that is not a Saturday, Sunday or a public
holiday in the United Kingdom or United States;

1.1.5 ‘Calendar Quarter’ means each period of three months beginning on the
first day of January, April, July and October in each calendar year;

1.1.6 ‘Commencement Date’ means the effective date of this Agreement;

1.1.7 ‘Commercially Reasonable Efforts’ means, with respect to a Product,
efforts which, consistent with the exercise of prudent scientific and business
judgment:

 

  a) are normally used by Ethicor in connection with the manufacture, use or
sale of those products which it owns or has rights to and which are at a similar
stage of development and have similar commercial potential to such Product; and

 

  b) take into account the resources available to Ethicor in the conduct of its
business; and

 

  (c) conform with the requirements of the Relevant Regulatory Authority and the
Applicable Laws;

1.1.8 ‘Cost of Goods’ means the agreed ex-factory price for finished Products as
supplied by the Assembly Contractors, delivered CIF to premises as determined by
Ethicor, inclusive of Product, API and excipient (provided by RXi or sourced
elsewhere), delivered CIF to Ethicor Assembly Contractors, and packaging costs.

1.1.9 ‘Effective In-Market Revenue’ means, with respect to a Product, the true,
net invoice value received by Ethicor on sales of such Product (whether such
sale is made directly by Ethicor or by any Sub-Distributors on behalf of
Ethicor).

1.1.10 ‘Ethicor’s Facsimile Number’ means or such other number as Ethicor may
notify to RXi;

1.1.11 ‘Field’ means, with respect to a Product, the Field that is identified on
the Product Schedule for such Product;

1.1.12 ‘GBP’ shall mean GB Pounds Sterling.

1.1.13 ‘Gross Profit’ means, with respect to a Product, an amount equal to:
(i) the true, net invoice value received (cash collected) by Ethicor on sales of
the Product to unaffiliated third parties; minus (ii) the Cost of Goods.

1.1.14 ‘Initial Product’ means the Product described on Schedule 1 annexed
hereto.

1.1.15 ‘Intellectual Property’ means all inventions, patents, utility models,
design rights (registered or unregistered), database rights, copyright and trade
marks (both registered and unregistered), data, know-how, technology and other
proprietary rights, together with all rights to the grant of and applications
for the same and including all similar or analogous rights and all other rights
in the nature of intellectual and industrial property throughout the world;

1.1.16 ‘Interest Rate’ means the rate of [***]% per annum above the base rate of
Barclays Bank Plc as applying from time to time in the UK;

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

2

--------------------------------------------------------------------------------

1.1.17 ‘Mark’ means: (i) the RXi mark and (ii) any other marks that are
identified in a Product Schedule;

1.1.19 ‘Market’ means to promote, distribute, market and sell Products to the
extent permitted under Applicable Law;

1.1.19 ‘Marketing Authorisation’ in relation to a country or region in the
Territory, means the grant of registration approval or license provided by the
Relevant Regulatory Authority in such country or region for the promotion,
distribution and sale of a Product;

1.1.20 ‘Performance Requirements’ means, with respect to a given Product, any
Performance Requirements set forth on the Product Schedule that is applicable to
such Product;

1.1.21 ‘RXi’s Facsimile Number’ means or such other number as RXi may notify to
Ethicor;

1.1.22 ‘RXi Intellectual Property’ means: (i) the Marks and (ii) any other
Intellectual Property relating to the Products that at any time during the term
of this Agreement is owned by or held under license from a third party by, RXi
or any of its affiliates.

1.1.23 ‘Post Termination Sales Period’ means a period of [***] months following
termination of this Agreement;

1.1.24 ‘Product’ means any product that is identified on a Product Schedule;

1.1.25 ‘Product Schedule’ means a Product Schedule that is signed by both
Parties for each Product under this Agreement. Each Product Schedule shall set
forth: (i) the Product to which it applies, (ii) the applicable Field, (iii) the
applicable Marks and (iv) any other terms and conditions agreed to by the
Parties with respect to such Product (in addition to the terms set forth in this
Agreement). Each Product Schedule is hereby incorporated by reference into and
made part of this Agreement. To the extent that any of the provisions set forth
in a Product Schedule conflict with any of the provisions set forth elsewhere in
this Agreement, the provisions set forth in the Product Schedule shall control.
The Product Schedule agreed to by the Parties as of the Commencement Date with
respect to the Initial Product is attached to this Agreement as Schedule 1.

1.1.26 ‘Relevant Regulatory Authority’ in relation to a country or region in the
Territory, means the government authority, whether Federal, State or municipal,
regulating the manufacture and Marketing of therapeutic substances in such
country or region;

1.1.27 ‘Sub-Distributor’ has the meaning set forth in clause 2.2;

1.1.28 ‘Term’ means the period during which this Agreement is in force;

1.1.29 ‘Territory’ means (i) the countries specified in Schedule 2 and (ii) any
other countries that may be added to this Agreement pursuant to clause 7;

1.1.30 ‘Unlicensed Medicine’ means any medicinal product that may be supplied
under Applicable Laws without having received a Marketing Authorisation from the
applicable Relevant Regulatory Authority (including, but not limited to, any
unlicensed ‘specials’ that may be supplied in the United Kingdom under
Applicable Law and/or a product that can be supplied pursuant to an ‘orphan
drug’ or similar designation from a Relevant Regulatory Authority prior to
receiving a Marketing Authorisation ); and

1.1.31 ‘Year’ means the period of twelve months from the Commencement Date and
each consecutive period of 12 months thereafter during the Term.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

3

--------------------------------------------------------------------------------

1.2 Interpretation. References to clauses and schedules are to the clauses of
and schedules to this Agreement and all of the schedules shall form part of and
shall be deemed to be incorporated in this Agreement. Headings are for
convenience only and shall be ignored in interpreting this Agreement.

 

2. LICENSE GRANT; SUBLICENSES

 

2.1 License Grant. RXi hereby grants to Ethicor an exclusive (even as to RXi),
transferable (to the extent provided in clause 21) license during the Term,
under the RXi Intellectual Property, to formulate, make, have made, use, Market
and otherwise commercialize and exploit the Products for use in the Territory in
the Field applicable to each Product (the ‘License’).

 

2.2 Sublicenses. Ethicor may grant sublicenses under the License (i) to third
parties in markets where Ethicor does not have distribution capabilities,
subject in each case, to prior, written approval by RXi, which approval shall
not be unreasonably withheld (‘Sub-Distributors’) and (ii) to Assembly
Contractors, to the extent necessary for such Assembly Contractors to
manufacture the Products.

 

3. DEVELOPMENT OF PRODUCTS; PROVISION OF PRODUCT DATA

 

3.1 Development of Products. RXi will develop the final dosage form of the
Products to a quality acceptable for Unlicensed Medicines under Applicable Laws
in the European Union. Where stability studies are required to be conducted at
the Assembly Contractor’s premises to ensure that any Product (or any Additional
Products) complies with relevant regulatory regulations for Unlicensed
Medicines, Ethicor shall bear the cost unless otherwise agreed in writing by the
Parties. Ethicor shall appoint Assembly Contractors with the capability to
compound and assemble finished Product(s) to a quality acceptable for Unlicensed
Medicines within the European Union.

 

3.2 Provision of Product Data. RXi will provide Ethicor with data required for
Ethicor to complete its regulatory and assembly responsibilities and information
in the English language that is in the possession or control of RXi or any of
its affiliates that is applicable to the formulation, manufacture, use and
marketing of the Products (collectively, the “Product Data”). RXi will provide
Ethicor with the necessary Product Data existing as of the Commencement Date
promptly after the Commencement Date, and will provide Ethicor with Product Data
generated or obtained after the Commencement Date promptly after such Product
Data is generated or obtained.

 

4. SUPPLY OF PRODUCTS

 

4.1 Engagement of Assembly Contractors. Ethicor will be responsible for engaging
one or more Assembly Contractors for the production and supply of Products for
Ethicor in the event that it does not obtain its Product supply from RXi.
Ethicor will meet the Assembly Contractor’s invoice for Cost of Goods on
conventional credit terms. For the avoidance of doubt, the cost of goods
established in conjunction with the Assembly Contractor shall contain no element
of commission or rebate to the benefit of any Party other than the Assembly
Contractor. In the event that RXi supplies API and/or finished product, the cost
of such goods shall contain no element of commission or rebate to the benefit of
any Party other than the manufacturer. For the avoidance of doubt, the price
charged to Ethicor’s designated Assembly Contractor shall be equal to the actual
net cash paid by RXi to the manufacturer for the product.

 

4

--------------------------------------------------------------------------------

4.2 Transparency. Ethicor will provide RXi with full insight into manufacturing,
quality and financial aspects of the relationship between Ethicor and each
Assembly Contractor with regard to the supply of Product(s). In addition,
Ethicor will provide RXi, upon request, with copies of all release documentation
relating to the Products. In the event RXi is providing Product supply to
Ethicor, RXi will provide Ethicor with full insight into manufacturing, quality
and financial aspects of producing and supplying Product(s), and will provide
Ethicor, upon request, with copies of all release documentation relating to the
Products.

 

4.3 Specification Changes. Any changes to the final specifications for the
Products (including any changes to specifications pertaining to patient dosing)
(collectively, ‘Specification Changes’) shall be subject to approval by RXi;
provided, however, that Ethicor shall not be required to implement any
Specification Change that is requested by RXi if (i) Ethicor determines that
such Specification Change is not commercially reasonable from a cost perspective
or (ii) if the Assembly Contractor does not have sufficient time or resources to
implement such Specification Change. Notwithstanding any of the foregoing, RXi
and Ethicor agree that any Specification Changes required for patient safety
will be implemented as soon as possible.

 

4.4 Supply to RXi. To minimise unit cost and optimise the batch production
limits of the Assembly Contractor with respect to the Products, in the event
Ethicor is obtaining Product supply from an Assembly Contractor, Ethicor and RXi
will liaise before each new production order is placed so that RXi can order
quantities of the Products for its own research, development and testing use
(‘RXi-Ordered Quantities’). In such event, Ethicor will supply any RXi-Ordered
Quantities to RXi with labelling supplied by RXi, as if RXi were a client, and
invoice RXi in accordance with Ethicor’s normal practices, at [***] for such
RXi-Ordered Quantities. The Parties will reasonably cooperate to ensure that
production runs of Product at the Assembly Contractor will ensure the most
economical cost and optimal amount of Product(s) according to the requirements
of each Party and the batch production volumes of the Assembly Contractor. RXi
will not market or sell (or permit any third party to market or sell) any of the
RXi-Ordered Quantities as unapproved medicines in the Territory.

 

5. REGULATORY RESPONSIBILTIES

 

5.1 Ethicor Regulatory Responsibilities. Ethicor will be responsible for
regulatory matters relating to the assembly and distribution of the Products in
the Territory by or on behalf of Ethicor as Unlicensed Medicines, as well as
pharmacovigilance matters with respect to such Products. Such responsibility
will include the handling and monthly aggregation of all adverse events relating
to such Products for RXi and the immediate reporting of any Serious Adverse
Events relating to such Products to RXi. Ethicor agrees to use its best efforts
to obtain information regarding adverse events and serious adverse events and
when reporting these events to RXi, to provide, at a minimum, if available, the
following information: dose level, timing of an adverse event (relative to time
of dose), if adverse or serious adverse event was related to drug and the
duration of the adverse event. According to the MHRA “healthcare professionals
have a responsibility to help monitor the safety of medicines in clinical use
through submission of suspected adverse drug reaction to the MHRA and CHM via
the Yellow Card Scheme. Such reporting is equally important for unlicensed
medicines or those used off-label as for those that are licensed.” Ethicor will
require Sub-Distributors to follow substantially similar reporting and
pharmacovigilance requirements with respect to such Products. Ethicor or its
Sub-Distributors will be the sole reporting entity to the Relevant Regulatory
Authorities with respect to the Products distributed by Ethicor and its
Sub-Distributors.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

5

--------------------------------------------------------------------------------

5.2 Cooperation Regarding Marketing Authorisations. If RXi determines that it
wishes to obtain Marketing Authorisation for any of the Products in any part of
the Territory, Ethicor will co-operate fully with RXi; provided, however, that
Ethicor will not be required to incur any costs without Ethicor’s prior written
consent which may be granted or denied in Ethicor’s sole discretion.

 

5.3 Cooperation Regarding Patient Registry. Ethicor will provide reasonable
support to RXi, subject to RXi’s reimbursement of any costs incurred by Ethicor,
if RXi’s decides to implement patient registry with respect to the Products.

 

5.4 Product Labelling. Both Parties shall jointly approve labelling for the
Products; provided, however, that RXi’s and Ethicor’s approval for the labelling
shall not be unreasonably withheld.

 

5.5 Data Protection. Both Parties shall ensure that they comply with current
data protection legislation.

 

6. SALE OF PRODUCTS

 

6.1 General Obligations. Ethicor will, subject to and in accordance with
Applicable Laws: (i) use Commercially Reasonable Effort to sell the Products in
the Territory and (ii) at all times provide commercially reasonable and adequate
resources to fulfil its obligations under this Agreement, including adequate
marketing efforts and production of marketing materials (in each case, to the
extent permitted under and in compliance with Applicable Law), as well as sales
resources. Ethicor will be responsible for, and have sole discretion over all
market pricing, promotion, strategy, reimbursing, branding, distribution and
sale of the Products in the Territory. RXi shall set up and run an induction
session of at least one day to cover product positioning, technical and
performance data, with a follow-up session, if required, that may be covered by
joint visits to centres of excellence.

 

6.2 Sales Forecasts. Ethicor shall provide to RXi its non-binding sales
forecasts, including units, for the forthcoming twelve (12) month period on a
quarterly basis as well as provide long-term outline projections updated on a
rolling quarterly basis.

 

6.3 Further Ethicor Commitments. Ethicor further commits to: (i) set up a
pharmacovigilance program and share data with RXi and Relevant Regulatory
Authorities upon written request, (ii) operate a controlled Medical Information
Service to which RXi will have full access and (iii) initiate a formal feedback
system to ensure traceability of the Products.

 

6

--------------------------------------------------------------------------------

6.4 Review Meetings. The Parties shall from time to time hold in-person meetings
to discuss progress of the activities contemplated under this Agreement and, at
a minimum, shall hold a telephone conversation every second week (or on such
other period as may be agreed upon by the Parties) to discuss the status of such
activities. If RXi believes that Ethicor is not performing in accordance with
this Agreement, RXi shall promptly raise such matter at such meetings and/or
telephone conversations and Ethicor shall use all reasonable efforts to resolve
such matter.

 

6.5 Inspection. Each Party shall have the right to inspect the relevant records
of the other party during regular business hours with respect to the conduct of
the collaboration by providing one (1) week’s written notice.

 

7. TERRITORY EXPANSION

 

7.1 The Parties will discuss in good faith the potential expansion of the
Territory. Any such expansion of the Territory will be set forth in a written
amendment to this Agreement that is signed by both Parties.

 

8. FINANCIAL TERMS

 

8.1 Sharing of Financial Information. Both Parties will share information with
each other regarding the Cost of Goods and the Effective In-Market Prices for
the Products at all times.

 

8.2 Responsibility for Pricing. Ethicor and its Sub-Distributors are wholly
responsible for setting the prices and other terms of sale at which the Products
are sold in the Territory, at their sole discretion.

 

8.3 Payments to Third Parties. Ethicor will be responsible for paying the
Assembly Contractors’ invoices for the Products.

 

8.4 Sharing of Gross Profits. Ethicor shall pay to RXi (i) [***] percent
([***]%) of Gross Profits received by Ethicor during each year of Term on the
first GBP [***] of sales, and (ii) [***] ([***]%) of Gross Profit on all sales
in excess of GPB [***] during each year of the Term. All amounts due RXi will be
paid monthly [***] months in arrears based on Ethicor invoiced sales for the
Products in the United Kingdom. All amounts due RXi for sales of the Products in
the Territory, but outside the United Kingdom, will be paid [***] months in
arrears and exclude currency transaction costs.

 

8.5 Currency of Payments. All amounts payable hereunder shall be paid in GBP. In
calculating the amounts due RXi hereunder, any currency conversions necessary in
applying the above principles shall be at the then applicable market rate.

 

8.6 Reporting. Ethicor and RXi will share information on Cost of Goods and the
Effective In-Market Revenue at all times.

 

8.7 Inspection Rights. Each Party shall have the right to inspect the relevant
records of the other Party with respect to payments made under this Agreement.
Any such inspection by a Party shall be conducted no more than once per year,
during normal business hours and upon at least ten (10) business days prior,
written notice to the other Party, and in a manner that is not unreasonably
disruptive to such other Party’s business.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

7

--------------------------------------------------------------------------------

8.8 Reconciliation. RXi and Ethicor agree to reconcile the number of units of
the Product(s) ordered by Ethicor from the Assembly Contractor with the number
of units sold or otherwise used by Ethicor such that the agreed fee paid to RXi
is for the total units of the Product(s) bought by Ethicor from the Assembly
Contractor exclusive of those used for samples. Units of the Product(s) ordered
by RXi through Ethicor for use by RXi will not be included. The reconciliation
process will take place once annually within a ten (10) working day period at
the end of each consecutive twelve-month period beginning from the commencement
date of this Agreement. For the purposes of payments due RXi hereunder, the
accumulator will be reset to zero every twelve-month period following the
commencement date of this Agreement.

 

9. REPRESENTATIONS, WARRANTIES AND COVENANTS; DISCLAIMER.

 

9.1 Mutual Representations and Warranties. Each Party hereby represents and
warrants to the other Party as of the Commencement Date, as follows:

 

  9.1.1 such Party (i) has the power and authority and the legal right to enter
into this Agreement and to perform its obligations hereunder, and (ii) has taken
all necessary action on its part required to authorize the execution and
delivery of this Agreement;

 

  9.1.2 this Agreement has been duly executed and delivered on behalf of such
Party and constitutes a legal, valid and binding obligation of such Party and is
in accordance with its terms subject to the effects of bankruptcy, insolvency or
other laws of general application affecting the enforcement of creditor rights
and judicial principles affecting the availability of specific performance and
general principles of equity, whether enforceability is considered a proceeding
at law or equity;

 

  9.1.3 such Party is not aware of any pending or threatened litigation (and has
not received any communication relating to any pending or threatened litigation)
that alleges that such Party’s activities related to this Agreement have
violated, or that by conducting the activities as contemplated in this Agreement
such Party would violate, any of the intellectual property rights of any person
(after giving effect to the license grants in this Agreement);

 

  9.1.4 all necessary consents, approvals and authorizations of all regulatory
and governmental authorities and other Persons required to be obtained by such
Party in connection with the execution and delivery of this Agreement and the
performance of its obligations under this Agreement have been obtained (other
than such consents, approvals and authorizations that the Parties will obtain in
the course of performing their obligations under this Agreement); and

 

  9.1.5 the execution and delivery of this Agreement and the performance of such
Party’s obligations hereunder (i) do not conflict with or violate in any
material way any requirement of Applicable Law, (ii) do not conflict with or
violate any provision of the articles of incorporation, bylaws, limited
partnership agreement or any similar instrument of such Party, and (iii) do not
conflict with, violate, or breach or constitute a default or require any consent
under, any contractual obligation or court or administrative order by which such
Party is bound.

 

8

--------------------------------------------------------------------------------

9.2 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY (AND
THEIR RESPECTIVE AFFILIATES) HEREBY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER
WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT,
INCLUDING ANY WARRANTY OF QUALITY, PERFORMANCE, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR USE OR PURPOSE. FOR THE AVOIDANCE OF DOUBT, NOTHING CONTAINED IN THIS
CLAUSE 9.2 SHALL OPERATE TO LIMIT OR INVALIDATE ANY EXPRESS WARRANTY CONTAINED
HEREIN.

 

10. INDEMNITY

 

10.1 RXi Indemnity Obligations. RXi will defend, indemnify and hold harmless
Ethicor and its affiliates and its and their respective officers, directors,
employees and agents (collectively, the “Ethicor Indemnified Parties”) from and
against any and all claims, actions, lawsuits and investigations brought by a
third party (“Third Party Claims”) and will pay any settlements, awards, fines
and reasonable attorney’s fees and expenses and court costs associated with such
Third Party Claims (collectively, “Losses”), in each case to the extent arising
from or relating to any allegation that the manufacture, marketing,
distribution, sale or use of any of the Products infringes any Intellectual
Property of any third party; provided, however, that RXi shall have no
obligation to defend, indemnify or hold harmless any Ethicor Indemnified Party
from any Third Party Claims or Losses to the extent arising from the wilful
misconduct or negligence of any Ethicor Indemnified Party.

 

10.2 Ethicor Indemnity Obligations. Ethicor will defend, indemnify and hold
harmless RXi and its affiliates and its and their respective officers,
directors, employees and agents (collectively, the “RXi Indemnified Parties”)
from and against any and all Third Party Claims and will pay any Losses
associated with such Third Party Claims, in each case to the extent arising from
or relating to (i) any breach of this Agreement by Ethicor, (ii) any wilful
misconduct or negligence on the party of Ethicor; provided, however, that
Ethicor shall have no obligation to defend, indemnify or hold harmless any RXi
Indemnified Party from any Third Party Claims or Losses to the extent arising
from the wilful misconduct or negligence of any RXi Indemnified Party.

 

10.3 Indemnity Procedures. A Party seeking indemnification under clause 10.1 or
clause 10.2 (the ‘Indemnified Party’) will give the other Party (the
‘Indemnitor’) written notice of any Third Party Claim for which the Indemnified
Party seeks indemnification promptly; provided, however, that the failure to
give timely notice hereunder will not affect rights to indemnification
hereunder, except to the extent that Indemnitor demonstrates actual damage
caused by such failure. Indemnitor may elect to direct the defense or settlement
of any such Third Party Claim by giving written notice to the Indemnified Party,
which election will be effective immediately upon receipt by the Indemnified
Party of such written notice of election. Indemnitor will have the right to
employ counsel reasonably acceptable to the Indemnified Party to defend any such
Third Party Claim, or to compromise, settle or otherwise dispose of the same, if
Indemnitor deems it advisable to do so, all at the expense of Indemnitor;
provided, however, that Indemnitor will not settle, or consent to any entry of
judgment in, any such Third Party Claim without obtaining either: (i) an
unconditional release of all of the Indemnified Party (and its affiliates and
its and their respective officers, directors, employees and agents) from all
liability with respect to all claims underlying such Third Party Claim or
(ii) the prior, written consent of the Indemnified Party. The Parties will fully
cooperate with each other in any such Third Party Claim and will make available
to each other any books or records useful for the defense of any such Third
Party Claim.

 

9

--------------------------------------------------------------------------------

11. LIABILITY

 

11.1 Exclusion of Certain Damages. NEITHER PARTY SHALL BE LIABLE TO THE OTHER
PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, SPECIAL, PUNITIVE OR
EXEMPLARY DAMAGES (INCLUDING DAMAGES FOR LOSS OF BUSINESS, LOSS OF PROFITS OR
THE LIKE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, SUCH PARTY’S PERFORMANCE
HEREUNDER, OR ANY PRODUCTS, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES AND REGARDLESS OF THE CAUSE OF ACTION (WHETHER IN
CONTRACT, TORT, BREACH OF WARRANTY OR OTHERWISE).

 

11.2 Limitation of Liability. EACH PARTY’S MAXIMUM CUMULATIVE LIABILITY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR SUCH PARTY’S PERFORMANCE HEREUNDER, OR
ANY PRODUCTS, REGARDLESS OF THE CAUSE OF ACTION (WHETHER IN CONTRACT, TORT,
BREACH OF WARRANTY OR OTHERWISE), WILL NOT EXCEED [***] POUNDS STIRLING (£[***])
IN THE AGGREGATE.

 

11.3 Exceptions. Notwithstanding anything to the contrary, the exclusions and
limitations of liability set forth in clause 11.1 and clause 11.2 will not
apply: (i) to the extent that acts or omissions of a Party constitute fraud,
willful misconduct, (ii) each Party’s indemnity obligations under clause 10 with
respect to Third Party Claims or (iii) to the extent any liability which cannot
be excluded by applicable law.

 

12. INSURANCE

 

12.1 Commencing on the date on which the first sale of a Product by or on behalf
of Ethicor occurs, each Party shall obtain, at its sole cost and expense,
liability insurance applicable to its performance under this Agreement, in
amounts that are reasonable and customary in the pharmaceutical industry. All
such policies shall include a contractual endorsement naming the other Party to
this Agreement as an additional insured.

 

13. DURATION AND TERMINATION

 

13.1 Term. This Agreement shall come into effect on the Commencement Date and
shall continue in force for an initial term of four (4) years from the
Commencement Date (the ‘Initial Term’). At the end of the Initial Term, or any
subsequent term pursuant to a renewal under this clause (‘Renewal Term’), this
Agreement will automatically renew for consecutive periods of one (1) year each.
The Initial Term and each Renewal Term shall be subject to earlier termination
in accordance with this clause 13.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

10

--------------------------------------------------------------------------------

13.2 Mutual Termination for Convenience During Renewal Terms. During any Renewal
Term, either Party may terminate this Agreement (either in whole or with respect
to any one or more Products) at any time for convenience upon twelve
(12) month’s prior, written notice to the other Party.

 

13.3 Mutual Termination for Material Breach. Without prejudice to any other
rights to which it may be entitled, either Party may give notice in writing to
the other terminating this Agreement with immediate effect if the other Party is
in breach of any material term hereof and (if such breach is remediable) fails
to remedy such breach within [***] days of that Party being notified of such
breach. Notwithstanding anything to the contrary, if any such breach primarily
relates to some, but not all, Products under this Agreement, then such
termination shall only apply with respect to the Product or Products to which
the breach primarily relates.

 

13.4 Mutual Termination for Quality or Safety Issues. Either Party may terminate
this Agreement in part with respect to a particular Product upon thirty
(30) days prior, written notice to the other Party in the event that such Party
has made a good faith determination that the distribution of such Product under
this Agreement should be discontinued or halted due to a safety or quality
issue; provided, however, that this Agreement will not terminate with respect to
such Product if, before the end of such thirty (30) day period, either such
safety or quality issues have been addressed, or reasonable efforts are being
undertaken to address such safety or quality issues.

 

13.5 Termination by RXi for Failure to Meet Performance Standards. RXi may
terminate this Agreement upon [***] days prior, written notice to Ethicor if:
(i) Ethicor does not make reasonable efforts to educate physician prescribers
about the Product(s) or fails to convince such prescribers to use the Product(s)
in patients, or (ii) Ethicor does not provide adequate or critical personnel for
the project; provided, however, that this Agreement will not terminate with
respect if Ethicor, before the end of such [***] day period, either cures such
failure or is undertaking reasonable efforts to cure such failure.

 

13.6 Termination by RXi In the Event of Marketing Authorization or Sale. In the
event that either (A) RXi gains a Marketing Authorisation in any part of the
Territory for a Product, (B) RXi decides to sell or out-license a Product
following such Marketing Authorisations or (C) RXi or its assets relating to a
Product in a Territory are acquired by a third party ((A), (B) and (C), each a
‘Partial Termination Trigger’), RXi shall have the right to terminate this
Agreement in part (only with respect to the specific Product and the specific
part of Territory that is the subject of the Partial Termination Trigger), on
[***] months’ prior, notice to Ethicor.

 

13.7 Termination by Ethicor for Commercial Reasons. Ethicor may terminate this
Agreement on a country-by-country basis within the Territory if the continued
sale and marketing of a Product(s) is commercially unreasonable by providing RXi
with [***] months’ notice.

 

13.8 Termination Payment. In the event of any termination by [***] during the
Initial Term, except for a termination pursuant to [***], [***] shall make a
termination payment to [***] determined in accordance with the following:

 

  (a) with respect to any termination notice given between [***] and [***]
months following the Commencement Date, [***] shall pay [***] an amount equal to
the [***] in the previous [***] year period;

 

  (b) with respect to any termination notice that is issued before the date that
is [***] months following the Commencement Date, [***] shall pay [***] [***]% of
[***] (up to a maximum of $[***] USD).

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

11

--------------------------------------------------------------------------------

14. EFFECTS OF EXPIRATION OR TERMINATION

 

14.1 Accrued Rights and Liabilities. Expiration or termination of this Agreement
howsoever caused shall be without prejudice to any rights or liabilities accrued
at the date which this Agreement terminates.

 

14.2 Effect of Expiration or Termination. Upon any expiration or termination of
this Agreement (in whole or in part), the following provisions shall apply with
respect to any Products that are the subject of such expiration or termination:

 

  14.2.1 RXi must, if requested to do so by Ethicor, allow Ethicor to fulfil all
binding purchase orders for such Products that are in place as of the effective
date of such expiration or termination;

 

  14.2.2 Ethicor shall be permitted for the Post Termination Sales Period to
sell and distribute any stocks of such Products as it may at the time have in
store or under its control; and

 

  14.2.3 subject to clause 14.2.2 (and also subject to clause 14.3 with respect
to any Products that are not the subject of such termination or expiration) all
other rights and Licenses hereunder shall terminate on the date when this
Agreement terminates or expires.

 

14.3 Survival. The following provisions will survive any expiration or
termination of this Agreement: Clause 1 (“Definitions and Interpretation”),
Clause 9 (“Representations, Warranties and Covenants; Disclaimer”), Clause 10
(“Indemnity”), Clause 11 (“Liability”), this Clause 14 (“Effects of Expiration
or Termination”), Clause 15 (“Intellectual Property”), Clause 16
(“Relationship”), Clause 17 (“Confidential Information”), Clause 18 (“Force
Majeure”), Clause 19 (“Entire Agreement”), Clause 20 (“Amendments”), Clause 21
(“Assignment”), Clause 22 (“Waiver”), Clause 23 (“Counterparts”), Clause 24
(“Notices”), Clause 25 (“Rights of Third Parties”) and Clause 26 (“Governing Law
and Forum”). For the avoidance of doubt, if this Agreement is terminated in part
(i.e., with respect to a Product and/or portion of the Territory), all
provisions of this Agreement that apply with respect to any Product and/or
portion of the Territory that is not being terminated shall survive such
termination.

 

15. INTELLECTUAL PROPERTY

 

15.1 RXi Intellectual Property. Ownership of the RXi Intellectual Property shall
reside with RXi and Ethicor shall have no claim to ownership or any part thereof
in any way.

 

15.2 New IP. In the event that Ethicor creates any new Intellectual Property
relating to the formulation and delivery of any of the Products (‘New IP’), such
New IP shall be jointly owned by Ethicor and RXi and Ethicor shall fully and
promptly disclose the same to RXi. Ethicor shall have first right to protect any
such New IP at its expense; provided, however, that if Ethicor elects not to
protect an item of New IP, then RXi shall have the right to protect, at RXi’s
expense, and solely own such New IP that Ethicor elects not to protect. For the
avoidance of doubt, any New IP, whether jointly owned by the Parties or solely
owned by RXi pursuant to the preceding sentence, shall be subject to the License
granted to Ethicor under this Agreement.

 

15.3 Bankruptcy of Licensor. The Parties agree that the licenses granted
hereunder are rights in “intellectual property” within the scope of Section 101
(or its successors) of the United States Bankruptcy Code and for other similar
laws. To the extent that a Party is a licensee or any rights of the other Party
under this Agreement, such party shall have and may fully exercise all rights
available to a licensee under the United States Bankruptcy Code including
without limitation under Section 365(n) (or its successors).

 

12

--------------------------------------------------------------------------------

16. RELATIONSHIP

Nothing in this Agreement shall constitute or shall be deemed to constitute a
partnership between the Parties hereto or constitute or be deemed to constitute
Ethicor as agent of RXi for any purpose whatsoever and Ethicor shall have no
authority or power to bind RXi or to contract in the name of or create a
liability against RXi in any way or for any purpose. Ethicor hereby undertakes
that it will in all correspondence and other dealings relating directly or
indirectly to the sale, distribution or other disposal of the Products clearly
indicate that it is acting solely on its own behalf and not as an agent for RXi.

 

17. CONFIDENTIAL INFORMATION

Any proprietary or confidential information relating to a party’s business,
technologies or finances disclosed to the other Party under this Agreement
collectively constitutes the “Confidential Information” of the disclosing Party.
Neither Party will use the Confidential Information of the other Party for any
purpose unrelated to the exercise of its rights or fulfillment of its
obligations under this Agreement, and will hold such Confidential Information in
confidence during the Term and for a period of [***] years after the termination
or expiration of this Agreement (except that Confidential Information identified
by a Party as a trade secret shall be held in confidence for as long as such
information remains a trade secret). Each Party shall exercise with respect to
the Confidential Information of the other Party the same degree of care as the
Party exercises with respect to its own confidential or proprietary information
of a similar nature, but in no event less than reasonable care, and shall not
disclose it or permit its disclosure to any third party, other than: (i) to its
affiliates, and those of its and its Affiliates’ respective employees,
sublicensees, consultants, contractors, accountants, attorneys, advisors and
agents, as well as to any potential acquirers, investors or lenders and their
respective advisors, in each of the foregoing cases who are bound by a
substantially similar obligation of confidentiality of this Agreement and
(ii) by or on behalf of Ethicor to any Relevant Regulatory Authority in
connection with any regulatory matters with respect to any Product. However, the
foregoing undertakings of confidentiality shall not apply to any information or
data which:

 

  (a) the receiving Party receives without obligation of confidentiality at any
time from a third party lawfully in possession of same and having the right to
disclose same;

 

  (b) is, as of the Commencement Date, in the public domain, or subsequently
enters the public domain through no fault of the receiving Party;

 

  (c) is independently developed by the receiving Party as demonstrated by
written evidence without reference to or benefit of information disclosed to the
receiving Party by the disclosing Party; or

 

  (d) is publically disclosed pursuant to the prior, written approval of the
disclosing Party.

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

13

--------------------------------------------------------------------------------

If a Party is required to disclose any Confidential Information of the other
Party pursuant to applicable law or legal process, the first Party shall
(i) give prior, written notice of such required disclosure to the other Party,
to the extent reasonably practicable, (ii) give reasonable assistance to the
other Party, if requested thereby, seeking confidential or protective treatment
thereof, and (iii) only disclose such Confidential Information to the extent
required by such applicable law or legal process; provided, however, that the
foregoing requirement shall not apply with respect to any disclosures by Ethicor
to any Relevant Regulatory Authority.

The Parties will mutually agree on a press release to be issued by RXi upon
execution of this Agreement or reasonably soon thereafter, which shall contain,
at a minimum, Ethicor’s name and the key financial terms, excluding, without
limitation, the margin share rates and other amounts to be paid hereunder.
Neither Party shall make any subsequent public announcement concerning this
Agreement or the terms hereof not previously made public without the prior
written approval of the other Party, such consent not be unreasonably withheld
or delayed by such other Party, with regard to the form, content, and precise
timing of such announcement, except as may be required by either Party in order
to comply with applicable law, regulations, court orders, or tax, securities
filing, financing arrangements, acquisitions, or sublicenses. Prior to any such
public announcement, the Party wishing to make the announcement will submit a
draft of the proposed announcement to the other Party in sufficient time to
enable such other Party to consider and comment thereon.

 

18. FORCE MAJEURE

 

18.1 The obligations of each Party under this Agreement shall be suspended
during the period and to the extent that such Party is prevented or hindered
from complying therewith by any cause beyond its reasonable control including
(insofar as beyond such control but without prejudice to the generality of the
foregoing expression) strikes, lock-outs, labour disputes, act of God, war,
riot, civil commotion, terrorist activity, malicious damage, fire, flood or
storm.

 

18.2 In the event of either Party being so hindered or prevented, such Party
shall give notice of suspension as soon as reasonably possible to the other
Party stating the date and extent of such suspension and the cause thereof and
the omission to give such notice shall forfeit the rights of such Party to claim
such suspension. Any Party whose obligations have been suspended as aforesaid
shall resume the performance of such obligations as soon as reasonably possible
after the removal of the cause and shall so notify the other Party.

 

19. ENTIRE AGREEMENT

This Agreement constitutes the entire understanding between the Parties hereto
with respect to the subject matter hereof and supersedes all prior agreements,
negotiations and discussion between the Parties hereto relating thereto.

 

20. AMENDMENTS

Save as expressly provided herein, no amendment or variation of this Agreement
shall be effective unless in writing and signed by a duly authorised
representative of the Parties hereto.

 

21. ASSIGNMENT

Neither Party may transfer or assign this Agreement or assign any rights
hereunder or delegate any duties hereunder without the other Party’s prior,
written consent, such consent not to be unreasonably withheld. Notwithstanding
the foregoing: (A) either Party may subcontract portions of its obligations
under this Agreement without any requirement to obtain the other Party’s
consent, provided that the subcontracting Party remains responsible for the
performance of such obligations by the subcontractor and (B) either Party may
transfer or assign this Agreement, without any requirement to obtain the other
Party’s consent: (i) to any of its affiliates or (ii) in connection with any
merger, consolidation, sale of all or substantially all assets, sale of equity
interests or other change of control transaction involving such Party or such
Party’s line of business to which this Agreement relates. Subject to the
foregoing, this Agreement will bind and inure to the benefit of the Parties and
their respective successors and permitted assigns.

 

14

--------------------------------------------------------------------------------

22. WAIVER

The failure of a Party hereto to exercise or enforce any right under this
Agreement shall not be deemed to be a waiver thereof nor operate so as to bar
the exercise or enforcement thereof at any time or times thereafter.

 

23. COUNTERPARTS

This Agreement may be signed in any number of counterparts, all of which taken
together shall constitute one and the same Agreement. Any Party may enter into
this Agreement by signing any such counterpart.

 

24. NOTICES

Any notice required to be given pursuant to this Agreement shall be in writing
and shall be given by delivering the same by hand at, or by sending the same by
prepaid first class post (airmail if to an address outside the country of
posting) or by facsimile transmission using the relevant number set out in this
Agreement or to the address of the relevant Party set out in this Agreement or
such other address as either Party may notify to the other from time to time.
Any such notice given as aforesaid shall be deemed to have been given at the
time of delivery (if delivered by hand) or received the first working day next
following the day of sending (if sent by facsimile transmission) and when
received (if sent by post). Facsimile transmissions should be made to RXi’s
Facsimile Number and Ethicor’s Facsimile Number.

 

25. RIGHTS OF THIRD PARTIES

A person who is not a party to this Agreement has no rights under the Contracts
(Rights of Third Parties) Act 1999 to enforce any term of this Agreement, but
this does not affect any right or remedy of a third party which exists or is
available apart from under that Act.

 

26. GOVERNING LAW AND FORUM

This Agreement shall be governed by and construed in accordance with [***] law
and each Party hereby irrevocably submits to the non-exclusive jurisdiction of
the [***].

Any disputes relating to this Agreement or the terms hereof shall be submitted
to binding arbitration in [***] according to the rules of [***], which each
party paying its own costs in relation to the arbitration.

(signature page follows)

 

[***] Certain information in this document has been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

 

 

15

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
by their respective duly authorized officers in counterpart originals, effective
as of the date first above written.

 

RXI PHARMACEUTICALS, INC.     ETHICOR PHARMACEUTICALS LTD By:   /s/ Geert
Cauwenbergh     By:   /s/ Robert Jackson Name:   Geert Cauwenbergh, Dr. Med. Sc.
    Name:   Robert Jackson Title:   President & CEO     Title:   Chairman

 

16

--------------------------------------------------------------------------------

SCHEDULE 1

Product Schedule No. 1

This Product Schedule No. 1 (this “Product Schedule”) is entered into by RXI
PHARMACEUTICALS, INC. and ETHICOR PHARMACEUTICALS LTD pursuant to that certain
Manufacturing and Distribution Agreement dated November 14, 2013 (the “Master
Agreement”). This Product Schedule constitutes a “Product Schedule” for the
purposes of the Master Agreement and is hereby incorporated by reference into
and made part of the Master Agreement.

Initial Product: RXI-109, a self-delivering RNAi compound (sd-rxRNA)

Field: Treatment of dermal scarring following planned surgeries when prescribed
by a specialty physician as unlicensed medicine “Special” (Special Order product
as defined in the United Kingdom by MHRA).

Marks:

 

  •   [            ]

IN WITNESS WHEREOF, the Parties have caused this Product Schedule to be duly
executed by their respective duly authorized officers in counterpart originals,
effective as of the date first above written.

 

RXI PHARMACEUTICALS, INC.     ETHICOR PHARMACEUTICALS LTD By:   /s/ Geert
Cauwenbergh     By:   /s/ Robert Jackson Name:   Geert Cauwenbergh, Dr. Med. Sc.
    Name:   Robert Jackson Title:   President & CEO     Title:   Chairman

 

17

--------------------------------------------------------------------------------

SCHEDULE 2

The Territory

The Territory consists of all of the countries of the world except for the
United States, Canada and Mexico.

 

18