Execution Copy

Exhibit 10.18

 

[***] 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.

 

 

FIRST AMENDMENT TO LICENSE AGREEMENT BETWEEN NOVAN, INC. AND SATO PHARMACEUTICAL
CO., LTD.

 

This First Amendment to the License Agreement (the “Amendment”) is made and
entered into as of January 12, 2017 (the “Amendment Effective Date”) by and
between Novan, Inc., a Delaware corporation having an address at 4105 Hopson
Road, Morrisville, North Carolina 27560, USA (“Novan”) and Sato Pharmaceutical
Co., Ltd., a Japanese corporation having an address at 1-5-27, Moto-Akasaka,
Minato-ku, Tokyo 107-0051, Japan (“Sato”), and amends that certain License
Agreement between Novan and Sato, dated as of January 12, 2017 (the
“Agreement”).

 

RECITALS

 

WHEREAS, Novan and Sato are parties to the Agreement; and

 

WHEREAS, Novan and Sato desire to amend certain payment terms and conditions of
the Agreement as provided below.

 

NOW THEREFORE, in consideration of the mutual covenants contained herein, the
Parties hereto agree as follows:

 

AGREEMENT

 

1.

Defined Terms.  All capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Agreement.

 

2.

Section 14.1.  Section 14.1 shall be amended and restated in its entirety to
read as follows:

 

14.1Payments.  In consideration of the licenses and other rights granted to Sato
herein, Sato shall pay to Novan the following one-time, lump sum payments on
occurrence of the corresponding events.

UPFRONT PAYMENT (the “Upfront Payment”)

Upon the Effective Date

1.25 billion JPY

 

 

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

 

DEVELOPMENT MILESTONE PAYMENTS

Upon [***]

[***]

Upon [***]

[***]

Upon [***]

[***]

Upon [***]

[***]

Upon [***]

[***]

 

SALES MILESTONE PAYMENTS

One-time sales milestone payments shall be made by Sato to Novan upon the first
achievement of each of the following annual Net Sales milestones:

Annual Net Sales of [***]

[***]

Annual Net Sales of [***]

[***]

Annual Net Sales of [***]

[***]

 

For avoidance of doubt, if two or more of the foregoing milestones shall be
achieved in the same calendar year, the payments corresponding to each such
milestone shall be payable to Novan with respect to such calendar year.

3.

Section 14.3.  Section 14.3 shall be amended and restated in its entirety to
read as follows:

 

14.3Notification.  Sato shall notify Novan of the achievement of each of the
development milestones set forth in Section 14.1 within [***] of its
achievement, and each of the sales milestones set forth in Section 14.1 within
[***] after Sato closes its books for the relevant annual period in which such
sales milestone payment becomes due.  All payments under Section 14.1 shall be
made within [***] after Sato receives the relevant invoice from Novan, except
that the Upfront Payment due pursuant to Section 14.1 shall be made within [***]
after the Effective Date.  All payments under Section 14.1 shall be made without
setoff or deduction of any kind, other than pursuant to [***].

4.

Effective Date.  This Amendment is effective as of the Amendment Effective Date
immediately after the Agreement becomes effective (the “Effective Time”), and
the terms and conditions of this Amendment shall govern after such Effective
Time.

[***] 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.

Reaffirmation of Other Terms and Conditions.  The Agreement shall remain in full
force and effect, as amended hereby, and as so amended, the Parties hereby
reaffirm their respective rights and obligations thereunder.

 

6.

The Parties may execute this Amendment in multiple counterparts, each of which
shall be an original and all of which together shall constitute, together with
the Agreement, one legal instrument.

 

IN WITNESS WHEREOF, the Parties have signed and delivered this Amendment as of
the date first written above.

 

Novan, Inc.

 

Sato Pharmaceutical Co., Ltd.

 

 

 

 

 

 

/s/ Nathan Stasko

 

/s/ Seiichi Sato

 

 

 

By:

Nathan Stasko, President and CEO

 

By:

Seiichi Sato, President and CEO

 

 

 

 

 

Date: January 12, 2017

 

Date: January 12, 2017

 

[***] 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.