exv10w1






Exhibit 10.1




FIRST AMENDMENT OF EXCLUSIVE TECHNOLOGY OPTION AGREEMENT



This amendment (this “Amendment”) serves to amend the Exclusive Technology Option Agreement dated
September 4, 2008 between Omeros Corporation (“Omeros”), Patobios Limited (“Patobios”), Susan R.
George, M.D., Brian F. O’Dowd, Ph.D. and U.S. Bank National Association (the “Agreement”) and is
effective as of November 10, 2009. Except as expressly set forth below, capitalized terms used and
not redefined in this Amendment have the same meanings given to them in the Agreement.



WHEREAS the Agreement provides that Patobios may exercise the Put Option upon the achievement of
the De-Orphanization Milestone;



AND WHEREAS Omeros has advised Patobios that because the De-Orphanization Milestone would trigger
the Put Option and the corresponding liability to complete the Acquisition, Omeros has not
attempted the surrogate de-orphanization of orphan GPCRs to date;



AND WHEREAS Omeros has advised Patobios that Omeros’ obligations under the Put Option must be
conditioned on reasonably sufficient resources being available to Omeros to complete the
Acquisition in such circumstances, and has requested that it be able to proceed with the surrogate
de-orphanization of orphan GPCRs using the MOCA Technology for purposes of assisting Omeros to
determine and demonstrate the validity of the MOCA Technology;



AND WHEREAS Patobios wishes to facilitate Omeros’ achievement of the De-Orphanization Milestone and
completion of the Acquisition and for other good and valuable consideration;



NOW THEREFOR Omeros and Patobios hereby agree as follows:





	 	1.	 	Permitted Activities.
	 
	 	1.1	 	In addition to Omeros’ rights to use the MOCA Technology during the Option Period as
set forth in Section 3.1(a) of the Agreement, Omeros shall have the right during the Option
Period to attempt to surrogate de-orphanize orphan GPCRs, in sequential sets of five orphan
GPCRs per set, to a maximum of three sets and no more, until, and only until, a set is
attempted that results in an aggregate for all sets of three orphan GPCRs that have been
successfully de-orphanized by Omeros (such activity the “Initial De-Orphanization” and
collectively resulting in the “De-Orphanized GPCRs”). For greater certainty, and by way of
example, if the first set results in at least three orphan GPCRs having been successfully
de-orphanized, Omeros would not have the right to conduct any screening of the second and
third sets. Following the screening of each set, Omeros shall provide to Patobios a full
and detailed written report on the screening, together with any data reports produced by
the subject equipment, and such written report shall include, without limitation, Omeros’
interpretation of the screening results and its reasons therefore, accompanied by a written
certification as to accuracy and completeness by Omeros’ Chief Science Officer or Chief
Executive Officer, and shall not proceed with the screening of any further sets until
Omeros has received a written acknowledgment from Patobios accepting such report (such
acknowledgement to be provided within seven days of receipt of such report and not to be
unreasonably withheld; provided that Omeros




 









 






	 	 	 	shall operate in good faith to furnish any additional information within Omeros’ possession
regarding the screening and the report should Patobios request such additional information
from Omeros within this seven day period, and in the event of such request for additional
information Patobios shall have an additional seven days from its receipt of such first
requested additional information, provided, however, that Patobios shall not request and
Omeros shall not be required to perform additional analysis, to provide its acknowledgement)
and authorizing Omeros to proceed with the screening of the next set if three De-Orphanized
GPCRs have not been achieved. Patobios understands and agrees that, given that the Initial
De-Orphanization will occur in sets of five orphan GPCRs in which all five will be screened
simultaneously, it is possible that more than three orphan GPCRs may be de-orphanized (e.g.,
two GPCRs successfully de-orphanized in the first set of five and two in the second set of
five). Omeros will make the selection of the orphan GPCRs to be surrogate de-orphanized
during the Initial De-Orphanization with Patobios’ input, and the number of GPCRs screened
in any given set may be modified by mutual written agreement. Any successful
de-orphanization (i.e., the surrogate de-orphanization of one orphan GPCR meeting the
De-Orphanization Milestone criteria set forth in Section 1.14 of the Agreement) in the
Initial De-Orphanization will result in the De-Orphanization Milestone to have been achieved
and shall trigger Patobios’ Put Notice and sale rights, subject to Omeros’ right to avail
itself of the Put Objection Notice procedure provided under the Agreement in such
circumstances. Omeros shall notify Patobios in writing immediately in the event the
De-Orphanization Milestone is achieved during the Initial De-Orphanization so that Patobios
may exercise its Put Notice and sale rights.






	 	1.2	 	The provisions of Section 1 of this Amendment shall not change the definition of the
De-Orphanization Milestone (for greater certainty, the achievement of one surrogate
de-orphanization of one orphan GPCR meeting the De-Orphanization Milestone criteria set
forth in Section 1.14 of the Agreement in Omeros’ attempts to complete the Initial
De-Orphanization shall result in the De-Orphanization Milestone having been achieved) and,
except as expressly set forth in this Amendment, shall not change the parties’ respective
rights and obligations when and if the De-Orphanization Milestone is met by Omeros.
	 
	 	1.3	 	In the event that the Agreement is terminated for any reason prior to Omeros exercising
its option to acquire the MOCA Technology, the Parties’ ownership of Intellectual Property
shall be determined in accordance with the Agreement including, without limitation,
Sections 3.1, 3.2 and 7.2 of the Agreement, which ownership will not be affected by this
Amendment. The parties agree that Omeros shall not be required under any circumstances to
convey any equipment, compound libraries, materials or supplies that is purchased or
licensed in connection with its performance of the Plan for MOCA Evaluation or the Initial
De-Orphanization. For greater certainty, Patobios’ ownership of Intellectual Property
shall include, without limitation, the validation path and high through put methodologies
developed and used by Omeros in testing and using the MOCA Technology, as well as the data
from the arrayscans obtained by Omeros in the process. For greater certainty with respect
to the last sentence of Section 7.2 of the




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	 	 	 	Agreement, if the De-Orphanization Milestone has been achieved and Omeros does not purchase
the MOCA Technology prior to the termination of this Agreement, Omeros shall not be
entitled to retain or purchase any hits and shall not own any Intellectual Property rights
that claim the composition of matter of such compound(s).






	 	1.4	 	Upon the De-Orphanization Milestone having been achieved, Omeros shall lose its rights
to terminate the Agreement under the provisions of Section 9.1(b).
	 
	 	1.5	 	For greater certainty, upon the De-Orphanization Milestone having been achieved by
Omeros, Omeros shall communicate such achievement to Patobios immediately and this
Agreement shall not terminate before Patobios has had no less than twenty (20) days from
being so notified to deliver a Put Notice to Omeros.
	 
	 	1.6	 	Upon the De-Orphanization Milestone having been achieved, Omeros shall, within ten (10)
days of such event and in accordance with the Payment Instructions, pay to Patobios the sum
of $500,000 CAD as an irrevocable and non-refundable deposit on account of the Acquisition
Price (the “De-Orphanization Milestone Payment”), which De-Orphanization Milestone Payment
shall be credited in full against the cash portion of the Acquisition Price upon the
Closing.
	 
	 	2.	 	Funding Condition.
	 
	 	2.1	 	Patobios’ right to require Omeros to purchase the MOCA Technology upon Omeros’
achievement of the De-Orphanization Milestone and Omeros’ obligation to purchase the MOCA
Technology upon receipt of a Put Notice from Patobios, as set forth in Section 3.3 of the
Agreement, shall be further conditioned on Omeros’ receipt of at least the Minimum Proceeds
(as defined below) during the Option Period. Omeros will be deemed to have received the
“Minimum Proceeds” for purposes of this Section 2.1 if the sum of the following amounts is
at least equal to five million one hundred thirty five thousand ($5.135MM) CAD: (a) the
amount of the Initial Patobios License Proceeds (as defined in Section 4.2 of this
Amendment) that have been paid to Patobios by Omeros during the Option Period as provided
in Section 4.3 of this Amendment (as converted into CAD on the dates that such proceeds
were actually paid to Patobios); (b) the amount of any other funds that Omeros receives
from governmental agencies or not-for-profit funding entities during the Option Period that
are specifically allocated in the applicable funding document for the payment of the
Acquisition Price by Omeros for the MOCA Technology (as converted into CAD as of the dates
Omeros actually receives such funds) and (c) the De-Orphanization Milestone Payment. For
purposes of clarity, the parties acknowledge that Omeros shall not be required to allocate,
set aside or pay to Patobios any funds described in clause (b) of the preceding sentence
until Omeros is deemed to have received the Minimum Proceeds. Throughout the term of this
Agreement, Omeros shall with reasonable diligence use commercially reasonable efforts to
raise the Minimum Proceeds and to source such further capital as may be necessary to enable
Omeros to meet its obligations with respect to the Acquisition.




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	 	2.2	 	Omeros’ right at it sole discretion to purchase the MOCA Technology at any time during
the Option Period in accordance with Section 3.2 of the Agreement shall continue and shall
not be affected by this Amendment, except for the crediting against the Acquisition Price
of the Initial Patobios License Proceeds as set forth in Section 4.3 of this Amendment and
the De-Orphanization Milestone Payment as set forth in Section 1.6 of this Amendment.
	 
	 	2.3	 	The definition of the Option Fee Credit as defined in Section 1.40 of the Agreement
shall remain unchanged prior to receipt by Omeros of a Put Notice from Patobios. If the
Closing has not occurred within sixty (60) days following Patobios’ delivery of the Put
Notice to Omeros, the Option Fee Credit as defined in Section 1.40 of the Agreement shall
be redefined to mean an amount in CAD equal to the product obtained by multiplying (x) the
Option Fee for the Option Period in which the Closing occurs, by (y) the quotient obtained
by dividing a numerator that is equal to the number of days remaining in such Option Period
at the time of the Closing by a denominator that is equal to the total number of days in
such Option Period, provided, however, that the length of any delays by Patobios in
completing the Closing after receipt of the Exercise Notice shall be added to the
numerator.
	 
	 	3.	 	Option Periods.
	 
	 	3.1	 	If Omeros receives a Put Notice from Patobios in accordance with Section 3.3 of the
Agreement during any of Option Period Two, Option Period Three (if entered) or Option
Period Four (as defined below, if entered), the corresponding Option Fee Two, Option Fee
Three or Option Fee Four (if applicable), respectively, and any subsequent Option Fees paid
by Omeros after its receipt of the Put Notice shall thereafter become nonrefundable upon
termination of the Agreement for any reason other than breach by Patobios, notwithstanding
the provisions of Section 9.2(c) of the Agreement; provided, however, the provisions of
this sentence shall not be construed to reduce the Option Fee Credit under Section 1.40 of
the Agreement.
	 
	 	3.2	 	“Option Period Two” as defined in Section 2.2 of the Agreement shall be extended by one
month and redefined to end 5:00 p.m. Seattle time on January 4, 2010. This extension of
Option Period Two shall not act to extend Option Period Three, which, if entered into by
Omeros as provided in Section 3.3 of this Amendment, shall run through June 4, 2010 unless
earlier terminated in accordance with the Agreement and this Amendment.
	 
	 	3.3	 	Unless the Agreement has been terminated by either party prior to December 4, 2009 as
provided for in Section 9.1 of the Agreement, then by December 4, 2009, Omeros shall pay to
Patobios an extension fee (the “Extension Fee”) of one hundred and eight thousand, three
hundred and thirty three ($108,333) CAD in consideration for the one month extension of
Option Period Two set forth in Section 3.2 of this Amendment.
	 
	 	3.4	 	Extension of the Option Period into Option Period Three shall remain discretionary on
Omeros’ part unless prior to the end of Option Period Two no Closing has occurred and




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	 	 	 	Omeros has achieved the De-Orphanization Milestone, in the event of which occurrences Omeros
shall be required to extend the Option Period into Option Period Three. If Omeros extends
the Option Period into Option Period Three by providing notice as set forth in Section 2.3
of the Agreement, Omeros shall instead of paying the full Option Fee Three shall pay the
difference of the amount of Option Fee Three less the amount of the Extension Fee (i.e., the
$650,000 CAD Option Fee Three less the $108,333 CAD Extension Fee = $541,667 CAD).
	 
	 	3.5	 	Omeros shall have the option to extend the Option Period beyond Option Period Three for
an additional six months to end December 4, 2010 (“Option Period Four”), exercisable by
Omeros delivering to Patobios written notice of Omeros’ intent to extend the Option Period
by June 4, 2010 and paying to Patobios by June 14, 2010, in accordance with the Payment
Instructions, an additional fee of $500,000 CAD (the “Option Fee Four”). During Option
Period Four, Omeros, the Founders and Patobios shall have the rights and obligations set
forth in Article III of the Agreement and as provided for in this Amendment. The Option
Fee Refund provisions of Section 9.2 of the Agreement shall also apply to Option Period
Four except as set forth in Section 3.1 of this Amendment.
	 
	 	3.6	 	The term “Option Period” under the Agreement shall also include Option Period Four, if
Option Fee Four has been paid by Omeros.
	 
	 	3.7	 	Clause (a) of the second sentence of the first paragraph of Article III of the
Agreement shall be revised to read as follows: “(a) that if within the Option Period (i)
an Exercise Notice is provided or (ii) a Put Notice is provided and all other conditions on
Omeros’ obligation to purchase the MOCA Technology have been met, then the Option Period
shall automatically extend until the earlier of the Closing Date and the termination of
this Agreement in accordance with Section 9.1,”.
	 
	 	3.8	 	For greater certainty, following the achievement of the De-Orphanization Milestone and
if the Closing has not occurred in advance of any remaining Option Periods, the exercise by
Omeros of any remaining Option Periods provided for under this Agreement shall become
mandatory and any Option Fees paid or payable by Omeros in such circumstances shall be
non-refundable, subject to the application of the Option Fee Credit and any available
remedies under law or equity for breach of the Agreement by Patobios.
	 
	 	4.	 	Licensing of De-Orphanized GPCRs.
	 
	 	4.1	 	Omeros and Patobios also agree that during the Option Period Omeros may, in
consultation with Patobios, license, partner or assign therapeutic development and/or
commercialization rights associated with up to three (and no more) of the De-Orphanized
GPCRs to third party(ies) (each a “Third Party License”), subject to the prior written
approval by Patobios of the scope, general financial, licensing and/or commercialization
terms (as applicable) and target(s) of interest of each proposed Third Party License, such
approval not to be unreasonably delayed or conditioned, and that such Third Party
License(s) may be granted free of any rights of reversion including in the event that the




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	 	 	 	Agreement is terminated prior to the Closing. All communications regarding proposed Third
Party Licenses shall be considered as Omeros’ Confidential Information under the Agreement.
The execution of any Third Party License shall be promptly notified by Omeros to Patobios
and Patobios shall be provided with a copy of the executed Third Party License, provided
that the copy and content of the Third Party License shall be treated as Omeros’
Confidential Information under the Agreement, and shall additionally be maintained in
confidence by Patobios for the full term of the Third Party License except for any
disclosure in court by Patobios under a protective order in any legal action by Patobios to
enforce the Agreement, and Patobios shall defend, indemnify and hold Omeros harmless for any
claims, damages or liability incurred by or threatened against Omeros due to the breach by
Patobios of its obligations of confidentiality under the Agreement or this section of this
Amendment with respect to the Third Party License. For greater certainty, the exclusions to
Confidential Information set out in Section 7.1(b) of the Agreement shall apply to the
Omeros Confidential Information noted this section 4.1 of the Amendment. No MOCA Technology
shall be transferred directly or indirectly in any such license.






	 	4.2	 	Omeros shall pay to Patobios a percentage of any Proceeds (as defined below) from each
Third Party License as follows: (a) prior to termination of the Agreement and prior to the
Closing, sixty percent (60%) to Patobios in accordance with the Payment Instructions (the
“Initial Patobios License Proceeds”) not to exceed any amounts due from Omeros to complete
the Acquisition Price; (b) after the Closing (if applicable), zero percent (0%) to
Patobios; and (c) after termination of the Agreement (if applicable) in the absence of the
Closing, any remaining Proceeds shall be shared equally between Omeros and Patobios for the
remainder of the term of the Third Party License. “Proceeds” shall include all monetary
compensation collected by Omeros resulting directly from the Third Party License(s)
excluding (a) (i) funds received by Omeros in connection with the sale or conveyance of its
securities or other financing activities, (ii) funds or other consideration received by
Omeros in connection with the merger, sale, acquisition or other conveyance of all of its
assets or of assets unrelated to the MOCA Technology, and (iii) funds received by Omeros in
payment for the performance of future research or development services not utilizing, prior
to the Closing, the MOCA Technology except as mutually agreed between Patobios and Omeros
in writing.
	 
	 	4.3	 	The full amount of the Initial Patobios License Proceeds paid to Patobios shall be
credited against and reduce the Acquisition Price by a corresponding dollar amount, applied
first against the cash portion of the Acquisition Price and then if any portion of the
Initial Patobios License Proceeds credit remains to the stock portion of the Acquisition
Price.
	 
	 	4.4	 	The entering by Omeros into one or more Third Party License(s) shall deem the
De-Orphanization Milestone to have been achieved and shall trigger Patobios’ Put Notice and
sale rights provided under the Agreement and Omeros shall lose its right to use the Put
Objection Notice procedure provided for in the Agreement.




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	 	5.	 	Constraints on Internal Development. Except for the development of product candidates
in connection with potential Third Party Licenses as permitted under Section 4 of this
Amendment and/or the evaluation of hits as part of the Plan for MOCA Evaluation or the
Initial De-Orphanization, prior to the Closing Omeros shall not be permitted to undertake
the development of product candidates based on compound hits identified from the surrogate
de-orphanization of any De-Orphanized GPCRs. If the Agreement is terminated for any reason
prior to the Closing, Omeros shall destroy all hits identified during the Initial
De-Orphanization that are not hits generated in connection with De-Orphanized GPCRs that
were the subject of Third Party License(s), and shall certify to Patobios that it has
completed such destruction within thirty (30) days of termination; provided, however, that
Omeros shall not be required to alter or eliminate compound samples from its libraries of
compounds.
	 
	 	6.	 	Reporting During Option Period. In addition to the obligations set forth in Section
3.1(a) of the Agreement concerning the reporting to Patobios at the end of each defined
evaluation or test phase of any study being performed as part of the Plan for MOCA
Evaluation, including the results of attempts to achieve the De-Orphanization Milestone,
and in addition to the reporting obligations on the part of Omeros provided for in this
Amendment, Omeros shall provide Patobios quarterly written reports providing the status of
its progress on preparing for and attempting the Initial De-orphanization and shall
promptly notify Patobios upon the execution by Omeros of any Third Party Licenses.




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	 	7.	 	No Other Changes. Except as expressly set forth in this Amendment, all other terms of the
Agreement remain in full force and effect unamended.
	 
	 	8.	 	Counterparts. This Amendment may be signed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party, it
being understood that all parties need not sign the same amendment.




IN WITNESS WHEREOF, Omeros, Patobios, the Founders and the Escrow Agent have caused this Amendment
to be signed, all as of the date first written above.




	 	 	 	 	 	 	 	 	 	 	 
	OMEROS CORPORATION	 	 	 	PATOBIOS LIMITED	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gregory A. Demopulos
	 	 	 	By:
	 	/s/ Brian O’Dowd	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 

	 	Gregory A. Demopulos, M.D.
	 	 	 	 	 	Name:  Brian O’Dowd	 	 
	 

	 	CEO & Chairman
	 	 	 	 	 	Title:    CEO	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SUSAN R. GEORGE,
M.D.	 	 	 	BRIAN F. O’DOWD, PH.D.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ Susan R. George
 	 	 	 	/s/ Brian O’Dowd
 	 	 






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