Exhibit 10.3


 


PUBLIC HEALTH SERVICE


 


PATENT LICENSE AGREEMENT—NONEXCLUSIVE


 


COVER PAGE


 


For PHS internal use
only:


 


Patent License
Number:      L-024-2006/0


 


 


 


Serial Number(s) of Licensed Patent(s) and/or Patent Application(s):


 


E-173-1992


“CONVECTION-ENHANCED
DRUG DELIVERY” U.S. Patent No. 5,720,720.


 


Licensee:


 


NeoPharm, Inc.


 


Cooperative
Research and Development Agreement (CRADA) Number (if applicable):


 


N/A


 


Additional Remarks:


 


 


 


Public Benefit(s):


 


Treatment of
Glioblastoma Multiform


 


This Patent License
Agreement, hereinafter referred to as the “Agreement”,
consists of this Cover Page, an attached Agreement, a
Signature Page, Appendix A (List of Patent(s) and/or Patent Application(s)),
Appendix B (Fields of Use and Territory), Appendix C (Royalties), Appendix D.
(Modifications), Appendix E (Benchmarks), and Appendix F (Commercial
Development Plan). The Parties to this Agreement are:


 


1)             The
National Institutes of Health (“NIH”), the Centers for Disease Control and
Prevention (“CDC”), or the Food and Drug Administration (“FDA”), hereinafter
singly or collectively referred to as “PHS”, agencies
of the United States Public Health Service within the Department of Health and
Human Services (“DHHS”); and


 


2)             The
person, corporation, or institution identified above and/or on the Signature
Page, having offices at the address indicated on the Signature Page,
hereinafter referred to as “Licensee”.


 


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PHS and License agree as follows:


 


1.           BACKGROUND


 


1.01         In
the course of conducting biomedical and behavioral research, PHS investigators made inventions that may have
commercial applicability.


 


1.02         By assignment of rights from PHS employees and other inventors, DHHS,
on behalf of the United States Government, owns intellectual property rights
claimed in any United States and/or foreign patent applications or patents
corresponding to the assigned inventions. DHHS also owns
any tangible embodiments of these inventions actually reduced to practice by PHS.


 


1.03         The Secretary
of DHHS has delegated to PHS the authority to enter into this Agreement
for the licensing of rights to these
inventions.


 


1.04         PHS desires to transfer these inventions to the
private sector through commercialization licenses to facilitate the commercial
development of products and processes for public use and benefit.


 


1.05         Licensee desires to acquire commercialization rights
to certain of these inventions in order to develop processes, methods, and/or
marketable products for public use and benefit.


 


2.             DEFINITIONS


 


2.01         “Benchmarks” mean the performance milestones that are set
forth in Appendix E.


 


2.02         “Commercial Development Plan” means the written commercialization plan
attached as Appendix F.


 


2.03         “First Commercial Sale” means the initial transfer, by or on behalf
of Licensee of Drug for administration or
recommendation of administration using the Licensed Process
in exchange for cash or some equivalent to which value can be assigned for the
purpose of determining Net Sales.


 


2.04         “Government” means the Government of the United States of
America.


 


2.05         “Licensed Fields of Use” means the fields of use identified in
Appendix B.


 


2.06         “Licensed Patent Rights” shall mean:


 


a)            Patent applications (including provisional
patent applications and PCT patent applications) and/or patents listed in
Appendix A, all divisions and continuations of these applications, all patents
issuing from such applications, divisions, and continuations, and any reissues,
reexaminations, and extensions of all such patents;


 


b)            to the extent that the following contain one
or more claims directed to the invention or inventions disclosed in a) above:
i) continuations-in-part of a) above; ii) all divisions and continuations
of these continuations-in-part; iii) all patents issuing from such continuations-in-part,
divisions, and continuations; iv) priority patent application(s) of a) above;
and v) any reissues, reexaminations, and


 


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                extensions
of all such patents;


 


c)            to the
extent that the following contain one or more claims directed to the invention
or inventions disclosed in a) above: all counterpart foreign and U.S.
patent applications and patents to a) and b) above, including those listed in
Appendix A.


 


Licensed
Patent Rights shall not include
b) or c) above to the extent that they contain one or more claims directed to
new matter which is not the subject matter disclosed in a) above.


 


2.07         “Licensed Process(es)” means processes which, in the course
of being practiced would be within the scope of one or more claims of the Licensed Patent Rights that have not been held unpatentable,
invalid or unenforceable by an unappealed or unappealable judgment of a court
of competent jurisdiction.


 


2.08         “Drug” means a pharmaceutical or pharmaceutical composition,
including 1L13-PE38QQR, for treating gliomas delivered or recommended to be
delivered using the Licensed Process.


 


2.09        “Licensed Territory” means the geographical area identified
in Appendix B.


 


2.10         “Net Sales” means the total gross receipts for sales of Drug administered or recommended for administration using
the Licensed Process for the treatment of
gliomas by or on behalf of Licensee and
from making Drug available to others without
sale or other dispositions, whether invoiced or not, less returns and
allowances, packing costs, insurance costs, freight out, taxes or excise duties
imposed on the transaction (if separately invoiced), and wholesaler and cash discounts
in amounts customary in the trade to the extent actually granted. No deductions
shall be made for commissions paid to individuals, whether they be with
independent sales agencies or regularly employed by Licensee
and on its payroll, or for the cost of collections. 


 


2.11         “Practical Application” means to manufacture in the case of
a composition or product, to practice in the case of a process or method, or to
operate in the case of a machine or system; and in each case, under such
conditions as to establish that the invention is being utilized and that its benefits
are to the extent permitted by law or Government
regulations available to the public on reasonable terms. 


 


3.             GRANT
OF RIGHTS


 


3.01         PHS hereby grants and Licensee
accepts, subject to the terms and conditions of this Agreement,
a nonexclusive license under the Licensed Patent Rights
in the Licensed Territory to use and have used
or practice and have practiced the Licensed Process
and to sell and have sold, to offer to sell, and to import Drug
to be administered or recommended for administration using the Licensed Process in the Licensed Fields of Use.


 


3.02         This Agreement confers no license or rights by implication,
estoppel, or otherwise under any patent applications or patents of PHS other than Licensed Patent Rights
regardless of whether such patents are dominant or subordinate to Licensed Patent Rights.


 


4.             SUBLICENSING


 


4.01         Licensee does not have the right to sublicense
the Licensed Patent Rights granted under
this Agreement.


 


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5.             STATUTORY AND PHS REQUIREMENTS AND RESERVED
GOVERNMENT RIGHTS


 


5.01         Prior to the
First Commercial Sale, Licensee agrees
to provide PHS reasonable
quantities of Drug for PHS research use upon request or as
otherwise agreed to under a Cooperative Research and Development Agreement. 


 


5.02         Licensee agrees that products used or sold in the United
States embodying Drug or administered or
recommended for administration using the Licensed Process(es)
shall be manufactured substantially in the United States, unless a written
waiver is obtained in advance from PHS.


 


6.             ROYALTIES AND REIMBURSEMENT


 


6.01         Licensee agrees to pay to PHS
a noncreditable, nonrefundable license issue royalty as set forth in Appendix C
within thirty (30) days from the date that this Agreement becomes effective.


 


6.02         Licensee agrees to pay to PHS
a nonrefundable minimum annual royalty as set forth in Appendix C.


 


6.03         Licensee agrees to pay PHS earned
royalties as set forth in Appendix C.


 


6.04         Licensee agrees to pay PHS
benchmark royalties as set forth in Appendix C.


 


6.05         A patent or
patent application licensed under this Agreement shall
cease to fall within the Licensed Patent Rights
for the purpose of computing earned royalty payments in any given country on
the earliest of the dates that a) the application has been abandoned and not
continued, b) the patent expires or irrevocably lapses, or c) the claim has
been held to be invalid or unenforceable by an unappealed or unappealable
decision of a court of competent jurisdiction or administrative agency. 


 


6.06         No multiple
royalties shall be payable because any Licensed Process(es)
are covered by more than one of the Licensed Patent Rights.


 


6.07         On sales of Drug administered or recommended for administration using a Licensed Process by Licensee made
in other than an arm’s-length transaction, the value of the Net Sales attributed under this Article 6 to such a
transaction shall be that which would have been received in an arm’s-length
transaction, based on sales of like quantity and quality products on or about
the time of such transaction.


 


7.             PATENT
FILING, PROSECUTION, AND MAINTENANCE


 


7.01         PHS agrees to take responsibility for the preparation,
filing, prosecution, and maintenance of any and all patent applications or
patents included in the Licensed Patent Rights.


 


8.             RECORD
KEEPING


 


8.01         Licensee agrees to keep accurate and correct records of Drug made, used, sold, or imported administered or
recommended for administration using the Licensed Process(es)
under this Agreement appropriate to determine
the amount of royalties due PHS. Such
records shall be retained for at least five (5) years following a given
reporting period and shall be available during normal business hours for
inspection at the expense of PHS by an
accountant or other designated auditor selected by PHS
for the sole purpose of verifying reports and payments hereunder. The
accountant or auditor shall only disclose to PHS
information relating to the accuracy of reports


 


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and
payments made under this Agreement. If
an inspection shows an underreporting or underpayment in excess of five percent
(5%) for any twelve (12) month period, then Licensee
shall reimburse PHS for the cost
of the inspection at the time Licensee pays
the unreported royalties, including any late charges as required by Paragraph
9.07 of this Agreement. All payments required under this
Paragraph shall be due within thirty (30) days of the date PHS
provides Licensee notice of the
payment due.


 


8.02         Licensee agrees to have an audit of sales
and royalties conducted by an independent auditor at least every two (2) years
if annual sales of the Drug administered
or recommended for administration using the Licensed
Process, are over two
(2) million dollars. The audit shall address, at a minimum, the amount of
gross sales by or on behalf of Licensee during
the audit period, terms of the license as to percentage or fixed royalty to be
remitted to the Government, the
amount of royalty funds owed to the Government
under this Agreement, and
whether the royalty amount owed has been paid to the Government and is reflected in the records of the Licensee. The audit shall also indicate the PHS
license number, product, and the time period being audited. A report certified
by the auditor shall be submitted promptly by the auditor directly to PHS on completion. Licensee shall pay for the entire cost of
the audit.


 


9.             REPORTS
ON PROGRESS, BENCHMARKS, SALES, AND PAYMENTS


 


9.01         Prior to
signing this Agreement, Licensee has
provided to PHS the Commercial Development Plan at Appendix F,
under which Licensee intends to
bring the subject matter of the Licensed Patent
Rights to the point of Practical
Application. This Commercial
Development Plan is hereby incorporated by reference into this Agreement. Based on this plan, performance Benchmarks are determined as specified in Appendix E. 


 


9.02         Licensee shall provide written annual
reports on its product development progress or efforts to commercialize under
the Commercial Development Plan for
each of the Licensed Fields of Use within
sixty (60) days after December 31 of each calendar year. These progress
reports shall include, but not be limited to: progress on research and
development, status of applications for regulatory approvals, manufacturing,
marketing, importing, and sales during the preceding calendar year, as well as
plans for the present calendar year. PHS also
encourages these reports to include information on any of Licensee’s
public service activities that relate to the Licensed
Patent Rights. If reported progress differs from that projected in
the Commercial Development Plan and
Benchmarks, Licensee shall
explain the reasons for such differences. In any such annual report, Licensee may propose amendments to the
Commercial Development Plan, acceptance of which by PHS may not be denied unreasonably. Licensee agrees to provide any additional
information reasonably required by PHS to evaluate
Licensee’s performance under this Agreement. Licensee may amend
the Benchmarks at any time upon
written consent by PHS. PHS shall
not unreasonably withhold approval of any request of Licensee to extend the time periods of this schedule if
such request is supported by a reasonable showing by Licensee of diligence in its performance under the Commercial Development Plan and toward
bringing the Licensed Process to
the point of Practical Application.


 


9.03         Licensee shall report to PHS the dates for achieving Benchmarks specified in Appendix E and the First Commercial Sale in each
country in the Licensed Territory within
thirty (30) days of such occurrences. 


 


9.04         Licensee shall submit to PHS within sixty (60) days after each calendar half-year
ending June 30 and December 31 a royalty report setting forth for the
preceding half-year period the amount of the Drug
sold administered or recommended for administration using the Licensed Process(es) practiced by or on
behalf of Licensee in each country within the Licensed Territory, the Net


 


5

















 


Sales, and the amount of royalty
accordingly due. With each such royalty report, Licensee
shall submit payment of the earned royalties due. If no earned royalties are
due to PHS for any reporting period, the
written report shall so state. The royalty report shall be certified as correct
by an authorized officer of Licensee and
shall include a detailed listing of all deductions made under Paragraph 2.10 to
determine Net Sales made under Article 6 to
determine royalties due.


 


9.05         Royalties
due under Article 6 shall be paid in U.S. dollars. For conversion of
foreign currency to U.S. dollars, the conversion rate shall be the New York
foreign exchange rate quoted in The Wall Street
Journal on the day that the payment is due. All checks and bank
drafts shall be drawn on United States banks and shall be payable, as
appropriate, to “NIH/Patent Licensing.” All such payments shall be sent to the
following address: NIH, P.O. Box 360120, Pittsburgh, PA 15251-6120. Any
loss of exchange, value, taxes, or other expenses incurred in the transfer or
conversion to U.S. dollars shall be paid entirely by Licensee.
The royalty report required by Paragraph 9.04 of this Agreement
shall accompany each such payment, and a copy of such report shall also be
mailed to PHS at its address for notices
indicated on the Signature Page of this Agreement.


 


9.06         Licensee shall be solely responsible for determining if any
tax on royalty income is owed outside the United States and shall pay any such
tax and be responsible for all filings with appropriate agencies of foreign
governments. 


 


9.07         Interest and
penalties may be assessed by PHS on any
overdue payments in accordance with the Federal Debt Collection Act. The
payment of such late charges shall not prevent PHS
from exercising any other rights it may have as a consequence of the
lateness of any payment.


 


9.08         All plans
and reports required by this Article 9 and marked “confidential” by Licensee shall, to the extent permitted by law, be treated
by PHS as commercial and financial
information obtained from a person and as privileged and confidential, and any proposed
disclosure of such records by the PHS under the Freedom of Information Act
(FOIA), 5 U.S.C. §552 shall be subject to the predisclosure notification
requirements of 45 CFR Part 5.65(d). 


 


10.           PERFORMANCE


 


10.1         Licensee shall use its Commercially Reasonable Efforts to
bring the Licensed Process to Practical Application. “Commercially Reasonable Efforts” for
the purposes of this provision shall include adherence to the Commercial  Development Plan
at Appendix F and performance of the Benchmarks at
Appendix E. 


 


10.2         Upon the First Commercial Sale, until the expiration of this Agreement, Licensee shall
use its Commercially Reasonable Efforts to make Drug
administered or recommended for administration using the Licensed
Process(es) reasonably accessible to the United States public.


 


11.           INFRINGEMENT
AND PATENT ENFORCEMENT


 


11.01      PHS and Licensee agree
to notify each other promptly of each infringement or possible infringement of
the Licensed Patent Rights, as well as any
facts which may affect the validity, scope, or enforceability of the Licensed Patent Rights of which either Party becomes aware. 


 


11.02      In
the event that a declaratory judgment action alleging invalidity of any of the Licensed Patent Rights shall be brought against PHS, PHS agrees to
notify Licensee that an action alleging invalidity
has been brought. PHS does not
represent that it shall commence legal action to defend against a declaratory
action alleging invalidity. Licensee shall
take no action to compel the Government
either to initiate or to join in any such declaratory judgment action. Should
the Government be made a party to any such
suit by motion or any other action of Licensee, Licensee


 


6

















 


shall reimburse the Government
for any costs, expenses, or fees, which the Government
incurs as a result of such motion or other action. Upon Licensee’s
payment of all costs incurred by the Government as a
result of Licensee’s joinder motion or other
action, these actions by Licensee shall
not be considered a default in the performance of any material obligation under
this Agreement.


 


12.           NEGATION
OF WARRANTIES AND INDEMNIFICATION


 


12.01       PHS offers no warranties other than those
specified in Article 1.


 


12.02      PHS does not warrant the validity of the Licensed Patent Rights and makes no representations whatsoever
with regard to the scope of the Licensed Patent Rights,
or that the Licensed Patent Rights may be
exploited without infringing other patents or other intellectual property
rights of third parties.


 


12.03      PHS MAKES NO WARRANTIES, EXPRESSED OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY SUBJECT MATTER
DEFINED BY THE CLAIMS OF THE LICENSED PATENT RIGHTS
OR TANGIBLE MATERIALS RELATED THERETO.


 


12.04      PHS does not represent that it shall commence
legal actions against third parties infringing the Licensed
Patent Rights.


 


12.05      Licensee shall indemnify and hold PHS, its employees, students, fellows, agents, and
consultants harmless from and against all liability, demands, damages,
expenses, and losses, including but not limited to death, personal injury,
illness, or property damage in connection with or arising out of: a) the use by
or on behalf of Licensee, its directors,
employees, or third parties of any Licensed Patent Rights;
or b) the design, manufacture, distribution, or use of any Drug,
Licensed Process(es) or materials by Licensee,
or other products or processes developed in connection with or arising out of
the Licensed Patent Rights. Licensee agrees to maintain a liability insurance program
consistent with sound business practice.


 


13.           TERM,
TERMINATION, AND MODIFICATION OF RIGHTS


 


13.01       This Agreement is
effective when signed by all parties and shall extend to the expiration of the
last to expire of the Licensed Patent Rights
unless sooner terminated as provided in this Article 13.


 


13.02       In the event that Licensee
is in default in the performance of any material obligations under this Agreement, including but not limited to the obligations
listed in Paragraph 13.05, and if the default has not been remedied within
ninety (90) days after the date of notice in writing of such default, PHS may terminate this Agreement
by written notice and pursue outstanding amounts owed through procedures
provided by the Federal Debt Collection Act.


 


13.03       In the event that Licensee
becomes insolvent, files a petition in bankruptcy, has such a petition filed
against it, determines to file a petition in bankruptcy, or receives notice of
a third party’s intention to file an involuntary petition in bankruptcy, Licensee shall immediately notify PHS
in writing. Furthermore, PHS shall have
the right to terminate this Agreement immediately upon Licensee’s
receipt of written notice.


 


13.04       Licensee shall have a unilateral right to terminate
this Agreement in any country or territory
by giving PHS sixty (60) days written notice to
that effect.


 


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13.05       PHS shall specifically have the right to terminate or
modify, at its option, this Agreement, if PHS determines that the Licensee: 1) is
not executing the Commercial Development
Plan submitted with its request for a license and the Licensee cannot otherwise demonstrate to PHS’s satisfaction that the Licensee
has taken, or can be expected to take within a reasonable time, effective steps
to achieve Practical Application of the Drug or Licensed

Process(es); 2) has not achieved the Benchmarks
as may be modified under Paragraph 9.02; 3) has willfully made a false
statement of, or willfully omitted, a material fact in the license application
or in any report required by the license Agreement; 4)
has committed a material breach of a covenant or agreement contained in the
license; 5) is not keeping Drug or Licensed Process(es) reasonably available to the public after
commercial use commences; 6) cannot reasonably satisfy unmet health and safety
needs; or 7) cannot reasonably justify a failure to comply with the domestic
production requirement of Paragraph 5.02 unless waived. In making this
determination, PHS shall take into account the normal
course of such commercial development programs conducted with sound and
reasonable business practices and judgment and the annual reports submitted by Licensee under Paragraph 9.02. Prior to invoking this right,
PHS shall give written notice to Licensee providing Licensee specific
notice of, and a ninety (90) day opportunity to respond to, PHS’s concerns as to the previous items 1) to 7). If Licensee fails to alleviate PHS’s
concerns as to the previous items 1) to 7) or fails to initiate corrective
action to PHS’s satisfaction, PHS may terminate this Agreement.



 


13.06       PHS reserves the right according to 35 U.S.C. §209(f)(4) to
terminate or modify this Agreement if it
is determined that such action is necessary to meet requirements for public use
specified by federal regulations issued after the date of the license and such
requirements are not reasonably satisfied by Licensee.


 


13.07       Within
thirty (30) days of receipt of written notice of PHS’s
unilateral decision to modify or terminate this Agreement,
Licensee may, consistent with the
provisions of 37 CFR Part 404.11, appeal the decision by written
submission to the designated PHS official.
The decision of the designated PHS official
shall be the final agency decision. Licensee may thereafter
exercise any and all administrative or judicial remedies that may be
available.


 


13.08       Within
ninety (90) days of expiration or termination of this Agreement
under this Article 13, a final report shall be submitted by Licensee. Any royalty payments, including those incurred but
not yet paid, shall become immediately due and payable upon termination or
expiration.


 


14.           GENERAL
PROVISIONS


 


14.01       Neither
Party may waive or release any of its rights or interests in this Agreement except in writing. The failure of the Government to assert a right hereunder or to insist upon
compliance with any term or condition of this Agreement
shall not constitute a waiver of that right by the Government
or excuse a similar subsequent failure to perform any such term or
condition by Licensee.


 


14.02       This
Agreement constitutes the entire
agreement between the Parties relating to the subject matter of the Licensed Patent Rights, and all prior negotiations,
representations, agreements, and understandings are merged into, extinguished
by, and completely expressed by this Agreement with
the exception of License Amendment

L-226-1996/1.


 


14.03       The
provisions of this Agreement are
severable, and in the event that any provision of this Agreement
shall be determined to be invalid or unenforceable under any controlling body
of law, such determination shall not in any way affect the validity or
enforceability of the remaining provisions of this Agreement.


 


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  14.04

  	
   

  	
  If either Party desires
  a modification to this Agreement,
  the Parties shall, upon reasonable notice of the proposed modification by the
  Party desiring the change, confer in good faith to determine the desirability
  of such modification. No modification shall be effective until a written
  amendment is signed by the signatories to this Agreement
  or their designees.

  
	
   

  	
   

  	
   

  
	
  14.05

  	
   

  	
  The
  construction, validity, performance, and effect of this Agreement
  shall be governed by Federal law as applied by the Federal courts in the
  District of Columbia.

  
	
   

  	
   

  	
   

  
	
  14.06

  	
   

  	
  All notices
  required or permitted by this Agreement
  shall be given by prepaid, first class, registered or certified mail or by an
  express/overnight delivery service provided by a commercial carrier, properly
  addressed to the other Party at the address designated on the following
  Signature Page, or to such other address as may be designated in writing
  by such other Party. Notices shall be considered timely if such notices are
  received on or before the established deadline date or sent on or before the
  deadline date as verifiable by U.S. Postal Service postmark or dated receipt
  from a commercial carrier. Parties should request a legibly dated U.S. Postal
  Service postmark or obtain a dated receipt from a commercial carrier or the
  U.S. Postal Service. Private metered postmarks shall not be acceptable as
  proof of timely mailing.

  
	
   

  	
   

  	
   

  
	
  14.07

  	
   

  	
  This Agreement shall not be assigned by Licensee
  except: a) with the prior written consent of PHS,
  such consent not to be withheld unreasonably; or b) as part of a sale or
  transfer of substantially the entire business of Licensee
  relating to operations which concern this Agreement.
  Licensee shall notify PHS within ten (10) days of any assignment of this Agreement by Licensee, and
  Licensee shall pay PHS, as an additional royalty, one percent (1%) of the
  fair market value of any consideration received for any assignment of this Agreement within thirty (30) days of such assignment.

  
	
   

  	
   

  	
   

  
	
  14.08

  	
   

  	
  Licensee
  agrees in its use of any PHS-supplied
  materials to comply with all applicable statutes, regulations, and
  guidelines, including PHS and DHHS regulations and guidelines. Licensee
  agrees not to use the materials for research involving human subjects or
  clinical trials in the United States without complying with 21 CFR
  Part 50 and 45 CFR Part 46. Licensee
  agrees not to use the materials for research involving human subjects or
  clinical trials outside of the United States without notifying PHS, in writing, of such research or trials and complying
  with the applicable regulations of the appropriate national control
  authorities. Written notification to PHS of
  research involving human subjects or clinical trials outside of the United
  States shall be given no later than sixty (60) days prior to commencement of
  such research or trials.

  
	
   

  	
   

  	
   

  
	
  14.09

  	
   

  	
  Licensee
  acknowledges that it is subject to and agrees to abide by the United States
  laws and regulations (including the Export Administration Act of 1979 and
  Arms Export Control Act) controlling the export of technical data, computer
  software, laboratory prototypes, biological material, and other commodities.
  The transfer of such items may require a license from the cognizant
  Agency of the U.S. Government or
  written assurances by Licensee that
  it shall not export such items to certain foreign countries without prior
  approval of such agency. PHS neither
  represents that a license is or is not required or that, if required, it
  shall be issued.

  
	
   

  	
   

  	
   

  
	
  14.10

  	
   

  	
  Licensee
  agrees to mark the Drug or its
  package inserts sold in the United States with all applicable U.S. patent
  numbers associated with the administration of Drug
  using the Licensed Process. All Drugs manufactured in, shipped to, or sold in other
  countries shall be marked in such a manner as to preserve PHS patent rights in such countries.

  
	
   

  	
   

  	
   

  
	
  14.11

  	
   

  	
  By entering into
  this Agreement, PHS
  does not directly or indirectly endorse any product or service provided, or
  to be provided, by Licensee
  whether directly or indirectly related to this Agreement.
  Licensee shall not state or imply
  that this Agreement is an endorsement by
  the Government, PHS,
  any other Government organizational unit,
  or any Government employee.

  



 


9

















 


                Additionally,
Licensee shall not use the names
of NIH, CDC, PHS, or DHHS
or the Government or their employees in any advertising, promotional, or sales literature
without the prior written consent of PHS. 


 


14.12       The
Parties agree to attempt to settle amicably any controversy or claim arising
under this Agreement or a breach
of this Agreement, except for appeals of modifications or termination decisions
provided for in Article 13. Licensee agrees
first to appeal any such unsettled claims or controversies to the designated PHS official, or designee, whose decision
shall be considered the final agency decision. Thereafter, Licensee
may exercise any administrative or judicial remedies that may be
available.


 


14.13       Nothing
relating to the grant of a license, nor the grant itself, shall be construed to
confer upon any person any immunity from or defenses under the antitrust laws
or from a charge of patent misuse, and the acquisition and use of rights
pursuant to 37 CFR Part 404 shall not be immunized from the operation of
state or Federal law by reason of the source of the grant.


 


14.14       Paragraphs
8.01, 9.06-9.08, 12.01-12.05, 13.07, 13.08, and 14.12 of this Agreement shall survive termination of this
Agreement.


 


SIGNATURES
BEGIN ON NEXT PAGE


 


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PHS PATENT
LICENSE AGREEMENT—NONEXCLUSIVE


 


SIGNATURE
PAGE


 


	
  For
  PHS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/
  Steven M. Ferguson

  	
   

  	
   

  	
  2/27/06

  	
   

  
	
  Steven
  M. Ferguson

  	
   

  	
  Date

  	
   

  
	
  Director,
  Division of Technology Development and Transfer

  	
   

  	
   

  
	
  Office
  of Technology Transfer

  	
   

  	
   

  
	
  National
  Institutes of Health

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Mailing
  Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Office of Technology Transfer

  
	
  National Institutes of Health

  
	
  6011 Executive Boulevard, Suite 325

  
	
  Rockville, Maryland 20852-3804 U.S.A.

  
					



 


For
Licensee (Upon, information and belief,
the undersigned expressly certifies or affirms that the contents of any
statements of Licensee made or referred to in
this document are truthful and accurate):


 


	
  by:

  	
   

  
	
  /s/ Guillermo A.
  Herrera

  	
   

  	
  5/30/06

  	
   

  
	
  Signature
  of Authorized Official

  	
  Date

  
	
   

  	
   

  
	
  Guillermo A. Herrera

  	
   

  	
   

  
	
  Printed
  Name

  	
   

  
	
   

  	
   

  
	
  President & CEO

  	
   

  	
   

  
	
  Title

  	
   

  
	
   

  	
   

  
	
  Official
  and Mailing Address for Notices:

  	
   

  
	
   

  	
   

  
	
  NeoPharm, Inc.

  
	
  150 Field Drive

  
	
  Suite 195

  
	
  Lake Forest, IL 60045

  



 


Any
false or misleading statements made, presented, or submitted to the Government, including any relevant omissions, under this Agreement and during the course of negotiation of this Agreement are subject to all applicable civil and criminal
statutes including Federal statutes 31 U.S.C. §§3801-3812 (civil liability) and
18 U.S.C. §1001 (criminal liability including fine(s) and/or imprisonment).


 


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APPENDIX A—Patent(s) or Patent
Application(s)


 


Patent(s) or Patent Application(s):


 


U.S.
Patent 5,720,720 “Convection-Enhanced Drug Delivery”


 


12

















 


APPENDIX B—Licensed Fields of Use
and Territory


 


Licensed
Fields of Use:


 


Nonexclusive
for using the Licensed Process to administer Drug to treat gliomas.


 


Licensed Territory:


 


The United States of America including its Territories, Commonwealths
and Possessions.


 


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APPENDIX C—Royalties


 


Issue Royalty:


 


Licensee
agrees to pay PHS a noncreditable, nonrefundable
license issue royalty in the amount of Five Thousand U.S. Dollars (USD $5,000).


 


Minimum Annual Royalty:


 


Beginning January 1,
2007, Licensee agrees to pay PHS a nonrefundable minimum annual royalty of Two Thousand
U.S. Dollars (USD $2,000), which Licensee may credit
against the earned royalties due in that year.


 


Earned Royalty:


 


Licensee
will pay PHS earned royalties as follows:


 


One Half of One
Percent (0.5%) on aggregate Net Sales of up
to and including One Hundred Million U.S. Dollars (USD$ 100,000,000) of Drug therapeutics or kits containing Drug
labeled with the recommendation that Drug be
administered using the Licensed Process.


 


and


 


One Percent (1%)
on aggregate Net Sales of over One Hundred
Million U.S. Dollars (USD$100,000,000), of Drug
therapeutics or kits containing Drug labeled
with the recommendation that the Drug be
administered using the Licensed Process.


 


Benchmark Royalties:


 


Licensee
agrees to pay PHS a benchmark royalty of Twenty
Thousand U.S. Dollars (USD $20,000) within thirty (30) days of receiving U.S.
Food and Drug Administration approval of using the Licensed
Process for administering Drug in the
treatment of gliomas.


 


14

















 


APPENDIX D—Modifications


 


PHS and
Licensee agree to the following modifications to the Articles
and Paragraphs of this Agreement:


 


N/A


 


15

















 


APPENDIX E—Benchmarks and
Performance


 


Licensee
agrees to the following Benchmarks for
its performance under this Agreement and,
within thirty (30) days of achieving a Benchmark,
shall notify PHS that the Benchmark
has been achieved.


 


•      By September 30, 2006, Licensee will submit an application for approval by the U.S.
Food and Drug Administration of the use of Convection Enhanced Drug Delivery
for administering Drug in the
treatment of gliomas.


 


•      By
April 30,2007, Licensee will
achieve a First Commercial Sale of a Drug therapeutic for treating gliomas using Convection
Enhanced Drug Delivery.


 


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APPENDIX F—Commercial
Development Plan


 


NeoPharm, Inc.
(NASDAQ: NEOL) is a 121 person publicly traded biotechnology company focusing
on the research, development and commercialization of cancer therapeutics. For
R&D expenses, NeoPharm committed approximately $28M in 2002 and $35M in
2003. Since all NeoPharm drug candidates are in the developmental stage, the
budget does not account for production, sales and/or marketing in cancer
therapeutics. However, NeoPharm has successfully commercialized NeoPhectinTM (in vitro application) and NeoPhectin-ATTM (in vivo application) as delivery vehicles
for nucleic acids. NeoPharm has commercial distributors for both of these
products.


 


As
of September 30, 2004, NeoPharm has $75.7M in cash and cash equivalents in
resources. Additionally, NeoPharm holds a per share price of $11.92, as of
stock market close November 29, 2004, with an average volume of three
million shares.


 


NeoPharm
possesses unique capabilities in the technology of Convection Enhanced Delivery
(CED). First, NeoPharm has experience in applying CED to one of its products
IL13-PE38QQR, a tumor targeting molecule for the treatment of Glioblastoma
Multiform. Currently, a pivotal Phase III clinical trial is being conducted
with IL13-PE38QQR using CED (PRECISE Trial, www.precisetrial.com).


 


NeoPharm’s
drug portfolio also includes three drug products based on NeoLipidTM
liposome-based drug delivery technology. At present, these drug products are in
Phase I/II development for various types of cancer.


 


PHS
granted NeoPharm the following two exclusive licenses:


 


1.             License Agreement L-226-96 granted NeoPharm
the exclusive right to use the chimeric molecule hlLI3PE38QQR or cphIL13-PE38QQR
for the treatment of cancer; and


 


2.             License Agreement Number L-162-02 granted
NeoPharm. the exclusive right to transfect cancer cells with the IL-13
Receptor-alpha-2 chain in order to sensitize such cells to the therapeutic
effects of the IL13 Receptor-targeted immunoconjugates, hlL-13-PE38QQR or cph
IL-I 3-PE38QQR.


 


At
present, NeoPharm intends to develop and commercialize 1L13-PE38QQR with CED
technology. For clinical trials, NeoPharm utilizes CED technology as part of
its protocol for continuous direct infusion of IL13-PE38QQR into the post-resection brain
cavity.


 


Currently,
IL13-PE38QQR is in Phase III development (PRECISE Trial, www.precisetrial.com).
The purpose of this trial is to determine whether the overall survival
duration, safety and quality of life are improved for patients treated with
IL13-PE38QQR as compared to patients treated with the GLIADEL® Wafer. This comparison includes patients who
experienced a first recurrence of Glioblasoma Multiforme and who opted for
surgical tumor removal as treatment. For this trial, patients are randomized in
a ratio of 2:1 to receive either IL13-PE38QQR via CED or the GLIADEL® Wafer. Overall, enrollment will total 300
patients in centers located in North America, Europe and the Middle East. Thus
far,


 


17

















 


a number of renowned brain tumor treatment centers
and recognized investigators have agreed to participate in the PRECISE Trial
and a total of 92 patients have been enrolled to date.


 


In addition, IL13-PE38QQR will receive an expedited
review process. In Europe and the U.S., IL13-PEQQR has received orphan drug
designation. Furthermore, the FDA granted fast track review of IL13-PE38QQR and
selected IL13-PE39QQR to participate in the Continuous Marketing Application
Pilot 2 Program.


 


Market Analysis


 


The market segment for IL13-PE38QQR is directed to
patients with malignant gliomas. According to the National Brain Tumor
Foundation, about half of all primary brain tumors and about one-fifth of all
primary spinal cord tumors are gliomas. Overall, the number of patients
diagnosed with brain and other nervous system-related cancer is growing every
year; according to the American Cancer Society, in 2003 there were an estimated
18,300 new cases and will be an estimated 100 more cases in 2004.


 


For this market segment, the most widely used drugs
include Guilford Pharmaceuticals’ GLIADEL®.Wafer and Schering-Plough’s Temodar. GLIADEL® extends the median survival by six weeks
whereas Temodar, used off-label to treat newly diagnosed patients, extends the
survival rate by eight weeks. The preliminary results for 1L13-PE38QQR,
however, have shown the most promising results with a 50% improvement in
survival (42 weeks with IL13-PE38QQR versus 28 weeks with GLIADEL®).


 


For present and future brain cancer patients,
enabling NeoPharm to develop IL-13PE38QQR will greatly serve both the Federal
and public interests. NeoPharm possesses an exclusive license for IL13-PE38QQR,
a non-exclusive license for CED technology will allow NeoPharm to attract more
investments and thereby expedite the process for developing and commercializing
this product. As an essential part of the IL13-PE38QQR protocol, CED
technology plays an important role in effective delivery. This technology
allows the direct, slow and continuous infusion of IL13-PE38QQR over several
days to the target area.


 


18