**Exhibit10.24**

 

[*] Indicates that a portion of this exhibit hasbeen omitted based on a request for confidential treatment submitted to theSecurities and Exchange Commission.  Theomitted portion has been filed separately with the Commission.

 

**AGREEMENT**

 

This Agreement is entered into and made effective asof April 2, 2004, between **NeoRx Corporation** (“NeoRx”), having officesat 300 Elliott Avenue W., Suite 500, Seattle, Washington 98119-4114, and **Aletheon****Pharmaceuticals,Inc.**(“Aletheon”), having offices at 2722 Triton Drive NW, Seattle,WA 98117.

 

WHEREAS, NeoRx has rights relating to Pretarget® patents and trademarksand Aletheon desires to acquire certain of those rights pertaining to thePretarget® patents and trademarks as set forth below;

 

WHEREAS, the parties, for mutual good and valuable consideration,hereby agree as follows:

 

**1.             Definitions**

 

The following terms shall have the following meanings as used in thisAgreement:

 

**ClinicalTrial:**  A humanclinical trial conducted pursuant to an IND or its equivalent, including ahuman clinical trial conducted under physician–sponsored IND or its equivalent.

 

**EffectiveDate:**  April 2, 2004.

 

**IND:**                      AnInvestigational New Drug application (as defined in the U.S. Food, Drug andCosmetics Act and regulations promulgated thereunder), any successorapplication or any foreign equivalent.

 

**NetSales:**                                        Withrespect to a Pretarget Product, the [*] invoiced by Aletheon, its affiliatesand licensees for the sale of such Pretarget Product or other disposition ofsuch Pretarget Product, less (a) [*] and separately stated on the invoice, (b)credits actually given in the ordinary course for [*], and (c) [*] separatelyitemized on the invoice for shipping the Pretarget Product to independent thirdparties.  Net Sales shall not includeany transfer between Aletheon and its affiliates for resale, but shall includethe resale from its affiliates.  AnyPretarget Product sold or otherwise disposed of in other than an arm’s-lengthtransaction or for other property (e.g., barter) shall be deemed invoiced atits fair market value in the country of sale or disposition.

 

**Pivotal Clinical Trial:**  A Clinical Trial of a product on asufficient number of human subjects done primarily to support an applicationfor Regulatory Approval to market the product for the proposed therapeuticindication regardless of the outcome of the Regulatory Approval process.

 

1

----

 

**PretargetIntellectual Property:** Pretarget Patents and Pretarget Trademarks.

 

**PretargetPatents:** Patents andapplications owned or controlled by NeoRx and set forth on Schedule A,including foreign equivalents, provisionals, continuations, re-examinations,re-issues and patents issuing thereon.

 

**PretargetProduct:**  A product,the use, manufacture, sale, offer for sale or import of which,  where and when used, sold, offered for saleor imported, is covered by at least one claim of a patent or patent applicationincluded in the Pretarget Patents.

 

**PretargetTrademarks:**  Trademarkregistrations and applications, owned or controlled by NeoRx, and set forth inSchedule B, and all goodwill associated therewith.

 

**RegulatoryApproval:** The action by a regulatory body which is requiredbefore legal commercial sale or use of a product in a regulatory jurisdiction,for example, approval by the United States Food and Drug Administration in theUnited States.

 

**Third Party Licenses:**  The licenses set forth in Schedule C.

 

**2.****                                      Assignment**

 

Subject to the terms and conditions of this Agreement, NeoRx hereby sells,transfers, conveys, assigns and delivers to Aletheon, and Aletheon herebypurchases and accepts, all of NeoRx’s right, title and interest in and to allof the Pretarget Intellectual Property.

 

**3.             MilestonePayments, Royalties and Outlicensing Fees**

 

In consideration of the assignment of the Pretarget IntellectualProperty to Aletheon, Aletheon shall make the following payments to NeoRx:

 

Milestone Payments

 

(a)          [*] within 30 days ofinitiation of a Phase I Clinical Trial in any country for a Pretarget Productfor a first indication;

 

(b)         [*] within 30 days ofinitiation of a Phase I Clinical Trial in any country for a Pretarget Productfor a second indication;

 

(c)          [*] within 30 days ofthe initiation of a Phase II Clinical Trial in any country for a PretargetProduct for a first indication:

 

(d)         [*] within 30 days of theinitiation of a Phase II Clinical Trial in any country for a Pretarget Productfor a second indication:

 

2

----

 

(e)          [*] within 30 days of initiationof a Pivotal Clinical Trial in any country for a Pretarget Product for a firstindication;

 

(f)            [*] within 30 days ofinitiation of a Pivotal Clinical Trial in any country for a Pretarget Productfor a second indication;

 

(g)         [*] within 30 days of theRegulatory Approval in any country of a Pretarget Product for a firstindication;

 

(h)         [*] within 30 days of theRegulatory Approval in any country of a Pretarget Product for a secondindication;

 

(i)             [*] within 30 days of[*] Net Sales for all Pretarget Products worldwide reaching [*]:

 

(j)             [*] within 30 days of[*] Net Sales of all Pretarget Products worldwide reaching [*]; and

 

(k)          [*] within 30 days of[*] Net Sales of all Pretarget Products worldwide reaching [*].

 

Milestones (a) and (b) are due only for the first two PretargetProducts that enter a Phase I Clinical Trial. Milestones (c) and (d) are due only for the first two Pretarget Productsthat enter a Phase II Clinical trial whether these Pretarget Products are thesame or different from the Pretarget Products that triggered milestone (a) or(b).  Milestones (e) and (f) are dueonly for the first two Pretarget Products that enter a Pivotal Clinical Trialwhether these Pretarget Products are the same or different from the PretargetProducts that triggered milestone (a), (b), (c) or (d).  Similarly, milestones (g) and (h) are due onthe first two Pretarget Products that achieve Regulatory Approval whether theyare the same or different from the Pretarget Products that triggered milestones(a), (b), (c), (d), (e) or (f).  Paymentof any of the foregoing milestones shall be made only once for each achievementof such milestone.

 

Royalties

 

For a Pretarget Product that contains a radioactive effector molecule,Aletheon shall pay NeoRx a royalty of [*] of Net Sales worldwide.

 

For a Pretarget Product that does not contain a radioactive effectormolecule, Aletheon shall pay NeoRx a royalty of [*] of Net Sales worldwide.

 

Royalties shall be paid to NeoRx within 30 days after the end of eachcalendar quarter, unless such royalties are passed through from a third partyand in such event shall be paid within 60 days after the end of each calendarquarter.

 

3

----

 

Outlicensing Fees

 

Aletheon shall pay NeoRx [*] of the consideration (including upfront,license fees and milestone payments) it receives upfront or in the future underoutlicences or assignments of all or a portion of Pretarget IntellectualProperty; said payments to be based on that portion of the consideration fairlyattributable to the Pretarget Intellectual Property, said considerationincluding [*].  Outlicensing fees shallnot be due on royalties which shall be passed through as obligations under theterms in this Section 4 above. Outlicensing fees shall also not be due on direct R&D support.  Aletheon shall notify NeoRx within 15 daysof execution of an outlicense or assignment of all or a portion of PretargetPatents and provide a copy of said outlicense or assignment with sufficientinformation for NeoRx to determine the financial terms of the outlicense orassignment.  Outlicensing fees shall bepaid to NeoRx within 30 days after Aletheon’s receipt of such considerationunder each outlicense or assignment.

 

Late Fees

 

Any royalties, milestones, outlicensing fees or other amounts due underthis Agreement not paid when due shall be subject to finance charges of [*] permonth or the highest rate permitted by applicable usury law, whichever is less,determined and compounded daily from the date due until the date paid.

 

**4.             ThirdParty Licenses**

** **

NeoRx agrees to promptly request consent from each of its licensors ofThird Party Licenses to assign the licenses to Aletheon, and to reasonablycooperate in such assignment, but shall not be responsible for any additionalpayments such licensors may seek to impose for such assignments.  NeoRx shall assign to Aletheon all ofNeoRx’s right, title and interest under the Third Party Licenses for whichNeoRx obtains such consent, which consent shall include the release of NeoRxfrom any future liability under the Third Party Licenses, and Aletheon shallassume all of NeoRx’s liabilities and obligations arising under such ThirdParty Licenses after the effective date of the assignment.  NeoRx is not required to grant sublicensesunder any of its existing agreements related to the Pretarget IntellectualProperty and shall not be required to assign its agreement with the [*] unlessAletheon pays all costs incurred or to be incurred by NeoRx to assign suchagreement.

 

**5.             DueDiligence, Progress Reports, Term and Termination**

 

Due Diligence

 

Aletheon shall use commercially reasonable efforts to develop andmarket at least one Pretarget Product for which payments are due under Article4 of this Agreement and shall exercise reasonable judgment and good faith indetermining whether to cease the maintenance, prosecution or defense of any ofthe Pretarget Patents.

 

4

----

 

Progress Reports

 

Aletheon shall provide to NeoRx a written report at least [*] per [*],which accurately describes the current development progress of the PretargetProduct(s).

 

**6.             RoyaltyReports; Audits**

 

With each payment of royalties under Section 4, Aletheon shall provideNeoRx with a written report of (a) Net Sales and (b) a calculation of theroyalties due thereon.  Aletheon shallkeep, or cause to be kept, accurate books and records in reasonable detailregarding the calculation of payments and the reports given hereunder, andshall retain such books and records at its principal place of business for atleast [*] years after the end of the calendar year to which they pertain.  NeoRx shall have the right, at its expenseand not more frequently than once per calendar year, to have an independentcertified public accounting firm of nationally recognized standing, selected byNeoRx, examine during normal business hours the books and records of Aletheonrelating to the calculation of payments and reports given hereunder for anyperiod during which Aletheon is to keep the books and records.  If such examination discloses anunderpayment, Aletheon shall remit to NeoRx the amount of such underpayment(plus interest pursuant to Section 4). If such examination discloses an underpayment in excess of [*] for theperiod under review, then Aletheon shall also remit to NeoRx an amount equal toNeoRx’s out-of-pocket costs of the examination.

 

**7.             Acknowledgementand Warranties; Disclaimer; Indemnification**

** **

Each Party warrants that it has the authority to enter into thisAgreement and that its entry into or performance of this Agreement does notconflict with any other agreement, instrument or understanding, oral orwritten, to which it is a party or is bound.

 

Further, NeoRx warrants that (a) it is the owner of the PretargetPatents, and (b) to the knowledge of NeoRx, it has not received written noticefrom any third party alleging that the issued patents included in the PretargetPatents are invalid or unenforceable.

 

Except for the warranties expressly set forth above, NeoRx hereby statesand Aletheon acknowledges and accepts that the Pretarget Intellectual Propertyis being sold “AS IS”, “WHEREIS” and with (a) no express or implied warrantiesor representations of any kind including but not limited to any warrantiesregarding merchantability or fitness for a particular purpose or use, (b) nowarranties of validity, scope or enforceability, and (c) in the case of anyPretarget Product and Pretarget Trademarks, no warranties ofnon-infringement.  NeoRx makes norepresentations or warranties that it shall be able to obtain the consent ofthe licensors of Third Party Licenses to assign said Licenses to Aletheon.Furthermore, NeoRx shall have no obligation to initiate, pay for, enjoin ordefend any Pretarget Intellectual Property from possible infringing actions ofthird

 

5

----

 

parties, or to enforce, defend, prosecute or maintain any of thePretarget Intellectual Property after the Effective Date.  Aletheon shall reimburse any costs orexpenses incurred by NeoRx in connection with the prosecution, maintenance,defense or enforcement of the Pretarget Intellectual Property by Aletheon afterthe Effective Date.

 

EXCEPT AS SET FORTH IN THIS AGREEMENT, NEORX MAKES NO OTHERREPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PRETARGET INTELLECTUALPROPERTY, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESSFOR A PARTICULAR PURPOSE, PATENTABILITY AND NONINFRINGEMENT.

 

Aletheon shall indemnify, defend and hold harmless NeoRx and its directors,officers, employees and agents and their respective successors and assigns fromand against all liabilities, damages, losses and expenses (including, withoutlimitation, reasonable attorneys’ fees) arising from or attributable to (a) thedevelopment, manufacture, distribution, useor sale of Pretarget Products orPretarget Intellectual Property by Aletheon or its affiliates or licensees,and (b) any performance or non-performance of the Third Party Licenses assignedto Aletheon under this Agreement occurring after the effective date of theassignment.

 

**8.             GoverningLaw and Jurisdiction**

** **

This Agreement is governed by the laws of the State of Washingtonwithout reference to its choice of law principles to the contrary and bothparties submit to the jurisdiction of state and federal courts located in KingCounty, Washington for any disputes arising from this Agreement.

 

**9.             SecurityInterest**

** **

Aletheon hereby grants NeoRx a security interest in the PretargetPatents and all proceeds, income, royalties and other payments now or hereafterdue and payable with respect thereto (“Collateral”) to secure the payment ofall present and future royalties, milestones, and outlicensing fees payableunder this Agreement, as it may be amended from time to time.  Aletheon authorizes NeoRx to file and recordunder the Uniform Commercial Code (“UCC”) and with the United States Patent andTrademark Office financing statements, amendments and other documents deemedreasonably necessary by NeoRx to evidence, perfect and maintain the securityinterests created hereby.  Aletheonshall cooperate with NeoRx in the timely execution and filing of suchdocuments.  Upon the failure of Aletheonto pay any such amounts when due under this Agreement (after written noticethereof and a thirty day cure period), NeoRx shall have the rights and remediesof a secured party under the UCC; provided, however, that NeoRx shall notterminate the rights of an assignee or licensee of Aletheon’s interests in thePretarget Patents if (a) such assignee or licensee agrees to pay, and does pay,directly to NeoRx the royalties and milestones due under this Agreement thatare associated with, or arise from, its use of the

 

6

----

 

Pretarget Patents and (b) NeoRx is paid the outlicensing fees due underthis Agreement that are attributable to the assignment or license of thePretarget Patents to such assignee or licensee.

 

**10.          Assignment**

 

Aletheon may assign this Agreement with the written consent of NeoRx,which consent shall not be unreasonably withheld. NeoRx can assign thisAgreement without the consent of Aletheon. In the event NeoRx assigns any or all of its rights under this Agreementit shall notify Aletheon in writing.

 

**11.          Confidentialityand Publicity**

 

The Parties agree to keep confidential the terms of this Agreementexcept to the extent that disclosure is required by law or except as isotherwise agreed to by the parties. However, Aletheon may disclose the terms of this Agreement to itsaffiliates, sublicensees, and contractors, and including (without limitation)potential sublicensees, potential merger and/or acquisition partners, potentialacquirers, and professional advisors of Aletheon (so long as each of theseexecutes an appropriate non-disclosure and non-use agreement withAletheon).  All reports, agreements orother information provided by Aletheon to NeoRx or its agents pursuant to thisAgreement shall be kept confidential.

 

**12.          Severability**

 

Any provision in this Agreement that is prohibited or unenforceable inany jurisdiction shall, as to such jurisdiction, be ineffective only to theextent of such prohibition or unenforceability without invalidating theremaining provisions hereof or affecting the validity or enforceability of suchprovision in any other jurisdiction.

 

**13.          Waiver**

 

No failure or delay by any Party to insist on the strict performance ofany term, condition, covenant or agreement of this Agreement, or to exerciseany right, power or remedy hereunder or consequent upon a breach hereof, shallconstitute a waiver of any such term, condition, covenant, agreement, rightpower or remedy of any such breach or preclude such Party from exercising anysuch right, power or remedy at any later time or times.

 

**14.          Compliancewith Laws**

 

The Parties shall comply with all applicable laws, rules andregulations and orders of the United States and all jurisdictions and anygovernmental agency or court thereof in connection with this Agreement and thetransactions contemplated herein.

 

7

----

 

**15.          Notice**

** **

Any notice or other communication required or permitted to be made orgiven to either Party under this Agreement shall be in writing and shall bedeemed given if delivered by hand or by facsimile transmission (transmissionverified), received by registered or certified mail (return receipt requested),postage prepaid, or sent by overnight or express courier service, to theParties at the following addresses (or at such other address for a Party asshall be specified by like notice; provided, however, that notices of a changeof address shall be effective only upon receipt thereof):

 

In the case of NeoRx:

 

NeoRx Corporation

300 Elliott Avenue W., Suite 500

Seattle, WA 98119-4114

Attention: Vice President, Legal

Telephone: (206) 286-2526Facsimile:  (206) 286-2537

 

 

In the case of Aletheon:

 

Aletheon Pharmaceuticals, Inc.

c/o Heller Ehrman White & McAuliffe LLP

701 5th Avenue, Suite 6100

Seattle, WA 98104

Attention: Debra Leith

Telephone: (206) 389-6017

Facsimile: (206) 447-0849

 

**16.          EntireAgreement**

 

This Agreement constitutes the entire agreement and understandingbetween the parties with respect to the subject matter hereof and supersedesall prior agreements, understandings, negotiations, representations and statements,whether oral, written, implied or expressed, relating to such subject matter.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be dulyexecuted as of the Effective Date by their duly authorized representatives.

 

8

----

 
|   | **Aletheon  Pharmaceuticals, Inc.** |
|--------|-------------------------------------|
|   |                                |
|   | By:                                 |   | /s/ Donald B. Axworthy |   |
|   |                                | Donald B. Axworthy |
|   |                                | Chief Executive Officer |
|   |                                |
|   |                                |
|   | **NeoRx  Corporation**              |
|   |                                |
|   |                                |
|   | By:                                 |   | /s/ Jack L. Bowman |   |
|   |                                | Jack L. Bowman |
|   |                                | Chief Executive Officer |
|        |                                     |  |  |  |  |  |

 

9

----

 

**SCHEDULE A**

Pretarget Patents

 

[*]

 

10

----

 

**SCHEDULE B**

Pretarget Trademarks

 

[*]

 

11

----

 

**SCHEDULE C**

Third Party Licenses

 

[*]

 

12

----