EXHIBIT 10.27


[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


LICENSE
AGREEMENT


This License
Agreement (this “Agreement”) is entered into by and between ALNYLAM
PHARMACEUTICALS, INC., a corporation organized under the laws of the State of
Delaware having a principal office at 300 Third Street, Cambridge MA 02142
U.S.A. (“ALNYLAM”), and Quark Biotech, Inc. a corporation organized under the
laws of the State of California having offices located at 6536 Kaiser Avenue,
Fremont CA 94555 U.S.A. (“QUARK”).


INTRODUCTION


ALNYLAM owns or has
rights to certain intellectual property covering technology useful for the
discovery, development, manufacture, characterization, or use of therapeutic
products that function through RNA interference (“RNAi”).


QUARK desires to research
and potentially develop and commercialize products that function through RNAi
directed at inhibition of expression of the target identified as RTP801,
and QUARK seeks a non-exclusive license under certain intellectual property of
ALNYLAM to research, develop and commercialize such products.


ALNYLAM is willing to
grant the non-exclusive license to research, develop and commercialize products
as described above to QUARK under the terms and conditions of this Agreement,
and a related agreement of even date concerning other intellectual property.


In consideration
of the mutual covenants contained herein, and other good and valuable
consideration, the receipt of which is hereby acknowledged, ALNYLAM and QUARK
agree as follows:


 

















 


TABLE OF
CONTENTS


	
   

  	
   

  	
  PAGE

  
	
  ARTICLE 1 — DEFINITIONS

  	
  1

  
	
  1.1

  	
  Act

  	
  1

  
	
  1.2

  	
  Affiliate

  	
  1

  
	
  1.3

  	
  ALNYLAM

  	
  1

  
	
  1.4

  	
  ALNYLAM Patent Rights

  	
  1

  
	
  1.5

  	
  Approval

  	
  1

  
	
  1.6

  	
  Commercialize or Commercialization

  	
  1

  
	
  1.7

  	
  Commercially Reasonable Efforts

  	
  1

  
	
  1.8

  	
  Confidential Information

  	
  2

  
	
  1.9

  	
  Develop, Developing or Development

  	
  2

  
	
  1.10

  	
  Effective Date

  	
  2

  
	
  1.11

  	
  FDA

  	
  2

  
	
  1.12

  	
  Field

  	
  2

  
	
  1.13

  	
  First Commercial Sale

  	
  2

  
	
  1.14

  	
  GAAP

  	
  2

  
	
  1.15

  	
  Group I Patent Rights

  	
  2

  
	
  1.16

  	
  Group II Patent Rights

  	
  2

  
	
  1.17

  	
  IND or Investigational New Drug Application

  	
  2

  
	
  1.18

  	
  Licensed RNAi Product

  	
  2

  
	
  1.19

  	
  Major Market

  	
  3

  
	
  1.20

  	
  Net Sales

  	
  3

  
	
  1.21

  	
  Party

  	
  4

  
	
  1.22

  	
  Phase I Clinical Trial

  	
  4

  
	
  1.23

  	
  Phase II Clinical Trial

  	
  4

  
	
  1.24

  	
  Phase III Clinical Trial

  	
  5

  
	
  1.25

  	
  QUARK

  	
  5

  
	
  1.26

  	
  Research or Researching

  	
  5

  
	
  1.27

  	
  RNAi Product

  	
  5

  
	
  1.28

  	
  Royalty Quarter

  	
  5

  
	
  1.29

  	
  siRNA

  	
  5

  
	
  1.30

  	
  Sublicensee

  	
  5

  
	
  1.31

  	
  Target

  	
  5

  
	
  1.32

  	
  Term

  	
  5

  
	
  1.33

  	
  Territory

  	
  6

  
	
  1.34

  	
  Valid Claim

  	
  6

  
	
  ARTICLE 2 — LICENSE GRANT

  	
  6

  
	
  2.1

  	
  Licenses of
  ALNYLAM Patent Rights

  	
  6

  
	
  2.2

  	
  Retained Rights of ALNYLAM

  	
  6

  
	
  2.3

  	
  Commercially Reasonable Efforts

  	
  6

  
	
  2.4

  	
  Regulatory Filings

  	
  7

  



 


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[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 

















 


	
  ARTICLE 3 — FEES AND ROYALTIES

  	
  7

  
	
  3.1

  	
  Upfront Fee

  	
  7

  
	
  3.2

  	
  Maintenance Fee

  	
  7

  
	
  3.3

  	
  Milestone Payments

  	
  7

  
	
  3.4

  	
  Royalties

  	
  8

  
	
  3.6

  	
  Reduction in Royalty Payments

  	
  10

  
	
  ARTICLE 4 — INTELLECTUAL PROPERTY

  	
  10

  
	
  4.1

  	
  Prosecution and
  Maintenance of Patent Rights

  	
  10

  
	
  4.2

  	
  Infringement of ALNYLAM Rights

  	
  10

  
	
  4.3

  	
  Claimed Infringement of Third Party Rights

  	
  11

  
	
  4.4

  	
  Other Infringement Resolutions

  	
  11

  
	
  4.5

  	
  Interpretation of Patent Judgments

  	
  11

  
	
  ARTICLE 5 — CONFIDENTIAL INFORMATION

  	
  12

  
	
  5.1

  	
  Non-Use and
  Non-Disclosure of Confidential Information

  	
  12

  
	
  5.2

  	
  Limitation on Disclosures

  	
  12

  
	
  ARTICLE 6 — REPORTS, TAXES AND PAYMENTS

  	
  13

  
	
  6.1

  	
  Reports

  	
  13

  
	
  6.2

  	
  Tax Withholding

  	
  13

  
	
  6.3

  	
  Payments

  	
  13

  
	
  6.4

  	
  Audits

  	
  13

  
	
  ARTICLE 7 — INDEMNIFICATION AND INSURANCE

  	
  14

  
	
  7.1

  	
  QUARK
  Indemnification

  	
  14

  
	
  7.2

  	
  Insurance

  	
  15

  
	
  ARTICLE 8 — EXPORT

  	
  15

  
	
  8.1

  	
  General

  	
  15

  
	
  8.2

  	
  Delays

  	
  15

  
	
  8.3

  	
  Assistance

  	
  15

  
	
  ARTICLE 9 — TERM AND TERMINATION

  	
  16

  
	
  9.1

  	
  Term

  	
  16

  
	
  9.2

  	
  Expiration

  	
  16

  
	
  9.3

  	
  Material Breach

  	
  16

  
	
  9.4

  	
  Termination by QUARK

  	
  16

  
	
  9.5

  	
  Consequences of Termination; Survival

  	
  16

  
	
  9.6

  	
  License upon Termination

  	
  16

  
	
  ARTICLE 10 — MISCELLANEOUS

  	
  17

  
	
  10.1

  	
  Representations by QUARK and ALNYLAM

  	
  17

  
	
  10.2

  	
  Dispute Resolution

  	
  18

  



 


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[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 

















 


	
  10.3

  	
  Publicity

  	
  19

  
	
  10.4

  	
  Force Majeure

  	
  20

  
	
  10.5

  	
  Consequential Damages

  	
  20

  
	
  10.6

  	
  Assignment

  	
  20

  
	
  10.7

  	
  Notices

  	
  21

  
	
  10.8

  	
  Independent Contractors

  	
  22

  
	
  10.9

  	
  Governing Law; Jurisdiction

  	
  22

  
	
  10.10

  	
  Severability

  	
  22

  
	
  10.11

  	
  No Implied Waivers

  	
  22

  
	
  10.12

  	
  Entire Agreement

  	
  22

  
	
  10.13

  	
  Counterparts

  	
  22

  
	
  EXHIBIT A

  	
  ALNYLAM PATENT RIGHTS

  	
  1

  
	
  EXHIBIT B

  	
  IN-LICENSES COVERING ALNYLAM PATENT RIGHTS

  	
  1

  
	
  APPENDIX I

  	
  TARGET

  	
  1

  



 


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DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 

















 


ARTICLE I —
DEFINITIONS


General.  When used in this Agreement, each of the
following terms, whether used in the singular or plural, will have the meanings
set forth in this Article I.


1.1                                 Act
means the United States Food, Drug and Cosmetic Act of 1938, 21 U.S.C.  §§ 301, 42 U.S.C., as such may be amended
from time to time, and its implementing regulations.


1.2                                 Affiliate
means any corporation, company, partnership, joint venture and/or firm which
controls, is controlled by, or is under common control with a Party.  For purposes of the foregoing sentence, “control”
will mean (a) in the case of corporate entities, direct or indirect ownership
of at least fifty percent (50%) of the stock or shares having the right to vote
for the election of directors, (b) in the case of non-corporate entities,
direct or indirect ownership of at least fifty percent (50%) of the equity
interest with the power to direct the management and policies of such
non-corporate entities, and (c) in any country where local law does not permit
foreign entities to own stock or shares or have equity interest of fifty
percent (50%) or more in such entities, the direct or indirect ownership or
control of the maximum percentage of such stock or shares or equity interest as
is permitted under local law.


1.3                                 ALNYLAM
means Alnylam Pharmaceuticals, Inc., a Delaware corporation, its Affiliates
(including its subsidiaries, Alnylam U.S., Inc. and Alnylam Europe AG), and
their respective successors and assigns.


1.4                                 ALNYLAM
Patent Rights means the patents and patent applications listed on Exhibit A
and all patent applications hereafter filed that derive from the patents and
patent applications listed on Exhibit A, including all continuations,
continuations-in-part, divisions, applications for certificate of invention,
provisionals, or any substitute applications, any patents issued with respect
to any such patent applications; and all reissues, substitutions,
confirmations, re-registrations, re-examinations, invalidations, supplementary
protection certificates, certificates of invention and patents of addition of
any such patents; and all foreign equivalents of any of the foregoing.


1.5                                 Approval
means, with respect to each Licensed RNAi Product Developed and Commercialized,
the receipt of sufficient authorization from the appropriate regulatory
authority on a country-by-country basis to market such Licensed RNAi Product in
a country, including (where necessary in a particular country prior to
marketing a Licensed RNAi Product) all separate pricing and/or reimbursement
approvals that may be required for marketing.


1.6                                 Commercialize
or Commercialization means any and all activities directed to manufacturing
(including, without limitation, by means of contract manufacturers), marketing,
promoting, distributing, importing, exporting and selling an RNAi Product, in
each case for commercial purposes, and activities directed to obtaining pricing
and reimbursement approvals, as applicable.


1.7                                 Commercially
Reasonable Efforts means the level of efforts and resources that would be 






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


1

















 


                                                employed
by a biotechnology company with equivalent resources to QUARK in connection
with Researching, Developing, and Commercializing its own products of similar
market potential at a similar stage of its product life, taking into account
the apparent attributes of the molecule, the competitiveness of the relevant
marketplace, the proprietary positions of third parties, regulatory structures,
including the likelihood of obtaining an Approval, and the anticipated
profitability of such product.


1.8                                 Confidential
Information means all proprietary or confidential information and
materials, patentable or otherwise, of a Party which are disclosed by or on
behalf of such Party to the other Party hereunder, including, without
limitation, chemical substances, formulations, techniques, methodology,
equipment, data, reports, know how, sources of supply, patent positioning,
business plans, and also including without limitation proprietary and confidential
information of third parties in possession of such Party under an obligation of
confidentiality, whether or not related to making, using or selling Licensed
RNAi Products.


1.9                                 Develop,
Developing or Development means with respect to an RNAi Product,
preclinical and clinical drug development activities, including: test method
development and stability testing, toxicology, formulations, quality
assurance/quality control development, statistical analysis and report writing;
clinical studies and regulatory affairs; Approval and registration.


1.10                           Effective
Date means September 26, 2006.


1.11                           FDA
means the United States Food and Drug Administration or any successor agency
thereto.


1.12                           Field  means the use of therapeutic RNAi Products
against the Target for the treatment in humans of [ * ]


1.13                           First
Commercial Sale means, with respect to each Licensed RNAi Product, the
first commercial sale in a country as part of a nationwide introduction after
receipt by Quark or any of its Affiliates or Sublicensees of Approval in such
country, excluding de minimis named patient and compassionate use sales.


1.14                           GAAP
means United States generally accepted accounting principles applied on a
consistent basis.  Unless otherwise
defined or stated, financial references shall be calculated by the accrual
method under GAAP.


1.15                           Group
I Patent Rights means the ALNYLAM Patent Rights identified on Exhibit A as
Group I Patent Rights.


1.16                           Group
II Patent Rights means the ALNYLAM Patent Rights identified on Exhibit A as
Group II Patent Rights.


1.17                           IND
or Investigational New Drug Application means a United States
investigational new drug application or its equivalent or any corresponding
foreign application.






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


2

















 


1.18                           Licensed
RNAi Product means an RNAi Product, the identification, characterization,
validation, synthesis, development, use, formulation, manufacture, production
or sale of which would infringe a Valid Claim but for the grant of the licenses
set forth in this Agreement.


1.19                           Major
Market means, individually and collectively, [ * ].


1.20                           Net
Sales means, with respect to Licensed RNAi Products, the gross amount
invoiced by QUARK or its Affiliates or Sublicensees on sales or other
dispositions of such Licensed RNAi Products to third parties which are not
Affiliates in those countries where at least a Valid Claim covering such
Licensed RNAi Product then exists, less actual bad debts, sales returns and
allowances actually paid, granted or accrued, including trade, quantity and
cash discounts and any other adjustments, including granted on account of price
adjustments, billing errors, rejected goods, damaged or defective goods,
recalls, returns, rebates, chargebacks, reimbursements or similar payments
granted or given to wholesalers or other distributors, buying groups, health
care insurance carriers or other institutions, adjustments arising from
consumer discount programs or similar programs, or arising in connection with
any Discount or Savings Program (as defined below), customs or excise duties, sales
tax, consumption tax, value added tax, and other similar taxes (except income
taxes) measured by the production, sale, or delivery of goods in each case only
if included as a specific line item on an invoice to such third party or duties
relating to sales and any payments in respect of sales to the United States
government, any State government or any foreign government, or to any
governmental authority, or with respect to any government subsidized program or
managed care organization, and charges for freight and insurance related to the
return of Licensed RNAi Products and not otherwise paid by the customer.  For purposes of this definition of “Net Sales”
only, “Discount or Savings Program” means any discount, rebate or reimbursement
program applicable to a Licensed RNAi Product under which QUARK or its
Affiliates or Sublicensees provides to low income, uninsured or other patients
the opportunity to purchase pharmaceutical products at discounted prices.


In the event that
a Licensed RNAi Product is sold in any country in the form of a combination
product containing one or more therapeutically active ingredients in addition
to such Licensed RNAi Product in any year, Net Sales of such combination
product will be adjusted by multiplying actual Net Sales of such combination
product in such country by the fraction A/(A+B), where A is the average Net
Sales prices per daily dose during such year of the Licensed RNAi Product in
such country, if sold separately in such country, and B is the average Net
Sales prices per daily dose of any product containing the other therapeutically
active ingredients in the combination product in such country, if sold
separately in such country.  If, in a
specific country, the product containing the other therapeutically active
ingredients in the combination product are not sold separately in such country,
Net Sales will be calculated by multiplying actual Net Sales of such
combination product by the fraction A/C, where A is the average Net Sales
prices per daily dose of the Licensed RNAi Product in such country and C is the
average Net Sales prices per daily dose of the combination product in such
country.  If, in a specific country, the
Licensed RNAi Product is not sold separately in such country, Net Sales will be
calculated by multiplying actual Net Sales of such combination product by the
fraction






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


3

















 


(C-B)/C, where B
is the average Net Sales prices per daily dose of the product containing the
other therapeutically active ingredients in the combination product in such
country and C is the average Net Sales prices per daily dose of the combination
product in such country.  If, in a
specific country, both the Licensed RNAi Product and the product containing the
other therapeutically active ingredients in the combination product are not
sold separately in such country, the Net Sales price for the Licensed RNAi
Product and the product containing the other therapeutically active ingredients
in the combination product will be negotiated by the Parties in good faith
based upon the costs, overhead and profit as are then incurred for the Licensed
RNAi Product and all similar substances then being made and marketed by the
selling Party and having an ascertainable market price.


In the event QUARK
or any of its Affiliates or Sublicensees receive non-monetary consideration in
exchange for the sale or other disposition of Licensed RNAi Products to Third
Parties which are not Affiliates, Net Sales for such sale or other disposition
shall include the fair market value of the non-cash consideration received as a
result of such sale or other disposition. 
If such sale or other disposition occurred in a country where QUARK or
such Affiliate or Sublicensee sold the same Licensed RNAi Product in commercial
quantities solely for monetary consideration, the fair market value of the
non-cash consideration received for such Licensed RNAi Product shall be
determined on the basis of the value received in such solely monetary
transactions.  If QUARK or its Affiliate
or Sublicensee did not have sales or other dispositions of Licensed RNAi
Product in such country solely for monetary consideration, then the fair market
value of such products shall be determined on the basis of all relevant facts
and circumstances.


In the event that
QUARK or any of its Affiliates or Sublicensees price and sell Licensed RNAi
Products in conjunction with other products of QUARK or its Affiliates or
Sublicensees at a single price or rate or at a discount for collectively buying
such products, then Net Sales with respect to such Licensed RNAi Product shall
equal the number of units of the Licensed RNAi Product sold together with the
non-Licensed RNAi Products multiplied by the average Net Sales price at which
QUARK or any of its Affiliates or Sublicensees sold the Licensed RNAi Product
individually to similar customers for similarly sized orders.


Net Sales shall be
determined from books and records maintained in accordance with generally
accepted accounting principles in the United States, consistently applied throughout
the organization and across all products of the entity whose sales of Licensed
RNAi Product are giving rise to Net Sales.


1.21                           Party
means either ALNYLAM or QUARK; Parties means both ALNYLAM and QUARK.


1.22                           Phase
I Clinical Trial means a study of a Licensed RNAi Product in humans the
purpose of which includes the determination of safety and/or pharmacokinetic
and pharmacodynamic profile in healthy individuals or patients.


1.23                           Phase
II Clinical Trial means a study of a Licensed RNAi Product in patients of
dose range and efficacy of a Licensed RNAi Product, which is intended to
generate sufficient 






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


4

















 


                                                data
to commence a Phase III Clinical Trial.


1.24                           Phase
III Clinical Trial means a controlled study of a Licensed RNAi Product in
patients of the efficacy and safety of a Licensed RNAi Product which is
prospectively designed to demonstrate statistically whether such Licensed RNAi
Product is effective and safe for use in a particular indication in a manner
sufficient to obtain Approval to market such Licensed RNAi Product.


1.25                           QUARK
means Quark Biotech, Inc., a California corporation, and its successors and
assigns.


1.26                           Research
or Researching means identifying, evaluating, validating and optimizing
RNAi Products.


1.27                           RNAi
Product means a therapeutic product containing, comprised or based on
siRNAs or siRNA derivatives or other moieties effective in gene function
modulation and designed to modulate the function of the Target through RNA
interference.


1.28                           Royalty
Quarter means each of the four (4) thirteen (13) week periods (i) with
respect to the United States, commencing on January 1 of any year, and (ii)
with respect to any country in the Territory other than the United States,
commencing on December 1 of any year.


1.29                           siRNA
means a double-stranded ribonucleic acid (RNA) 
composition designed to act primarily through an RNA interference
mechanism that consists of either (a) two separate oligomers of native or
chemically modified RNA that are hybridized to one another along a substantial
portion of their lengths, or (b) a single oligomer of native or chemically
modified RNA that is hybridized to itself by self-complementary base-pairing
along a substantial portion of its length to form a hairpin.


1.30                           Sublicensee
means a third party which is not an Affiliate of QUARK and to whom QUARK has
granted a sublicense of all or a portion of the rights granted hereunder.  Without limiting the generality of the
foregoing, a Sublicensee will be deemed to include any third party (a) who is granted
a sublicense hereunder by QUARK pursuant to the terms of the outcome or
settlement of any infringement or threatened infringement action and (b) who
enters into any form of agreement with QUARK under which such third party will
distribute a Licensed RNAi Product in any country in the Territory and who has
twenty-five percent (25%) or more of the market share for such Licensed RNAi
Product in such country.


1.31                           Target
means RTP801 as more specifically described in Appendix I, and its
encoded gene products, including any fragment or common genetic variants
thereof that result from or prevent mutation in, or a single nucleotide
polymorphism with respect to such gene.


1.32                           Term
means the period of time that begins upon the Effective Date and ends upon the
expiration or abandonment of all issued patents and filed applications within
the ALNYLAM Patent Rights.






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


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1.33                           Territory
means worldwide.  For clarity, at any
time the Territory will not include any country to which the exportation or
re-exportation of materials, products and related technical data covered by
this Agreement is restricted under U.S. export laws, which restriction has not
been removed or waived.


1.34                           Valid
Claim means any claim [ * ].


ARTICLE II —
LICENSE GRANT


2.1                                 Licenses
of ALNYLAM Patent Rights.


(a)                                  ALNYLAM
grants to QUARK: a non-exclusive royalty-bearing right and license under the
ALNYLAM Patent Rights, subject to the terms and conditions of the in-license(s)
identified on Exhibit B governing ALNYLAM’s rights, for the sole and exclusive
purposes of Researching, Developing and Commercializing Licensed RNAi Products
for the Target in the Field in the Territory. 
The license granted in this Section 2.1(a) will be for the Term and such
license will include the right to grant sublicenses within the Field, subject
to Section 2.1(b) of this Agreement and other terms and conditions of this
Agreement and the in-license(s) identified on Exhibit B governing ALNYLAM’s
rights under the ALNYLAM Patent Rights.


(b)                                 In
the event that QUARK sublicenses the rights granted under Section 2.1(a) above,
QUARK will notify ALNYLAM within [ * ] after
such sublicense becomes effective and provide a copy of the fully executed
sublicense agreement to ALNYLAM within the same time frame (with such
reasonable redactions as QUARK may make, provided that such redactions do not
include provisions necessary to demonstrate compliance with the requirements of
this Agreement), which shall be treated as Confidential Information of QUARK,
provided that ALNYLAM may disclose such sublicense agreement(s) to third
parties under confidence if and to the extent required in order to comply with
ALNYLAM’s contractual obligations.


2.2                                 Retained
Rights of ALNYLAM.  Any rights of
ALNYLAM not expressly granted to QUARK under this Agreement will be retained by
ALNYLAM.  For clarity, this license does
not include a license under ALNYLAM trade secrets, and no communication of
significant technical information of either Party is expected to occur pursuant
to this Agreement.


2.3                                 Commercially
Reasonable Efforts.  QUARK shall use
Commercially Reasonable Efforts to carry out Research, Development, and
Commercialization of Licensed RNAi Products [ * ]
Development and Commercialization during the Term.  The activities of QUARK’s Affiliates,
Sublicensees, subcontractors, collaborators, transferees, and successors shall
be attributed to QUARK for purposes of determining QUARK’s satisfactions of the
foregoing diligence obligations.  QUARK
will [ * ] in written progress reports to be
provided [ * ]. 
Such reports will include a summary of all significant Development and
Commercialization events in respect of Licensed RNAi Products, including
without limitation, the status of clinical trials underway (but not the results
of such trials) and the 






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


6

















 


                                                achievement
of any of the milestone events set forth in Article III of this Agreement;
[ * ].


2.4                                 Regulatory
Filings.  QUARK, its Affiliates or
Sublicensees will prepare, file, and prosecute all appropriate governmental
applications and/or filings to obtain Approval of Licensed RNAi Products in the
Field.  QUARK, its Affiliates or
Sublicensees will own and maintain all such applications and/or filings and
Approvals of the Licensed RNAi Products in the Field.


ARTICLE III — FEES
AND ROYALTIES


3.1                                 Upfront
Fee.  Within [ * ]
of the Effective Date of this Agreement, QUARK will pay to ALNYLAM an upfront,
non-refundable fee of [ * ] as
consideration for the license granted in Section 2.1(a).


3.2                                 Maintenance
Fee.  Until the First Commercial Sale
of a Licensed RNAi Product, QUARK will pay to ALNYLAM an annual maintenance fee
in the amount of [ * ] for the license granted
under this Agreement.  Such annual
maintenance fee shall be due within  [ * ] after the anniversary of the Effective Date of this
Agreement.


3.3                                 Milestone
Payments.  With respect to Licensed
RNAi Products and the achievement by QUARK, its Affiliates or Sublicensees of
the milestones in the table below for Licensed RNAi Products, QUARK will
provide notice to ALNYLAM of the occurrence of a milestone event within [ * ] of such event, and make the indicated milestone
payment to ALNYLAM within [ * ] after the
occurrence of the relevant event. 
Milestone payments will be due only once for the first RNAi Product
against the Target being developed by QUARK, or an Affiliate or Sublicensee of
QUARK, to achieve the relevant milestone event that is a Licensed RNAi Product
or would be a Licensed RNAi Product if all of the claims included in the patent
applications under ALNYLAM Patent Rights in existence in Major Market countries
as of the date such milestone event is achieved were to issue in their
then-current form.  For clarity, only one
payment shall be due hereunder with respect to each of the following milestone events
against the Target, regardless of the number of such RNAi Products that achieve
such milestone.






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


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  Milestone Event

  	
   

  	
  Payment

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  [ * ]

  	
   

  	
  [ * ]

  	
   

  






 


In the event one
or more milestone events set out above are skipped for any reason, the payment
for such skipped milestone events(s) will be due at the same time as the
payment for the next achieved milestone event.


3.4                                 Royalties.


(a)                                  Royalties
on Net Sales will be due and payable by QUARK to ALNYLAM on a Licensed RNAi
Product-by-Licensed RNAi Product basis and on a country-by-country basis in the
Territory until the expiration of the last Valid Claim covering such Licensed
RNAi Product in such country.  Beginning
with the first Royalty Quarter in which a First Commercial Sale in a country
occurs, and during subsequent Royalty Quarters, running royalties are payable
on Net Sales in the Territory in accordance with the applicable running royalty
rates set out in subsections (b) and (c) of this Section 3.4.  If at the time of the First Commercial Sale
or at any time thereafter all Valid Claims covering a Licensed RNAi Product
expire in a particular country, then such RNAi Product shall be royalty-free in
such country; [ * ].


(b)                                 Subject
to subsections (a) and (c) of this Section 3.4, the following royalties will be
due to ALNYLAM (all references are to U.S. dollars):




	
  Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for Net Sales of Licensed RNAi Products in the Territory
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for Net Sales of Licensed RNAi Products in the Territory
  [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for Net Sales of Licensed RNAi Product in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  






 


(c)                                  In
the event a Licensed RNAi Product is covered by the license granted under that 






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


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                                                agreement
between the Parties of even date with this Agreement which provides for the
grant of rights to QUARK under patent rights in-licensed by ALNYLAM from Cancer
Research Technology Limited, subject to subsection (a) of this Section 3.4, the
applicable running royalty rates set out below will apply (all references are
to U.S. dollars): 




	
  Royalty Rate for
  Net Sales  of Licensed RNAi Product in
  the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for
  Net Sales of Licensed RNAi Product in the Territory [ * ]
  

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for
  Net Sales of Licensed RNAi Products in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for
  Net Sales of Licensed RNAi Products in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for
  Net Sales of Licensed RNAi Product in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  
	
  Royalty Rate for
  Net Sales of Licensed RNAi Product in the Territory [ * ]

  	
   

  	
  [ * ]

  	
   

  






 


3.5                                 Reduction
in Royalty Payments.  In the event
QUARK or any Affiliate or Sublicensee has Net Sales of Licensed RNAi Product in
a country during the Term at a time when there are also sales of Generic
Product in such country in the same calendar year, the Parties shall meet and
confer for the purpose of determining an equitable reduction in the royalties
payable by QUARK in respect of such Net Sales, taking into consideration
factors such as the reduced margins realized by QUARK or its Affiliate or
Sublicensee and also any Third Party obligations of ALNYLAM.  As used herein, the term “Generic Product”
means any pharmaceutical product sold by a third party, not authorized by QUARK
or any Affiliate or Sublicensee, that contains the same active pharmaceutical
ingredient as a Licensed RNAi Product and is approved in reliance on the prior
approval of a Licensed RNAi Product as determined by the applicable regulatory
authority.


ARTICLE IV —
INTELLECTUAL PROPERTY


4.1                                 Prosecution
and Maintenance of Patent Rights. 
ALNYLAM will have the right and responsibility to file, prosecute and
maintain patent protection in the Territory for all ALNYLAM Patent Rights.  [ * ].


4.2                                 Infringement
of ALNYLAM Rights.


(a)                                  Each
Party will promptly report in writing to the other Party during the Term any
known or suspected infringement by a third party of any of the ALNYLAM Patent
Rights of which such Party becomes aware, as such infringement relates to
Research, Development or Commercialization of Licensed RNAi Products in the
Field directed to the Target (a “Licensed Rights Infringement”) and will
provide the other Party with all available evidence supporting such Licensed
Rights Infringement.






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF
1933, AS AMENDED.


 


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(b)                                 ALNYLAM
will have the sole and exclusive right to initiate an infringement or other
appropriate suit in the Territory against any third party who at any time has
infringed, or is suspected of infringing, any of the ALNYLAM Patent Rights.


(c)                                  ALNYLAM
will have the sole and exclusive right to select counsel for any suit referred
to in subsection (b) above initiated by it and will pay all expenses of the
suit, including without limitation attorneys’ fees and court costs.


4.3                                 Claimed
Infringement of Third Party Rights.


(a)                                  In
the event that a third party at any time provides written notice of a claim to,
or brings an action, suit or proceeding against, either Party, or any of their
respective Affiliates or Sublicensees, claiming infringement of its patent
rights based upon an assertion or claim arising out of the development, use,
manufacture, distribution, importation or sale of Licensed RNAi Products (“Third
Party Claim”), such Party will promptly notify the other Party of the claim or
the commencement of such action, suit or proceeding, enclosing a copy of the
claim and all papers served.  Each Party
agrees to make available to the other Party its advice and counsel regarding
the technical merits of any such claim at no cost to the other Party and to
offer reasonable assistance to the other Party at no cost to the other Party.


(b)                                 Each
Party shall have sole and exclusive responsibility for the defense of its own
interests in actions in which they are named in connection with any Third Party
Claim brought against either Party or any of their respective Affiliates or
Sublicensees.  All litigation costs and
expenses incurred by either Party in connection with the defense of such Third
Party Claim will be borne by such Party. 
Each Party will keep the other Party promptly informed, and may from
time to time consult with the other Party regarding the status of any such
Third Party Claims.


(c)                                  Neither
Party will settle any Third Party Claim in a manner that is in derogation of
the rights of the other Party without obtaining the prior written consent of
such other Party.


(d)                                 THE
PROVISIONS OF THIS SECTION 4.3 STATE THE ENTIRE RESPONSIBILITY OF THE PARTIES,
AND THE SOLE AND EXCLUSIVE REMEDY OF THE PARTIES, IN THE CASE OF ANY THIRD
PARTY CLAIMS OR VIOLATION OF ANY THIRD PARTY’S RIGHTS.


4.4                                 Other
Infringement Resolutions.   In the
event of a dispute or potential dispute which has not ripened into a demand,
claim or suit of the types described in Sections 4.2 and 4.3 of this Agreement,
the same principles governing control of the resolution of the dispute, consent
to settlements of the dispute, and implementation of the settlement of the
dispute will apply.


4.5                                 Interpretation
of Patent Judgments. If any claim relating to a patent under the 






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF
1933, AS AMENDED.


 


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                                                ALNYLAM
Patent Rights becomes the subject of a judgment, decree or decision of a court,
tribunal, or other authority of competent jurisdiction in any country, which
judgment, decree, or decision is or becomes final (there being no further right
of review) and adjudicates the validity, enforceability, scope, or infringement
of the same, the construction of such claim in such judgment, decree or
decision shall be followed thereafter in such country in determining whether a
product is a Licensed RNAi Product hereunder, not only as to such claim but
also as to all other claims in such country to which such construction
reasonably applies.  If at any time there
are two or more conflicting final judgments, decrees, or decisions with respect
to the same claim, the decision of the higher tribunal shall thereafter
control, but if the tribunal be of equal rank, then the final judgment, decree,
or decision more favorable to such claim shall control unless and until the
majority of such tribunals of equal rank adopt or follow a less favorable final
judgment, decree, or decision, in which event the latter shall control.


ARTICLE V — CONFIDENTIAL INFORMATION


5.1                                 Non-Use
and Non-Disclosure of Confidential Information.  Each Party agrees that all Confidential
Information of a Party that is disclosed by a Party to the other Party (a) will
not be used by the receiving Party except in connection with the activities
contemplated by this Agreement or in order to further the purposes of this
Agreement (b) will be maintained in confidence by the receiving Party and (c)
will not be disclosed by the receiving Party to any third party who is not a
consultant or advisor under an obligation of confidentiality to, the receiving
Party or an Affiliate or Sublicensee of the receiving Party, without the prior
written consent of the disclosing Party. 
Notwithstanding the foregoing, the receiving Party will be entitled to
use and disclose Confidential Information of the disclosing Party which (i) was
known by the receiving Party or its Affiliates prior to its date of disclosure
by the disclosing Party to the receiving Party as demonstrated by legally
admissible evidence available to the receiving Party or its Affiliates, (ii) either
before or after the date of the disclosure such Confidential Information is
lawfully disclosed to the receiving Party or its Affiliates by sources other
than the disclosing Party, (iii) either before or after the date of the
disclosure by the disclosing Party to the receiving Party such Confidential
Information becomes published or otherwise part of the public domain through no
fault or omission on the part of the receiving Party or its Affiliates, (iv) is
independently developed by or for the receiving Party or its Affiliates without
reference to or in reliance upon the Confidential Information as demonstrated
by legally admissible evidence available to the receiving Party or its
Affiliates, (v) is reasonably necessary to conduct clinical trials or to obtain
regulatory approval of Licensed RNAi Products or for the prosecution and
maintenance of Patent Rights, (vi) is reasonably required in order for a Party
to obtain financing or conduct discussions with Development or
Commercialization partners so long as such third party recipients are bound by
an obligation of confidentiality or (vii) is required to be disclosed by the
receiving Party to comply with applicable laws or regulations or legal process,
including without limitation by the rules or regulations of the United States
Securities and Exchange Commission or similar regulatory agency in a country
other than the United States or of any stock exchange or NASDAQ, provided that
the receiving Party provides prior written notice of such disclosure to the
disclosing Party and takes 






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


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                                                reasonable
and lawful actions to avoid or minimize the extent of such disclosure.


5.2                                 Limitation
on Disclosures.  Each Party agrees
that it will provide Confidential Information received from the other Party
solely to its employees, consultants and advisors, and the employees,
consultants and advisors of its Affiliates or Sublicensees as applicable, who
have a legitimate business need to know and an obligation to maintain in
confidence the Confidential Information of the disclosing Party.  The disclosing Party is liable for any breach
of the non-disclosure obligation of its consultants, advisors, Affiliates and
Sublicensees as applicable.


ARTICLE VI — REPORTS, TAXES AND PAYMENTS


6.1                                 Reports.  As to each Royalty Quarter commencing with
the Royalty Quarter during which the First Commercial Sale occurs, [ * ] after the end of such Royalty Quarter (if QUARK has
not entered into an agreement with a Sublicensee) and within [ * ] after the receipt by QUARK from a Sublicensee of such
Sublicensee’s report, as required by such Sublicensee’s sublicense for each
Royalty Quarter (if QUARK has entered into an agreement with a Sublicensee),
QUARK will deliver to ALNYLAM a written report showing, on a country-by-country
basis, the Net Sales of Licensed RNAi Products calculated under GAAP and its
royalty obligation for such quarter with respect to such Net Sales under this
Agreement together with wire transfer of an amount equal to such royalty
obligation.  All Net Sales will be
segmented in each such report according to sales by QUARK and each Affiliate
and Sublicensee, as well as on a product-by-product basis, including the rates
of exchange used to convert Net Sales to United States Dollars from the
currency in which such sales were made. 
For the purposes of this Agreement, the rates of exchange to be used for
converting Net Sales to United States Dollars will be [ * ].


6.2                                 Tax
Withholding.  QUARK will use all
reasonable and legal efforts to reduce tax withholding with respect to payments
to be made to ALNYLAM.  Notwithstanding
such efforts, if QUARK concludes that tax withholdings under the laws of any
country are required with respect to payments to ALNYLAM, QUARK will make the
full amount of the required payment to ALNYLAM after any tax withholding.  In any such case, QUARK shall provide ALNYLAM
with a written explanation of such withholding and original receipts or other
evidence reasonably desirable and sufficient to allow ALNYLAM to document such
tax withholdings for purposes of claiming foreign tax credits and similar
benefits.  For purposes of clarity, any
payment due to ALNYLAM in respect of fees set out in Article III of this
Agreement will be paid in the full amount specified after any tax withholding,
with the amount of any tax withholding associated with such payments to be paid
by QUARK to the appropriate government authority.


6.3                                 Payments.  Unless otherwise agreed by the Parties, all
payments required to be made under this Agreement will be made in United States
Dollars via wire transfer to an account designated in advance by the receiving
Party.


6.4                                 Audits.






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
OF 1933, AS AMENDED.


 


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(a)                                  At
any given point in time, QUARK will have on file and will require its
Affiliates and Sublicensees to have on file complete and accurate records for
the last [ * ] of all Net Sales of Licensed RNAi
Products (including associated data). 
ALNYLAM will have the right, [ * ] during
each [ * ] period, to retain at its own
expense an independent qualified certified public accountant reasonably
acceptable to QUARK to review such records upon reasonable notice, during
regular business hours.  If the audit
demonstrates that the payments owed under this Agreement have been understated,
QUARK will pay the balance to ALNYLAM together with interest on such amounts
from the date on which such payment obligation accrued at a rate equal to [ * ].  If the
underpayment is greater than [ * ] of the
amount owed, then QUARK will reimburse ALNYLAM for its reasonable out-of-pocket
costs of the audit. If the audit demonstrates that the payments owed under this
Agreement have been overstated, ALNYLAM will credit the balance against the
next payment due from QUARK (without interest).


(b)                                 QUARK
shall require that the terms of any sublicense under its rights in this
Agreement are fully in compliance with the terms and conditions of the
in-licenses governing ALNYLAM’s rights under the ALNYLAM Patent Rights
identified on Exhibit B, including without limitation, all obligations with
respect to maintenance of records and audit rights.  ALNYLAM will provide QUARK in a timely manner
with a true and complete copy (subject to redaction of financial and other
information not material to ALNYLAM’s ability to sublicense rights licensed
thereunder to QUARK under this Agreement) of all such in-licenses.


ARTICLE VII —
INDEMNIFICATION AND INSURANCE


7.1                                 QUARK
Indemnification.  QUARK agrees to
indemnify and hold harmless ALNYLAM and its Affiliates, and their respective
agents, directors, officers and employees and their respective successors and
assigns (the “ALNYLAM Indemnitees”) from and against any and all losses, costs,
damages, fees or expenses (“Losses”) incurred by an ALNYLAM Indemnitee arising
out of or in connection with any claim, suit, demand, investigation or
proceeding brought by a third party (“Claim”) based on (a) the development,
use, manufacture, distribution or sale of any Licensed RNAi Product by QUARK or
any of its Affiliates or Sublicensees, including, but not limited to, any
claims made against ALNYLAM by third parties alleging infringement, injury,
damage, death or other consequence occurring to any person claimed to result,
directly or indirectly, from the possession, use or consumption of, or
treatment with, any Licensed RNAi Product, whether claimed by reason of breach
of warranty, negligence, product defect or otherwise, and regardless of the
form or forum in which any such claim is made, (b) any breach of any
representation, warranty or covenant of QUARK in this Agreement, and (c) actions
taken or omitted to be taken by QUARK or its Affiliates, subcontractors or
Sublicensees, or the employees, agents or representatives of any of them in
performing QUARK’s obligations under this Agreement.


The above
indemnification shall not apply to the extent that any Losses are due to a
material breach of any of ALNYLAM’s representations, warranties, covenants
and/or obligations under this Agreement.






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
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7.2                                 Insurance.  With respect to its activities under this
agreement, QUARK will secure and maintain in full force and effect throughout
the term of this Agreement (and for at least   
[ * ] thereafter for claims made
coverage), the following types and amounts of insurance coverage with carriers
having a minimum AM Best rating of A, with per claim deductibles that do not
exceed twenty thousand U.S. dollars ($20,000):


Comprehensive
General Liability and Personal Injury, including coverage for contractual
liability assumed by QUARK and coverage for QUARK independent contractor(s),
with limits of at least [ * ] per
occurrence and a general aggregate limit of [ * ].


Umbrella
Liability, exclusive of the coverage provided by the policies listed above,
with a limit of at least [ * ].


Products/Clinical/Professional
Liability, exclusive of the coverage provided by the Comprehensive General
Liability policy, with an aggregate limit of at least     [ * ] with
ALNYLAM to be named as an additional insured party with respect to each
Licensed RNAi Product under such coverage.


Notwithstanding the above, the obligations under this Section 7.2 shall
not apply to (i) QUARK after such time that QUARK achieves aggregate annual
revenues for all pharmaceutical and diagnostic products in excess of [ * ], or (ii) any Affiliate or Sublicensee that has aggregate
annual revenues for all pharmaceutical and diagnostic products in excess of one
billion U.S. dollars [ * ]; provided,
however, that QUARK shall provide written notice to ALNYLAM at such time
as it determines this Section is in effect.


ARTICLE VIII —
EXPORT


8.1                                 General.  The Parties acknowledge that the exportation
from the United States of materials, products and related technical data (and
the re-export from elsewhere of United States origin items) may be subject to
compliance with United States export laws, including without limitation the
United States Bureau of Export Administration’s Export Administration
Regulations, the Act and regulations of the FDA issued thereunder, and the
United States Department of State’s International Traffic and Arms Regulations
which restrict export, re-export, and release of materials, products and their
related technical data, and the direct products of such technical data.  The Parties agree to comply with all
applicable exports laws and to commit no act that, directly or indirectly,
would violate any United States law, regulation, or treaty, or any other
international treaty or agreement, relating to the export, re-export, or
release of any materials, products or their related technical data to which the
United States adheres or with which the United States complies.


8.2                                 Delays.  The Parties acknowledge that they cannot be
responsible for any delays attributable to export controls which are beyond the
reasonable control of either Party.


8.3                                 Assistance.  The Parties agree to provide assistance to
one another in connection with each Party’s efforts to fulfill its obligations
under this Article VIII.






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT
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ARTICLE IX — TERM
AND TERMINATION


9.1                                 Term.  This Agreement will remain in effect until it
expires as set forth in Section 9.2 unless terminated in accordance with this
Article IX.


9.2                                 Expiration.  Unless terminated earlier, this Agreement
will expire at the end of the Term.


9.3                                 Material
Breach.


(a)                                  ALNYLAM
will have the right to terminate this Agreement, upon written notice to QUARK,
in the event QUARK materially breaches its obligations under this Agreement and
does not remedy such breach within [ * ] after
receipt of written notice from ALNYLAM specifically identifying the breach and
stating that ALNYLAM intends to terminate the Agreement if QUARK fails to
remedy the breach within the [ * ] time
period.


(b)                                 In
the event that ALNYLAM materially breaches its obligations under this
Agreement, and does not remedy such breach within [ * ]
after receipt of written notice from QUARK specifically identifying the breach,
[ * ].


9.4                                 Termination
by QUARK.  QUARK will have the right
to terminate this Agreement for any reason upon [ * ]
prior written notice to ALNYLAM.


9.5                                 Consequences
of Termination; Survival.  Subject to
Section 9.6, in the event this Agreement is terminated under Section 9.4 above,
or by ALNYLAM under Section 9.3(a) above, all licenses and rights granted by
ALNYLAM to QUARK under this Agreement will terminate; provided, however,
that to the extent such licenses and rights are required in respect of clinical
trials that are ongoing and cannot reasonably be terminated promptly due to
health or safety reasons or the requirements of applicable law, such licenses
and rights will continue in effect until such clinical trials are properly
terminated.  Expiration or termination of
this Agreement shall not relieve the Parties of any obligation accruing prior
to such expiration or termination.  Any
expiration or termination of this Agreement shall be without prejudice to the
rights of either Party against the other accrued or accruing under this
Agreement prior to expiration or termination, including without limitation the
obligation to pay royalties for Licensed RNAi Product sold prior to such expiration
or termination.  The provisions of
Article V shall survive the expiration or termination of this Agreement and
shall continue in effect as applicable for [ * ] from the
date of initial disclosure.  In addition,
the provisions of Article VII and Article X (other than 10.1), and Sections 9.5
and 9.6 shall survive any expiration or termination of this Agreement.


9.6                                 License
upon Termination.  Upon any
termination of this Agreement pursuant to Sections 9.3, ALNYLAM shall enter
into an agreement containing substantially the same provisions as this
Agreement with any Sublicensees of QUARK existing at the time of such
termination, covering the RNAi Products that had been licensed to such
Sublicensee by QUARK, provided that at the time of any termination of this
Agreement, such Sublicensees are in full compliance with the terms and
conditions of the sublicense 






[ * ]  = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
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                                                agreement.  ALNYLAM acknowledges that such Sublicensees
of QUARK that are then in full compliance with the terms and conditions of
their respective sublicense agreement are third party beneficiaries of this
Agreement, including this Section 9.6.


ARTICLE X — MISCELLANEOUS


10.1                           Representations
by QUARK and ALNYLAM.


(a)                                  Subject
to Section 10.1 (e) below, each Party hereby represents and warrants to the
other Party as of the Effective Date:


(i)                                     Such
Party is a corporation duly organized under the laws of the state of its
incorporation, and has all necessary power and authority to conduct its
business in the manner in which it is currently being conducted, to own and use
its assets in the manner in which its assets are currently owned and used, and
to enter into and perform its obligations under this Agreement.


(ii)                                  The
execution, delivery and performance of this Agreement has been duly authorized
by all necessary action on the part of such Party and its Board of Directors
and no consent, approval, order or authorization of, or registration,
declaration or filing with any third party or governmental authority is
necessary for the execution, delivery or performance of this Agreement.


(iii)                               This
Agreement constitutes the legal, valid and binding obligation of such Party,
enforceable against it in accordance with its terms, subject to (A) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (B) rules of law governing specific performance, injunctive relief
and other equitable remedies.


(b)                                 QUARK
represents and warrants to ALNYLAM that as of the Effective Date:


(i)                                     Neither
QUARK nor any of its Affiliates has been found in breach of any laws or
regulations governing the production of medicinal products in the United States
or any other jurisdiction within the Territory.


(ii)                                  Neither
QUARK nor any of its Affiliates has been debarred (nor is QUARK or any of its
Affiliates using in any capacity in connection with its activities under this
Agreement any person who has been debarred) by the FDA from working for or
providing services to any pharmaceutical or biotechnology company under Section
306 of the United States Food, Drug and Cosmetic Act.


(iii)                               QUARK
has never approved or commenced any proceeding, or made any election
contemplating, the winding up or cessation of QUARK’s business or affairs or
the assignment of QUARK’s material assets for the benefit of creditors.  To QUARK’s knowledge, no such proceeding is
pending or






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                                                threatened.


(c)                                  QUARK
acknowledges and agrees that ALNYLAM has not made any representation or
warranty that it has or can provide all the rights that are necessary or useful
to Research, Develop or Commercialize (as applicable) a Licensed RNAi Product.


(d)                                 ALNYLAM
represents and warrants to QUARK that as of the Effective Date of this
Agreement it has the right to grant QUARK, its Affiliates and Sublicensees the
licenses granted hereunder and has not granted any conflicting rights to any
other person or entity.  ALNYLAM has
delivered to QUARK a true and complete copy (except for the redaction of
financial and other information not relevant to QUARK’s understanding of its
rights and obligations under this Agreement) of each in-license identified on
Exhibit B of this Agreement.  ALNYLAM
shall maintain such in-licenses in effect and shall not amend any such in-license
in a manner that is detrimental to the rights of QUARK under this Agreement
without the prior written consent of QUARK.


10.2                           Dispute
Resolution; Arbitration Procedures.


(a)                                  In
the event of any dispute, controversy or claim arising out of or relating to
this Agreement or the breach thereof, the Parties will try to settle such
dispute, controversy or claim amicably between themselves, including referring
such dispute, controversy or claim to the Chief Operating Officer of ALNYLAM or
his designee, and the Chief Executive Officer of QUARK, or any other officer
designated by such Chief Executive Officer. 
In the event that after [ * ] the
designated officers of both Parties fail to resolve the matter, either Party
may submit such dispute, controversy or claim that is not an “Excluded Claim”
for resolution by binding arbitration under the Rules of Arbitration of the
International Chamber of Commerce. 
Judgment on the arbitration award may be entered in any court of
competent jurisdiction.  The arbitration
will be conducted in New York, New York and the language of all communications
and proceedings relating to the arbitration will be English.


(b)                                 The
arbitration shall be conducted by a panel of three persons experienced in the
pharmaceutical business.  Within thirty
(30) days after initiation of arbitration, each Party shall select one person
to act as arbitrator and the two Party-selected arbitrators shall select a
third arbitrator within thirty (30) days of their appointment.  If the arbitrators selected by the Parties
are unable or fail to agree upon the third arbitrator, the Parties shall select
two replacement arbitrators to replace the arbitrators originally selected,
which replacement arbitrators shall select a third arbitrator within thirty
(30) days of their appointment.  The
Parties agree (a) to meet with the arbitrator(s) within thirty (30) days of
selection and (b) to agree at that meeting or before upon procedures for
discovery and as to the conduct of the hearing which will result in the hearing
being concluded within no more than six (6) months after selection of the
arbitrator(s) and in the award being rendered within thirty (30) days of any
post-hearing briefing, which briefing will 






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                                                be
completed by both sides within thirty (30) days after the conclusion of the
hearings, or within sixty (60) days of the conclusion of the hearings if there
is no post-hearing briefing.   In the
event the Parties cannot agree upon procedures for discovery as set forth in
(a) above, the arbitrator(s) shall provide that discovery be limited so that
the schedule may be met without difficulty and so that neither side obtains
more than a total of twenty-five (25) hours of deposition testimony from all
witnesses, including both fact and expert witnesses, or serves more than ten (10)
individual requests for documents or ten (10) individual requests for admission
or interrogatories.  In no event will the
arbitrator(s), absent agreement of the Parties, allow more than three (3) days
per side for the hearing or more than a total of six (6) days for the
hearing.  Multiple hearing days will be
scheduled consecutively to the greatest extent possible.


(c)                                  Either
Party may apply to the arbitrators for interim injunctive relief until the
arbitration award is rendered or the controversy is otherwise resolved.  Either Party also may, without waiving any
remedy under this Agreement, seek from any court having jurisdiction any
injunctive or provisional relief necessary to protect the rights or property of
that Party pending the arbitration award. 
The arbitrators shall have no authority to award punitive or any other
type of damages not measured by a Party’s compensatory damages.  Each Party shall bear its own costs and
expenses and attorneys’ fees and an equal share of the arbitrators’ fees and
any administrative fees of arbitration.


(d)                                 Except
to the extent necessary to confirm an award or as may be required by law,
neither a Party nor an arbitrator may disclose the existence, content, or
results of an arbitration without the prior written consent of both
Parties.  In no event shall an
arbitration be initiated after the date when commencement of a legal or
equitable proceeding based on the dispute, controversy or claim would be barred
by the applicable New York statute of limitations.


(e)                                  The
Parties agree that, in the event of a dispute over the nature or quality of
performance under this Agreement, neither Party may terminate this Agreement
until final resolution of the dispute through arbitration or other judicial
determination.  The Parties further agree
that any payments made pursuant to this Agreement pending resolution of the
dispute shall be refunded if an arbitrator or court determines that such
payments are not due.


(f)                                    As
used in this Section 10.2, the term “Excluded Claim” shall mean a dispute,
controversy or claim that concerns (a) the validity or infringement of a
patent, trademark or copyright; or (b) any antitrust, anti-monopoly or
competition law or regulation, whether or not statutory.  Excluded Claims shall be resolved in a court
of competent jurisdiction.


10.3                           Publicity.  No disclosure of the existence of, or the
terms of, this Agreement may be made by either Party, and no Party shall use
the name, trademark, trade name or logo of the other Party or its employees in
any publicity, news release or disclosure relating to this Agreement or its
subject matter, without the prior express written permission of the 






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                                                other
Party, except as may be required by law or as set forth in this Section 10.3.
The Parties acknowledge and agree that, upon and following the Effective Date,
one or both of the Parties intends to issue a press release announcing the
execution of this Agreement. 
Notwithstanding the foregoing, the Parties agree to consult with each
other reasonably and in good faith with respect to the text and timing of such
press releases prior to the issuance thereof. 
Either Party may issue such press releases or otherwise make such public
statements or disclosures (such as in annual reports to stockholders or filings
with the Securities and Exchange Commission) as it determines, based on advice
of counsel, are reasonably necessary to comply with applicable laws and
regulations.  In addition, following any
initial press release(s) announcing this Agreement or other public disclosure
approved by both Parties, either Party shall be free to disclose, without the
other Party’s prior written consent, the existence of this Agreement, the
identity of the other Party and those terms of the Agreement which have already
been publicly disclosed in accordance herewith.


10.4                           Force
Majeure.  No failure or omission by
the Parties in the performance of any obligation of this Agreement will be
deemed a breach of this Agreement or create any liability if the same will
arise from any cause or causes beyond the control of the Parties, including,
but not limited to, the following: acts of God; acts or omissions of any
government; any rules, regulations or orders issued by any governmental
authority or by any officer, department, agency or instrumentality thereof;
fire; flood; storm; earthquake; accident; war; rebellion; insurrection; riot;
and invasion.  The affected Party shall
notify the other Party of such force majeure circumstances as soon as
reasonably practical, and shall promptly undertake all reasonable efforts
necessary to cure such force majeure circumstances.


10.5                           Consequential
Damages.  NEITHER PARTY (INCLUDING
ITS AFFILIATES AND SUBLICENSEES) SHALL BE LIABLE UNDER THIS AGREEMENT FOR ANY
SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR FOR LOSS OF PROFIT OR LOST
REVENUE, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.  NOTWITHSTANDING THE FOREGOING,
NOTHING IN THIS SECTION 10.5 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE
INDEMNIFICATION RIGHTS OF A PARTY OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF
CONFIDENTIALITY OBLIGATIONS IN ARTICLE V.


10.6                           Assignment.


(a)                                  This
Agreement and any of its rights and obligations may not be assigned or
otherwise transferred by either Party without the prior written consent of the
other Party, which consent may not be unreasonably withheld, delayed or
conditioned; provided, however, that either Party may assign this
Agreement, without the consent of the other Party, in connection with such
Party’s merger, consolidation or transfer or sale of all or substantially all
of the assets of such Party; provided further that the successor,
surviving entity, purchaser of assets, or transferee, as applicable, expressly
assumes in writing such Party’s obligations under this Agreement.  Any purported assignment in contravention of
this Section 10.6 shall, 






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                                                at
the option of the non-assigning Party, be null and void and of no effect.


(b)                                 This
Agreement will be binding upon and inure to the benefit of the Parties and
their permitted successors and assigns.


10.7                           Notices.


Notices to ALNYLAM
will be addressed to:


Alnylam Pharmaceuticals, Inc.


300 Third Street


Cambridge, Massachusetts  02142


U.S.A.


Attention: Chief Operating Officer


Facsimile No.:
(617) 551-8101


With copy to:


Faber Daeufer & Rosenberg PC


950 Winter Street, Suite 4500


Waltham, Massachusetts  02451


Attention: James R. McGarrah,
Esq.


Facsimile No.:
(781) 795-4747


Notices to QUARK
will be addressed to:


Quark Biotech Inc.


6536 Kaiser Avenue


Fremont, CA 94555


Attention: Chief Executive Officer


Facsimile
No.:  (510) 402-4021


With copy to:


Cooley Godward LLP


Five Palo Alto Square


3000 El Camino Real


Palo Alto, CA  94306


Attention: Robert L. Jones, Esq.




Facsimile No.:
(650) 849-7400


Any Party may change
its address by giving notice to the other Party in the manner provided in this
Section 10.7.  Any notice required or
provided for by the terms of this Agreement will be in writing and will be (a)
sent by certified mail, return receipt requested, postage prepaid, (b) sent via
a reputable international express courier service, or (c) sent by facsimile
transmission, with a copy by regular mail. 
The effective date of the notice will be the actual date of receipt by
the receiving Party.






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10.8                           Independent
Contractors.  It is understood and
agreed that the relationship between the Parties is that of independent
contractors and that nothing in this Agreement will be construed as
authorization for either Party to act as the agent for the other Party.


10.9                           Governing
Law; Jurisdiction.  This Agreement
will be governed and interpreted in accordance with the substantive laws of the
State of New York, notwithstanding the provisions governing conflict of laws
under such law of the State of New York to the contrary, provided that matters
of intellectual property law will be determined in accordance with the national
intellectual property laws relevant to the intellectual property in
question.  Each Party agrees to submit to
the jurisdiction of the state and federal courts located in the State of New
York and waives any defense of inconvenient forum to the maintenance of any
action or proceeding in such courts.


10.10                     Severability.  In the event that any provision of this
Agreement is held by a court of competent jurisdiction to be unenforceable
because it is invalid or in conflict with any law of the relevant jurisdiction,
the validity of the remaining provisions will not be affected and the rights
and obligations of the Parties will be construed and enforced as if the
Agreement did not contain the particular provisions held to be unenforceable,
provided that the Parties will negotiate in good faith a modification of this
Agreement with a view to revising this Agreement in a manner which reflects, as
closely as is reasonably practicable, the commercial terms of this Agreement as
originally signed.


10.11                     No
Implied Waivers.  The waiver by
either Party of a breach or default of any provision of this Agreement by the
other Party will not be construed as a waiver of any succeeding breach of the
same or any other provision, nor will any delay or omission on the part of
either Party to exercise or avail itself of any right, power or privilege that
it has or may have hereunder operate as a waiver of any right, power or
privilege by such Party.


10.12                     Entire
Agreement.  This Agreement, along
with that certain Confidential Disclosure Agreement by and between the Parties
dated as of June 1, 2004, as amended, and the related License Agreement by and
between the Parties of even date herewith related to the Target and covering
sublicense of patent rights owned by Cancer Research Technology Limited,
constitute the entire agreement between the Parties with respect to its subject
matter and supersedes all previous written or oral representations, agreements
and understandings between the Parties. 
This Agreement may be amended only by a writing signed by both Parties.


10.13                     Counterparts.  This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument.






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IN WITNESS
WHEREOF, the Parties hereto have set their hand as of the Effective Date.


 


	
   

  	
  ALNYLAM PHARMACEUTICALS, INC.



  
	
   

  	
  By:

  	
  /s/ Barry Greene

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  QUARK BIOTECH INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Daniel Zurr

  
	
   

  	
   

  	
  Name: Daniel Zurr, Ph.D.

  
	
   

  	
   

  	
  Title: President and CEO

  



 






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EXHIBIT A



ALNYLAM Patent Rights


Group I




	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  






 


Group II 


	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  	
  [ * ]

  



 






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EXHIBIT
B


IN-LICENSES
COVERING ALNYLAM PATENT RIGHTS


 


[ * ]






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APPENDIX
I


TARGET


RTP 801


[ * ]


`






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OF 1933, AS AMENDED.


 


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