[
* ] = 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.

     

     Exhibit
10.38

    


    
      
        
          	 
      	
                  Pfizer
      Inc

                
	 
      	
                  235
      East 42nd
      Street

                
	 
      	
                  New
      York, New York 10017

                
	 
      	 
      
	 
      	
                  Global
      Research &
Development

                


        

      

    

    


    May 19,
2008

    


    Daniel
Zurr, Ph.D.

    President
and Chief Executive Officer

    Quark
Pharmaceuticals, Inc.

    6501
Dumbarton Circle

    Freemont,
CA 94555

    


    RE:  Amendment
to License Agreement by and between Quark Biotech, Inc. and Pfizer Inc., dated
September 25, 2006 and effective November 16, 2006.

    


    Dear Dr.
Zurr:

    


    As you
are aware, Quark Pharmaceuticals, Inc. (formerly Quark Biotech, Inc. and
hereinafter referred to as “Quark”) and Pfizer Inc. (“Pfizer”) have transferred
from Quark to Pfizer the United States Investigational Drug Application number
[*], Study QRK.003, titled “A PHASE I OPEN-LABEL, DOSE ESCALATION TRIAL OF
REDD14NP DELIVERED BY A SINGLE INTRAVITREAL INJECTION TO PATIENTS WITH CHOROIDAL
NEOVASCULARIZATION (CNV) SECONDARY TO EXUDATIVE AGE-RELATED MACULAR DEGENERATION
(“WET AMD”)” (hereinafter referred to as the “QRK.003 Study”).

    


    In
conjunction with the transfer of the QRK.003 Study to Pfizer, Quark and Pfizer
now wish to amend the License Agreement by and between Quark and Pfizer dated
September 25, 2006 and effective November 16, 2006 (the “Agreement”) to clarify
certain responsibilities of Quark in connection with the QRK.003 Study and
certain subsequent clinical studies commenced by Pfizer.  The parties
wish to memorialize such agreements by signing this letter (the “Letter
Amendment”), effective as of January 25, 2008, which sets forth the terms of an
amendment to the Agreement.  All capitalized terms used herein shall
have the meaning given to them in the Agreement, unless otherwise defined
herein.

    


    
      
        
          	  	
                  1.

                	
                  Section
      4.3A Development
      Services Provided by Quark [*].  The Agreement is hereby
      amended to include a new Section 4.3A immediately after Section 4.3, which
      Section 4.3A shall read as
follows:

                


        

      

    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    “Section
4.3A     Development Services
Provided by Quark [*].  In addition to the development work
contemplated by Section 4.3, Quark will provide Pfizer with various clinical
research-related services and assistance (such services and assistance
collectively referred to as the “Services”) in connection with the following
Pfizer-sponsored clinical trials for REDD14NP:  (i) [*], (ii) [*],
(iii) [*], (iv) [*], and (v) any other [*] clinical trials that may be conducted
(the clinical trials described in subclauses (i) through (v), collectively
referred to as the “Pfizer Studies” and individually referred to as a “Pfizer
Study”), in each case as further provided below.

    


    
      	
               
      

            	
              (a)

            	
              Services.  A
      description of the Services to be provided by Quark to Pfizer is set forth
      on Attachment
      A hereto.  Quark will establish a special team composed
      of personnel [*] who will perform the Services.  Such team will
      perform the Services.

            


    

    
      	
               
      

            	
              (b)

            	
              Performance of
      Services.  Quark will perform the Services (i) according
      to the protocols for each respective Pfizer Study, (ii) in compliance with
      all applicable laws and governmental regulations including ICH Good
      Clinical Practices, and (iii) in compliance with Pfizer Standard Operating
      Procedures (“SOPs”) or Quark-provided SOPs that have been prospectively
      approved, in writing, by Pfizer.

            


    

    
      	
               
      

            	
              (c)

            	
              Compensation.

            


    

    
      	
               
      

            	
              i.

            	
              Services and Estimated
      Budget.  Pfizer will pay Quark for Services rendered in
      accordance with Section 4.3A(c)(iii) through Section 4.3A(c)(vi) below and
      a written estimated budget for each calendar year.  The parties
      agree that Attachment A
      specifies the Services to be rendered by Quark during the calendar year
      2008 and that Attachment B
      includes two estimated budgets for such Services to be rendered in 2008,
      where each budget assumes [*].

            


    

    
      	
               
      

            	
              ii.

            	
              Annual Budget
      Update.  On an annual basis (no later than [*] of each
      calendar year), Quark and Pfizer will review the Services to be rendered
      by Quark during the next calendar year and will agree on the appropriate
      budget therefor.  Once agreed by the parties, the new budget
      will become effective on [*] of the next calendar year and will be in full
      force during such calendar year.

            


    

    
      	
               
      

            	
              iii.

            	
              Invoices.  Quark
      will request payments for Services rendered by means of monthly
      invoices.  The parties have agreed that Quark will invoice
      Pfizer in the amount of [*] ($[*]) each month (the “Monthly Quark
      Personnel Payment”), beginning with the [*] and continuing through the
      [*], as compensation for the personnel costs incurred by Quark for
      Services performed by Quark personnel.  Upon the parties’
      agreement on the budget for Services for each subsequent calendar year in
      accordance with Section 4.3A(c)(ii), the parties will agree on the Monthly
      Quark Personnel Payment that Quark will invoice Pfizer each month during
      such calendar year as compensation for the personnel costs incurred by
      Quark for Services performed by Quark personnel.  From time to
      time, the parties may adjust the Monthly Quark Personnel Payment pursuant
      to Section 4.3A(c)(v).  The parties have agreed that in addition
      to the Monthly Quark Personnel Payment, Quark will invoice Pfizer each
      month the actual amounts invoiced by Third Parties to Quark for services
      rendered by such Third Parties and for all other out-of-pocket costs
      incurred by Quark including, without limitation, travel costs and
      consulting expenses as set forth in the budgets contained in Attachment B,
      in each case for the performance of Services (collectively, such
      out-of-pocket costs, “Pass Through
Costs”).

            


    

    


    [
* ] = 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
-

        
          

        

      

      
         


      

    

    


    
      	
               
      

            	
              iv.

            	
              Reporting and
      Reconciliation.  For the months of [*] of each calendar
      year, Quark will provide for the preceding [*], (a) a detailed accounting
      of actual Services rendered and (b) amounts received from
      Pfizer.  Quark will reconcile the actual Services rendered
      against amounts received from Pfizer during such [*] period, and Quark
      will make any necessary adjustments to the invoices [*], including credits
      to Pfizer for any over-payments by Pfizer and charges or debits against
      Pfizer for any under-payments by Pfizer during the preceding [*]
      months.  The [*] invoices must be sufficiently detailed (with
      the same level of detail as provided in the budgets contained in Attachment B or
      any amendment thereto) to identify the nature, timing and extent of
      Services rendered, and [*] estimated budget for the calendar
      year.  Notwithstanding anything to the contrary in the
      foregoing, the parties have agreed that for 2008, Quark will reconcile the
      actual Services rendered against amounts received from Pfizer for such
      Services in the [*] invoices.  The mechanics of such
      reconciliation will be the same as described above except that each
      reconciliation period shall be for the preceding [*] months instead of the
      preceding [*] months.

            


    

    
      	
               
      

            	
              v.

            	
              Adjustments to Monthly
      Quark Personnel Payment.  If, as a result of the
      reconciliation described in Section 4.3A(c)(iv), the parties determine
      that the difference between the actual Services rendered and the amount
      received from Pfizer for such Services during such [*] (or [*], as
      applicable) month period is [*] or more ([*]) (the “Adjustment
      Threshold”), then the parties will negotiate in good faith a new Monthly
      Quark Personnel Payment that Quark will invoice Pfizer each subsequent
      month as compensation for the personnel costs incurred by Quark for
      Services performed by Quark personnel.  If the difference
      between the actual Services rendered and the total amount received from
      Pfizer for such Services during such [*] (or [*], as applicable) month
      period is less than the Adjustment Threshold, then no adjustments will be
      made to the then-existing Monthly Quark Personnel Payment.  If
      the parties commence negotiations for a new Monthly Quark Personnel
      Payment but are unable to agree on such new Monthly Quark Personnel
      Payment before Quark invoices Pfizer for Services rendered in the month
      following reconciliation, then, the parties hereby agree that Quark will
      invoice Pfizer in the amount of the Monthly Quark Personnel Payment
      existing as of the date of the reconciliation and the parties will
      continue to negotiate in good faith a new Monthly Quark Personnel
      Payment.

            


    

     

    
      [
* ] = 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
-

        
          

        

      

      
         


      

    


    
      	
               
      

            	
              vi.

            	
              Payment.  Unless
      a different time interval or payment mechanism is specified in Attachment B or
      any amendment thereto, Pfizer will pay all such invoices in accordance
      with Section 6.4.  If Pfizer disputes one or more Pass Through
      Costs contained in any monthly invoice or the reconciliation of actual
      Services rendered against amounts received from Pfizer in any [*] invoice
      (as applicable), Pfizer will pay the undisputed amount in accordance with
      Section 6.4 and shall pay the remaining amount determined to be due, if
      any, within [*] after Pfizer and Quark, acting in good faith, resolve the
      dispute.  The parties agree that Pfizer will not dispute any
      Monthly Quark Personnel Payment contained in any monthly
      invoice.

            


    

    
      	
               
      

            	
              (d)

            	
              Cancellation of
      Services.  Pfizer may cancel the Services in relation to
      one Pfizer Study or all Pfizer Studies under this Section 4.3A, [*],
      before completion of a particular Pfizer Study by [*] advance written
      notice to Quark.  In the event of any termination or
      cancellation of the Services or part thereof, the provision regarding
      accrued obligations described in Section 13.2 will apply.  For
      the avoidance of doubt, Pfizer will remain responsible for any
      indebtedness, liability or other obligation incurred hereunder by Quark in
      providing such Services, including without limitation any unavoidable
      wind-down costs associated with the termination or cancellation of the
      Services, whether incurred during the [*] notice period or
      thereafter.”

            


    

    


    2.  Section
4.13  Quark as Agent on Behalf of Pfizer.   The
Agreement is hereby amended to include a new Section 4.13 to read as
follows:

    


        “Section
4.13  Quark
as Agent of Pfizer.  Pfizer hereby appoints Quark, and Quark
hereby accepts such appointment, as Pfizer’s agent for the purpose of carrying
out the responsibilities assigned to Quark in the third party agreements listed
on Attachment C
to the extent such responsibilities relate to REDD14NP.  Quark will
act as an agent of Pfizer, at Pfizer’s sole expense, with respect to each of the
foregoing agreements beginning on [*] and ending, on an agreement-by-agreement
basis, on the earlier of (a) the date when [*], (b) the date when [*], and (c)
the date when Pfizer gives written notice to Quark that Quark no longer needs to
serve as an agent of Pfizer for such agreement.  Pfizer hereby agrees
to continue reimbursing Quark, in accordance with Section 4.8, for all costs and
expenses incurred by Quark while serving as Pfizer’s agent with respect to the
agreements listed on Attachment C,
including without limitation liabilities incurred by Quark by reason of
providing such agency services [*].  For the avoidance of doubt, if
Pfizer notifies Quark that Quark no longer needs to serve as an agent of Pfizer
with respect to an agreement listed on Attachment C, Quark
shall have no further obligation to provide agency services to Pfizer with
respect to such agreement but Pfizer shall continue to reimburse Quark, in
accordance with Section 4.8, for all costs and expenses associated with the
research, development, manufacture and commercialization of Licensed Products
that are incurred by Quark pursuant to such agreement and that otherwise could
not be reasonably avoided.”

    


    Nothing
in this Letter Amendment is meant to subvert or otherwise alter the rights and
obligations of either Quark or Pfizer under the Agreement, except as and to the
extent expressly stated herein.  For the avoidance of doubt, all other
terms and conditions of the Agreement will remain in full force and
effect.

     

    
      [
* ] = 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
-

        
          

        

      

      
         


      

    

    


    If this
Letter Amendment is acceptable to you, please have an officer of your company
sign it below and return it to us.

    


    
      
        
          
            
              
                	 
      	Very
      truly yours,
	 
      	 
      	 
      
	 
      	PFIZER
      INC
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/ Edmund P. Harrigan

                      
	 
      	 
      	
                        Edmund
      P. Harrigan, M.D.

                      
	 
      	 
      	
                        Senior
      Vice President

                      
	 
      	 
      	
                        Worldwide
      Business
Development

                      


              

            

          

        

      

    

    


    
      
        
          
            	
                    AGREED:

                  	 
      
	 
      	 
      
	
                    QUARK
      PHARMACEUTICALS, INC.

                  	 
      
	 
      	 
      	 
      
	
                    By:

                  	
                    /s/ D. Zurr

                  	 
      
	 
      	 
      	 
      
	
                    Name: 

                  	
                    Daniel Zurr, Ph.D

                  	 
      
	 
      	 
      	 
      
	
                    Title:

                  	
                    President & CEO

                  	 
      
	 
      	 
      	 
      
	
                    Date:

                  	
                    22nd May 2008

                  	 
      


          

        

      

    

     

    
      [
* ] = 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.

    


    
      
         


      

      
        - 5
-

        
          

        

      

      
         


      

    


    Attachment
A

    


    REDD14
Clinical program -Support by Quark Pharmaceuticals for 2008

    


    [*]

     

    
      [
* ] = 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
-

        
          

        

      

      
        
        

      

    

     

    Attachment
B

    Initial
Budget

    


    [*]

     

    
      [
* ] = 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.

       

      
        
          
             


          

          
            - 7
-

            
              

            

          

          
             


          

        

      

      


    

    Attachment
C

    


    List
of Agreements for Which Quark Will Serve as Agent to Pfizer

    [*]

    
       

      [
* ] = 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.

    


    
      
         


      

      
        - 8
-