Exhibit
10.24


 


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


 


AGREEMENT


 


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


 


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


 


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


 


1.             Definitions


 


The following terms shall have the following meanings as used in this
Agreement:


 


Clinical
Trial:  A human
clinical trial conducted pursuant to an IND or its equivalent, including a
human clinical trial conducted under physician–sponsored IND or its equivalent.


 


Effective
Date:  April 2, 2004.


 


IND:                      An
Investigational New Drug application (as defined in the U.S. Food, Drug and
Cosmetics Act and regulations promulgated thereunder), any successor
application or any foreign equivalent.


 


Net
Sales:                                        With
respect to a Pretarget Product, the [*] invoiced by Aletheon, its affiliates
and licensees for the sale of such Pretarget Product or other disposition of
such Pretarget Product, less (a) [*] and separately stated on the invoice, (b)
credits actually given in the ordinary course for [*], and (c) [*] separately
itemized on the invoice for shipping the Pretarget Product to independent third
parties.  Net Sales shall not include
any transfer between Aletheon and its affiliates for resale, but shall include
the resale from its affiliates.  Any
Pretarget Product sold or otherwise disposed of in other than an arm’s-length
transaction or for other property (e.g., barter) shall be deemed invoiced at
its fair market value in the country of sale or disposition.


 


Pivotal Clinical Trial:  A Clinical Trial of a product on a
sufficient number of human subjects done primarily to support an application
for Regulatory Approval to market the product for the proposed therapeutic
indication regardless of the outcome of the Regulatory Approval process.


 


1

















 


Pretarget
Intellectual Property: 
Pretarget Patents and Pretarget Trademarks.


 


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


 


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


 


Pretarget
Trademarks:  Trademark
registrations and applications, owned or controlled by NeoRx, and set forth in
Schedule B, and all goodwill associated therewith.


 


Regulatory
Approval: The action by a regulatory body which is required
before legal commercial sale or use of a product in a regulatory jurisdiction,
for example, approval by the United States Food and Drug Administration in the
United States.


 


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


 


2.                                      Assignment


 


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


 


3.             Milestone
Payments, Royalties and Outlicensing Fees 


 


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


 


Milestone Payments


 


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


 


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


 


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


 


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


 


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


 


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


 


(g)         [*] within 30 days of the
Regulatory Approval in any country of a Pretarget Product for a first
indication;


 


(h)         [*] within 30 days of the
Regulatory Approval in any country of a Pretarget Product for a second
indication;


 


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


 


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


 


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


 


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


 


Royalties


 


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


 


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


 


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


 


3

















 


Outlicensing Fees


 


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


 


Late Fees


 


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


 


4.             Third
Party Licenses


 


NeoRx agrees to promptly request consent from each of its licensors of
Third Party Licenses to assign the licenses to Aletheon, and to reasonably
cooperate in such assignment, but shall not be responsible for any additional
payments such licensors may seek to impose for such assignments.  NeoRx shall assign to Aletheon all of
NeoRx’s right, title and interest under the Third Party Licenses for which
NeoRx obtains such consent, which consent shall include the release of NeoRx
from any future liability under the Third Party Licenses, and Aletheon shall
assume all of NeoRx’s liabilities and obligations arising under such Third
Party Licenses after the effective date of the assignment.  NeoRx is not required to grant sublicenses
under any of its existing agreements related to the Pretarget Intellectual
Property and shall not be required to assign its agreement with the [*] unless
Aletheon pays all costs incurred or to be incurred by NeoRx to assign such
agreement.


 


5.             Due
Diligence, Progress Reports, Term and Termination


 


Due Diligence


 


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


 


4

















 


Progress Reports


 


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


 


6.             Royalty
Reports; Audits


 


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


 


7.             Acknowledgement
and Warranties; Disclaimer; Indemnification


 


Each Party warrants that it has the authority to enter into this
Agreement and that its entry into or performance of this Agreement does not
conflict with any other agreement, instrument or understanding, oral or
written, to which it is a party or is bound.


 


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


 


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


 


5

















 


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


 


EXCEPT AS SET FORTH IN THIS AGREEMENT, NEORX MAKES NO OTHER
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PRETARGET INTELLECTUAL
PROPERTY, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, PATENTABILITY AND NONINFRINGEMENT.


 


Aletheon shall indemnify, defend and hold harmless NeoRx and its directors,
officers, employees and agents and their respective successors and assigns from
and against all liabilities, damages, losses and expenses (including, without
limitation, reasonable attorneys’ fees) arising from or attributable to (a) the
development, manufacture, distribution, use
or sale of Pretarget Products or
Pretarget Intellectual Property by Aletheon or its affiliates or licensees,
and (b) any performance or non-performance of the Third Party Licenses assigned
to Aletheon under this Agreement occurring after the effective date of the
assignment.


 


8.             Governing
Law and Jurisdiction


 


This Agreement is governed by the laws of the State of Washington
without reference to its choice of law principles to the contrary and both
parties submit to the jurisdiction of state and federal courts located in King
County, Washington for any disputes arising from this Agreement.


 


9.             Security
Interest


 


Aletheon hereby grants NeoRx a security interest in the Pretarget
Patents and all proceeds, income, royalties and other payments now or hereafter
due and payable with respect thereto (“Collateral”) to secure the payment of
all present and future royalties, milestones, and outlicensing fees payable
under this Agreement, as it may be amended from time to time.  Aletheon authorizes NeoRx to file and record
under the Uniform Commercial Code (“UCC”) and with the United States Patent and
Trademark Office financing statements, amendments and other documents deemed
reasonably necessary by NeoRx to evidence, perfect and maintain the security
interests created hereby.  Aletheon
shall cooperate with NeoRx in the timely execution and filing of such
documents.  Upon the failure of Aletheon
to pay any such amounts when due under this Agreement (after written notice
thereof and a thirty day cure period), NeoRx shall have the rights and remedies
of a secured party under the UCC; provided, however, that NeoRx shall not
terminate the rights of an assignee or licensee of Aletheon’s interests in the
Pretarget Patents if (a) such assignee or licensee agrees to pay, and does pay,
directly to NeoRx the royalties and milestones due under this Agreement that
are associated with, or arise from, its use of the


 


6

















 


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


 


10.          Assignment


 


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


 


11.          Confidentiality
and Publicity


 


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


 


12.          Severability


 


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


 


13.          Waiver


 


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


 


14.          Compliance
with Laws 


 


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


 


7

















 


15.          Notice


 


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


 


In the case of NeoRx:


 


NeoRx Corporation


300 Elliott Avenue W., Suite 500


Seattle, WA 98119-4114


Attention: 
Vice President, Legal


Telephone: 
(206) 286-2526

Facsimile:  (206) 286-2537


 


 


In the case of Aletheon:


 


Aletheon Pharmaceuticals, Inc.


c/o Heller Ehrman White & McAuliffe LLP


701 5th Avenue, Suite 6100


Seattle, WA 98104


Attention: 
Debra Leith


Telephone: 
(206) 389-6017


Facsimile: (206) 447-0849


 


16.          Entire
Agreement


 


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


 


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


 


8

















 


	
   

  	
  Aletheon
  Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Donald B. Axworthy

  	
   

  
	
   

  	
   

  	
  Donald B. Axworthy

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NeoRx
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jack L. Bowman

  	
   

  
	
   

  	
   

  	
  Jack L. Bowman

  
	
   

  	
   

  	
  Chief Executive Officer

  
							



 


9

















 


SCHEDULE A


Pretarget Patents


 


[*]


 


10

















 


SCHEDULE B


Pretarget Trademarks


 


[*]


 


11

















 


SCHEDULE C


Third Party Licenses


 


[*]


 


12