EXHIBIT 10.26


 










[ * ]  = 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.


 


DEED


 


AMENDMENT AND OPTION


 


This Deed of Amendment and Option (this “Amendment and
Option”) is dated as of September 25, 2006 among ATUGEN AG, (“Atugen”), a
corporation incorporated under the laws of Germany, Robert-Rössle-Str. 10,
D13125 Berlin Germany, QUARK BIOTECH, INC. (“QBI”), a corporation incorporated
under the laws of California, 6536 Kaiser Drive, Freemont CA 94555, USA, QBI
ENTERPRISES LTD (“QEL”), a corporation organized under the laws of Israel, Weizman
Science Park, P.O. Box 4071, Nes Ziona 70400, Israel (QBI and QEL collectively,
“Quark”), and PFIZER INC. (“Pfizer”), a corporation incorporated under the laws
of Delaware, 235 East 42nd Street, New York, NY 10017, USA.


 


WHEREAS, Atugen owns certain patents and/or patent
applications as well as related know-how, technology and scientific and
technical information relating to siRNA molecules directed to silencing the
RTP801 gene which have been licensed by Atugen to Quark pursuant to the Atugen
License (as hereinafter defined);


 


WHEREAS, Pfizer and Quark will be entering into the Quark
License (as hereinafter defined) relating to siRNA molecules directed to
silencing the RTP801 gene under which Quark grants to Pfizer, inter  alia,
exclusive sublicenses under patents and related know-how, and scientific and
technical information licensed by Atugen to Quark pursuant to the Atugen
License;


 


WHEREAS, in connection with the Quark License, Pfizer
has requested certain clarifications regarding the Atugen License; and


 


WHEREAS, in order to assure to Pfizer the full
enjoyment of all rights to be granted to Pfizer under the Quark License, Pfizer
desires to obtain an option to acquire under certain circumstances from Atugen
certain licenses from Atugen relating to siRNA molecules directed to silencing the
RTP801 gene.


 


NOW, THEREFORE, in consideration of the mutual
covenants and agreements provided herein, the parties have executed this
Amendment and Option:


 


I.      Definitions.
For purposes of this Amendment and Option the following definitions shall be
applicable:


 


 





















 


A.           Save
as otherwise provided herein, all terms defined in the License Agreement (as
hereinafter defined) when used herein shall have their defined meanings as
specified in the License Agreement.


 


B.             “Atugen
License” means the Collaboration Agreement, dated December 6, 2004, among Atugen,
QBI and QEL, as amended by the Amendment dated May 25, 2006.


 


C.             “Quark
License” means the license agreement between QBI and Pfizer in the form set
forth in Exhibit A, or such amended form upon which QBI and Pfizer may agree
from time to time, subject to Section III C below, attached hereto and made a
part hereof.


 


D.            “License
Agreement” means the license agreement between Atugen and Pfizer in the
form set forth in Exhibit B, attached hereto and made a part hereof, as amended
from time to time in accordance with its terms.


 


II.    Grant
of Option.   Atugen hereby grants to
Pfizer, and Pfizer hereby accepts, an option to acquire an exclusive license to
the Atugen Existing IP and the Joint Program IP subject to the terms and conditions
of the License Agreement. The terms of said license are those contained in the
License Agreement which shall become effective as provided herein. The option
granted hereunder shall be exercisable by Pfizer in the event the Atugen
License is terminated or under any circumstances under which Quark shall no
longer, pursuant to the Atugen License, have license rights to the Atugen
Existing IP or the Joint Program IP. Upon the occurrence of such termination of
the Atugen License or such loss of such license rights, Atugen shall promptly
notify Pfizer, and, within thirty (30) days of receipt of such notice, Pfizer
shall have the right, at its sole discretion, to exercise the option granted
hereunder. The option shall be exercised by Pfizer by sending a notice to Atugen,
stating Pfizer’s desire to exercise the option provided herein; thereafter Atugen
and Pfizer shall promptly sign and deliver in duplicate the License Agreement,
to be dated the date of such execution, whereupon the License Agreement shall
become effective as of the date on which Quark shall have no longer any license
rights to the Atugen Existing IP or the Joint Program IP.


 


III.   Amendment
of Atugen License and Approval and Terms of Quark License.


 


A.           Notwithstanding
to the contrary any provisions of the Atugen License, (i) Quark shall be deemed
to be in full compliance with the provisions of the Atugen License by entering
into and performing the Quark License in accordance with its terms, and (ii)
Pfizer shall have no obligations or liability to Atugen or to Quark pursuant to
the Atugen License.


 


B.             Atugen
hereby consents and agrees to the execution, delivery and performance by Quark
and Pfizer of the Quark License. To the extent
that any of the provisions of the Quark License are inconsistent or conflict
with the terms of the Atugen License, the terms of the Quark License shall take
precedence, and Atugen and Quark waive any such conflict. To the extent that
any of the provisions of the Quark License are inconsistent or conflict
with the terms of this Amendment and Option, the terms of this Amendment and Option
shall take precedence, and QBI and Pfizer waive any such conflict.


 










[ * ]  = 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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C.             Pfizer and Quark agree
not to amend or modify Sections 1.14 (Extended
Royalty Term), 1.24 (Initial Royalty Term), 1.31 (Net Sales), 1.49 (Royalty
Term), 5.1 to 5.13, 6.1 to 6.6 and 7.9 of the Quark License, and Quark agrees
not to waive any right or interest it has under any such provision of the Quark
License, in each case in any manner which would materially restrict, limit,
impede or prejudice the benefits which Atugen is entitled under the Atugen
Licence (as amended by this Amendment and Option) or the License Agreement in
connection with the Quark License. Pfizer and Quark further agree to procure
that no assign or successor in title at any time to their respective rights
under the Quark Licence makes any such amendment or modification or, in the
case of Quark, waiver. For clarity, the parties hereto agree that amendment,
modification or waiver of any section of the Quark License that is not listed
above in this Section III(C) would not materially restrict, limit, impede or
prejudice the benefits which Atugen is entitled under the Atugen Licence (as
amended by this Amendment and Option) or the License Agreement in connection
with the Quark License.


 


D.            Atugen
and Quark agree not to amend or modify the Atugen License which would restrict,
limit, impede or prejudice in a material manner the exercise by Pfizer of its
rights under the Quark License, this Amendment and Option or the License
Agreement.


 


E.              Atugen
and Quark hereby amend and clarify, with Pfizer’s consent, the Atugen License,
as follows:


 


1.     All licenses granted by Quark
to Atugen under Section 6.1 of the Atugen License are hereby terminated and all
obligations of Atugen pursuant to the Atugen License, whose lawful performance
depends on Atugen having the continued benefit of any such license are also
hereby terminated.


 


2.     All intellectual property
rights of Quark arising under the Atugen License have been and remain vested
solely in QBI rather than QEL, which has been performing research and
development services on behalf of QBI.


 


3.     References in Sections
4.8.1 and 4.8.4 of the Atugen License to “best efforts” are hereby amended to
be “commercially reasonable efforts.”


 


4.     (a)       Section 8.1.2 of the Atugen License is hereby
deleted and replaced by the following wording:


 


“For Products that are developed and/or sold by sub-licensees, Atugen
shall be entitled to receive a royalty of [ * ] of the
Sublicense Royalties. For purposes of this Section, and in the case where
Pfizer Inc. is the sublicensee, the Sublicense Royalties shall be the payments due
from Pfizer Inc. to Quark under Sections 5.7 and/or 5.8, subject to Sections
5.9 to 5.12 inclusive and under Section 7.9, of the sublicence from Quark to
Pfizer Inc.”


 


(b)                    In
Section 8.2.2 of the Atugen License, the words “...necessary to commercialize
such Party’s Products (the “Royalty Offset”) against the royalties payable by
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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commercializing Party to the other Party...” shall be deleted and
replaced with the words “...necessary to commercialize such Party’s Products (the
“Royalty Offset”) against the royalties payable by the Royalty Paying Party
under Sections 8.1.1 or 8.1.2...”.


 


(c)                     In
Section 8.2.3 of the Atugen License, the percentage figure of [ * ] shall be replaced by the percentage figure of [ * ].


 


(d)                    In
Section 8.3 of the Atugen License, the percentage and percentage figure of [ * ] shall be replaced by the percentage and percentage figure
of [ * ] in respect of the first milestone
payment to be made by Pfizer to QBI pursuant to Section 5.1 of the Quark License
and by the percentage and percentage figure of [ * ]
in respect of all other milestone payments to be made by Pfizer to QBI pursuant
to Sections 5.1 to 5.5 inclusive of the Quark License. For clarity, no payments
shall be due to Atugen arising out of payments made under Sections 4.8 to 4.12 inclusive
of the Quark License.


 


(e)                     The
“Products” definition in Section 1 of the Atugen License is hereby deleted and
replaced by the following:


 


“‘Products’ means RNAi products that are (i) based on the Atugen
Existing IP or discovered, developed or produced using the Atugen Existing IP,
(ii) based on the Quark Existing IP and (iii) directed to the 801 gene.”


 


5.     The second sentence of
Section 12 of the Atugen License is hereby amended to read in full as
follows:  “The arbitration shall be
conducted in London, England, according to the rules of the London Court of
International Arbitration (“LCIA”) and the laws of England.”


 


6.     Atugen consents to Quark’s
delegation to Pfizer, in accordance with the Quark License, of responsibility
and control over the prosecution and enforcement of the Joint Patents (as defined
in the Atugen License) which are currently being prosecuted by Quark. Atugen
shall not have the right or obligation to enforce Atugen Existing IP or the
Joint Patents relating to the QBI Products; provided, however, that Quark shall
pay to Atugen [ * ] of any damages, settlements,
accounts of profits or other financial compensation received by Quark pursuant
to Section 7.9 of the Quark License.


 


7.     So long as the Quark License
remains in effect, Quark shall be deemed to have satisfied the Development
Milestones of Section 11.4 of the Atugen License (as defined in the Atugen
License). If the Quark License terminates for any reason, then:


 


(a)   The sole remaining
Development Milestone under the Atugen License applicable to Quark shall be to [ * ] within [ * ] from
termination of the Quark License (and all other Development Milestones shall be
cancelled); and


 


(b)   If Quark thereafter grants a
sublicense under the Atugen License, there shall be no Development Milestones,
but Quark and the new sublicensee(s) shall remain 


 










[ * ]  = 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





















 


obligated to use commercially reasonable efforts to develop a QBI
Product (as defined in the Atugen License).


 


IV.   Atugen Warranties.
Atugen hereby warrants to Pfizer that:


 


A.           Other
than the Atugen License, Atugen has not entered into any agreement with any
other person or firm granting any rights or licenses to the Atugen Existing IP
or the Joint Program IP to conduct activities within the scope of the licenses
granted to Pfizer in Sections 3.1 and 3.2 of the License Agreement.


 


B.             Atugen
has the corporate power and authority to execute and deliver this Amendment and
Option and to perform its obligations hereunder, and the execution, delivery
and performance of this Amendment and Option by Atugen has been duly and
validly authorized and approved by proper corporate action on the part of Atugen.


 


C.             The
Atugen License is in full force and effect. To Atugen’s knowledge, all payments
to date required to be made under the Atugen License by Quark have been made.


 


D.            Schedules
A1, A2 and A3 to the License Agreement contains a complete listing of all of
the patents and patent applications owned or controlled by Atugen or any of its
Affiliates relating to siRNA molecules directed to silencing of the RTP801 gene
which have been licensed to Quark under the Atugen License.


 


V.    Pfizer Warranties. Pfizer hereby
warrants to Atugen that:


 


A.           Pfizer
has the corporate power and authority to execute and deliver this Amendment and
Option and to perform its obligations hereunder, and the execution, delivery
and performance of this Amendment and Option by Pfizer has been duly and
validly authorized and approved by proper corporate action on the part of
Pfizer.


 


B.             Other
than the Quark License, Pfizer has not entered into any agreement with Quark in
relation to the Atugen Existing IP or the Joint Program IP.


 


VI.   Pfizer and Quark Warranty. Pfizer and
Quark hereby jointly and severally warrant to Atugen that no agreements, other
than the Quark License in the form set forth in Exhibit A, exist between them,
and that such form is a complete and accurate copy of the agreement to be
entered into between them.


 


VII.  Term and Termination. Sections I, VII
and VIII of this Amendment and Option shall be effective as of the date first
set forth above. The remaining Sections of this Amendment and Option shall be
effective as of the later of the date first set forth above and the date which
the Quark Licence comes into full force and effect. This Amendment and Option
shall terminate if for any reason the Quark License has not (a) been executed
within [ * ] following the date first set
forth above and become effective by [ * ], or (b)
the Quark License has been terminated. Except in the event of such termination,
this Amendment and Option shall remain in effect. In addition, upon [ * ] notice to Quark and Atugen, Pfizer shall have the
right, at its sole discretion, 


 










[ * ]  = 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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to terminate all of its rights and obligations under
this Amendment and Option, without prejudice to any rights or obligations which
have accrued hereunder prior to the effective date of such termination. The
provisions of Section III(E)(7)(a) above shall survive the termination of this
Amendment and Option.


 


VIII.    Miscellaneous.


 


A.           Force
Majeure. No party shall be liable for failure of or delay in performing
obligations set forth in this Amendment and Option, and no party shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes reasonably beyond the control of such party.


 


B.             Assignment.
This Amendment and Option shall not be assignable by any party without the
prior consent of the other, except that any party may assign this Amendment and
Option, in whole or in part, (i) to any affiliate of such party, provided, that
in all cases the assigning party shall remain responsible for all obligations
hereunder if its affiliate shall fail to perform hereunder, (ii) to any
successor to substantially all of such party’s business or assets, (iii) to a
third party in circumstances where such party is required to, or reasonably
believes based on advice of counsel, that it will be required to, divest any of
the Licensed Products (as defined in the Quark License) in order to comply with
applicable laws or the order of any governmental authority as a result of a
merger or acquisition, or (iv) by Atugen, QBI or QEL to a permitted assignee of
the Atugen License.


 


C.             Governing Law. This Amendment and Option shall be governed by the laws of England in
all respects of validity, construction and performance thereof. The parties
submit to the non-exclusive jurisdiction of the English courts.


 


D.            Notices.
Any notice, consent, approval reports, requests and communication hereunder
this Amendment and Option shall be in writing sent by registered airmail or by facsimile
(confirmed by such registered mail) and addressed as follows:


 


	
  If to Pfizer:

  	
   

  	
  If to Atugen:

  
	
   

  	
   

  	
   

  
	
  Pfizer Inc.

  	
   

  	
  Atugen AG

  
	
  235 East 42nd Street

  	
   

  	
  Robert-Rössle-Str. 10

  
	
  New York, N.Y. 10017

  	
   

  	
  D13125 Berlin Germany

  
	
  Attention: General
  Counsel

  	
   

  	
  Attention:
  Thomas Christély

  
	
  Fax: 212-808-8924

  	
   

  	
  Fax:
  +49 30 9489 2801

  
	
   

  	
   

  	
   

  
	
  If to Quark:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Quark Biotech Inc.

  	
   

  	
  QBI Enterprises Limited

  
	
  6536 Kaiser Drive

  	
   

  	
  Weizman Science Park

  
	
  Freemont, CA 94555

  	
   

  	
  P.O. Box 4071

  
	
  Attention: Daniel Zurr, Ph.D.

  	
   

  	
  Nes Ziona 70400, Israel

  



 










[ * ]  = 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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  Fax: (510) 402-4021

  	
   

  	
  Attention: Daniel Zurr, Ph.D.

  
	
   

  	
   

  	
  Fax: 972-8.940.6476

  



 


All notices shall be deemed to be effective five days after posting if
sent by registered post, and upon delivery as indicated on the facsimile
activity report if sent by facsimile. In case any party changes its address at
which notice is to be received, written notice of such change shall be given
without delay to the other party.


 


E.              Entire
Agreements, Amendments. This Amendment and Option (together with the
Schedule and Exhibits hereto and all other agreements referred to herein or in
said Exhibits) sets forth the entire agreement and understanding among the
parties hereto as to the subject matter hereof and supercedes all agreements or
understandings, verbal or written, made among Atugen, QBI, QEL and Pfizer
before the date hereof with respect to the subject matter hereof. None of the
terms or this Amendment and Option shall be amended, supplemented or modified
except in writing signed by the parties hereto.


 


F.              Severability.
If and solely to the extent that any provision of this Amendment and Option
shall be invalid or unenforceable, or shall render this Amendment and Option to
be unenforceable or invalid, such offending provision shall be of no effect and
shall not effect the validity of the remainder of this Amendment and Option or
any of its provisions; provided, however, the parties shall use their
respective reasonable efforts to renegotiate the offending provisions to best
accomplish the original intentions of the parties.


 


G.             Waivers.
Any term or condition of this Amendment and Option may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on
behalf of the party or parties waiving such term or condition. The waiver by
any party of any term or condition of this Amendment and Option or the failure
on the part of any party, on one or more instances, to enforce any of the
provisions of this Amendment and Option or to exercise any right or privilege,
shall not be deemed or construed to be a waiver of such term or condition for
any similar instance in the future or of any subsequent breach hereof. All
rights, remedies, undertakings, obligations and agreements contained in this Amendment
and Option shall be cumulative and none of them shall be a limitation of any
other remedy, right, undertaking, obligation or agreement.


 


H.            Binding
Effect. This Amendment and Option shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.


 


I.                 Counterparts.
This Amendment and Option may be executed in any two or more counterparts, each
of which, when executed, shall be deemed to be an original and all of which
together shall constitute one and the same document.


 


J.                Headings.
Headings in this Amendment and Option are included herein for ease of reference
only and shall have no legal effect. References to Sections, Schedules and
Exhibits are to Sections, Schedules and Exhibits of this Amendment and Option
unless otherwise specified.


 


K.            Publicity.
No party hereto shall make any public announcements regarding the terms of this



 










[ * ]  = 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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Amendment and Option or events or performance hereunder except as may
be required by a party to comply with any legal requirements or as the parties
may agree in writing. The parties hereby agree that a public announcement in
the form of that set out in Exhibit C may be released by Atugen following
execution and delivery of this Amendment and Option by the parties and the
execution and delivery of the Quark License by Quark and Pfizer.


 


L.              Third Party Rights. The Contracts
(Rights of Third Parties) Act 1999 shall not apply to this agreement and no
rights or benefits expressly or impliedly conferred by it shall be enforceable
under that Act against the parties to it by any other person.


 


M.         Waivers.
Quark and Atugen each confirms that the other is in compliance in all
respects with its obligations under the Atugen License and waives, in full and
final satisfaction, any claims and entitlements whatsoever that it may have in
respect of any breach by the other of any such obligation.


 


 


{Remainder of page
intentionally left blank}


 










[ * ]  = 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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IN WITNESS WHEREOF, the parties
hereto have caused this Deed of Amendment and Option to be executed as of the
date first written above by their duly authorized officers.


 


	
  Executed as a Deed by

  	
  Executed as a Deed by

  
	
  ATUGEN AG acting by its

  	
  PFIZER INC. acting by its

  
	
  authorized signatory

  	
  authorized signatory

  



 


 


	
  By:

  	
  /s/ T. Christely, /s/ K. Giese

  	
   

  	
  By:

  	
  /s/ Lisa Ricciardi

  	
   

  
	
  Name: T. Christely, K. Giese

  	
  Name: Lisa Ricciardi

  
	
  Title: CEO, CSO

  	
  Title: SVP Licensing & Development

  



 


 


	
  Executed as a Deed by

  	
  Executed as a Deed by

  
	
  QUARK BIOTECH, INC.

  	
  QBI ENTERPRISES, LTD.

  
	
  acting by its authorized signatory

  	
  acting by its authorized signatory

  



 


 


	
  By:

  	
  /s/ Daniel Zurr

  	
   

  	
  By:

  	
   /s/ Daniel Zurr

  	
   

  
	
  Name: Daniel Zurr

  	
  Name: Daniel Zurr

  
	
  Title: CEO

  	
  Title: CEO

  



 


 










[ * ]  = 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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{EXHIBIT
10.27}


 


{This Exhibit 10.27
has been filed separately as an exhibit to the Quark Biotech, Inc. Registration
Statement on Form S-1 in executed form.}


 










[ * ]  = 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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EXHIBIT B


 


DEED


 


LICENSE
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
OF 1933, AS AMENDED.


 


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