Document:

Exhibit 10.3

GENZYME CORPORATION

1999 Employee Stock Purchase Plan

1.             Purpose.

The
purpose of this 1999 Employee Stock Purchase Plan (the “Plan”) is to provide
employees of Genzyme Corporation (the “Company”) and its subsidiaries who wish
to become shareholders of the Company an opportunity to purchase shares of the
Company’s common stock, $0.01 par value (the “Shares”).  The Plan is intended to qualify as an “employee
stock purchase plan” within the meaning of Section 423 of the Internal Revenue
Code of 1986, as amended (the “Code”).

The
Plan constitutes an amendment and restatement of the Company’s 1990 Employee
Stock Purchase Plan (the “1990 Plan”), which is hereby merged with and into the
Plan, and the separate existence of the 1990 Plan shall terminate on the
effective date of the Plan.  The rights
and privileges of the holders of outstanding rights under the 1990 Plan shall
not be adversely affected by the foregoing action.

2.             Eligible Employees.

Subject
to the provisions of Sections 7, 8 and 9 below, any individual who is in the
full-time employment (as defined below) of the Company, or any of its
subsidiaries (as defined in Section 425(f) of the Code), the employees of which
are designated by the Board of Directors as eligible to participate in the Plan,
is eligible to participate in any Offering of Shares (as defined in Section 3
below) made by the Company hereunder. 
Full-time employment shall include all employees whose customary
employment is:

(a)           20 hours or more per
week; and

(b)           more than five months

in the calendar
year during which said Offering Date (as defined in Section 3 below) occurs or
in the calendar year immediately preceding such year.

3.             Offering Dates.

From
time to time, the Company, by action of the Board of Directors, will grant rights
to purchase the Shares to employees eligible to participate in the Plan
pursuant to one or more offerings (each of which is an “Offering”) on a date or
series of dates (each of which is an “Offering Date”) designated for this
purpose by the Board of Directors.

4.             Prices.

The
price per share for each grant of rights hereunder shall be the lesser of:

(a)           eighty-five percent
(85%) of the fair market value of a Share on the Offering Date on which such
right was granted; or

(b)           eighty-five percent
(85%) of the fair market value of a Share on the date such right is exercised.  At its discretion, the Board of Directors may
determine a higher price for a grant of rights.

 1
 

5.             Exercise of Rights
and Method of Payment.

(a)           Rights granted under
the Plan will be exercisable periodically on specified dates as determined by
the Board of Directors.

(b)           The method of payment
for Shares purchased upon exercise of rights granted shall be through regular
payroll deductions or by lump sum cash payment or both, as determined by the
Board of Directors.  No interest shall be
paid upon payroll deductions unless specifically provided for by the Board of
Directors.

(c)           Any payments received
by the Company from a participating employee and not utilized for the purchase
of Shares upon exercise of a right granted hereunder shall be promptly returned
to such employee by the Company after termination of the right to which the
payment relates.

6.             Term of Rights.

The
total period from an Offering Date to the last date on which rights granted on
that Offering Date are exercisable (the “Offering Period”) shall in no event be
longer than twenty-seven (27) months. 
The Board of Directors when it authorizes an Offering may designate one
or more exercise periods during the Offering Period.  Rights granted on an Offering Date shall be
exercisable in full on the Offering Date or in such proportion on the last day
of each exercise period as the Board of Directors determines.

7.             Shares Subject to the
Plan.

The
aggregate number of shares that may be issued upon exercise of options granted
under this Plan is 7,329,391.  Appropriate
adjustments in the number of Shares subject to the Plan, in the number of
Shares covered by outstanding rights granted hereunder, in the exercise price
of the rights and in the maximum number of Shares which an employee may
purchase (pursuant to Section 8 below) shall be made to give effect to any
mergers, consolidations, reorganizations, recapitalizations, stock splits,
stock dividends or other relevant changes in the capitalization of the Company
occurring after the effective date of the Plan, provided that no fractional
Shares shall be subject to a right and each right shall be adjusted downward to
the nearest full Share.  Any agreement of
merger or consolidation shall include provisions for protection of the then
existing rights of participating employees under the Plan.  Either authorized and unissued Shares or
issued Shares heretofore or hereafter reacquired by the Company may be subject
to rights under the Plan.  If for any
reason any right under the Plan terminates in whole or in part, Shares subject
to such terminated right may be subject to a right under the Plan.

8.             Limitations on
Grants.

(a)           No employee shall be
granted a right hereunder if such employee, immediately after the right is
granted would own stock or rights to purchase stock possessing five percent
(5%) or more of the total combined voting power or value of all series of
common stock of the Company, or of any subsidiary, computed in accordance with Section
423(b)(3) of the Code.

(b)           No employee shall be
granted a right which permits the employee’s rights to purchase shares under
all employee stock purchase plans of the Company and its subsidiaries to accrue
at a rate which exceeds twenty-five thousand dollars ($25,000) (or such other
maximum as may be prescribed from time to time by the Code) of the fair market
value of such shares (determined at the time such right is granted) for each
calendar year in which such right is outstanding at any time in accordance with
the provisions of Section 423(b)(8) of the Code.

(c)           No right granted to any
participating employee under an Offering, when aggregated with rights granted
under any other Offering still exercisable by the participating employee, shall
cover more shares than may be purchased at an exercise price not to exceed
fifteen percent (15%) of the employee’s

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annual rate of
compensation on the date the employee elects to participate in the Offering or
such lesser percentage as the Board of Directors may determine.

9.             Limit on
Participation.

Participation
in an Offering shall be limited to eligible employees who elect to participate
in such Offering in the manner, and within the time limitations, established by
the Board of Directors when it authorizes the Offering.

10.           Cancellation of
Election to Participate.

An
employee who has elected to participate in an Offering may cancel such election
as to all (but not part) of the unexercised rights granted under such Offering
by giving written notice of such cancellation to the Company before the
expiration of any exercise period.  Any
amounts paid by the employee for the Shares or withheld for the purchase of
Shares from the employee’s compensation through payroll deductions shall be
paid to the employee, without interest unless otherwise determined by the Board
of Directors, upon such cancellation.

11.           Termination of
Employment.

Upon
the termination of employment for any reason, including the death of the
employee, before the date on which any rights granted under the Plan are
exercisable, all such rights shall immediately terminate and amounts paid by
the employee for the Shares or withheld for the purchase of Shares from the
employee’s compensation through payroll deductions shall be paid to the
employee or to the employee’s estate, without interest unless otherwise
determined by the Board of Directors.

12.           Employee’s Rights as
Shareholder.

No
participating employee shall have any rights as a shareholder in the Shares
covered by a right granted hereunder until such right has been exercised, full
payment has been made for the corresponding Share and the Share certificate is
actually issued.

13.           Rights Not
Transferable.

Rights
under the Plan are not assignable or transferable by a participating employee
and are exercisable only by the employee.

14.           Amendments to or
Discontinuation of the Plan.

The
Board of Directors of the Company shall have the right to amend, modify or
terminate the Plan at any time without notice; provided, however, that the then
existing rights of all participating employees shall not be adversely affected
thereby, and provided further that, subject to the provisions of Section 7
above, no such amendment to the Plan shall, without the approval of the
shareholders of the Company, increase the total number of Shares which may be
offered under the Plan.

15.           Effective Date and
Approvals.

Subject
to the approval of the shareholders of the Company, this Plan shall be
effective on March 24, 1999, the date it was adopted by the Board of Directors.

The
Company’s obligation to offer, sell and deliver its Shares under the Plan is
subject to (i) the approval of any governmental authority required in
connection with the authorization, issuance or sale of such Shares, (ii)
satisfaction of the listing requirements of any national securities exchange on
which the

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Shares are then
listed and (iii) compliance, in the opinion of the Company’s counsel, with all
applicable federal and state securities and other laws.

16.           Term of Plan.

No
rights shall be granted under the Plan after March 24, 2009.

17.           Administration of the
Plan.

The
Board of Directors or any committee or person(s) to whom it delegates its
authority (the “Administrator”) shall administer, interpret and apply all
provisions of the Plan as it deems necessary. 
Nothing contained in this Section shall be deemed to authorize the
Administrator to alter or administer the provisions of the Plan in a manner
inconsistent with the provisions of Section 423 of the Code.

18.           Rights
Limited.

In no
event shall the Plan form a part of an employee’s contract of employment or
service, if any.  The Plan shall not
confer upon any employee of the Company or its subsidiaries any right with
respect to the continuance of his or her employment by, or other service with,
the Company or its subsidiary, nor shall it limit the right of the Company or
its subsidiaries to terminate the employee or otherwise change the terms of
employment.  The loss of existing or
potential profit in any Offering of Shares shall not constitute an element of
damages in the event of termination of employment for any reason, even if the
termination is in violation of an obligation of the Company or its subsidiary
to the employee.

Approved by
directors on March 24, 1999

Approved by shareholders
on May 26, 1999

Amended by
directors on December 18, 2000

Amended by
directors on March 1, 2001

Approved by shareholders
on May 31, 2001

Amended by
directors on February 28, 2002

Approved by shareholders
on May 30, 2002

Amended by
directors on February 27, 2003

Amended by directors
on April 8, 2003

Amended by
directors on May 8, 2003

Approved by shareholders
on May 29, 2003

Amended by
directors on June 30, 2003

Amended by
directors on February 26, 2004

Approved by
shareholders on May 27, 2004

Amended by
directors on March 14, 2005

Approved by
shareholders on May 26, 2005

Amended by
directors on February 28, 2007

Approved by shareholders on May 24, 2007

 4Exhibit 10.1

Confidential Materials omitted and filed separately
with the

Securities and Exchange Commission. 
Asterisks denote omissions.

 

SUB-LICENSE AGREEMENT

THIS
SUB-LICENSE AGREEMENT (this “Agreement”) is made effective
the 15th day of May, 2007 (the “Effective Date”), by
and between QuatRx Pharmaceuticals Company, a Delaware corporation, with
offices at 777 East Eisenhower Parkway, Suite 100, Ann Arbor, Michigan 48108
(hereinafter “QuatRx”), and Collagenex Pharmaceuticals Inc., a Delaware
corporation, with offices at 41
University Drive, Suite 200, Newtown, PA 18940 (hereinafter “Collagenex”).  QuatRx and Collagenex are each individually
referred to herein as a “Party” and collectively as the “Parties”.

WHEREAS,
QuatRx has licensed from Deltanoid Pharmaceuticals, Inc. (“Deltanoid”) certain
intellectual property rights, and QuatRx is willing to grant a sublicense to
Collagenex under such intellectual property rights and Collagenex desires a
license under all of them;

NOW, THEREFORE, in consideration
of the mutual covenants and agreements set forth below, the parties covenant
and agree as follows:

Section
1.              Definitions.

“Affiliate” shall mean each and every business entity
controlling, controlled by or under common control with a Party.  For purposes of this definition, “control”
shall mean ownership, directly or indirectly, of more than fifty percent (50%)
of the voting or income interest of the applicable business entity.

“Agreement” has the meaning set forth in the first
paragraph.

“Claim” has the meaning set forth in Section 9.1.

“Collagenex” has the meaning set forth in the first
paragraph.

“Collagenex Technology” shall mean all inventions,
discoveries, know-how, trade secrets, data, reports and information, of a
technical nature specifically relating to any Product or potential Product,
which is owned or controlled by 

 1
 

 

Collagenex at any time after the Effective Date, and
which is necessary or useful in furtherance of the development, manufacture or
marketing of such Product or potential Product, and all patents, patent
applications and other intellectual rights covering any of the foregoing.

“Combination Product” shall mean a Product containing
the Compound and at least one other active pharmaceutical ingredient.

“Compound” shall mean (20S)-2-methylene-19-nor-bis-homo-1a
hydroxypregnacalciferol, also referred to as “becocalcidiol” or “QRX-101”.

“Confidential Information” has the meaning set forth
in Section 7.1.

“Deltanoid” shall mean Deltanoid Pharmaceuticals, Inc.

“Deltanoid License” shall mean that certain Exclusive
License Agreement dated effective November 7, 2001 by and between Deltanoid and
QuatRx.

“Development” shall mean the development of any
Product from and after the Effective Date through, and including, product
registration.

“Development Plan” shall
mean the plan for the Development attached hereto as Exhibit B. The
Development Plan shall include projected dates by which certain development
activities shall be completed as well as the underlying assumptions upon which
such projections are based.

“Diligence Milestones” shall mean the requirements set
forth on Exhibit C, attached hereto

“Disclosing Party” has the meaning set forth in
Section 7.1.

“Effective Date” shall mean the date first above
written as the effective date of this Agreement.

“FDA” shall mean the United States Food and Drug
Administration or any successor entity.

“First Commercial Sale” shall mean the first sale of a
Product to a third party (other than an Affiliate or sublicensee) in any
jurisdiction in the Territory 

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after regulatory approval for such sale has been
obtained from the appropriate regulatory authorities in such jurisdiction.

“IND” shall mean an Investigational New Drug
Application as that term is defined in applicable FDA regulations.

“Invention” has the meaning set forth in Section 8.1.

“Inventor” has the meaning set forth in Section 8.1.

“Major EU Country” shall mean any of France, Germany,
Italy, Spain or the United Kingdom.

“Marketing Approval” shall mean approval by the
applicable FDA equivalent governmental entity with authority to approve the
sale of pharmaceutical products for human use in the applicable jurisdiction.

“NDA” shall mean a New Drug Application as defined by
FDA regulations.

“Net Sales” shall mean the gross receipts from sales
in any country less deductions for: (i) transportation and insurance charges;
(ii) sales and excise taxes, tax, tariff, duty or any other governmental
charges or duties paid; (ii) normal and customary trade, quantity and cash
discounts and rebates allowed;  (iii)
allowances on account of rejection or return by customers; (iv) credits,
rebates, charge-back rebates, reimbursements or similar payments actually
granted or given to wholesalers and other distributors, buying groups, health
care insurance carriers, governmental agencies and other institutions; (v)
payments or rebates actually paid in connection with state or federal Medicare,
Medicaid or similar programs.  However,
except where the sublicensee or Affiliate is the end-user, any sale to a
sublicensee or Affiliate shall be excluded from the computation of Net Sales,
but any subsequent sale by the sublicensee or Affiliate to a third party other
than another sublicensee or Affiliate shall be included in the computation of
Net Sales.

“Party” or “Parties” has the meaning set forth in the
first paragraph.

“Product” shall mean any product which contains the
Compound as one of its active ingredients, which product is being developed or
is approved for topical treatments (topical treatments do not include patch
delivery systems or mucous membrane delivery systems, such as a suppository,
intended for systemic treatment) of skin diseases (including treatments of
skin, hair and nails).

 3
 

 

“Progress Report” shall mean a written report prepared
by Collagenex that includes a detailed summary, as of the submission date, of
the following topics at a level that enables QuatRx to determine the progress
of the development of Products and to determine whether or not Collagenex has
met its diligence obligations set forth in Article 3:

·                                          summary
of work completed with respect to Development and commercialization of
Products;

·                                          a
description of key scientific discoveries relating to Products;

·                                          a
summary of work in progress with respect to Development and commercialization
of Products;

·                                          a
current schedule of anticipated events and milestones with respect to
Development and commercialization of Products, including the Diligence
Milestones and those events and milestones specified in the Development Plan;

·                                          Market
plans for introduction of Products including the anticipated and actual market
introduction dates of each Product;

·                                          a
description of sublicensees’ and/or development partners’ activities relating
to the above items, if there are any sublicensees or development partners;

·                                          a
summary of resources (dollar value) spent in the reporting period with respect
to Development and commercialization of Products; and

·                                          if sublicenses are granted pursuant to
Article 2 of this Agreement, the identity and number of all Products under
development by each sublicensee for each Product in development.

“QuatRx” has the meaning set forth in the first
paragraph.

“QuatRx Inlicensed Patents” shall mean the patent
applications and patents listed in Exhibit A, which is attached hereto and is
incorporated herein by 

 4
 

 

reference and any foreign counterparts thereof, and
any continuations, continuations-in-part, divisions, re-issues, additions,
renewals and extensions thereof, and any patents issuing therefrom all to the
extent licensed by QuatRx from Deltanoid under the Deltanoid License.

“QuatRx Owned Patents” shall mean the patents and
patent applications listed on Exhibit A as QuatRx Owned Patents and any foreign
counterparts of the foregoing, and any continuations, continuations-in-part,
divisions, re-issues, additions, renewals and extensions thereof, and any
patents issuing therefrom.

“Representatives” shall mean, as to any person, its
shareholders, employees, agents (such word including, without limitation, any
person acting on behalf of such person), consultants, independent contractors,
officers and directors.

“Royalty Term” shall mean, with respect to a
particular Product in any jurisdiction in the Territory, the period of time
commencing on the date of the First Commercial Sale of such Product in such
jurisdiction and ending upon the later of (a) the ten year anniversary of such
date of First Commercial Sale and (b) the date of expiration of the last to
expire QuatRx Owned Patent or QuatRx Inlicensed Patent containing a Valid Claim
which would be infringed by the manufacture, use, importation, offer for sale,
or sale of such Product in such jurisdiction.

“Steering Committee” has the meaning set forth in
Section 3.3.

“Technical Information” shall mean any and all
know-how, trade secrets and other information of a technical or scientific
nature specifically relating to any Product or potential Product which is
necessary or useful in furtherance of the development, manufacture or marketing
of such Product or potential Product.

“Territory” shall mean all jurisdictions worldwide
other than Japan.

“Valid Claim” shall mean a claim contained in an
issued patent or patent application, which claim has not expired and has not
been held unenforceable, unpatentable or invalid by an unappealable decision of
a court or other governmental agency of competent jurisdiction.

“WARF” shall mean Wisconsin Alumni Research
Foundation, a nonstock, nonprofit Wisconsin corporation.

 5
 

 

Section
2.              Grant.

2.1.          Sub-License.  QuatRx hereby grants to Collagenex an
exclusive (even as to QuatRx) license in the Territory, with the right to grant
sublicenses, under the QuatRx Inlicensed Patents and the QuatRx Owned Patents
to the extent necessary to make, have made, use, sell, have sold, and import
the Compound for topical treatments (topical treatments do not include patch
delivery systems or mucous membrane delivery systems, such as a suppository,
intended for systemic treatment) of skin diseases (including treatments of
skin, hair and nails).  The foregoing license
specifically excludes the right to, and the right to license others to, make,
have made, use, sell, have sold, or import (a) any treatment of cancer or renal
osteodystrophy, (b) products approved, made, use, sold, and marketed for
systemic applications, and (c) products other than Products. Collagenex
acknowledges and agrees that Collagenex’s rights in this Agreement are subject
to the terms and conditions of the Deltanoid License.

Section
3.              Development.

3.1.          Development Responsibility.  As
of the Effective Date and subject to the terms of this Article 3, Collagenex
shall assume responsibility for the performance and funding of the Development
and shall conduct the Development in accordance with the requirements and time
schedules set forth in the Development Plan and in accordance with the Diligence
Milestones.  The Steering Committee shall
meet within 30 days of the Effective Date to coordinate the transfer of
responsibility for the Development to Collagenex. Except to the extent set
forth in Section 3.3, QuatRx shall not be required to incur any research or
development costs or otherwise conduct research or development relating to the
Compound or any Products.

3.2.          Technology Transfer.  Except to the extent necessary to permit
QuatRx to perform its obligations under Section 3.3, within 90 days of the
Effective Date, QuatRx shall deliver to Collagenex copies of all materials
consisting of the Technical Information in its possession as of the Effective
Date. In addition, within one year of the Effective Date, QuatRx will provide to Collagenex, upon
written request from Collagenex, all existing quantities of Compound API
(approximately [**]) in QuatRx’s possession or control. Collagenex will pay
QuatRx a $[**] fee for such Compound API upon exercise of Collagenex’s option
to receive such Compound API.

 6

 

3.3.          Steering
Committee.

3.3.1 Formation.  Within 30 days of the Effective Date,
Collagenex and QuatRx shall each appoint two representatives to a Steering
Committee (the “Steering Committee”). Such representatives will include
individuals with expertise and responsibilities in the area of clinical
development. The Steering Committee shall agree on modifications and amendments
to the Development Plan, shall monitor execution of the Development Plan, and
shall oversee all aspects of the Development of each Product through the filing
of an NDA or its foreign equivalent. The Steering Committee will meet on a
semi-annual basis and will otherwise communicate on an as-needed basis by
telephone, facsimile and video conference. At least 3 business days prior to each
meeting of the Steering Committee, Collagenex shall deliver to QuatRx a
Progress Report. Each party recognizes the importance of the Steering Committee
in the success of the Development and will use diligent efforts to cause all of
its representatives to the Steering Committee to attend all meetings of the
Steering Committee. A party may change any of its appointments to the Steering
Committee at any time upon giving written notice to the other Party. Any
disputes or disagreements within the Steering Committee (other than with
respect to modifications or amendments to the Development Plan) shall be
resolved pursuant to Section 3.3.3.

3.3.2.  Meetings  Subject
to Section 3.3.1, the Steering Committee may meet by telephone or video
conference or in person at such times as are agreeable to the members of such
committee. Attendance at meetings shall be at the respective expense of the
participating parties. The Steering Committee shall assure that agendas and
minutes are prepared for each of its meetings. All actions taken and decisions
made by the Steering Committee shall be by unanimous agreement.  If personal attendance is not possible for
valid reasons, voting by proxy is permissible.

3.3.3. Committee Dispute
Resolution.  Notwithstanding the
provisions of Section 10.1, any disputes or disagreements arising in the
Steering Committee will be referred to the chief executives of each of
Collagenex and QuatRx.  In the event that
after good faith discussion, the chief executives are unable to resolve such
dispute, Collagenex shall have the right to make a final determination on the
outcome of such dispute (other than any dispute regarding the modification or
amendment to the Development Plan, which shall require the unanimous agreement
of the Steering Committee).

3.4. Diligence
and Termination.  Collagenex shall
earnestly and diligently develop, seek approval for, commercialize, market,
sell and meet the commercial 

 7
 

 

demand for all Products in accordance with the
Diligence Milestones and the time schedule and requirements set forth in the
Development Plan.  The Parties
acknowledge and agree that the Development Plan shall be regularly reviewed and
modified to reflect the actual experience of Collagenex in conducting
development of the Compound. In the event that Collagenex notifies QuatRx in
writing that it will not pursue commercialization in a particular country or
region (including, without limitation, by failure to include such country or
region in the notice required in the first sentence of milestone 8 of Exhibit
C), then QuatRx shall have the right to terminate the license rights granted
hereunder with respect to such country or region .  In addition, QuatRx shall have the right to
terminate the license rights granted hereunder with respect to any country or
region which (a) is identified in a CollaGenex Diligence Milestone on Exhibit C
or (b) is identified in the notice described in the second sentence of
milestone number 8 on Exhibit C and, in the case of either (a) or (b), in
relation to which Collagenex has failed to fulfill its diligence obligations
set forth herein, or in any plan proposed pursuant hereto, including, without
limitation, failure to file for approval to sell Products in any country or
region within the applicable time frames set forth in the Diligence Milestones.
In the event that Collagenex’s rights are terminated with respect to any
country or region per this Section 3.4, the provisions of Section 6.7 shall
apply with respect to the terminated country or region.

If, at any time, QuatRx provides Collagenex with
written notice that Collagenex has failed to adhere to the Diligence Milestones
or the milestones contained in the Development Plan for reasons unrelated to
the safety or efficacy of the Products, the availability of clinical supplies or
patient recruitment, or other reasons beyond the reasonable control of
Collagenex, then Collagenex shall have up to [**] days to provide a detailed
written response to these concerns, highlighting additional steps to be taken,
if appropriate. In the event that at the end of such [**] day period,
Collagenex still has not met the Diligence Milestones or the milestones set
forth in the Development Plan for reasons unrelated to the safety or efficacy
of the Products, the availability of clinical supplies or patient recruitment,
or other reasons beyond the reasonable control of Collagenex, QuatRx may
terminate, at its option, this Agreement or the license rights granted to
Collagenex in the jurisdictions affected by such default.

3.5. Collagenex Manufacturing Responsibility.  Collagenex shall be responsible for the
performance and cost of all manufacturing, storage, shipment, disposal and all
activities related thereto, regarding the Compound and all Products and
potential Products.

 8
 

 

3.6. Regulatory Approvals. 
Collagenex, by itself or with or through its sublicensees or development
partners, shall obtain all necessary Regulatory Approvals in each country where
Products are manufactured, used, sold, offered for sale or imported.

3.7. Japan.  Any QuatRx
sublicensee in Japan shall have the right to access and use, without cost, any
and all data, information, records, drug master files, reports and other
information developed, prepared or created by Collagenex at any time regarding
the Compound to the extent necessary for obtaining regulatory approval for and
to make, have made, use, sell, have sold, offer to sell and import Products in
Japan, provided, however, that if compliance with this undertaking involves
more than [**] hours of work by CollaGenex personnel, CollaGenex shall be
entitled to receive a reasonable fee per hour of work in which its personnel
engage in fulfillment of this obligation. Collagenex
shall further negotiate in good faith with any such Japanese sublicensee for a
license under any patents and patent applications owned or controlled by
Collagenex to the extent necessary to make, have made, use, sell, have sold,
offer to sell and import Products in Japan, provided that the consideration to
be offered to such sublicensee shall not exceed [**]% of the total
out-of-pocket costs paid by Collagenex (and/or its Affiliates) in connection
with the generation and creation of such patents and patent applications.

Section
4.              Consideration.

4.1.          License Fee.  Collagenex agrees to pay to QuatRx a license
fee of $1,500,000, due within 5 business days of the full execution of this
Agreement.

4.2.          Milestones.  Collagenex shall make the following milestone
payments to QuatRx within 30 days after the achievement of each corresponding
milestone:

	
  Milestone

  	
   

  	
  Payment

  
	
  1. Dosing of the
  first patient in the first Phase III trial for a Product.

  	
   

  	
  $1,500,000

  
	
  2. Acceptance
  for review by the FDA of the first NDA for a Product.

  	
   

  	
  $2,000,000

  
	
  3. Approval by
  the FDA of the first NDA for a Product which is entitled to the protections
  described in section 505(c)(3)(E)(ii) of the Federal Food Drug and Cosmetic
  Act (21 USC 355(c)(3)(E)(ii)) or any amendment thereto or successor provision
  thereof (provided that if such section, amendment or successor provision
  shall be repealed, rescinded or terminated, then this milestone shall be due
  upon any such approval by the FDA of the first NDA for a Product).

  	
   

  	
  $3,000,000

  
	
  4. First
  Commercial Sale of the first Product to be sold.

  	
   

  	
  $[**]

  
	
  5. The date in
  the first calendar year in which annual Net Sales of a Product exceed $[**]
  million.

  	
   

  	
  $[**]

  
	
  6. First
  Commercial Sale of a Product using a formulation different from the
  formulation used in the first Product to receive NDA approval.

  	
   

  	
  $[**]

  
	
  7. First
  Commercial Sale of a Combination Product.

  	
   

  	
  $[**]

  
	
  8. Submission of
  an application in a Major EU Country for Marketing Approval for the first
  Product.

  	
   

  	
  $[**]

  
	
  9. First
  Commercial Sale of the first Product in a Major EU Country.

  	
   

  	
  $[**]

  

 

The milestone payments
received by QuatRx under this Section 4 shall be non-refundable and
non-creditable. Each milestone payment referred to in this Section 4 shall be
made only once, regardless of whether more than one Product achieves such
milestone.

 9
 

 

4.3.                              Royalty.

4.3.1.           Standard
Rates.  During the Royalty Term
applicable to each Product in each jurisdiction in the Territory, Collagenex
shall pay to QuatRx a royalty payment on annual Net Sales of such Product sold
by Collagenex and its Affiliates and permitted sublicensees in each calendar
year in such jurisdiction according to the following table.

	
  Total Combined Annual Net Sales of all Products

  (whether Single Agent or Combination

  Products) in the Territory

  	
   

  	
  Royalty % on

  US Sales of

  Single Agent

  Products

  	
   

  	
  Royalty %

  on US Sales

  of Combination

  Products

  	
   

  	
  Royalty % on

  Non-US Sales

  of all Products

  	
   

  
	
  $0 up to $[**]
  million

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  
	
  Greater than
  $[**] million and up to $[**] million

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  
	
  Greater than
  $[**] million and up to $[**] million

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  
	
  Greater than
  $[**] million and up to $[**] million

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  
	
  Greater than $[**]
  million

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  	
  [**]%

  	
   

  

4.3.2.           Royalty Stacking.  In the event that Collagenex obtains an
opinion from a nationally recognized patent law firm that its manufacture, use
or sale of one or more Products in any jurisdiction infringes on the patent
rights of any un-affiliated third party in such jurisdiction, and Collagenex
thereafter obtains a license to such third party patent rights, then Collagenex
may reduce the foregoing royalties on Net Sales by [**] of the royalties due
such third party, provided that in no event shall the royalty rate due to
QuatRx fall below [**]%.

 10

 

4.4.          Minimum Royalty.  Collagenex further agrees to pay to QuatRx a
minimum royalty on the sale of Products of (i) $[**] for the first consecutive
12 month period following the First Commercial Sale of the first Product in the
United States, (ii) $[**] for the second such 12 month period, (iii) $[**] for
the third such 12 month period, (iv) $[**] for the fourth such 12 month period,
and (v) $[**] for the fifth such 12 month period and all subsequent 12 month
periods during the Royalty Term applicable to such Products.  Royalties paid to QuatRx pursuant to Section
4.3 for Net Sales in the 12 month period applicable to each minimum royalty
amount shall be credited against each such minimum royalty.  The minimum royalty amounts shall be due and
owing within 20 days of the end of the 12 month period applicable to each such
minimum royalty amount.

4.5. Accounting; Payments.

4.5.1. Collagenex shall
keep and maintain complete books and records containing an accurate accounting
of all data in sufficient detail to enable verification of earned royalties and
other payments due hereunder.

4.5.2. Collagenex shall
report to QuatRx the date of First Commercial Sale within [**] business days of
such First Commercial Sale.  Thereafter
and within [**] days after the end of each calendar quarter, Collagenex shall
remit to QuatRx a statement of Net Sales by Collagenex and by its sublicensees
on account for such quarter, which statement shall be accompanied by the
payment due to QuatRx pursuant to Section 4.3. 
With each such quarterly payment, Collagenex shall furnish QuatRx a
royalty statement setting forth, on a country-by-country basis, the
total number of units of each royalty-bearing Product sold hereunder for
the quarterly period for which the royalties are due, the exchange rates
applied, and the gross amount of all receipts and the specific deductions
applied in arriving at Net Sales.  QuatRx
shall be free to provide such statement to Deltanoid and WARF.

4.5.3. Collagenex shall keep, and shall cause it sublicensees
to keep, accurate books and records showing all Products under development,
manufactured, used, offered for sale, imported, sold and/or otherwise
exploited; all Net Sales and other amounts upon which payments are due
hereunder; and all sublicenses granted under the terms of this Agreement. Such
books and records will be preserved for at least five years after the date of
the payment to which they pertain. During the term of this Agreement and
for three years thereafter, QuatRx 

 11
 

 

and/or WARF and Deltanoid may request that the
financial statements of Collagenex and of its sublicensees relating to the sale
of Products be audited, at QuatRx and/or WARF and Deltanoid’s expense, by a
nationally recognized independent certified public accountant reasonably
acceptable to Collagenex for the purpose of verifying the amount of royalty
payments due.  Such examination of books
and records of Collagenex and its sublicensees shall take place during regular
business hours.  Such an examination
shall not take place more than once a year and shall not cover records for more
than the preceding three years.  The
auditing accountant shall agree to keep confidential all the information
obtained by such accountant during such audit and shall report to QuatRx only
as to the accuracy of the royalty statements and payments.  If such accountant shall find an underpayment
to QuatRx, presentation of a written statement substantiating the underpayment
shall be provided to Collagenex.  If
Collagenex is not in agreement with the findings of the accountant selected by
QuatRx, then Collagenex shall so notify QuatRx in writing within 20 days of
receipt by Collagenex of said findings, in which case the parties shall jointly
appoint, within a further period of 20 days, an independent certified public accountant
to validate, at Collagenex’s expense, QuatRx’s accountant’s findings, and the
decision of said independent accountant shall be final.  If said independent accountant verifies that
an underpayment has occurred, the amount due and interest (accruing at the
prevailing prime rate of interest for commercial loans published in the Wall
Street Journal, Eastern Edition, from the date payment was due through the date
of actual payment to QuatRx) shall be paid to QuatRx within 20 days. If the amount of the underpayment is greater than 5% of the required
payment, then Collagenex shall reimburse QuatRx the out-of-pocket costs for the
audit in question.

4.5.4. All payments due
to QuatRx under this Agreement shall be made in United States dollars and shall
be sent by Collagenex to QuatRx to the attention of “President” at the address
shown in Section 10.  If Collagenex
receives Net Sales in currency other than United States dollars, royalty
payments due to QuatRx on account of Net Sales shall be converted into United
States dollars at the conversion rate for the foreign currency as published in
the eastern edition of The Wall Street Journal as of the last business day of
the applicable calendar quarter.

4.5.5. Any income or
other tax that Collagenex hereunder, its Affiliates or sublicensees are
required to withhold and pay on behalf of QuatRx hereunder with respect to the
royalties payable under this Agreement shall be deducted from and offset
against said royalties prior to remittance to QuatRx; provided, however, that
in regard to any tax so deducted, Collagenex shall give or cause to be given to
QuatRx such assistance as may reasonably be necessary to 

 12
 

 

enable QuatRx to claim exemption therefrom or credit
therefor, and in each case shall furnish QuatRx proper evidence of the taxes
paid on its behalf.

4.6.          Patent
Invalidity; Royalty Due.

(a) In the event that any patent, patent application
or claim thereof included within the QuatRx Inlicensed Patents or QuatRx Owned
Patents is held invalid in a final decision by a court of competent
jurisdiction and last resort and from which no appeal has or can be taken, then
all obligation to pay royalties based on that patent or claim will cease as of
the date of such final decision.  Collagenex
will not, however, be relieved from paying any royalties that accrued before
such final decision and the foregoing shall not limit Collagenex’s obligation
to pay the full amount of royalties due hereunder if any other QuatRx
Inlicensed Patents or QuatRx Owned Patents covers the Products that are sold or
if royalties are otherwise due hereunder.

(b) In the event that (i) U.S. Patent 6,627,622 has
not, at any time that royalties would be due pursuant to paragraph 4.3,
reissued, (ii) QuatRx does not owe to Deltanoid under the Deltanoid Agreement
any royalties on sales of Products in the United States, and (iii) one or more
third parties are selling “Generic Competitor Products” (as defined below) in
the United States then the amount of royalties due hereunder in connection with
sales of the Products in the United States shall be reduced during such period
by one half of the amount that would otherwise be payable pursuant to paragraph
4.3. For purposes of this Agreement, “Generic Competitor Products” shall mean
products that are substantially similar to the applicable Product being sold by
Collagenex and which (a) contain the Compound as an active ingredient in the
same or similar dose as the applicable Product being sold by Collagenex, (b)
are labeled for the same use for which such Product is labeled, and (c) the
sales of such product constitute more than [**]% of the total combined sales of
such product and the applicable Product being sold by Collagenex.

Section 5.              Representations
and Warranties.

5.1.          QuatRx Representation. QuatRx
represents and warrants that it is the owner or licensee of the QuatRx Inlicensed Patents and QuatRx Owned
Patents or otherwise has the right to grant the licenses granted to
Collagenex in this Agreement.

 13
 

 

5.2.          Deltanoid/WARF
Patent Prosecution.  QuatRx shall
request that Deltanoid request that WARF prepare, file, prosecute and maintain
patents and patent applications claiming the inventions claimed in the QuatRx Inlicensed Patents licensed to
QuatRx from Deltanoid in jurisdictions requested by Collagenex. Collagenex shall
notify QuatRx in writing indicating those jurisdictions in which Collagenex
desires QuatRx to make or maintain such patents or patent applications. QuatRx
shall provide CollaGenex with such updates regarding the prosecution of any
patents related to the Products as QuatRx shall receive from Deltanoid.  QuatRx reserves the right to request that
WARF file a patent application, at its own expense, in any countries not
requested by Collagenex pursuant to this Section 5.

5.3.          Mutual Representations.  Each of the Parties hereby represents and
warrants to the other Party as follows:

5.3.1. This
Agreement is a legal and valid obligation binding upon such Party and
enforceable in accordance with its terms. The execution, delivery and
performance of this Agreement by such Party does not conflict with any
agreement, instrument or understanding, oral or written, to which it is a Party
or by which it is bound, nor violate any law or regulation of any court,
governmental body or administrative or other agency having jurisdiction over
it.

5.3.2. Such Party
has not granted, and during the term of this Agreement will not grant, any
right to any third party relating to its respective patents and know-how which
would conflict with the rights granted to the other Party hereunder.

5.3.3.
During the course of development of Products, neither such Party nor any of its
employees or agents,
shall be, or shall be the subject of a proceeding that could lead to that party
becoming, as applicable, a Debarred Entity or Individual, an Excluded Entity or
Individual or a Convicted Entity or Individual. 
For purposes of this provision, the following definitions shall apply:

(a)         A “Debarred Individual” is an individual who has been
debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from providing
services in any capacity to a person that has an approved or pending drug
product application.

(b)         A “Debarred Entity” is a corporation,
partnership or association that has been debarred by the FDA pursuant to 21 

 14
 

 

U.S.C.
§335a (a) or (b) from submitting or assisting in the submission of any
abbreviated drug application, or a subsidiary or affiliate of a Debarred
Entity.

(c)         An “Excluded Individual” or “Excluded Entity” is (i) an
individual or entity, as applicable, who has been excluded, debarred, suspended
or is otherwise ineligible to participate in federal health care programs such
as Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of the
U.S. Department of Health and Human Services, or (ii) is an individual or entity,
as applicable, who has been excluded debarred, suspended or is otherwise
ineligible to participate in federal procurement and non-procurement programs,
including those produced by the U.S. General Services Administration (GSA); and

(d)         a “Convicted Individual” or “Convicted Entity” is an
individual or entity, as applicable, who has been convicted of a criminal
offense that falls within the ambit of 42 U.S.C. §1320a — 7(a), but has not yet
been excluded, debarred, suspended or otherwise declared ineligible.

5.3.4. The Parties
recognize that each may perform some or all of its obligations under this
Agreement through Affiliates. Each Party shall remain responsible for, and
hereby guarantees, the performance by its Affiliates and shall cause its
Affiliates to comply with the provisions of this Agreement in connection with
such performance. In the event of any dispute arising from the performance by
an Affiliate under this Agreement, the Party having such a dispute may proceed
directly against the other Party, without any obligation to first proceed
against the Affiliate.

5.4.          Collagenex Compliance.  Collagenex represents and warrants that it
shall comply with all applicable laws, rules and regulations regarding the
research, development, commercialization, marketing, manufacture, import,
export and sale of Products in the Territory. 
Collagenex shall not take any action or fail to take any action that it
knows will result in a breach by QuatRx of the Deltanoid License.

 15

 

5.5.          Expertise and Financial Resources.  Collagenex has sufficient expertise and
financial resources to enter into this Agreement and perform its obligations
hereunder.

5.6.          Sublicenses. 
Collagenex shall ensure that all of its sublicensees shall comply with
the terms of this Agreement.

5.7.          Disclaimer.  Except as otherwise expressly stated herein, QuatRx hereby
disclaims any warranty, expressed or implied, as to the merchantability or
fitness for any purpose of any Product or the Compound sold or placed in
commerce by or on behalf of Collagenex.

5.8           Non-Competition.  For the term of this Agreement, QuatRx will
not to the extent its consent may be required, consent to WARF or Deltanoid
granting any rights in any of its or their technology estate to any person or
company that would permit such person or company to make, use or sell any
topical vitamin D analog product for psoriasis (a “Competing Product”) that
would compete with the Products in the Territory, and neither will QuatRx
itself develop any such Competing Product. The parties acknowledge and agree
that such QuatRx consent is not currently required for WARF or Deltanoid to
grant such rights. Nothing in this paragraph shall prevent or inhibit QuatRx
from merging with or being acquired by another company that has a Competing
Product in its portfolio. In addition, nothing in this paragraph shall prevent
or inhibit QuatRx from acquiring a Competing Product as part of an acquisition
by QuatRx of another entity, provided that for a period of 5 years from the
Effective Date, QuatRx shall not acquire a Competing Product as part of any
such acquisition if such Competing Product has annual sales in the United
States in excess of $[**] million unless QuatRx divests itself of such
Competing Product promptly after such acquisition.

Section 6.              Term
and Termination.

6.1. Term.
The term of this Agreement shall begin on the Effective Date of and continue
until the earlier of (a) payment of the last royalty due hereunder after
expiration of the Royalty Term in all jurisdictions in the Territory, (b)
termination of this Agreement pursuant to the terms hereof or (c) termination
of QuatRx’s rights under the QuatRx Inlicensed Patents to the extent such
QuatRx Inlicensed Patents are necessary to make, have made, use, sell, have
sold or import any Products.

 16
 

 

6.2. Voluntary
Termination. Collagenex may terminate this Agreement at any time by giving
at least 120 days prior written and unambiguous notice of such termination to
QuatRx. Such a notice shall be accompanied by a statement of the reasons for
termination.

6.3. Termination
for Default. If Collagenex at any time defaults in the timely payment of
any monies due to QuatRx hereunder or commits any breach of any other
representation, warranty, term, provision or covenant herein contained, and
Collagenex fails to follow the dispute resolution procedure set out in section
10.1 to contest such breach or default, or fails to remedy any such breach or
default, within 30 days after written notice thereof by QuatRx, QuatRx may, at
its option, terminate this Agreement by giving written notice of termination to
Collagenex. QuatRx shall also have the right to termination this Agreement as
set forth in Section 3.4.

6.4.
Insolvency. This Agreement shall be automatically terminated upon the
commencement of an involuntary case or other proceeding against Collagenex
seeking liquidation, reorganization or other relief with respect to Collagenex
or its debts under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, and such case or proceeding remains unstayed and
undismissed for a period of 45 days, or an order for relief is entered against
Collagenex under the federal bankruptcy laws as now or hereafter in effect.

6.5. Bankruptcy.
This Agreement shall be automatically terminated if Collagenex commences a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or consents to the entry of an order for relief in
an involuntary case under any such law, or consents to the appointment or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Collagenex or for any substantial part of
Collagenex’s property, or Collagenex makes any general assignment for the
benefit of creditors, or takes any corporate action to authorize any of the
foregoing.

6.7. Effect
of Termination.

6.7.1.       Termination of Entire Agreement.  Upon the termination of this Agreement, (a)
Collagenex shall remain obligated to provide an accounting for and to pay
milestones and royalties earned up to the date of the termination and any 

 17
 

 

minimum royalties shall be prorated as of the date of
termination by the number of days elapsed in the applicable 12 month period;
(b) Collagenex shall promptly
transfer to QuatRx ownership of all INDs, NDAs and all other regulatory filings
(including, without limitation, all foreign equivalents thereof) relating to
all Products; and (c) Collagenex shall deliver on the effective date of
termination, all Technical Information and all know-how, trade secrets,
materials, drug supplies, study reports and study data and all other
information, records and data created, derived or manufactured by or on behalf
of Collagenex that relates to any Product or potential Product. Upon termination
of this Agreement, Collagenex shall further grant to QuatRx an exclusive,
worldwide, royalty-free, sublicensable license, in the applicable country where
Collagenex’s rights have been terminated, to all intellectual property owned by
Collagenex or licensed from third parties by Collagenex to the extent necessary
to make, use, sell, have sold, import and export all Products and potential
Products.

6.7.2.  Termination of Rights with Respect to a
Country.  In the case of a
termination of Collagenex’s rights with respect to one or more countries (but
not the entire Agreement),

(a) Collagenex shall promptly transfer to QuatRx ownership of all
INDs, NDAs and all other regulatory filings (or foreign equivalents thereof)
relating to all Products in such country,

(b) Collagenex shall
deliver on the effective date of termination, copies of all Technical
Information and all know-how, trade secrets, materials, study reports and study
data and all other information, records and data created or derived by or on behalf
of Collagenex that relates to any Product or potential Product, and

(c) Collagenex shall
grant to QuatRx an exclusive, royalty-free, sublicensable license, in the
applicable country where Collagenex’s rights have been terminated, to all
intellectual property owned by Collagenex or licensed from third parties by
Collagenex all to the extent necessary to make, use, sell, have sold, import
and export all Products and potential Products in such country.

6.8. Survival.
The terms of Sections 1, 6, 7, 8, 9, and subsections 3.7, 4.5, 10.1, 10.2.3,
10.3, 10.4, 10.6 thru 10.10, and 10.13 thru 10.16 shall survive the termination
or expiration of this Agreement.

 18
 

 

Section 7. 
Confidentiality.

7.1. Confidentiality
Obligation. Except as specifically permitted hereunder or as required to
research, develop, manufacture or market Products or potential Products, each
Party hereby agrees to hold in confidence and not use on behalf of itself or
others all data, samples, technical and economic information (including the economic
terms hereof), commercialization, clinical and research strategies and know-how
provided by the other Party or its Affiliates (the “Disclosing Party”) for a
period of five years from the date of disclosure and all data, results and
information developed hereunder and solely owned by the other Party
(collectively the “Confidential Information”). Each Party may disclose
Confidential Information to its licensors, representatives, employees,
officers, directors and agents. The term “Confidential Information” shall not
include:

(i) information
that is or becomes part of the public domain through no fault of the
non-Disclosing Party or its Affiliates;

(ii) information
that is obtained after the date hereof by the non-Disclosing Party or one of
its Affiliates from any third party which is lawfully in possession of such
Confidential Information and not in violation of any contractual or legal
obligation to the Disclosing Party with respect to such Confidential
Information;

(iii) information
that is known to the non-Disclosing Party or one or more of its Affiliates
prior to disclosure by the Disclosing Party, as evidenced by the non-Disclosing
Party’s written records; and

(iv) information
that is necessary to be disclosed to any governmental authorities or pursuant
to any regulatory filings (including any securities filings), provided that in
such case the non-Disclosing Party notifies the Disclosing Party reasonably in
advance of such disclosure and cooperates with the Disclosing Party to minimize
the scope or content of such disclosure.

7.2. Publications.
The Parties shall cooperate with each other and Deltanoid in the publication of
the results of the Development. With respect to any publications proposed by
QuatRx or Collagenex, in no event shall any such publication that includes any
confidential information be published without giving all Parties at least 30
days to review and adequately protect the intellectual property that may be
incorporated in such information. The Parties acknowledge and agree that a publication
of the results of the most recent Phase II clinical trial 

 19
 

 

using the Compound is being prepared by an
investigator from such study and Collagenex agrees that QuatRx may proceed with
such publication without restriction.

7.3. Survival.
The obligations of Section 7.1 shall survive the expiration or termination of
this Agreement for a period of 5 years.

Section 8. 
Intellectual Property Rights.

8.1. Inventorship.
Inventorship of any invention that is developed, discovered or made by a Party,
solely or jointly with the other Party (as applicable, the “Inventor”) pursuant
to work conducted under this Agreement (an “Invention”) shall be determined in
accordance with United States laws of inventorship. Subject only to the license
rights granted under this Agreement, each Party shall own the entire right,
title and interest in and to any Invention made solely by such Party’s
employees or agents, and all intellectual property rights therein and shall own
an undivided one-half interest in and to any Invention made jointly by the
employees or agents of both Parties, and all intellectual property rights
therein. Each Party shall promptly notify the other Party if it determines that
an Invention has been made, including any such jointly owned Invention.

8.2. Prosecution
of Solely-Owned Patents. With respect to any patent that only claims
Inventions that are solely-owned by one Party hereunder, the Inventor shall
have the right, at its option and expense, to prepare, file and prosecute in
its own name any patents with respect to any such Invention and to maintain any
patents issued thereon. In connection with any such prosecution efforts, the
other Party agrees to cooperate reasonably with the Inventor at the Inventor’s
expense in the preparation and prosecution of all such patents and in the
maintenance of any patents issued. This obligation shall survive the expiration
or termination of this Agreement.

8.3. Prosecution
of Joint Patents. Collagenex will have first right to control the
preparation, filing and prosecution of joint patents and patent applications
and the maintenance of patents issuing thereon, and QuatRx shall cooperate
reasonably with Collagenex in such prosecution efforts. Collagenex shall pay
all expenses in connection with its preparation, filing and prosecution of such
patents. Collagenex shall, from time to time (no more often than once per
calendar quarter), notify QuatRx of the actual amount of out-of-pocket expenses
incurred in such efforts, and QuatRx shall promptly thereafter pay Collagenex
50% of such out-of-pocket 

 20
 

 

expenses. Notwithstanding the foregoing, QuatRx shall
have no obligation to pay any fees in connection with the prosecution of any
joint patent unless the filing of such joint patent is agreed to in writing by
QuatRx, provided, however, that if QuatRx refuses to agree to or pay for the
prosecution of a joint patent in any jurisdiction, QuatRx shall assign and
shall be deemed to have assigned to Collagenex all of QuatRx’s right, title and
interest in such patent and patent application in such jurisdiction. In the
event that Collagenex fails to fulfill its obligations to prepare, file,
prosecute and maintain joint patents, QuatRx shall have the right, upon written
notice to Collagenex, to take over such activities, and Collagenex shall be
deemed to have assigned, and shall assign, all of its rights, title and
interest in and to such joint patents and patent applications to QuatRx. As
used in this Section 8, “out-of-pocket expenses” shall mean direct costs,
excluding internal labor costs (and any indirect costs associated therewith).

8.4. Cross
License to Inventions. Each Party hereby grants to the other an exclusive
(except as to the licensing Party), worldwide, sublicensable, right and license
under all Inventions, know-how and all patents owned or controlled by such
Party to the extent necessary to make, have made, use, import and export
Products to the extent necessary to conduct the Development under this
Agreement. In addition, Collagenex hereby grants to QuatRx a non-exclusive, worldwide,
sublicensable, right and license under all Inventions, know-how and all patents
owned or controlled by Collagenex to the extent necessary to make, have made,
use, import and export Products outside the Territory .

8.5. Enforcement. Collagenex acknowledges and agrees that all
prosecution, maintenance and enforcement of QuatRx Inlicensed Patents owned by
WARF or Deltanoid shall be the responsibility of WARF. QuatRx hereby grants to
Collagenex such rights as QuatRx may have or obtain with respect to the
prosecution or enforcement of QuatRx Inlicensed Patents, including the right to
prosecute patents related to the Products if WARF declines to do so (to the
extent QuatRx obtains such right). Collagenex shall promptly notify QuatRx of
any actual or threatened infringement of the QuatRx Inlicensed Patents and any
jointly owned patents.

8.6. Prosecution and Maintenance of QuatRx Owned Patents. QuatRx
shall have sole control and responsibility for prosecution, maintenance and
enforcement of all QuatRx Owned Patents. Collagenex shall cooperate with QuatRx
in such prosecution, maintenance and enforcement. Collagenex shall promptly
notify QuatRx of any actual or threatened infringement of the QuatRx Owned
Patents.

 21

 

Section 9. 
Indemnification.

9.1.  Collagenex Indemnification  Collagenex hereby agrees and shall cause its
sublicensees to agree to indemnify, defend and hold harmless QuatRx, its
Affiliates and licensees (including, without limitation, WARF and Deltanoid) and
their respective officers, directors, shareholders, agents, representatives and
employees (“QuatRx Indemnitees”) from and against any and all costs, expenses
(including reasonable attorneys’ fees and amounts paid in settlement), damages
and liabilities (including, without limitation, product liability claims)
arising out of claims by a third party (a “Claim”) resulting directly or
indirectly from Collagenex’s or its Affiliates or sublicensees or their
respective officers, directors, shareholders, agents, representatives and employees
or any other party acting on their behalf (a) research, development, sale,
manufacture, commercialization or marketing of Products and potential Products
or any exercise of the license rights granted hereunder, (b) negligence,
willful misconduct or breach of any term, representation or warranty of this
Agreement or (c) failure to adhere to any applicable law, rule or regulation,
except to the extent such Claim results from the negligence or willful
misconduct or breach of this Agreement by a QuatRx Indemnitee.

9.2  QuatRx Indemnification.  QuatRx hereby agrees to indemnify, defend and
hold harmless Collagenex, its Affiliates and their respective officers,
directors, shareholders, agents, representatives and employees (“Collagenex
Indemnitees”) from and against any and all costs, expenses (including
reasonable attorneys’ fees and amounts paid in settlement), damages and
liabilities arising out of Claims resulting directly or indirectly from QuatRx’s
or its Affiliates’ or their respective officers, directors, shareholders,
agents, representatives and employees or any other party acting on their behalf
(a) research, development, or manufacture of Products and potential Products,
(b) negligence, willful misconduct or breach of any term, representation or
warranty of this Agreement or (c) failure to adhere to any applicable law, rule
or regulation, except to the extent such Claim results from any act for which
Collagenex is obligated to indemnify QuatRx Indemnitees under Section 9.1.

9.3. Claim
Management.  In the event that a
Party is seeking indemnification under this Section 9, it shall inform the
other Party of a Claim as soon as reasonably practicable after it receives
notice of the Claim, shall permit the indemnifying Party to assume direction
and control of the defense of the Claim (including the right to settle the
Claim solely for monetary consideration), and shall 

 22
 

 

cooperate as requested in the defense and settlement
of the Claim. The indemnified Party shall not voluntarily make any payment or
incur any expense in connection with any claim or suit without the consent of
the indemnifying Party, provided that if the indemnifying Party does not assume
direction and control of the defense of the Claim, the indemnified Party may
assume direction and control of the defense of the Claim and, if successful,
shall be reimbursed by the indemnifying Party for costs incurred in connection
with such defense.

9.4. Insurance.  Beginning on the Effective Date, Collagenex shall, at its sole cost and
expense, procure and maintain Product and General Liability Insurance
(contractual liability included) with limits as follows:

	
  Each Occurrence — Product

  	
   

  	
  $10,000,000

  
	
  Each
  Occurrence — General

  	
   

  	
  $1,000,000

  
	
  Aggregate
  — Product

  	
   

  	
  $10,000,000

  
	
  Aggregate
  — General

  	
   

  	
  $2,000,000

  
	
   

  	
   

  	
   

  
	
  General
  Umbrella / Excess

  	
   

  	
  $10,000,000

  

 

9.5.  Evidence of Insurance.
 Collagenex shall provide QuatRx with
written evidence of such insurance upon request. Collagenex shall provide
QuatRx with written notice at least 45 days prior to the cancellation,
non-renewal, or material change in such insurance; if Collagenex does not
obtain replacement insurance providing comparable coverage within such 45 day
period, QuatRx shall have the right to terminate this Agreement effective at
the end of such 45 day period without notice or any additional waiting periods.

9.6.  Insurance Retention
Period.  Collagenex shall maintain
such comprehensive, general liability insurance beyond the expiration or
termination of this Agreement during: (i) the period that any Product is being
commercially distributed or sold (other than for the purpose of obtaining
regulatory approvals) by Collagenex or by an Affiliate or sublicensee of
Collagenex and (ii) a reasonable period after the period referred above, but in
no event less than 5 (five) years.

 23
 

 

Section 10. 
Miscellaneous.

10.1. Dispute
Resolution.

10.1.1. Informal Resolution Procedure. The Parties recognize that disputes as to
certain matters may from time to time arise during the term of this Agreement
which relate to either Party’s rights and/or obligations. It is the objective
of the Parties to establish procedures to facilitate the resolution of disputes
arising under this Agreement in an expedient manner by mutual cooperation and
without resort to litigation, if possible. To accomplish this objective, the
Parties agree to follow the procedures set in this Section 10.1 if and when an
issue or dispute arises under this Agreement

10.1.2. Chief Executive Discussion. In the event of any claim, controversy,
issue or dispute arising out of, or related to, this Agreement which the
parties are unable or unwilling to resolve on an informal basis (collectively
referred to hereafter as a “Dispute”), the aggrieved Party shall submit written
notice thereof to the other Party. If representatives of both Parties, other
than their respective chief executive officers, are unable to resolve any such
Dispute arising within their authority within thirty (30) days after receipt of
written notice of same, either Party may, by written notice to the other (the “Executive
Referral Notice”), require that such Dispute be referred to the Parties’
respective chief executive officers for attempted resolution by good faith
negotiations. Within thirty (30) days of the date of the Executive Referral
Notice, such chief executive officers shall meet at a mutually agreeable time
and place and shall use good faith efforts to attempt to resolve such dispute
or issue.

10.1.3. Binding
Arbitration.  If the Dispute is still not resolved 30 days
after the date of the Executive Referral Notice, the Dispute shall be decided
by arbitration before the American Arbitration Association in accordance with
the Commercial Arbitration Rules (“Rules”) of the American Arbitration
Association, unless the Parties agree otherwise. This agreement to arbitrate
shall be specifically enforceable under the Federal Arbitration Act. Within 60
days of the date of the Executive Referral Notice, each Party shall select an
arbitrator and give written notice to the other Party of the identity of such
arbitrator. Within 90 days of the date of the Executive Referral Notice, the
arbitrators shall select a neutral arbitrator. The arbitration shall be
conducted by such panel of three arbitrators selected in accordance with this
Agreement.  In the event the two
Party-selected arbitrators are unable to agree on the identity of the third
arbitrator, such third 

 24
 

 

arbitrator shall be a neutral arbitrator selected in
accordance with the Rules. The award rendered by the arbitrators shall be a “reasoned
award”, including findings of fact and conclusions of law. Such award shall be
final and binding on all Parties, and judgment may be entered thereon in any
court having jurisdiction thereof, except that either Party shall be entitled
to de novo review of said award, including the findings of fact and conclusions
of law, in a court of competent jurisdiction in Chicago, Illinois.  The arbitration shall be held in Chicago,
Illinois.

10.2. Assignment.

10.2.1. Affiliates.
Either Party may assign any of its rights or obligations under this Agreement
in any country in the Territory to any Affiliates; provided, however, that such
assignment shall not relieve the assigning Party of its responsibilities for
performance of its obligations under this Agreement, and further provided that
if a proposed assignment would have an adverse financial impact upon the other
Party (e.g., by reason of changed tax treatment of payments due under this
Agreement), such assignment shall be subject to the other Party’s prior written
consent.

10.2.2. Merger,
Acquisition Or Sale Of Assets. Subject to the terms hereof, either Party
may assign its rights or obligations under this Agreement to a non-Affiliate
only in connection with a merger or similar reorganization or the sale of all
or substantially all of its assets or the sale of all or substantially all of
its pharmaceutical and/or healthcare assets, or otherwise without the prior
written consent of the other Party. This Agreement shall survive any such
merger or reorganization of either Party with or into, or such sale of assets
to, another party and no consent for such merger, reorganization or sale shall
be required hereunder; provided, that in the event of such merger,
reorganization or sale, no intellectual property rights of the acquiring
corporation shall be included in the technology licensed hereunder.

10.2.3. Binding
Upon Successors And Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and permitted assigns of the Parties. Any
assignment not in accordance with this Agreement shall be void.

10.3. Further
Actions. Each Party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate
in order to carry out the purposes and intent of this Agreement.

 25
 

 

10.4. No
Trademark Rights. Except as otherwise provided herein, no right, express or
implied, is granted by this Agreement to use in any manner the name QuatRx,
Collagenex or any other trade name or trademark of the other Party or its
Affiliates in connection with the performance of this Agreement.

10.5. Notices.
All notices hereunder shall be in writing and shall be deemed given if
delivered personally or by facsimile transmission (receipt verified), telexed,
mailed by registered or certified mail (return receipt requested), postage
prepaid, or sent by 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, that notices of a change of address shall be effective only
upon receipt thereof).

If to QuatRx, addressed
to:

QuatRx
Pharmaceuticals Company

777 East Eisenhower Parkway, Suite 100

Ann Arbor, MI 48108
 Attention:  President and CEO

Telephone:  734-913-9900

Telecopy:  734-913-0743

If to Collagenex,
addressed to:

Collagenex
Pharmaceuticals, Inc.

41 University Drive Suite
200

Newtown, PA
 Attention:  President and Chief
Executive Officer

Telephone:  215-579-7388

Telecopy:  215-579-8577

10.6. Limitation
Of Liability.  IN NO EVENT SHALL
EITHER PARTY OR ITS RESPECTIVE AFFILIATES AND PERMITTED SUBLICENSEES BE LIABLE
FOR SPECIAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER IN CONTRACT,
WARRANTY, TORT, STRICT LIABILITY OR OTHERWISE, except to the extent such Party
may be required to indemnify the other Party from such damages claimed by third
parties under Article 9.

 26

 

10.7. Waiver.
 Except as specifically provided for
herein, the waiver from time to time by either of the Parties of any of their
rights or their failure to exercise any remedy shall not operate or be
construed as a continuing waiver of same or of any other of such Party’s rights
or remedies provided in this Agreement.

10.8. Severability.
 If any term, covenant or condition of
this Agreement or the application thereof to any Party or circumstance shall,
to any extent, be held to be invalid or unenforceable, then (i) the remainder
of this Agreement, or the application of such term, covenant or condition to
the Parties or under circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby and each term, covenant
or condition of this Agreement shall be valid and be enforced to the fullest
extent permitted by law; and (ii) the Parties hereto covenant and agree to
renegotiate any such term, covenant or application thereof in good faith in
order to provide a reasonably acceptable alternative to the term, covenant or
condition of this Agreement or the application thereof that is invalid or
unenforceable, it being the intent of the Parties that the basic purposes of
this Agreement are to be effectuated.

10.9. Ambiguities.
 Ambiguities, if any, in this Agreement
shall not be construed against any Party, irrespective of which Party may be
deemed to have authored the ambiguous provision.

10.10. Governing
Law.  This Agreement is made pursuant
to and shall be governed by and construed in accordance with the laws of the
State of Michigan, United States, without reference to conflicts of laws’ rules
or principles.

10.11.
Bankruptcy Provision.  All rights
and licenses granted by QuatRx to Collagenex under or pursuant to this Agreement
are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code, licenses of rights to “intellectual property” as defined
in Section 101 of the Bankruptcy Code. The Parties agree that Collagenex, as
exclusive licensee of such rights under this Agreement, shall retain and may
fully exercise all of its rights and elections under the Bankruptcy Code. The
Parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against QuatRx under the Bankruptcy Code, Collagenex shall be
entitled to a complete duplicate of (or complete access to, as appropriate) any
such intellectual property and all embodiments of such intellectual property,
and same, if not already in its possession, shall be promptly delivered to
Collagenex (i) upon such commencement of a bankruptcy proceeding, unless QuatRx
elects to continue to 

 27
 

 

perform all of its obligations under this Agreement;
or (ii) if not delivered under (i) above, upon rejection of this Agreement by
or on behalf of QuatRx.

10.12. Headings.
 The section headings contained herein
are for the purposes of convenience only and are not intended to define or
limit the contents of said sections.

10.13. Counterparts.
 This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

10.14. Entire
Agreement.  This Agreement and all
exhibits attached hereto, and all documents delivered concurrently herewith, set
forth all the covenants, promises, agreements, warranties, representations,
conditions and understandings between the Parties hereto with respect to the
subject matter hereof and supersede and terminate all prior agreements and
understandings between the Parties as to such subject matter. There are no
covenants, promises, agreements, warranties, representations, conditions or
understandings, either oral or written, between the Parties with respect to
such subject matter other than as set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties hereto unless reduced to writing and signed by the respective
authorized officers of the Parties.

10.15. Independent
Contractors.  Each Party acknowledges
that neither it nor any of its employees are employees of the other Party and
that neither it nor any of its employees are eligible to participate in any
employee benefit plans of the other Party. Each Party further acknowledges that
neither it nor any of its employees are eligible to participate in any such
benefit plans even if it is later determined that its or any of its employees’
status during the period of this Agreement was that of an employee of the other
Party. In addition, each Party hereby waives any claim that it may have under
the terms of any such benefit plans or under any law for participation in or
benefits under any of the other Party’s benefit plans.

10.16. Use Of
Names.  Neither Party shall use the
name of the other Party in relation to this transaction in any public
announcement, press release or other public document without the written
consent of such other Party, which consent shall not be unreasonably withheld
or delayed; provided, however, that either Party may use the name of the other
Party in any document required to be filed to obtain regulatory approval for
Product or to comply with applicable laws, rules or regulations, including,
without limitation, applicable securities laws. The Parties 

 28
 

 

agree that the press release set forth in Exhibit
10.16 shall be issued on an agreed upon date and time within five business days
of the execution of this Agreement (or such earlier date on which a Form 8-K
with respect thereto is required to be filed under U.S. federal securities
laws).

10.17. Force
Majeure.  Neither Party shall lose
any rights hereunder or be liable to the other Party for damages or losses on
account of failure of performance by the defaulting Party if the failure is
occasioned by government action, war, fire, earthquake, explosion, flood,
strike, lockout, embargo, act of God, or any other similar or dissimilar cause
beyond the control of the defaulting Party, provided that the Party claiming
force majeure has exerted all reasonable efforts to avoid or remedy such force
majeure. If such force majeure event cannot be remedied within 120 days of
occurrence, then the non-defaulting Party shall have the right to terminate
this Agreement upon written notice to the other Party.

 29
 

 

IN WITNESS WHEREOF,
the parties hereto have duly executed this Sub-License Agreement as of the
Effective Date.

	
  QUATRX PHARMACEUTICALS

  COMPANY

  	
   

  	
  COLLAGENEX

  PHARMACEUTICALS, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ C. I.
  Nicholas

  	
   

  	
  By:

  	
  /s/ Colin Stewart

  	
   

  	
   

  
	
   

  	
  (Signature)

  	
   

  	
   

  	
  (Signature)

  	
   

  	
   

  
	
   

  	
  C. I. Nicholas

  	
   

  	
   

  	
  Colin Stewart

  	
   

  	
   

  
	
   

  	
  (Print Name)

  	
   

  	
   

  	
  (Print Name)

  	
   

  	
   

  
	
  Title:

  	
  Chief Operating
  Officer

  	
   

  	
  Title:

  	
  President & CEO

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 30
 

 

EXHIBIT A

TO
SUB-LICENSE AGREEMENT

QuatRx Owned Patents:

U.S.
Provisional No. [**].

U.S. Provisional No. [**].

QuatRx In-Licensed Patents:

See attached
schedule 1 to Exhibit A

 

 31
 

 

SCHEDULE
1 TO EXHIBIT A

TO SUB-LICENSE AGREEMENT

 

Confidential Materials
omitted and filed separately with the Securities and Exchange Commission.

Asterisks denote omissions. 

                                   [**]

 

 32

 

EXHIBIT B

TO SUB-LICENSE
AGREEMENT

COLLAGENEX
BECOCALCIDIOL DEVELOPMENT PLAN

The following is a
broadly defined development plan for becocalcidiol given what is known about
the compound to date. As future requirements of regulatory agencies and
decisions based upon safety, efficacy, and supply of compound cannot be
determined at this time, this plan should be used as a general outline.

Process Development:

[**].

Clinical:

Phase II study — [**].

Phase II study — [**].

Phase III studies — [**].

[**].

Preclinical:

[**]

 33
 

 

EXHIBIT C

TO
SUB-LICENSE AGREEMENT

COLLAGENEX
DILIGENCE MILESTONES

1.               Dose
the first patient in a Phase II trial of a Product within [**] of the Effective
Date.

2.               Initiate
carcinogenicity toxicology studies to support a Product NDA within [**] years
of the Effective Date.

3.               Dose
the first patient in a Phase III trial of a Product within [**] years of the
Effective Date.

4.               Submit
an NDA for a Product with the FDA within [**] years of the Effective Date.

5.               Submit
an application for marketing approval in the European Union to a foreign
equivalent of the FDA within [**] years of the Effective Date.

6.               Achieve
the First Commercial Sale of a Product in the United States within [**] months
after approval by the FDA.

7.               Launch
and market each subsequent Product in the United States within [**] months of
receiving approval for such Product from the FDA.

8.               At
least [**] months prior to submission for approval of an NDA for a Product,
prepare and submit to QuatRx in writing a list of countries, other than the
United States and European Union, in which CollaGenex intends to file for
marketing approval for sale of such Product. Within [**] months from NDA
approval of a Product in the United States, prepare and submit to QuatRx for
approval a schedule of milestone dates by which CollaGenex intends to file for
marketing approval for sale of a Product for human use in those countries or
regions other than the USA or the European Union that are in the Territory,
which dates, once approved by QuatRx, shall be considered Diligence Milestones.

9.               Fill
the market demand for Products following commencement of marketing.

 34
 

 

EXHIBIT 10.16

TO
SUB-LICENSE AGREEMENT

Press Release

	
  

  	
   

  	
  CollaGenex Company 

  
	
   

  	
   

  	
  Contact:

  
	
   

  	
   

  	
  Nancy Broadbent

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
  (215) 579-7388

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  QuatRx Company Contact:

  
	
   

  	
   

  	
  Julia Owens

  
	
   

  	
   

  	
  (734) 913-9900

  

 

CollaGenex
Pharmaceuticals and QuatRx Pharmaceuticals Announce Agreement for the
Development and Commercialization of Becocalcidiol

Newtown,
PA and Ann Arbor, MI, May   , 2007—CollaGenex Pharmaceuticals, Inc. (Nasdaq:
CGPI) and QuatRx Pharmaceuticals Company today announced a licensing agreement
to develop and commercialize becocalcidiol, a patented Vitamin D analogue
currently in Phase II clinical trials for the topical treatment of mild to
moderate psoriasis. Unlike all other Vitamin D-based treatments for psoriasis,
becocalcidiol does not appear to induce hypercalcemia, a significant
dose-limiting toxicity. According to the National Institutes of Health, approximately
7.5 million Americans have psoriasis, a non-contagious, chronic skin disease
characterized by itching and red, scaly patches of skin.

Colin Stewart, president and
chief executive officer of CollaGenex, said, “We have been in discussions with
QuatRx for a number of months and have been very impressed with the quality of
their research and development efforts. This license is another important step
in executing our strategy to become a leader in therapeutic dermatology by
developing a broad portfolio of innovative, proprietary products. The market
for non-biological treatments of psoriasis is currently $600 million. This
compound has great potential as a unique treatment for psoriasis and is an
excellent fit for CollaGenex.”

Dr. Klaus Theobald, Chief Medical
Officer of CollaGenex, commented, “Becocalcidiol has shown efficacy in the
clinic and appears to be a non-irritating formulation for the treatment of
psoriasis. It is unique among available Vitamin D analogues because it does not
seem to promote hypercalcemia. If successfully developed, this product could
provide significant advances in the topical treatment of psoriasis.”

 35
 

 

Robert Zerbe, M.D.,
president and chief executive officer of QuatRx, said, “QuatRx is extremely
pleased to have CollaGenex continue the development of becocalcidiol. With its
strong development team and expertise in dermatology, we believe CollaGenex is
the ideal strategic partner to maximize the potential of this important new
product candidate.”

The license provides for the
right to practice various patents, patent applications and related technology
covering the compound and methods of using it topically to treat psoriasis and
other skin diseases. Under the terms of the agreement, CollaGenex will pay an
upfront licensing fee of $1.5 million to QuatRx and will be responsible for all
further development costs. Additional fees are payable upon the achievement of
various development and sales milestones. The agreement also provides for
royalty payments linked to future product sales.

About
QuatRx

QuatRx Pharmaceuticals Company is a privately-held biopharmaceutical
company focused on the discovery, development and commercialization of
compounds to treat endocrine, metabolic and cardiovascular disorders. In
addition to becocalcidiol, QuatRx has three other product candidates in
clinical development and two in preclinical development. OphenaTM, being studied
in a large Phase 3 trial, is a potential estrogen-free therapy for
post-menopausal vaginal syndrome, a common problem that results from thinning
of vaginal tissues associated with estrogen deficiency of menopause.
Fispemifene is a new, selective estrogen receptor antagonist that is in Phase 2
studies as an oral treatment for testosterone deficiency and associated
disorders in men. QRX-431, a novel, selective thyroid receptor beta antagonist,
is in Phase 1 studies as a potential treatment for lipid disorders and obesity.
QuatRx’s two preclinical small molecule drug programs are designed to address
common endocrine disorders in women.

About CollaGenex

CollaGenex Pharmaceuticals, Inc. is a specialty pharmaceutical company
currently focused on developing and marketing proprietary, innovative medical
therapies to the dermatology market. In July 2006, CollaGenex launched Oracea,
the first FDA-approved systemic product for the treatment of rosacea. CollaGenex’s
professional dermatology sales force also markets Pandel, a prescription
topical corticosteroid licensed from Altana, Inc., Alcortin(R) (1% iodoquinol
and 2% hydrocortisone), a prescription topical antifungal steroid combination,
and Novacort(R) (2% hydrocortisone acetate and 1% pramoxine HCl), a
prescription topical steroid and anesthetic. Alcortin and Novacort are marketed
by the Company under a Promotion and Cooperation agreement with Primus
Pharmaceuticals, Inc. CollaGenex is conducting two Phase II dose-finding
studies to evaluate its second dermatology candidate, incyclinide, for the
treatment of acne and rosacea, respectively. CollaGenex is also conducting
Phase II clinical trials to evaluate COL-118, a topical compound based on the
SansRosa technology, for the treatment of redness associated with rosacea and
other skin disorders.

Research has shown that compounds can be created by chemically
modifying certain tetracyclines and that these new compounds have properties
that may make them effective in treating diseases involving inflammation and/or
destruction of the body’s connective tissues. 

 36
 

 

CollaGenex is evaluating various chemically modified
tetracyclines (so called “IMPACS”(TM) compounds because they are Inhibitors of
Multiple Proteases And CytokineS) to assess whether they are safe and effective
in these applications. The Company has a pipeline of innovative product
candidates with possible applications in dermatology and other disease states. In
addition, CollaGenex has acquired the SansRosa(TM) technology, which consists
of a class of compounds that have shown promise in reducing the redness
associated with rosacea, and the Restoraderm(R) technology, a unique,
proprietary dermal drug delivery system. CollaGenex plans to leverage these
platforms to develop a range of topical dermatological products with enhanced
pharmacologic and cosmetic properties.

To receive additional information on the Company, please visit our
Website at www.collagenex.com, which does not form part of this press release.

Statements in this press release regarding management’s future
expectations, beliefs, intentions, goals, strategies, plans or prospects,
including statements relating to the Company’s plans to develop becocalcidiol
and its future research and development efforts relating to Oracea, incyclinide
and COL-118 and its dermatology franchise, product pipeline and intellectual,
property, may constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking statements
can be identified by terminology such as “anticipate,” “believe,” “could,” “could
increase the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,”
“will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would”
or similar terms, variations of such terms or the negative of those terms. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors including those risks, uncertainties and factors referred to in
the Company’s Annual Report on Form 10-Q for the quarter ended March 31, 2007
filed with the Securities and Exchange Commission under the section “Risk
Factors,” as well as other documents that may be filed by CollaGenex from time
to time with the Securities and Exchange Commission. As a result of such risks,
uncertainties and factors, the Company’s actual results may differ materially
from any future results, performance or achievements discussed in or implied by
the forward-looking statements contained herein. CollaGenex is providing the
information in this press release as of this date and assumes no obligations to
update the information included in this press release or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

Periostat(R), Restoraderm(R) and Oracea(R) are
registered trademarks and IMPACS(TM) and SansRosa(TM)  are
trademarks of CollaGenex Pharmaceuticals, Inc.

Novacort(R) and Alcortin(R) are trademarks of Primus
Pharmaceuticals, Inc.

Pandel(R) is a trademark of Taisho Pharmaceuticals.

Atridox(R), Atrisorb(R) and Atrisorb-D(R) are
registered trademarks of Tolmar, Inc.

OphenaTM is a trademark of QuatRx
Pharmaceuticals Company.

 37
 

 

All other trade names, trademarks or service marks are the
property of their respective owners and are not the property of CollaGenex
Pharmaceuticals, Inc. or any of our subsidiaries.

# # #

 38

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