Document:

Exhibit 10.10

 

RESEARCH AND LICENCE AGREEMENT

 

Entered into on June 2, 2005

 

Between

 

YEDA RESEARCH AND DEVELOPMENT COMPANY LIMITED

 

a company duly registered under the laws of Israel of P O Box 95, Rehovot 76100, Israel

 

(hereinafter, “Yeda”)

 

and

 

BRAINSWAY, INC.

 

a company duly registered under the laws of the state of Delaware, U.S.A

 

(hereinafter, “the Company”)

 

	
PREAMBLE:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
WHEREAS:
    	
 
    	
(A)
    	
 
    	
the Company engages in the development and   production of transcranial magnetic stimulation (“TMS”)   apparatus and therapies for the treatment of depression, addictions and   certain brain deficiencies and/or malfunctions; and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(B)
    	
 
    	
the Company is interested in the performance of   research at the Weizmann Institute of Science (“the   Institute”) under the supervision of Dr. Abraham Zangen (“the Scientist”) of the Department of Neurobiology in the   field of depression, as specified in the research program attached hereto,   marked Appendix A (“the Research Program” and   “the Research”); and is willing,   subject to and in accordance with the terms and conditions of this Agreement,   to finance the performance of the Research in accordance with the budget   attached hereto and marked Appendix B (“the   Research Budget”); and
    

 

	
Ref: 05-2595-04-4
    	
No.: 60604-001
    
	
L/88017/4000/407949/1
    	
 
    

 

 

	
 
    	
 
    	
(C)
    	
 
    	
Yeda is willing, subject to and in accordance with   the terms and conditions of this Agreement, to procure the performance of the   Research in accordance with the Research Program and the Research Budget, at   the Institute as aforesaid; and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(D)
    	
 
    	
by operation of Israeli law and/or under the terms   of employment of the Scientist at the Institute and pursuant to an agreement   between the Institute, Yeda and the Scientist, all right, title and interest   of the Scientist and/or the Institute in and to any results deriving from the   performance of the Research at the Institute, vests and shall vest in Yeda;   and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(E)
    	
 
    	
subject to and in accordance with the terms of this   Agreement, the Company wishes to receive, and Yeda is willing to grant to the   Company, a worldwide exclusive licence in respect of the Licensed Information   (as hereinafter defined) and under the Patents (as hereinafter defined), for   the research, development, manufacture, production, commercialisation and   sale of Products (as hereinafter defined), all subject to and in accordance   with the terms and conditions of this Agreement below; and
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(F)
    	
 
    	
the Company declares that: (i) on 10   August 2003 the Company entered into a patent license agreement with the   U.S. National Institutes of Health, the U.S. Center for Disease Control and   Prevention, and/or the U.S. Food and Drug Administration (“the FDA”) (collectively, “PHS”), acting for and behalf of the U.S.   Department of Health and Human Services (“the   U.S. DHHS”), pursuant to which, inter   alia, PHS granted to the Company, a worldwide exclusive licence in   respect of U.S. provisional application no. 60/242,297 and corresponding PCT   patent application number PCT/US01/50737, entitled “Coil For Magnetic Stimulation and Methods For Using The   Same” (“the U.S. DHHS Patent   Applications”) and in respect of certain patent applications   corresponding to the U.S. DHHS Patent Applications and all patents issuing on   any of the aforegoing patent applications (such agreement, “the PHS Patent License Agreement”); and   (ii) it has received an undertaking from investor(s), pursuant to a   signed agreement of July 17, 2003 to make an aggregate cumulative   investment in the Company of at least US $1,000,000 (one million United   States Dollars), to be expended for the purpose of the development of   Products pursuant to this Agreement as part of the Company’s business   activities,
    

 

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NOW THEREFORE IT IS AGREED BETWEEN THE PARTIES HERETO AS FOLLOWS:

 

1.                          PREAMBLE, APPENDICES AND INTERPRETATION

 

1.1.                            The Preamble and Appendices hereto form an integral part of this Agreement.

 

1.2.                            In this Agreement the terms below shall bear the meanings assigned to them below, unless the context shall indicate a contrary intention:

 

 

	
1.2.1.
    	
“Affiliated   Entity”
    	
— shall mean,   with respect to any party hereto, any company, corporation, other entity or   person (hereinafter, collectively, “entity”),   which directly or indirectly, is controlled by, or controls, or is   under common control with, such party. For the purposes of this definition, “control” shall mean the ability,   directly or indirectly, to direct the activities of the relevant entity (save   for an ability flowing solely from the fulfillment of the office of director   or another office) and shall include, without limitation, the holding,   directly or indirectly, of 51% (fifty-one percent) or more of the issued   share capital or of the voting power of the relevant entity or the holding,   directly or indirectly, of a right to appoint more than 51% (fifty-one   percent) or more of the directors of such entity or of a right to appoint the   chief executive officer of such entity;
    
	
 
    	
 
    	
 
    
	
1.2.2.
    	
“Development   Program”
    	
— shall mean,   with respect to any Product or Products, the development program specifying   the activities and timetable necessary to develop such Products to   commercialisation, including the performance of safety and efficacy tests,   preclinical tests and clinical trials and the steps required for obtaining   regulatory approvals from the FDA or equivalent regulating authorities in   other countries, and the development of procedures and facilities for   commercial production of such Products, sales projections and proposed   marketing efforts;
    

 

	
Ref.: 05-2595-04-4
    	
No. 50604-001
    
	
L/88017/4000/407949/1
    	
 
    

 

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1.2.3.
    	
“Exchange   Rate”
    	
— shall mean, with respect to any amount to be   calculated, or which is paid or received in a currency other than US Dollars,   the rate reported in the Wall Street   Journal for the purchase of US Dollars with such currency except   if such currency is New Israel Sheqels, in which case such rate shall be the   Bank Hapoalim Rate as defined below, on the last Business Day prior to the   date of calculation, payment or receipt, as the case may be; for the purpose   of the above, “Business Day” shall   be a day, other than a Saturday, Sunday or other day on which the principal   banks located in Tel-Aviv are not open for business during normal banking   hours; and “Bank Hapoalim Rate” shall   mean the average of the selling and buying exchange rates of New Israel   Sheqels (in respect of cheques and remittances) and the US Dollar prevailing   at Bank Hapoalim B.M. at the end of business on the date of calculation,   payment or receipt, as the case may be;
    
	
 
    	
 
    	
 
    
	
1.2.4.
    	
“First   Commercial Sale”
    	
— shall mean,   with respect to any Product in any country, the first commercial sale, in   exchange for cash or some equivalent to which value can be assigned, for the   purposes of determining Net Sales hereunder, of such Product in such country   after the obtaining of all necessary regulatory approvals required (if   required) in such country for the commercial sale of such Product, other than a sale for experimental,   promotional, compassionate or test market purposes;
    

 

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1.2.5.
    	
“Licence”
    	
— shall mean an exclusive worldwide licence under   the Licensed Information and the Patents, for the research, development,   manufacture, production, commercialisation and sale of the Products for any   indications whatsoever, in all therapeutic areas, subject to the provisions   of clause 7.1 below and the other terms and conditions of this Agreement;
    
	
 
    	
 
    	
 
    
	
1.2.6.
    	
“Licensed   Information”
    	
— shall mean all and any inventions, products,   materials, compounds, compositions, substances, methods, processes,   techniques, know-how, data, information, discoveries and other results of   whatsoever nature discovered or occurring in the course of, or arising from,   the performance of the Research;
    
	
 
    	
 
    	
 
    
	
1.2.7.
    	
“Net   Sales”
    	
— shall mean the total amount received by the   Company and the total amount received by each Sublicensee in connection with   the sale of Products (for the removal of doubt, whether such sales are made   before or after the First Commercial Sale of any Product in any country);   provided that, with respect to sales which are not at arms-length and/or are   not in the ordinary course of business and/or are not according to then   current market conditions for such a sale, the term “Net Sales” shall mean the total amount   that would have been due in an arms-length sale made in the ordinary course   of business and according to the then current market conditions for such sale   or, in the absence of such current market conditions, according to market   conditions for sale of products similar to the Products, in all cases after deduction of   amounts actually received in respect of such sales which are:
    

 

	
Ref.: 05-2595-04-4
    	
No.: 60504-001
    
	
L/88017/40O0/4O7949/I
    	
 
    

 

 

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(i)    in respect of sales taxes (including value added   taxes) to the extent applicable to such sale and included in the invoice in   respect of such sale;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)   are subsequently repaid to   the purchaser in the form of credits or allowances, if any, actually granted   on account of price adjustments, recalls, rejections or returns of Products   previously sold;

 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii)  in respect of packing, freight, shipping and   insurance charges applicable to the Products sold to the extent such items   are separately itemised on invoices; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iv)  wholesaler and cash discounts in amounts customary   in the trade, to the extent actually granted;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
and provided further   that, with respect to sales by the Company and/or a Sublicensee, as   applicable, to any Affiliated Entity of the Company or of such Sublicensee,   as the case may be, the term, “Net Sales”   shall mean the higher of: (a) “Net Sales”, as defined above, with   respect to sales which are not at arms-length and/or in the ordinary course   of business and/or according to current market conditions; and (b) the   total amount received by such Affiliated Entity on resale to an independent   third party purchaser after the deductions specified in subparagraphs (i),   (ii), (iii) and (iv) above, to the extent applicable;
    

 

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1.2.8.
    	
“Patents”
    	
— shall mean all patent applications or applications   for certificates of invention covering portions of the Licensed Information   and all patents or certificates of invention which may be granted thereon; as   well as all continuations, continuations-in-part, patents of addition,   divisions, renewals, reissues and extensions of any of the aforegoing   patents, but excluding: (a) patents that have been held unpatentable or   invalid or cancelled pursuant to the final (i.e.,   unappealable or unappealed) judgment of a competent court; and   (b) patent applications that have been withdrawn or have expired, in   each case, such exclusion to be effective only from the date of such   judgment, or such withdrawal or expiry, as the case may be.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
For the purposes   of this Agreement the term “patent” shall also mean “Orphan Drug” status   (within the meaning of such term under the US Orphan Drug Act), Supplementary   Protection, Certificate (within the meaning of such term under Council   Regulation (EU) No. 1768/92) and/or any other similar statutory   protection;
    
	
 
    	
 
    	
 
    
	
1.2.9.
    	
“Research   Period”
    	
— shall mean the 3 (three) year period commencing on   the date of signature of this Agreement;
    

 

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1.2.10.
    	
“Products”
    	
— shall mean any products, apparatuses, or devices   within the Field of Use, for treatment of all indications in all therapeutic   areas, the development, manufacture or sale of which is based, in whole or in   part, on, or involves the use of, the Licensed Information or any part   thereof, or is otherwise covered (in whole or in part) by, or falls within   the scope of, or which are produced or manufactured using a process or method   covered by, or falling within the scope of, any claim under any Patent   (including under any patent application falling within the definition of   Patents). For the purposes of the above, “Field   of Use” shall mean the field of TMS apparatus and therapies;
    
	
 
    	
 
    	
 
    
	
1.2.11.
    	
“Sublicence”   and “Sublicensee”
    	
— “Sublicence” shall   mean any right granted, licence given, or agreement entered into, by the   Company to or with any other person or entity, permitting any use of the   Licensed Information and/or the Patents (or any part thereof) for the   development and/or manufacture and/or marketing and/or distribution and/or   sale of Products (whether or not such grant of rights, licence given or   agreement entered into is described as a sublicence or as an agreement with   respect to the development and/or manufacture and/or distribution and/or   marketing and/or sale of Products or otherwise) and the term “Sublicensee” shall be construed   accordingly;
    
	
 
    	
 
    	
 
    
	
1.2.12.
    	
“Sublicensing   Receipts”
    	
— shall mean consideration, whether monetary or   otherwise, received (for the removal of doubt, whether received before or   after the First Commercial Sale in any country) by the Company for or from   the grant of Sublicences and/or pursuant thereto, or in connection with the   grant of an option for a Sublicence, except   for:
    

 

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(i)      amounts received by the Company which   constitute royalties based on sales of the Products by Sublicensees in   respect of which the Company has paid royalties to Yeda, or owes such   royalties, under the terms of this Agreement;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)     gross receipts for commercial sales of Products   in respect of which the Company has paid royalties to Yeda;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii)    amounts received from a Sublicensee and actually   expended by the Company in respect of future research and development   activities to be performed at the Company for or on behalf of such   Sublicensee with regard to the Product or Products being the subject-matter   of the Sublicence, provided that;
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)              such research and development   activities are performed pursuant to a defined research and development   program and budget agreed between the Company and such Sublicensee, a copy of   which is furnished to Yeda; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)              the Company submits to Yeda a written   report, audited by the Company’s independent auditor, setting out the time   and materials utilised, and overhead costs and other expenses actually   incurred by the Company in the conduct of the said research and development   activities, which demonstrates that reasonable amounts have actually been   expended by the Company in the conduct of such research and development   activities,
    

 

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it being agreed, for   the removal of doubt, that any amounts received by the Company as aforesaid,   but not expended as set out above, shall be deemed to be Sublicensing   Receipts; and
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iv)      equity investments in the   Company at current market rates;
    
	
 
    	
 
    	
 
    
	
1.2.13.
    	
“U.S. DHHS Patents”
    	
—           shall mean all patent   applications (including the U.S. DHH Patent Applications) and all patents (as   well as all continuations, continuations-in-part, divisions, renewals,   reissues and extensions of the aforegoing patent applications and/or patents   (as the case may be)) in respect of which the Company has received a licence   from PHS under the PHS Patent License Agreement, and which have not been held   unpatentable or invalid or cancelled pursuant to the final judgment of a competent   court; or, in the case of patent applications—have not been withdrawn or   expired;
    

 

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1.2.14.
    	
“U.S. DHHS Patent Protected   Product(s)”
    	
—           shall mean any   Product(s) that cannot be developed, manufactured or sold without   infringing a claim under any U.S. DHHS Patent; and
    
	
 
    	
 
    	
 
    
	
1.2.15.
    	
the terms: “Yeda”, “the Company”, “TMS”   “the Institute”, “the Scientist”, “the Research Program”, “the Research”,   “the Research Budget”, “the FDA”, “PHS”, “the U.S. DHHS”, “the U.S. DHHS   Patent Applications and “the PHS Patent License   Agreement”
    	
—           shall bear the   definitions assigned to them respectively in the heading or the preamble   hereto, as the case may be.
    
	
 
    	
 
    	
 
    
	
1.3.                            In   this Agreement:
    	
 
    
	
 
    	
 
    
	
1.3.1.
    	
words importing the   singular shall include the plural and vice-versa and   words importing any gender shall include all other genders and references to   persons shall include partnerships, corporations and unincorporated   associations; and
    
	
 
    	
 
    
	
1.3.2.
    	
any reference in this   Agreement to the term “patent” shall also include any re-issues, divisions,   continuations or extensions thereof (including measures having equivalent   effect); and
    
	
 
    	
 
    
	
1.3.3.
    	
any reference in this   Agreement to the term “patent applications” shall include any provisional   patent applications, applications for continuations, continuations-in-part,   divisions, patents of addition or renewals, as well as any other applications   or filings for similar statutory protection; and
    
	
 
    	
 
    
	
1.3.4.
    	
any reference in this   Agreement to the term “sale” shall include the sale, lease, rental or other   disposal of any Product;
    
	
 
    	
 
    
	
1.3.5.
    	
“including” and   “includes” means including, without   limiting the generality of any description preceding such terms;
    
	
 
    	
 
    
	
1.3.6.
    	
in the event of any   discrepancy between the terms of this Agreement and any of the Appendices   hereto, the terms of this Agreement shall prevail.
    

 

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2.                                      PERFORMANCE OF THE RESEARCH

 

	
2.1.
    	
In consideration of the sums to be paid by the   Company to Yeda pursuant to clause 3 below and, subject to the execution of   such payments, Yeda undertakes, subject to clause 2.2 below, to procure the   performance of the Research at the Institute under the supervision of the   Scientist during, and for the duration of, the Research Period. By prior   written agreement of the parties, the Research Period may be extended by such   period and upon such terms and conditions as the parties shall so agree.
    
	
 
    	
 
    	
 
    
	
2.2.
    	
If the Scientist shall cease to be available for the   supervision of the performance of the Research, such cessation shall not   constitute a breach of this Agreement by Yeda. If no replacement scientist   can be found, who is acceptable to the Company, at its sole and absolute   discretion, within 30 (thirty) days of the Scientist becoming unavailable as   aforesaid, then the Company shall be entitled, by written notice to Yeda, to   terminate the Research Period, in which event the Research Period and the   performance of Research hereunder shall cease at the end of a further period   of 30 (thirty) days from the date of receipt by Yeda of such written notice.   In the event of such termination, Yeda shall be released from any obligation   to procure the performance of the Research during the period after such   termination, and the Company shall be released from any obligation to finance   the Research in respect of the period commencing after such termination, but   without affecting the Licence and all the other terms and conditions of this   Agreement which shall remain in full force and effect (save for those   relating to the performance and financing of the Research).
    
	
 
    	
 
    	
 
    
	
2.3.
    	
It is agreed that the performance of the Research   shall be subject to applicable Israeli law. Without derogating from the   generality of the foregoing, if the performance of the Research shall involve   the conduct of experiments on and/or using animals and/or human subjects   and/or human material (such as cells, blood, tissue, DNA, RNA, lysates, or   body fluids), then the performance of the Research and the Research Program   shall be subject to: (i) the Israeli Anti-Cruelty Law, 1994 and to the   approval of, and any modifications requested by, the Institutional Animal   Care and Use Committee and the Safety Committee of the Institute, in order to   ensure compliance with applicable law; and (ii) the approval of, and any   modifications requested by the Safety Committee of the Institute and the   Institutional Review Board for Human Experimentation, as the case may be.
    
	
 
    	
 
    	
 
    
	
2.4.
    	
For the avoidance of doubt, it is agreed that   nothing in this Agreement shall constitute a representation or warranty by   Yeda, express or implied, that any results will be achieved by the Research   or that the Licensed Information or any of the results achieved by the   Research are or will be commercially exploitable or of any other value and   Yeda furthermore makes no warranties and representations, express or implied,   whatsoever as to the Research, any results of the Research or the Licensed   Information.
    

 

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3.                                      FUNDING THE RESEARCH

 

The Company undertakes to pay to Yeda the total amount (in US Dollars) of the Research Budget (being US $79,446 (seventy-nine thousand, four hundred and forty-six United States Dollars)) in 12 (twelve) equal 3 (three) monthly instalments, payable in advance at the beginning of each 3 (three) month period during the Research Period, the first such payment to be made on the date of signature of this Agreement. In the event that the Research to be performed in any calendar quarter (“the relevant calendar quarter”) is not performed during such calendar quarter or prior thereto, the Company shall be entitled to: (a) postpone payment of the instalment in respect of the second calendar quarter following the relevant calendar quarter (i.e., the instalment due at the beginning of the 3rd (third) calendar month following the expiry of the relevant calendar quarter), until such time as such part of the Research has been performed, provided that written notification is given to Yeda to such effect no later than 7 (seven) days after the end of the relevant calendar quarter; and/or (b) to terminate the Research Period, by written notice to Yeda, no later than 14 (fourteen) days prior to the date of expiry of the first calendar quarter following the relevant calendar quarter, in which event the Research Period and the performance of Research hereunder shall cease at the end of such calendar quarter. An invoice in respect of an instalment paid as aforesaid shall be issued by Yeda promptly after the receipt by Yeda of such instalment. All payments of the Research Budget shall be made by direct wire transfer to Yeda’s bank account, the details of which are as follows: Bank Hapoalim B.M. Rehovot branch #615 account no. 37852; swift: POALILIT. For the removal of doubt, nothing contained in this Agreement shall prevent Yeda and/or the Institute from obtaining further finance for the Research from other entities, provided that, in Yeda’s reasonable opinion, such other entities are not granted any rights in respect of the Research and/or the Licensed Information which prejudices any rights granted to the Company under the Licence, and provided further that the obtaining of further finance for Research in the field of depression shall be subject to the prior written consent of the Company which shall not be withheld or delayed unreasonably. For the removal of doubt, the results of any research at the Institute financed by other entities shall not form part of the Licensed Information and shall not be subject to the Licence hereunder. For the further removal of doubt, the Company shall not bear the consequences (whether financial or otherwise) of the obtaining by Yeda of such additional funding, in any manner whatsoever, all of the aforegoing without derogating from any of the Company’s obligations under this Agreement.

 

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4.                                      REPORTING BY YEDA

 

	
4.1.
    	
Yeda will procure the preparation by the Scientist   of, and shall submit to the Company: (i) an interim written report on   the progress of the Research in each 6 (six) month period during the Research   Period, within 60 (sixty) days of the end of each such 6 (six) month period,   and of a written report summarising the results of the Research within 60   (sixty) days of the end of the Research Period; and (ii) reports of any   significant findings in the Research promptly upon such findings being made.
    
	
 
    	
 
    
	
4.2.
    	
Yeda shall submit to the Company, with respect to   each 6 (six) month period of the Research Period, a financial report setting   forth the monies received and expended in connection with the Research during   such 6 (six) month period. Each report as aforesaid shall be submitted to the   Company not later than 60 (sixty) days after the end of the period covered by   such report. Charges in respect of Research expenditures shall be made in   accordance with the procedures prevailing at the Institute for charging   research expenditures to individual projects of applied research.
    
	
 
    	
 
    
	
5.                                      TITLE
    
	
 
    
	
5.1.
    	
Subject only to the Licence and the rights granted   to the Company thereunder, all right, title and interest in and to the   Licensed Information and the Patents and all right, title and interest in and   to any drawings, plans, diagrams, specifications, other documents, models, or   any other physical matter in any way containing, representing or embodying   any of the aforegoing, vest and shall vest in Yeda.
    
	
 
    	
 
    
	
5.2.
    	
Nothing contained herein shall be construed as   granting Yeda any rights in or to or in connection with any of the U.S. DHHS   Patent Applications.
    
	
 
    	
 
    
	
 
    	
Without derogating from the provisions of clause 12   below, in the event that Yeda receives notification from, or any claim or   suit filed by PHS claiming and/or alleging that the performance of the   Research infringes any of the U.S. DHHS Patents, then Yeda shall be entitled   to terminate the Research by written notice to the Company, such termination   to be effective on the date specified in such notice. The Company confirms   and undertakes to Yeda unconditionally and irrevocably that the Company shall   have no claims of any nature whatsoever, in connection with such claim, suit   or allegations by PHS and/or alleging that the performance of the Research   infringes any of the U.S. DHHS Patents and/or in connection with the   termination of the Research as aforesaid, and the Company shall indemnify and   hold Yeda harmless from and against any claim, demand, liabilities, losses,   damages or expenses (including legal costs and attorneys’ fees) of whatsoever   kind or nature that directly or indirectly arise from any claim or suit   brought by PHS as aforesaid. For the avoidance of doubt, in the event that   the Research is terminated pursuant to the terms of the preceding sentence,   the Company shall be under no obligation to fund the Research in respect of   the period commencing after such termination.
    

 

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6.                                      PATENTS; PATENT INFRINGEMENTS

 

	
6.1.
    	
At the initiative of either party, the parties shall   consult with one another regarding the filing of patent applications in   respect of any portion of the Licensed Information, including the   jurisdictions in which such applications should be filed, the timing of the   filing of such applications and the contents thereof. Following such   consultations, and subject to clauses 6.3 and 6.4 below, Yeda shall retain   outside patent counsel agreed upon by the Company, to prepare, file and   prosecute patent applications as aforesaid in such jurisdiction or   jurisdictions as shall be determined by the parties in consultation as   aforesaid. Subject to clauses 6.3 and 6.4 below, Yeda shall also maintain at   the applicable patent office any patents granted as a result of any of the   above patent applications. The parties agree that their joint policy will be   to seek comprehensive patent protection for all Licensed Information licensed   to the Company hereunder. The Company and Yeda shall cooperate fully in the   preparation, filing, prosecution and maintenance of such patent applications   and patents.
    
	
 
    	
 
    
	
6.2.
    	
All applications to be filed in accordance with the   provisions of clause 6.1 above, shall be filed in the name of Yeda or, should   the law of the relevant jurisdiction so require, in the name of the relevant   inventors and then assigned to Yeda. The Parties agree that should the law of   the relevant jurisdiction so allow, and if so requested by the Company, the   Company shall be registered as the exclusive licensee with respect to such   patents, at the Company’s expense, provided that upon the termination of this   Agreement for any reason, the Company shall execute all documents or   instruments and do all other acts necessary for the cancellation of such   registration, at the Company’s expense.
    

 

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6.3.
    	
In the event that, following such consultations   between the parties regarding the filing, prosecuting and/or maintenance (as   applicable) of patent applications and/or patents pursuant to clause 6.1.   above, the Company shall not wish to file and/or continue to prosecute a   patent application and/or maintain a patent in any country in relation to any   part of the Licensed Information, then Yeda, in its discretion, may elect to   file and/or continue to prosecute such patent application and/or maintain   such patent in such country at its own cost and expense. Yeda shall notify   the Company in writing of Yeda’s election to file and/or continue to   prosecute such patent application and/or maintain such patent in such country   as aforesaid, at Yeda’s expense (such notice, “the Yeda   Notice”), and, in the event that the Company shall not, within 30   (thirty) days of receipt of the Yeda Notice: (i) reimburse Yeda for all   out-of-pocket costs and fees incurred by Yeda until the date of the Yeda   Notice (the Yeda Notice to be supported by receipts or other appropriate   documents evidencing such costs and fees) in connection with the said patent   application (in the preparation and/or filing and/or prosecution and/or   maintenance of such application) and/or such patent, such costs and fees to   be expressed in the currency in which paid by Yeda and to be reimbursed or   paid (as the case may be) by the Company to Yeda in US Dollars in accordance   with the Exchange Rate of such currency on the date of reimbursement or   payment; and (ii) undertake in writing to Yeda to bear all additional   and future expenses relating to such patent application and/or patent, then   Yeda shall be entitled, at any time after the expiry of the said 30 (thirty)   day period after the Company’s receipt of the Yeda Notice, to terminate the   Licence granted to the Company under this Agreement in respect of such patent   application and/or patent in such country, and to take whatever action it   deems fit (in its sole discretion) with respect to such patent application   and/or patent.
    
	
 
    	
 
    
	
6.4.
    	
 
    
	
 
    	
 
    
	
6.4.1.
    	
The Company shall bear   and pay all out-of-pocket costs and fees incurred in the preparation, filing   and prosecution (and similar activities) of all patent applications filed in   accordance with the provisions of clause 6.1 above, and the maintenance at   the appropriate patent office (and similar activities) of all patents issuing   from the patent applications referred to above.
    
	
 
    	
 
    
	
6.4.2.
    	
Unless otherwise   instructed by Yeda in writing, the Company shall pay directly to Yeda’s   relevant outside patent counsel amounts payable by the Company pursuant to   this clause 6.4 above or clause 6.3 above.
    

 

16

 

	
6.5.
    	
Should the Company: (i) determine that a third   party is infringing one or more of the Patents; or (ii) be sued on the   grounds that the manufacture, use, commercialisation or sale of a Product by   it or by a Sublicensee under any of the Patents or using the Licensed   Information or any portion thereof infringes upon the patent rights of a   third party or be notified of the possibility of such a claim, then the   Company shall, after first having consulted Yeda, be entitled to sue for such   infringement or defend such action (as the case may be), and (aa) Yeda may   elect, at its own initiative, to join as a party to such action, or (bb)   where the Company takes any action to sue for infringement of a Patent and if   required by law, Yeda shall consent to be named as a party to such action,   such consent as aforesaid in this paragraph (bb) may, for the removal of   doubt, be conditional upon, inter alia, the   provision by the Company of security, satisfactory to Yeda, for the payment   of the expenses or costs referred to in paragraph (a) below), and Yeda   shall cooperate and shall use its reasonable efforts to cause the   Scientist to cooperate with the Company in prosecuting or defending such   litigation, provided that: (a) any expenses or costs or other   liabilities incurred in connection with such litigation (including attorneys   fees, costs and other sums awarded to the counterparty in such action) shall   be borne by the Company, who shall indemnify Yeda against any such expenses   or costs or other liabilities, the above without derogating from the   provisions of clause 12 below; (b) in the event that Yeda shall be named   as a party in any such litigation then Yeda shall be entitled to select its   own legal counsel in such litigation at Yeda’s expense, provided that in the   event of a conflict of interests, actual or potential, the fees and costs of   legal counsel selected by Yeda as aforesaid shall be borne by the Company,   and if Yeda elects not to select its own counsel, and no conflict of   interests exists, then the selection of the legal counsel representing the   Company and Yeda in such litigation shall be subject to prior written   approval of Yeda, which approval shall not be withheld unreasonably and   Yeda’s response to a request for such approval shall not be delayed   unreasonably; (c) no settlement, consent order, consent judgment or   other voluntary final disposition of such action may be entered into without   the prior written consent of Yeda; and (d) if an action is brought   against the Company alleging the invalidity of any of the Patents, Yeda shall   have the right to take over the sole defence of the action and the Company   shall cooperate fully with Yeda in connection with any such action. Any   recovery in any litigation as aforesaid relating to an infringement shall   first be applied to cover the costs of both parties and thereafter divided   92% (ninety-two percent) to the Company and 8% (eight percent) to Yeda. For   the removal of doubt, Yeda shall not itself be obliged to take any action to   sue for any infringement or to defend any action as referred to in this   clause 6.5 above.
    
	
 
    	
 
    
	
 
    	
Each party shall notify the other promptly of each   infringement or possible infringement of any of the Patents and/or Licensed   Information of which such party becomes aware.
    
	
 
    	
 
    
	
6.6.
    	
If the Company fails to take action to abate any   alleged infringement of a Patent, or to defend any action as aforesaid,   within 60 (sixty) days of a written request by Yeda to do so (or within a   shorter period, if required to preserve the legal rights of Yeda under   applicable law), then, without derogating from any of the Company’s rights   hereunder, Yeda shall have the right (but not the obligation) to take such   action at its expense and the Company shall cooperate in such action at the   Company’s expense and, if required under applicable law or contract, consent   to be named as a party to any such action. Yeda shall have full control of   such action and shall have full authority to settle such action on such terms   as Yeda shall determine. Any recovery in any such litigation shall be for the   account of Yeda only.
    

 

17

 

	
6.7.
    	
Each party shall notify   the other promptly in writing of each infringement or possible infringement   of any of the Patents and/or Licensed Information of which such party becomes   aware and of any action initiated by any third party concerning any alleged   infringement, or any allegation by a third party of infringement resulting   from the Patents of which such party becomes aware, giving full particulars   thereof. The Company shall keep Yeda informed timeously of developments and   provide copies to Yeda of all documents regarding all such actions or   proceedings instituted by or against the Company as contemplated under any of   the provisions of clause 6.5.
    
	
 
    	
 
    
	
7.                                      LICENCE
    
	
 
    
	
7.1.
    	
Yeda hereby grants the   Licence to the Company, and the Company hereby accepts the Licence from Yeda,   during the period set out in this Agreement, and for the consideration and   subject to the terms and conditions set out in this Agreement. For the   removal of doubt, no licence is granted hereunder with regard to the Licensed   Information and/or the Patents and/or any portion of any of the aforegoing,   with respect to any exploitation or activities (including the activities   referred to in clause 1.2.5 above) relating to any product or services, other   than Products.
    
	
 
    	
 
    
	
7.2.
    	
For the removal of   doubt, nothing contained in this Agreement shall prevent Yeda or the   Institute from using the Licensed Information and the Patents for academic   research or other scholarly purposes only. Notwithstanding the above, Yeda   shall not transfer to others materials created during the course of the   performance of Research financed by the Company in accordance with the   provisions of this Agreement, without the Company’s prior written consent,   unless such transfer is of small amounts of materials to the Institute’s   scientists or other research scientists at other institutions, without   consideration and for research purposes only. Yeda will procure that the   transfer of any such material for research purposes as aforesaid will be made   under a material transfer agreement, in the form attached hereto as Appendix C, which agreement shall   provide, inter alia, that any   transfer of material thereunder shall, at all times, be subject to Yeda’s and   the Company’s rights under this Agreement.
    
	
 
    	
 
    
	
7.3.
    	
The Licence shall   remain in force with respect to each Product (if not previously terminated in   accordance with the provisions of this Agreement) until the later of:
    
	
 
    	
 
    
	
7.3.1.
    	
the date of expiry or   revocation of the last of any Patent (including, for the removal of doubt,   any patent application, as referred to in the definition of “Patents” in   clause 1.2.8 above) in such country covering such Product; or
    

 

	
Ref.: 05-2595-04-4
    	
No.: 6060- 1-001
    
	
L/88017/4000/407949/1
    	
 
    

 

18

 

	
7.3.2.
    	
if there is any   Licensed Information that is identifiable, secret and of value relating to   such Product, the date of expiry of a period of 15 (fifteen) years commencing   on the date of First Commercial Sale by the Company or a Sublicensee of such   Product in such country, provided that and for so long as such Licensed   Information remains secret and of value.
    
	
 
    	
 
    
	
 
    	
The Company shall   notify Yeda in writing immediately upon the making of each such First   Commercial Sale referred to in clause 7.3.2 above, specifying its date, the   country in which such sale took place and the type of Product sold.
    
	
 
    	
 
    
	
7.4.
    	
A Sublicence under the   Licence may be granted by the Company only with the prior written consent of   Yeda, which shall not be withheld unreasonably and Yeda’s response to a   request for such consent shall not be delayed unreasonably, and provided   that: (i) the proposed Sublicence is for current or future monetary   consideration only; (ii) the proposed Sublicence is to be granted in a bona fide arms-length commercial   transaction; (iii) any act or omission by the Sublicensee which would   have constituted a breach of this Agreement by the Company had it been the   act or omission of the Company, shall be deemed a breach of this Agreement by   the Company; (iv) the terms of the proposed Sublicence are submitted to   Yeda prior to the signature thereof, such to be maintained in confidence by   Yeda; and (v) the proposed Sublicence is made by written agreement, the   provisions of which are consistent with the terms of the Licence, and   contain, inter alia, the   following terms and conditions:
    
	
 
    	
 
    
	
7.4.1.
    	
the Sublicence shall   expire automatically on the termination of the Licence for any reason;
    
	
 
    	
 
    
	
7.4.2.
    	
the Sublicensee shall   be bound by provisions substantially similar to those in clause 10 below   relating to confidentiality binding the Company (the obligations of the   Sublicensee so arising being addressed also to Yeda directly);
    
	
 
    	
 
    
	
7.4.3.
    	
an exclusion of   liability and indemnification undertaking in the same form, mutatis mutandis, as the provisions of   clause 12 below (the indemnification obligations of the Sublicensee to be   given also in favour of, and shall be actionable by Yeda, the Institute, any   director, officer or employee of Yeda or of the Institute, or by the   Scientist);
    
	
 
    	
 
    
	
7.4.4.
    	
all terms necessary to   enable performance by the Company of its obligations hereunder;
    
	
 
    	
 
    
	
7.4.5.
    	
that the Sublicence   shall not be assignable, otherwise transferable or further sublicenseable;
    

 

19

 

	
7.4.6.
    	
that: (i) a copy   of the agreement granting the Sublicence shall be made available to Yeda,   within 14 (fourteen) days of its execution; (ii) all amendments to any   such Sublicence agreement shall be subject to Yeda’s prior written consent,   which shall not be unreasonably withheld; and (iii) the Company shall   submit to Yeda copies of all such amendments (as approved by Yeda), within 14   (fourteen) days of the execution thereof; and
    
	
 
    	
 
    
	
7.4.7.
    	
that the Sublicensee   shall grant to Yeda the right, at reasonable times during the Sublicensee’s   business hours and upon reasonable notice to the Sublicensee, to send   representatives in order to examine those books of accounts, records and   other documentation of the Sublicensee as may be necessary in order to   determine the correctness or completeness of any payment made by the Company   to Yeda under this Agreement, all without derogating from clause 9.5 below.
    
	
 
    	
 
    
	
7.5.
    	
For the removal of   doubt, the Company shall not be entitled to grant, directly or indirectly, to   any person or entity any right of whatsoever nature to exploit or use in any   way the Licensed Information or the Patents or to develop, manufacture and/or   sell the Products or any part of any of the aforegoing, save by way of   Sublicence within the meaning of such term in clause 1.2.11 above and subject   to the conditions of this clause 7 relating to any such grant.
    
	
 
    	
 
    
	
7.6.
    	
Nothing contained in   this Agreement shall be deemed to be a representation or warranty, express or   implied, by Yeda that any patent applications relating to the Licensed   Information or any portion thereof will be granted or that the patents   obtained on any of the said patent applications are or will be valid or will   afford proper protection or that the Licensed Information is or will be   commercially exploitable or of any other value or that the exploitation of   the Patents or the Licensed Information will not infringe the rights of any   third party.
    
	
 
    	
 
    
	
8.                                      DEVELOPMENT AND COMMERCIALIZATION
    
	
 
    	
 
    
	
8.1.
    	
Within 18 (eighteen)   months of the date of signature of this Agreement, the Company shall submit   to Yeda, for its written approval (not to be unreasonably withheld), a   Development Program for the development of Products (such Development   Program, as approved by Yeda, “the Initial   Development Program”). Such Initial Development Program may be   updated by the Company from time to time based on reasonable grounds to be   notified to Yeda in writing, subject to the Company’s discretion and without   derogating from the milestones set in 13.2.1 below.
    

 

	
Ref:   05-2595-04-4
    	
No.: 60604-001
    
	
L/88017/4000/407949/1
    	
 
    

 

20

 

	
8.2.
    	
The Company undertakes,   at its own expense, to take all commercially reasonable steps to   commercialise the Products and, without derogating from the generality of the   foregoing, to use commercially reasonable efforts to expedite the   commencement of the commercial sale of the Products and use commercially   reasonable efforts to continue with marketing and sale of the Products   throughout the term of the Licence. For such purpose and without derogating   from the generality of the aforegoing, the Company shall carry out and/or   have a third party carry out on its behalf the performance of the trials,   tests and other works and activities detailed in the Initial Development   Program and in all further Development Programs (if any) submitted and   approved pursuant to clause 8.5 below, in accordance with the respective   timetables included therein.
    
	
 
    	
 
    
	
8.3.
    	
The Company shall,   after the delivery to, and approval by, Yeda of the Initial Development   Program under clause 8.1 above, provide Yeda on December 31 of each   calendar year with written progress reports (“Progress   Reports”) which shall include detailed descriptions of the   progress and results, if any, of: (i) the tests and trials conducted and   all other actions taken by the Company pursuant to the Initial Development   Program or any other Development Program delivered and approved pursuant to   clause 8.5 below; (ii) manufacturing, sublicensing, marketing and sales   during the preceding 12 (twelve) months; and (iii) the Company’s plans   in respect of the testing, undertaking of trials or commercialisation of   Products for the following 12 (twelve) months; and (iv) projections of   sales and marketing efforts following the First Commercial Sale. If progress   in respect of a Product differs from that anticipated in its Development   Program or preceding Progress Report, then the Company shall explain, in its   Progress Report, the reason therefor and prepare a modified Development   Program for Yeda’s review subject to and without derogating from the   milestones set in 13.2 below. The Company shall also make reasonable efforts   to provide Yeda with any reasonable additional data that Yeda requires to   evaluate the performance of the Company hereunder.
    
	
 
    	
 
    
	
8.4.
    	
For the removal of   doubt, without derogating from the remaining provisions of this clause 8 or   of clause 13.2 below, nothing contained in this Agreement shall be construed   as a warranty by the Company that any Development Program to be carried out   by it as aforesaid will actually achieve its aims or any other results and   the Company makes no warranties whatsoever as to any results to be achieved   in consequence of the carrying out of any such Development Program.   Furthermore, the Company makes no representation to the effect that the   commercialization of the Product(s), or any part thereof, will succeed.
    
	
 
    	
 
    
	
8.5.
    	
Without derogating from   the obligations of the Company pursuant to this clause 8 or from the   provisions of clause 13.2 below, in the event that the Company shall wish to   develop and/or commercialise Products in addition to those specified in the   Initial Development Program, the Company shall submit to Yeda, for its   written approval (not to be unreasonably withheld), a further Development   Program in respect of such additional Products and the provisions of this   clause 8 shall apply also with respect to such further Development Program   and to the development and commercialisation of such additional Products, mutatis mutandis.
    

 

21

 

	
8.6.
    	
The Company agrees to   lend (for no consideration) Yeda and/or the Institute one unit of the Product   developed and/or manufactured under this Agreement, for academic research   purposes only.
    
	
 
    	
 
    
	
8.7.
    	
The Company shall mark,   and cause all its Sublicensees to mark, all Products that are manufactured or   sold under this Agreement with the number or numbers of each Patent applicable   to such Product.
    

 

9.                                      ROYALTIES

 

	
9.1.
    	
In consideration for   the grant of the Licence, the Company shall pay Yeda:
    
	
 
    	
 
    
	
9.1.1.
    	
(i)             one-time   non-refundable and non-deductible fee of US $5,000 (five thousand United   States Dollars) to be paid by the Company within 30 thirty days of obtaining   marketing approval from the first of either   (i) the FDA in the USA, or (ii) equivalent   regulatory authorities in Europe for a particular category of Products (such   amount to be paid, for the removal of doubt, once only with respect to each   category of Products approved as aforesaid), provided that if the Products in   the relevant category are not U.S. DHHS Patent Protected Products, then the   fee referred to above shall be US $10,000 (ten thousand United States   Dollars);
    
	
 
    	
 
    
	
 
    	
(ii)          one-time sum of US   $25,000 (twenty-five thousand United States Dollars) on the date of issuance   of the first of the patents issuing from any of the patent applications filed   in accordance with the provisions of clause 6.1 above;
    
	
 
    	
 
    
	
9.1.2.
    	
 
    
	
 
    	
 
    
	
9.1.2.1.
    	
a royalty of 1.5% (one   point five percent) of Net Sales of up to and including an aggregate   cumulative amount of US $10,000,000 (ten million United States Dollars) by or   on behalf of the Company or any Sublicensees; and
    
	
 
    	
 
    
	
9.1.2.2.
    	
a royalty of 1% (one   percent) of all further Net Sales by or on behalf of the Company or any   Sublicensees (i.e., Net Sales   in excess of the aggregate cumulative amount of US $10,000,000 (ten million   United States Dollars));
    

 

22

 

	
 
    	
provided that:
    
	
 
    	
 
    
	
 
    	
(i)             With respect to Net   Sales from sales of any Products that are not U.S. DHHS Patent Protected   Products, the royalty rate referred to in clause 9.1.2.1 above shall be 3%   (three percent) and the royalty rate referred to in clause 9.1.2.2 above   shall be 2% (two percent); and
    
	
 
    	
 
    
	
 
    	
(ii)          In the event that in   any calendar year during the term of this Agreement commencing on the first   day of January of the first calendar year following the date of expiry   of the Research (as extended, if extended, pursuant to the last sentence in   clause 2.1 above), the total royalties pursuant to this clause 9.2 payable by   the Company to Yeda shall be less than US $1,000 (one thousand United States   Dollars), the Company shall pay to Yeda, within 30 (thirty) days after the   end of such calendar year, in addition to such royalties as aforesaid, the   sum being the difference between US $1,000 (one thousand United States   Dollars) and such total royalties payable in such calendar year; and
    
	
 
    	
 
    
	
 
    	
(iii)       If any Product is sold by   the Company to a Sublicensee and is subsequently resold by such Sublicensee,   royalties shall be paid to Yeda pursuant to this clause 9.1.2 above on the   higher of: (a) Net Sales from the said sale; and (b) Net Sales from   the resale as aforesaid;
    
	
 
    	
 
    
	
 
    	
and
    
	
 
    	
 
    
	
9.1.3.
    	
4%   (four percent) of all Sublicensing Receipts; provided that with respect to   Sublicensing Receipts received pursuant to or in connection with a Sublicence   for the development and/or manufacture and/or marketing and/or distribution   and/or sale of Products that are not U.S. DHHS Patent Protected Products, the   percentage of Sublicensing Receipts payable to Yeda shall be 8% (eight   percent).
    
	
 
    	
 
    
	
 
    	
For the removal of   doubt, the Company undertakes that all sales (within the meaning of such term   in clause 1.3.3 above) of Products by the Company and each Sublicensee shall   only be for cash consideration or some equivalent to which a value can be   assigned for the purposes of determining Net Sales under this Agreement.
    

 

	
Ref.:   05-2595-04-4
    	
No.: 60604-001
    
	
L/88017/4000/4079-9/1
    	
 
    

 

23

 

	
9.2.
    	
In calculating Net   Sales and Sublicensing Receipts, all amounts shall be expressed in US Dollars   and any amount received in a currency other than US Dollars shall be   translated into US Dollars, for the purposes of calculation, in   accordance with the Exchange Rate between the US Dollar and such currency on   the date of such receipt. For the removal of doubt, in calculating amounts   received by the Company, whether by way of Net Sales or Sublicensing   Receipts, any amount deducted or withheld in connection with any such payment   on account of taxes on net income (including income taxes, capital gains tax,   taxes on profits or taxes of a similar nature) payable by the Company in any   jurisdiction, shall be deemed, notwithstanding such deduction or withholding,   to have been received by the Company. In the event that the Sublicensing   Receipts comprise, in whole or in part, of non-cash consideration (including   shares or other securities of the Sublicensee or any other entity), then the   Company agrees, promptly upon Yeda’s request, to execute and deliver such   documents and instruments and do any other acts as may be necessary, so that   Yeda receives the applicable percentage share of such non-cash consideration   as provided in clause 9.1.3.
    
	
 
    	
 
    
	
9.3.
    	
 
    
	
 
    	
 
    
	
9.3.1.
    	
Amounts payable to Yeda   in terms of this clause 9 shall be paid to Yeda in US Dollars: (i) in   the case of Net Sales, on a half-year basis and no later than 30 (thirty)   days after the end of each calendar half-year, commencing with the first   calendar half-year in which any Net Sales are made; or (ii) in the case   of Sublicensing Receipts, no later than 14 (fourteen) days after any such   Sublicensing Receipts are actually received by the Company from any   Sublicensees.
    
	
 
    	
 
    
	
9.3.2.
    	
The Company shall   submit to Yeda: (i) no later than 14 (fourteen) days after any   Sublicensing Receipts are received, an interim written report setting out   amounts owing to Yeda in respect of such Sublicensing Receipts; and   (ii) no later than 30 (thirty) days after the end of each calendar   half-year, commencing with the first calendar half-year in which any Net   Sales are made, or Sublicensing Receipts received by the Company, a full and   detailed report, in a form reasonably acceptable to Yeda, certified as being   correct by the chief financial officer of the Company, setting out all   amounts owing to Yeda in respect of such previous calendar half-year to which   the report refers, and with full details of:
    
	
 
    	
 
    
	
9.3.2.1.
    	
(i)             the sales made by   the Company and Sublicensees, including a breakdown of Net Sales according to   country, identity of seller, currency of sales, dates of invoices, number and   type of Products sold; and
    
	
 
    	
 
    
	
 
    	
(ii)          the Sublicensing   Receipts, including a breakdown of Sublicensing Receipts according to   identity of Sublicensees, countries, the currency of the payment and date of   receipt thereof; and
    

 

	
Ref.:   05-2595-04-4
    	
No.: 60604-001
    
	
L/88017/4000/407949/1
    	
 
    

 

24

 

	
 
    	
(iii)   eductions applicable, as provided in the definition of “Net Sales”;
    
	
 
    	
 
    
	
 
    	
and
    
	
 
    	
 
    
	
9.3.2.2.
    	
any other matter   reasonably necessary to enable the determination of the amounts of royalties   payable to Yeda hereunder.
    
	
 
    	
 
    
	
9.4.
    	
The Company shall keep   and shall cause Sublicensees to keep complete, accurate and correct books of   account and records consistent with sound business and accounting principles   and practices and in such form and in such details as to enable the   determination of the amounts due to Yeda in terms hereof. The Company shall   supply Yeda at the end of each calendar year, commencing with the first   calendar year in which any amount is payable by the Company to Yeda under   this clause 9, a report signed by the Company’s independent auditors in   respect of the amounts due to Yeda pursuant to this clause 9 in respect of   the year covered by the said report and containing details in accordance with   clause 9.3 above in respect of the half-year reports. The Company shall   retain and shall require and cause its Sublicensees to, retain the aforegoing   books of account for 6 (six) years after the end of each calendar year during   the period of this Agreement, and, if this Agreement is terminated for any   reason whatsoever, for 6 (six) years after the end of the calendar year in   which such termination becomes effective.
    
	
 
    	
 
    
	
9.5.
    	
At Yeda’s expense, Yeda   shall be entitled to appoint representatives to inspect during the Company’s   normal business hours and to make copies of the Company’s and Sublicensees’   books of accounts, records and other documentation (including technical data and   lab books) to the extent relevant or necessary for the ascertainment or   verification of the amounts due to Yeda under this clause 9, provided however   that Yeda shall coordinate such inspection with the Company or Sublicensee   (as the case may be) in advance. The Company shall take all steps necessary   so that all such books of account, records and other documentation of the   Company are available for inspection as aforesaid at a single location, and   the Company shall procure a contractual obligation from each of its   Sublicensees to have all of such Sublicensee’s books of account, records and   other documentation available for inspection at a single location. In the   event that any inspection as aforesaid reveals any underpayment by the   Company to Yeda in respect of any calendar year of the Agreement in an amount   exceeding 5% (five percent) of the amount actually paid by the Company to   Yeda in respect of such year then the Company shall (in addition to paying   Yeda the shortfall together with interest thereon in accordance with clause   13.4 below), bear the actually incurred costs of such inspection. The   provisions of this clause 9 shall survive the termination of this Agreement   for whatsoever reason. Yeda shall not be entitled to exercise its auditing   rights under this clause more than twice in any calendar year. For the   removal of doubt, each audit shall continue for such period as Yeda, in its   discretion, deems necessary.
    

 

25

 

10.                               CONFIDENTIALITY

 

	
10.1.
    	
The Company shall   maintain in confidence all information or data relating to the Patents, the   Licensed Information, this Agreement and the terms hereof (hereinafter,   collectively referred to as “the   Confidential Information”), except and to the extent that the   Company can prove that any such information or data is in the public domain   at the date of the signing hereof or becomes part of the public domain   thereafter (other than through a violation by the Company or a Sublicensee of   this obligation of confidentiality) and except with regard to that portion,   if any, of the Confidential Information expressly released by Yeda from this   obligation of confidentiality by notice in writing to the Company to such   effect. Notwithstanding the foregoing, the Company may disclose to its   personnel and Sublicensees the Confidential Information to the extent   necessary for the exercise by it of its rights hereunder or in the fulfilment   of its obligations hereunder, provided that such personnel and such   Sublicensees are bound by similar obligations of confidentiality in writing.   The Company shall be responsible and liable to Yeda for any breach by its   personnel or any Sublicensee of such undertakings of confidentiality as if   such breach were a breach by the Company itself. For the removal of doubt,   the provisions of this clause 10.1 shall not apply in respect of any   information (not being Licensed Information) independently developed by the   Company without reference to the Confidential Information received from Yeda.
    
	
 
    	
 
    
	
10.2.
    	
In addition to and   without derogating from the aforegoing, the Company undertakes not to make   mention of the names of Yeda, the Institute, the Scientist (in his capacity   as a scientist at the Institute and/or with respect to the Patents or the   Licensed Information or this Agreement) or any scientists or other employees   of the Institute or any employee of Yeda in any manner or for any purpose   whatsoever in relation to this Agreement, its subject-matter and any matter   arising from this Agreement or otherwise, unless the prior written approval   of Yeda thereto has been obtained, which approval shall not be unreasonably   withheld. The Company will be entitled to submit, for Yeda’s prior written   approval, a schedule setting out specimens of standard wording, which, if   approved by Yeda as aforesaid, may be used by the Company without the need to   obtain Yeda’s written approval prior each such use.
    

 

26

 

	
10.3.
    	
Notwithstanding the   provisions of clauses 10.1 and 10.2 above, the Company shall not be prevented   from mentioning the name of Yeda, the Institute, the Scientist and/or   any scientists or other employees of the Institute or any employee of Yeda or   from disclosing any information if, and to the extent that, such mention or   disclosure is to competent authorities for the purposes of obtaining approval   or permission for the exercise of the Licence, or in the fulfilment of any   legal duty owed to any competent authority (including a duty to make regulatory   filings); provided that, any mention in a private placement memorandum or a   public offering registration statement shall not be deemed fulfilment of a   legal duty to a competent authority, and any such mention shall be subject to   Yeda’s consent, which consent shall not be withheld unreasonably. Without   derogating from the aforegoing, the Company shall be entitled to disclose the   existence and the terms of this Agreement to any potential   investor(s) in the Company, subject to such investor(s) being bound   by a written undertaking of confidentiality to the Company on similar terms   to those set out in this clause 10 above, provided that the Company informs   Yeda of the identity of such investor(s) to which such disclosure has   been made.
    
	
 
    	
 
    
	
10.4.
    	
No termination of this   Agreement, for whatever reason, shall release the Company from any of its   obligations under this clause 10 and such obligations shall continue in force   until the later of: (i) the date of expiry of a period of 3 (three)   years after the termination of this Agreement for whatever reason; and   (ii) the date of expiry of a period of 5 (five) years following the   disclosure of the Confidential Information to the Company. The provisions of   this Clause 10.4 shall not apply in respect of the obligations of the Company   set forth in Clause 10.3 above or in respect of the obligation of the Company   to maintain this Agreement and the terms thereof in confidence, which   obligations as aforesaid shall survive the termination of this Agreement   indefinitely.
    
	
 
    	
 
    
	
10.5.
    	
Yeda shall maintain in   confidence the existence of this Agreement and the terms hereof, the terms of   Sublicence agreements, as well as all information received by Yeda from the   Company which has been designated by the Company in writing as confidential, except   and to the extent that Yeda can prove that: (i) any such information or   data is in the public domain at the date of the signing hereof or becomes   part of the public domain thereafter (other than through a violation by Yeda   of this obligation of confidentiality) or is released by the Company from   this obligation of confidentiality by notice in writing; (ii) Yeda is   required to disclose such information in order to fulfill its obligations   under this Agreement (including in connection with the filing and prosecution   of patent applications in accordance with the provisions of clause 6 above);   or (iii) Yeda is required to disclose such information in fulfilment of   any legal duty owed to any competent authority (the Company hereby   acknowledging that it is aware that such competent authority may not be bound   by any confidentiality obligations and may disclose or be required to   disclose such information to a third party, whether by order of court or by   law or otherwise). Yeda shall notify the Company thereof in writing as soon   as possible in order to enable the Company to oppose such disclosure. For the   removal of doubt, the provisions of this clause 10.5 shall not apply in   respect of any information (not being Licensed Information) independently   developed at the Institute without reference to the confidential information   received from the Company.
    

 

27

 

	
10.6.
    	
For the removal of   doubt, Yeda shall have the right to allow the scientist of the Institute to   publish articles relating to the Licensed Information in scientific journals   or posters or to give lectures or seminars to third parties relating to the Licensed   Information, on the condition that, to the extent that the information to be   published or disclosed is Licensed Information which is not in the public   domain, a draft copy of the said contemplated publication or disclosure shall   have been furnished to the Company at least 60 (sixty) days before the making   of any such publication or disclosure and the Company shall have failed to   notify Yeda in writing, within 30 (thirty) days from receipt of the said   draft publication or disclosure, of its opposition to the making of the   contemplated publication or disclosure. Should the Company notify Yeda in   writing within 30 (thirty) days from the receipt of the draft contemplated   publication or disclosure that it opposes the making of such publication or   disclosure because it includes material (which has been specified in said   notice) in respect of which there are reasonable grounds (which have also   been specified in said notice) requiring the postponement of such publication   or disclosure so as not adversely to affect the Company’s interests under the   Licence because such Licensed Information is patentable subject-matter for   which patent protection pursuant to clause 6.1 above should be sought, then   Yeda shall not permit such publication or disclosure unless and until there   shall first have been filed (by or on behalf of Yeda) an appropriate patent   application in respect of the material to be published or disclosed as   aforesaid. The Company acknowledges that it is aware of the importance to the   researchers of publishing their work and, accordingly, the Company will use   its reasonable efforts not to oppose such publications.
    
	
 
    	
 
    
	
10.7.
    	
Subject to the second   sentence hereunder, no termination of this Agreement, for whatever reason,   shall release Yeda from any of its obligations under this clause 10 and such   obligations shall continue in force until the later of: (i) the date of   expiry of a period of 3 (three) years after the termination of this Agreement   for whatever reason; and (ii) the date of expiry of a period of 5 (five)   years following the disclosure of the information described in clause 10.5   above to Yeda. The provisions of this clause 10.7 shall not apply in respect   of the Company’s Information (as defined in clause 13.5 below) or in respect   of any information regarding the existence of this Agreement the terms hereof   and the termination thereof, and Yeda’s obligations with respect thereto   pursuant to clause 10 above shall terminate upon termination of this   Agreement.
    

 

28

 

11.                               NO ASSIGNMENT

 

	
11.1.
    	
The Company shall not   be entitled to assign or encumber all or any of its rights or obligations   under this Agreement or arising therefrom, unless it shall have received the   prior written consent of Yeda to such assignment or encumbrance, which   consent, if given, may be conditioned by Yeda on, inter alia, the payment of a fee or other consideration in   relation thereto (including, if so conditioned by Yeda, that any   consideration received by the Company in respect of an assignment to which   Yeda consents as aforesaid shall be deemed to be Sublicensing Receipts and   the provisions of clause 9 above shall apply with respect thereto, mutatis mutandis). For the purposes of this clause 11,   the merger of the Company with another entity in the event that the Company   is not the surviving entity shall be deemed to be an assignment.
    
	
 
    	
 
    
	
11.2.
    	
Notwithstanding the   aforegoing, the Company shall not be required to obtain Yeda’s prior written   consent in the event of:
    
	
 
    	
 
    
	
11.2.1.
    	
an assignment of this   Agreement upon a merger of the Company with another entity or upon the sale   of all or substantially all of the Company’s assets, shares or business;   provided that: (i) no material breach of the Company’s obligations under   this Agreement shall have occurred prior to the date of assignment and remain   unremedied at the date thereof, or if such material breach has occurred, Yeda   shall not have waived, in writing, its rights to terminate this Agreement on   account of such breach; (ii) the assignee shall confirm to Yeda in   writing that it accepts all the obligations of the Company hereunder; and   (iii) the assignee shall not be entitled to further assign this   Agreement without Yeda’s prior written consent; or
    
	
 
    	
 
    
	
11.2.2.
    	
an assignment of this   Agreement to a wholly-owned subsidiary of the Company (which shall remain a   wholly-owned subsidiary of the Company during the term of the Licence),   subject to the conditions set out in paragraphs (i) to (iii) of   clause 11.2.1 above, which shall apply mutatis   mutandis; and provided that if the assignee shall cease to be a   wholly-owned subsidiary of the Company (“the   Cessation”), then the assignee shall be required to obtain Yeda’s   written consent prior to the Cessation pursuant to clause 11.1 above, which   shall apply, mutatis mutandis. If   such prior written consent is not granted, then this Agreement shall   terminate automatically upon the Cessation.
    
	
 
    	
 
    
	
12.                               EXCLUSION OF LIABILITY AND INDEMNIFICATION
    
	
 
    	
 
    
	
12.1.
    	
Yeda, the Scientist,   the Institute and the directors, officers and employees of Yeda and/or of the   Institute (hereinafter collectively “the   Indemnitees”) shall not be liable for any claims, demands,   liabilities, costs, losses, damages or expenses (including legal costs and   attorneys’ fees) of whatever kind or nature (all of the aforegoing,   collectively, “Liabilities”) caused   to or suffered by any person or entity (including the Company or any   Sublicensee) that directly or indirectly arise out of or result from or are   encountered in connection with this Agreement or the exercise of the Licence,   including directly or indirectly arising out of or resulting from or   encountered in connection with: (i) the development, manufacture, sale   or use of any of the Products by the Company, any Sublicensee or any person   acting in the name of or on behalf of any of the aforegoing, or acquiring,   directly or indirectly, any of the Products from any of the aforegoing; or   (ii) the exploitation or use by the Company or any Sublicensee of the   Licensed Information or any part thereof, including of any data or   information given, if given, in accordance with this Agreement.
    

 

	
Ref.:   05-2595-04-4
    	
No.: 00604-001
    
	
L/88017/4000/407949/1
    	
 
    

 

29

 

	
12.2.
    	
In the event that any   of the Indemnitees should incur or suffer any Liabilities that directly or   indirectly arise out of or result from or are encountered in connection with   this Agreement or the exercise of the Licence as aforesaid in clause 12.1   above, or shall be requested or obliged to pay to any person or entity any   amount whatsoever as compensation for any Liabilities as aforesaid in clause   12.1 above, then the Company shall indemnify and hold harmless such   Indemnitees from and against any and all such Liabilities. Without limiting   the generality of the aforegoing, the Company’s indemnification as aforesaid   and the exclusion of liability in clause 12.1 above shall extend to product   liability claims and to damages, claims, demands, liabilities, losses, costs   and expenses attributable to death, personal injury or property damage or to   penalties imposed on account of the violation of any law, regulation or   governmental requirement.
    
	
 
    	
 
    
	
12.3.
    	
The Company shall at   its own expense insure its liability pursuant to clause 12.2 above during the   period beginning on the date of expiry of the Research Period or, if earlier,   the date of commencement of clinical trials in respect of any Product and   continuing during the entire period that the Licence is in force in any   country, plus an additional period of 7 (seven) years. Such insurance shall   be in reasonable amounts and on reasonable terms in the circumstances, having   regard, in particular, to the nature of the Products, and shall be subscribed   for from a reputable insurance company. The named insured under such   insurances shall be the Company, the Inventors, Yeda and the Institute and   the beneficiaries thereof shall include also the respective employees,   officers and directors of Yeda and the Institute. The policy or policies so   issued shall include a “cross-liability” provision pursuant to which the   insurance is deemed to be separate insurance for each named insured (without   right of subrogation as against any of the insured under the policy, or any   of their representatives, employees, officers, directors or anyone in their   name) and shall further provide that the insurer will be obliged to notify   each insured in writing at least 30 (thirty) days in advance of the expiry or   cancellation of the policy or policies. The Company hereby undertakes to   comply punctually with all obligations imposed upon it under such policy or   policies and in particular, without limiting the generality of the   aforegoing, to pay in full and punctually all premiums and other payments for   which it is liable pursuant to such policy or policies. The Company shall be   obliged to submit to Yeda copies of the aforesaid insurance policy or   policies within 14 (fourteen) days of the date of issue of each such policy.
    

 

	
Ref.:   05-2595-04-4
    	
No.: 60604-001
    
	
L/88017/4000/407949/1
    	
 
    

 

30

 

	
12.4.
    	
The provisions of this   clause 12 shall survive the termination of this Agreement for whatsoever   reason.
    

 

13.                               TERM AND TERMINATION

 

	
13.1.
    	
Unless otherwise agreed   to in writing, this Agreement shall terminate upon the occurrence of the   later of the following:
    
	
 
    	
 
    
	
13.1.1.
    	
the date of expiry of   the last of the Patents; or
    
	
 
    	
 
    
	
13.1.2.
    	
the expiry of a   continuous period of 20 (twenty) years during which there shall not have been   a First Commercial Sale of any Product in any country.
    
	
 
    	
 
    
	
13.2.
    	
Notwithstanding   anything to the contrary contained in this Agreement:
    
	
 
    	
 
    
	
13.2.1.
    	
Yeda shall be entitled,   at its option:
    
	
 
    	
 
    
	
 
    	
(i)             to modify the Licence   hereunder so that it is non-exclusive only, by written notice to the Company   (any such amendment of this Agreement by Yeda as aforesaid, being effective   immediately, the Company’s consent thereto (written or otherwise) not being   required, notwithstanding the provisions of clause 17.2 below); or
    
	
 
    	
 
    
	
 
    	
(ii)          to terminate this   Agreement (including the Licence hereunder), by giving the Company 45   (forty-five) days written notice,
    
	
 
    	
 
    
	
 
    	
if:
    
	
 
    	
 
    
	
 
    	
(a)         an application for   marketing approval for at least one Product is not submitted to the FDA or an   equivalent regulatory authority by June 1, 2007;
    
	
 
    	
 
    
	
 
    	
(b)         FDA or equivalent   marketing approval is not obtained for at least one Product by June 1,   2008;
    

 

31

 

	
 
    	
(c)          the First Commercial   Sale of at least one Product shall not have occurred by January 1, 2009;   or
    
	
 
    	
 
    
	
 
    	
(d)         commercial sale of any   Product having commenced, there shall be a period of 12 (twelve) months or   more during which no sales of any Product shall take place (except as a   result of force majeure or other factors beyond the control of the Company);
    
	
 
    	
 
    
	
 
    	
provided that if and to   the extent the Company and PHS shall agree to extend the development   milestone dates set out in the PHS Patent License Agreement, then the dates   stipulated in paragraphs (a) to (d) above shall be extended by the   same period(s) that such development milestone dates are extended in the   PHS Patent License Agreement, but only with respect to Products that are U.S.   DHHS Patent Protected Products.
    
	
 
    	
 
    
	
13.2.2.
    	
Without derogating from   the aforegoing, Yeda shall be entitled to terminate this Agreement (unless   previously terminated in accordance with the provisions of this Agreement),   by written notice to the Company (effective immediately), if the Company   contests the validity of any of the Patents.
    
	
 
    	
 
    
	
13.2.3.
    	
Without derogating from   the aforegoing, the Company shall be entitled to terminate this Agreement at   any time after the expiry of the Research Period and prior to the First   Commercial Sale of any Product in any country (unless previously terminated   in accordance with the provisions of this Agreement), by giving Yeda 60   (sixty) days’ written notice of termination, if the Company determines,   within its sole discretion, that it does not require the use of the Licensed   Information or any part thereof. The Company shall have no obligation to   compensate Yeda as a result only of termination by the Company pursuant to   this clause 13.2.3 above. For the removal of doubt, nothing contained herein   shall derogate from any of Yeda’s rights arising prior to such termination.
    
	
 
    	
 
    
	
13.2.4.
    	
Without derogating from   the aforegoing, in the event that the PHS Patent License Agreement is   terminated due to the failure or inability of the Company to develop any   products pursuant to thereto, this Agreement shall terminate automatically   upon the termination of the PHS Patent License Agreement as aforesaid.
    
	
 
    	
 
    
	
 
    	
The Company shall   notify Yeda promptly of any notice received by the Company from PHS   (including any notice in respect of any default by the Company) or of any   occurrences, demands, actions, threatened actions or any other matter of   which the Company is aware which may adversely affect its performance under   the PHS Patent License Agreement and/or the validity or continued force and   effect of the PHS Patent License Agreement and/or the licences granted   thereunder.
    

 

32

 

	
13.3.
    	
Without derogating from   the parties’ rights hereunder or at law to any other or additional remedy or   relief, it is agreed that either Yeda or the Company may terminate this   Agreement and the Licence hereunder by serving a written notice to that effect   on the other (effective immediately) upon or after: (i) the commitment   of a material breach hereof by the other party, which material breach cannot   be cured or, if curable, which has not been cured by the party in breach   within 30 (thirty) days (or, in the case of failure by the Company to pay any   amount due from the Company to Yeda pursuant to or in connection with this   Agreement on or before the due date of payment, 10 (ten) days) after receipt   of a written notice from the other party requesting the remedy of such   breach, or (ii) the granting of a winding-up order in respect of the   other party, or upon an order being granted against the other party for the   appointment of a receiver, or if such other party passes a resolution for its   voluntary winding-up, or if a temporary or permanent liquidator or receiver   is appointed in respect of such other party, or if a temporary or permanent   attachment order is granted on such other party’s assets, or a substantial   portion thereof, or if such other party shall seek protection under any laws   or regulations, the effect of which is to suspend or impair the rights of any   or all of its creditors, or to impose a moratorium on such creditors, or if   anything analogous to any of the aforegoing in this clause 13.3(ii) above   under the laws of any jurisdiction occurs in respect of such other party;   provided that in the case that any such order or act is initiated by any   third party, the right of termination shall apply only if such order or act   as aforesaid is not cancelled within 60 (sixty) days of the grant of such   order or the performance of such act.
    
	
 
    	
 
    
	
13.4.
    	
Any amount payable   hereunder by one of the parties to the other, that has not been paid by its   due date of payment, shall bear interest from its due date of payment until   the date of actual payment, at the maximum rate prevailing from time to time   during the period of arrears at Bank Hapoalim B.M. in respect of unapproved   overdrafts in current accounts.
    
	
 
    	
 
    
	
13.5.
    	
Upon the termination of   this Agreement for whatever reason, except by the passage of time:   (i) all rights in and to the Licensed Information and the Patents shall   revert to Yeda and the Company shall not be entitled to make any further use   thereof and the Company shall deliver to Yeda all drawings, plans, diagrams,   specifications, other documentation, models or any other physical matter in   the Company’s possession in any way containing, representing or embodying the   Licensed Information; and (ii) the Company shall grant to Yeda a   non-exclusive, irrevocable, perpetual, paid-up, worldwide licence in respect   of the Company’s Information. In this clause 13.5 above, the term “the Company’s Information” shall mean   any invention, product, material, method, process, technique, know-how, data,   information or other result which does not form part of the Licensed   Information, discovered or occurring in the course of or arising from the   performance by the Company of the development work pursuant to clause 8   above, including any regulatory filing or approval, filed or obtained by the   Company in respect of the Products.
    

 

33

 

	
13.6.
    	
The termination of this   Agreement for any reason shall not relieve either party hereto of any   obligations which shall have accrued prior to such termination.
    
	
 
    	
 
    
	
13.7.
    	
For the avoidance of   doubt, it is hereby recorded and agreed that following the expiry of the   Licence hereunder in any country with respect to any Product (hereinafter “the said country” and “the said Product”), such expiry   occurring by passage of time only pursuant to clause 7.3 above, then,   notwithstanding such expiry and as long as this Agreement is in force and   even thereafter, if this Agreement has expired as a consequence only of the   passage of time pursuant to clause 13.1 above, the Company shall be entitled   to continue to manufacture and/or sell the said Product in the said country   without having to pay royalties to Yeda in respect of such activities   subsequent to such expiry date. This clause 13.7 shall survive termination of   this Agreement pursuant to clause 13.1.
    
	
 
    	
 
    
	
13.8.
    	
In the event that this   Agreement shall be terminated, other than by way of termination by Yeda   pursuant to clause 13.2.2 or 13.3 above, and that, at any time within 5   (five) years following such termination, Yeda shall grant to a third party a   licence in respect of the Company’s Information or any part thereof (alone or   together with any part of the Licensed Information) and Yeda shall receive in   respect of such licence consideration, then, subject to the Company having   complied and continuing to comply with all its obligations under this   Agreement which remain in existence following termination of this Agreement   as aforesaid (including the provisions of clause 13.5 above, Yeda shall pay to   the Company 25% (twenty-five percent) of the Net Proceeds actually received   by Yeda in respect of such a licence, until such time as the Company shall   have received, in aggregate, the full amount of the Research Budget actually   paid by the Company to Yeda, as well as all the development expenses incurred   by the Company in acquiring the Company’s Information, as certified by the   independent accountants of the Company. Yeda shall pay to the Company   amounts, if any, payable under this clause 13.8 above, within 90 (ninety)   days of receipt of the relevant Net Proceeds.
    
	
 
    	
 
    
	
 
    	
For the purpose of this   clause 13.8, “Net Proceeds” means   royalties or other monetary consideration actually received by Yeda in   respect of such licence (excluding funds for research and/or development at   the Institute or payments for the supply of services) after deduction of all   costs, fees and expenses incurred by Yeda in connection with such licence   (including, without limitation, patent related costs, and all attorneys fees   and expenses and other costs and expenses actually incurred by Yeda in   connection with the negotiation, conclusion and administration of such   licence) and, in the case of patent related costs and expenses—to the extent   that such costs and expenses have not actually been paid or reimbursed to   Yeda by any licensee under such licence.
    

 

34

 

14.                               NOTICES

 

Any notice or other communication required to be given by one party to the other under this Agreement shall be in writing and shall be deemed to have been served: (i) if personally delivered, when actually delivered; or (ii) if sent by facsimile, the next business day after receipt of confirmation of transmission; or (iii) 10 (ten) days after being mailed by certified or registered mail, postage prepaid (for the purposes of proving such service—it being sufficient to prove that such notice was properly addressed and posted) to the respective addresses of the parties set out below, or to such other address or addresses as any of the parties hereto may from time to time in writing designate to the other party hereto pursuant to this clause 14:

 

	
14.1.
    	
to Yeda at:
    	
P.O. Box 95

Rehovot 76100

Attention:   the CEO

Facsimile:   (08) 9470739
    
	
 
    	
 
    	
 
    
	
14.2.
    	
to the Company at:
    	
c/o Tulchinsky   Stern & Co,

Law Offices

14 Abba Hillel Street

Ramat Gan

Attention:   Yaacov Michlin  

Facsimile:   +972 3 751 1127
    

 

15.                               VALUE ADDED TAX

 

The Company shall pay to Yeda all amounts of Value Added Tax imposed on Yeda in connection with the transactions under this Agreement. All amounts referred to in this Agreement are gross amounts (subject to withholding tax as provided in 17.9 below) and are exclusive of Value Added Tax.

 

16.                               GOVERNING LAW AND JURISDICTION

 

	
16.1.
    	
This Agreement shall be   governed in all respects by the laws of Israel and the parties hereby submit   to the exclusive jurisdiction of the competent courts of Tel Aviv-Jaffa,   except that Yeda may bring suit against the Company in any other jurisdiction   outside Israel in which the Company has assets or a place of business.
    

 

35

 

	
16.2.
    	
Without prejudice to   the right of Yeda to make service in any other manner permitted by law, the   Company:
    
	
 
    	
 
    
	
16.2.1.
    	
irrevocably appoints   Moach Research and Development Services Ltd. of HaRechavim 15, Jerusalem as   its agent for service of process in relation to any suit or proceedings   before the Israeli courts in connection with this Agreement;
    
	
 
    	
 
    
	
16.2.2.
    	
agrees to maintain such   an agent for service of process in Israel during the period commencing on the   date hereof and ending 7 (seven) years after the date of termination of this   Agreement;
    
	
 
    	
 
    
	
16.2.3.
    	
agrees that failure by   a process agent to notify the Company of the process will not invalidate the   proceedings concerned; and
    
	
 
    	
 
    
	
16.2.4.
    	
agrees that if the   appointment of Moach Research and Development Services Ltd. referred to in   clause 16.2.1 above ceases to be effective for the Company, the Company shall   immediately appoint a further person in Israel to accept service of process   on its behalf in Israel and, failing such appointment within 15 (fifteen)   days, Yeda is entitled to appoint such a person by notice to the Company.
    
	
 
    	
 
    
	
17.                               MISCELLANEOUS
    
	
 
    	
 
    
	
17.1.
    	
The headings in this Agreement   are intended solely for convenience or reference and shall be given no effect   in the interpretation of this Agreement.
    
	
 
    	
 
    
	
17.2.
    	
This Agreement   constitutes the entire agreement between the parties hereto in respect of the   subject-matter hereof, and supersedes all prior agreements or understandings   between the parties relating to the subject-matter hereof (including the   Memorandum of Understanding between Yeda and the Company dated 31   August 2004 and, subject to clause 13.2.1 above, this Agreement may be   amended only by a written document signed by both parties hereto. No party   has, in entering into this Agreement, relied on any warranty, representation   or undertaking, except as expressly set out herein.
    
	
 
    	
 
    
	
17.3.
    	
This Agreement may be   executed in any number of counterparts (including counterparts transmitted by   telecopier or fax), each of which shall be deemed to be an original, but all   of which taken together shall be deemed to constitute one and the same   instrument.
    
	
 
    	
 
    
	
17.4.
    	
No waiver by any party   hereto, whether express or implied, of its rights under any provision of this   Agreement shall constitute a waiver of such party’s rights under such   provisions at any other time or a waiver of such party’s rights under any   other provision of this Agreement. No failure by any party hereto to take any   action against any breach of this Agreement or default by another party   hereto shall constitute a waiver of the former party’s rights to enforce any   provision of this Agreement or to take action against such breach or default   or any subsequent breach or default by such other party.
    

 

36

 

	
17.5.
    	
If any provision of   this Agreement is held to be unenforceable under applicable law, then such   provision shall be modified as set out below and the balance of this   Agreement shall be interpreted as if such provision were so modified and   shall be enforceable in accordance with its terms. The parties shall   negotiate in good faith in order to agree on the terms of an alternative   provision which complies with applicable law and achieves, to the greatest   extent possible, the same effect as would have been achieved by the invalid   or unenforceable provision.
    
	
 
    	
 
    
	
17.6.
    	
Nothing contained in   this Agreement shall be construed to place the parties in a relationship of   partners or parties to a joint venture or to constitute either party an   agent, employee or a legal representative of the other party and neither   party shall have power or authority to act on behalf of the other party or to   bind the other party in any manner whatsoever.
    
	
 
    	
 
    
	
17.7.
    	
All payments to be made   to Yeda hereunder shall be made in US Dollars by banker’s cheque or by bank   transfer to Yeda’s bank account, the details of which are as set out in   clause 3 above.
    
	
 
    	
 
    
	
17.8.
    	
All payments to be made   to Yeda hereunder shall be made free and clear of, and without any deduction   for or on account of, any set-off, counterclaim or tax, subject to clause   17.9 below.
    
	
 
    	
 
    
	
17.9.
    	
 
    
	
 
    	
 
    
	
17.9.1.
    	
In the event that the   Company is required under applicable law, to withhold amounts from the   payments to be made under the terms of this Agreement (such payments, for the   avoidance of doubt, being gross payments as aforesaid in clause 15 above), on   account of income tax, tax on profit, or any other taxes of a similar nature   imposed on Yeda by applicable law (“the   withholding tax”), the Company shall immediately notify Yeda in   writing of such requirement and shall, subject to the provisions of clause   17.9.2 below, deduct withholding tax from the payments referred to above, as   prescribed by applicable law, unless Yeda provides the Company with evidence   of an exemption from withholding tax.
    
	
 
    	
 
    
	
17.9.2.
    	
The Company shall make   payment of the withholding tax (if any) deducted as aforesaid to the   appropriate tax authorities within the period prescribed by applicable law   and shall submit receipts or other documents issued by the tax authorities in   favour of Yeda, evidencing such payment, to Yeda within 7 (seven) days of   payment thereof.
    

 

37

 

	
17.10.
    	
The Company shall pay   all stamp duty (if any) imposed in connection with this Agreement.
    
	
 
    	
 
    
	
17.11.
    	
Each party agrees to   execute, acknowledge and deliver such further documents and instruments and   do any other acts, from time to time, as may be reasonably necessary, to   effectuate the purposes of this Agreement.
    
	
 
    	
 
    
	
17.12.
    	
None of the provisions   of this Agreement shall be enforceable by, any person who is not a party to   this Agreement.
    
	
 
    	
 
    
	
17.13.
    	
The remedies afforded   to any of the parties hereto, whether hereunder, or under applicable law or   otherwise, shall be cumulative in nature and not alternative.
    

 

IN WITNESS WHEREOF the parties hereto have set their signatures as of the date first mentioned above.

 

	
for
    	
YEDA   RESEARCH AND
   DEVELOPMENT COMPANY LIMITED
    	
for
    	
BRAINSWAY, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	

    	
 
    	

    	
 
    	
By:
    	

    
	
 
    	
Isaac Shariv
    	
Prof. Haim Garty
    	
 
    	
 
    
	
Title:
    	
C.E.O
    	
CHAIRMAN
    	
Title:
    	
 
    
							

 

38

 

APPENDIX A

(the Research Program)

 

Transcranial Magnetic Stimulation for the Treatment of Depressive Disorders and Addiction

 

Abraham Zangen PhD

Dept. Neurobiology, Weizmann Institute of Science

Rehovot Israel 76100

 

Scientific goals

 

The main goal of my research is the study of mechanisms by which the brain controls mood and motivation. In addition to the basic importance of understanding the neuronal processes that mediate reward and motivation, such knowledge is essential for the development of better treatments for mood disorders (manly depressive disorders) and for treating drug addiction, both of which are major problems in our society, It is not trivial to gather valuable scientific information in this field, since, on the one hand, the tools and approaches available for performing human brain research are very limited, while on the other hand, the interpretation of animal or in vitro data related to emotional issues is also limited. Nevertheless, some greet advances have bean achieved in clinical and basic research by the development of new tools for animal and human brain research.

 

In order to permit non-invasive stimulation of brain regions that are related to the brain reward system, I ve started to develop a special magnetic coiI (that was patented by the NIH during my post-doctoral research fellowship there) for the transcranial magnetic stimulation (TMS) of deep brain regions The advantage of this device is its ability to induce electric fields in deep brain regions that are thought to be involved in both depression and drug addiction, while previous devices could only stimulate cortical brain regions.

 

Description of the subject

 

Depression is a very common psychiatric disorder. In any given 1-year period, 9.5 percent of the population in industrialized countries suffer from a depressive illness (1-3). The usual episode of depression last 4-12 months and is characterized by inability to express pleasure (anhedonia) and by general loss of interest. Some of the following symptoms may also occur: disturbed sleep, altered appetite, loss of energy, decreased sex drive restlessness, unjustified feelings of guilt and thoughts about dying and suicide (1,2). Our understanding of depression has been revolutionized by the introduction of two classes of antidepressants: the tricyclic anti depresants and the monoamine oxidase inhibitors, The introduction of these antidepressants demonstrated that depression can be treated medically and that it most likely results from a chemical imbalance of the brain.

 

	
Ref.: 05-2595-06-5
    	
No.: 65001-001
    

 

 

This chemical imbalance may cause dysfunction of brain reward mechanisms (4-7) and may be the reason that certain depressed individuals seek substance abuse (4,8). Interestingly, epidemiological and clinical data indicate high comorbidity between depression and drug dependence, including nicotine addiction (8). Although depressive disorders and drug abuse are different problems in society, they both relate to the pathology related to the brain reward system. Better understanding of the brain reward circuitry would lead to the development of better therapeutic approaches to both depression and substance abuse.

 

Basic research in Depression

 

Every year, new antidepressant drugs are introduced to the public. Since the tricyclic antidepressants and monoamine oxidase inhibitors were discovered half a century ago, and in most cases displaced the traditional electroconvulsive therapy (ECT), the research on antidepressant mode of action have led to the discovery of target proteins like the monoamine transporters and serotonergic receptors and to the development of serotonin-selective reuptake inhibitors (SSRIs) and norepinephrine-selective reuptake inhibitors that are in wide use today. However, a significant amount of depressed patients (30-40%) do not respond well even to the modern type of antidepressant drugs [9,10]. Moreover, even after a successful treatment of a major depressive episode, the likelihood of another occurrence is 50% and increases to 80% after the second episode [11]. Nearly one quarter of patients are never fully free of symptoms, even while maintaining antidepressant therapy [12]. Another critical problem in antidepressant therapy is the slow onset of effect. Typically, 2-6 weeks of treatment are required with most antidepressant drugs before the effects of the drugs are felt, while some recently developed drugs are effective after only 1-2 weeks. However, despite these advances, the delay in the onset of the therapeutic action of antidepressants continues to plague drug therapy of this disorder. Not only is the suffering of patients prolonged after commencement of treatment, but they also remain at great risk of suicide. Moreover, since adverse effects are frequently at their worst during the initial phases of treatment, compliance is often additionally hampered by the delayed onset of symptom relief [13].

 

Magnetic stimulation of deep brain regions

 

Electroconvulsive therapy (ECT) is perhaps the most effective treatment for depression, with response rate of 80% in some samples [14]. However, it is not widely used due to the adverse side effects associated with this therapy. Although ECT has been used for almost a century for treating depressive disorders, the mechanism of its action is not clear, as the etiology of depression has not yet been defined. One reasonable hypothesis is that such repetitive treatment, which strongly stimulates the whole brain, also affects the brain reward circuitry (including the prefrontal cortex, nucleus accumbens, ventral tegmental area and other limbic structures), thereby inducing long-term neuroadaptations that normalize the activity of this circuitry.

 

	
Ref.: 05-2595-05-5
    	
No.: 65001-001
    

 

2

 

A more recent approach that allows stimulation of relatively focal cortical regions non-invasively is transcranial magnetic stimulation (TMS). The stimulation is induced by passing a high alternating current through a magnetic coil, which is placed over the scalp. Due to several technical limitations it is not possible to create a coil for stimulating a specific region in a rat brain without affecting the surrounding regions, but it is possible to stimulate a relatively focal region in the human brain. Repetitive TMS (rTMS) over the prefrontal cortex was recently shown to be effective as a treatment for major depression in several studies [15] and in some cases, as effective as ECT [16]. Moreover, some neurochemical alterations induced by TMS are similar to those induced by ECT [17]. Nevertheless, the efficacy of TMS as a treatment for depressive disorders is still controversial [18]. As standard coils are only able to stimulate cortical regions (which are relatively close to the scalp), the therapeutic efficacy of such stimulation have thus far been limited to the TMS effect on superficial levels of the prefrontal cortex. Since recent studies indicate that the nucleus accumbens and other deep brain region have major roles in reward circuitries and in depressive behavior (4-8), we have developed a new coil for direct stimulating of such deep brain regions and the neuronal pathways connecting the VTA or the nucleus accumbens with the prefrontal cortex [19]. These neuronal pathways were shown to be activated in conjunction with craving for abused drugs and pathological conditions of these pathways seem to be associated with both depressive disorders and addiction [4-8, 20, 21]. Therefore, our new coil could potentially affect craving for drugs, and possibly even the general motivational status of humans. We also expect our new coil to become a new tool for the investigation and treatment of drug addiction. The NIH has patented the new coil (of which I am the first inventor; patent# PCT/US01/50737) and I have recently preformed the first clinical trial in healthy volunteers indicating that the new coil can indeed penetrate into much deeper brain regions. I plan to study the efficacy of our new coil in depressed patients and in patients suffering nicotine addiction.

 

Treating the acute withdrawal symptoms of various drug addictions has relatively good success. However, the majority of drug addicts relapse to abusing the drug after several months [22]. It has been hypothesized that the addictive behavior is, at least partly, the result of sensitization [23] to the behavioral and rewarding influences of the drug itself [58,59] and sensitization to the conditioned environmental cues that were associated with the drug taking [60]. The behavioral sensitization has been demonstrated in animal models of drug addiction [e.g. 61]. A gradual increase in the stimulant (locomotor) effect has been demonstrated during repeated administration of drugs of abuse including cocaine [e.g. 62], d-amphetamine [e.g. 63] and morphine [e.g. 64]. In addition, repeated drug intake results in neuronal adaptations and synaptic plasticity [e.g.59] which, in theory, can lead to alterations in the behavior of the drug addict. In particular, it has been demonstrated that the ability of drugs of abuse to cause an up-regulation of the GluR1 subunit of AMPA glutamate receptors in the ventral tegmental area (VTA) is crucial for the development of sensitization [59]. This elevation can trigger other neural transduction events resulting in neuronal adaptations and synaptic plasticity resembling long term potentiation (LTP) cascade which eventually can influence the entire motive/reward circuit connectivity leading to behavioral sensitization and thus to addiction. There is considerable evidence that drug reward and electrical brain stimulation share overlapping motive/reward neuronal circuits and neurotransmission. Nevertheless, repeated exposure to stimulation of the medial forebrain bundle (MFB) selectively down-regulates the GluR1 subunit of AMPA glutamate receptors in the VTA [65]. This is opposite in effect to the up-regulation of GluR1 that is necessary for the development of sensitization to various drugs [59]. Therefore, it is hypothesized that treatment with repeated electrical stimulation to the motive/reward circuit during or after repeated drug administration could prevent or at least attenuate the up-regulation of GluR1 in the VTA, thus attenuating the neuronal adaptations which lead to behavioral sensitization and subsequently to addiction.

 

3

 

I propose that chronic treatment of the brain reward system, using our non-invasive coil for magnetic stimulation of deep brain regions, may become a new tool for treating various addictions.

 

Research Plan

 

I will first optimize the coil in order to maximize the induced electrical field in the nucleus accumbens and minimize the field in other brain regions. Then, Brainsway will perform clinical trials within clinical centers, such as Sheba Medical Center in Israel, in order to test the efficacy of the treatment and to search for optimal treatment conditions for depressive disorders and for nicotine addiction. The optimization of the coils and the interpretation of the clinical effects will be supported by functional MR1 studies in order to have a biological measure for the distribution of the activated brain tissue and the changes developed in patients after chronic treatment with TMS. The functional MRI sessions will take place either in the Sheba Medical center or in the Weizmann Institute, if same will be permitted when relevant. The clinical trial itself will take place in the Sheba Medical Center.

 

Optimization of TMS coils for deep brain regions

 

Standard TMS coils enable stimulation of cortical brain regions. In patent No. PCT/US01/50737 we (through the NIH) stated a theoretical framework for construction principles of new TMS coils enabling non-invasive activation of deep brain structures. The current research will include development of several TMS coils, designed for activation of specific deep brain structures which are known to play an important role in depressive disorders and addiction. The construction of the new TMS coils will meet several requirements simultaneously:

 

a.    sufficiently high electric field intensity in the desired deep brain region, such that same will surpass the threshold for neuronal activation.

 

b.     High percentage of electric field in the desired deep brain region relative to the maximal intensity in the cortex.

 

c.    Minimal aversive side effects such as pain and activation of facial muscles.

 

The electric field distribution of each coil will be measured in air and in a phantom model of the brain containing saline water with physiological concentration. Three-dimensional maps of the electric field induced by each coil will be created in order to draw conclusions on which brain sites are expected to be activated for each coil design. Feedback from the clinical trials and from the functional MRI data will be taken into account for further optimization of the coil design. An optimized coil for the clinical trial in cigarette smokers will be designed.

 

	
Ref.: 05-2595-05-5
    	
No.: 65001-00!
    

 

4

 

REFERENCES

 

[1] Akiskal HS (1995): Mood disorders: Introduction and overview. In: Comprehensive textbook of psychiatry Vol 6, 16 edition (eds: Kaplan HI and Sadock BJ), pp. 1067-1068 (William and Wilkins, Baltimore)

 

[2] Davis JM and Moss JW (eds) The effective disorders, Washington DC American Psychiatry Press (1983)

 

[3] Robins LN, Regier DA (1990) (eds). Psychiatric Disorders in America, The Epidemiologic Catchment Area Study (New York: The Free Press)

 

[4] Naranjo CA, Tremblay LK and Busto UE (2001) The role of the brain reward system in depression. Prog. Neuropsychopharmacol. Biol Psychiatry 25, 781-823.

 

[5] Nestler EJ, Barot M, Dileone RJ, Eisch AJ, Gold SJ and Monteggia LM (2002a) Neurobiology of depression. Neuron 34: 13-25

 

[6] Zangen A, Nakash R, Overstreet DH and Yadid G (2001) Association between depressive behavior and absence of serotonin-dopamine interaction in the nucleus accumbens. Psychopharmacology 155: 434-439

 

[7] Zangen A, Nakash R, Roth-Deri I, Overstreet DH and Yadid G (2002a) Impaired release of beta-endorphin in response to serotonin in a rat model of depression. Neuroscience 110:389-393

 

[8] Markou A, Kosten TR, Koob GF (1998) Neurobiological similarities in depression and drug dependence: a self-medication hypothesis. Neuropsychopharmacology 18: 135-174.

 

[9] Fava M and Davidson KG (1996) Definition and epidemiology of treatment-resistant depression. Psychiatr. Clin. North Am 19: 179-200

 

[10] Frank E, karp JF and Rush AJ (1993) Efficacy of treatment for major depression. Psychopharmacol Bull 29: 457-475

 

[11]  Cohen LJ (1997) Rational drug use in the treatment of depression. Pharmacotherapy 17:45-61.

 

[12] Paykel ES, Ramana R, Cooper Z, Hayhurst H, Kerr J and Barocka A (1995) Residual symptoms after partial remission: an important outcome of depression. Psychol Med 25: 1171-1180

 

	
Ref.: 05-2595-05-5
    	
No.: 65001-001
    

 

5

 

[13] Blier P (2003) The pharmacology of putative early-onset antidepressant strategies. Eur Neuropsychopharmacol 13: 57-66

 

[14] Nestler EJ, Gould E, Manji H, Buncan M, Duman RS, Greshenfeld HK, Hen R, Koester S, Lederhendler I, Meaney M, Robbins T, Winsky L and Zaleman S (2002b) Preclinical models: Status of basic research in depression. Biol Psychiatry 52:503-528.

 

[15] Overstreet DH (1993) The flinders sensitive line rats: a genetic animal model of depression. Neurosci Biobehav Res 17: 51-68.

 

[16] Overstreet DH, Janowsky DS, Gillin JC, Shiromani PJ and Sutin EL (1986) Stress-induced immobility in rats with cholinergic supersensitivity. Biol Psychiatry 21: 657-664

 

[17] Knapp DJ, Sim-Selley LJ, Breese GR and Overstreet DH (2000) Selective breeding of 5-HT (1A) receptor mediated responses: application to emotion and receptor action. Pharmacol Biochem Behav 67: 701-708

 

[18] Zangen A, Overstreet DH and Yadid G (1997) High serotonin and 5-hydroxyindoleacetic acid levels in limbic brain regions in a rat model for depression: Normalization by chronic antidepressant treatment. J Neurochem 69: 2477-2483

 

[19] Serova L, Sabban E, Zangen A, Overstreet DH and Yadid G (1998) Altered gene expression foe catecholamine biosynthetic enzymes and stress response in rat genetic model of depression. Mol Brain Res 63: 133-138

 

[20] Zangen A, Overstreet DH and Yadid G (1999) Increased catecholamine levels in specific brain regions of a rat model of depression: Normalization by chronic antidepressant treatment. Brain Res 824: 243-250

 

[21] Yadid G, Nakash R, Deri I, Tamar G, Kinor N, Gispan I and Zangen A (2000) Elucidation of the neurobiology of depression: insights from a novel genetic animal model. Prog Neurobiol 62: 353-378

 

[22] Yacoubi ME, Bouali S, Popa D, Naudon Leroux-Nicollet I, Hamon M, Constentin J, Adrien J and Vaugeois JM (2003) Behavioral, neurochemical and electrophysiological characterization of genetic mouse model of depression. PNAS 100: 6227-6232

 

[23] Weiss JM, Cierpial MA and West CHK (1998) Selective breeding of rats for high and low motor activity in a swim test: towards a new animal model of depression. Pharmacol Biochem Behav 61: 49-66

 

[24] West CHK, Bonsall RW, Emery MS and Weiss JM (1999) Rat selectively bred for high and low swim-test activity show differential response to dopaminergic drugs. Pharmacology 146: 241-251

 

6

 

[25] Landgraf R and Wigger A (2002) High vs low anxiety-related behavior rats: an animal model of extremes in trait anxiety. Behavior Genetics 32: 301-314.

 

[26] Sanders AR, Detera-Wadleigh SD and Gershon ES (1999) Molecular genetics of mood disorders. In neurobiology of mental illness Charney DS, Nestler EJ and Bunney eds (New York: Oxford) pp 299-316

 

[27] Fava M and Kendler KS (2000) Major depressive disorder. Neuron 28: 335-341

 

[28] Bellivier F, Henry C, Szoke A, Schurhoff F, Nosten-Bertrand M, Feingold J, Launay JM, Leboyer M and Laplanche JL (1998) Serotonin transporter gene polymorphisms in patients with unipolar or bipolar depression. Neurosci Lett 255: 143-146.

 

[29] Frisch A, Postilnick D, Rockah R, Michaelovsky E, Postilnick S, Birman E, Laor N, Rauchverger B, Kreinin A, Poyurovsky M et al (1999) Association of unipolar major depression disorder with genes of the serotonergic and dopaminergic pathways. Mol Psychiatry 4: 389-392.

 

[30] Gutierrez B, Pintor L, Gasto C, Rosa A, Bertranpetit J, Viesta E and Fananas L (1998) Variability in the serotonin transporter gene and increase risk for major depression with melancholia. Hum Genet 103: 319-322.

 

[31] Rosenthal NE, Mazzanti CM, Barnett RL, Hardin TA, Turner EH, Lam GK, Ozaki N and Goldman D (1998) Role of serotonin transporter promotor repeat length polymorphism (5-HTTLPR) in seasonality and seasonal affective disorders. Mol Psychiatry 3: 175-177.

 

[32] Flory JD, Manuck SB, Ferrell RE, Dent KM, Peters DG and Muldoon MF (1999) Neuroticism is not associated with the serotonin transporter (5-HTTLPR) polymorphism. Mol Psychiatry 4: 93-96

 

[33] Gelernter J, Kranzler H, Coccaro EF, Siever LJ and New AS (1998) Serotonin transporter protein gene polymorphism and personality measures in African American and European American subjects. Am J Psychiatry 155: 1332-1338

 

[34] Ebstein RH, (1997) No association between the serotonin transporter gene regulatory region polymorphism and the Tridimensional Personality Questionnaire (TPQ) temperament of harm avoidance. Mol Psychiatry 2: 224-226

 

[35] Burmeister M (1999) Basic concepts in the study of diseases with complex genetics. Biol Psychiatry 45: 522-532.

 

[36] Duman RS, Heninger GR and Nestler EJ (1997) A molecular and cellular theory of depression. Arch Gen Psychiatry 54: 597-66

 

[37] Altar CA (1999) Neurotrophins and depression. Trend Pharmacol Sci 20: 59-61

 

7

 

[38] Shimizu E, Hashimoto K, Okamura N, Koike K, Komatsu N, Kumakiri C, Nakazoto M, Watanabe H, Shinoda N, Okada S, Iyo M (2003) Alteration of serum levels of brain derived neurotrophic factor (BDNF) in depressed patients with or without antidepressants. Biol Psychiatry 54: 70-75

 

[39] Smith MA, Makino S, Kvetnansky R and Post RM (1995) Stress and glucocorticoids effect the expressing affect the expressing of brain-derived neurotrophic factor and the neurotrophin-3-mRNAs in the hippocampus. J Neurosci 15: 1768-1777.

 

[40] Nibuya M, Morinobu S and Duman RS (1995) Regulation of BDNF and trkB mRNA in rat brain by chronic electroconvulsive seizure and antidepressant drug treatment. J Neurosci 15: 7539-7547

 

[41] Chen B, Dowlatshahi D, MacQueen GM, Wang JF and Young LT (2001) Increased hippocampal BDNF immunoreactivity in subjects treated with antidepressant medication. Biol Psychiatry 50: 260-265

 

[42] Schildkraut JJ (1965) The catecholamine hypothesis of effective disorders: A review of supporting evidence. Am J Psychiatry 122; 509-522.

 

[43] Bunney WE Jr and Davis JM (1965) Norepinephrine in depressive reaction. Arch Gen Psychiatry 13: 483-494

 

[44] Gerner RH and Bunney WE Jr (1986) Biological hypothesis of effective disorders. In Berger PA and Brodie KH (eds) American handbook of Psychiatry. New York: Basic books, vol 8 pp 265-301.

 

[45] Van Ree JM, Niesnik RMJ, Wolfswinkel LV, Ramsey NF, Kornet MLMW, Van Furth WR, Vanderschuren LJMJ, Gerrits MAFM, Van den Berg CL (2000) Endogenous opioids and reward. Eur J Pharmacol 405: 89-101.

 

[46] Greenwell TN, Zangen A, Martin-Schilds S, Wise RA, Zadina JE (2002) Endomorphin-1 and-2 immunoreactive cells in the hypothalamus are labeled by fluoro-gold injection to the ventral tegmental area. J Comp Neurol 454: 320-328

 

[47] Zangen A, Ikemoto S, Zadina JE, Wise RA (2002b) Rewarding and psychomotor stimulant effect of endomorphin-1: anterior differences within the ventral tegmental area and lack of effect in the nucleus accumbens. J Neurosci 22: 7225-7233.

 

[48] Abrams, R (1997) Electroconvulsive Therapy 3rd edn (Oxford Univ. Press, New York)

 

[49] Gershon AA, Dannon PN, Grunhaus L. (2003) Transcranial magnetic stimulation in the treatment of depression. Am J Psychiatry. 160:835-845.

 

8

 

[50] Grunhaus L, Schreiber S, Dolberg OT, Polak D, Dannon PN. (2003) A randomized controlled comparison of electroconvulsive therapy and repetitive transcranial magnetic stimulation in severe and resistant nonpsychotic major depression. Biol Psychiatry. 53:324-331.

 

[51] Belmaker RH, Grisaru N (1998) Magnetic stimulation of the brain in animal depression models responsive to ECS. J ECT. 14:194-205.

 

[52] Martin JL, Barbanoj MJ, Schlaepfer TE, Clos S, Perez V, Kulisevsky J, Gironell A. (2002) Transcranial magnetic stimulation for treating depression. Cochrane Database Syst Rev. CD003493.

 

[53] Roth Y, Zangen A, and Hallett M (2002) A Coil Design for Transcranial Magnetic Stimulation of Deep Brain Regions. J. Clin Neurophysiol, 19:361-370

 

[54] Self DW, Nestler EJ (1995) Molecular mechanisms of drug reinforcement and addiction. Annu Rev Neurosci 18:463-95

 

[55] Breiter HC, Gollub RL, Weisskoff RM et al. (1997) Acute effects of cocaine on human brain activity and emotion. Neuron 19:591-611

 

[56] Stewart J (2000) Pathways to relapse: the neurobiology of drug- and stress-induced relapse to drug-taking. J. Psychiatry Neurosci. 25:125-136.

 

[57] Stewart J, Badiani A (1993) Tolerance and sensitization to the behavioral effects of drugs, Behav. Pharmacol. 4: 289-312.

 

[58] Robinson TE, Becker JB (1986) Enduring changes in brain and behavior produced by chronic amphetamine administration: a review and evaluation of animal models of amphetamine psychosis. Brain Res. 396:157-198.

 

[59] Carlezon WA Jr, Nestler EJ (2002) Elevated levels of GluR1 in the midbrain: a trigger for sensitization to drugs of abuse? Trends Neurosci. 25:610-605.

 

[60] Pierce RC, Kalivas PW (1997) A circuitry model of the expression of behavioral sensitization to amphetamine-like psychostimulants. Brain Res Rev. 25:192-216.

 

[61] Lett BT (1989) Repeated exposures intensify rather than diminish the rewarding effects of amphetamine, morphine and cocaine. Psychopharmacol. 98:357-362

 

[62] Post RM, Rose H (1976) Increasing effects of repetitive cocaine administration in the rat Nature. 260:731-732.

 

9

 

[63] Segal DS, Mandell AJ (1974) Long-term administration of d-amphetamine: progressive augmentation of motor activity and stereotypy. Pharmacol Biochem Behav. 2:249-255.

 

[64] Babbini M, Davis WM (1972) Time-dose relationships for locomotor activity effects of morphine after acute or repeated treatment. BR. J. Pharmacol, 46:213-224.

 

[65] Carlezon WA Jr, Todtenkopf MS, McPhie DL, Pimentel P, Pliakas AM, Stellar JR, Trzcinska M. (2001) Repeated exposure to rewarding brain stimulation downregulates GluR1 expression in the ventral tegmental area. Neuropsychopharmacology. 25:234-241.

 

10

 

Appendix B

(the Research Budget)

 

A. EQUIPMENT, SUPPLIES & MATERIALS

 

	
 
    	
 
    	
Requested sums (in $)
    	
 
    
	
Item
    	
 
    	
1st year
    	
 
    	
2nd year
    	
 
    	
3rd year
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TMS stimulator service*
    	
 
    	
25,500
    	
 
    	
13,500
    	
 
    	
9,500
    	
 
    
	
Phantom human brain
    	
 
    	
320
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Cables, electrodes, disposables
    	
 
    	
2,000
    	
 
    	
1,000
    	
 
    	
1,000
    	
 
    
	
Total supplies, materials & services
    	
 
    	
27,820
    	
 
    	
14,500
    	
 
    	
10,500
    	
 
    

 

* The stimulator will be dedicated for the use of the present research.

 

B. MANPOWER

 

	
 
    	
 
    	
Role in
    	
 
    	
% time
    	
 
    	
Salaries (in $)
    	
 
    
	
Name (last, first)
    	
 
    	
project
    	
 
    	
devoted
    	
 
    	
lst year
    	
 
    	
2nd year
    	
 
    	
3rd year
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Zangen Abraham
    	
 
    	
PI/1
    	
 
    	
25
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

C. MISCELLANEOUS

 

	
 
    	
 
    	
Requested sums (in $)
    	
 
    
	
 
    	
 
    	
1st year
    	
 
    	
2nd year
    	
 
    	
3rd year
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Professional literature
    	
 
    	
250
    	
 
    	
250
    	
 
    	
 
    	
 
    
	
Publication charges in scientific journals
    	
 
    	
0
    	
 
    	
1,000
    	
 
    	
1,000
    	
 
    
	
Communication services
    	
 
    	
500
    	
 
    	
500
    	
 
    	
500
    	
 
    
	
Photocopies
    	
 
    	
250
    	
 
    	
250
    	
 
    	
250
    	
 
    
	
Total miscellaneous
    	
 
    	
1,000
    	
 
    	
2,000
    	
 
    	
1,750
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Functional MRI service**
    	
 
    	
TBD
    	
 
    	
TBD
    	
 
    	
TBD
    	
 
    

 

** At this point it is not clear whether Functional MRI for this study will be performed in the Weizmann Institute. If permitted by the Weizmann Institute, the fee for using the fMRI service will apply and shall be agreed upon by the parties.

 

	
Ref.: 05-2595-05-6
    	
No.: 65002
    

 

 

 

Total:

 

	
 
    	
 
    	
1st year
    	
 
    	
2nd year
    	
 
    	
3rd year
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
A+B+C
    	
 
    	
28,820
    	
 
    	
16,500
    	
 
    	
12,250
    	
 
    
	
Overhead (27.5%)
    	
 
    	
10,951
    	
 
    	
6,270
    	
 
    	
4,655
    	
 
    
	
Total
    	
 
    	
39,771
    	
 
    	
22,770
    	
 
    	
16,905
    	
 
    

 

2

 

WEIZMANN INSTITUTE OF SCIENCE

 

APPENDIX C

 

 

Dear 

 

Further to your request to receive              (hereinafter “the Material”) from                (hereinafter “the Scientist”) for the purpose of              (hereinafter “the Research”), please be advised that all rights and title in and to the Material and any derivatives, progeny or fragment thereof, vest in the Weizmann Institute of Science (hereinafter “the Institute”) and these have been exclusively licensed to a commercial entity (hereinafter “the Licensee”). Thus the Institute requires that the Material be provided to you under the following terms:

 

1.              The Material is provided for non-commercial research purposes only. Neither the Material nor any results accrued using the Material shall be used in or for any commercial purposes.

 

2.              The Material shall be kept in your strict possession and you further agree not to transfer the Material to other people, except to those who are under your direct supervision and who have previously accepted the terms of this Agreement.

 

3.              You agree to use reasonable efforts to treat in confidence any information related to the Material, except for information you can prove was previously known to you or that is or becomes publicly available without any breach of this agreement by yourself or any person on your behalf. Any proposed disclosure of such Confidential Information shall be presented for the Scientist’s approval, at least 30 (thirty) days prior to the proposed disclosure, and no disclosure shall be made until, and to the extent that, the Scientist’s approval is granted to you in writing.

 

4.              You agree to provide the undersigned with the results of the Research.

 

5.              In all oral or written publication concerning the use of the Material, an appropriate acknowledgment of the Scientist’s contribution shall be made, unless requested otherwise by the Scientist in advance and in writing.

 

6.              (a)         You acknowledge that the Material, being research samples, has not been fully investigated and consequently is supplied for the Research entirely at the user’s risk and is provided to you with no warranties, express or implied, and no representation is made that the use of the Material will not infringe any patent or proprietary rights of third parties.

 

	
Ref: 05-2595-05-7
    	
No.: 65003-001
    

 

 

1

 

WEIZMANN INSTITUTE OF SCIENCE

 

(b)         Neither the Institute nor its scientists nor the Licensee will be liable for loss or damage arising from use of the Material by you or anyone obtaining it from you, or anyone on your behalf. In accepting the Material, you irrevocably assume upon yourself all risks associated with the use of the Material (whether such risk is to yourself and to any others). The Licensee, the Institute and its scientists will not be liable to Recipient for any loss, claim or demand made by Recipient for any loss, claim or demands made against Recipient by other parties, or incurred by Recipient, due to Recipient’s use of the Material. No indemnification is provided or intended to be provided hereunder.

 

Please indicate your acceptance of these terms by signing and returning one copy of this letter to the undersigned.

 

	
 
    	
 
    	
Sincerely yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Dr. Abraham Zangen
    

 

Agreed and accepted:

 

	
Recipient Scientist   Name:
    	
 
    	
Recipient Institution   Seal/Stamp
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signature:
    	
 
    	
 
    	
Authorized Person’s Name   and Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    	
Signature and Date:
    
	
 
    	
 
    	
 
    	
 
    
					

 

cc: Yeda Research and Development Co. Ltd. at the Weizmann Institute of Science.

 

2Exhibit 10.11

 

FIRST ADDENDUM AGREEMENT

 

Dated: August 19, 2007

 

BY AND BETWEEN

 

YEDA RESEARCH AND DEVELOPMENT COMPANY LTD.

 

of P.O. Box 95, Rehovot 76100, Israel

 

(hereinafter “Yeda”)

 

and

 

BRAINSWAY, INC.

 

a company duly registered under the laws of the state of Delaware, U.S.A

 

(hereinafter “the Company”)

 

	
WHEREAS
    	
Yeda and the Company   are parties to a Licence Agreement dated 2 June 2005 (the “Agreement”); and
    
	
 
    	
 
    
	
WHEREAS
    	
The Research Period   defined under the Agreement commenced on 2 June 2005 and is scheduled to   end on 1 June 2008; and
    
	
 
    	
 
    
	
WHEREAS
    	
without derogating from   the Research Period and Budget, the parties wish to commence an additional   research plan and budget for a period commencing on 1 June 2007 and   ending on 31 May 2008 (the “Additional   Research” and the “Additional   Research Period”, respectively);
    

 

NOW THEREFORE IT IS AGREED BY THE PARTIES HERETO AS FOLLOWS:

 

	
1.
    	
Terms and phrases   included in this First Addendum Agreement (“this   Addendum”) which are defined in the Agreement shall have the same   meaning attributed to them in the Agreement unless otherwise defined in this   Addendum.
    
	
 
    	
 
    
	
2.
    	
This Addendum and the   Agreement shall be read as one and shall represent the complete current   understanding between the parties with respect to the subject matter hereof.   Subject to the modifications contained herein, the provisions of the   Agreement shall remain unaltered and in full force and effect.
    

 

	

    	
Ref.: 09-2595-07-20

L/88017/4430/745250/1
    	
No.: 87823-004
    

 

 

1

 

	
3.
    	
All appendices attached   hereto shall form an integral part of this Addendum.
    
	
 
    	
 
    
	
4.
    	
The Research Program   attached to the Agreement as Appendix A thereto shall be supplemented by the   research program for the Additional Research attached hereto as Appendix A.
    
	
 
    	
 
    
	
5.
    	
The Budget for the   Additional Research, attached hereto as Appendix   B, in the total amount of US$50,000 +VAT, will be paid to Yeda in   2 (two) equal instalments of US$25,000 + VAT each. The first instalment will   be paid to Yeda upon the date of signature of this Addendum, and the second   instalment on 1/12/2007 (i.e., at the end of the first half of the Additional   Research Period). The payments shall be made by cheque. Yeda shall issue a   VAT invoice in respect of the amounts actually paid by the Company pursuant   to this clause 5, promptly after the receipt of each payment by Yeda.
    
	
 
    	
 
    
	
6.
    	
The parties acknowledge   that in the course of the Research, the Scientist, together with other   scientists, has arrived at a joint invention relating to transcranial   magnetic stimulation (“the Invention”) all   as more fully described in the patent applications filed in relation thereto   (as described in Appendix C hereto) (“the   Existing Patent Applications”) and that, for the avoidance of   doubt, the Invention falls within the Licensed Information and the Existing   Patent Applications fall within the Patents.
    
	
 
    	
 
    
	
7.
    	
Notwithstanding the   date of signature hereof, this Addendum shall be in full effect as of 1   June 2007.
    

 

IN WITNESS WHEREOF THE PARTIES HERETO HAVE SET THEIR SIGNATURES.

 

	

    	
 
    	

    	
 
    	

    
	
Prof.   Mudi Sheves
    	
 
    	
C.E.O.
    	
 
    	
BRA1NSWAY, INC.
    
	
Chairman
    	
 
    	
 
    	
 
    	
 
    
	
YEDA RESEARCH   AND DEVELOPMENT COMPANY LTD.
    	
 
    	
 
    	
 
    	
 
    

 

	

    	
 
    	
 
    

 

 

2

 

APPENDIX A

 

Research Program for Additional Research Period

 

Investigation of theta burst stimulation in preclinical models of major

depression: Development of a novel antidepressant intervention

 

Brief description of the project and the scientific and technological background

 

The World Health Organization (WHO) reports that major depressive illness is the leading cause of disability and estimates that in 2020 depression will reach the 2nd position among major contributors to the global burden of disease. An estimated 5.8% of men and 9.5% of women will experience a depressive episode in any given year and depression is associated with increased mortality including suicide and profoundly affects the quality of life, productivity, the autonomy and social integration of patients. While the therapeutic armamentarium developed over the past few decades has transformed the treatment of major depressive disorder, treatment-resistant depression remains a fundamental clinical problem, with up to 30% of patients not even partially responding and low percentages remitting with antidepressant treatment (Keller et al 1992; Rush and Thase 1997). Moreover, in randomized controlled trials of nonresistant, uncomplicated major depressive disorder, only 50-60% respond to an antidepressant medication, and of this group, only 2/3 (or 35% of the initial group) attain remission. The need to frequently augment or switch treatment is recognized (Thase and Rush 1997). Therefore treating therapy-resistant depression and preventing chronic depressive conditions constitute major clinical issues. These have generated tremendous interest not only, in novel principles of pharmacological treatment, but also in novel non-pharmacological approaches such as repetitive transcranial magnetic stimulation (rTMS) and vagus nerve stimulation (VNS).

 

To date, preclinical and clinical evidence have been accumulated supporting the antidepressant action of rTMS of the prefrontal cortex (PFC) in treatment-resistant depression (Gershon et al 2003). About 25 small placebo-controlled clinical studies have been published, mainly investigating rTMS as add-on treatment in therapy-resistant depression. Three meta-analyses confirmed a significant antidepressant effect of two weeks high frequency rTMS treatment compared to placebo rTMS (Burt et al 2002; Martin et al 2003). However, effect sizes have been modest to moderate and the clinical significance of its therapeutic effects is questionable. Very recently, data of two large multicenter trials have been presented (O’Reardon et al 2006; Herwig et al 2006). In the U.S. multicenter trial a significant antidepressant effect superior to placebo has been reported in medication-free and treatment-resistant patients. However, the response and remission rates for active vs. placebo rTMS were 24% vs. 15% and 17.5% vs. 8%, respectively (O’Reardon et al 2006), i.e. much lower than reported for electroconvulsive therapy (ECT): 40 to 72 % (Burt et al 2002). The second multicenter trial unfortunately failed to show a significant difference between active and sham rTMS adjunctive to antidepressant medication (Herwig et al 2006).

 

 

 

3

 

Among others two main reasons for the modest clinical effectiveness of rTMS in previous trials can be discussed: 1) Concerns over safety have limited human studies to relatively low frequencies of stimulation (usually <20 Hz) (Wassermann 1998), whereas animal studies often use much higher frequencies such as the theta burst paradigms (3-5 pulses at 100 Hz repeated at 5 Hz) in order to induce long-lasting alterations in localized brain connectivity such as long-term potentiation (LTP) or depression (LTD) (Larson and Lynch 1986; Huemmeke et al 2002), 2) The depth of direct stimulation by standard rTMS coils (usually figure-8) is limited to regions at the cortex surface (Nadeem et al 2003; Zangen et al 2005) and compared to ECT standard rTMS may not be effective enough in therapeutically modulating regional brain activity altered in deeper lateral and medial regions of the PFC in depression (Drevets 2001; Mayberg et al 2005).

 

We have recently developed a novel coil that allows stimulation of deep brain regions directly (Roth et al. 2002) and proved its ability to stimulate deep brain regions (Zangen et al. 2005) with minimal side effects (Levkovitz et al. 2006). This coil can even induce short-lasting positive cognitive effects in healthy volunteers (Levkovitz et al. 2006). In addition, a new stimulation paradigm, i.e. theta burst (TB) rTMS mimicking TB protocols used in animal models for inducing long-term potentiation (LTP) or long-term depression (LTD), has been reported exhibiting more robust and stable effects on cortical excitability compared to standard rTMS protocols. Both recent achievements, deep rTMS and TB rTMS, represent promising avenues for optimizing the efficacy of rTMS as therapeutic intervention.

 

 

 

4

 

However, the efficacy of such novel rTMS approaches as a treatment for depressive disorders has still to be evaluated. It is not known what would be the optimal brain region to stimulate as well as the optimal stimulation parameters for achieving the best (and fastest) therapeutic effect with least side effects. These issues, as well as the neurochemical effects of such electromagnetic stimulation can be addressed, at least in part, by investigation of behavioral and neurochemical outcome induced by repeated electrical stimulation of specific brain regions in animal models of depressive behavior, using similar parameters as those used for TMS. Such investigation is necessary to facilitate the establishment of rTMS as a potential alternative treatment for depression and may be relevant for other non-pharmacological approaches such as DBS (Mayberg et al. 2005). It is not possible to induce localized stimulation with TMS in rats as the minimal size of coils that can produce an effective field, stimulates a very large portion of the rat brain. Therefore, in order to learn which brain region should be targeted and what the optimal stimulation parameters in animal models are, it is necessary to insert electrodes into specific brain regions and study the effect of repeated sub-convulsive electrical stimulation treatment. The goal of the preclinical track of the proposed project is to further investigate the antidepressant effects of repeated sub-convulsive electrical stimulation of PFC regions as well as other reward-related brain regions.

 

Objectives and expected significance of the research

 

Objectives

 

The main objective of this preclinical development using animal model for depressive behavior is to develop a more effective antidepressant intervention compared to standard rTMS, using the TB stimulation. The major hypotheses tested in this project is that prefrontal deep TB stimulation is safe and exerts a higher short-term efficacy in treating depressive behavior compared to standard repeated 20Hz stimulation.

 

 

 

5

 

The need for this project now and expected significance of the research

 

According to critical meta-analyses and the results of recent multicenter-trials the effectiveness of rTMS in depression remains modest compared to ECT which is still the most effective antidepressant intervention to date. At this stage, current research should not only investigate the standard rTMS protocols, but also focus on developing more powerful novel rTMS approaches in order to increase the antidepressant efficacy of rTMS. Very recently, major achievements in developing rTMS methodology have been made: 1) Theta burst (TB) rTMS (e.g. 3 pulses at 50 Hz repeated at 5 Hz) mimicking TB protocols used in animal models in order to induce LTP/LTD-like effects and 2) novel stimulation coils, termed H-coils, for deep rTMS (Zangen et al 2005). TB rTMS has been recently applied over the primary motor cortex in humans and reported to induce more robust and stable effects on cortical excitability in comparison with standard rTMS (Huang et al 2005). In addition, a newly developed deep rTMS system, which allows direct stimulation of over 5 cm in depth from the cortex surface (while standard TMS is limited to depth of 1-2 cm) was recently tested for its safety in healthy subjects (Zangen et al 2005; Levkovitz et al 2006). The basic concept of H-coils is that the rapid decrease in the electric field as a function of distance from the coil can be minimized by inducing summation of several coil elements carrying a current in a common direction and by minimizing any radial components of the coil (Roth et al 2002; Zangen et al 2005). These advances made in rTMS methodology are very promising and should now be tested for their application in clinical treatment protocols. Moreover, the combination of both deep rTMS and theta burst stimulation may allow to directly stimulate deeper prefrontal areas at comparably lower intensities and may exert more robust and stable effects on neurobiological and clinical measures. Thus, the proposed project will further develop these approaches in preclinical models.

 

Comprehensive description of the methods and plan of operation

 

The widely used rat model for depressive behavior induced by chronic mild stress (CMS) is established in the lab at the Weizmann Institute since 2004. Several behavioral paradigms are used to evaluate model behaviors of motivation and anhedonia. In our setup, CMS induces anhedonia-like behavior as observed in a sucrose preference test and in sexual behavior testing and reduced exploration of novel environments. Our preliminary results indicate that repeated sub-convulsive electrical stimulation (SCES) of deep, but not superficial layers of the prefrontal cortex (10 daily sessions, 50 x 5 sec trains of 20 Hz, intertrain interval 20 sec) induces partial normalization of the behavioral deficit in CMS animals. These parameters are similar to those used with rTMS, however pulse duration is 0.2 msec (vs. 0.2-0.4 msec in TMS) and intensity is set at 400 μA. Sham control groups undergo the same surgical procedures and are connected to the stimulation cables daily without activation. In the first year we will expand this study and replicate these results in additional groups of animals. We will measure neurochemical alterations induced by our stimulation protocol in the hippocampus and reward-related brain sites. These will include measurements of brain-derived neurotrophic factor (BDNF) levels as well as monoamine release measured by microdialysis (Zangen et al 2001). BDNF levels in the hippocampus are upregulated by ECT and standard antidepressant drugs and associated with brain plasticity necessary for long-term behavioral changes. BDNF levels in the hippocampus are decreased in depressed subjects and upregulated by chronic antidepressant treatment in both humans and animal models. We found reduced BDNF levels in the hippocampus of CMS animals and partial normalization of BDNF levels by ECT or SCES treatment of the ventral PFC of CMS animals. By the end of the first year, we will start with the evaluation of TB stimulation. TB stimulation will be applied to superficial and deep layers of different PFC regions for 10 days. Two established TB protocols (continuous and intermittent TB) (Huang et al 2005) and new upcoming protocols will be compared regarding their action on behavioral and biochemical measurements. Eight different groups of animals (n=10 / group) will undergo surgery and be tested as described above, without additional control (non-CMS) groups. The effect of continues vs. intermittent TB protocols will be tested in different groups implanted with electrodes in either the dorsal or the ventral PFC.

 

Methods: Rats (n=10 /group) will be implanted under anesthesia with a monopolar stimulating electrode into either the dorsal or the ventral PFC. Four groups of rats (sham and real stimulation for each brain site) will undergo the CMS protocol and another four groups will serve as non-CMS controls to evaluate behavioral and neurochemical profiles for control animals and the effect of stimulation. Stimulation will be preformed as described previously (Zangen and Shalev 2003). SCES treatment will be applied for 10 days with 50 trains/day, 5 sec trains of 0.2 msec, 20 sec intertrain interval, 1 or 20 Hz rectangular cathodal pulses of either 0 (sham), or 400 μA. The behavioral measurements will include the swim test using our modified protocol and analysis tool (Gersner et al 2005), the two bottle choice test for anhedonia-like behavior, an automatic exploration test using an Actimot system (TSE, Germany), and an automatic baseline locomotion test over 7 days within the home cages using 16 InfraMot units (TSE, Germany). We will also test the effect of electrical stimulation on learning and spatial memory using the Morris Maze test.

 

 

 

6

 

After the behavioral battery will be completed, animals will be sacrificed, brains will be removed and neurochemical alterations in specific brain regions will be measured. BDNF levels will be measured by ELISA in hippocampal homogenates. In different groups of animals, the acute effects of stimulation protocols on monoamine release in the nucleus accumbens will be measured using in vivo microdialysis (Zangen et al 2001; Zangen and Hyodo 2002). These behavioral and neurochemical measurements as well as the CMS model and SCES are already established in the lab.

 

Project schedule

 

	
Research task
    	
 
    	
Beginning
   month
    	
 
    	
Beginning Year
    	
 
    	
End month
    	
 
    	
End Year
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Testing the behavioral effects of stimulation at   20Hz in sub–regions of the PFC in the CMS model as compared to shams and to   normal controls
    	
 
    	
6
    	
 
    	
2007
    	
 
    	
12
    	
 
    	
2007
    	
 
    
	
Testing neurochemical effects of stimulation at 20Hz   in sub– regions of the PFC in the CMS model as compared to shams and to   normal controls
    	
 
    	
9
    	
 
    	
2007
    	
 
    	
3
    	
 
    	
2008
    	
 
    
	
Testing the behavioral effects of continues and   intermittent TB stimulation in sub-regions of the PFC in the CMS model as   compared to shams
    	
 
    	
10
    	
 
    	
2007
    	
 
    	
12
    	
 
    	
2007
    	
 
    
	
Testing the behavioral effects of continues and   intermittent TB stimulation in sub-regions of the PFC in the CMS model as   compared to shams
    	
 
    	
12
    	
 
    	
2007
    	
 
    	
5
    	
 
    	
2008
    	
 
    

 

 

 

7

 

APPENDIX B

 

Budget for Additional Research Period

 

(attached)

 

 

 

8

 

	
Date
    	
 
    
	
Company
    	
Brainsway
    
	
Principal   Investigator
    	
Prof.   Zangen Abraham
    
	
Research   period
    	
01/06/2007-31/05/2008
    
	
Personnel
    	
 
    

 

	
Name
    	
 
    	
Position
    	
 
    	
Total Annual Salary
    	
 
    	
% of Employment
    	
 
    	
Employment
   Term(months)
    	
 
    	
Project Cost
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Sub   Total
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Consumables,   chemicals small equipment:
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
5,200
    	
 
    
	
Animals
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
12,032
    	
 
    
	
Computers
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Travel
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fix   equipment (please specify)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Others (please   specify)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Tecnician   (parcial)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
9,000
    	
 
    
	
Hr basis   employees
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
10,000
    	
 
    
	
  
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net   Budget
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
36,232
    	
 
    
	
WIS   Overhead (27.5% of Total, 38% of Net)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
13,768
    	
 
    
	
Total   Budget (Including Overhead)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
50,000
    	
 
    

 

 

 

9

 

Appendix C

 

PATENT CARD

 

2005-117

 

Title: TRANSCRANIAL MAGNETIC STIMULATION SYSTEM AND METHODS

 

Inventors: ZANGEN Abraham, ROTH Yiftach, MIRANDA Pedro, HAZANI David, HALLETT Mark

 

	
Country
    	
 
    	
Application
    	
 
    	
Publication
    	
 
    	
Grant
    	
 
    	
Status
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
U.S.A
    	
 
    	
16/06/2005 -11/153,905
    	
 
    	
—
    	
 
    	
—
    	
 
    	
Pending
    	
 
    
	
PATENT   COOPERATION TREATY
    	
 
    	
15/06/2006 - PCT/IL2006/000694
    	
 
    	
21/12/2006 -  WO/2006/134598
    	
 
    	
—
    	
 
    	
Published
    	
 
    

 

 

10

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