Document:

Exhibit 4.2(b)

 

“CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND HAVE BEEN SEPARATELY FILED WITH
THE COMMISSION.  CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.”

 

	
  DATE

  	
   

  	
  April 28 1999

  

 

 

AUTOGEN Pty Ltd

 

and

 

LIPHA S.A.

 

 

RESEARCH AND LICENCE AGREEMENT

(Field of Diabetes)

 

1

 

	
  THIS AGREEMENT is made on

  	
   

  	
  April 28 1999

  

 

BETWEEN

 

Autogen Pty Ltd ACN 074 636 847

of 210 Kings Way, South Melbourne, Victoria, Australia

 

(“Autogen”)

 

AND

 

Lipha S.A.

of 37 rue Saint Romain, 69379 Lyon, CEDEX 08, France

 

(“Lipha”)

 

RECITALS:

 

A.                                  Lipha has for many years, been
strongly involved in the research, development, manufacturing and
commercialisation of pharmaceuticals addressing metabolic diseases and has
invented, developed, manufactured and marketed pharmaceutical products
containing metformin, one of the
leading oral anti-diabetic products throughout the world.

 

B.                                    Lipha has agreed to provide research
support to the Autogen/Deakin/International Diabetes Institute (IDI) research
program for the discovery of novel genes involved in obesity and diabetes, the
product of these genes being able to be used as therapeutic agents or as a
target for drug discovery as well as providing in house facilities including
combinatorial chemistry to advance subsequent drug development in that field.

 

C.                                    Lipha and Autogen have commenced an
initial program of research as from 1 June, 1998 which it was agreed would be
on essentially the same terms as their arrangements in respect of obesity.

 

D.                                   Lipha and Autogen have agreed in
accordance with their current commitments to enter into this research and licence
agreement related to research into diabetes and novel genes involved in
diabetes.  Lipha and Autogen have
simultaneously entered into a substantially similar agreement in respect of
obesity.

 

2

 

OPERATIVE PROVISIONS:

 

1.                                     INTERPRETATION

 

1.1                              Definitions

 

In this agreement
the following expressions have the following meanings:

 

“Affiliate” means with respect to a Party, any person which
directly or indirectly Controls, or is Controlled by, or is under common
Control with, such Party.

 

“Autogen Know-How” means Know-How owned by or licensed to
Autogen in relation to the Autogen Patents, or of relevance or use in relation
to the Licensed Field or the conduct of Stage 1 Research or Stage 2 Research
but excludes Stage 1 Know-How.

 

“Autogen Patents” means the patents and patent applications
owned by or licensed to Autogen related to the Licensed Field including but not
limited to those referred to in Schedule 1 and
including:

 

(i)            any re-issue, renewal or extension of such a
patent or patent application (whether in whole or in part) and any patent of
addition thereto; and

 

(ii)           any supplementary protection certificate or
other form of extension based on or arising from such patents or patent
applications.

 

“Base Rate” means PIBOR rate published as such by the French
Association of Banks (Association Francaise de Banque (AFB)) or EURIBOR rate
applicable on 1 January 1999 or at any later date, should such date be
postponed for any reason and published as such by the European Federation of
Banks (Federation Européenne de Banque (FEB)) plus in either case the amount of
one 1.5% per annum.

 

“Business Day” means a day on which the trading banks are
open for general banking business in both Melbourne, Australia and Lyon,
France.

 

“Commencement Date” means the date of execution of this
agreement by the Party last signing it.

 

“Commercialisation Licence” means a licence in respect of
Patents and Know-How in the form of the agreement contained in Schedule 3.

 

“Complementary Agreement” means a detailed agreement, if any,
entered into towards the end of Stage 2 Research, including all the terms of
the Commercialisation Licence, unless the Parties agree to amend the same, and
otherwise taking account of the terms of any Joint Venture Agreement.

 

“Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management of policies of a
person.

 

3

 

“Dollars” or “$” means Australian
dollars.

 

“Europe” means those countries specified in Schedule 2.

 

“EUR” means the new European currency called EURO.

 

“FFR” means French Francs.

 

“Force Majeure” means any cause which is not within the
reasonable control of the party affected by it including, but not limited to,
acts of God, industrial disputes of any kind, war declared or undeclared, civil
disturbance, acts or omissions of Government or other competent authority,
fire, lightning, explosion or flood.

 

“Further Development” means the program of further research
and development in relation to a Product or potential Product undertaken after
completion of Stage 2 Research.

 

“IDI” means International Diabetes Institute, a company
established in Victoria, Australia.

 

“Insolvency Event” means any event of insolvency, bankruptcy
or liquidation of the relevant party, including any voluntary or involuntary
judicial liquidation or re-organisation proceedings.

 

“Joint Venture Agreement” means a joint venture in respect of
certain specified Patents and Know-How, containing the definitions and
provisions contained in this agreement as specified in Schedule 4,
and dealing with such other matters as are specified in that schedule.

 

“Know-How” means technical, commercial and other information,
data, know-how, drawings, specifications and/or designs, animal or other
models, methodologies and biological materials embodied in some Material Form,
and without prejudice to the generality of the foregoing includes:

 

(i)            all experimental, manufacturing, process,
analytical, packaging, product, warehousing, quality control and quality
assurance and marketing specifications, standards, procedures, processes,
methods, instructions and techniques, samples, prototypes, formulae, writings
of any kind, opinions or otherwise unwritten data or in the form of computer
software or computer programs or any part thereof in any code; and

 

4

 

(ii)           all other information and other material supplied to or received by a
party or its Representatives from another party or Representatives on a
confidential basis pursuant to this agreement.

 

“Licence” means the right and licence granted by Autogen to
Lipha pursuant to this agreement.

 

“Licensed Field” means the field of human therapeutic
applications for the treatment or prevention of diabetes and its
complications.  For clarity it is noted
that this does not include diagnostics or veterinary applications.

 

“Lipha Fields” means the Licensed Field and the “Licenced
Field) as described in the Obesity Agreement, so long as that agreement remains
in full force and effect.

 

“Loss” means any loss, damage, cost, interest, expense, fee,
penalty, fine, forfeiture, assessment, demand, action, suit, claim, proceeding,
cause of action, liability or damages incurred by a person, and includes:

 

(i)                                     the cost of any action taken by the
person to protect itself against any loss or to preserve any right it has under
this agreement; and

 

(ii)                                  where applicable reasonable legal
costs.

 

“Material Form” in relation to Information includes any form
(whether visible or not) of storage from which Information can be reproduced,
and any form in which Information is embodied or encoded.

 

“Month” means calendar month.

 

“Novel Gene Product” means any new gene, novel protein or
novel antigen, and any product arising from the transcription of these genes.

 

“Obesity Agreement” means the agreement dated around the same
date as this agreement and on substantially similar terms, save that it relates
to obesity rather than diabetes.

 

“Option Period” means the Research Term and the 24 month
period following the Research Term within which Lipha has the option to decide
whether it wishes to progress some part of Stage 1 Research to Stage 2
Research.

 

“Party” means Autogen or Lipha and their respective
successors and permitted assigns and “Parties” means both of them.

 

“Patent” means any patent or patent application as defined in
the Patents Act 1952 (C’th) and any similar
international, national or regional patent or patent application and includes
any and all extensions, renewals, continuations, patent-of-addition and/or supplementary
protection certificates to any of the foregoing and includes any corresponding
patent or patent application taken out or applied for in any country in the
Territory which is fairly based upon or derived from any of the aforesaid
patents.

 

“Pre-Stage 2 Results” means the Autogen Patents, Autogen
Know-How, Stage 1 Patents and Stage 1 Know-How.

 

5

 

“Products” means any products produced or arising out of use
of the results of Stage 1 Research or Stage 2 Research or arising out of all
and any further development by Lipha pursuant to Stage 1 Research or Stage 2
Research or both.

 

“Project Patents” means the Autogen Patents, the Stage 1
Patents and/or the Stage 2 Patents.

 

“Project Research” means the research in the area of obesity
and diabetes of novel genes involved in obesity and diabetes and the research
arising therefrom, consisting of the Stage 1 Research and the Stage 2 Research.

 

“Representatives” of a party means that party’s directors,
officers, employees or agents.

 

“Required Insurance” means:

 

(i)            public liability insurance in respect of Losses
up to a limit of $5,000,000 covering property damage and personal injury as may
be relevant to the performance of each party’s obligations under this agreement
to the other, including (without limitation) liability, loss or damage due to
negligent or malicious damage, data corruption or loss, fire, theft, electrical
and water damage; and

 

(ii)           if the relevant party sells a Product, product
liability insurance in respect of Losses up to a limit of $20,000,000
covering any liability associated with use or misuse of the Product including,
personal injury and consequential loss.

 

“Research Agreement” means the Research Agreement dated 28 February 1997
between Autogen and IDI and Deakin University to carry out research in the
field of, amongst other things, diabetes.

 

“Research Term” means the period which commences on 1 January 1998
and which shall end on 31 May 1999, unless otherwise extended pursuant to
clause 3.4.

 

“Scientific Board” means the board established under clause 5.1.

 

“Stage 1 Know-How” means the Know-How relating to or arising
out of Stage 1 Research.

 

“Stage 1 Patents” means Patents relating to or arising out of
Stage 1 Research.

 

“Stage 1 Research” means discovery of Novel Gene Products,
characterisation and studies of such Novel Gene Products in animal models and
human gene expression studies as resulting from such Stage 1 Research performed
according to this agreement as described in Schedule 5.

 

“Stage 1 Results” means the Stage 1 Know-How and the Stage 1
Patents.

 

“Stage 2 Know-How” means in the context of a Stage 2 Research
Program, the Know-How relating to or arising out of that Stage 2 Research
Program.

 

“Stage 2 Patents” means in the context of a Stage 2 Research
Program, Patents relating to or arising out of that Stage 2 Research Program.

 

6

 

“Stage 2 Research” means generally antibody productions,
large scale protein production, structural analysis, screening of compounds
affecting such Novel Gene Product, combinatorial chemistry, toxicological
studies and first clinical studies in diabetic patients and completion of dose
efficiency relationship studies in diabetic patients (clinical Phase 2),
performed on products or technologies generated by Stage 1 Research according
to this agreement as described in Schedule 5.

 

“Stage 2 Research Program” means a program of Stage 2
Research in respect of a Novel Gene Product.

 

“Stage 2 Results” means in the context of a Stage 2 Research
Program, the Stage 2 Know-How and the Stage 2 Patents for that Stage 2 Research
Program.

 

“Target Compound” means a compound or small molecule, or
group of the same, identified in the course of Project Research, being a compound
which it is expected will be Covered By a Project Patent.

 

“Term” means the period this agreement is in force pursuant
to clause  13.

 

1.2                              Construction

 

In this agreement
unless the context otherwise requires:

 

(a)           Business Day. If any day appointed or specified
by this agreement for the payment of any money or the doing of any act or thing
falls on a day that is not a Business Day, the day so appointed or specified is
deemed to be the next day which is a Business Day.

 

(b)           Collective references. Reference to any thing (including,
without limitation, any amount) is a reference to the whole or any part of it
and a reference to a group of things or persons is a reference to any one or
more of them.

 

(c)           Defined expressions. If a word or phrase is defined,
cognate words and phrases have corresponding definitions.

 

(d)           Gender. Words importing any gender include
the other genders.

 

(e)           Headings. Headings must be ignored in
construing this document.

 

7

 

(f)            Joint liability. An obligation of two or more
Parties binds them jointly and severally.

 

(g)           Joint obligations. An obligation incurred in favour
of two or more Parties is enforceable by them jointly and severally.

 

(h)           Month. Means a calendar month.

 

(i)            Numbers. Words importing the singular
include the plural and vice versa.

 

(j)            Parts of agreement. References to this agreement
include its recitals, schedules and annexures.

 

(k)           Persons. References to persons include
corporations and bodies politic.

 

(l)            Reconstituted bodies. References to a body which has
ceased to exist or has been reconstituted, amalgamated, reconstructed or
merged, or the functions of which have become exercisable by any other person
or body in its place, is taken to refer to the person or body established or
constituted in its place or the person or body by which its functions have
become exercisable.

 

(m)          Representatives and assigns. References to a person include the
legal personal representatives, successors and permitted assigns of that
person.

 

(n)           Statutory amendments. A reference to a statute,
ordinance, code or other law includes regulations and other statutory
instruments under it and consolidations, amendments, re-enactments or
replacements of any of them (whether of the same or any other legislative
authority having jurisdiction).

 

(o)           Variation. References to this or any other
document include the document as varied or replaced, and notwithstanding any
change in the identity of the Parties.

 

(p)           Writing. References to writing include any
mode of representing or reproducing words in tangible and permanently visible
form, and include telex and facsimile transmissions.

 

1.3                              Obesity Agreement Crossover

 

Whilst and so long
as the Obesity Agreement remains in full force and effect, the parties agree,
that for the purposes of the following defined terms as included in the Obesity
Agreement those terms will have in that agreement an extended meaning which
includes the corresponding defined term as defined in this agreement and vice
versa:

 

(a)                                  Novel Gene Product;

 

(b)                                 Stage 1 Know How;

 

(c)                                  Stage 1 Patents;

 

8

 

(d)                                 Stage 2 Know-How; and

 

(e)                                  Stage 2 Patents

 

2.                                      CONDITION AND INITIAL
PAYMENTS

 

2.1                               Approval by parent

 

This agreement is
conditional on the written approval of the Pharma Management Board of Merck
KGaA, the parent company of Lipha, of both this agreement and the Obesity
Agreement.  If such approval is not
obtained by Lipha within 60 days of execution of this agreement by Autogen,
then this agreement will lapse and be of no further force and effect.  Lipha must use all reasonable endeavours to
procure satisfaction with this condition. 
If as a result of the non-satisfaction of this condition, this agreement
lapses, then the following will apply:

 

(a)                                  Autogen will not be liable to repay
any up-front payment made to it;

 

(b)                                 Lipha will have no entitlement to
any Stage 1 Results;

 

(c)                                  Lipha will have no rights to any
Stage 1 Results;

 

(d)                                 Lipha must immediately return to
Autogen any and all Autogen Know-How and Stage 1 Know-How; and

 

(e)                                  the provisions of clauses 9, 18, 20 and 21 will continue to apply.

 

2.2                               Up-front payment

 

Lipha has paid as
an up-front payment to Autogen [***] FFR in consideration of Autogen entering
into this agreement, and granting to Lipha a licence of the Autogen Patents and
Autogen Know-How.

 

3.                                     STAGE 1 RESEARCH

 

3.1                              Undertaking of Stage 1 Research

 

Autogen has been
carrying out and must continue to carry out through arrangement with Deakin
University and IDI under the Research Agreement Stage 1 Research for the period
of the Research Term. The currently agreed program for Stage 1 Research is as
set out in Schedule 5. The general
objective of Stage 1 Research is to identify Novel Gene Products that may be of
utility in the Licensed Field.

 

9

 

3.2                              Initial contribution

 

Lipha has already
paid the sum of [***] FFR in respect of the first year of the Research Term as
a part contribution to the cost of the research being funded by Autogen under
the Research Agreement in the Licenced Field.

 

3.3                              Lipha contribution

 

At Autogen’s
request, but at Lipha’s cost, Lipha agrees to perform biotechnological studies
for production and yield optimisation of protein and limited animal pharmacological
studies as part of Stage 1 Research up to a limit of [***] FFR

 

3.4                              Extension of Stage 1 Research

 

(a)                                  If Stage 1 Research is not completed
during the Research Term Lipha shall have the right to require Autogen to
continue Stage 1 Research, and at the same time extend the Research Term, for
successive periods of one year, by giving written notice to Autogen not less
than 3 months prior to the expiry of the current Research Term, or in the case
of the first extension of the Research Term, not less than one month prior to
expiry of the Research Term.

 

(b)                                 Where Lipha does extend the Research
Term then:

 

(i)            Lipha shall pay to Autogen for each renewal
period the amount [***] FFR as part contribution to the research being funded
by Autogen under the Research Agreement in the Licensed Field; and

 

(ii)           Autogen will then continue to carry out through
arrangement with Deakin University and IDI the Stage 1 Research for the
extended period of the Research Term.

 

(c)                                  Following the giving by Lipha of
notice under clause 3.4(a), the
Parties will liaise in relation to the content of the Stage 1 Research for the
following year, which will, unless otherwise agreed, be conducted under the
Research Agreement. Initially this liaison will take place through the
Scientific Board, who will prepare a draft research plan which is to be finally
agreed between the Parties.

 

(d)                                 The research being undertaken under
the Research Agreement may include more than just Stage 1 Research, and Autogen
is solely responsible for funding this as well as the balance of the funding
required to conduct the Stage 1 Research.

 

(e)                                  If Lipha elects not to extend the
Research Term, then without in any way limiting Lipha’s discretion in relation
to such decision, Lipha will give Autogen written reasons why it has elected
not to do so.

 

10

 

3.5                              Transition to Stage 2 Research

 

Lipha is entitled
at any time during the Option Period to exercise its right by notice in writing
to Autogen to proceed to Stage 2 Research. 
Lipha in exercising its option will identify the Novel Gene Product in
respect of which Stage 2 Research is to commence.

 

3.6                              Action on option

 

Upon receipt by
Autogen of such notice of exercise by Lipha of its option, under clause
3.5:

 

(a)           Lipha must, in the case of the first transition
of a Novel Gene Product to Stage 2 Research only, pay to Autogen the sum of [***]
FFR such amount to be paid within 30 Business Days of exercise by Lipha of its
option, it being acknowledged that Lipha will not have to pay such sums for
transition of further Novel Gene Products to Stage 2 Research following such
first transition; and

 

(b)           the Parties will execute a Commercialisation
Licence in respect of such Novel Gene Product.

 

This option may be
separately exercised by Lipha in respect of separate Novel Gene Products, and
each exercise will lead to additional Commercialisation Licences and Stage 2
Research Programs.

 

3.7                              Autogen and Stage 1 Research Rights

 

Subject to the
terms of this agreement and any other licence granted by Autogen in favour of
Lipha, Autogen will own and have an unfettered right to use and exploit all
Stage 1 Patents and Stage 1 Know-How in any and all fields.

 

3.8                              Lipha Research Licence

 

Whilst Lipha is
continuing Stage 1 Research, Stage 2 Research, Further Development or paying
royalties to Autogen under any Commercialisation Licence, Lipha has a
non-exclusive royalty free right to use the Pre-Stage 2 Results for the
purposes of its own internal research for human therapeutic purposes. This
research licence extends to Affiliates of Lipha.

 

3.9                              Option lapsing

 

If Lipha does not
exercise its option under clause 3.5 during the Option Period then Lipha and
its Affiliates must not thereafter in any way exploit, benefit or use directly
or indirectly Pre-Stage 2 Results save and except for the purpose of their own
internal research, but, for the sake of clarity not for any research into Novel
Gene Products discovered in the course of Stage 1 Research.

 

3.10                       Stage 1 Patents

 

(a)                                 Where either party in the course of
Stage 1 Research makes or discovers any patentable invention then it must
forthwith advise the other party in writing together with full details. Lipha
will have the first option to patent such invention at its own cost, and if it
elects not to do so then Autogen may do so at its cost. Any

 

11

 

such patent application in
respect of Stage 1 Research will be in the name of Autogen.

 

(b)                                If Autogen has patented an invention
under clause 3.10(a) and paid the
costs of such patenting, and Lipha elects to participate in Stage 2 Research in
respect of the Stage 1 Research to which the invention relates, Lipha will
then reimburse to Autogen the reasonable external costs incurred by Autogen in
respect of each patent.

 

12

 

(c)                                  If Lipha does not exercise its
option in respect of the Novel Gene Product within the Option Period then
Autogen will be free to offer the Novel Gene Product to third parties on such
terms as it considers appropriate.  In
doing so Autogen may grant to such third parties a licence in respect of the
Autogen patents and the Stage 1 Patents to the extent that such a licence is
necessary to exploit the Novel Gene Product and such licence will not be a
breach of any licence granted by Autogen in the Lipha Fields to Lipha, the
scope of any licence in favour of Lipha being commensurately reduced, such
reduction being limited to a reduction in respect of such Novel Gene Product.

 

(d)                                 In the case where Lipha patents an
invention pursuant to clause 3.10(a) where
the invention also has application in areas outside the Licensed Fields,
Autogen may:

 

(i)            require Lipha to patent the invention in such a
manner as to include the application of the invention in those areas outside
the Licensed Fields (and if this involves any additional external cost to
Lipha, Autogen will reimburse to Lipha the reasonable additional external
costs); or

 

(ii)           patent the invention itself in so far as the
invention has application outside the Licensed Fields and, in this case,
Autogen can require Lipha to amend or limit the patent lodged by Lipha so that
the patent only covers the Licensed Fields.

 

3.11                       Continuing Research Agreement

 

Where Lipha has
ceased to provide support for research being conducted under the Research
Agreement as contemplated by clause 2.4, Lipha
acknowledges it will have no rights in respect of any new or further Know-How
or Patents arising under such Research Agreement.

 

4.                                     STAGE 2 RESEARCH

 

4.1                              Multiple Stage 2 Research Programs

 

The Parties
acknowledge that there may be multiple Stage 2 Research Programs, each of which
will be based on or around different Novel Gene Products, and will generate
their own Know-How and Patents.

 

4.2                              Undertaking Stage 2 Research

 

(a)           Where Lipha has exercised its rights as
provided in clause 3.5 or 3.10 in respect of a Novel Gene Product, Lipha will have
sole carriage of all research and development in respect of that Novel Gene
Product until completion of the Stage 2 Research Program in respect of that
Novel Gene Product. Each Stage 2 Research Program will be conducted and funded
by Lipha until completion of that Stage 2 Research Program. Each Stage 2
Research Program must be directed at developing Novel Gene Products within the
Licensed Field and discovering Target Compounds for use within the Licensed
Field.  Autogen may itself or through
others seek to develop and exploit Novel Gene Products outside of the Licenced
Field.

 

(b)           Where Autogen desires to develop and exploit
Novel Gene Products outside of the Licensed Field through a third party, then
Autogen will at first instance engage in

 

13

 

discussions with Lipha with a
view to looking at opportunities for the Parties to work together on such
development and exploitation.

 

4.3           Licence to Lipha

 

Where Lipha is solely
undertaking a Stage 2 Research Program then:

 

(a)           all Stage 2 Know-How or Stage 2 Patents in
respect of that Stage 2 Research Program will belong solely to Lipha, subject
to the remainder of this clause and clauses 4.6, 4.8 and
4.9, and
Lipha will be solely responsible for the cost of obtaining and maintaining any
patent or other protection, provided that:

 

(i)            Lipha may not assign any Stage 2 Results to a
third party without the prior written consent of Autogen which consent will not
be unreasonably withheld provided the assignee agrees to similar conditions in
respect of such Stage 2 Results as are applicable under this agreement and the
relevant Commercialisation Licence and in a manner which makes those conditions
enforceable against the assignee by Autogen; and

 

(ii)           if Lipha seeks to patent an invention from the
Stage 2 Research which has application exclusively outside the Licensed
Field, then Lipha must notify Autogen of such invention prior to lodgment of
the application for the patent and Autogen can require Lipha to extend the
patent in respect of claims or other matters outside of the Licensed Field;

 

(b)           Autogen grants to Lipha a licence in respect of
the Pre-Stage 2 Results within the Licensed Field to the extent necessary to
undertake the Stage 2 Research Program, but not to undertake commercialisation
(which must be subject to the Commercialisation Licence or a Complementary
Agreement), such licence to be exclusive in the Licensed field, royalty free
and extending to Affiliates of Lipha.

 

4.4                              Autogen Stage 2 Research assistance

 

Autogen agrees upon
Lipha’s request to cooperate with Lipha for Stage 2 Research and both Parties
may agree on specific studies to be included in a Stage 2 Research Program
which are to be performed by Autogen or through Autogen and paid by Lipha,
provided Lipha has previously given Lipha’s written approval on the costs of
such studies. Lipha agrees that it will not in respect of any Stage 2 Research
contract directly with Deakin University or IDI without the prior written
consent of Autogen, it being the expectation that any research conducted by
those Parties will be contracted through Autogen.

 

14

 

4.5                              Obligations of Lipha

 

Lipha will use its
best endeavours to progress each Stage 2 Research Program in a timely and
diligent fashion and with a substantial dedication of resources. Where
activities forming part of a Stage 2 Research Program could properly and
effectively be undertaken at IDI or Deakin University, then Lipha will consider
the possible performance of those activities at those institutions, subject to clause 4.4, and will not conduct such activities through
other third Parties without first offering them to IDI or Deakin University as
appropriate.

 

4.6          Rights of Autogen

 

(a)                                  Lipha grants to Autogen and its
Affiliates, with a right to sublicencee to IDI and Deakin University, a
non-exclusive royalty free right to use for the purposes of their own internal
research the Stage 2 Results of all Stage 2 Research Programs.

 

(b)                                 If such internal research leads to
an invention which can be commercialised within the Licensed Fields, then Lipha
will have the first option to commercialise such invention within the Licensed
Fields, and the Parties will negotiate in good faith in this regard. If
agreement cannot be reached within 90 days of the making of a formal offer by
Autogen, then Autogen will be free to offer the commercialisation opportunity
to third Parties, but on no better terms than those offered to Lipha, unless it
first offers such better terms to Lipha, which will have 14 days to either
accept or reject such terms.

 

(c)                                  If the internal research conducted
under clause 4.6(a) leads to the
commercialisation of the results of such internal research outside the Licensed
Fields by Autogen, either on its own account, or acting as licensee on behalf
of IDI or Deakin University then the Parties agree to negotiate in good faith
for the grant by Lipha of a royalty bearing licence in respect of the ongoing
use of the Stage 2 Results in such commercialisation. The Parties acknowledge
that the natural outcome of such discussions may be that Lipha takes on the
role of commercialisation of the results of such internal research.

 

15

 

4.7                              Discontinuation of Stage 2 Research

 

Lipha has the right
at its own option and without any liability to Autogen to stop a Stage 2
Research Program if further development is not justifiable due to Lipha’s
reasonable determination that for efficacy, safety or medical reasons, the
validity of the Patents covering such Novel Gene Product, a substantial change
of economic factors or otherwise, such development should be terminated. If
Lipha does cease such development it must promptly advise Autogen and provide
written reasons as to why Lipha has ceased such development, but Lipha’s
determination will prevail. Lipha must endeavour to consult with the Scientific
Board prior to ceasing development.

 

4.8                              Unwanted rights Stage 2 Results

 

Where in accordance
with clauses 4.7 or 7.2 Lipha
ceases a Stage 2 Research Program, Lipha retains the exclusive ownership of the
relevant Stage 2 Results generated up to the date of the cessation of that
Stage 2 Research Program, provided that Autogen may request a commercial and
research licence of such Stage 2 Results, in which case the Parties will
negotiate in good faith the terms of a licence (which may be exclusive or
non-exclusive) for development and commercialisation of such Stage 2 Results,
and unless the negotiated licence otherwise provides, Autogen must not assign
the rights licensed from Lipha to a third party without the prior written
consent of Lipha, which consent must not be unreasonably withheld.

 

4.9                              Commercialisation Licences required

 

In the event Lipha
wishes to in any way use, commercialise, licence, or assign Stage 2 Results,
then, unless it does so pursuant to a Complementary Agreement, it must enter
into a Commercialisation Licence in respect of those Stage 2 Results, to the
intent and with the effect that amongst other things Autogen will receive “royalties”
in respect of such use, commercialisation, licensing or assignment.

 

5.                                     RESEARCH
GENERALLY

 

5.1                              Scientific Board

 

The Parties agree
to establish a scientific board comprised of both Parties’ representatives to
discuss between the parties the carrying out of Stage 1 Research.  The Scientific Board will consist of 2
representatives of Autogen, initially Prof. Gregory Collier of Deakin
University and Prof. Paul Zimmet of IDI and 2 representatives of Lipha.

 

5.2                              Meetings of the Scientific Board

 

Scientific Board
meetings will be held every three (3) months, or as otherwise agreed by
the Parties and each party may have any of its employees participate in said
meeting if the party considers it necessary. Such meeting shall take place
alternating at each party’s place of business or at any other place subject to
prior agreement by the Parties, and be chaired by a representative of the party
who hosts the meeting. The chairman of the meeting must circulate the agenda
for the meeting at least 2 weeks prior to each meeting and will issue the
formal minutes of the meeting.

 

16

 

The Parties agree
that Scientific Board meetings are only a place to report and discuss:

 

(a)                                  the progress of each party’s
research and development work related to Stage 1 Research; and

 

(b)                                 the progress of Lipha’s research and
development work related to each Stage 2 Research Program,

 

but the Scientific
Board does not have capacity to make decisions on important matters to bind
either party, unless otherwise agreed.

 

5.3                              Reports

 

(a)           Autogen agrees that it will prepare and submit
reports to Lipha every 3 months during Stage 1 Research and it shall promptly
give to Lipha at the end of Stage 1 Research a final and detailed report on
such Stage 1 Research.

 

(b)           If Lipha performs part of Stage 1 Research, as
contemplated by clause 3.3, it will prepare and
submit reports to Autogen every 3 months on such studies related to Stage 1
Research and it shall promptly give to Autogen at the end of Stage 1 Research a
final and detailed report on such studies.

 

(c)           Lipha agrees that it will prepare and submit
reports to Autogen every 3 months during each Stage 2 Research Program and it
shall promptly give to Autogen at the end of each Stage 2 Research Program a
final and detailed report on such completion of Stage 2 Research.

 

(d)           The reports provided above must in each case
set out in reasonable and informative detail the activities undertaken in the
period to which the report relates, and the activities planned for the next
reporting period, if any.

 

6.                                     OPTION FOR
FURTHER AGREEMENT

 

6.1                              Multiple Complementary Agreements

 

If, and each time,
Lipha exercises its option under clause 3.5 or 3.9 then the Parties agree, if it is necessary, to enter
into a Complementary Agreement which will take effect no later than 6 months
prior to completion by Lipha of relevant Stage 2 Research Program. A
Complementary Agreement may not be required if Lipha does not elect to proceed
with a Joint Venture Agreement.

 

6.2                              Licence milestones

 

Within 30 days
after the commencement of Phase III clinical trials in respect of a Product the
subject of a Stage 2 Research Program Lipha must pay to Autogen a milestone
payment of:

 

(a)                                 if Lipha elects to proceed with a
Joint Venture Agreement, [***] FFR (less any amount paid in respect of the
first transition of a Novel Gene Product to Stage 2 Research under clause 3.6(a), which is non refundable and will not be
credited against future royalty payments, if any, payable to Autogen; or

 

17

 

(b)                                in any other case [***] FFR for
(less any amount paid in respect of the first transition of a Novel Gene
Product to Stage 2 Research under clause 3.6(a)) provided
that [***] FFR of such milestone payment will be treated as an advance royalty
and be credited against future royalty payments, if any, payable to Autogen.

 

7.                                     COMMERCIALISATION
LICENCE

 

7.1                              Requirement for such a licence

 

Upon exercise by
Lipha of its option to commence each relevant Stage 2 Research Program, the
Commercialisation Licence for the Stage 2 Research Program will be deemed
to be in force, and Lipha and Autogen must promptly execute a Commercialisation
Licence.

 

7.2                              Failure to sign Commercialisation
Licence

 

In the event that
the Commercialisation Licence in respect of a Stage 2 Research Program is not
executed in accordance with clause 7.1,
then:

 

(a)                                  the relevant Stage 2 Research
Program must cease; and

 

(b)                                 the provisions of clause 4.8 will apply.

 

7.3                              Commercialisation

 

The obligations of
each of the Parties in respect of commercialisation will be as contained in the
relevant Commercialisation Licence or Complementary Agreement (if any).

 

8.                                     INDUSTRIAL AND
INTELLECTUAL PROPERTY RIGHTS

 

8.1                              Autogen Patents, Autogen Know-How
and Stage 1 Results

 

The Autogen
Patents, Autogen Know-How and Stage 1 Results (as per clause 3.7)
are owned by Autogen, or exclusively licensed by it from IDI or Deakin
University and are freely exploitable by it, subject to:

 

(a)                                  a research licence in favour of
Lipha and its Affiliates within the Licensed Field (as per clause 3.8);

 

(b)                                 an exclusive licence in favour of
Lipha within the Licensed Field for commercialisation in terms of the relevant
Commercialisation Licence (if any); and

 

(c)                                  if appropriate, the rights granted
under the Joint Venture Agreement.

 

18

 

8.2                              Scope of any exclusive licence

 

Any grant of an
exclusive licence in a given limited field in respect of Patents or Know-How,
does not preclude the licensing of the same Patents or Know-How for use or
exploitation in some other field.

 

8.3                              Stage 2 Results

 

As provided in
clause 43(a) Stage 2 Results in respect
of each Stage 2 Research Program are owned by Lipha and are freely exploitable
by it, subject to:

 

(a)                                  a research licence in favour of
Autogen and its Affiliates and IDI and Deakin University for the purpose of
their own internal research, as provided in clause 4.6;

 

(b)                                 a right for Autogen to seek a
licence in certain circumstances as provided in clause 4.8;

 

(c)                                  the use of, including the licensing
of such Stage 2 Results, being subject to the same restrictions as are applicable
to Pre-Stage 2 Results, under a Commercialisation Licence, save for the
Licensed Field restriction, but including, amongst other things:

 

(i)                                     the obligation to pay “royalties” to
Autogen for the use or exploitation of the Stage 2 Results; and

 

(ii)                                  the requirements in relation to the
grant of licences of the Stage 2 Results,

 

to the intent that Stage 2
Results will be accorded the same treatment and generate for Autogen the same
benefits and entitlements as Pre-Stage 2 Results, even though their legal
ownership is different.

 

19

 

8.4                              Use outside of Licensed Field

 

While Stage 2
Results are freely exploitable by Lipha outside of the Licensed Field (subject
to clause 7.3), this does not imply any licence
to use Pre-Stage 2 Results outside of the Licensed Field, and Lipha will need
to seek a licence from Autogen in relation to the same, if such exploitation
uses Pre-Stage 2 Results, or would amount to an infringement of Stage 1 Patents
or Autogen Patents.

 

9.                                     CONFIDENTIAL
INFORMATION

 

9.1                              Obligations to Autogen

 

Subject to clauses 9.3 and 9.6, Lipha
covenants with Autogen as follows:

 

(a)                                  to keep all Know-How belonging to
Autogen or supplied to it by Autogen, including the existence of such Know-How,
strictly secret and confidential (including from all its employees, servants
and agents), exercising at least the same degree of care as it uses to maintain
its own Know-How;

 

(b)                                 to provide proper and secure storage
for such Know-How within its possession or control;

 

(c)                                 to use such Know-How only for the
purposes of this agreement and not for any other activity or purpose whatsoever
without the prior written approval of Autogen; and

 

(d)                                 to not copy or reduce to writing or
any other medium any part of such Know-How except as may be reasonably
necessary for the purposes of this agreement.

 

9.2                              Obligations to Lipha

 

Subject to clauses 9.3 and 9.6, Autogen
covenants with Lipha as follows:

 

(a)                                  to keep all Know-How belonging to
Lipha or supplied to it by Lipha, including the existence of such Know-How,
strictly secret and confidential (including from all its employees, servants
and agents), exercising at least the same degree of care as it uses to maintain
its own Know-How;

 

(b)                                 to provide proper and secure storage
for such Know-How within its possession or control;

 

(c)                                  to use such Know-How only for the
purposes of this agreement and not for any other activity or purpose whatsoever
without the prior written approval of Lipha; and

 

(d)                                 to not copy or reduce to writing or
any other medium any part of such Know-How except as may be reasonably
necessary for the purposes of this agreement.

 

9.3                              Exceptions to obligations

 

The obligations of
confidence set out in clauses 9.1 and 9.2 do not extend to Know-How which:

 

20

 

(a)                                  at the time of disclosure to a party
is in the public domain;

 

(b)                                 after disclosure to a party becomes
part of the public domain otherwise than as a result of the wrongful act of
that party or one of that party’s disclosees;

 

(c)                                 a party can show was in its
possession at the time of disclosure and was not acquired directly or
indirectly from the other party; or

 

(d)                                 is received from a third party
provided that it was not acquired directly or indirectly by that third party
from a party to this agreement or under an obligation of confidence;

 

(e)                                  is required by compulsion of law to
be disclosed,

 

provided that:

 

(f)                                    the onus is on the party alleging
the same to prove that one of the above exceptions has application; and

 

(g)                                in any case of uncertainty as to
whether the obligations in clauses 9.1 or 9.2 have application to any information, such information
must be treated as subject to the obligations until advised otherwise by the
party to whom the obligations are owed.

 

9.4                              Rights in Know-How

 

Each party
acknowledges and agrees that each other party has made a substantial investment
in that party’s Know-How and has a legitimate right to protect itself against
wrongful disclosure or use of such Know-How.

 

9.5                              Term of obligation

 

The obligations in
this clause 9 survive the expiry or
termination of this agreement for whatever reason and continue for a period of
10 years, subject always to the exceptions included in clause 9.3.

 

9.6                              Permitted disclosures

 

Each party (“the
first party”) is permitted to disclose Know-How belonging to another party or
supplied to it by another party (“the other party”) to such of the first party’s
Representatives as require access to such information for the purposes of this
agreement, provided that:

 

(a)                                  only such Know-How as needs to be
disclosed to a person for the purposes of this agreement will be disclosed to
that person; and

 

(b)                                 the first party must:

 

(i)            have obtained from each such person
undertakings in favour of the other party substantially in the form of the
relevant obligations and undertakings in this clause 9
(but not this clause 9.6);

 

(ii)           be responsible for the performance of its
Representatives’ undertakings referred to in clause 9.6(b)(i);
and

 

21

 

(ii)                                  take whatever steps are reasonably
necessary, including the institution of legal proceedings, to ensure that each
of its Representatives is bound by and observes the terms of the undertakings
referred to in clause

9.6(b)(i).

 

9.7                              Delivery-up of Know-How

 

All of a party’s
Know-How and all materials containing or embodying such Know-How and all copies
of or extracts from or notes on the same in the possession, power or control of
another party or any of its employees, servants or agents together with all
forms and other materials relating to practices and procedures in relation to
the Know-How to the extent possible must:

 

(a)                                  in the event of the expiration or
sooner termination of this agreement, be delivered up by the other party to the
first party at the expense of the other party; and

 

(b)                                in the event of any demand made by
the first party be delivered up by the other party to the first party at the
expense of the first party.

 

9.8                              Terms of this Agreement

 

Lipha and Autogen
shall not disclose any terms or conditions of this agreement to any third party
without the prior consent of the other party, except as required by applicable
law or local regulations or to a third party with whom Autogen or Lipha has
entered into or proposes to enter into a business relationship, provided that
such third party shall enter into a confidentiality agreement with, or
otherwise owe a duty or confidentiality to Lipha or Autogen, as applicable.

 

9.9                              Public Announcement

 

Except as required
by law, order or regulation of a governmental agency or a court of competent
jurisdiction, no other announcement, public release or notice of any kind may
be issued without the express written consent of both Parties, which consent
shall not be unreasonably withheld, provided, however, the Parties shall
prepare a joint press release announcing the transaction set forth in this
agreement to be issued promptly upon execution of this agreement.

 

9.10                       Continuous disclosure obligations

 

Autogen is a
subsidiary of Australia Wide Industries Limited (“AWI”) ACN 000 248 304 which
is listed on the Australian Stock Exchange (“ASX”). As such Autogen is subject
to the continuous disclosure requirements of the ASX. The obligations of
Autogen under this agreement will not restrict it or AWI from making whatever
disclosures are necessary for the purposes of fulfilling the requirements
applicable to AWI as a company listed on the ASX, and neither Autogen or AWI is
under any obligation to delay the public release of any required announcement
pending the provision of any consent or approval from Lipha. The above
provision will also apply with such adaptations as are necessary to disclosure
obligations imposed upon Lipha as a subsidiary of its listed parent Merck KGaA.

 

22

 

10.                              LIABILITY

 

10.1                       Responsibility for Products

 

Lipha must ensure
at all times that Stage 2 Research is conducted and Products are developed,
manufactured, tested and used strictly in accordance with all relevant
applicable requirements and standards of relevant jurisdictions and Lipha will
be responsible for conducting its own independent examination and verification
of the accuracy and suitability of Pre-Stage 2 Results and for ensuring the
same are suitable for the purposes for which the same are used.

 

10.2                       Autogen not liable

 

Except as provided
in clauses 11.2 and 17.2,
Autogen is not liable (in contract or tort or otherwise) to compensate Lipha
for any loss howsoever arising suffered by Lipha arising directly or indirectly
from the use by Lipha of Pre-Stage 2 Results or the sale of Products.

 

11.                              INDEMNITIES

 

11.1                       Indemnity by Lipha

 

Lipha agrees to
indemnify Autogen against and hold Autogen harmless from any and all Losses
arising from or in connection with:

 

(a)                                  a breach by Lipha of any of its
warranties or obligations under this agreement;

 

(b)                                 the conduct of Stage 1 Research by Lipha
under clause 3.3; and

 

(c)                                  the conduct of Stage 2 Research,

 

provided that Lipha
is not required to indemnify Autogen for any Losses to the extent they result
from Autogen’s or its Representatives negligence or breach of any of Autogen’s
warranties or obligations under this agreement.

 

11.2                       Indemnity by Autogen

 

Autogen agrees to
indemnify Lipha and hold Lipha harmless from any and all Losses, arising from or
in connection with:

 

(a)                                  a breach by Autogen of any of its
warranties or obligations under this agreement;

 

(b)                                 the negligent performance by
Autogen, IDI or Deakin University of the Stage 1 Research; and

 

(c)           the termination of the Research Agreement as a
result of the failure of Autogen to provide research funding under this
agreement (other than as a result of any act or omission of Lipha or its
Representatives),

 

provided that
Autogen is not required to indemnify Lipha for any Losses to the extent they
result from Lipha’s or its Representatives’ negligence or breach of any of
Lipha’s warranties or obligations under this agreement.

 

23

 

11.3                       Notification regarding indemnity

 

Each party must
promptly notify the other of any claims or suits for which the first party may
assert indemnification from the other party and the first party will permit the
other party and its insurer at the other party’s expense to assume or
participate in the defence of any such claims or suits and the first party will
co-operate with the other party or its insurers in such defence when reasonably
requested to do so.

 

12.                              INSURANCE

 

Each party must
have and must maintain for the Term the relevant Required Insurance.  The Required Insurance must be with a
reputable insurer and name the other party as an additional insured.  Each party will at the others request provide
to that party a certificate from a reputable insurance broker confirming that the
insurance required by this clause in currently in effect.

 

13.                              TERM AND
TERMINATION

 

13.1                       Term

 

Subject to making
of the payment contemplated by clause 3.4(a), or
earlier termination pursuant to the further provisions of this clause 13, the initial term of this agreement will expire on 31 May 1999,
subject to extension pursuant to clause 3.4. In the
event that Lipha exercises its option in relation to undertaking Stage 2
Research, then this agreement will be extended and continue to apply whilst and
so long as any Stage 2 Research Program continues, it being acknowledged that
in such circumstances Lipha is not obliged to extend the Research Term (and
comply with clause 3.4(b)) unless
it wishes to extend Stage 1 Research in respect of some other Novel Gene
Product.

 

13.2                       Termination for breach

 

If one party
breaches any term, provision or obligation of this agreement (the “Defaulting
Party”) and the Defaulting Party fails to:

 

(a)                                  remedy such breach within 60 days
after receipt of notice from the other party requiring remedy of the breach; or

 

(b)                                 if the breach cannot be remedied
within the said 60 day period, commence action within the said 60 day period to
remedy the breach and undertake in writing to the other party to complete
remedy of the breach as soon as practicable thereafter,

 

the other party has
the right to terminate this agreement immediately upon the expiration of the
said period of 60 days by written notice to the Defaulting Party.

 

13.3                       Termination in default of payment

 

This agreement may
be forthwith terminated by a party by giving notice to the other party if that
other party defaults in the payment of any money due by that other party to the
first party under this agreement and such default continues for a period of 30
days after notice has been given to the other party demanding the payment of
such money.

 

24

 

13.4                       Grounds for immediate Termination

 

Subject to clause 12.5, this
agreement may be terminated by a party giving notice to the other party upon
the happening of any of the following events in respect of that other party:

 

(a)                                  an Insolvency Event; or

 

(b)                                 if the other party is in breach of
an undertaking given pursuant to clause 13.2(b).

 

13.5                       Reconstruction exception

 

A winding up or
liquidation for the purposes of reconstruction or amalgamation by the other
party is not an event permitting or giving rise to termination if after that
reconstruction or amalgamation the resulting corporation becomes bound by the
terms of this agreement by way of assignment or novation.

 

13.6                       Termination by Autogen

 

Autogen may
terminate this agreement upon notice to Lipha if:

 

(a)           there is a change of greater than 50% in the
control of the issued voting capital of Lipha or a holding company (if any) of
Lipha other than for the purpose of internal re-construction;

 

(b)           a person or persons not previously in Control
of Lipha obtain Control of Lipha or a holding company (if any) of Lipha; or

 

(c)           if Lipha or any of its affiliates challenges or
seeks or causes to be challenged the validity of the Project Patents.

 

13.7                       Termination by Lipha

 

Lipha may terminate
this agreement upon notice to Autogen if there is a change of greater than 50%
in the control of the issued voting capital of Autogen or a holding company (if
any) of Autogen other than for the purpose of internal re-construction.

 

13.8                       Termination to be without prejudice

 

Any termination of
this agreement is without prejudice to the rights which a party has against the
other in respect of anything done or omitted to be done hereunder prior to such
termination or in respect of any sums or other claims outstanding at the time
of termination.

 

13.9                       Survival of provisions

 

The provisions of
clauses 1, 3.8, 3.9, 4.3, 4.6, 4.8, 4.9, 8.3, 8.4, 9, 11,
12, 13.8, 13.9, 15.1, 19, 20 and 21
will survive termination of this agreement.

 

25

 

14.                              OBLIGATIONS AND
RIGHTS ON TERMINATION

 

Immediately upon
termination or expiration of this agreement, each party must return or destroy
all copies of Know-How owned or supplied by the other party, except for the
retention of a copy as necessary for that party to be able to exploit any
continuing licenses.

 

15.                              WARRANTIES

 

15.1                       General warranties

 

Each party
represents and warrants to the other that:

 

(a)           it has all necessary powers and authorisations
necessary to enter into this agreement and observe its obligations hereunder
and allow this agreement to be enforced against it; and

 

(b)           all necessary consents, approvals and
authorisations of all governmental authorities required to be obtained by that
party in connection with this agreement have been obtained; and

 

(c)           the execution and delivery of this agreement
does not contravene any law, regulation or official directive or any
obligations or undertakings, contractual or otherwise, by which it or any of
its assets are bound or cause a limitation on its powers to be exceeded; and

 

(d)           the performance of the party’s obligations
under this agreement:

 

(i)                                     do not and will not conflict with or
violate any requirement of applicable laws or regulations; and

 

(ii)                                  do not and will not conflict with,
or constitute a default under any contractual obligation of that party; and

 

(e)           there does not presently exist any event which
would either now or with the effluxion of time entitle the other party to
terminate this agreement pursuant to clause 13; and

 

(f)            it is not a party to any pending or threatened
action or proceeding affecting it or any of its assets before a court,
governmental agency, commission or arbitrator where an adverse outcome could
reasonably be expected to adversely impact upon the performance of its
obligations under this agreement; and

 

(g)           it has no immunity from the
jurisdiction of a court or from legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise).

 

26

 

15.2        Specific warranty for Autogen Patents

 

Autogen warrants to
Lipha that:

 

(a)           as at the date of this agreement it has
disclosed to Lipha details of all prior art sighted by Autogen by way of
international search in relation to the Autogen Patents, but does not warrant
that it has undertaken a thorough or exhaustive search of prior art; and

 

(b)           at the date of this agreement it is unaware of
any other Patent which has not been disclosed to Lipha and which may be
infringed by Lipha using the Autogen Patents in accordance with the terms of
this agreement.

 

15.3                       Warranties by Lipha

 

Lipha warrants to
Autogen that:

 

(a)                                  it will obtain or has obtained from
its Representatives who have access to the Autogen Know-How and Stage 1
Know-How written obligations to treat such information as confidential strictly
in accordance with this agreement.

 

(b)                                 that it has made its own enquiries
into the validity and enforceability of the Autogen Patents and satisfied
itself that the usage by Lipha, its Affiliates or sub-licensees of the Autogen
Patents and the Confidential Information do not and will not infringe the
intellectual property rights of any third party.

 

16.                              PROTECTION OF
PATENTS

 

16.1                       Maintenance of Patents

 

Autogen is responsible for the
cost of preparing filing prosecuting and maintaining the Autogen Patents but
nothing expressed or implied herein necessarily obligates Autogen to institute
legal proceedings to protect same.  The
party responsible for the cost of preparing, filing, prosecuting and
maintaining the Stage 1 Patents will initially be determined in accordance with
clause 3.10, provided that as from the date
that a Commercialisation Licence in respect of Stage 1 Patents is entered into
between the Parties, Lipha will assume full responsibility for the full cost of
preparing, filing, prosecuting and maintaining such Stage 1 Patents.  Lipha is responsible
for the cost of preparing, filing, prosecuting and maintaining the Stage 2
Patents.  Nothing expressed or implied
herein necessarily obligates Lipha to institute legal proceedings to protect
Stage 1 Patents or Stage 2 Patents.

 

16.2                       Reporting infringements

 

A party must
promptly report to the other in writing particulars of any action or activity
of which the first party becomes aware which might reasonably amount to
infringement of or challenge to any of the Pre-Stage 2 Results or Stage 2
Results.

 

27

 

16.3                       Conduct of proceedings regarding
Pre-Stage 2 Results

 

Lipha has the first
right to take control of and conduct any infringement proceedings in respect of
the Pre-Stage 2 Results where such infringement is within the Licensed
Field.  Should Lipha undertake such
proceedings Autogen must fully co-operate with Lipha in relation to such action
including the lending of Autogen’s name to the action and assistance by
personnel of Autogen. The costs and expenses of any such action will be borne
by Lipha, and the proceeds of such action after payment of Lipha’s reasonable
external costs will be divided between Autogen and Lipha on the basis that
Autogen gets 50% and Lipha the balance. In the event Lipha does not wish to
undertake the conduct of such proceedings on its own, Autogen and Lipha must
discuss whether they will undertake joint proceedings and if so on what basis.
If no such agreement can be reached Autogen is entitled to bring an action in
its own name, and Lipha must provide Autogen with all reasonable assistance
including lending Lipha’s name to such action. 
Autogen must bear all the costs of such an action, and the proceeds of
any such action belong to Autogen absolutely.

 

17.                              INFRINGEMENT OF
OTHERS RIGHTS

 

17.1                       Notification of action

 

In the event that
legal action is threatened or commenced against Lipha arising out of Lipha’s
use of Autogen Patents or Autogen Know-How, Lipha must not make any admissions
or enter into any substantive steps in connection therewith but must promptly
notify Autogen.

 

17.2                       Autogen action

 

If such legal
action against Lipha arises out of the use of the Autogen Patents or Autogen
Know-How in accordance with the terms and conditions of this agreement in
relation to Products, then Autogen must defend and/or assist in the defence of
such litigation, and must bear the reasonable costs and expenses of such
defence. If as a result of such proceedings any damages or awards are assessed
against Lipha, then provided that Lipha has at all times followed the
instructions of, or otherwise obtained the consent of, Autogen in respect of
the defence of such claims, then such damages or awards, as well as any and all
reasonable costs incurred by Lipha, must be satisfied and paid by Autogen.

 

17.3                       Lipha action

 

If such legal
action against Lipha related to the use by Lipha, Lipha Affiliates or
sub-licensees of the Autogen Patents or Autogen Know-How or use of Stage 1
Patents, Stage 1 Know-How or Stage 2 Patents or Stage 2 Know-How other than in
accordance with the terms and conditions of this agreement Lipha must promptly
notify Autogen of the commencement of legal action. Autogen must (at the
expense of Lipha) assist Lipha’s efforts to settle and/or defend such claims.
Lipha must bear all its own costs and expenses and must be responsible for
awards against it and Autogen, as well as any and all reasonable costs incurred
by Autogen, to the extent that indemnification, warranties and other claims may
not be available against Autogen.

 

28

 

If any amounts are
recovered by or awarded or paid to Lipha from or by a third party as a result
of any such action or litigation, Lipha must from such amounts reimburse
Autogen for all costs and amounts paid by Autogen in connection with such
action or litigation and must, after deducting the legal costs incurred by it
in taking such legal or other action, pay to Autogen from any compensation
recovered thereby, Autogen’s part thereof determined in accordance with the
respective interests of the Parties in such compensation.

 

18.                              FORCE MAJEURE

 

18.1                       Party not liable

 

Where a party is
required under this agreement to perform an obligation or do any act or thing
by a designated time or date (other than an obligation to make payment) (“Obligation”),
the party is not to be liable for any delay in performing or for failure to
perform an Obligation where the delay or failure arises from Force Majeure and
that party has complied with this clause.

 

18.2                       Notice of Force Majeure

 

A party who claims
Force Majeure must:

 

(a)                                  give the other party prompt notice
of the Force Majeure with reasonably full particulars and an estimate of the
extent and duration of its delay in performance, or inability to perform; and

 

(b)                                use all possible diligence to remove
the Force Majeure as quickly as possible provided that this will not oblige the
party to settle on terms unsatisfactory to that party any strike, lockout or
other labour difficulty, or any investigation or proceeding by any governmental
authority or any litigation by any third party.

 

18.3                       Termination in case of Force Majeure

 

If the delay
continues beyond 30 Business Days, after the notice given under clause 18.2, the Parties must meet to discuss in good faith a
mutually satisfactory resolution of the problem and, if unable to achieve such
a resolution within a further 30 Business Days, either party may elect to
terminate this agreement by 5 Business Days prior written notice to the other.

 

19.                              ARBITRATION

 

In case of any
disputes arising between the Parties or arising out of the performance or
non-performance of the obligations of either party hereunder, or the
termination of this agreement, the Parties will endeavour to settle such
disputes amicably between themselves.  If
the Parties fail to resolve such disputes, then such disputes shall be finally
resolved by arbitration in accordance with the Rules of Conciliation and
Arbitration of the International Chamber of Commerce (ICC) by one or more
arbitrators appointed in accordance with the said rules.

 

Any such
arbitration will be held in English language and take place in Paris - FRANCE.

 

29

 

20.                              NOTICES

 

20.1                       Form of Notice

 

Any notice,
approval, consent or other communication (“notice”) from one party to another (“Recipient”)
must be in writing and be signed by a person duly authorised by the person
giving the notice.

 

20.2                       Manner of Service

 

A notice must be
served by:

 

(a)           leaving it at the Recipient’s address;

 

(b)           sending it by ordinary pre-paid post (airmail
if being sent from or to a place outside of Australia) to the Recipient’s
address; or

 

(c)           sending it by facsimile to the facsimile number
of the Recipient.

 

20.3                       Address for Service

 

Until other details
are specified by a Party as its address or facsimile number for service the
following apply:

 

Autogen

 

	
  Address :

  	
   

  	
  210 Kings Way,
  South Melbourne, Victoria, Australia

  
	
   

  	
   

  	
   

  
	
  Facsimile :

  	
   

  	
  61 3 9234 1190

  
	
   

  	
   

  	
   

  
	
  Attention :

  	
   

  	
  Company Secretary

  

 

Lipha

 

	
  Address :

  	
   

  	
  37 rue Saint
  Romain, 69379 Lyon, CEDEX 08, France

  
	
   

  	
   

  	
   

  
	
  Facsimile :

  	
   

  	
  33-4-78-75-39-05

  
	
   

  	
   

  	
   

  
	
  Attention :

  	
   

  	
  Head of Legal
  Department

  

 

20.4                       Time of Service

 

A letter or
facsimile will be taken to be served:

 

(a)                                  in the case of a delivered letter,
on the day of delivery, unless delivery is made on a non Business Day or after
4:30 p.m. (local time in the place of receipt) on a Business Day, in which
case it will be taken to be served on the next Business Day;

 

(b)                                in the case of a posted letter, on
the third (or seventh in the case of airmail) Business Day after posting; and

 

30

 

(c)                                 in the case of a facsimile, on
receipt by the party giving the notice of a transmission confirmation report,
unless within one Business Day of receipt the Recipient has informed the party
giving the notice that the transmission was incomplete or garbled, provided
that in any case if transmission is completed after 4:30 p.m. (local time
in the place of receipt) or is received on a non Business Day, the notice will
be taken to be served on the next Business Day.

 

21.                              MISCELLANEOUS

 

21.1                       Severance

 

If any provision is
held invalid or unenforceable, in whole or in part in any jurisdiction, then
such invalidity or unenforceability will only affect such provision or part
thereof in such jurisdiction, and will not in any manner affect the provision
in this agreement in any other jurisdiction. 
To the extent legally permissible an arrangement which reflects the
original intent of the Parties must be substituted for such invalid or unenforceable
provision.

 

21.2                       Waiver

 

The failure, delay,
relaxation or indulgence by any party in exercising any power or right given to
that party under this agreement will not operate as a waiver of that power or
right, nor will any single exercise of a power or right preclude any other or further
exercise of it or the exercise of any other power or right under this
agreement.  A power or right may only be
waived in writing, signed by the party to be bound by the waiver.

 

21.3                       Relationship of Parties

 

Nothing contained
in this agreement is to be construed so as to place any Party in the
relationship of principal, employee, agent, partner, joint venturer or legal
representative of any other Party. The Parties expressly agree and acknowledge
that each of the Parties is an independent contracting Party and does not,
unless expressly provided, have the authority or power for or on behalf of any
other Party to enter into any contract, to incur debts, to accept money, to
assume any obligations or to make any warranties or representations.

 

21.4                       Injunctive relief

 

If there is any
conduct or threatened conduct which is or may be a breach of this agreement,
both Parties acknowledge that damages may be inadequate compensation for such a
breach and that the other Party is entitled to apply to any court of competent
jurisdiction for interim or permanent injunctive relief or both restraining the
other Party from committing any breach or threatened breach of this agreement
without showing or proving any actual damage sustained by it. Such rights and
remedies will be cumulative and in addition to any other rights or remedies
which that party may be entitled to at law or in equity.

 

31

 

21.5                       Proper law

 

This agreement must
be construed in accordance with and governed by the laws of the United Kingdom
and its form, execution, validity, construction and effect is to be determined
in accordance with the laws of the United Kingdom.

 

21.6                       Rule of construction

 

No rule of
construction applies to this agreement to the disadvantage of a Party because
that Party was responsible for the preparation of this agreement or any part of
it.

 

21.7                       Variation

 

Any modification,
alteration, change or variation of any term or condition of this agreement must
be in writing, executed by all Parties.

 

21.8                       Assignment

 

This agreement is personal to
the respective Parties and neither is entitled to assign in whole or in part
without the prior written consent of the other Party.

 

21.9                       Further documents

 

Each Party agrees
that it will forthwith upon the request of the other Party execute and deliver
all such instruments and agreements and will take all such other actions as the
other Party may reasonably request from time to time in order to give effect to
the provisions and purposes of this agreement.

 

21.10                Affiliates’ actions

 

Each Party will
ensure that none of its Affiliates takes any action which is inconsistent with
that Party’s obligations under this agreement, or which if it was done or not
done under this agreement by that Party would amount to a breach of this agreement
by that Party.

 

21.11                Costs and Taxes

 

Each party must pay
its own costs and expenses in relation to the negotiation, preparation,
execution, delivery, stamping and registration, completion, variation and
discharge of this agreement and Lipha must pay any Tax in respect of the
execution, delivery, performance, release, discharge, amendment, enforcement or
attempted enforcement or otherwise of any of the following:

 

(a)                                  this agreement;

 

(b)                                 any agreement or document entered into
or signed under this agreement;

 

(c)                                  any transaction contemplated under
this agreement; and

 

(d)                                 any payment made or received in
respect of this agreement,

 

except in any case
to the extent to which such Tax is payable in Australia or on or in respect of
the income of Autogen.

 

32

 

21.12                Interest on overdue amounts

 

If any amount due
under this agreement is not paid when due, then the Party obliged to make
payment must pay to the other Party interest at the Base Rate on the amount due
and payable, accruing from day to day and to be computed from the date for
payment of the amount until payment of the amount in full.

 

21.13                Counterparts

 

This agreement may
be executed in counterparts, and by the Parties on separate or the same
counterparts, each of which is deemed an original, but all of which constitute
one and the same instrument.

 

21.14                Registration of agreement

 

If this agreement
or any associated transaction is required by the law of any country, other than
Australia, to be either approved or registered in any country or with any
governmental agency, Lipha is responsible for obtaining such approval or
registration including without limiting the generality of the foregoing,
causing this agreement to be stamped, recorded and registered at its cost in
such country. Autogen agrees to co-operate in any such application or
registration procedure. Lipha must furnish proof of compliance with the
foregoing to Autogen when and if Autogen so requires.

 

21.15                Not obliged to act contrary to law

 

No Party is obliged
to carry out or perform any of the terms of this agreement where doing so would
constitute a violation of any treaty, law, code or regulation of any
governmental authority whether local, national or supranational. In any event
the other terms of this agreement nevertheless continue and the Parties must
use all reasonable endeavours to re-negotiate and amend this agreement so that
the performance of this agreement as so amended will not involve any such violation.

 

21.16                Statutory rights not limited

 

The powers,
remedies and rights conferred upon the Parties by or under any statute are
(except to the extent inconsistent with the terms and provisions expressed in
this agreement) be in addition to the powers, remedies and rights conferred by
this agreement.

 

21.17                Consents

 

Unless this
agreement provides otherwise and to the extent permitted by law, a Party may,
in its absolute discretion, conditionally or unconditionally give or withhold
any approval or consent permitted or required to be given by it pursuant to
this agreement.

 

21.18                Entire agreement

 

This agreement
constitutes the entire agreement between the Parties in relation to the subject
matter of this agreement. Any prior arrangements, agreements, representations
or undertakings are superseded and, except as expressly provided, each party
acknowledges that it has not relied on any arrangement, agreement,
representation or understanding which is not expressly set out in this
agreement.

 

33

 

SCHEDULE 1

 

Autogen Patents

 

(Referred to in clause 1.1,
definition of “Autogen Patents”)

 

Nil

 

34

 

SCHEDULE 2

 

Europe

 

	
  Albania

  	
   

  
	
  Austria

  	
   

  
	
  Belgium

  	
   

  
	
  Belarus

  	
   

  
	
  Bosnia-Herzegovina

  	
   

  
	
  Bulgaria

  	
   

  
	
  Croatia

  	
   

  
	
  Cyprus

  	
   

  
	
  Czech Republic

  	
   

  
	
  Denmark

  	
   

  
	
  Estonia

  	
   

  
	
  Finland

  	
   

  
	
  France

  	
   

  
	
  Germany

  	
   

  
	
  Greece

  	
   

  
	
  Hungary

  	
   

  
	
  Iceland

  	
   

  
	
  Ireland

  	
   

  
	
  Italy

  	
   

  
	
  Latvia

  	
   

  
	
  Liechtenstein

  	
   

  
	
  Lithunia

  	
   

  
	
  Luxembourg

  	
   

  
	
  Macedonia

  	
   

  
	
  Malta

  	
   

  
	
  Moldavia

  	
   

  
	
  Netherlands

  	
   

  
	
  Norway

  	
   

  
	
  Poland

  	
   

  
	
  Portugal

  	
   

  
	
  Romania

  	
   

  
	
  Russia

  	
   

  
	
  San Marino

  	
   

  
	
  Slovak Republic

  	
   

  
	
  Slovenia

  	
   

  
	
  Spain

  	
   

  
	
  Sweden

  	
   

  
	
  Switzerland

  	
   

  
	
  Turkey

  	
   

  
	
  Ukraine

  	
   

  
	
  United Kingdom

  	
   

  
	
  Yugoslav Federal Republic (Serbia-Montenegro)

  	
   

  

 

35

 

SCHEDULE 3

 

Proforma Commercialisation Licence

 

36

 

SCHEDULE 4

 

Joint Venture Agreement

 

1.                                      Suggested Equity of Autogen [***]%,
Lipha [***]%

 

2.                                      Joint Venture would be conducted
through a jointly owned company (“JVCO”) to be located in an agreed country.

 

3.                                      JVCO would hold, either directly, or
by way of exclusive “free” licence all relevant intellectual property rights,
including Pre-Stage 2 Results and Stage 2 Results.  the licence would be restricted to the
Licensed Field and only apply to countries outside Europe.

 

4.                                      An exclusive research and
development and commercialization agreement (“Joint Venture”) on the Research
relating to all countries outside Europe provided that each Party equally
shares all costs and revenues of such research and development costs. Any sales
made outside Europe by this joint venture shall not be subject to royalty
payments.

 

5.                                      In case any study is necessary for
development both in Europe and outside Europe, both Parties shall agree on
which of Lipha or JVCO will conduct such study, and the cost of such study
shall be shared by Lipha and JVCO according to the part of the world in which
such study may be used, considering of the world for Europe, for North and
Latin America and for Japan, the other parts of the world not being considered
in such sharing.

 

6.                                      Both Parties are to contribute all
relevant patents and technology (including core registration data and other
material relevant to registration and approval) necessary or useful to commercialise
products or processes in the relevant Licensed Field, which they already have,
or subsequently separately create or generate at or prior to the date of
commencement of JVCO at the end of Stage 2, such contribution to be without
cost or royalty entitlements, unless the same are due to non-Affiliates.

 

7.                                      This free contribution does not
extend to manufactured product which, subject to the price being cost
competitive with third Parties on a contract or toll manufacturing basis, will
be supplied exclusively by Lipha at a price to be agreed.

 

37

 

SCHEDULE 5

 

Stage 1 Research

 

The Discovery of Novel Genes
Involved in the Development of Diabetes

 

Deakin University/Autogen/Lipha

 

Stage 1 Research Plan 1999-2000

 

Introduction

 

This is research program is aimed at
discovering novel genes involved in the development of diabetes, determining
their functions, and eventually, developing new approaches to treatment of
diabetes and its complications. Already a number of key genes have been
identified and are at various stages of the program,

 

The project capitalizes on the availability of
a unique animal model for the study of diabetes, Psammomys
obesus, and the availability of the latest molecular biology
technologies. The Autogen/Deakin collaboration has one of only two active
research colonies of Psammomys  obesus in the world. This animal develops metabolic defects
in a manner very similar to humans, with a broad spectrum of glucose
intolerance, insulin resistance, and diabetes, providing an ideal model system
to uncover now genes and pathways involved in diabetes development. No other
animal model has this pattern of diabetes development, as most available models
are either single gene mutation models, or chemically created by damage to the
pancreas.

 

The observation that one breeding pair of Psammomys obesus can have a litter with some animals
developing diabetes whilst other remain diabetes-free, despite living in
exactly the same environmental conditions, makes the model perfect to explore
underlying genetic causes.

 

In this research plan, key tissues involved in
the development of diabetes, including brain, pancreas, liver, muscle and
adipose tissue, are ‘removed and RNA extracted, Using molecular techniques
routine in our laboratories, including differential gene expression, we
determine which genes are up- or down-regulated in diabetic and non-diabetic
animals. This powerful technique highlights novel genes linked with diabetes
and diabetes development and further functional studies provide lead compounds
for therapeutic development. The major expected outcomes are identification of
novel gene sequences linked with diabetes, new proteins involved in diabetes
development, and the patenting of potential new lead compounds for treatment.

 

38

 

Research Plan

 

This research project covers a large range of
research and development areas from basic discovery using gene technologies,
gene expression, protein production and testing of protein function in cell
systems and animal models.

 

The research and development plan can be easily
subdivided into a number of sections.

 

1.                                       Gene Discovery

 

in this section RNA is isolated from Psammomys  obesus with and
without diabetes and under a variety of conditions with disturbed energy
balance, including fasting, energy restriction, over-feeding,- RNA samples
collected from brain, liver, muscle, and pancreas are examined to determine
which genes are over- or under-expressed in the disease states, using
differential gene expression. This technique has the advantage of not requiring
prior knowledge of the disease process and it allows identification of novel
genes not previously linked with the disease process.

 

2.                                       Gene Sequencing

 

Following identification of a novel gene
sequence linked with diabetes, the entire gene sequence is determined and its
novel characteristics confirmed with available bioinformatic software.
Sequencing techniques are employed to identify
the entire gene sequence.

 

3.                                       Gene Expression

 

Following identification of the entire novel
gene sequence, gene expression is determined in a number of tissues including
brain, liver, pancreas, and muscle. In addition, gene expression under a
variety of metabolic disturbances including obesity, fasting, aver-feeding and
diabetes is determined. The pattern o£ gene expression is then examined to
identify leads for future experiments aimed at identifying the function of the
novel gene. A major advance in technology in the area of gene expression is ‘real-time PCR’ which is
now routinely available in our laboratory and allows accurate and rapid
determination of gene expression. Following detailed animal experiments in Psammomys  obesus and to
confirm the importance of the identified gene in human metabolism, human RNA
blots are used to examine gene expression in a variety of human tissues.

 

4.                                       Protein Production

 

The next stage of research and development
involves the introduction of the newly identified gene sequence into
appropriate bacterial vectors for protein production. Once the appropriate
bacterial vector has been identified, protein production and purification
provides the protein product of the novel gene discovered for functional
analysis.

 

5.                                       Functional Studies

 

To determine the function of novel proteins,
both in vivo and in vitro models are utilized. In both cases the research
involves two major approaches; firstly, administration of purified protein at
varying doses and times of treatment, secondly, administration of an antisense
oligonucleotide directed at the novel gene sequence to block expression of the
protein product. Subsequently, a variety of metabolic parameters are measured
and gene expression of key enzyme pathways determined. The availability of
real-time PCR technology in our laboratories allows us to quickly and
confidently quantitate changes in expression in tissue samples following
protein treatment.

 

Each phase of the research program is currently
underway and running simultaneously; different genes identified are at various
stages of development throughout the program.

 

At the end of the research and development
program, we will have identified a number of new genes involved in diabetes
development; we will have produced their protein products and further developed
this research by determining the basic function of the novel protein in tissue
culture systems and in

 

39

 

whale animal studies. The result will be key
lead compounds for further development by Lipha in Stage 2.

 

We currently have identified a pool of
potential genes of which four are novel diabetes-related genes and these genes,
and others as confirmed, will proceed through various stages of the above
research plan during 1999/2000.

 

The development and progress achieved with each
of identified navel gene and new genes uncovered will be reported to the
Scientific Board established under the Autogen/Lipha Research and Licence
Agreement under the following Milestones:

 

1.                    Identification of
gene sequences up- or down-regulated in diabetic, non-diabetic, loan and obese
animals.

 

2.                    Identification of
full-gene sequence and confirmation of novel character.

 

3                       Production of protein
product by bacterial expression of novel genes.

 

4.                    Confirmation of
tissue differential gene expression and regulation of expression of the novel
gene in various metabolic conditions.

 

5.                    Effects of gene
product on carbohydrate and fat metabolism,

 

40

 

EXECUTED as an agreement

 

	
  The common seal of Autogen
  Pty Ltd is affixed in 

  	
   

  	
  )

  
	
  accordance with its articles of association in the 

  	
   

  	
  )

  
	
  presence of:

  	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph Isaac Gutnick

  
	
  Director

  	
   

  	
  (name printed)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Peter James Lee

  
	
  Director/Secretary

  	
   

  	
  (name printed)

  

 

 

	
  The common seal
  of Lipha S.A. is affixed 

  	
   

  	
  )

  
	
  in accordance with its
  articles of association in the presence of:

  	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
   

  	
   

  	
  )

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Jean-Noël TREILLES

  
	
  CHAIRMAN OF THE BOARD

  	
   

  	
  (name
  printed)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Yves BONHOMME

  
	
  MANAGING DIRECTOR

  	
   

  	
  (name printed)

  

 

41Exhibit 4.2(c)

 

“CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL
PORTIONS OF THIS DOCUMENT HAVE BEEN OMITTED AND HAVE BEEN SEPARATELY FILED WITH
THE COMMISSION.  CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.”

 

DEED dated          March 16th,
2001

 

BETWEEN:

 

AUTOGEN RESEARCH PTY LIMITED ABN 84 074 636 847
of 210 Kings Way, South Melbourne, Victoria 3205 (“Autogen”);

 

AND

 

LIPHA S.A. of 37 rue Saint Romain, 69379 Lyon, CEDEX 08
France (“Lipha”)

 

RECITALS

 

A.                                   In
April 1999 the parties entered into an agreement (“Research and
Licence Agreement”) including both diabetes and obesity fields
setting out the terms and conditions for the provision for certain Stage 2
Research (as defined in that agreement) services by or through Autogen.

 

B.                                    The
parties now agree to further extend and vary the Research and Licence Agreement
subject to the terms and conditions of this deed.

 

AGREEMENT

 

1.             EXTENSION OF TERM

 

With effect on and from 1 July 2000 the parties
agree that the term of the Research and Licence Agreement is extended until 30 June 2006
(“Extended Term”) (unless the Research and
Licence Agreement is earlier terminated in accordance with its terms).  During the Extended Term the terms and
conditions of the Research and Licence Agreement will continue to apply except
to the extent to which they are inconsistent with anything set out in this
deed, in which case the provisions of this deed will prevail to the extent of
the inconsistency.

 

2.             PAYMENT AND RESEARCH PROPOSAL DURING EXTENDED TERM

 

During the Extended Term:

 

(a)                                  the
payment program set out in Schedule 1 to this deed will be substituted for
any payment program previously applying under the Research and Licence
Agreement; and

 

(b)                                 the
research proposal set out in Schedule 2 to this deed will be substituted
for any research proposal previously applying under the Research and Licence
Agreement provided that such research proposal will be reviewed by the parties
and updated once during each year of the Extended Term.

 

 

EXECUTED AS A DEED

 

	
  THE
  COMMON SEAL of

  	
  )

  
	
  AUTOGEN
  RESEARCH PTY LIMITED

  	
  )

  
	
  ABN
  84 074 636 847 was
  hereunto affixed

  	
  )

  
	
  in accordance with its
  Constitution

  	
  )

  
	
  in the presence of:

  	
  )

  

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Director/Secretary

  	
  Director

  

 

 

	
  THE
  COMMON SEAL of LIPHA S.A.

  	
  )

  
	
  was hereunto affixed in accordance

  	
  )

  
	
  with its Constitution in the

  	
  )

  
	
  presence of:

  	
  )

  

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Director/Secretary

  	
  Director

  

 

 

SCHEDULE 1

 

Funding 1 July 2000
to 30 June 2001 as attached.

 

Payable by Lipha to
Autogen as follows:-

 

Funding consists of
quarterly net payments of Euros[*] made in advance.  The first installment of Euros[*] is to be
paid on or about the date of this deed with the second, third and fourth
installments to be paid respectively in October 2000, January 2001, March 2001
and June 2001.

 

 

SCHEDULE 2

 

 

Budget (July 2000 – June 2001)

 

Salaries (plus on costs)

 

[*]           Post-doctoral
fellows

 

[*]           Graduate
Research Assistants

 

[*]           Full time
equivalent (part time) Research Assistants

 

	
   

  	
   

  	
  EUROS 

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consumables

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Project 1 [*]

  	
  Euros 

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project 2 [*]

  	
  Euros 

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project 3 [*]

  	
  Euros 

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Project 4 [*]

  	
  Euros 

  	
  [*]

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sub-total: consumables

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Sub-total: Personnel

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equipment

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Sub-total

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Infrastructure costs (20%)

  	
   

  	
  [*]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  Euros 

  	
  [*]

  	
   

  
										

 

 

Milestones (July 2000 - June 2001)

 

Beacon

 

July - September 2000

 

[*] (76 aa) production at Silenus.

[*] (73 aa and 75 aa) as 6XHis and GST fusion protein.

MAb - Production in bags from two selected lines.

PAb - Test and assess sera from two rabbits. [*]
promoter - cloning and expression.

Inducer effects on [*] gene expression - in different
cell lines - by Taqman.

[*] / CLK - co-expression and co-immunoprecipitation.

Cloning of hCLKl, 2, 3 and 4 isoforms.

ICV studies - “A” animals - dose response studies.

In vitro studies - setting up of functional assays and
macroarrays.

 

October - December 2000

 

[*] (76 aa or 73 aa if available) production at
Silenus.

[*] (73 aa and 75 aa) expression and purification - optimization.

MAb -A, B and C, fed and fasted animals by
immunohistochemistry.

PAb - Test, assess and process sera from third and
fourth rabbits.

[*] promoter - identification of additional promoter
and enhancer elements, analysis of inducer effects.

[*] / CLK - co-expression and co-immunoprecipitation -
comparison of four hCLKs.

ICV studies with “B and C” animals - infusion with
optimized amounts.

In vitro studies - glucose and fatty acid uptake
measurements. Macroarrays to identify differentially expressed genes.

 

January - March 2001

 

[*] (73 aa or 75 aa) production -protease free and
homogeneous [*].

[*] (73 or 75 aa) production at Silenus.

PAb - Immunohistochemistry studies with purified
antisera from third and fourth rabbits.

[*] promoter - optimize high through put screening
assay.

[*] / hCLK - effects on down stream [*] signaling
events with the best interacting hCLK.

ICV studies with “A” animals - 73 or 75 aa [*]
infusion with optimized amounts.

In vitro functional studies with 73 aa [*] - glucose
and fatty acid uptake, effects on insulin responsiveness.

GST-pull down assays - to fish for other, if any
proteins interacting with [*].

 

 

April - June 2001

 

PAb - Immunohistochemistry studies with other animal
models with the most reactive antisera.

[*] promoter - continue with optimization of high
through put screening assay.

[*] / hCLK - complete signaling studies, optimize high
through put assay for drug screening.

ICV studies with “B and C” animals - 73 or 75 aa [*]
infusion with optimized amounts.

In vitro functional studies - take leads from
macroarray results and set up studies with the interesting genes.

Studies with other [*] interacting proteins identified
from GST-pull down assay.

 

Band 55

 

July - September 2000

 

Gene expression profile in 3T3-Ll - glucose treatment
effects.

Yeast 2 hybrid screen -sequence analyze 4 candidate
interacting clones.

Cloning and expression - fragments of and full length
B55 as 6XHis fusion products.

PAbs - characterization of antisera - B55 expression
in tissues and transfected cells.

Adenoviral expression - cloning and in vivo
recombination of B55, B55 with N- and C-terminal tags into adenoviral vectors.

Antisense oligos - design and testing of oligos in
cell culture.

 

October - December 2000

 

Yeast 2 hybrid screen - isolation of full length
clones of interacting partners, sequencing, subcloning into expression vectors.

Expression and purification - recombinant 6XHis-B55
fusion proteins. Recombinant protein production at Silenus.

PAbs - begin immunizing rabbits with recombinant B55.

Adenoviral expression - production of B55 adenoviral
stocks in 293A cells.

In vitro functional studies with B55 Adenovirus.

Localization studies by immunohistochemistry.

 

January - March 2001

 

Co-expression and co-immunoprecipitation - B55 and the
candidate interacting partners.

Signaling pathway - set up assays to analyze
downstream signaling events.

GST-pull down assays with C- and N-terminal
recombinant B55 fragments - identify other strongly interacting proteins.

A second Y2H screen to isolate other interacting
clones from human liver cDNA library.

Cloning and expression of B55 promoter.

 

 

Studies with Biacore - fractionation of tissue
homogenates by chromatography methods - test for interaction with immobilized
B55.

 

April - June 2001

 

To further characterize the B55 interacting partners
and their functional roles.

Continue with B55 promoter studies.

Set up high through put assays for drug screening
based on either B55 promoter driven reporter activity or interaction between
B55 and one of the interacting partners.

 

H24

 

July - September 2000

 

Preliminary ICV infusion studies with chemically
synthesized peptide.

Immunization of rabbits with KLH-H24 conjugates.

 

October - December 2000

 

Further ICV infusion studies to analyze the dose dependent
effects.

ICV infusion of A, B and C animals - to study the
differences in response to treatments with peptide.

To analyze the test bleeds from rabbits for effective
immune response.

 

January - March 2001

 

If the results from the previous quarter are encouraging,
the following plan, modified as necessary, will be adapted to understand the
functional role of H24 in energy homeostasis.

 

To affinity purify the antipeptide antisera and
characterize for specificity.

 

Immuno-localization studies with crude and purified
antisera.

 

To perform a set of in vitro functional studies using
novel protein delivery techniques such as “Trojan peptides”.

 

April - June 2001

 

As we have in the case of other genes, to implement
techniques such as Yeast 2 hybrid analysis, GST-pull down assay and Biocore
sensor systems to identify the H24 interacting proteins.

 

 

[***]

 

July - September 2000

 

Measurement of [***] in tissue samples, C2C12 and L6
cells by Western blotting. Antisense - inhibition of [*] 3 expression in cells,
analysis by Real time PCR. [*] expression clone - plasmid preps and restriction
mapping.

 

Over expression of [*] in C2C12 cells and assay for
effects on fatty acid uptake and insulin responsiveness.

 

October - December 2000

 

In vivo functional studies with best performing
antisense oligos - monitor changes in [*] levels.

Complete in vitro studies with [*].

Construct recombinant [*] Adenovirus and prepare viral
stocks.

 

January - March 2001

 

Adenoviral mediated expression of [*] - in vitro
functional studies in cell culture. In vivo functional studies - IP and IM
delivery of Adenoviral [*].

 

April - June 2001

 

Continue with in vivo functional studies.

 

If a physiological relationship between changes in [*]
and [*] levels to the diabetic or obese state of the animals is once
established, methods to modulate endogenous levels of [*] activity will be
investigated.

 

 

[*] - Research Proposal

 

Hypothesis

 

Increased expression of [*] in hypothalamus is found
to be associated with increased food intake and increase in body weight.

 

Background

 

[*] was initially discovered by the technique of
differential display PCR, screening hypothalamic mRNA from lean vs obese Psammomys  obesus. [*]
gene expression in the hypothalamus positively correlated with the percentage
of body fat. Intracerebroventricular infusion of [*] resulted in a dose
dependent increase in food intake and body weight and increased hypothalamic
expression of neuropeptide Y. The predicted protein product of [*] consists of
73 amino acids. Amino acid sequences deduced from human and mouse expressed
sequence tags show 100% homology with P.obesus [*],
indicating that the protein is highly conserved between species. Strong
homology (81%) was found with C. elegans protein and a weak similarity to
Arabidopsis thaliana ubiquitin-like protein 8.

 

[*] was also found to be expressed in various other
tissues tested indicating its ubiquitous presence. In yeast two hybrid system, [*]
has been found to interact with human homolog of mouse CLK4 (CDC like kinase).
It is possible to predict a role for [*] in the downstream insulin signaling
pathway involving [*] and [*].

 

Our current efforts are directed towards understanding
the precise functional role of [*] in the modulation of energy balance and
develop a high through put screening assay for evaluation of drugs that
interact with [*].

 

Research Plan

 

Recombinant [*]:

 

Conditions for production of recombinant GST-[*]
fusion protein and [*] cleaved off of GST have been optimised. The cleaved
protein comprises the complete 73 amino acid [*] with additional three residues
aReceived over 200 mg of GST-[*] fusion protein and about 20 mg of cleaved [*] from Selinus, to whom we contracted the
process. We are currently verifying the purity and yield of the samples. The
samples will be used for raising and screening polyclonal and monoclonal
antibodies to [*] as well as for functional studies.

 

Monoclonal and Polyclonal antibodies:

 

Mice immunized with Pinpoint-[*] fusion protein were
utilized for making monoclonals. GST-[*] is used for screening to select out
pinpoint and select [*] specific hybridomas. Three lines from first fusion are
currently being characterized for specificity. Single cell cloning and
screening is under way for five positives from second fusion.

 

 

Four rabbits are currently being immunized with GST-[*].
The titers from first test bleeds of two of the animals are found to be low.
However, we would expect the titers to improve on further boosts. We will try
to enrich the sera for [*] specific antibodies by removing the GST reactive
antibodies by affinity adsorption.

 

Antibodies will be used for immunolocalization and
functional studies.

 

[*] promoter:

 

We are currently subcloning 0.8 and 1.2 kb upstream
sequence from the transcription start site in human beacon gene into promoter
less pCAT vector. Promoter activity in the selected sequence will be analyzed
by expression of the constructs in few different cell lines. Specific promoter
elements will be further analyzed by screening of different fragments of
promoter positive sequence.

 

We aim to establish a rapid luciferase reporter assay
for high throughput drug screening based on alteration of [*] promoter
activity.

 

[*] / CLK interaction:

 

It is important to demonstrate that true interaction
occurs between endogenously expressed [*] and CLK4 and may even be with other
forms of CLK such as CLK1 and 2. We will isolate and sequence human homolog of
CLK4. We will coexpress [*] and CLK4 as Flag, Myc or HA fusion proteins in
selected cell lines. We will verify endogenous interaction between the two
proteins by immunoprecipitation. Further, we will isolate human CLKI, 2 and 3
isoforms and examine the anticipated interaction with [*], if occurs, by
similar experiments.

 

Once the CLK / [*] interaction is established, we will
develop a rapid screening assay in an ELISA plate format for screening drugs
that modulate the interaction between the proteins. We will produce recombinant
proteins either in cell culture or bacteria. We have options to incorporate
different tags such as Alkaline phosphatase, GST, biotin or radioactive label
for convenient monitoring of the interaction.

 

(For more details refer to the attached proposal on “[*]
/ CLK interaction - HTS assay development”).

 

Other [*] interacting
proteins:

 

Using GST-[*], currently available in the lab, we will
perform “GST-pull down assay” with fresh tissue homogenates from Sand rat and
attempt to isolate, obtain partial sequence and identify the specifically
interacting proteins. Further experiments will be designed based on the nature
of proteins discovered to be interacting with [*].

 

Immunolocalization of [*]:

 

Level and location of expression of [*] in the brain
may have important implications in the maintenance of energy balance in animals
and humans. Using the monoclonals and polyclonals 

 

 

prepared in house, a series of experiments will be
performed to examine and compare the precise location and level of expression
of [*] in the brains of Sand rats: lean / obese, fed / fasted, and also in
different animal models such as ob/ob, db/db, tub etc.,

 

We will be able to further elucidate the [*] signaling
pathway by examining co-localization of [*] with other signaling peptides in
the brain such as NPY, CART, POMC, leptin using respective antibodies.

 

[*] treatment - functional
role:

 

Considering the significant effect the treatment with [*]
peptide has on animals, we plan to perform a series of in vitro and in vivo
functional studies with the available recombinant [*].

 

In vivo functional studies:

 

We will repeat the in vivo ICV fusion experiments we
have earlier carried out with [*] peptide with the full length recombinant
protein and examine whether similar or different physiological changes in the
animals follow. While we are more certain of a role for [*] in the CNS signaling,
we do not yet know whether it is a secreted protein, exerting in addition some
other regulatory effects on other organs. To address this question, we will
design experiments to treat animals with intra-peritoneal injections of [*] and
monitor any changes taking place in the animals food intake, plasma insulin and
glucose levels, body weight and observe for any other symptoms animals develop
compared to the control treated animals.

 

(Refer to the attached “In vivo functional studies
with full length [*]”)

 

In vitro functional studies:

 

Effect on glucose and fatty acid uptake:

 

On a simpler level, we will treat adipocytes
(differentiated 3T3-L cells) and muscle cells (C2C12 or L6 cells) with varying
concentrations of [*] and examine the changes in cells ability to take up
glucose, fatty acid in response to with or without insulin. The results should
indicate to us the role if any [*] plays in altering the insulin sensitivity of
tissues such as liver and muscle. We have optimized a method to analyze fatty
acid uptake and are currently working on standardizing method to analyze
glucose uptake in cells.

 

Differential gene expression:

 

There is no evidence to think that the molecular
pathways [*] is linked to will be simple. The level of [*] present in the
animal may determine the expression levels of various genes that in turn may
determine the level of food intake of the animal.

 

In cell culture, we will treat adipocytes and GT1-7
cells with two or three different concentrations of [*], isolate mRNA, prepare
labeled cDNA and probe hypothalamic and liver macroarrays using the procedures
established in our laboratory. On further analysis, we will be able to identify
the genes 

 

 

whose expression levels are significantly up or down
regulated as a result of [*] treatment. We will if necessary, vary the
treatment times (12h, 24h or 48h) and [*] concentrations (2, 5, 10 mM).

 

The information obtained will assist us in further
elucidation of function of [*].

 

 

[*] / CLK interaction - HTS assay development

 

 

	
  A.

  	
   

  	
  Be / hCLK4 Evidence from Y2H Evidence from Y2H (p)

  	
   

  	
  C.

  	
   

  	
  Isolate the full length hCLK 1, 2,3 & 4

  
	
   

  	
   

  	
   ̄

  	
   

  	
   

  	
   

  	
   ̄

  
	
  B.

  	
   

  	
  Confirm the interaction by Co-expression and IP

  	
   

  	
  D.

  	
   

  	
  Confirm the interaction by Co-expression and IP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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  E.

  	
  In vitro screening assay

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  F.

  	
  High Throughput Screening

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  G.

  	
  Re-screen the hits to confirm

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  H.

  	
  Gene expression / Biochemical changes in cell model
  Resulting from disruption of Be / CLK interaction

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
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  I.

  	
  In vivo studies

  	
   

  	
   

  	
   

  	
   

  

 

Abbreviations:

 

Be = Beacon, CLK = CDC like kinase, (p) = partial
clone, AP = Alkaline phosphatase, GST = Glutathione S-transferase,

 

HTS = High throughput screening, IP =
Immunoprecipitation.

 

 

B.            Confirmation
of [*]/hCLK4 interaction

 

A yeast two-hybrid (Y2H) screen using human brain
cDNA library has identified CLK as a potential binding partner to [*]. The CLK
sequence identified was partial and showed high sequence homology to mouse
CLK4. We will further pursue to establish the biological relevance of this
interaction.

 

Aim:

 

To confirm the interaction between [*] and hCLK4 using
co-expression and immunoprecipitation.

 

Principle:

 

Clone [*] into the epitope tagged vector pCMV-myc.

Clone partial hCLK4 into the epitope tagged vector
pCMV-HA.

Co-transfect COS-7 or 293T cells.

Prepare cell lysates.

Perform immunoprecipitation with Anti-myc or Anti-HA
antibodies. Western blot and confirm co-immunoprecipitation of [*]/hCLK4.

 

[*]/hCLK4 (partial) co-immunoprecipitation:

 

A commercially available kit, designed specifically
for confirming two-hybrid interactions, has been purchased to facilitate these
studies.

 

In the preliminary studies, we will utilise the
partial hCLK4 clone obtained from Y2H screening. We also have plans (See section C)
to clone the full length version and repeat the described
co-immunoprecipitation experiments.

 

Alternatives:

 

If no inter-action between [*] and hCLK4
is detected using the epitope-tagged vector set, a number of alternate options
are available.

 

For example, should either protein express poorly
in transfected cells, a GST Pull-down’ assay could be employed to allow
confirmation. of the [*]/IzCLK4 interaction. Specifically, cell lysates
prepared from cells overexpressing tagged hCLK4 can be incubated with either
GST or GST-[*] 

 

 

coupled beads. Following incubation, bound proteins
are eluted and subsequently analysed by western blotting.

 

The epitope-tagged vector set that will be used in
studies listed above only allows for the expression of N’-terminal tagged
proteins. Should the presence of N’-terminal tags on either protein result in
disruption of the [*]/hCLK4 interaction, alternate C’-terminal and N’-terminal
tagged vectors are available.

 

C.            Determination
of full-length, hCLK4 mRNA sequence

 

We will employ 5’ RACE to obtain hCLK4 complete
cDNA, hitherto unidentified member of the human CLK family. In addition, as the
partial hCLK4 sequence we have contains the highly conserved CLK active domain,
it is possible that other members of the CLK family may also interact with [*].
To validate this hypothesis, we will clone all members of the CLK family and
test their ability to interact with [*].

 

Aim:

 

Using 5’ RACE, determine the full-length mRNA sequence
for hCLK4 and clone the predicted ORF into C’ and N’-terminal epitope tagged
mammalian expression vectors.

 

Using the published mRNA sequences for hCLKl, 2 &
3, ORF’s will be isolated and cloned into C’ and N’-terminal epitope tagged
mammalian expression vectors.

 

Parallel Studies:

 

Isolation of genes encoding ISR, CLK homologues will
be also be attempted. At this stage, however this work is of lesser priority in
terms of the proposed research plan.

 

D.            Interaction
of [*] other members of the hCLK family

 

Studies of [*]/hCLK interaction will essentially
follow those described previously in section B. It is envisioned that the
outcomes of testing [*] interaction, with all CLK members, will allow for
further elucidation of [*] action in vivo.

 

Aim:

 

To confirm the interaction between [*] and full-length
hCLK4 using co-expression and immunoprecipitation.

 

To identify protein:protein interactions between [*]
and hCLKl, 2 & 3.

 

 

Principle:

 

Refer to section B.

 

Alternatives:

 

If interaction between [*] and hCLK family members
is not detected using the epitope-tagged vectors, alternate options are
available such as the GST ‘pull-down’ assay described in section B.

 

Interaction of [*] with other hCLK members could
also be validated and quantified using the Y2H system.

 

E.             In vitro
screening assay

 

Based on our studies in section D, we will
select the particular isoform of human CLK that best interacts with [*] and set
up a simple in vitro system for drug screening.

 

Aim:

 

To develop a simple assay system in a microtiter plate
format using CLK and [*] as Binding partners I & II (BP I &
II) or vice versa.

 

Principle:

 

Coat the plate with BP I.

 

Add BP II fused / conjugated to an assay tag. Wash the
excess unbound BP II.

 

Assay for the bound tag.

 

CLK / AP-[*] interaction assay:

 

We will standardize the methods to produce large
quantities of recombinant CLK using either GST or 6XHis fusion vectors.

 

We will produce required amounts of AP-[*] (Alkaline
phosphatase fused [*]) in cell culture using the protocols, already developed
in this laboratory.

 

We will try to establish an interaction assay using
CLK as BP I and AP-[*] as BP II.

 

The binding efficiency will be determined by assaying
for Alkaline phosphatase activity.

 

 

Alternatives:

 

In the event we do not achieve the required levels of
binding efficiency or detection sensitivity, we will try to implement other
tags and detection systems and evaluate their performance in the binding assay.

 

For example, it should be possible to substitute
AP-[*] in the above method with GST-[*] and assay for GST.

 

Compared to [*], AP and GST are large proteins and may
interfere in the binding of [*] to CLK in which case we will try to substitute
125I labeled [*] for AP-[*] and assay for interaction by measuring the bound
radioactivity.

 

Proximity based fluorescence detection systems with
reporter / quencher tags are novel, sensitive and appear to work well even for
low affinity interactions. However, it will be our last option since it
requires outside resources and special equipment for obtaining tagged proteins
and to carry out the screening.

 

F.             High
throughput screening

 

At Lipha.

 

G.                                    Re-screen
the hits to confirm

 

At Lipha.

 

H.            Gene
expression / Biochemical changes in cell model

 

It is predictable that the disruption of the
interaction between [*] and CLK could result in changes in expression of the
genes involved in the down stream signaling pathway. On the other hand the
changes could be biochemical in nature effecting the immediate signaling
events.

 

It is possible for us to design experiments using
established cell lines such as GT1-7 or 3T3-L. We can treat the cells with the
compounds of interest, isolate mRNA and probe macro array membranes to identify
the genes that show altered gene expression in response to the treatment.

 

We will be able to employ Anti-phospho tyrosine and
Anti-phospho serine antibodies to study the changes in the overall
phosphorylation and dephosphorylation patterns resulting as a consequence of
the treatments rendered.

 

 

In Vivo Functional studies with full length [*]

 

Hypothesis:

 

Full-length [*] (73aa) will affect food intake and
body weight in Psammomys obesus.

 

Background:

 

[*] is a novel gene overexpressed in the hypothalamus
of obese animals that encodes a small (73 amino acid) protein. [*] mRNA gene
expression in the hypothalamus was measured using TaqMan PCR and was positively
correlated with percentage body fat (p<0.01) and body weight in Psammomys obesus (p<0.05). A 33 amino acid fragment of
the predicted [*] protein was chemically synthesized to test for in vivo
effects of [*] administration in lean, non-diabetic Psammomys
obesus. Intracerebroventricular infusion of the 33-amino acid [*]
fragment (3-30 mg/d) for 7 days
resulted in a dose-dependent increase in food intake (p<0.05) and body
weight (p<0.001), and resulted in a 2-fold increase in hypothalamic
expression of neuropeptide Y (NPY; p<0.005), measured using TaqMan PCR.

 

Research Plan:

 

We currently have a supply of GST-[*] (obtained from
Silenus). 6-8mg of cleaved GST-beacon is available, consisting of the 73aa [*]
with an additional 3 amino acids at the N-terminus. GST-[*] is cleaved with
thrombin for removal of the GST tag. The preparation was assayed for the
presence of active Thrombin by using a fresh sample of GST-[*] as a substrate.
We did not see any visible Thrombin activity. We feel that the Thrombin
activity in [*] samples is either very low or none present. We are looking into
having the samples tested using more traditional, plasma clotting assays as
well to confirm the results.

 

It is difficult to predict what effects does the GST-[*],
slight contaminant present in the sample will have on treated animals. We may
in future have a cleaner preparation of [*]. However, we decided to use the [*]
preparation available as it is and conduct in vivo studies.

 

In the next two or three weeks, we will be performing
the ICV studies using group A animals. Initially, an identical protocol to that
in the Nature manuscript will be performed with the 76aa [*]. A dose-response
of 0, 3, 15 and 30 mg /day will be administered
to n=8 animals in each group, as summarized in the timeline below. Timeframe
for the completion of this study would be 6-8 weeks.

 

 

	
  ICV

  cannulation

  	
   

  	
  Implantation

  of pump

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
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  Day   0

  	
   

  	
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  24

  	
   

  
	
  Recovery

  	
   

  	
   

  	
   

  	
  Recovery

  	
   

  	
   

  	
   

  	
  Baseline

  	
   

  	
   

  	
   

  	
  Treatment

  	
   

  	
   

  	
   

  
	
  ­

  	
   

  	
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  Body weight, glucose, insulin

  	
   

  	
  Body weight, glucose, insulin

  	
   

  	
   

  	
   

  	
  Body weight, glucose, insulin

  	
   

  	
   

  	
   

  	
  Body weight, glucose, insulin

  	
   

  	
   

  	
   

  	
  Body weight, glucose, insulin

  	
   

  

 

* Body weight and food intake measured daily during
the treatment period.

 

An assessment needs to be made after this study. If
the 76aa [*] does have an effect in Group A animals, we should test for similar
effects in Group B and Group C animals. The experimental design would be the
same as used in Group A animals above, however the time frame would be longer
(16 weeks) as Group C animals are less common than Group A animals.

 

If 76aa [*] has effects on food intake and body weight
in Group A animals, a calorimeter study should be conducted to investigate
effects on substrate oxidation and energy expenditure. The protocol used would
be the same as for the 33aa [*] experiments in Group A animals. The study would
involve 8 treated and 8 control animals, with the [*] dosage determined from
the food intake study. A summary of the experimental protocol is presented
below.

 

 

B55 Research Plan

 

B55 Hypothesis:

 

B55 plays a role in the pathophysiology of type 2
diabetes mellitus and is potentially a target for anti-diabetic agents.

 

Background:

 

Band 55 was discovered in the liver of fasted compared
to fed animals using the differential display technique. This pattern of
expression was confirmed by real-time PCR. Band 55 was also found to be
over-expressed in adipose tissue in response to fasting and in the liver in
response to a two-week energy restriction. There is no difference in liver Band
55 expression between A, B and C in the fed state. Band 55 mRNA is 1155
nucleotides long and encodes a 189 amino acid protein. The protein sequence is
predicted to have one transmembrane domain and overexpression studies in
mammalian cells using epitope-tag vectors have indicated that Band 55 is a
plasma membrane protein. Experiments conducted in HepG2 cells have shown a
tenfold increase in expression of Band 55 in response to high glucose media
compared to low glucose media. With addition of fatty acids to the cells, Band
55 expression was generally reduced in a dose-dependent manner. Overall these
results suggest that Band 55 expression is modulated by metabolic signals and
may be involved in the pathophysiology of type 2 diabetes in Psammomys  obesus.

 

Research Plan:

 

Gene Expression Profiling

 

Finalising/repeating 3T3-L1 glucose treatment effects
on B55 expression (3 weeks part time).

 

Yeast-Two Hybrid Screen

 

Identifying proteins that interact with full-length
B55 using a human liver cDNA expression library.

 

 

	
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  calorimeter

  	
   

  	
   

  	
   

  	
  calorimeter

  	
   

  	
   

  	
   

  	
  calorimeter

  	
   

  
	
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  Recovery

  	
   

  	
   

  	
   

  	
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  ­

  	
   

  	
   

  	
   

  	
   

  	
   

  	
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  Body weight,
  glucose, insulin

  	
   

  	
  Body weight,
  glucose, insulin

  	
   

  	
   

  	
   

  	
  Body weight,
  glucose, insulin

  	
   

  	
   

  	
   

  	
  Body weight,
  glucose, insulin

  	
   

  	
   

  	
   

  	
  Body weight,
  glucose, insulin

  	
   

  

 

* Body weight and food intake measured daily during
the treatment period.

 

If 76aa [*] affects food intake/body weight in Group B
and Group C animals, this calorimeter study will need to be conducted in these
groups also.

 

In addition, after analysing the results of the ICV
experiments we will also perform studies of IP [*] administration in group A
animals. After a 7-day baseline period, animals will be administered [*] via a
single daily IP injection for a period of 7 days. A dose-response of 0, 3, 15
and 30mg/day will be
administered to n=8 animals in each group, and body weight, food intake, blood
glucose and plasma insulin concentrations will be monitored. Timeframe for the
completion of this study would be 6-8 weeks. Once again, results of these
studies in Group A animals will determine whether similar experiments will be
conducted in Group B and C animals.

 

 

So far, 30 clones have been identified as preliminary
positives and 4 clones were further identified as containing potential
interacting proteins due to induction of all three reporter genes (clone 10,
25, 27 and 28, all are yet to be sequenced).

 

To complete this study, need to finish screening for
proteins that interact with B55 (>1 million transformants tested), confirm
potential interactions and isolate plasmid DNA and obtain the sequence of the
potential B55 protein partners identified (3 months part time).

 

Polyclonal Antibody

 

Very small amounts of B55 polyclonal antibody are
beginning to be produced.

 

Need to finish isolating and purifying significant
amounts of B55 polyclonal antibody, which will include performing Westerns and
confirming specificity of the antibody for B55 (2-3 months full time).

 

Once the antibody is produced immunoneutralisation
studies and cellular localisation studies are planned.

 

Recombinant B55 Expression

 

This study is ongoing and B55 has been expressed in E.
coli using the GST-expression system, however the protein cannot be solubilised
using this system. We will have to redo this experiment in new system, possibly
6His tag

 

(2 months to complete pilot expression work, part
time).

 

B55 Adenoviral Vector construction

 

It is estimated that PC2 classification should be
completed within one month. After this, work on the construction of the
adenoviral vector can continue.

 

The recombinant adenoviral vector production will be
completed using the AdEasy kit and then overexpression of B55 will be confirmed
in vitro (3 months part time).

 

Adenoviral B55 in vitro and in vivo Treatments

 

After construction of the adenoviral vector is
completed (in 4 months time)

 

 

•                  Test adenoviral B55 effects on
glucose uptake, fat uptake and insulin effects in 3T3L 1 and Hep-G2 cells (2-3
months part time).

 

•                  Administer adenoviral vector to P. O.
from groups A, B and C (n=8). Should be able to begin this study: collect
animals, begin run-in/baseline period, treat animals within 6 months (4 months
to complete full study).

 

Antisense Antagonism of B55 Expression

 

We currently have designed 3 antisense oligonucleotides
and 1 control oligonucleotide. Testing of these has just begun and further
characterisation and testing of B55 AS oligonucleotides is continuing (1-2
months full time).

 

To confirm decreased gene expression and protein
expression in vitro Northern and Western blots may be performed (1 month full
time).

 

Using the most potent antisense oligonucleotide (or
combination of oligos) in vitro treatments with functional AS oligonucleotide
and control oligonucleotide in HepG2 and 3T3-Ll cells can begin, including
glucose and insulin treatments, glucose uptake studies (basal and insulin
stimulated), and fat uptake studies (3-4 months part time)

 

B55 Localisation Studies

 

After polyclonal antibody is produced and specificity
confirmed (2 months), examination of B55 localisation in sections of liver,
adrenal gland and brain from P. O. can begin (9 animals, 1 month full time).

 

Continuing studies will include expression of B55 in
lean/obese, fed/fasted P. O. and different animal models of obesity (ob/ob,
Zuckers) (6 animals each study, 4 months full time).

 

 

H24 Research Proposal

 

Hypothesis

 

H24 plays a role in body weight regulation in the
hypothalamus.

 

Background

 

H24 was discovered by differential display of
hypothalamic cDNA. Taqman real time PCR showed that gene expression was greater
in the hypothalamus of A animals than B and C animals, and there was a negative
correlation with body weight, percent body fat and plasma insulin levels. Gene
expression was also increased in the fasted state, to a larger extent in A and
B animals. The H24 gene was found to be expressed only in the brain and testes,
and not in muscle, adipose tissue, liver, heart or kidney. Expression in testes
is interesting given the link between body weight regulation and reproduction.
The H24 protein is predicted to be only 22 amino acids long, the N terminal end
of which is hydrophobic and the C terminal end hydrophilic.

 

Research Plan

 

l. Further characterization of H24 expression in Psammomys  obesus

 

A Northern blot will be performed to check that the
transcript size predicted from 5’ RACE is correct and that we have the full
transcript sequence. The Northern blot will also be able to identify if there
are any splice variants and both brain and testis RNA will be examined. 3’ RACE
has to be finalised as well although we are fairly sure that we have the 3’
sequence.

 

Taqman PCR will be performed on NPY, leptin and [*]-treated
hypothalamus to examine H24 gene expression after these treatments.

 

Hypothalamic RNA will be extracted from the chronic
energy restriction study currently being performed and Taqman PCR used to
quantitate H24 gene expression levels.

 

2. Search for a human homologue

 

An ANGIS Notify has been set up to check new sequences
entered onto GenBank database for homology to H24 on a daily basis. In the
meantime, 3 approaches will be used to look for a human homologue to H24.

 

Once the Northern blots are working on Psammomys obesus brain, Northerns will be performed with human brain
RNA. Cross species Northerns have been tried with band 55 and a single band of
the expected size was seen in human liver RNA with a Psammomys obesus RNA probe.

 

If no band can be seen by Northern blot or expression
levels are too low, a Southern blot will be performed with human genomic DNA.
Genomic DNA will be cut with a number of restriction enzymes and probed with a
H24 DNA probe.

 

The final approach will be to probe a human brain cDNA
library to try and pull out a human H24 clone.

 

 

3. Functional studies

 

The H24 peptide is currently being chemically
synthesised and should arrive early July. It will be used to ICV treat Psammomys obesus animals to examine if it has an effect on
food intake, body weight or glucose or insulin levels. 8 A, 8 B and 8 C animals
will be treated with 30 ug/day for 7 days and if an effect is seen 15 ug and 3
ug doses will be administered into further animals to establish a dose
response.

 

Polyclonal antibodies will be raised to H24. H24
conjugated to KLH will be made and injected into rabbits. After 4 months
(including 2-3 boosters), the antibodies will be isolated and purified,
including Westerns to confirm the specificity of the antibody for H24.

 

 

[*] Research Plan

 

Hypothesis

 

Altered expression/activity of [*] contributes to type
2 diabetes.

 

Background

 

Several methods of gene
discovery simultaneously identified the various components of this system as
being differentially expressed in obese, type 2 diabetic Psammomys
obesus. Differential display PCR in muscle of Psammomys
obesus was used to identify [*] and microarray analysis showed
differential expression of calpastatin in diabetic animals. Subsequent analyses
demonstrated that [*] was overexpressed in the muscle of diabetic animals and
the expression of this proteolytic enzyme was associated with blood glucose
concentration independent of body weight and plasma insulin levels. Both
fasting and 2-week dietary energy restriction significantly reduced the
expression of CAPN3. In addition, calpastatin (CAST; endogenous inhibitor of [*])
gene expression was significantly reduced by fasting and dietary energy
restriction in muscle. CAST was also overexpressed in the liver of diabetic and
obese animals. Together these results suggest that dysregulation within the [*]
system may be involved in the pathophysiology of obesity and/or type 2 diabetes
in Psammomys obesus.

 

Research Plan

 

1.             Measurement
of [*]

 

A number of previous studies report the use of
SDS-PAGE gels to quantitate the amount of [*] present in tissue samples, and to
measure breakdown of [*] (eg. Fry et al., Acta Physiol. Scand. 1997; 161:473).
The specificity of the fragments observed using SDSPAGE are confirmed by
Western blot. We will utilise this technique to investigate the levels of
intact and degraded [*] in a number of skeletal muscle tissues obtained from lean,
obese and diabetic Psammomys obesus.

 

Frozen muscle samples will be serially sectioned using
40~Lm sections. 5 sections from each sample will be placed into 1.0ml of lysing
buffer containing 10% (w/v) glycerol, 5% (v/v) b-mercaptoethanol
and 2.3% (w/v) SDS in 62.5 nmo1/L Tris-HCL (pH 6.8), and heated for 10 min at
65°C. 15m1 of the extract will be loaded on 3-6°io
gradient SDS-polyacrylamide gels (pH 8.4) with 3% stacking gels (pH 6.8) and
electrophoresed for 21h at 120V. Protein bands will be visualised using silver
staining and quantitated using optical densitometry.

 

Western blots will be used to verify the identity of [*]
bands on the gels, using a monoclonal anti-[*] clone T11 antibody (available
from Sigma, St. Louis, MO). Immunoreactivity will be visualised with an
anti-mouse secondary antibody and horseradish peroxidase chloro development
reagent 4-chloro-l-napthol (Bio-Rad, Hercules, CA).

 

[*] content will also be measured in C2C12 and/or L6
cells

 

 

(1 month F/T)

 

TOTAL - 1 month

 

2.             Inhibition
of CAPN3 expression in vitro and in vivo

 

We will synthesise antisense oligonucleotides specific
to the CAPN3 gene and test these for effects on glucose/fat uptake and [*]
levels and degradation.

 

Design 3-4 antisense oligonucleotides, test the
oligonucleotides in cell culture (C2C12) using:

•several
different concentrations

•different
combinations

 

Using the most potent antisense oligo (or combination
of oligos):

•do Real time
PCR to show decreased gene expression and protein production after treatment with
antisense oligonucleotide

 

(3 months F/T)

 

Following the demonstration of [*] inhibition using
antisense oligonucleotides in the C2C12 muscle cell line, oligos will be
injected intramuscularly into the hind limbs of Psammomys
obesus. The animals will be monitored for a 2 week period for
changes in food intake, energy expenditure, body weight, blood glucose and
plasma insulin concentrations.

 

(3 months F/T)

 

TOTAL - 6 months

 

3.             Effect
of overexpression of CAPN3 in muscle cell lines

 

We will be requesting from Koichi Suzuki from the
University of Tokyo the mammalian expression vector that has been cloned with
p94. If we are able to get this vector we will transfect and measure glucose
and fatty acid uptake in response to insulin in C2C12 and/or L6 cells. If
overexpression is achieved and a significant difference is observed then we
will proceed to adenoviral work.

 

(2 months F/T)

 

 

4.             Effect
of overexpression of CAPN3 using an adenovirus

 

An adenoviral vector will be constructed to produce
overexpression of CAPN3 both in vivo (Psammomys obesus)
and in vitro (C2C12 cells). The virus
will be constructed using AdEasy kit (Quantum Biotechnologies). Once we have
confirmed overexpression of CAPN3 by the recombinant adenoviral vector, it will
be administered locally in the hind limb skeletal muscle of Psammomys obesus from groups A (lean, healthy), B
(overweight, insulin resistant) and C (obese, diabetic; n=8 for each group).
The animals will be monitored for a 2 week period for changes in food intake,
energy expenditure, body weight, blood glucose and plasma insulin
concentrations. SDS-PAGE and Western blotting will be used to measure intact
and degraded [*] levels in various muscle tissues from animals treated with the
recombinant adenovirus.

 

Construction of adenoviral vector-[*] months (1/2 time)

 

Time-course experiments + physiological
experiments - [*] weeks (1/2 time)

 

TOTAL - [*] months

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