Document:

Exhibit 10.1

AMENDMENT No. 5

to

Cooperative Research and Development Agreement

This Amendment No.5 (“Amendment
is made as of July 15,2006 by and among NeoPharm, Inc. a Delaware corporation (“NeoPharm”),
and United States Department of Health & Human Services, Public Health
Service (“PHS”), Food and Drug Administration/Center for Biologics Evaluation
and Research Dr. Raj Purl (“Principal Investigator”), and amends that certain
Cooperative Research and Development Agreement No. 26-97 between NeoPharm and
PHS; dated as of August 27, 1997 (the “CRADA”).

WHEREAS, the CRADA was
effective for an original term from August 1997 through August 2001; and

WHEREAS, the parties
executed Appendix C  Revised to the CRADA dated January 1, 2000,
amending the provisions of Appendix C;
and

WHEREAS, the parties
executed an Addendum to Appendix B
and Appendix C Revised.1 to
the CRADA dated December 12, 2000, amending Appendices B and C and extending the term of the CRADA
through December 31, 2003; and

WHEREAS, the parties
executed Appendix B Revised.l
and an updated Appendix C  Revised.l dated March 11, 2004 to the
CRADA, amending Appendices B and C
and extending the term of the CRADA through February 28, 2005; and

WHEREAS, the parties
executed Appendix C - Revised.2
to the CRADA, dated July 15, 2005, amending Appendix C and extending the term of the CRADA; and;

WHEREAS, the parties
hereby amend Appendices B and C
to the CRADA and extend the term of the CRADA through July 31, 2009;

NOW, THEREFORE, pursuant
to Section 13.6 of the CRADA, the following changes are made:

1.                                       Article
4 is deleted in its entirety and replaced with the following:

Article 4.                                            Reports.

4.1          Interim
Reports.  The Parties
shall exchange formal written interim progress reports on a Schedule agreed to
by the PIs, but at least within six (6) months after this Addendum becomes
effective and at least within every six (6) months thereafter. Such reports
shall set forth the technical progress made, identifying such problems as may
have been encountered and establishing goals and objectives requiring further
effort, any modifications to the Research Plan pursuant to Article 3.2 and
identify Subject Inventions pursuant to Article 6.1.

4.2          Final
Reports.  The Parties
shall exchange final reports of their results within four (4) months after
completing the projects described in the RP or after the expiration or
termination of this CRADA.

 

4.3          Presentations.  PHS shall make live presentations explaining
the contents of the Interim Reports of Section 4.1 to the Collaborator within
two (2) months of exchanging each Interim Report and shall provide a
presentation explaining the contents of the Final Report of Section 4.2 within
two (2) months of exchanging the Final Report.

2.             The
research objectives listed on Appendix B -
Addendum 2 hereto are added to those described in Appendix B to the CRADA, and the term of
the CRADA is extended through July 31, 2009.

3.             Appendix C - Revised.3 attached hereto
replaces in full Appendix C - Revised.2
to the CRADA.

4.             All
other provisions of the CRADA, as heretofore amended, are unchanged and shall
remain in full force and effect.

SIGNATURES APPEAR ON THE
NEXT PAGE

 2
 

 

 

	
  FOR THE PHS:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jesse L. Goodman

  	
   

  	
  9/26/06

  
	
  Jesse L. Goodman, M.D., M.P.H. Director Center for
  Biologics Evaluation and Research Food and Drug Administration

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  Mailing Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Food and Drug Administration

  Center for Biologics Evaluation and Research

  (HFM-544)

  1401 Rockville Pike

  Rockville, MD 20892

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  FOR THE COLLABORATOR:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Jeff Sherman 

  	
   

  	
  9/8/06

  
	
  Dr. Jeff Sherman

  Chief Medical Officer and Executive Vice President

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  /s/ Timothy P. Walbert

  	
   

  	
  9/8/06

  
	
  Timothy P. Walbert

  Executive Vice President, Commercial Operation

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
  Mailing Address for Notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  NeoPharm, Inc.

  1850 Lakeside Drive

  Waukegan, IL 60085

  	
   

  	
   

  

 

 3
 

 

Appendix B - Addendum 2

The following research
objectives are added to those described in the Research Plan, Appendix B of
CRADA No. 26-97.

1.                                       Ongoing study of evaluation of synergistic therapeutic
efficacy of IL13 with radiation therapy or temozolomide:

Since radiation induced
tumor cell stasis/death and IL13-PE induced cell death involve different
mechanisms, it is possible that the combination of radiation and IL13-PE
therapy may lead to combined or synergistic effect on glioma cells.  As ILl3-PE is being studied in
newly-diagnosed high-grade glioma along with radiation therapy to support
development, additional in vitro and animal studies should be performed, to
determine the optimal schedule of therapy with these two modalities. Similarly,
since temozolomide (FDA approved for newly-diagnosed GBM and recurrent
anaplastic astrocytoma) and IL13-PE will mediate therapeutic effect through
different mechanisms, it is also possible that the combination of both drugs
may mediate combined or synergistic effects.

Summary of ongoing
studies:

1.                                      In
vitro sublethal irradiation of glioma cell lines followed by culture with
IL13-PE and conversely incubation with IL-13-PE followed by irradiation was
performed and the growth, cell viability and cytotoxicity to IL-13-PE was
assessed. These studies show that irradiation increases IL-13Ralpha2 mRNA
expression but it does not enhance sensitivity to IL13-PE. Similarly, prior
treatment with IL13-PE did not                enhance
sensitivity to irradiation.

2.                                      Concomitant
radiation and IL13-PE incubation demonstrated enhanced antitumor effect in
vitro when compared to either modality alone. Confirmatory studies are ongoing,
which are nearly completed.

3.                                      Pre-treatment
irradiation of subcutaneous or intracranial xenografts followed by local
delivery of IL13-PE are also planned and will be initiated in collaboration
with Dr. Jann Sakaria at the Mayo Clinic. Immunocompetent tumor model will be
used when available.  Currently, we do not
use syngeneic mouse model in our labs. 
Based on xenograft model syngeneic model will be developed.  Several experiments were performed in s.q.
model, however, optimal dose (50 ug/kg dose showed toxicity in the model
system) of lL13-PE has not been established.

4.                                      Concomitant
effect of temozolomide and IL13-PE in various glioma cell lines in vitro and
the effect of co-administration of temozolomide and IL- I3-PE by various routes
subcutaneous and intracranial xenografts will continue to be evaluated.  Our results suggest that temozolomide
synergies with IL13-PE in mediating antitumor activity in vitro and in
vivo.  These studies are expected to be
completed in 2006.  Additional syngeneic
GBM model will be developed after the completion of xenograft studies and the
combined effects will be investigated.

 4
 

 

The
following studies began in 2004 but were discontinued due to availability of
resources. These studies will now be performed during the period of this
Amendment.

2.                                       Study of the mechanism of action of delayed toxic
effect of IL13-PE in normal brain and role of immune response in IL13-PE
induced tumor regression:

Clinical studies have
demonstrated that IL13-PE can induce cytotoxic effect on tumors when
administered intratumorally.  In
addition, intraparenchymal administration of IL13-PE in normal brain with
infiltrating glioma is very well tolerated up to the concentration of 0.5
microgram/mI. At 1.0 microgram/ml, dose limiting local toxicity has been
observed.  In addition, in several
patients, appearance of abnormal hyperintense signal on FLAIR images and new
gadoliniumenhancing solid lesion with central hypointense area suggesting an
inflammatory and necrotic process involving normal or infiltrated brain
parenchyma have been observed between 4 and 8 weeks following treatment.  This type of phenomenon has not been observed
previously as in all studies most rats or mice were sacrificed only several
days after IL13-PE infusion.  No long
term monitoring was performed after intraparenchymal administration of IL13-PE.  The following studies have been initiated and
are expected to lead to an understanding of the mechanism of this effect and
develop strategies to avoid this delayed effect of IL13-PE.

Planned studies:

5                                         Develop
animal model in mice and rats to simulate clinical situation by intra
parenchymal administration of IL13-PE. The brains of these animals will be
evaluated for toxicity. Toxicity will be evaluated by histology and
immunohistochemistry at various time points after IL13-PE administration.

6                                         Identification
of local or systemic immune mechanism (if any) post ILl3-PE administration in
normal brain. In some cases, animals will be immunosuppressed by whole body
irradiation to determine the impact on IL13-PE induced delayed effect.

7.                                      Identification
of the role of cytokines or other factors in this mechanism, which will be
evaluated by microarray technology.

8.                                      
Study of humoral or cell-mediated immune response in mice bearing IL-13Ralpha2
positive murine tumors treated with IL13-PE. 
T cell responses will be assessed by in vivo CD4 and CD8 cell depletion
and measure cytotoxicity and gamma-IFN release by splenocytes.  Tumor challenge studies will be performed in
mice which are cured by IL13-PE.

3.                                       Targeting of Interleukin-13 Receptor for pediatric
brain tumor therapy:

In contrast to malignant
gliomas in adults that are predominantly supratentorial, pediatric tumors are
also localized in posterior fossa and brain stem. Because of their location,
these tumors cannot be resected, resulting into progressive disease with poor
prognosis. As not many options are available for these children, an urgent
search for innovative therapeutic approach is needed. Our previous studies have
demonstrated that 83% of 36 different pediatric brain tumor samples express
IL13Ra2 chain when analyzed by immunohistochemical and in-situ hybridization
studies 

 5
 

 

(Kawakami et al. Cancer
2004).  Although both assays produced
compatible results, quantitative difference in receptor density between various
samples is not known.  In addition, it is
not known whether IL13 receptors are expressed in pediatric brain stem gliomas,
tumors that are sensitive to the cytotoxic effect of IL13-Pseudomonas exotoxin
(IL13-PE), which targets these receptors. 
Furthermore, it is not known whether IL13R is a biomarker and whether
IL13-PE will be efficacious in these tumors in animal models of brain tumors.
Previous studies have suggested that adult glioma cells expressing IL13Ra2 are
highly sensitive to IL13-PE.  As IL13-PE
has been tested in a PRECISE Phase 3 clinical trial in adult patients with
recurrent glioma, it will be of importance to study IL13-PE in not only in
vitro and in vivo animal studies of pediatric brain tumors, but also tested in
patients to address unmet medical needs and to unravel antitumor activities of
this important molecule in pediatric tumors

The following studies are
designed to address the important issues identified above:

1.                                      Analysis of ILl3 receptor expression and type of
receptors in brain stem glioma. The previous study utilized
pediatric brain tumor samples including glioma, low-grade astrocytoma, giant
cell tumor, mixed glioma arid ganglioglioma obtained through Cooperative Human
Tissue Network (CHTN). For this study, a collaborative study will be performed
with scientists from St. Jude Children’s Hospital, Memphis, TN.  Tissue sections of brain stem glioma samples
(n=20) will be acquired for these studies. 
FDA IRB (RIHSC) has approved our request to obtain these tissue
sections.  This study was initiated in
2005.

2.                                      Identification on pediatric brain tumor cell lines and
isolation of primary cell cultures of tumors.  Tumor cell lines derived from pediatric
glioma including low-grade astrocytoma, ependymoma, mixed glioma and
ganglioglioma, giant cell tumor and PNET will be obtained from Commercial
source or from investigators. In addition, primary cell cultures from surgical
samples will be generated.  These cells
and cell lines will be tested for the expression of IL13R and sensitivity to IL13-PE
in vitro by various techniques established in our laboratories.

3.                                      Efficacy of IL-l3-PE in Pediatric brain tumor models:  The efficacy of IL13-PE will be evaluated in
tumor bearing mice.  Tumor cell lines
derived from various tumors will be established as tumors in immunodeficient
mice. These animals will be then treated with IL13~PE by various routes and
schedules. Initially, animals with subcutaneous flank tumors will be treated
and later, intracranial tumor models will be treated. Various routes of
administration of IL13~PE including CED through a burr hole will be
evaluated.  Tumor shrinkage as assessed
by imaging and animal survival will be analyzed.

These studies will
provide scientific support for pediatric brain tumor clinical studies,
including, for brain stem glioma.

 6
 

 

4.                                       Role of IL13R and IL13-PE in various inflammatory
diseases:

IL13 promotes
B-cell proliferation, induces immunoglobulin class switching in B cells to IgE
isotype, inhibits the release of proinflammatory mediators by macrophages,
increases expression of VCAM-l on endothelial cells and enhances the expression
of class II MHC on monocytes.  To mediate
these effects, IL13R is expressed on a variety of cells including B cells, NK
cells, monocytes, mast cells, endothelial cells and fibroblasts, but not on T
cells.  Recent studies have demonstrated
that IL13 is a central mediator of inflammatory diseases including asthma,
schistosoma mansoni, pulmonary fibrosis, ulcerative colitis and Crohn’s
disease.  We have demonstrated that
IL13-PE can have a role in modulating these diseases in several animal
models.  Additional following studies
will be performed to translate this observation from bench to bedside:

1.             Study of the structure and function of IL13R in various
pathological states.

2.             Expression of IL13R in clinical fibroblast samples and
their sensitivity to IL13-PE.

3.             Determine toxicity of IL13-PE when administered by
various routes such as l.p., i.v., intranasal, and intratracheal in mice and by
nebulization in monkeys.

4.             Immunogenicity of IL13-PE when delivered by various
routes such as i.p., i.v., intranasal, and intratracheal in mice.

 7
 

 

Appendix
C - Revised.3

Financial
and Staffing Contribution of the Parties:

Collaborator’s
Contribution.

NeoPharm, Inc. will
provide $165,000 per year for this CRADA
extension.  The extended term
of CRADA No. 26-97 will be through July 31, 2009.

The funds will be used to
hire research personnel, purchase equipment, laboratory supplies, animals, and
reagents.  Two research fellows will be
hired by FDA for full time participation in the CRADA project.

Under the terms of this
updated “Financial and Staffing Contribution of the Parties”, the funds
provided by NeoPharm, Inc. will be used by FDA for:

Personnel:

	
  Two
  Post-Doctoral Research Fellows (including overhead charges)

  	
   

  	
  $

  	
  130,000

  	
   

  
	
  Annual Personnel Subtotal

  	
   

  	
  $

  	
  130,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Equipments:

  	
   

  	
   

  	
   

  
	
  Computer,
  software and printer

  	
   

  	
  $

  	
  3,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Estimated
  Subtotal

  	
   

  	
  $

  	
  13,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Supplies:

  	
   

  	
   

  	
   

  
	
  Purchase of
  immunodeficient animals

  	
   

  	
  $

  	
  5,000

  	
   

  
	
  Tissue
  Histochemistry and Pathology & CBER Core Facility Services

  	
   

  	
  $

  	
  5,000

  	
   

  
	
  Chemicals,
  Reagents, antibodies, enzymes, test kits, cytokines

  	
   

  	
  $

  	
  15,000

  	
   

  
	
  Annual Supplies Subtotal

  	
   

  	
  $

  	
  25,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Travel:

  	
   

  	
   

  	
   

  
	
  Annual Travel
  Costs and Conference Fees for PI for CRADA-related activities (meetings with
  CRADA partners, presentation of research findings)

  	
   

  	
  $

  	
  7,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual
  total for Personnel, Equipment, Supplies and Travel

  	
   

  	
  $

  	
  165,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FDA’s
  Contribution

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  FTE:   PI Time

  	
   

  	
  15

  	
  %

  
	
  Technician Time

  	
   

  	
  5

  	
  %

  
	
  Staff Scientist Time

  	
   

  	
  20

  	
  %

  
	
  Post Doctoral
  Fellows’ Time

  	
   

  	
  100

  	
  %

  

 

 8
 

 

FDA
Supplies: Some of the supplies and reagents will be purchased
with intramural budget allotted to the Puri laboratory ($15,000).

FDA
Equipment:

Most of the equipment
needed for the collaboration are available in the laboratory or have been
purchased with funds provided by the Collaborator during the first seven years,
of the collaboration.

PI will have laboratory
space to house post-doctoral fellows and staff scientist

FDA will provide the PI,
who has expertise in the field of molecular tumor biology. The PI will also
provide onsite supervision of the fellows, laboratory technician and staff
scientist. The PI will direct the work of the postdoctoral fellow by planning
experiments, assuring that the fellow performs the required work in a professional
manner, evaluate and interpret the experimental results and prepare written
progress reports for the Collaborator.

The Collaborator agrees
that the PI has broad flexibility in the use, transfer and disbursement of
funds among the resource categories described above.  Monies not spent in a given fiscal year may
be carried over into the following year.

 9EXHIBIT 10.1

ARRAY BIOPHARMA
INC.

DESCRIPTION OF
PERFORMANCE BONUS PROGRAM

Array BioPharma Inc. (the
“Company”) has established an annual performance bonus program for employees,
including the Company’s executive officers. Through this program, employees can
receive an annual bonus payable in cash, stock or stock option equivalents
based on achievement of key Company and individual goals.  There is no
guarantee that bonuses will be awarded in any given year. The bonus program is
intended to strengthen the connection between individual compensation and
Company success; reinforce the Company’s pay-for-performance philosophy by
awarding higher bonuses to higher performing employees; and help ensure that
the Company’s cash compensation is competitive.

At the beginning of the
fiscal year, the Compensation Committee establishes the minimum, target and
stretch corporate performance goals, and the relative weighting of these goals,
for the upcoming fiscal year. The goals generally are based on the following
objective performance criteria: revenues, earnings per share, year-end cash,
clinical development goals with respect to the Company’s proprietary drug
programs and transactional goals relating to out-licensing transactions. Each
participant in the bonus program may be eligible to receive a target bonus
amount calculated by multiplying the participant’s base salary by a percentage
value later assigned to the participant or his or her position with the Company
by the Compensation Committee.

Following the end of each
fiscal year, the Compensation Committee determines in its discretion the extent
to which the company-wide and individual performance goals were attained. Based
on this assessment, the Compensation Committee will award bonuses equal to a
varying percentage of an employee’s target bonus amount. The Compensation
Committee may award a bonus in an amount less than or greater than the amount
earned by a participant under the bonus program.

Individual bonuses can
vary significantly based on performance. Any bonuses for a particular year are
paid as a lump sum cash award, less applicable payroll and other withholdings,
in the quarter following that year. The plan can be amended in whole or in part
but the compensation committee at any time until paid.

*****

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