Document:

[
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    
      Exhibit
10.37

    

    Addendum
No 1

    to

    Option
and License Agreement

     

    This
Addendum No. 1 (the “Addendum” is made and entered Into as of this 13th day of
July, 2007 (the “Effective Date”) between Silence Therapeutics AG, (formerly
known as Atugen AG) a company incorporated under the laws of Germany, whose
registered office is at Robert-Rössle-Str. 10, D13125 Berlin, Germany
(hereinafter referred to as “ST”), and Quark
Pharmaceuticals, Inc. (formerly known as Quark Biotech, Inc.), a corporation
incorporated under the laws of California whose principal office is at 6501
Dumbarton Circle Fremont, CA 94555 and QBI Enterprises Ltd., a private company
incorporated under the laws of the State of Israel whose principal office is at
Weizmann Science Park, P.O. box 4071, Nes Ziona 70400, ISRAEL (together
hereinafter referred to as “QBI”)

     

    WHEREAS ST and QBI are parties
to an Option and License Agreement dated April 19, 2005 (the “Agreement”);

     

    WHEREAS the Parties are
desirous to make certain additions and amendments to the Agreement as set forth
more fully below, to reflect their agreement to add additional QBI Targets to
the Agreement:

     

    NOW, THEREFORE the Parties
hereto agree as follows:

     

    
      	
              1.

            	
              Scope:

            

    

     

    
      	
               
      

            	
              1.1

            	
              The
      terms of the Agreement as amended in this Addendum shall apply only to the
      Additional QBI
      Products (as defined below).

            

    

     

    
      	
               
      

            	
              1.2

            	
              The
      terms of the Agreement (and not of this Addendum) shall continue to apply
      to the License granted to QBI under the agreement in relation to the [*]
      target and with respect to the additional target that QBI still has the
      right to select for an Option and License under the terms and conditions
      of Agreement (the “Original Target”),
      except that the selection mechanism described in section 3.2 below will
      apply in relation to the Original
Target.

            

    

     

    
      	
               
      

            	
              1.3

            	
              The
      Parties hereby confirm that the Option Period according to Section 3.3 of
      the Agreement [*].

            

    

     

    
      	
              2.

            	
              Definitions:

            

    

     

    
      	
               
      

            	
              2.1

            	
              In
      this Addendum, save as otherwise provided herein, all terms defined in the
      Agreement when used herein shall have their defined meanings as specified
      in the Agreement.

            

    

     

    
      	
               
      

            	
              2.2

            	
              “Atugen IP” means Atugen
      IP as defined in the Agreement [*] Patent application [*] describing the
      [*] and [*] and all equivalent and derived applications including
      [*].

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.3

            	
              “AtuRNAi(s)” (formerly known as
      “atuRNAi(s)”) shall mean siRNAs inhibiting Additional QBI Targets
      (as defined in section 3.1 of this Amendment below) for therapeutic
      intervention, [*] which would infringe a Valid Patent Claim of the Atugen
      IP were it not for the grant of the options and licenses set forth in this
      Addendum.

            

    

     

    
      	
               
      

            	
              2.4

            	
              “Additional QBI Product”
      shall mean an AtuRNAi (as defined above), commercialized by QBI or its
      sublicensee for human diagnostic or therapeutic
  use.

            

    

     

    
      	
               
      

            	
              2.5

            	
              “Target” shall mean Homo
      sapiens “NAME” (abbreviation) mRNA encoded by the XXX gene as more
      specifically described in Appendix I, and splice variants thereof. 
      The term target shall include, and the license will allow, using non-human
      orthologs for preclinical studies that will enable to obtain proof of
      concept and approval of an IND for clinical trials.  Target could
      also be a mRNA and protein expression product of a pathogenic
      organism.

            

    

     

    
      	
              3.

            	
              Grant of Additional
      QBI Options:

            

    

     

    
      	
               
      

            	
              3.1

            	
              QBI
      shall be entitled to select up to three (3) additional Targets (the “Additional QBI Targets”)
      in accordance with section 3.2 of this Amendment below in order to obtain
      from ST an option for a non-exclusive and worldwide License for the Atugen
      IP with the right to sub-license in accordance with the terms of the
      Agreement and this Addendum, to develop and commercialize Additional QBI
      Products (the “Additional
      QBI Option(s)”).  The right of QBI to select up to three
      Additional QBI Targets in order to obtain up to three Additional QBI
      Options for these selected targets shall [*].  It is understood by
      the Parties that each such Additional QBI Option will be separately
      granted by ST for each Additional QBI
Target.

            

    

     

    
      	
               
      

            	
              3.2

            	
              Selection
      of an Additional QBI Target for the Additional QBI Option.  QBI shall
      have the right to select an Additional QBI Target in order to obtain an
      Additional QBI Option as set forth in this Section
  3.2:

            

    

     

    3.2.1     
  QBI shall provide ST with the QBI Option Notice for the selected
Additional QBI Target for which it requests an option.  This QBI Option
Notice has to be sent by mail and by email to the Chief Executive Officer of ST
on or before [*].

     

    3.2.2     
  ST shall have [*] to [*] Additional QBI Target.  Within such time,
ST will provide QBI with a [*], where relevant, the [*] (as defined
below).  There are [*] in which [*] a particular Target:

     

    
      	
               
      

            	
              1.

            	
              If
      [*] or [*] (e,g., [*]) and such [*] and [*] by [*] a [*] of the [*]. 
      For the purposes of this Addendum a [*] is a [*] of an [*] of [*] and [*],
      which will [*] by [*], [*] which are [*] under the [*] to [*] or [*] (the
      “[*]”).

            

    

      

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
         

      

      
        2.

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.

            	
              If
      [*] with respect to [*] that [*].

            

    

     

    
      	
               
      

            	
              3.

            	
              If
      [*] is the [*] with [*] within the [*] that [*] and such [*] and the [*]
      has [*] by [*] of the [*].  In the event that a [*] or a [*] with the
      [*] for [*] has [*] within [*] it [*] of [*], [*] and [*] for
      [*].

            

    

     

    
      	
               
      

            	
              3.2.3

            	
              [*]
      that particular Target included in the QBI Option Notice is automatically
      added to the list of Additional QBI Targets for which QBI has an
      Additional QBI Option until three (3) Additional QBI Targets are on the
      list of selected Targets.  For clarity, if [*] as set forth in [*]
      and [*], in such case QBI shall be [*] that [*] or
  [*].

            

    

     

    
      	
               
      

            	
              3.3

            	
              Option
      Periods:  Each of the three Additional QBI Options will be
      granted to QBI for a period of [*] starting with the delivery of a QBI
      Option Notice by QBI to ST (the “Amended Option Period”),
      and shall automatically expire thereafter unless QBI has exercised the
      Additional QBI Options by delivery to ST of written notice thereof. 
      For clarity, the Option Fee of €[*] according to Section 3.7.2 of the
      Agreement shall be payable within [*] after the delivery of each QBI
      Option Notice for each Additional QBI Option (provided
    [*]).

            

    

     

    
      	
               
      

            	
              3.4

            	
              Exercise of the
      Additional QBI Options:  QBI can exercise each of the
      Additional QBI Options granted hereunder after the delivery of the QBI
      Option Notice to ST at any time during the applicable Amended Option
      Period by written notice to ST (the “Exercise Notice”). 
      The exercise of the Additional QBI Option is contingent upon payment of
      the exercise fee of € [*] (Euro [*]) in accordance with section 3.8 of the
      Agreement payable within [*] from the delivery of the respective
      Additional Option Exercise Notice.

            

    

     

    
      	
               
      

            	
              3.5

            	
              License
      Grant:  Upon exercise of each specific Additional QBI Option
      in accordance with section 3.4 above, QBI will have a non-exclusive and
      worldwide license with the right to sub-license under the Atugen IP and
      the know-how relating to the AtuRNAi(s) to research, develop, have
      developed, manufacture, have manufactured, market and sell Licensed QBI
      Products.

            

    

     

    
      	
               
      

            	
              3.6

            	
              Milestone Payments and
      Royalties:  Sections 4.3, 4.4 and 4.5 of the Agreement will be
      amended with respect only to the Additional QBI Products as
      follows:

            

    

     

    
      	
               
      

            	
              3.6.1

            	
              In
      Section 4.3.1.1 of the Agreement the figure €[*] will be replaced by € [*]
      (Euro [*]);

            

    

     

    
      	
               
      

            	
              3.6.2

            	
              In
      both Sections 4.3.1.2 and 4.3.1.3 of the Agreement the figure €[*] will
      each be replaced by € [*] (Euro [*]), such payment each of €[*] (€[*] in
      accordance with Section 4.3.2 of the Agreement and as restated in section,
      3.6.7 of this Amendment) shall be
[*].

            

    

     

    
      	
               
      

            	
              3.6.3

            	
              The
      second paragraph of Section 4.3.3 of the Agreement shall be
      deleted.

            

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
         

      

      
        3.

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.6.4

            	
              In
      Section 4.4.1 of the Agreement the figure [*]% will be replaced by [*]%;
      the figure [*]% will be replaced by [*]%; and the figure [*]% will be
      replaced by [*]%.

            

    

     

    
      	
               
      

            	
              3.6.5

            	
              Section
      4.4.3 of the Agreement shall be deleted in its entirety and replaced by
      the following provision:

            

    

     

    In the
event that QBI develops an Additional QBI Product that is [*] and if QBI or its
Sublicensee (i) reasonably determines that, in order to avoid infringement of
any patent not licensed hereunder, it is necessary for QBI to obtain a license
from a third party, in a country in the Territory and to pay a royalty or other
payment under such license (including in connection with settlement of a patent
infringement claim), or (ii) shall be subject to a final court or other binding
order or ruling requiring the payment of a royalty or other payment to a third
party patent holder (“Third
Party Patent Licenses”), [*] of any royalties paid under Third Party
Patent Licenses by QBI or its Affiliates shall be creditable against royalties
payable to ST hereunder, provided, however, that in no event shall such credit
cause the royalties payable to ST for any particular year to be reduced to less
than [*] of the amount that would otherwise be payable to ST for such
year.  In the event of a dispute between QBI and ST on the question whether
such Additional QBI Product infringes a patent as above, such dispute will be
resolved by a mutually acceptable patent attorney, and failing agreement on such
patent attorney, by arbitration in accordance with section 8 of the
Agreement.

     

    In the
event that QBI develops an Additional QBI Product that is [*], then (i) the
royalty stacking provision mentioned in the previous paragraph above of this
section 3.6.5 of the Amendment and also any other royalty stacking provision
shall [*]; (ii) QBI may enter into a Third Party Patent License [*] that
requires such Third Party License as [*] of a [*] AtuRNAi or an Additional QBI
Product including a [*] AtuRNAi.  In such event any royalties paid to such
third party shall [*].

     

    
      	
               
      

            	
              3.6.6

            	
              In
      sections 4.5.1 and 4.5.2 of the Agreement, the figure [*]% will be
      replaced by [*]%; and the figure [*]% will be replaced by
      [*]%.

            

    

     

    
      	
               
      

            	
              3.6.7

            	
              ST
      declares and QBI acknowledges that [*] and that consequently the
      conditions of Sections [*] of the Agreement have been fulfilled with the
      consequences that (a) the [*] in Section [*] of the Agreement, (b) the [*]
      in Section [*] of the Agreement and (c) the [*] in Section [*] of the
      Agreement as well as [*] in accordance with section [*] and [*] in
      accordance with section [*] of this Amendment shall
  [*].

            

    

     

    
      	
              4.

            	
              For
      any Additional QBI Target, Sections 2.1 through 2.3, 2.7 though 2.11 and
      Section 5.2 of the Agreement shall not apply.  For clarity, Sections
      2.4 through 2.6 and Section 5.1 will also apply for any Additional QBI
      Target.  QBI may exercise each such Additional QBI Option for all
      therapeutic fields including
oncology.

            

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
         

      

      
        4.

        
          

        

      

      
         

      

    

     

    
      	
              5.

            	
              Public
      Announcements.  QBI and ST agree that they will jointly
      publicly announce the execution of this Addendum.  The joint press
      release is set forth in Appendix II attached hereto and may be promptly
      disseminated following the execution of this Addendum by any party,
      provided it is approved by QBI’s securities counsel prior to publication;
      such approval shall not unreasonably be withheld. ST and QBI will
      communicate on the pipeline page of their respective websites and in the
      corresponding public announcements for each Option Notice and Exercise
      Notice and the following announcements for the in-licensed AtuRNAi
      compounds that the siRNA compounds developed under the agreements with ST
      have an AtuRNAi structure in-licensed from ST.  QBI undertakes the
      additional obligation to communicate to ST about the [*] with siRNA
      compounds which have an AtuRNAi structure within [*] of the [*] and if the
      [*], within [*] after such [*].  Except for the joint press release
      set forth in this section 5, no party may make a public statement or
      disclosure (written or oral), including in analyst meetings, relating to
      confidential information of this Agreement or its subject matter, without
      the prior express written permission of the other Party, except where such
      statement: (a) is required by applicable law or legal proceedings, or (b)
      in the case of any public statement or disclosure pursuant to clause (a)
      above, the party required to make such statement or disclosure shall (i)
      use reasonable efforts to include in such statement or disclosure only the
      information that, after consultation with counsel, such party believes is
      required by applicable law to be disclosed and (ii) provide the other
      party with a copy of such statement sufficiently in advance of
      dissemination so that the other party will have the opportunity to comment
      upon the statement, and shall give due consideration to any comments of
      the other party in the final
statement.

            

    

     

    
      	
              6.

            	
              [*].  In
      the event of [*] (as defined below), QBI’s right hereunder to receive an
      option and a License with respect to Target which [*].  For the
      avoidance of doubt, QBI’s rights hereunder with respect to Additional QBI
      Targets that [*] in accordance with Section
[*].

            

    

     

    For the
purposes of this Section - “[*]” shall mean any [*] or [*] which,
[*].

     

    
      
        	
                In
      Witness Whereof –

              	 
      	 
      
	 
      	 
      	 
      
	
                QBI

              	 
      	
                ST

              
	
                Quark
      Pharmaceuticals, Inc.

              	 
      	
                Silence
      Therapeutics AG

              
	
                QBI
      Enterprise Ltd.

              	 
      	 
      
	 
      	 
      	 
      
	
                By:

              	
                /s/ D. Zurr

              	 
      	
                By:

              	
                /s/ Thomas Christély

              
	
                Name:     
      Daniel Zurr

              	 
      	
                Name:
      Thomas Christély           Dr. Klaus
      Giese

              
	
                Title:       
      President and CEO

              	 
      	
                Title: 
                   CEO     
                         
           CSO

              
	
                Date

              	
                July 30, 2007

              	 
      	
                Date:

              	
                July 30,
2007

              

      

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
         

      

      
        5.

        
          

        

      

      
         

      

    

     

    Appendix
I

    Target
NAME

     

    RefSeqN/NM
XXXXX (number defines the Target) Nucleotide sequence of the mRNA including 5’
and 3’ untranslated regions or such identification of the target in EMBL
nucleotide databases or similar information that uniquely identifies the target
gene if not submitted to RefSeqN or EMBL)

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
         

      

      
        6.

        
          

        

      

      
         

      

    

    Appendix
II

     

    Silence
Therapeutics And Quark Pharmaceuticals Expand Strategic Licensing
Agreement.

     

    London,
England and Fremont, CA, 30th, July 2007

    Silence
Therapeutics plc and Quark Pharmaceuticals, Inc. (“Quark”), announced today an
expansion of their current strategic technology licensing
agreement.

     

    In April
2005 the Companies signed an Option and Licence Agreement, which provided Quark
with access to Silence Therapeutics’ novel proprietary siRNA technology,
AtuRNAi.  The first outcome of Companies’ relationship was the development
of the AtuRNAi technology-based compound RTP801i, which was licensed to Pfizer
Inc in 2006 by Quark and is currently in a phase 1 clinical trial in patients
with wet age related macular degeneration.  Quark’s product portfolio
includes one additional siRNA molecule with a structure covered by patents
licensed from Silence Therapeutics.

     

    The
expanded agreement provides Quark with options to non-exclusive licenses to
develop additional molecules against 3 specific targets using Silence
Therapeutics’ proprietary AtuRNAi technology.  The terms of the amendment
signed today will entitle Silence Therapeutics to milestone payments and a
royalty on product sales after exercise of the options by Quark.  Further
financial details were not disclosed,

     

    Danny
Zurr, Chief Executive Officer of Quark Pharmaceuticals:  “We are pleased to
extend our relationship with Silence Therapeutics.  We believe extending
this relationship provides Quark with opportunities to further develop its
pipeline of clinical product candidates targeted at indications with significant
unmet medical needs.”

     

    Iain
Ross, Chairman of Silence Therapeutics stated: “This is a long-standing
relationship for us and we are pleased we have been able to broaden it. 
The goal in the RNAi sector is to advance clinical development and Quark has
already proven it can utilise our proprietary AtuRNAi technology and take
products into the clinic.  This agreement forms part of our continuing
strategy of signing target-specific collaboration and license agreements with
pharmaceutical and biotech companies which will lead to a broader clinical
application of our AtuRNAi product platform outside of our internal programs for
systemic applications in oncology.”

     

    - Ends
-

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
         

      

      
        7.

        
          

        

      

      
         

      

    

    Notes
to Editors

     

    Quark Pharmaceuticals is a
clinical-stage biopharmaceutical company focused on discovering and developing
novel therapeutics based on its proprietary gene discovery science and
technology, with an initial focus on drug candidates that work through the
natural mechanism in the cell known as RNA interference, or RNAi, for the
treatment of diseases associated with oxidative stress.  Quark believes
that its proprietary target gene discovery platform, BIFARTM,
combined with its ability to design and successfully deliver synthetic molecules
of the new class of RNAi therapeutics known as small-interfering RNA, or siRNA,
to specific organs in the body, enables the Company to rapidly develop drug
candidates.  Quark has two internally discovered and developed lead product
candidates: RTP801i-14 in phase 1 clinical trial for the treatment of wet
age-related macular degeneration, and AKIi-5 for the prevention of acute renal
failure.  The Company has licensed RTP801i-14 to Pfizer on an exclusive
worldwide basis.  Quark corporate product development teams are based in
Fremont, CA and research facilities in Ness-Ziona, Israel.  Additional
information is available at www.quarkpharma.com

     

    Notes
to Editors

     

    Silence Therapeutics plc
(www.silence-therapeutics.com)

     

    Silence
Therapeutics plc (LSE:SLN) is a leading RNAi company.  RNA interference
(RNAi) can selectively ‘silence’ genes linked to the onset of
disease.

     

    Silence
Therapeutics has developed novel, proprietary short interfering RNA (‘siRNA’)
molecules, AtuRNAi, which provide a number of advantages over conventional siRNA
molecules as they show increased stability against nuclease degradation. 
In addition, the Company has developed a proprietary systemic delivery system,
AtuPLEX.  This enables the delivery of siRNA molecules to targeted diseased
tissues and cells, whilst increasing their bioavailability and intracellular
uptake.

     

    In July
2007, Silence Therapeutics formed a research and development collaboration with
Astra Zeneca to develop AtuRNAi against five targets in respiratory
indications.  The Group’s AtuRNAi technology has also been sublicensed to
Pfizer by Quark Pharmaceuticals, through Quark’s license of the compound
RTP-801i-14 for the treatment of Age-related Macular Degeneration (AMD) and a
number of other indications.  This compound entered the clinic in early
2007.  Quark Pharmaceuticals, Inc. has developed a further compound,
AKIi-5, having AtuRNAi structure under the existing licence from Silence
Therapeutics.  This compound has been granted an IND for acute kidney
injury and is expected to enter the clinic in 2007.  In addition, Silence
Therapeutics expects to begin the clinical development of its proprietary
AtuRNAi therapeutic molecules for systemic cancer indications, such as
gastrointestinal and non-small lung cancer, in 2008.

     

    Silence
Therapeutics is based in London, UK, and Berlin, Germany, and is listed on
AIM.

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
         

      

      
        8.

        
          

        

      

      
         

      

       

    

    About
RNAi

     

    RNA
interference (RNAi), a Nobel Prize winning technology, is one of the most
exciting areas of drug discovery today. It represents a completely new approach
to selectively ‘silence’ or inactivate disease relevant genes and as such it has
the potential to create a new class of therapeutic products.  RNAi could
therefore offer a therapeutic approach to a broad range of diseases (cancer,
infectious diseases, inherited diseases), many of which have been regarded as
incurable and are not addressed by current therapeutics, therefore providing a
large market opportunity.

     

    Forward-Looking
Statements

     

    This
press release includes forward-looking, statements that are subject to risks,
uncertainties and other factors.  These risks and uncertainties could
cause actual results to differ materially from those referred to in the
forward-looking statements.  All forward-looking statements are based
on information currently available to Silence Therapeutics and Silence
Therapeutics assumes no obligation to update any such forward-looking
statements.

     

    Enquiries:

    For
further information, please contact the following:

     

    
      	
              Silence
      Therapeutics plc

              +44(0)20
      7307 1620

              Iain
      Ross, Chairman

              Melvyn
      Davies, Finance Director

            	
              Quark
      Pharmaceuticals, Inc.

              +1-510-402-4020

              Rami
      Skaliter, Chief Operating Officer

               

            
	 
      	 
      
	
              +49(0)
      30 9489 2800

              Thomas
      Christély, Chief Operating Officer

              Dr.
      Klaus Giese, Chief Scientific Officer

            	 
      
	 
      	 
      
	
              Investor
      Relations

              Citigate
      Dewe Rogerson

              +44(0)20
      7638 9571

              David
      Dible

              Yvonne
      Alexander

            	
              Investor
      Relations

              The
      Ruth Group

              +1-846-536-7033
      / 7025

              Janine
      McCargo / Jason Rando

              jmccargo@theruthgroup.com

              jrando@theruthgroup.com

            
	 
      	 
      
	
              Nominated
      Advisers

              Grant
      Thornton Corporate Finance

              +44(0)20
      7383 5100

              Gerry
      Bearley

              Colin
      Aaronson

            	 
      

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

       

      
        
          
             

          

          
            9.[
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

     

     Exhibit
10.38

    

    
      
        
          	 
      	
                  Pfizer
      Inc

                
	 
      	
                  235
      East 42nd
      Street

                
	 
      	
                  New
      York, New York 10017

                
	 
      	 
      
	 
      	
                  Global
      Research &
Development

                

        

      

    

    

    May 19,
2008

    

    Daniel
Zurr, Ph.D.

    President
and Chief Executive Officer

    Quark
Pharmaceuticals, Inc.

    6501
Dumbarton Circle

    Freemont,
CA 94555

    

    RE:  Amendment
to License Agreement by and between Quark Biotech, Inc. and Pfizer Inc., dated
September 25, 2006 and effective November 16, 2006.

    

    Dear Dr.
Zurr:

    

    As you
are aware, Quark Pharmaceuticals, Inc. (formerly Quark Biotech, Inc. and
hereinafter referred to as “Quark”) and Pfizer Inc. (“Pfizer”) have transferred
from Quark to Pfizer the United States Investigational Drug Application number
[*], Study QRK.003, titled “A PHASE I OPEN-LABEL, DOSE ESCALATION TRIAL OF
REDD14NP DELIVERED BY A SINGLE INTRAVITREAL INJECTION TO PATIENTS WITH CHOROIDAL
NEOVASCULARIZATION (CNV) SECONDARY TO EXUDATIVE AGE-RELATED MACULAR DEGENERATION
(“WET AMD”)” (hereinafter referred to as the “QRK.003 Study”).

    

    In
conjunction with the transfer of the QRK.003 Study to Pfizer, Quark and Pfizer
now wish to amend the License Agreement by and between Quark and Pfizer dated
September 25, 2006 and effective November 16, 2006 (the “Agreement”) to clarify
certain responsibilities of Quark in connection with the QRK.003 Study and
certain subsequent clinical studies commenced by Pfizer.  The parties
wish to memorialize such agreements by signing this letter (the “Letter
Amendment”), effective as of January 25, 2008, which sets forth the terms of an
amendment to the Agreement.  All capitalized terms used herein shall
have the meaning given to them in the Agreement, unless otherwise defined
herein.

    

    
      
        
          	  	
                  1.

                	
                  Section
      4.3A Development
      Services Provided by Quark [*].  The Agreement is hereby
      amended to include a new Section 4.3A immediately after Section 4.3, which
      Section 4.3A shall read as
follows:

                

        

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Section
4.3A     Development Services
Provided by Quark [*].  In addition to the development work
contemplated by Section 4.3, Quark will provide Pfizer with various clinical
research-related services and assistance (such services and assistance
collectively referred to as the “Services”) in connection with the following
Pfizer-sponsored clinical trials for REDD14NP:  (i) [*], (ii) [*],
(iii) [*], (iv) [*], and (v) any other [*] clinical trials that may be conducted
(the clinical trials described in subclauses (i) through (v), collectively
referred to as the “Pfizer Studies” and individually referred to as a “Pfizer
Study”), in each case as further provided below.

    

    
      	
               
      

            	
              (a)

            	
              Services.  A
      description of the Services to be provided by Quark to Pfizer is set forth
      on Attachment
      A hereto.  Quark will establish a special team composed
      of personnel [*] who will perform the Services.  Such team will
      perform the Services.

            

    

    
      	
               
      

            	
              (b)

            	
              Performance of
      Services.  Quark will perform the Services (i) according
      to the protocols for each respective Pfizer Study, (ii) in compliance with
      all applicable laws and governmental regulations including ICH Good
      Clinical Practices, and (iii) in compliance with Pfizer Standard Operating
      Procedures (“SOPs”) or Quark-provided SOPs that have been prospectively
      approved, in writing, by Pfizer.

            

    

    
      	
               
      

            	
              (c)

            	
              Compensation.

            

    

    
      	
               
      

            	
              i.

            	
              Services and Estimated
      Budget.  Pfizer will pay Quark for Services rendered in
      accordance with Section 4.3A(c)(iii) through Section 4.3A(c)(vi) below and
      a written estimated budget for each calendar year.  The parties
      agree that Attachment A
      specifies the Services to be rendered by Quark during the calendar year
      2008 and that Attachment B
      includes two estimated budgets for such Services to be rendered in 2008,
      where each budget assumes [*].

            

    

    
      	
               
      

            	
              ii.

            	
              Annual Budget
      Update.  On an annual basis (no later than [*] of each
      calendar year), Quark and Pfizer will review the Services to be rendered
      by Quark during the next calendar year and will agree on the appropriate
      budget therefor.  Once agreed by the parties, the new budget
      will become effective on [*] of the next calendar year and will be in full
      force during such calendar year.

            

    

    
      	
               
      

            	
              iii.

            	
              Invoices.  Quark
      will request payments for Services rendered by means of monthly
      invoices.  The parties have agreed that Quark will invoice
      Pfizer in the amount of [*] ($[*]) each month (the “Monthly Quark
      Personnel Payment”), beginning with the [*] and continuing through the
      [*], as compensation for the personnel costs incurred by Quark for
      Services performed by Quark personnel.  Upon the parties’
      agreement on the budget for Services for each subsequent calendar year in
      accordance with Section 4.3A(c)(ii), the parties will agree on the Monthly
      Quark Personnel Payment that Quark will invoice Pfizer each month during
      such calendar year as compensation for the personnel costs incurred by
      Quark for Services performed by Quark personnel.  From time to
      time, the parties may adjust the Monthly Quark Personnel Payment pursuant
      to Section 4.3A(c)(v).  The parties have agreed that in addition
      to the Monthly Quark Personnel Payment, Quark will invoice Pfizer each
      month the actual amounts invoiced by Third Parties to Quark for services
      rendered by such Third Parties and for all other out-of-pocket costs
      incurred by Quark including, without limitation, travel costs and
      consulting expenses as set forth in the budgets contained in Attachment B,
      in each case for the performance of Services (collectively, such
      out-of-pocket costs, “Pass Through
Costs”).

            

    

    

    [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    

    
      	
               
      

            	
              iv.

            	
              Reporting and
      Reconciliation.  For the months of [*] of each calendar
      year, Quark will provide for the preceding [*], (a) a detailed accounting
      of actual Services rendered and (b) amounts received from
      Pfizer.  Quark will reconcile the actual Services rendered
      against amounts received from Pfizer during such [*] period, and Quark
      will make any necessary adjustments to the invoices [*], including credits
      to Pfizer for any over-payments by Pfizer and charges or debits against
      Pfizer for any under-payments by Pfizer during the preceding [*]
      months.  The [*] invoices must be sufficiently detailed (with
      the same level of detail as provided in the budgets contained in Attachment B or
      any amendment thereto) to identify the nature, timing and extent of
      Services rendered, and [*] estimated budget for the calendar
      year.  Notwithstanding anything to the contrary in the
      foregoing, the parties have agreed that for 2008, Quark will reconcile the
      actual Services rendered against amounts received from Pfizer for such
      Services in the [*] invoices.  The mechanics of such
      reconciliation will be the same as described above except that each
      reconciliation period shall be for the preceding [*] months instead of the
      preceding [*] months.

            

    

    
      	
               
      

            	
              v.

            	
              Adjustments to Monthly
      Quark Personnel Payment.  If, as a result of the
      reconciliation described in Section 4.3A(c)(iv), the parties determine
      that the difference between the actual Services rendered and the amount
      received from Pfizer for such Services during such [*] (or [*], as
      applicable) month period is [*] or more ([*]) (the “Adjustment
      Threshold”), then the parties will negotiate in good faith a new Monthly
      Quark Personnel Payment that Quark will invoice Pfizer each subsequent
      month as compensation for the personnel costs incurred by Quark for
      Services performed by Quark personnel.  If the difference
      between the actual Services rendered and the total amount received from
      Pfizer for such Services during such [*] (or [*], as applicable) month
      period is less than the Adjustment Threshold, then no adjustments will be
      made to the then-existing Monthly Quark Personnel Payment.  If
      the parties commence negotiations for a new Monthly Quark Personnel
      Payment but are unable to agree on such new Monthly Quark Personnel
      Payment before Quark invoices Pfizer for Services rendered in the month
      following reconciliation, then, the parties hereby agree that Quark will
      invoice Pfizer in the amount of the Monthly Quark Personnel Payment
      existing as of the date of the reconciliation and the parties will
      continue to negotiate in good faith a new Monthly Quark Personnel
      Payment.

            

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              vi.

            	
              Payment.  Unless
      a different time interval or payment mechanism is specified in Attachment B or
      any amendment thereto, Pfizer will pay all such invoices in accordance
      with Section 6.4.  If Pfizer disputes one or more Pass Through
      Costs contained in any monthly invoice or the reconciliation of actual
      Services rendered against amounts received from Pfizer in any [*] invoice
      (as applicable), Pfizer will pay the undisputed amount in accordance with
      Section 6.4 and shall pay the remaining amount determined to be due, if
      any, within [*] after Pfizer and Quark, acting in good faith, resolve the
      dispute.  The parties agree that Pfizer will not dispute any
      Monthly Quark Personnel Payment contained in any monthly
      invoice.

            

    

    
      	
               
      

            	
              (d)

            	
              Cancellation of
      Services.  Pfizer may cancel the Services in relation to
      one Pfizer Study or all Pfizer Studies under this Section 4.3A, [*],
      before completion of a particular Pfizer Study by [*] advance written
      notice to Quark.  In the event of any termination or
      cancellation of the Services or part thereof, the provision regarding
      accrued obligations described in Section 13.2 will apply.  For
      the avoidance of doubt, Pfizer will remain responsible for any
      indebtedness, liability or other obligation incurred hereunder by Quark in
      providing such Services, including without limitation any unavoidable
      wind-down costs associated with the termination or cancellation of the
      Services, whether incurred during the [*] notice period or
      thereafter.”

            

    

    

    2.  Section
4.13  Quark as Agent on Behalf of Pfizer.   The
Agreement is hereby amended to include a new Section 4.13 to read as
follows:

    

        “Section
4.13  Quark
as Agent of Pfizer.  Pfizer hereby appoints Quark, and Quark
hereby accepts such appointment, as Pfizer’s agent for the purpose of carrying
out the responsibilities assigned to Quark in the third party agreements listed
on Attachment C
to the extent such responsibilities relate to REDD14NP.  Quark will
act as an agent of Pfizer, at Pfizer’s sole expense, with respect to each of the
foregoing agreements beginning on [*] and ending, on an agreement-by-agreement
basis, on the earlier of (a) the date when [*], (b) the date when [*], and (c)
the date when Pfizer gives written notice to Quark that Quark no longer needs to
serve as an agent of Pfizer for such agreement.  Pfizer hereby agrees
to continue reimbursing Quark, in accordance with Section 4.8, for all costs and
expenses incurred by Quark while serving as Pfizer’s agent with respect to the
agreements listed on Attachment C,
including without limitation liabilities incurred by Quark by reason of
providing such agency services [*].  For the avoidance of doubt, if
Pfizer notifies Quark that Quark no longer needs to serve as an agent of Pfizer
with respect to an agreement listed on Attachment C, Quark
shall have no further obligation to provide agency services to Pfizer with
respect to such agreement but Pfizer shall continue to reimburse Quark, in
accordance with Section 4.8, for all costs and expenses associated with the
research, development, manufacture and commercialization of Licensed Products
that are incurred by Quark pursuant to such agreement and that otherwise could
not be reasonably avoided.”

    

    Nothing
in this Letter Amendment is meant to subvert or otherwise alter the rights and
obligations of either Quark or Pfizer under the Agreement, except as and to the
extent expressly stated herein.  For the avoidance of doubt, all other
terms and conditions of the Agreement will remain in full force and
effect.

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    

    If this
Letter Amendment is acceptable to you, please have an officer of your company
sign it below and return it to us.

    

    
      
        
          
            
              
                	 
      	Very
      truly yours,
	 
      	 
      	 
      
	 
      	PFIZER
      INC
	 
      	 
      	 
      
	 
      	
                        By:

                      	
                        /s/ Edmund P. Harrigan

                      
	 
      	 
      	
                        Edmund
      P. Harrigan, M.D.

                      
	 
      	 
      	
                        Senior
      Vice President

                      
	 
      	 
      	
                        Worldwide
      Business
Development

                      

              

            

          

        

      

    

    

    
      
        
          
            	
                    AGREED:

                  	 
      
	 
      	 
      
	
                    QUARK
      PHARMACEUTICALS, INC.

                  	 
      
	 
      	 
      	 
      
	
                    By:

                  	
                    /s/ D. Zurr

                  	 
      
	 
      	 
      	 
      
	
                    Name: 

                  	
                    Daniel Zurr, Ph.D

                  	 
      
	 
      	 
      	 
      
	
                    Title:

                  	
                    President & CEO

                  	 
      
	 
      	 
      	 
      
	
                    Date:

                  	
                    22nd May 2008

                  	 
      

          

        

      

    

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

    Attachment
A

    

    REDD14
Clinical program -Support by Quark Pharmaceuticals for 2008

    

    [*]

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

     

    
      
        
        

      

      
        - 6
-

        
          

        

      

      
        
        

      

    

     

    Attachment
B

    Initial
Budget

    

    [*]

     

    
      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

       

      
        
          
             

          

          
            - 7
-

            
              

            

          

          
             

          

        

      

      

    

    Attachment
C

    

    List
of Agreements for Which Quark Will Serve as Agent to Pfizer

    [*]

    
       

      [
* ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED.

    

    
      
         

      

      
        - 8
-

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