Document:

Exhibit 10.3

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

LICENSE and OPTION AGREEMENT

 

BRIGHAM YOUNG UNIVERSITY and ARIDIS, LLC

 

This Agreement, effective July 29, 2005 is entered into between Brigham Young University, a Utah non-profit corporation and institution of higher education, with its principal campus and place of business located at Provo, Utah 84602 (referred to in this Agreement as “BYU”) and Aridis, LLC, a California corporation with its principal place of business located at 350 Cervantes Road, Portola Valley, CA 94028, (referred to in this Agreement as “LICENSEE”).

 

RECITALS

 

I                                           BYU is the sole owner of certain intellectual property rights known as “Stabilization of Biological Agents” and has the right to grant licenses with respect to these rights.

 

A.                                    BYU is an institution of higher education and is not in the business of commercially developing ideas, inventions, or other types of intellectual property, but it does desire to have Stabilization of Biological Agents available to the public and is willing to grant a license for this purpose.

 

B.                                    LICENSEE has represented to BYU that LICENSEE has the technical and commercial ability, and the technical, financial and other resources necessary to successfully develop and sell products or services based upon Stabilization of Biological Agents.

 

C.                                    LICENSEE desires to obtain a license to Stabilization of Biological Agents upon the terms and conditions of this Agreement.

 

In consideration of the promises and mutual covenants contained in this Agreement the parties agree as follows:

 

TERMS OF AGREEMENT

 

1.                                      Definitions

 

For the purposes of this Agreement, the following terms, words and phrases shall have the meaning ascribed to them in this Section.

 

1.1                               “ADJUSTED GROSS SALES” shall mean actual gross receipts or the fair market monetary equivalent value of consideration received by LICENSEE, AN AFFILIATE OR A SUBLICENSEE for the sale, lease, license, transfer or use of LICENSED PRODUCTS, less qualifying costs directly attributable to such sale, lease, license or transfer actually allowed and ‘borne by LICENSEE, an AFFILIATE, or a SUBLICENSEE.  Such qualifying costs shall be limited to the costs of the following:

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

A.                                    Trade or quantity discounts and credits for free goods actually allowed and taken in such amounts as are customary in the trade;

 

B.                                    Sales, import and export duties (or other transportation taxes) and/or production, use, delivery and excise taxes directly imposed with reference to particular sales;

 

C.                                    Outbound transportation and insurance expenses prepaid or allowed; and

 

D.                                    Amounts allowed or credited by reason of timely rejections, recalls, destruction or returns, or for rebates or chargebacks.

 

No deductions shall be made for commissions paid to individuals, whether they be regularly employed by LICENSEE or by independent sales agents, or for the cost of collections.

 

1.2                               “AFFILIATE” shall mean any person or entity owned or controlled directly or indirectly by LICENSEE or a SUBLICENSEE or any person or other entity controlled by, controlling or under common control with LICENSEE or a SUBLICENSEE.  The term “control” means possession, direct or indirect, of the powers to direct or cause the direction of the management and policies of a person or entity; whether through ownership, voting securities, beneficial interests, by contract, by agreement, or otherwise.

 

1.3                               “FIELD OF APPLICATION-ANTIBODIES” means therapeutic antibodies for treatment of infectious diseases.

 

1.4                               “FIELD OF APPLICATION-VACCINES” means vaccines and prophylactic biologics.

 

1.5                               “IMPROVEMENT(S)” means any invention (not currently comprised by the LICENSED TECHNOLOGY described in Exhibit A) which is both (i) specific in its operation or use as dependent upon the use of the LICENSED TECHNOLOGY as described (i.e., not general to the field of stabilization of biological agents), and (ii) an enhancement or improvement of some portion of the LICENSED TECHNOLOGY.

 

1.6                               “INTELLECTUAL PROPERTY” means and includes all patent applications listed in Exhibit A and all patent applications claiming the inventions described in Exhibit A, including any divisional, continuation, or continuation-in-part to such applications to the extent comprising the inventions described therein, as well as any patent issued thereon, any reissue or extension of such patent, and any foreign counterparts to such patents and application.

 

1.7                               “LICENSED PRODUCT(S)” means and includes any drug or other product whose manufacture, use or sale in a country would but for this agreement comprise an infringement of a valid patent claim included in the INTELLECTUAL PROPERTY, the phrase “valid patent claim” meaning either (i) a claim issued and not expired, revoked, abandoned or held unenforceable, or (ii) a claim that is pending, made in good faith, and reasonably designed to cover inventions described in the INTELLECTUAL PROPERTY.  Solely for purposes of calculating ADJUSTED GROSS SALES above, LICENSED PRODUCT shall also include any

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

drug or other product whose manufacture, use or sale in a country would, but for Aridis’s own ownership rights in a valid patent claim covering an IMPROVEMENT, comprise an infringement of that patent claim.

 

1.8                               “LICENSED TECHNOLOGY” means and includes all of BYU’s rights in the INTELLECTUAL PROPERTY known as “Stabilization of Biological Agents” as more particularly described in Exhibit A, which is attached to this Agreement and by reference is incorporated and made part of this Agreement.

 

1.9                               “LICENSEE” is Aridis, LLC and its AFFILIATES and any other person or entity that becomes a successor in interest to, purchases, merges with, assumes control of, or becomes an assignee of LICENSEE.

 

1.10                        “SUBLICENSEE” is any person or entity sublicensed by LICENSEE under any of its license rights under this Agreement.

 

1.11                        “TERRITORY” means the world.

 

2.                                      BYU Grant

 

2.1                               Subject to the provisions of Section 2.6, BYU hereby grants LICENSEE an exclusive right and license to utilize the LICENSED TECHNOLOGY to develop LICENSED PRODUCTS, and IMPROVEMENTS, and to make, have made, use, have used, import, have imported, and sell, lease and otherwise transfer LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-VACCINES as authorized in this Agreement until such time as this Agreement expires or is terminated.  This grant will extend to the manufacture, sale, lease, transfer or other disposition of LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-VACCINES through an AFFILIATE or through LICENSEE’s use of any retail outlet or distributor.

 

2.2                               Subject to the provisions of Section 2.4, BYU hereby grants LICENSEE a non-exclusive right and license to utilize the LICENSED TECHNOLOGY to develop LICENSED PRODUCTS, and IMPROVEMENTS, and to make, have made, use, have used, import, have imported, and sell, lease and otherwise transfer LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-ANTIBODIES as authorized in this Agreement until such time as this Agreement expires or is terminated.  This grant will extend to the manufacture, sale, lease, transfer or other disposition of LICENSED PRODUCTS within the TERRITORY and the FIELD OF APPLICATION-ANTIBODIES through an AFFILIATE or through LICENSEE’s use of any retail outlet or distributor.

 

2.3                               BYU hereby grants LICENSEE an option to convert the non-exclusive grant of Section 2.2 for the FIELD OF APPLICATION-ANTIBODIES into an exclusive grant upon acceptance by BYU of a reasonable development plan for the exploitation of the FIELD OF APPLICATION-ANTIBODIES including financing and a development plan and schedule.  If the exclusive license is granted, LICENSEE shall agree to pay milestone payments for the FIELD OF  APPLICATION-ANTIBODIES equal to the payments specified in Section 6.1 for

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

the HELD OF APPLICATION-VACCINES.  This option shall terminate on the fifth anniversary of the effective date of this Agreement, or if BYU receives a bona fide offer for license rights for the FIELD OF APPLICATION-ANTIBODIES from a third party and LICENSEE fails to exercise its option within ninety days of notice thereof, whichever event occurs earlier in time.

 

2.4                               The grants provided under this Agreement shall specifically include the right for LICENSEE to sublicense to SUBLICENSEES its rights under this Agreement to the LICENSED TECHNOLOGY with respect to the TERRITORY, in the following fields:

 

(i)                                     the FIELD OF APPLICATION-VACCINES;

 

(ii)                                  the FIELD OF APPLICATION-ANTIBODIES, where the sublicense is made to
 cover LICENSED PRODUCTS developed or jointly developed by LICENSEE; and

 

(iii)                               the FIELD OF APPLICATION-ANTIBODIES, if the option described in section 2.3 above is exercised.

 

All sublicenses granted by LICENSEE shall be subject to the terms and conditions of this Agreement and any sublicense agreement shall have an express provision to this effect.  No sublicense shall relieve LICENSEE of any of its obligations under this Agreement.  Sublicenses under this Agreement shall be structured to guarantee the payment of royalties to BYU in an amount at least equal to the amount of royalties which BYU would have received from LICENSEE had LICENSEE made, sold, leased, or otherwise transferred the LICENSED PRODUCTS authorized in the sublicense.  LICENSEE agrees to forward to BYU a fully executed copy of each sublicense agreement within thirty (30) days of its execution, and to act as a fiduciary to protect BYU’s interests in the sublicense and to collect and transmit to BYU all royalties due.

 

2.5                               Nothing in this Agreement shall be considered as granting any rights, express or implied, in BYU’s patents, patent applications, inventions, methods, technical, confidential or proprietary information, expertise, know-how, trade secrets or knowledge not specifically licensed in this Agreement, and all rights not expressly granted by this Agreement to LICENSEE are expressly reserved by BYU.  The license granted by this Agreement shall not be construed to confer any rights upon LICENSEE by implication, estoppel or otherwise as to any existing, new or derivative technology not specifically licensed by this Agreement.  The reservation of rights described in this Section is intended to be broadly construed and not to be limited by the definitions set forth in this Agreement.

 

2.6                               Notwithstanding the exclusive license granted pursuant to this Agreement with respect to the TERRITORY and FIELD OF APPLICATION, BYU, the Church of Jesus Christ of Latter-day Saints and the Church Education System reserve the right to make, have made or use the LICENSED TECHNOLOGY, LICENSED PRODUCTS, and IMPROVEMENTS anywhere in the world for continuing research and non-commercial academic and ecclesiastical uses without cost.  Moreover, should BYU, The Church of Jesus Christ of Latter-day Saints or any educational institution within the Church Education System (collectively, the “Church”)

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

wish to purchase any LICENSED PRODUCTS from LICENSEE or its AFFILIATES, LICENSEE agrees to sell such LICENSED PRODUCTS at the [***] or the price given by LICENSEE to its most favored customers, whichever is less.  (The parties to this Agreement do not expect that these sales would comprise more than [***] of the overall LICENSED PRODUCT sales in any country.  If BYU or the Church were to require LICENSED PRODUCT in excess of this amount the parties agree to meet in order to agree upon fair consideration for the LICENSED PRODUCTS provided.)

 

3.                                      Rights in Improvements

 

3.1                               Upon any termination of this Agreement other than its termination due to expiration of the patent rights as described in section 16.1, and to the extent LICENSEE at that time has the legal right to grant such license, LICENSEE shall grant to BYU a non-exclusive, irrevocable, perpetual, worldwide license, to any of LICENSEE’s rights in IMPROVEMENTS.  LICENSEE agrees to disclose to BYU all information reasonably requested by BYU with respect to any such licensed IMPROVEMENTS and to provide to BYU all documents and data, in whatever form, reasonably necessary for BYU to exercise such license rights.  BYU’s license under this Section shall include the right to practice, license or sublicense IMPROVEMENTS for commercial use when done in conjunction with the practice, license or sublicense of INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY, provided that BYU and LICENSEE shall agree in advance upon an appropriate sharing between them for royalties or other consideration received by BYU, in recognition of and to the extent of the value contributed to the INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY by addition of the licensed IMPROVEMENTS.

 

3.2                               During the term of this Agreement, LICENSEE shall disclose to BYU (under appropriate confidentiality, where appropriate) information with respect to any IMPROVEMENTS developed by LICENSEE for which patent protection is being sought, in order that BYU may assess whether it has any legitimate ownership interest in the invention comprised by the IMPROVEMENT.

 

3.3                               During the term of this Agreement, any IMPROVEMENTS and associated patent rights which are developed by licensees of BYU other than LICENSEE, and for which BYU hereafter acquires ownership or license rights, shall be deemed to be included under the definition of INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY above and included in the license herein.

 

4.                                      Activities of LICENSEE

 

4.1                               The parties acknowledge that LICENSEE may investigate or develop alternative approaches towards the stabilization of biological agents other than the LICENSED TECHNOLOGY.  LICENSEE represents that it enters into this Agreement, including its performance obligations under Section 5 hereunder, and its obligations to support and cooperate in BYU’s efforts to obtain properly patentable valid patent claims as set out in Section 12 hereunder, all in good faith.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

5.                                      Performance Requirements

 

5.1                               LICENSEE shall, during the term of this Agreement, use its reasonable best efforts to bring one or more LICENSED PRODUCTS to market in order to maximize the ADJUSTED GROSS SALES through a thorough, vigorous and diligent commercial program.

 

5.2                               LICENSEE has delivered to BYU a development plan and schedule which is attached hereto as Exhibit B.  LICENSEE shall use its reasonable best efforts to accomplish said development plan and schedule.

 

5.3                               LICENSEE shall provide biannual progress reports to BYU by the last day of January and the last day of July until LICENSEE’S first commercial sale.

 

5.4                               LICENSEE’s failure to perform in accordance with this Section of the Agreement to the reasonable satisfaction of BYU may be considered by BYU to be a material breach of this Agreement and as such may entitle BYU to exercise its termination rights in accordance with Section 16.4 below.

 

6.                                      Milestone Payments and Royalties

 

In consideration of the license granted under this Agreement, LICENSEE shall pay to BYU, in the manner designated below until the Agreement shall be terminated, as follows:

 

6.1                               Milestone Payments: LICENSEE shall make the following milestone payments for the first LICENSED PRODUCT to BYU according to the following schedule:

 

	
Upon the completion of   Phase 2 clinical trials
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Upon the completion of Phase 3 clinical trials
    	
 
    	
[***]
    
	
 
    	
 
    	
 
    
	
Upon the first commercial sale of a LICENSED PRODUCT
    	
 
    	
[***]
    

 

6.2                               Earned Royalties: Earned royalties shall be paid quarterly in the amount equal to [***] of the ADJUSTED GROSS SALES for LICENSED PRODUCT anywhere in the TERRITORY and FIELD OF APPLICATION-VACCINES or FIELD OF APPLICATION-ANTIBODIES.

 

6.3                               If LICENSEE judges it to be necessary to license and utilize additional rights from a third party which are reasonably considered to fall within the scope of the LICENSED TECHNOLOGY, LICENSEE may reduce the Earned Royalties due BYU on any such LICENSED PRODUCT sold which utilizes the third party’s licensed rights by one-half of the royalty paid to the third party for said rights provided prior notice is given to BYU by LICENSEE and BYU provides written consent thereto, which consent shall not be unreasonably withheld.  However, under no circumstances shall the Earned Royalties payable to BYU be less than [***]

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

6.4                               Any royalty amount due to BYU arising out of this Agreement shall accrue at the time of receipt by LICENSEE of consideration for LICENSED PRODUCT or LICENSED PROCESS and shall be deemed to be held in trust for the benefit of BYU until actual payment of such amounts is made pursuant to this Agreement.

 

7.                                      Reports, Records, Penalties and Interest

 

7.1                               LICENSEE shall keep, and shall require all SUBLICENSEES, AFFILIATES, and any other party responsible by the terms of this Agreement to make payments to BYU to keep, at their own expense, accurate books of account, using generally accepted accounting principles and practices, detailing all data necessary to calculate and easily audit any payments due to BYU under this Agreement.  These books of account shall be kept at LICENSEE’s, AFFILIATE’s or SUBLICENSEE’s principal place of business.  These books and supporting data shall be open at all reasonable times, upon ten (10) calendar days written notice, throughout the term of this Agreement and for a period of five (5) years following the end of the calendar year to which they pertain, to inspection by BYU or its agents for the purpose of verifying LICENSEE’s reports, royalty statements or other compliance with this Agreement.  In the event that any such inspection reveals any underpayment of royalties by LICENSEE, LICENSEE shall promptly rectify any such underpayment, reimburse BYU for the cost of such inspection if such inspection reveals a deficiency in any quarterly payment due to BYU hereunder in the amount of [***] or more of the amount payable to BYU, and shall pay the penalty and interest amounts specified in Section 7.4 below.

 

7.2                               LICENSEE, within sixty (60) days after the last day of each full calendar quarter subsequent to the effective date of this Agreement, shall deliver to BYU an accurate written report summarizing in sufficient detail to allow BYU to verify all payment amounts, the data used during the preceding three-month period under this Agreement to calculate the payments due to BYU during the applicable accounting period.  These records and reports shall include at least the following information for the accounting period:

 

A.                                    Calculation of ADJUSTED GROSS SALES, itemized as to the number and the identity of the LICENSED PRODUCTS sold.

 

B.                                    All qualifying deductible costs claimed as offsets as applicable.

 

C.                                    Calculation of earned royalties and total royalties due broken down by applicable category.

 

D.                                    Names and address of all AFFILIATES and SUBLICENSEES and full reports from them complying with the reporting requirements of Section A-C.

 

7.3                               With each such report submitted, LICENSEE shall pay to BYU all fees, royalties and all other amounts due, payable and arising pursuant to this Agreement.  If no amounts shall be due, LICENSEE shall so report.  All amounts paid to BYU pursuant to this Agreement shall be in United States Dollars unless otherwise agreed in writing between the parties, and the amount of all royalties to be paid to BYU shall be determined on the basis of the relevant

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

currency exchange rate published by the Wall Street Journal on the last business day of the calendar quarter to which such royalties relate.

 

7.4                               A penalty will be assessed in an amount equal to [***] of any payment due to BYU arising out of this Agreement if the payment is made more than sixty (60) days late.  Interest will accrue from the thirtieth day after the payment was due at a rate of [***] per annum or the highest rate permitted by law, whichever is lower.  Any unpaid interest or penalty shall be compounded monthly at the applicable interest rate.  The penalty and interest provisions of this Section 7.4 shall not apply to any payment reasonably in dispute or any circumstance of force majeure as described in Section 22.6.

 

7.5                               In the event LICENSEE engages an independent auditor or employs an internal auditor for the purpose of verifying the accuracy of its books of account, LICENSEE shall cause said auditor to verify the accuracy of the quarterly reports required in Section 7.2 of this Agreement, and LICENSEE shall provide to BYU a copy of the report and any documentation generated in the verification process on or before ninety (90) days after the verification process is completed.

 

8.                                      Confidentiality

 

8.1                               If either party receives material provided by the other party which is marked as confidential, or is verbally so designated and confirmed in writing by the disclosing party within thirty (30) days of the receipt of the materials by the receiving party, the receiving party shall take reasonable precautions to protect such material and to preserve its confidential, proprietary or trade secret status during the term of this Agreement and for a period of five (5) years after termination of this Agreement.

 

8.2                               In determining whether or not information is confidential, the burden of proof shall be upon the receiving party to establish by competent proof and by preponderance of the evidence that such information to be non-confidential was:

 

A.                                    Already known to the receiving party at the time of disclosure by the disclosing party or independently developed by the receiving party, or

 

B.                                    Generally available to the public or otherwise part of the public domain at the time of its disclosure to the receiving party, or

 

C.                                    Became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or omission of the receiving party in breach of this Agreement, or

 

D.                                    Subsequently, lawfully disclosed to the receiving party by a third party, or

 

E.                                     Required by law to be disclosed.

 

8.3                               LICENSEE may disclose BYU’s confidential information to its agents, employees, independent contractors, officers, AFFILIATES and SUBLICENSEES where

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

reasonably necessary to further the objectives of this Agreement, and otherwise only to the extent it is authorized in writing to do so by BYU.

 

8.4                               All of the receiving party’s SUBLICENSEE’s, employees and independent contractors with access to the disclosing party’s confidential information shall be bound in writing, copies of which shall be retained by the receiving party and submitted to the disclosing party upon request of the disclosing party, to make no unauthorized use or disclosure of the confidential information.

 

8.5                               Both parties agree that a breach of its obligation to protect the other party’s confidential information shall cause immediate and irreparable harm which cannot be adequately compensated by monetary damages.  Accordingly, any breach or threatened breach of confidentiality shall entitle the disclosing party to preliminary and permanent injunctive relief in addition to such remedies as may be otherwise available.

 

9.                                      Separate Service Agreement

 

If BYU and LICENSEE mutually agree that BYU shall supply technical and engineering services required to effectively transfer to LICENSEE the LICENSED TECHNOLOGY licensed herein, then LICENSEE shall reimburse BYU for its expenses incurred in furnishing such technical and engineering services pursuant to the terms and conditions of a separate written agreement.

 

10.                               Export Controls and Applicable Laws

 

10.1                        It is understood that the LICENSED TECHNOLOGY may be subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended, and the Export Administration Act of 1979), and LICENSEE’s obligations under this Agreement may be contingent upon compliance with applicable United States export laws and regulations.  The transfer of certain technical data and commodities may require a license from the cognizant agent of the United States Government and/or written assurances by LICENSEE that LICENSEE shall not export data or commodities to certain foreign countries without prior approval of such agency.  BYU neither represents that a license shall not be required nor that, if required, it shall be issued.  LICENSEE shall observe and obey all export laws in countries in which it shall do business.

 

10.2                        In the exercise of its rights, and the performance of its obligations under this Agreement, LICENSEE shall comply with all applicable laws, regulations and governmental orders.  LICENSEE shall obtain, and shall maintain in full force and effect throughout the continuance of this Agreement, all licenses, permits, authorizations and approvals required under all applicable laws, regulations and governmental orders of the TERRITORY, and shall make all filings, notifications and reports to all relevant governmental agencies, which are necessary or appropriate in order for the performance by LICENSEE of all of its obligations under this Agreement.  In the event that the issuance of any such license, permit, authorization or approval is conditioned upon any material modification or amendment of BYU’s rights under this

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

Agreement, and is sought without BYU’S agreement to that modification or amendment, then BYU shall have the right to terminate this Agreement with respect to the affected territory, and such TERRITORY shall be excluded from the definition of the TERRITORY herein

 

11.                               Patent Marking and Copyright Notice

 

If applicable, LICENSEE agrees to mark the LICENSED PRODUCTS sold in the United States with all applicable United States patent numbers and copyright notices.  All LICENSED PRODUCTS shipped to or sold in other countries shall be marked in such a manner as to conform with the patent and/or copyright laws and practice of the country of manufacture or sale.

 

12.                               Patent Prosecution and Maintenance

 

12.1                        BYU shall use its reasonable best efforts to apply for, seek prompt issuance of, and maintain during the term of this Agreement any patent rights to properly patentable INTELLECTUAL PROPERTY set forth in Exhibit A or to any enhancements and modifications thereto.  BYU shall diligently prosecute, file, perfect and maintain all such patent rights, patents or applications utilizing legal counsel of its choice.  LICENSEE shall cooperate with BYU in such prosecution, filing and maintenance.

 

12.2                        Payment of one-third of all fees and costs relating to the filing, prosecution, perfection and maintenance of the patent rights, both domestic and foreign, shall be reimbursed by LICENSEE to BYU, whether such fees and costs were incurred before or after the date of this Agreement.  If the option for an exclusive license to the HELD OF APPLICATION-ANTIBODIES of Section 2.3 is granted, and if BYU has no other non-exclusive licensee in the FIELD OF APPLICATION-ANTIBODIES, LICENSEE shall pay an additional one-third of said patent-related costs.  For filings outside the United States not made in joint agreement between the parties, LICENSEE may elect not to reimburse BYU for such expenses by providing advance written notice to BYU, but any such filing in such country shall thereafter be excluded from INTELLECTUAL PROPERTY and LICENSED TECHNOLOGY as defined herein.

 

12.3                        LICENSEE shall have the right to comment upon all patent prosecution or interference matters.  Strategic matters affecting potential breadth and term of any patent coverage, and all other material matters related to patent prosecution, shall be managed by joint agreement negotiated in good faith among BYU, LICENSEE and (where necessary) any third party BYU licensees.  Copies of all documentation and correspondence with governmental patent offices and patent counsel shall be provided to LICENSEE.

 

12.4                        LICENSEE SHALL HAVE NO CLAIM OR DAMAGES AGAINST BYU, ITS  PERSONNEL, TRUSTEES OR STUDENTS FOR FAILURE TO PERFORM ITS  OBLIGATIONS PURSUANT TO SECTION 12 OF THIS AGREEMENT, AND SHALL NOT CONSIDER BYU’S FAILURE TO SO PERFORM A BREACH OF THIS AGREEMENT, PROVIDED THAT BYU COMPLIES WITH THE FOLLOWING TERMS: IF BYU SHALL ELECT NOT TO PERFORM ITS OBLIGATIONS HEREUNDER WITH RESPECT TO ANY  OR ALL PATENT APPLICATIONS AND PATENTS, THEN IT SHALL PROVIDE  LICENSEE WITH REASONABLE ADVANCE WRITTEN NOTICE OF ITS INTENT, AND  PROVIDE LICENSEE THE OPPORTUNITY THEREAFTER TO CONTINUE THE

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

PROSECUTION, FILING, PERFECTION AND MAINTENANCE OF SUCH PATENT  APPLICATIONS AND PATENTS INDEPENDENTLY OF BYU AND AT ITS OWN  EXPENSE.

 

13.                               Infringement

 

LICENSEE will have the first right to pursue, prosecute and settle infringement matters in its exclusive field of use.  BYU shall have the first right to pursue all other infringement matters.  In either case the other party may pursue matters not elected by the party with the first right (provided the matter is within LICENSEES’ field of use).  Where LICENSEE takes first action, proceeds shall be divided, net of expenses, 75% to LICENSEE and 25% to BYU.  Where BYU takes first action, proceeds shall be divided 75% to BYU and 25% to LICENSEE.

 

14.                               Warranty and Limitation of Remedy

 

14.1                        BYU represents and warrants that to the best of its knowledge it is the owner of the entire right, title, and interest in and to and has the sole right to grant licenses under this Agreement to the LICENSED TECHNOLOGY as described on Exhibit A.  BYU makes no warranty or representation with respect to the application of the LICENSED TECHNOLOGY to any particular purpose.

 

14.2                        BYU makes no representation that the manufacture, use, lease, or sale of the LICENSED TECHNOLOGY will not infringe a copyright or patent granted to others, other than to state that it knows of no such copyright, patent or other proprietary interests which would be so infringed.

 

14.3                        Each party represents and warrants to the other that it has all of the requisite power and authority to enter into this Agreement and to perform each and every term, provision and obligation of this Agreement, and that neither the execution nor delivery of this Agreement will conflict with or result in a breach of the terms, provisions or obligations of, or constitute a default pursuant to, any other agreement or instrument under which such party is obligated.

 

14.4                        ALL WARRANTIES MADE IN THIS AGREEMENT ARE EXCLUSIVE AND, TO THE EXTENT PERMITTED BY LAW, ARE IN LIEU OF ALL OTHER WARRANTIES EXPRESS  AND IMPLIED, INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER WARRANTY WHETHER EXPRESS OR IMPLIED.

 

14.5                        BYU will not be liable for any loss of profits or for any claim or demand against LICENSEE by any other party.  BYU’s liability, if any, for any damages to LICENSEE shall not exceed in any event the total earned royalties which have been paid by LICENSEE to BYU during the term of this Agreement.  IN NO EVENT WILL BYU BE LIABLE FOR INCIDENTAL OR  CONSEQUENTIAL DAMAGES EVEN IF BYU HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  No action, regardless of form, arising out of the transaction subject of this Agreement may be brought against BYU more than one year after the cause of action is discovered.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

15.                               Product Liability and General Indemnification

 

15.1                        BYU does not warrant the effectiveness or operation of any of the LICENSED PRODUCTS, and the parties to this Agreement agree and understand that BYU shall have no liability to any user of LICENSED PRODUCTS.  LICENSEE, therefore, agrees to hold BYU harmless and indemnify BYU, its trustees, officers, employees and agents from and against any and all litigation, claims, damages or actions (including reasonable attorneys’ fees) that may be instituted against BYU arising out of LICENSEE’s marketing, distribution, sale, production, manufacture, lease, consumption or advertisement of the LICENSED TECHNOLOGY or LICENSED PRODUCTS or arising from any obligation of LICENSEE under this Agreement, including, but not limited to, claims resulting from any alleged type of defect in the LICENSED TECHNOLOGY or LICENSED PRODUCTS or damages allegedly caused by any breach of contract by LICENSEE, its AFFILIATES or SUBLICENSEES, or the use or misuse of the LICENSED TECHNOLOGY or LICENSED PRODUCTS, notwithstanding any third-party allegation that their claims, injuries or damages were proximately caused in part or wholly by BYU’s negligence.  In the event BYU is sued as a party defendant or otherwise pursuant to claims identified in this Section as being subject to indemnification, LICENSEE agrees to defend BYU at LICENSEE’s sole expense in such action.  Should any award or decree be made against BYU, it shall be the obligation of LICENSEE to (a) appeal the decision and pay if the appeal is lost or (b) pay such award or make any settlement as may be warranted before or after the decision on appeal.  BYU shall have the right to elect to participate in any such action with counsel of its choosing; the costs of BYU’s participation shall be at its own expense.

 

15.2                        LICENSEE shall immediately notify BYU of any litigation in which it, its officers or its directors, agents or employees may be involved if there is a reasonable possibility that this Agreement or BYU will be affected and afford BYU reasonable cooperation should BYU elect to make its own defense.

 

16.                               Term and Termination

 

16.1                        Subject to earlier termination in accordance with this Section, this Agreement shall commence on the effective date of this Agreement and remain in force until the expiration of the last valid patent claim contained in the LICENSED TECHNOLOGY.

 

16.2                        The Agreement may be terminated immediately by written notice to LICENSEE by BYU at its election in the event of the occurrence of any one of the following circumstances:

 

A.                                    In the event LICENSEE is placed in the hands of a receiver or makes a general assignment for the benefit of creditors, such that LICENSEE is unable to perform its continuing obligations hereunder; or

 

B.                                    In the event that all or substantially all of the assets of LICENSEE or its successor-in-interest are seized or attached in a final, unappealed or unappealable order in conjunction with any action brought against it by a third party creditor, such that LICENSEE is unable to perform its continuing obligations hereunder.

 

12

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

16.3                        This Agreement may be terminated effective upon thirty (30) days written notice from BYU and the failure of LICENSEE to cure any breach or default prior to the expiration of the thirty-day notice period in any of the following circumstances:

 

A.                                    In the event LICENSEE becomes insolvent or shall cease to carry on its business in the normal course; or

 

B.                                    In the event there is a transfer or sale of LICENSEE’s business purporting to transfer or assign this Agreement and/or the LICENSED TECHNOLOGY without the prior express written consent of BYU.

 

16.4                        In the case of breach or default arising from LICENSEE’s failure to pay BYU royalties or other costs or expenses pursuant to the Agreement when due and payable, failure to complete the performance requirements of Section 5 of this Agreement, or from any other material breach or default of this Agreement, BYU shall have the right to terminate this Agreement upon thirty (30) days written notice to LICENSEE.  Termination shall become effective upon the failure of LICENSEE to cure such breach or default within such notice period.

 

16.5                        LICENSEE may terminate this Agreement at any time by providing sixty (60) days written notice to BYU.

 

16.6                        Upon termination of this Agreement for any reason, the parties shall not be released from any obligation that has matured prior to the effective date of the termination.  LICENSEE may, however, after the effective date of such termination, sell all LICENSED PRODUCTS in its inventory or in process as of the time of such termination, provided that LICENSEE shall pay to BYU the royalties and other consideration due on such products as required by this Agreement and shall submit the reports as required.

 

16.7                        Upon the termination of this Agreement, any SUBLICENSEE which has not breached in any material way its sublicense agreement shall be offered by BYU the option of receiving a license directly from BYU on substantially the same terms and conditions as those provided herein.

 

16.8                        Upon the termination of this Agreement, LICENSEE shall immediately cease using the INTELLECTUAL PROPERTY and return to BYU all documents and information as may have been provided by BYU pursuant to this Agreement, which contain information which is confidential or proprietary to BYU.

 

16.9                        Nothing herein shall be construed to limit BYU’s legal or equitable remedies in the event of a default by LICENSEE and/or subsequent termination of this Agreement by BYU.

 

17.                               Dispute Resolution and Mediation

 

17.1                        With respect to any and all claims, disputes or controversies arising out of the performance of or in connection with this Agreement, the parties agree to attempt in good faith to resolve those claims, disputes or controversies by negotiations between the parties.  In the

 

13

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

event either party believes the negotiation discussions are likely not to result in settlement, the parties must, in good faith, participate in mediation sessions with a professional mediator to be mutually selected by the parties and the expense of which is to be paid fifty percent (50%) by each party.  In the event, after one or more mediation sessions, either party believes the mediation process is not likely to resolve the dispute by mutual agreement, such party may seek any legal or equitable remedy available through a court of competent jurisdiction.

 

17.2                        Nothing in this Section shall be construed to waive any rights of timely performance of any obligation existing under this Agreement.

 

18.                               Licensee Assignment

 

Neither this Agreement nor the LICENSED TECHNOLOGY is assignable by LICENSEE without the express written consent of BYU, which shall not be unreasonably withheld.  Any attempt to make such an assignment without BYU’s written consent may be voided at the election of BYU.  LICENSEE agrees that in the event BYU elects to void an unauthorized assignment that BYU will have suffered immediate and irreparable damage and shall be entitled to immediate injunctive relief.  In the event BYU does not elect to void an unauthorized assignment, LICENSEE agrees that the assignee will be treated in all respects as a LICENSEE for purposes of this Agreement.  Nothing in this section may be construed to preclude BYU from initiating an independent action against the assignee of the unauthorized assignment or to otherwise pursue other legal or equitable remedies against LICENSEE, the assignee or both.

 

19.                               Non Use of BYU Name

 

LICENSEE shall not use the name of Brigham Young University nor of any of its employees, nor any adaptation thereof, in any advertisement, promotion or sales literature without the express prior written consent from BYU in each case, except that LICENSEE may state that it is licensed by BYU.

 

20.                               Publication

 

BYU shall have the right to publish any academic paper, article or learned treatise and make public disclosure at professional meetings or seminars regarding any portion of the LICENSED TECHNOLOGY which has been or may be invented, conceived or developed by BYU.

 

21.                               Payment, Notices and Other Communications

 

Any payment, notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent by certified first-class mail, postage prepaid, addressed to the receiving party at its address designated below or such address as shall be designated by written notice given to the other party.

 

14

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

	
BYU:
    	
Technology Transfer Office
    
	
 
    	
A-285 ASB
    
	
 
    	
Brigham Young University
    
	
 
    	
P.O. Box 21231
    
	
 
    	
Provo, Utah 84602-1231
    
	
 
    	
(801) 378-6266
    
	
 
    	
 
    
	
LICENSEE:
    	
Aridis, LLC
    
	
 
    	
350 Cervantes Road
    
	
 
    	
Portola Valley, CA 94028
    

 

22.                               Miscellaneous Provisions

 

22.1                        Independence of Parties.   BYU and LICENSEE are independent parties engaged in independent business and neither party nor any respective agent or employee of either party shall be regarded as an agent or an employee of the other.  Nothing in this Agreement shall be construed as reserving to either party the right to control the other in the conduct of its business, nor shall either party have the authority to make any promise, guarantee, warranty or reservation which will create any obligation or liability whether express or implied on behalf of the other.

 

22.2                        Attorneys’ Fees.  In the event a legal proceeding is commenced in a court of competent jurisdiction to construe or enforce any provision of this Agreement, the prevailing party, in addition to all other amounts to which such party may be entitled, shall be entitled to recover from the non-prevailing party its reasonable attorneys’ fees, expert witness fees and costs incurred in connection with the proceeding.

 

22.3                        Waiver.  No waiver by either party, whether express or implied, of any provisions of this Agreement or of any breach or default of either party, shall constitute a continuing waiver of such provision or a waiver of any other provisions of this Agreement.

 

22.4                        Governing Law.  This Agreement shall be interpreted and construed in accordance with the laws of the State of Utah.  Venue for any legal disputes shall be in Utah County, Utah.

 

22.5                        Partial Invalidity.  Should any Section or any part of a Section of this Agreement be held unenforceable or in conflict with the law of any jurisdiction, the validity of the remaining Sections and Subsections shall not be affected by the invalidity of any other part of the Agreement.

 

22.6                        Force Majeure.  Neither party to this Agreement shall be in default because of a delay or failure to perform which is not the result of the defaulting party’s intentional or negligent acts or omissions, but results from causes beyond the reasonable control of such party such as acts of God, terrorism, civil disobedience and war.

 

22.7                        Entire Agreement.  This Agreement constitutes the entire Agreement and understanding between the parties and supersedes all prior agreements and understandings with

 

15

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

respect to the LICENSED TECHNOLOGY, whether written or oral.  No modification or claimed waiver of any of the provisions of this Agreement shall be valid unless in writing and signed by authorized representatives of the party against whom such modification or waiver was sought to be enforced.

 

22.8                        Full and Fair Meaning.  This Agreement shall be interpreted in accordance with its fair meaning and shall not be interpreted for or against any party on the ground that such party drafted or caused to be drafted this Agreement or any part thereof.

 

22.9                        Binding Effect.  This License Agreement shall be binding upon and shall inure to the benefit of the successors, assigns and legal representatives of the parties.

 

22.10                 Headings.  The paragraph and subparagraph headings contained in this Agreement are for convenience and reference only.  They are not intended to define, limit, or expand the scope of the provisions of this Agreement.

 

IN WITNESS WHEREOF, the parties have entered into this Agreement:

 

	
Date:
    	
July 29, 2005
    	
 
    	
BRIGHAM YOUNG   UNIVERSITY
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Gary R. Hooper
    
	
 
    	
 
    	
 
    	
Gary R. Hooper
    
	
 
    	
 
    	
 
    	
Associate Academic Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
July 29, 2005
    	
 
    	
LICENSEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Eric Patzer
    
	
 
    	
 
    	
 
    	
Eric J. Patzer
    
	
 
    	
 
    	
 
    	
President
    

 

16

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

EXHIBIT A

 

LICENSED TECHNOLOGY

 

STABILIZATION OF BIOLOGICAL AGENTS

 

The LICENSED TECHNOLOGY includes U.S. patent application number 10/199,061, “Plasticized Hydrophilic Glasses for Improved Stabilization of Biological Agents”, the corresponding Patent Cooperation Treaty application number PCT/US02/28320, Canadian application number 2,458,794, European Patent Office application number 02795489.0 and any additional foreign counterparts thereof, as well as all continuations, continuations-in-part, divisions and renewals thereof, all patents which may be granted thereon, and all reissues, reexaminations and extensions; and any trade secrets and know-how which are in existence upon the effective date of this Agreement.Exhibit 10.4

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

LICENSE AGREEMENT

 

This Agreement is made and entered into by and between the University of Iowa Research Foundation (hereinafter “UIRF”) having offices at 2660 University Capitol Centre, Iowa City, Iowa 52242 and Aridis Pharmaceuticals, LLC (hereinafter “Licensee”), having offices at 5941 Optical Court, San Jose, CA 95138

 

WHEREAS, under the patent policy of The University of Iowa (UI), all inventions and technology arising during the normal course of research and teaching at the UI are assigned and entrusted to the UIRF to obtain patent or other appropriate intellectual property protection and license said technology;

 

WHEREAS, UIRF is, therefore, owner by assignment from Larry Schlesinger and Bradley Britigan (“Inventors”) of their entire right, title and interest in United States Patent [***] and United States Patent  [***] ([***]);

 

WHEREAS, UIRF is, therefore, co-owner, with the United States Department of Veterans Affairs (“VA”) by assignment from Bradley Britigan and owner, by assignment from Pradeep Singh (“Inventors”) of their entire right, title and interest in the following patents and patent applications ([***]):

 

United State Patent Application  [***];

United State Patent Application  [***];

International Patent Application  [***];

European Patent Application  [***];

Australian Patent Application  [***];

Canadian Patent Application  [***];

Japanese Patent Application  [***];

Indian Patent Application  [***];

Chinese Patent Application  [***];

Hong Kong Patent Application  [***];

Mexican Patent Application  [***];

New Zealand Patent Application  [***];

 

WHEREAS, UIRF and the VA have entered into that certain Cooperative Technology Administration Agreement, effective as of September 18, 2001 (the “Inter-Institutional Agreement”), pursuant to which all inventions and technology arising during the normal course of research and teaching by VA employees at the University of Iowa (“UI”) may be assigned to both the UIRF and the VA, and are entrusted to the UIRF to obtain patent or other appropriate intellectual property protection and UIRF acquired the sole authority to license rights to any such patents, including those included in the UIRF Patent Assets;

 

WHEREAS, Licensee wishes to obtain an exclusive world-wide license in order to practice the above referenced invention covered by patent rights in the United States and in certain foreign countries, and to manufacture, use and sell in the commercial market the products made in accordance therewith; and

 

WHEREAS, UIRF wishes to grant such a license to Licensee in accordance with the terms of this Agreement.

 

NOW THEREFORE, in consideration of the foregoing premises, the parties agree as follows:

 

1

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

ARTICLE I — DEFINITIONS

 

1.1                               PATENT RIGHTS shall mean the following patents and patent applications, the inventions described and claimed therein, and any divisions, continuations, continuations-in-part to the extent the claims are directed to subject matter specifically described in the following, patents issuing thereon or reissues thereof; and any and all foreign patents and patent applications corresponding thereto; which will be automatically incorporated in and added to this Agreement and shall periodically be added to Appendix A attached to this Agreement and made part thereof.

 

United States Patent  [***];

United States Patent  [***];

United States Patent Application  [***]

International Patent Application  [***];

European Patent Application  [***];

Australian Patent Application  [***];

Canadian Patent Application  [***];

Japanese Patent Application  [***];

Indian Patent Application  [***];

Chinese Patent Application  [***];

Hong Kong Patent Application  [***];

Mexican Patent Application  [***];

New Zealand Patent Application  [***]; and

South Africa Patent Application  [***].

 

1.2                               LICENSED PRODUCTS shall mean any product the manufacture, use, import or sale of which, absent the license granted hereunder, would infringe one or more Valid Claims within the Patent Rights.

 

1.3                               Net Sales: Net Sales would mean the amounts received by Licensee, Affiliates and sublicensees from sales of Licensed Products (in final form for end use) to a third party, less the following deductions, which are actually incurred, separately itemized or otherwise demonstrated on invoices, and included in and not otherwise deducted from Net Sales:

 

a)                                     credits or allowances actually granted for damaged Licensed Products, returns or rejections of Licensed Products and retroactive price reductions;

b)                                     freight, packaging, postage, shipping, taxes and customs duties (imposed upon the sale, importation, delivery, or use of a Licensed Product) and insurance charges;

c)                                      normal and customary trade, cash and quantity discounts, allowances and credits;

d)                                     sales, value added, withholding or similar taxes measured by the billing amount, when included in billing.

 

1.4                               Combination Product: In the event that a Licensed Product is sold in combination with other product(s) for which no royalty would be due if sold separately, Net Sales from such combination sales for purposes of calculating the amounts due under this License Agreement shall be calculated by multiplying the Net Sales of the combination product by the fraction A/(A + B), where A is the average gross selling price during the applicable calendar quarter of the Licensed Product sold separately to the same category of customers (e.g. patients, health care providers, or product distributors) and B is the average gross selling price during the applicable calendar quarter of the other product(s) and/or services. In the event that such separate sales were not made during the previous calendar quarter then the Net Sales would be as reasonably allocated by Licensee and UIRF in good faith discussion, taking into

 

2

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

account the Licensed Product’s proprietary importance relative to the other products or services sold in combination with such Licensed Product.

 

1.5                               AFFILIATES shall mean any company, corporation, or business in which Licensee owns or controls at least fifty percent (50%) of the voting stock.

 

1.6                               FIELD shall mean the manufacture, use, sale, offer for sale, import or other exploitation of Gallium compounds, except those claimed in United States Patent [***].

 

Note: The phrase, “except those claimed in United States Patent [***]”, in the definition of FIELD above, is included by reason of a license agreement granted by UIRF for the practice of that patent by Titan Pharmaceuticals, Inc. Should that license agreement expire or terminate for any reason, the phrase, “except those claimed in United States Patent [***]”, shall be deleted from the definition of FIELD above and United States Patent [***] shall be thereafter included in the definition of Patent Rights under Article 1.1 above, by written amendment to this Agreement, subject to the following:

 

a)                                     Licensee shall demonstrate compliance with this Agreement, including terms requiring diligent development of technology, reasonably satisfactory to UIRF, and

b)                                     Licensee and UIRF shall negotiate for reimbursement of any unreimbursed expenses relating to PATENT RIGHTS previously licensed to Titan.

 

1.7                               SUBLICENSE FEES shall mean amounts received by Licensee from a sublicensee in consideration for a sublicense to make and have made, to use and have used, to sell and have sold LICENSED PRODUCTS or practice a LICENSED PROCESSES under the PATENT RIGHTS, including amounts received by way of license issue fees and milestone payments on the sale or distribution of LICENSED PRODUCTS, but excluding amounts received as an earned royalty upon Net Sales. Notwithstanding the foregoing, the following would not be included in the definition of Sublicense Fees: income received by Licensee as payment or reimbursement for research, development or other costs incurred by or for Licensee, including costs associated with materials, equipment or clinical testing; amounts received for securities (equity or debt); amounts paid in consideration for licenses or other rights under intellectual property other than the PATENT RIGHTS, as allocated by Licensee; amounts in consideration for the sale of all or substantially all of the business or assets of Licensee, whether by merger, acquisition of stock or assets or otherwise; and any governmental charges, including withholding or other taxes (but not income taxes), paid or payable by Licensee on amounts received in consideration for a sublicense under the PATENT RIGHTS.

 

1.8                               “Valid Claims” shall mean any pending or issued claim of any Patent Right that has not expired, nor been permanently revoked, nor held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction.

 

ARTICLE II — GRANT

 

2.1                               UIRF hereby grants to Licensee and Licensee accepts, subject to the terms and conditions hereof, a worldwide license in the HELD under PATENT RIGHTS to make and have made, to use and have used, import, to sell and have sold the LICENSED PRODUCTS. Such license shall include the right to grant sublicenses in the FIELD, provided made in accordance with this Agreement. Licensee shall provide copies of all such sublicenses within thirty (30) days of execution. In order to provide Licensee with a period of exclusivity, UIRF agrees it will not grant licenses under PATENT RIGHTS to others except as required by UIRF’s obligations in paragraph 2.3 (a) or as permitted in paragraph 2.3 (b). Licensee agrees during the period of exclusivity of this license in the United States that any LICENSED

 

3

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

PRODUCT produced for sale in the United States will be manufactured substantially in the United States, to the extent required by Federal law, unless appropriate waivers shall have been obtained as provided by law.

 

2.2                               The term of this agreement and the exclusive license set forth in Paragraph 2.1 shall be from the effective date of this Agreement until the expiration of the last to expire of the PATENT RIGHTS.

 

2.3                               The granting and acceptance of this license is subject to the following conditions:

 

(a)                                 The UI Patent Policy approved in 1983, Public Law 96-517, Public Law 98-620 and UIRF’s obligations under agreements with other sponsors of research as of the Effective Date of this Agreement (UIRF represents that to the best of its knowledge the sole sponsors of research relating to Patent Rights are the VA and the United States National Institutes of Health). Any right granted in this Agreement greater than that permitted under Public Law 96-517 or Public Law 98-620 shall be subject to modification as may be required to conform to the provision of that statute. UIRF represents that the Public Laws 96-517 and 98-620 are consistent with and do authorize the grant of rights made under 2.1 above.

 

(b)                                 The right to grant non-commercial licenses on reasonable terms and conditions under 35U.S.C.§200-212 or 15 U.S.C. 3710a, and other applicable governmental implementing regulations, whichever may be appropriate.

 

(c)                                  UIRF reserves for itself, Inventors, and future not-for-profit employers of Inventors, the right to make and to use for educational, research, and patient care and treatment purposes (with respect to patient care and treatment, at UIRF only) only, the subject matter described and claimed in PA VENT RIGHTS. UIRF further reserves the right to provide and to grant non-exclusive licenses to make and use subject matter covered by PATENT RIGHTS to not-for-profit organizations and government entities for internal research and scholarly purposes only.

 

(d)                                 Licensee shall pay all future costs connected with the commercial development of the LICENSED PRODUCTS, including but not limited to the costs of complying with applicable governmental testing, approvals and regulations.

 

(e)                                  Licensee shall use reasonable efforts to effect introduction of the LICENSED PRODUCTS into the commercial market as soon as practicable, consistent with sound and reasonable business practices and judgment; thereafter, until the expiration of this Agreement, Licensee shall endeavor to keep LICENSED PRODUCTS reasonably available to the public.

 

(f)                                   Licensee has submitted to UIRF a development plan attached hereto as an appendix. Licensee shall use commercially reasonable efforts to follow the development plan. The development plan shall include benchmark dates for development as negotiated by Licensee and UIRF. Licensee shall demonstrate compliance with the benchmark dates set out in the development plan, or shall demonstrate to UIRF’s reasonable satisfaction that Licensee (Or Affilliates or sublicensees, as the case may be) has taken, or can be expected to take within a reasonable time, effective steps to correct the failure to achieve the relevant benchmark in order to achieve that benchmark within the earliest reasonably possible time. If Licensee has not met the milestones in the development plan, either as originally listed or agreed to by UIRF after demonstration by Licensee, UIRF may furnish Licensee with written notice of the determination thereof. Within sixty (60) days after receipt of the notice, Licensee shall either, at its option (i) fulfill the relevant obligation, or (ii) provide to UIRF a mutually acceptable schedule of revised diligence obligations and plans to meet the same. In the case of (ii), UIRF and Licensee shall meet and discuss such revised

 

4

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

obligations and plans, and UIRF shall consider such revisions in good faith. If the UIRF does not find the revised timeline, data and plan reasonably acceptable in its good faith discretion, UIRF may, upon fifteen (15) days written notice to Licensee, terminate the license granted under this Agreement

 

(g)                                  All sublicenses granted by Licensee hereunder shall include a requirement that the sublicensee use efforts at least equivalent to those required of Licensee to bring the subject matter of the sublicenses into commercial use as quickly as is reasonably possible, and shall bind the sublicensee to meet Licensee’s obligations to UIRF under this Agreement and a copy of this Agreement shall be attached to such sublicense agreements. Royalties charged for sublicenses by Licensee shall not be in excess of normal trade practice. Copies of all sublicense agreements shall be provided to UIRF.

 

(h)                                 In accordance with the rights reserved to the Government under 35 U.S.0 §203 and succeeding statutes, the Government shall retain the right to require UIRF or its Licensee to grant a sublicense to a responsible applicant on terms that are reasonable under the circumstances. The Government may exercise its tights retained herein only in exceptional circumstances and only if the Government determines that (i) the action is necessary to meet health or safety needs that are not reasonably satisfied by UIRF; (ii) the action is necessary to meet requirements for public use specified by Federal regulations, and such requirements are not reasonably satisfied by UIRF; or (iii) UIRF has failed to comply with an agreement containing provisions described in 35 U.S.0 §204 or 15 U.S.0 3710a©(4)(B), whichever is appropriate.

 

(i)                                     A license in any other field of use in addition to the FIELD shall be the subject of a separate agreement and shall require Licensee’s submission of evidence, satisfactory to UIRF, demonstrating its willingness and ability to develop and commercialize the kinds of products or processes likely to be encompassed in such other field. If UIRF has non-exclusively licensed in such other field prior to Licensee’s request, HIRE shall grant to Licensee a non-exclusive license under terms and conditions at least as favorable as the previous non-exclusive license.

 

2.4                               UIRF hereby grants to Licensee the right to extend the licenses granted or to be granted in paragraphs 2.1 and 2.3 to an AFFILIATE subject to the terms and conditions hereof.

 

2.5                               All rights reserved to the United States Government and others under Public Law 96-517, 98-620, 35U.S.C.§200-212, 37 CFR part 401 et.al., and succeeding statutes. To the extent set out in those statutes, the Government shall have the nonexclusive, nontransferable, irrevocable, royalty-free, paid-up right to practice or have practiced the PATENT RIGHTS throughout the world by or on behalf of the Government and on behalf of any foreign government or international organization pursuant to any existing or future treaty or agreement to which the Government is a signatory.

 

ARTICLE III — ROYALTIES, PAYMENTS

 

3.1                               Licensee shall pay to UIRF a non-refundable license fee in the sum of  [***] upon sixty (60) days following execution of this Agreement and a sum of  [***]  upon notice by the U.S. Patent Office that any claims in United States Patent Application  [***] (or any continuation thereof) applicable to a human therapeutic use of Gallium will be allowed.

 

3.2                               (a)                                 Licensee shall pay UIRF within thirty (30) days after the end of each calendar quarter, during the term of the license of paragraph 2.1, a royalty of [***] of the NET SALES of all LICENSED PRODUCTS sold by Licensee and its AFFILIATES or sublicensees.

 

5

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

(b)                                 In the case of sublicenses, Licensee shall also pay to UIRF [***] of SUBLICENSE FEES received prior to the filing of an IND for a therapeutic Licensed Product, and [***] of SUBLICENSE FEES thereafter. All royalties paid on SUBLICENSE FEES under this section relating to a specific milestone listed under section 3.3, shall be creditable against that same milestone payment due under 3.3.

 

(c)                                  On sales between Licensee and its AFFILIATES or sublicensees for resale, the royalty shall be paid on the resale only.

 

3.3                               Licensee shall pay to UIRF the applicable non-refundable, non-recoverable, and non-creditable milestone payment set forth below within forty five (45) days after the end of the calendar quarter during which each milestone event for the Licensed Product referenced below occurs is first achieved (i.e., each milestone payment shall not be due more than one (1) time each) by Licensee, Affiliate or Sublicensee.

 

a)                                     [***] upon initiation of FDA, or foreign equivalent, Phase II Clinical Trial for a therapeutic;

b)                                     [***] upon initiation of FDA, or foreign equivalent, Phase III Clinical Trial for a therapeutic;

c)                                      [***] upon filing with the FDA, or foreign equivalent, an NDA for a therapeutic;

d)                                     [***] upon approval by FDA, or foreign equivalent, an NDA for a therapeutic;

e)                                      [***] upon completion of FDA, or foreign equivalent, Phase II Clinical Trial for a Medical Device or a coating for a Medical Device;

f)                                       [***] upon completion of FDA, or foreign equivalent, Phase III Clinical Trial for a Medical Device or a coating for a Medical Device;

g)                                      [***] upon approval by FDA, or foreign equivalent, an NDA for a Medical Device or a coating for a Medical Device;

 

3.4                               UIRF shall have the right to terminate this license in the event that Licensee does not pay to UIRF at least  [***] per year, beginning on the third anniversary of the Effective Date of the License Agreement, under Articles 3.2 and 3.3 combined, or pay to UIRF the amount of any deficiency thereto upon filing of the final royalty report for that year. Sponsored research and patent reimbursement shall not count towards this milestone. Only monies paid under Articles 3.2 and 3.3 (or the make-up of any deficiency paid under this Article 3.4) shall count as meeting the minimum  [***].

 

3.5                               Should Licensee (or any entity or person acting on its behalf, with Licensee’s express permission) bring any action or claim challenging the validity or enforceability of PATENT RIGHTS in any forum, UIRF shall have the option to terminate this Agreement upon 30 days notice to Licensee.

 

ARTICLE IV — REPORTING

 

4.1                               Prior to signing this Agreement, Licensee has provided to UIRF a written research and development plan, attached hereto as an appendix, under which Licensee intends to bring the subject matter of the licenses granted hereunder into commercial use upon execution of this Agreement.

 

4.2                               Licensee shall provide written annual reports within sixty (60) days after June 30 of each calendar year which shall include but not be limited to: reports of progress on research and development, regulatory approvals, manufacturing, sublicensing, marketing and sales during the preceding twelve (12) months as well as plans for the coming year. If progress differs from that anticipated in the plan provided under 4.1, Licensee shall explain the reasons for the difference and propose a modified plan for UIRF’s review and approval. Licensee shall also provide any reasonable additional data UIRF requires to evaluate Licensee’s performance.

 

6

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

4.3                               Licensee shall report to UIRF the date of first sale of LICENSED PRODUCTS (or results of LICENSED PROCESSES) in each country within thirty (30) days of occurrence.

 

4.4                               (a)                                 After the date of first sale of LICENSED PRODUCTS, Licensee agrees to submit to UIRF within sixty (60) days (ninety [90] days if the report includes activities of sublicensees) after the calendar quarters ending March 31, June 30, September 30, and December 31, reports setting forth for the preceding three (3) month period at least the following information:

 

i)                                         the number of the LICENSED PRODUCTS sold by Licensee, its AFFILIATES and sublicensees in each country;

ii)                                      total receipts for such LICENSED PRODUCTS;

iii)                                   an accounting for all LICENSED PROCESSES used or sold;

iv)                                  deductions applicable to determine the NET SALES thereof;

v)                                     the amount of royalty due thereon;

 

and with each such royalty report to pay the amount of royalty due. Such report shall be certified as correct by an officer of Licensee and shall include a detailed listing of all deductions from royalties as specified herein. If no royalties are due to DIRE for any reporting period, the written report shall so state. If royalties for any calendar year do not equal or exceed the minimum royalties established in paragraph 3.4, Licensee shall include the balance of the minimum royalty with the payment for half year ending December 31.

 

(b)                                 All payments due hereunder shall be payable in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of each royalty period. Such payments shall be without deduction of exchange, collection or other charges.

 

(c)                                  All such reports shall be maintained in confidence by UIRF, except as required by law, including Public Law 96-517 and 98-620.

 

(d)                                 Late payments shall be subject to an interest charge of [***] per month.

 

ARTICLE V — RECORD KEEPING

 

5.1                               Licensee shall keep, and shall require its AFFILIATES and sublicensees to keep, accurate and correct records of LICENSED PRODUCTS made, used or sold under this Agreement, appropriate to determine the amount of royalties due hereunder to UIRF. Such records shall be retained for at least five (5) years following a given reporting period. They shall be available during normal business hours for inspection at the expense of UIRF by UIRF’s Internal Audit Department or by an independent Certified Public Accountant selected by HIRE and approved by Licensee for the sole purpose of verifying reports and payments hereunder. In the event that any such inspection shows an underreporting and underpayment in excess of ten percent (10%) for any twelve (12) month period, then Licensee shall pay the cost of such examination as well as any additional sum that would have been payable to UWE had the Licensee reported correctly, plus interest.

 

ARTICLE VI — FILING, PROSECUTION AND MAINTENANCE OF PATENTS

 

6.1                               Licensee shall reimburse UIRF for seventy-five percent (75%) of all reasonable expenses UIRF has incurred for the preparation, filing, prosecution and maintenance of PATENT RIGHTS [***] up to the Effective Date of this License Agreement, on the following schedule: one-half of such amounts shall be reimbursed within sixty (60) days of the Effective Date and the remaining second half within one

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

hundred twenty (120) days of the Effective Date. Licensee shall reimburse UIRF seventy-five percent (75%) for all such future expenses upon receipt of invoices from UIRF, thirty (30) days net. Late payment of these invoices shall be subject to interest charges of one and one-half percent (1 1/2%) per month. UIRF represents that the two current agreements for the patent rights shall total one-hundred percent (100%) reimbursement of all patent costs. UIRF further agrees that through duration of this License Agreement, should UIRF license the Patent Rights to another third party, then UIRF shall inform Licensee and agree with Licensee to an appropriate pro rata reduction (based on the costs of prosecution associated with Patent Rights licensed to such third party) in Licensee’s contribution to the patent expenses. UIRF shall take responsibility for the preparation, filing, prosecution and maintenance of any and all patent applications and patents included in PATENT RIGHTS. UIRF shall promptly inform Licensee regarding all matters directly pertaining to prosecution of PATENT RIGHTS, and shall seek Licensee’s counsel concerning all proposed course of action affecting the PATENT RIGHTS, including but not limited to in which countries patent protection should be obtained and all proposed course of action in any interference proceedings.

 

6.2                               UIRF and Licensee shall cooperate fully in the preparation, filing, prosecution and maintenance of PATENT RIGHTS and of all patents and patent applications licensed to Licensee hereunder, executing all papers and instruments or requiring members of UIRF to execute such papers and instruments as to enable UIRF to apply for, to prosecute and to maintain patent applications and patents in UIRF’s name in any country. Each party shall provide to the other prompt notice as to all matters which come to its attention and which may affect the preparation, filing, prosecution or maintenance of any such patent applications or patents.

 

6.3                               If Licensee elects to no longer pay the expenses of a patent application or patent included with PATENT RIGHTS, Licensee shall notify UIRF not less than sixty (60) days prior to such action and shall thereby surrender its rights under such patent or patent application.

 

ARTICLE VII — MARKING

 

7.1                               If a licensed patent has been or is subsequently issued to UIRF covering any feature or features of the LICENSED PRODUCTS, Licensee agrees to mark each and every package or container in which the LICENSED PRODUCTS are used or sold by or for Licensee with marking complying with the provisions of Title 35, U.S. Code, Section 287, if required, or any future equivalent provisions of the United States relating to the marking of patented devices, or with marking complying with the law of the country where the LICENSED PRODUCTS are shipped, used or sold.

 

ARTICLE VIII — INFRINGEMENT

 

8.1                               With respect to any PATENT RIGHTS under which Licensee is exclusively licensed in a FIELD pursuant to this Agreement, Licensee or its sublicensee shall have the right to prosecute in its own name and at its own expense any infringement within the FIELD of such patent, so long as such license is exclusive at the time of the commencement of such action. UIRF agrees to notify Licensee promptly of each infringement of such patents of which UIRF is or becomes aware. Before Licensee or its sublicensees commences an action with respect to any infringement of such patents Licensee shall give careful consideration to the views of UIRF and to potential effects on the public interest in making its decision whether or not to sue and in the case of a Licensee sublicense, shall report such views to the sublicensee.

 

8.2                               If Licensee elects to sue for patent infringement, UIRF agrees to be named as nominal third party plaintiff if necessary to the commencement of any such action, and further agrees to provide any information available to UIRF and needed by Licensee in prosecuting such action. Licensee shall

 

8

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

reimburse UIRF for any costs it incurs as part of an action brought by Licensee or its sublicensee, irrespective of whether UIRF shall become a co-plaintiff.

 

8.3                               If Licensee or its sublicensee elects to commence an action as described above, Licensee may reduce, by up to fifty percent (50%), the royalty due to UIRF earned under the patent subject to suit by fifty percent (50%) of the amount of the expenses and costs of such action, including attorney fees. In the event that such fifty percent (50%) of such expenses and costs exceed the amount of royalties withheld by Licensee for any calendar year, Licensee may to that extent reduce the royalties due to UIRF from Licensee in succeeding calendar years, but never by more than fifty percent (50%) of the royalty due in any one year.

 

8.4                               No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of UIRF, which consent shall not be unreasonably withheld.

 

8.5                               Recoveries or reimbursements from such action shall first be applied to reimburse Licensee and UIRF for litigation costs not paid from royalties and then to reimburse UIRF for royalties withheld. Any remaining recoveries or reimbursements shall be shared 75% to the Party electing to pursue and 25% to the other Party.

 

8.6                               In the event that Licensee and its sublicensee, if any, elect not to exercise their right to prosecute an infringement of the PATENT RIGHTS pursuant to the above paragraphs, UIRF may do so at its own expense, controlling such action and sharing recoveries as provided in section 8.5.

 

8.7                               If a declaratory judgment action alleging invalidity of any of the PATENT RIGHTS shall be brought against Licensee, or UIRF, then UIRF, at its sole option, shall have the right to intervene and take over the sole defense of the action at its own expense.

 

8.8                               UIRF shall have no obligation to defend any action for infringement brought against Licensee by a third party. In the event Licensee is sued by a third party, and as a result of the settlement of such suit is required to pay a royalty to a third party on a LICENSED PRODUCT, the amount of royalty paid will be deducted from the royalty payment due to the UIRF for that LICENSED PRODUCT. In the event the settlement prevents the Licensee from continuing sales of a LICENSED PRODUCT, no additional royalties and/or minimum royalties will apply for that LICENSED PRODUCT.

 

ARTICLE IX — TERMINATION OF AGREEMENT

 

9.1                               Upon any termination of this Agreement, and except as provided herein to the contrary, all rights and obligations of the Parties hereunder shall cease, except as follows:

 

(a)                                 UIRF’s right to receive or recover and Licensees obligation to pay royalties accrued or accruable for payment at the time of any termination;

 

(b)                                 Licensees obligation to maintain records and UIRF’s right to conduct a final audit as provided in Article V of this Agreement; and

 

(c)                                  Any cause of action or claim of UIRF, accrued or to accrue because of any breach or default by Licensee.

 

9.2                               In the event Licensee fails to make payments due hereunder, UIRF shall have the right to terminate this Agreement upon forty-five (45) days written notice, unless Licensee makes such payments

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

plus interest within the forty-five (45) day notice period. If payments are not so made, UIRF may immediately terminate this Agreement.

 

9.3                               In the event that Licensee shall be in default in the performance of any obligations under this Agreement (other than as provided in 9.2 above which shall take precedence over any other default), and if the default has not been remedied within ninety (90) days after the date of notice in writing of such default, UIRF may terminate this Agreement immediately by written notice.

 

9.4                               If Licensee shall (a) make a general assignment for the benefit of creditors, (b) file or have filed against it a petition in bankruptcy or seeking reorganization (and, in the case of a petition filed against Licensee, such petition is not dismissed or stayed by the earlier of the date that is (i) 90 days after the date that such petition is filed, or (ii) the date that an order for relief is granted by the bankruptcy court in connection therewith), (c) voluntarily commence any case, proceeding or other action or file any petition seeking relief under Title 11 of the United States Code, (d) consent to the institution of, or fail to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, or (e) apply for or consent to the employment of a receiver, trustee, custodian, sequestrator or similar official in bankruptcy for the Licensee; then Licensee shall notify UIRF and provide its plan, if any, for emerging from such proceeding or removing such assignment. UIRF shall review the plan in good faith and, if deemed sufficient in its reasonable discretion to emerge from such proceeding or remove such assignment, shall maintain this Agreement for a reasonable time; otherwise, it shall have the right to terminate this Agreement upon thirty (30) days written notice. In the event that Licensee commences any bankruptcy proceeding, it shall not thereafter deliver any Patent Rights constituting intellectual property (or any embodiments of such intellectual property) to any third party.

 

9.5                               Any sublicenses granted by Licensee under this Agreement shall provide for termination or assignment to UIRF, at the option of HIRE, of Licensee’s interest therein upon termination of this Agreement, except that UIRF will, to the extent it is legally able to do so, offer to the sublicensee a license agreement as immediately described below, provided that the sublicensee: CO reaffirms the terms and conditions of this Agreement as it relates to the rights the sublicensee has been granted under the sublicense; (ii) agrees to abide by all of the terms and conditions of this Agreement applicable to such sublicensee. and to discharge directly all pertinent obligations of Licensee which Licensee is obligated hereunder to discharge; (iii) acknowledges that UIRF shall have no obligations to the sublicensee other than its obligations set forth in the License Agreement with regard to Licensee; and (iv) can demonstrate to UIRF that sublicensee has at least an equal amount of capital and ability as Licensee to diligently advance the Patent Rights for commercial use. UIRF agrees that, provided UIRF receives notice that complies with the immediately preceding sentence, and sublicensee is not in breach of its sublicense, UIRF shall grant to such sublicensee license rights and terms equivalent to the sublicense rights and terms which Licensee shall have granted to said sublicensee.

 

9.6                               Licensee shall have the right to terminate this Agreement by giving ninety (90) days advance written notice to DIRE to that effect. Upon termination, a final report shall be submitted and any royalty payments and unreimbursed patent expenses due to DIRE become immediately payable.

 

9.7                               Licensee shall have the right during a period of six (6) months following the effective date of such termination to sell or otherwise dispose of the LICENSED PRODUCT existing at the time of such termination, and shall make a final report and payment of all royalties related thereto within sixty (60) days following the end of such period or the date of the final disposition of such inventory, whichever first occurs.

 

9.8                               Termination of this agreement to a LICENSED PRODUCT shall not alter the rights and obligations of the parties to the remaining LICENSED PRODUCTS.

 

10

 

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

ARTICLE X — ASSIGNMENT

 

10.1                        The rights and licenses granted by UIRF in this agreement are specific and may not be assigned or otherwise transferred to any party other than to the acquirer of substantially all the business interest of Licensee relating to the PATENT RIGHTS, without the prior written approval of UIRF. Any attempted assignment or transfer without such approval except as provided in the preceding sentence shall be void and shall automatically terminate all rights of Licensee under this Agreement.

 

ARTICLE XI — REPRESENTATIONS AND WARRANTIES: LIMITATIONS

 

11.1                        Nothing in this agreement shall be construed as:

 

(a)                                 A warranty or representation by UIRF as to the validity or scope of any LICENSED PATENT; or

 

(b)                                 A warranty or representation that anything made, used or sold under the license granted in this agreement is or will be free from infringement of patents owned by third parties; or

 

(c)                                  Conferring a right to use in advertising, publicity or otherwise the name of the UI or UIRF, or the inventors. Unless required by law, or unless specifically approved in advance in writing by UIRF, Licensee’s use of the name “The University of Iowa” or the name of any University of Iowa college, department, or inventor in advertising, publicity or other promotional activities is expressly prohibited.

 

11.2                        UIRF represents that, to the best of its knowledge, anything made, used or sold under this agreement will be free from infringement of patents of third parties.

 

11.3                        UIRF EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF THE PA PENT RIGHTS, OR INFORMATION SUPPLIED BY UIRF, LICENSED PROCESSES OR LICENSED PRODUCTS CONTEMPLATED BY THIS AGREEMENT. UIRF assumes no responsibilities whatever with respect to design, development, manufacture, use, sale or other disposition by Licensee or AFFILIATES of LICENSED PRODUCTS, or LICENSED PROCESSES. The entire risk as to the design, development, manufacture, offering for sale, sale, or other disposition and performance of LICENSED PRODUCTS and LICENSED PROCESSES is assumed by Licensee and AFFILIATES.

 

11.4                        To the best knowledge of UIRF, UIRF and VA are the sole owner by assignment of the Patent, the Inter-Institutional Agreement is in full effect and UIRF has committed no material breach nor proffered or received any notice of termination under that Agreement, and UIRF has the authority to enter into this Agreement and license the Patent Rights on behalf of itself and VA, and the patents and applications listed in Patent Rights comprise all filings relating to the subject matter disclosed in those patents and applications by the inventors listed therein that are owned by UIRF and VA. During the term of this Agreement, UIRF shall use its best efforts to maintain the Inter-Institutional Agreement (attached as appendix hereto) and all of UIRF’s rights thereunder with VA in full force and effect.

 

ARTICLE XII — GENERAL

 

12.1                        (a)                                 Licensee shall indemnify, defend and hold harmless UIRF and the University of Iowa and their current or former directors, governing board members, trustees, officers, faculty, medical and professional staff, employees, students, and agents and their respective successors, heirs and assigns (the “Indemnities”), against any liability, damage, loss or expenses (including reasonable attorneys’ fees and

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

expenses of litigation) incurred by or imposed upon the Indemnities or any one of them in connection with any claims, suits, actions, demands or judgments arising out any theory of product liability (including, but not limited to, actions in the form of tort, warranty, or strict liability) concerning any product, process or service made, used or sold pursuant to any right or license granted under this Agreement.

 

(b)                                 Licensee agrees, at its own expense, to provide attorneys reasonably acceptable to UIRF to defend against any actions brought or filed against any party indemnified hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought.

 

(c)                                  Beginning at the time as any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by Licensee or AFFILIATE or agent of Licensee, Licensee shall, at its sole cost and expense procure and maintain Commercial General Liability insurance in amounts not less than $2,000,000 per occurrence and $2,000,000 annual aggregate and naming the Indemnitees as additional insureds. During clinical trials of any such product, process or service Licensee shall, at its sole cost and expense, procure and maintain Commercial General Liability insurance in such equal or lesser amounts as UIRF shall require, naming the Indemnitees as additional insureds. Such Commercial General Liability insurance shall provide coverage for bodily injury and property damage, including completed operations, personal injury, coverage for contractual employees, blanket contractual and products and completed operations. If Licensee elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $250,000 annual aggregate) such self-insurance program must be acceptable to UIRF. The minimum amounts of insurance coverage required shall not be construed to create a limit of Licensee’s liability with respect to its indemnification under this Agreement. Policy shall contain a severability of interests provision.

 

(d)                                 Licensee shall provide UIRF with a certificate of liability insurance at the time insurance is required under 12.1 (c). Licensee shall provide UIRF with written notice at least thirty (30) days prior to the cancellation, non-renewal or material change in such insurance; if Licensee does not obtain replacement insurance providing comparable coverage within such thirty (30) day period, UIRF shall have the right to terminate this Agreement effective at the end of such thirty (30) day period without notice or any additional waiting periods.

 

(e)                                  Licensee shall maintain such Commercial General Liability insurance beyond the expiration or termination of this Agreement during (i) the period that any product, process, or service, relating to, or developed pursuant to, this Agreement is being commercially distributed or sold by Licensee or by a sublicensee, AFFILIATE or agent of Licensee and (ii) a reasonable period after the period referred to in (e)(i) above which in no event shall be less than fifteen (15) years.

 

12.2                        In the event of any controversy or claim arising out of or relating to any provision of this Agreement or the breach thereof, the parties shall try to settle such conflicts amicably between themselves. Subject to the limitation stated in the final sentence of this section, any such conflict which the parties are unable to resolve may be settled through arbitration conducted in accordance with the rules of the American Arbitration Association. In the event a dispute is arbitrated, the demand for arbitration shall be filed within a reasonable time after the controversy or claim has arisen, and in no event after the date upon which institution of legal proceedings based on such controversy or claim would be barred by the applicable statutes of limitation. Such arbitration shall be held in Des Moines, Iowa. The award through arbitration shall be final and binding. Either party may enter any such award in a court having jurisdiction or may make application to such court for judicial acceptance of the award and an order of enforcement, as the case may be. Notwithstanding the foregoing, either party may, without recourse to

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

arbitration, assert against the other party a third-party claim or cross-claim in any action brought by a third party, to which the subject matter of this Agreement may be relevant.

 

12.3                        Should a court of competent jurisdiction later consider any provision of this Agreement to be invalid, illegal, or unenforceable, it shall be considered severed from this Agreement. All other provisions, rights and obligations shall continue without regard to the severed provision, provided that the remaining provisions of this Agreement are in accordance with the intention of the parties.

 

12.4                        No waiver by a Party of any breach of this Agreement, no matter how long continuing or how often repeated, shall be deemed a waiver of any subsequent breach thereof, nor shall any delay or omission on the part of a Party to exercise any right, power or privilege hereunder be deemed a waiver of such right, power or privilege.

 

12.5                        The relationship between the Parties is that of independent contractor and contractee. Licensee shall not be deemed to be an agent of UIRF in connection with the exercise of any rights hereunder, and shall not have any right or authority to assume or create any obligation or responsibility on behalf of UIRF.

 

12.6                        No party hereto shall be deemed to be in default of any provision of this Agreement, or for any failure in performance, resulting from acts or events beyond the reasonable control of such Party, such acts of God, acts of civil or military authority, civil disturbance, war, strikes, fires, power failures, natural catastrophes or other “force majeur” events.

 

ARTICLE XIII — NOTICES; APPLICABLE LAW

 

13.1                        Any notice, report or payment provided for in this Agreement shall be deemed sufficiently given if in writing and when sent by express courier, certified or registered mail addressed to the party for whom intended at the address set forth below, or to such address as either party may hereafter designate in writing to the other:

 

	
(a) For the UIRF:
    	
University of Iowa   Research Foundation
    
	
 
    	
Attn: Executive   Director
    
	
 
    	
2660University Capitol   Centre
    
	
 
    	
Iowa City, Iowa   52242-5500
    
	
 
    	
 
    
	
(b) For the   Licensee:
    	
Eric Patzer or Vu   Truong
    
	
 
    	
Aridis Pharmaceuticals
    
	
 
    	
5941 Optical Court
    
	
 
    	
San Jose, CA 95138
    

 

13.2                        This Agreement shall be construed, interpreted, and applied in accordance with the laws of the State of Iowa.

 

13.3                        Licensee agrees to comply with all applicable laws and regulations. In particular, it is understood and acknowledged that the transfer of certain commodities and technical data is subject to United States laws and regulations controlling the export of such commodities and technical data, including all Export Administration Regulations of the United States Department of Commerce. These laws and regulations among other things, prohibit or require a license for the export of certain types of technical data to certain specified countries. Licensee hereby agrees and gives written assurance that it will comply with all United States laws and regulations controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by Licensee or its AFFILIATES or sublicensees, and that it will

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

defend and hold UIRF harmless in the event of any legal action of any nature occasioned by such violation.

 

ARTICLE XIV — INTEGRATION

 

14.1                        This Agreement constitutes the final and entire agreement between the parties, and supersedes all prior written agreements and any prior or contemporaneous oral understanding regarding the subject matter hereof. Any representation, promise or condition in connection with such subject matter which is not incorporated in this agreement shall not be binding on either party. No modification, renewal, extension or termination of this agreement or any of its provisions shall be binding upon the party against whom enforcement of such modification, renewal, extension or termination is sought, unless made in writing and signed on behalf of such party by a duly authorized officer.

 

IN WITNESS WHEREOF, each of the parties have caused this agreement to be executed by its duly authorized representative. The Effective Date of this Agreement is October 22, 2016            .

 

	
Signed this 22 day   of October, 2010
    	
Signed this 18th day of   October, 2010
    
	
 
    	
 
    
	
LICENSOR
    	
LICENSEE
    
	
The University of Iowa   Research Foundation
    	
Aridis Pharmaceuticals,   LLC
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Pamela York
    	
 
    	
By:
    	
/s/ Eric Patzer
    
	
Name:
    	
Pamela York
    	
Name:
    	
Eric J. Patzer
    
	
Title:
    	
Executive Director
    	
Title:
    	
President
    
					

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

Appendix A

 

The following comprise PATENT RIGHTS:

 

United State Patent Application No. 60/526,907, titled “Gallium Inhibits Biofilm Formation”, filed December 4, 2003; United State Patent Application No. 11/004,049, titled “Gallium Inhibits Biofilm Formation”, filed December 3, 2004; International Patent Application No. PCT/USO4/40525, titled “Gallium Inhibits Biofilm Formation”, filed December 3, 2004;

European Patent Application No. 04817941.0, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004;

Australian Patent Application No. 2004296178, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004;

Canadian Patent Application No. 2,547,982, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004; Japanese Patent Application No. 2006-542790, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004;

Indian Patent Application No. 3724/DELNP/2006, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004;

Chinese Patent Application No. 200480039693.X, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004;

Hong Kong Patent Application No. 07101980.3, titled “Gallium Inhibits Biofilm Formation”, filed February 22, 2007; Mexican Patent Application No. PA/A/2006/006379, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004, issuing as Patent No. 267209, issuing date June 4, 2009;

New Zealand Patent Application No. 547884, titled “Gallium Inhibits Biofilm Formation”, priority date December 3, 2004, issuing as Patent No. 547884, issuing date February 11, 2010;

South Africa Patent Application No. 2006/05428, titled “Gallium Inhibits Biofilm Formation’, priority date December 3, 2004, issuing as Patent No. 2006/05428, issuing date February 28, 2008;

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX B

 

PanaecinTM Product Development Plan

 

Background
 Gallium has an extensive history of therapeutic use in humans. It is the active component of a commercial product (Ganite®) that is used to treat hypercalcemia related to cancer (1). In addition, there is a rich clinical history testing various gallium salts in over 1,000 cancer patients (2,3) and using 67Ga scans to detect areas of infection and inflammation. As a result, there is a well understood safety profile of gallium nitrate when administered in large doses (200-400 mg/24h), both acutely and chronically, and as an intravenous (iv) infusion. More recently, the anti-infective properties of gallium have been increasingly recognized. Gallium is a semi-metallic compound with similar chemical characteristics to iron, particularly in atomic radius and electron negativity. It binds to many iron binding proteins, such as bacterial siderophores, and unlike iron, gallium cannot be reduced, or readily dislodged from iron binding proteins, since sequential oxidation and reduction are critical for many of iron’s biological functions. As a consequence, many critical enzymatic pathways in bacteria, which require iron, such as DNA synthesis, metabolic conversion, electron transport and oxidative stress defense are disrupted leading to growth inhibition (4). This mechanism of action mimics that of host defenses, which have evolved to combat both acute and chronic infection by sequestering iron. Thus, gallium is a new anti-infective with a mechanism of action that differs from all current antibiotics. One of the most extensive studies of the antibacterial activity of gallium has been performed with P. aeruginosa. Gallium inhibits P. aeruginosa growth with a minimum inhibitory concentration (MIC90) and minimum bactericidal concentration (MBC) of approximately 10 pM (0.7 pg/mL; ref. 5). Furthermore, gallium nitrate inhibits the formation of P. aeruginosa biofilms at 0.1 pg/mL and disrupts pre-existing biofilms at 7 pg/mL (5).

 

Preclinical Development
 Studies at Aridis have shown that gallium has excellent activity against P. aeruginosa clinical isolates with varying degrees of antibiotic resistance (Table 1) with 10 of 11 strains exhibiting complete inhibition at gallium concentrations below 1 ug/mL. Time to kill kinetics also demonstrated that even at concentrations 10-fold lower than the maximally achievable clinical dose, P. aeruginosa was completely killed within 3 hours of exposure to gallium (Figure 1). Furthermore, the activity of gallium against a broad spectrum of bacteria (Appendix 1, Table 4) particularly those that chronically colonize the lungs of CF patients, such as P. aeruginosa, Burkholderia cepacia, Staphylococcus aureus and methicillin-resistant S. aureus (MRSA) confirms that it is a promising drug candidate for treatment of chronic lung infections in CF patients, non-CF bronchiectasis patients and for the treatment of chronic obstructive pulmonary disease (COPD).

 

Table 1

 

[Table and Image]

 

Process Development and Manufacturing Drug Substance
  Bulk GMP material (drug substance) suitable for clinical testing is commercially available from several contract manufacturers. Aridis evaluated Regis Technologies, Inc. (Morton Grove, IL) and Johnson Matthey (West Deptford, NJ) as contract manufacturers and will purchase GMP drug substance for initial clinical testing from one of these vendors.

 

Formulation Development
 Rationale for the use of inhaled gallium for the treatment of lung infections
  As mentioned, clinical data have demonstrated the safety of gallium when administered in large doses

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

(200-400 mg/24h), both acutely and chronically (2,3). Aridis’ projected pulmonary daily dose (15 mg of gallium nitrate) is a small fraction of the iv doses used with the GaniteTM product.

 

Progression toward reduced systemic exposure, reduced dose and administration time with inhalable antibiotics.
  Current therapies to control P. aeruginosa infections in CF patients are inconvenient and exert a limited impact on mortality. The current standard of care to treat P. aeruginosa lung infections in CF patients, which represents a significant advancement, is twice-daily treatment of tobramycin solution administered by oral inhalation for alternating 28-day on/off cycles. Pulmonary delivery has been shown to significantly increase local lung bioavailability and reduce systemic toxicity (Figure 2). The downside of pulmonary administration is that CF patients may spend nearly three hours on an average day on inhalation therapy (i.e. saline solution, antibiotic and DNase treatment; 6), which impacts their quality of life and has become an important factor in the development of new drug therapies. In this regard, recent advances in powder inhalers and more efficient liquid nebulizers have enabled a marked reduction in dose level and dosing time.

 

FIGURE 2. (A) Mean peak tobramycin level in serum following administration via I.V. infusion at 6 to 10.8 mg/kg/day, dry powder inhalation, 4 X 28-mg capsules BID and solution inhalation 300mg BID. (B) Mean peak tobramycin levels in sputum following same dosing regimes.

 

We will develop gallium as an inhaled therapy, because it maximizes the dose at the site of infection and minimizes the systemic exposure. Gallium has been formulated into a liquid that can be readily inhaled into the lungs using a commercially available nebulizer device (Aeroneb® Go, Aerogen, Inc.). In preliminary preclinical studies, gallium administered into the lungs of rats intratracheally was shown to have a lung half-life of 16.5 hrs, which may allow a dosing frequency of about once a day. We will extend these studies by producing material initially for preclinical testing and GLP toxicology studies, and subsequently phase 1 and 2A clinical trials. A potentially more convenient powder formulation may be bridged into phase 2 clinical studies once initial efficacy has been established.

 

The formulation development has been performed at the Aridis facility. Once a clinical scale process is developed, then it will be transferred to the manufacturing facility where clinical scale formulation (drug product) will be produced under GMP manufacturing conditions.

 

Preclinical Safety Testing
 Non-GLP Studies
 Liquid and dry powder formulations were subjected to in vitro bacterial killing tests and acute mouse protection studies (5) to ensure that Panaecin has retained full activity. The minimum inhibitory concentration (MIC) and time to kill (TTK) were calculated for a representative sample of P.aeruginosa including both clinical isolates and standard laboratory strains. MIC and TTK will be determined for other lung pathogens including S. aureus, B. cepacia, H. influenza, S. pneumonia, Stenotrophomonas maltophilia and Klebsiella pneumonia. Panaecin has been tested in a non-GLP rat intratracheal instillation study to determine the deposition in the lung and the half-life of the residence time in the lung. The data displayed in Fig 3 indicates a half-life of 2-3 days for gallium in the lung.

 

GLP studies
  Overview. GLP inhalation toxicology testing will be performed at contract laboratory and included in an IND with US FDA. Although Ganite® has been tested in >1,000 patients for cancer indications with an

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

extensive literature on the toxicology of systemic and oral administration, the FDA indicated that inhalation toxicology studies in two animal species will be required to initiate clinical testing of inhaled formulations. Several laboratories were identified with expertise in performing GLP inhalation toxicology studies in rats and dogs, and Huntingdon Life Sciences (East Milstone, NJ) has been selected. The study design mimics the administration of gallium in the proposed phase 1 and 2A clinical studies where gallium will be administered for up to 14 days. Expanded, longer duration toxicology studies are planned to support future clinical trials.

 

Maximum Tolerated Dose (MTD) Studies in Rats. MTD studies will be conducted in rats to determine the highest dose that can be safely administered to animals under routine exposure conditions. The MTD studies will be single dose administrations followed by blood collection at multiple time points to determine systemic levels of compound from tidal breathing animal exposures. Depending on the observed response of rats, after a washout period of 2 days, the exposure concentration will be increased or decreased for subsequent exposures for up to a maximum of 4 treatments to identify the maximum tolerated inhaled dose. In phase 2, rats will be exposed for 7 days to confirm the maximum tolerated or maximum practical dose. The following evaluations will be performed: twice daily viability and clinical observations, physical examinations at pretest, 2 hours after exposure and weekly thereafter, body weights, complete macroscopic examination and histology of entire respiratory tract will be performed on all animals 14-days after exposure.

 

14 Day Inhalation Toxicology Studies in Rats. These will be the definitive GLP toxicology studies. 10 male and 10 female animals per dose with four doses (low, mid, high, control; 80 total). For toxicokinetic analysis 3 male and 3 female animals will be used for the control group (6 total) and 9 male and 9 female animals will be used for each dose group (54 total). Evaluations will be as described above and will also include food consumption, ophthalmology examinations, and hematology, coagulation, clinical chemistry and urinalysis on day 14. Samples for toxicokinetic analyses will be collected on days 1 and 14 at 6 time points with 3 animals/sex/dose/timepoint being evaluated. 0.5 mL of blood will be collected at each time point and the sample processed and stored frozen until analysis. Microscopic examination of a complete tissue set (including up to 4 gross lesions) will be performed on all main study animals in the control and high dose groups (low and mid dose groups available, if needed) and examination of the respiratory tract and lymphoid tissues (including up to 4 gross lesions) will be performed on all main study animals in the low and mid-dose groups.

 

Maximum Tolerated Dose (MTD) Studies in Dogs. MTD studies will be conducted in dogs (purebred Beagles, 8 to 9 Months Old, 1 male and 1 female per group, 4 animals total) to determine the highest dose that can be safely delivered to animals under routine exposure conditions. Animals will be exposed by facemask or oro-pharyngeal administration (1 hr/day for mask or up to 10 min/day for OP) at each target dose. Dosing will proceed as described for MTD study in rats. In phase 2, an additional 1 male and 1 female dog will be exposed to confirm the maximum tolerated or maximum practical dose during a 7 day treatment period. Evaluations will be as described above for MTD in rats with the addition of a qualitative electrocardiogram at pretest and days 1 and 7, and samples will be collected for toxicokinetic evaluations on days 1 and 7 at 6 timepoints per occasion.

 

14 Day Inhalation Toxicology Studies in Dogs. These will be the definitive GLP toxicology studies with a similar design to the 14 day inhalation study in rats. This study will use purebred beagles (9 months old) with 3 males and 3 females at each dose group (low, mid, high, control; 24 total). Toxicokinetic samples will be collected from all animals on days 1 and 14 at 6 timepoints per day. Evaluations will be as described for 14 day inhalation study in rats.

 

Clinical Development Plan for Inhaled Gallium
 Overview. A phase 1 clinical trial will be performed in healthy adults to determine the deposition and

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

safety of inhaled gallium. Subsequently, a phase 2A clinical trial in cystic fibrosis patients will be conducted to establish safety and antimicrobial activity of inhaled gallium in the target population. A multicenter, 3 month phase 2B trial will expand the number of CF patients treated and the duration of treatment prior to the pivotal phase 3 trial. More detailed clinical trial designs for each clinical testing phase have been prepared with the input of Aridis’ Clinical Advisory Board.

 

Phase 1 Safety, Tolerability, Deposition, and PK Trial

 

Part A. Demonstrate safety, tolerability, deposition, & PK of 3 escalating doses of inhaled gallium nitrate in 6 healthy adults (2 per dose level)

 

·                                          Safety (PFTs, AEs, ECGs, vital signs), tolerability (coughing, irritation), lung clearance by imaging, and PK will be monitored.

·                                          Safety, tolerability, and lung clearance will be evaluated before proceeding to next dose level

 

Part B. Demonstrate safety, tolerability and steady state PK of highest tolerated dose from Part A administered daily for 7 consecutive days

 

·                                          Safety, tolerability & steady state PK will be monitored periodically for duration of dosing Phase 2A Study to Evaluate Safety, Tolerability, and Anti-microbial Effect of Inhaled Gallium Nitrate

 

·                                          Outcomes: FEV1 (14 day versus baseline), QOL, Safety, Tolerability

·                                          Primary Efficacy endpoints - FEV1 & sputum microbiology with P. aeruginosa density and resistance

·                                          Secondary Efficacy endpoints - CF validated QOL questionnaire, Quittner tool)

 

Phase 28 Multi-Center Safety and Efficacy Study

 

·                                          Endpoints: FEV1, QOL (increase over baseline, versus placebo), and time to exacerbation, sputum Pa microbiology

 

·                                          Primary endpoint - FEV1

·                                          2° endpoints - CF validated QOL questionnaire, Quittner tool, and time to exacerbation), exercise test, high quality CT scan

 

Post Phase 2 meeting with FDA, and discussion of possible further study requirements and Phase 3 plan.

 

Pivotal Phase 3 Trial

 

·                                          Primary efficacy endpoint - FEV1

·                                          Secondary endpoints

 

·                                          CF validated QOL questionnaire

·                                          Quittner tool

·                                          Time to exacerbation

 

·                                          6 month open-label extension

·                                          Size and duration dependent on results from Phase 2 trials & FDA concurrence

 

NDA will follow the successful Phase 3 trials.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

Phase 4 Registration Studies and other indications with chronic pulmonary Pseudomonas (Non-CF bronchiectasis, Chronic obstructive pulmonary disease [COPD], Ventilator Associated Pneumonia), Burkholderia cepacia CF population.

 

·                                          To satisfy requirements of FDA for long-term follow up

·                                          To pursue label expansions in pulmonary disease with chronic Pseudomonas infection

 

	
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Formulation &   Device Dev’t (12 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Analytical   Dev’t & Testing (12 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Preclinical   Animal Testing
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Bulk   manufacturing — 3 clinical lots (6 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Fill/finish   — 3 clinical lots (6 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
GLP   Tox studies (12 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
File   IND (1 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Phase   1 Safety, Tolerability, PK in Healthy Adults
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Part A.   Dose Escalation (3 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Part B.   7 Day Dosing at MTD (3 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Phase   2A Repeat Dose Safety, Tol., Antimicrobial in CF (18 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Phase   2B Multi-center Safety & Efficacy in CF (24 m)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Phase   3 Safety & Efficacy in CF (24 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
File   US IND (6 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Regulatory   Review and approval (18 mo)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Table 3. Panaecin TM Product Development Timelines for treatment of CF Chronic Lung Infections

 

References

 

1.                                      Ganite package insert

2.                                      Collery, P., Keppler, B., Madoulet, C., and Desoize, B. (2002) Gallium in cancer treatment, Crit Rev Oncol Hematol 42, 283-296.

3.                                      Chitambar Curr Opin Onco1.2004.16.547_Gallium As Antineoplastic

4.                                      Bullen et al., FEMS Immunol. Med. Microbiol. (2005) 43:325-330.

5.                                      Kaneko et al., 2007 J Clin Invest. 117: 877-888.

6.                                      Geller, D. E., Konstan, M. W., Smith, J., Noonberg, S. B., and Conrad, C. (2007) Novel tobramycin inhalation powder in cystic fibrosis subjects: Pharmacokinetics and safety, Pediatr Pulmonol 42, 307-313.

 

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Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 406 of the Securities Act of 1933, as amended

 

APPENDIX 1

 

Table 4 The antimicrobial activity spectrum of Ga(III)

 

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