AMENDED AND RESTATED LICENSE AGREEMENT

 

CONFIDENTIAL TREATMENT REQUEST

[*] indicates information that has been omitted

pursuant to a confidential treatment request and

this information has been filed under separate

cover with the Commission.

 

 

 

AMENDED AND RESTATED LICENSE AGREEMENT

 

BETWEEN

 

ADVAXIS, INC.

 

(COMPANY)

 

AND

 

THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA

 

(PENN)

_______

 

EFFECTIVE DATE: JULY 1, 2002

 

TABLE OF CONTENTS

 

AMENDED AND RESTATED   LICENSE AGREEMENT

 

 

This Amended and Restated License Agreement (“AGREEMENT”) is between The Trustees of the University of Pennsylvania, a Pennsylvania nonprofit corporation, with offices located at 3160 Chestnut Street, Suite 200, Philadelphia, Pennsylvania 19104-6283 (“PENN”) and Advaxis, Inc., a corporation organized and existing under the laws of Delaware (“COMPANY”), having a place of business at The Technology Centre of New Jersey, Suite 117, 675 U.S. Route 1, North Brunswick, NJ 08902.

 

This AGREEMENT shall be and become effective on the date (the “EFFECTIVE DATE”) on which COMPANY raises two-hundred fifty thousand dollars ($250,000) of equity capital or convertible debt, namely, July 1, 2002, whereupon the COMPANY shall be deemed to have exercised its rights under the Option (as defined below).

 

 

BACKGROUND

 

A. PENN owns issued and pending U.S. and foreign patent applications based upon information in PENN Dockets D751, H1219, H1219 - CIP, J1598, M2244, M2244 - CIP, N2483 (which was joined with M2244), O2876 and O2883 naming Dr. Yvonne Paterson and colleagues of PENN’s School of Medicine, as inventors; and,

 

B. PENN and COMPANY entered into an Exclusive Negotiation and Option Agreement (the “Option”) with an effective date of March 15, 2002 and extendable upon agreement of the parties, which grants COMPANY exclusive rights to negotiate for a license to such pending U.S. and foreign patents and patent applications; and,

 

C. COMPANY desires to fund further research by Dr. Paterson relating to therapeutic vaccines based on LLO-antigen fusion proteins under a SPONSORED RESEARCH AGREEMENT between PENN and COMPANY; and,

 

D. COMPANY desires to obtain the exclusive right and license to use and exploit the intellectual property developed by Dr. Paterson, et al, as described in Attachment 1 , in accordance with the DEVELOPMENT PLAN (as defined below); and,

 

 

 

NOW, THEREFORE, in consideration of the promises and covenants contained in this AGREEMENT and intending to be legally bound, the parties agree as follows:

 

 

1. DEFINITIONS

 

1.1   AFFILIATE means any legal entity directly or indirectly controlling, controlled by or under common control with COMPANY that has executed a Joinder Agreement substantially in the form of Attachment 2 or such other form as PENN and COMPANY may hereafter agree in writing. For purposes of this AGREEMENT, “control” means the direct or indirect ownership of more than fifty percent (50%) of the outstanding voting securities of a legal entity, or the right to receive more than fifty percent (50%) of the profits or earnings of a legal entity, or the right to control the policy decisions of a legal entity.

 

1.2   CALENDAR QUARTER means each three calendar month period beginning on January 1, April 1, July 1 and October 1, or any portion thereof, arising during the term of this AGREEMENT.

 

1.3   DEVELOPMENT PLAN means a plan for the development and/or marketing of the PENN PATENT RIGHTS and/or PENN LICENSED PRODUCTS that reasonably demonstrates COMPANY’s capability to bring such patent rights, technical information and/or products to practical application, as more fully described in Attachment 3, consisting of the following:

 

1.3.1   development activities to be undertaken, including proposed dates of completion of all major milestones to develop and commercialize PENN LICENSED PRODUCTS;

1.3.2   a list of all government regulatory approvals, including the nature of submissions and government agencies involved in pre-market clearance;

1.3.3   a list of current competitors and their competitive products, including competitors’ known plans for further development of competing technologies; and

1.3.4   anticipated dates of first SALE of each PENN LICENSED PRODUCT described in the DEVELOPMENT PLAN.

 

1.4   FAIR MARKET VALUE means the cash consideration which COMPANY, an AFFILIATE, or any sublicensee would realize from an unaffiliated, unrelated buyer in an arm’s length sale of an identical item or service, as applicable, sold in the same quantity and at the same time and place of the transaction.

 

1.5   FIELD OF USE means therapeutic use in humans and other mammals.

 

1.6   NET SALES means the consideration or FAIR MARKET VALUE attributable to the SALE of any PENN LICENSED PRODUCT(S), less the qualifying costs set forth below that are directly attributable to such SALE and actually identified on the invoice and borne by COMPANY, an AFFILIATE, or any sublicensee. Such qualifying costs shall be limited to the following:

 

Advaxis/PENNpage 1 of 35

Amended and Restated Start-Up License Agreement

 

1.7   PENN LICENSED PRODUCT(S) means products which are made, made for, used or sold by COMPANY, an AFFILIATE, or any sublicensees and which: (1) in the absence of this AGREEMENT would infringe at least one VALID CLAIM or (2) use a process or machine covered by a VALID CLAIM.

 

1.8   PENN PATENT RIGHTS means all patents represented by or issuing from those United States patent applications listed in Attachment 1, including continuation, divisional and re-issue applications and any foreign counterparts and extensions of the foregoing.

 

1.9   PRIMARY STRATEGIC FIELD shall be Cancer, including Cancer caused by infection.

 

1.10   SALE means any bona fide transaction for which consideration is in fact received by COMPANY or AFFILIATE or any sublicensee hereunder or expected for the sale, use, lease, transfer or other disposition of PENN LICENSED PRODUCT(S). A SALE shall be deemed completed at the time COMPANY, an AFFILIATE, or any sublicensee invoices, ships, or receives payment for such PENN LICENSED PRODUCT(S), whichever occurs first.

 

1.11   SECONDARY STRATEGIC FIELDS includes (a) Infectious Disease, (b) Allergy, (c) Autoimmune Disease, and (d) any other therapeutic indications for which PENN LICENSED PRODUCT(S) are developed.

 

1.12   SPONSORED RESEARCH AGREEMENT means a sponsored research agreement between PENN and COMPANY providing for the conduct of certain research consistent with this AGREEMENT, all on terms and conditions acceptable to PENN and COMPANY.

 

1.13   TERRITORY shall mean any jurisdiction in which a VALID CLAIM persists.

 

1.14   VALID CLAIM means any pending, issued or granted claim of the PENN PATENT RIGHTS that has not been surrendered, abandoned or declared invalid or unenforceable by an unappealed and unappealable decision of a court of competent jurisdiction up to the Federal Courts of Appeal level in the United States or equivalent court in other jurisdictions, as applicable.

 

 

2. LICENSE GRANT

 

2.1   PENN grants to COMPANY for the term of this AGREEMENT an exclusive right and license, with the right to grant sublicenses, to make, have made, use, import, sell and offer for sale PENN LICENSED PRODUCT(S) in the FIELD OF USE in the TERRITORY. Except for Section 2.6, no other rights or licenses are granted. Intellectual property created or conceived during the performance of the SPONSORED RESEACH AGREEMENT shall be governed by the SPONSORED RESEARCH AGREEMENT.

 

2.2   This license grant is exclusive except that PENN may use and permit other not-for profit organizations to use the PENN PATENT RIGHTS for educational and research purposes.

 

2.3   COMPANY acknowledges that pursuant to Public Laws 96-517, 97-256 and 98-620, codified at 35 U.S.C. 200-212, the United States government retains certain rights in intellectual property funded in whole or part under any contract, grant or similar agreement with a Federal agency. Pursuant to these laws, the government may impose certain requirements regarding such intellectual property, including but not limited to the requirement that products resulting from such intellectual property sold in the United States must be substantially manufactured in the United States. This license grant is expressly subject to all applicable United States government rights as provided in the above-mentioned laws and any regulations issued under those laws, as those laws or regulations may be amended from time to time.

 

2.4   The right to sublicense granted to COMPANY under this AGREEMENT is subject to the following conditions:

 

2.4.1 In each such sublicense, COMPANY must prohibit the sublicensee from further sublicensing and require that the sublicensee is subject to the terms and conditions of the license granted to COMPANY pursuant to Section 2.1 of this AGREEMENT, the limitations thereon set forth in Sections 2.2 , 2.3 and 2.4 as well as sublicensee’s compliance with Sections 3.4.4, 5.5, 5.9 and 9, and COMPANY shall impose upon its sublicensees obligations comparable to those obligations imposed upon COMPANY pursuant to Sections 8.2 and 8.4 of this AGREEMENT. COMPANY may submit a written request to PENN to obtain the right to allow a sublicensee to further sublicense on a case by case basis. Such right to allow a sublicensee to further sublicense PENN PATENT RIGHTS shall not be unreasonably withheld provided that COMPANY can validate to PENN’s satisfaction that such sublicensee has the financial and resource capabilities to develop and commercialize PENN PATENT RIGHTS and further, such sublicensee agrees that any sub-sublicense shall be subject to the terms and conditions of the license granted to COMPANY under this AGREEMENT.

 

2.4.2 Within thirty (30) days after COMPANY enters into any sublicense, COMPANY shall deliver to PENN a complete copy of the sublicense written in the English language. PENN’s receipt of the sublicense shall not constitute an approval of the sublicense or a waiver of any of PENN’s rights or COMPANY’s obligations under this AGREEMENT.

 

 

 

2.4.3 In the event of a DEFAULT under Section 5.3 hereunder all payments then or thereafter due to COMPANY from its AFFILIATES or sublicensees in connection with rights granted to such third party pursuant to this AGREEMENT shall upon notice from PENN to any such AFFILIATE or sublicensee become owed directly to PENN for the account of COMPANY; provided however, that PENN shall remit to COMPANY the amount by which such payments exceed the amounts owed by COMPANY to PENN.

 

2.4.4 In the event that COMPANY enters into sublicenses, COMPANY remains primarily liable to PENN for all of COMPANY’S duties and obligations contained in this AGREEMENT, and any act or omission of a sublicensee which would be a breach of this AGREEMENT if performed by COMPANY shall be deemed to be a breach by COMPANY of this AGREEMENT.

 

2.5   Promptly after the date of execution of this AGREEMENT, PENN and COMPANY shall in good faith negotiate the terms of, and enter into, the SPONSORED RESEARCH AGREEMENT; provided, however, that neither PENN nor COMPANY shall be obligated to enter into the SPONSORED RESEARCH AGREEMENT on terms that are not acceptable to such party in all respects.

 

2.6   PENN grants to COMPANY a series of exclusive options during [ [*] ] following the EFFECTIVE DATE of this AGREEMENT to obtain exclusive licenses to new inventions on therapeutic vaccines: (1) involving the use of Listeria vectors and/or Listeria antigen and/or PEST-containing fusion proteins in the FIELD OF USE and (2) developed by, under the supervision of, or in collaboration with Dr. Yvonne Paterson; to the extent of PENN’s ownership interest in any resulting intellectual property and if Penn has no obligation to license or to license to any third party any resulting intellectual property. Each option shall be granted at [*] to COMPANY by PENN, and shall extend for a period of [*] from the date of disclosure of such new inventions if the disclosure was made after December 31, 2004 but before [*] . Upon exercise of the option by COMPANY, PENN and COMPANY agree to negotiate in good faith a comprehensive license agreement during a period not to exceed ninety (90) days after COMPANY’s exercise of its option. Such license agreement shall include a license initiation fee of [*] , subject to negotiation and agreement of PENN and COMPANY, shall be substantially similar in form to this AGREEMENT and shall include no financial terms that exceed or are not present in this AGREEMENT. All fees, excluding the license initiation fee and royalty payments, shall be fully creditable against payments made by COMPANY to PENN under this AGREEMENT. For clarity, such license agreement shall require reimbursement of all historic and ongoing patent costs relating to any licensed new inventions, which patent costs are not creditable against any other payments of any kind. Upon the expiration of the option period, or, if later, the negotiation period, PENN may license such new inventions to any third party upon such terms and conditions as PENN deems appropriate.

 

2.7   PENN grants to COMPANY a series of exclusive options during the [*] years following the EFFECTIVE DATE of this AGREEMENT to obtain exclusive licenses to new inventions on therapeutic vaccines: (1) involving the use of Listeria vectors and/or Listeria antigen and/or PEST-containing fusion proteins in the FIELD OF USE; and (2) developed by, under the supervision of, or in collaboration with Dr. Fred Frankel; to the extent of PENN’s ownership interest in any resulting intellectual property and if Penn has no obligation to license or to offer to license to any third party any resulting intellectual property Each option shall be granted at [*] to COMPANY by PENN, and shall extend for a period of [*] from the date of disclosure of such new inventions if the disclosure was made after December 31, 2004 [*] . PENN shall provide COMPANY an accounting of all patent prosecution activities and expenses relating to said new inventions within a reasonable time after disclosure of said new invention to COMPANY. Upon exercise of option by COMPANY, PENN and COMPANY agree to negotiate in good faith a comprehensive license agreement during a period not to exceed ninety (90) days after COMPANY’s exercise of its option. Such license agreement shall include a license initiation fee of [*] , subject to negotiation and agreement of PENN and COMPANY, fully creditable against license maintenance fees and shall be substantially similar in form to this AGREEMENT, with financial terms not to exceed those in this AGREEMENT. For clarity, such license agreement shall require reimbursement of all historic and ongoing patent costs relating to the licensed new inventions, which patent costs are not creditable against any other payments of any kind. Upon the expiration of the option period, or, if later, the negotiation period, PENN may license such new inventions to any third party upon such terms and conditions as PENN deems appropriate.

 

 

 

3. FEES AND ROYALTIES

 

3.1   LICENSE INITIATION FEE AND ROYALTIES

 

3.1.1 In partial consideration of the exclusive license granted to COMPANY, COMPANY shall pay to PENN a non-refundable license initiation fee of [*] within thirty (30) days of the date COMPANY receives in the aggregate [*] . The initiation fee paid to PENN pursuant to this Section shall be creditable against license maintenance fees payable on the first anniversary of the Effective Date pursuant to Section 3.3.6.

 

3.1.2 In further consideration of the exclusive license granted to COMPANY, COMPANY shall perform its obligations under that certain Stock Purchase Agreement dated April 19, 2002, between COMPANY and PENN (“STOCK PURCHASE AGREEMENT”), a copy of which is attached as Attachment 4.

 

3.1.3.   In further consideration of the exclusive license granted to COMPANY, COMPANY must pay to PENN, on a quarterly basis, royalties on the annual, worldwide NET SALES of PENN LICENSED PRODUCTS as follows:

 

 

However, in the event that the PENN royalty rates represent greater than [*] of any royalty payable to COMPANY by a sublicensee, PENN’s royalty rate shall be reduced to [*] of such sublicense royalties; provided, however, that at no time will the aggregate royalty due to PENN for any CALENDAR QUARTER be less than [*] of worldwide NET SALES of PENN LICENSED PRODUCTS in the TERRITORY.

 

 

 

3.1.4. Following the first commercial SALE of each PENN LICENSED PRODUCT, COMPANY must pay to PENN non-refundable minimum royalties in advance on the following dates and in the corresponding amounts:

 

The obligation to pay such Minimum Royalties will not, in respect of each PENN LICENSED PRODUCT, extend beyond January 1 ^st of the [*] year following the first commercial sale of that PENN LICENSED PRODUCT. A minimum royalty payment paid under this Section 3.1.4 shall serve as an advance payment against royalties due under Section 3.1.3 during the period for which such minimum royalty payment was paid.

 

3.1.5 COMPANY will pay PENN, on a quarterly basis, a percentage of any sublicense initiation fee or any other non-royalty payments received by COMPANY from sublicensees of PENN PATENT RIGHTS as follows:

    

 

Such sublicense payments include but are not limited to: i) upfront cash payments made to COMPANY in consideration of the sublicense, but excluding funds paid to COMPANY for the conduct of research and development of Licensed Products, not to exceed the FAIR MARKET VALUE of such services actually performed and documented to PENN, and equity investments in COMPANY at FAIR MARKET VALUE, and excluding equity received by COMPANY in affiliates, joint venture partners and sublicensees; ii) “premium” over the fair market value of equity investments in COMPANY, where “premium” is defined as the amount by which cash amounts received by COMPANY for a particular equity security exceed the fair market value of such security and, notwithstanding the definition of FAIR MARKET VALUE set forth in Section 1.4 above, the fair market value of securities shall, for purposes of this Section 3.1.5(ii), be the average of the final “bid” and “ask” price of COMPANY’s securities as of the close of business on the last business day prior to the date such securities are transferred to COMPANY if such securities are publicly traded or, in the event that such securities are not traded in the public market, the fair market value, as of the date of such securities are issued to the sublicensee, shall be established in good faith by the COMPANY Board of Directors; and iii) the fair market value of non-cash consideration received by COMPANY from a sublicensee (excluding equity received by COMPANY in sublicensee), where such fair market value, notwithstanding the definition of FAIR MARKET VALUE set forth in Section 1.4 above, is determined as of the date such consideration is received by COMPANY and equals the fair market value determined in good faith by the COMPANY Board of Directors

 

 

 

3.1.6 NET SALES of any PENN LICENSED PRODUCT shall not be subject to more than one assessment of the scheduled royalty; such assessment shall be the highest applicable royalty. Where any PENN LICENSED PRODUCT is the subject of a SALE by the COMPANY or any AFFILIATE but the COMPANY concludes in good faith that, in the ordinary course of business, the same PENN LICENSED PRODUCT will be the subject of a subsequent SALE by the COMPANY or any AFFILIATE for an amount greater than the consideration paid for the previous SALE, the COMPANY may exclude consideration paid for the previous SALE from NET SALES until the date arising ninety (90) days after the date of the previous SALE. If a subsequent SALE for an amount greater than the consideration paid for the previous SALE arises prior to such date, then the consideration paid for the previous SALE shall be permanently excluded from NET SALES; if there is no subsequent SALE for an amount greater than the consideration paid for the previous SALE prior to such date, then the consideration paid for the previous SALE shall be included in NET SALES, but shall still be credited against any subsequent SALE of the same PENN LICENSED PRODUCT for a higher price.

 

3.2   MILESTONE PAYMENTS

 

The following milestone payments are non-refundable, non-creditable, and payable to PENN by COMPANY as follows:

 

 

 

 

 

3.2.2   [*] shall be due for first commercial SALE of the first PENN LICENSED PRODUCT in the PRIMARY STRATEGIC FIELD. Such payment shall be payable as follows: [*] shall be paid within forty-five (45) days of the date of the first commercial SALE, [*] shall be paid on the first Anniversary of the first commercial SALE; and [*] shall be paid on the second Anniversary of the date of the first commercial SALE.

 

3.2.3   [*] shall be due and payable within forty-five (45) days following the date of the first commercial SALE of a PENN LICENSED PRODUCT in a SECONDARY STRATEGIC FIELD; provided , however , that this fee shall only be payable once for each of the SECONDARY STRATEGIC FIELDS in which PENN LICENSED PRODUCTS are sold.

 

3.3   DILIGENCE AND MAINTENANCE FEES

 

3.3.1 Financial Due Diligence

 

3.3.2 Developmental Due Diligence.

 

3.3.2.1   COMPANY will use commercially reasonable efforts to develop, commercialize, and market PENN LICENSED PRODUCTS as soon as practical, consistent with the terms of the DEVELOPMENT PLAN and any DEVELOPMENT PLAN PROGRESS REPORTS provided pursuant to Section 3.6.1 of this AGREEMENT. The DEVELOPMENT PLAN will be prepared by COMPANY and delivered to PENN prior to the EFFECTIVE DATE.

 

3.3.2.2   COMPANY agrees to commit resources (including relevant resources dedicated by sublicensees and strategic or collaboration partners and including research grants for Dr. Paterson) during the term of this AGREEMENT to the development and commercialization of PENN LICENSED PRODUCTS in the PRIMARY STRATEGIC FIELD in amounts not less than the following:

 

 

Notwithstanding the above, COMPANY shall not be obligated to make any due diligence expenditures at any time after the date the COMPANY first becomes obligated to pay minimum royalties pursuant to Section 3.1.4. In the event that total expenditures for the development and commercialization of PENN LICENSED PRODUCTS do not meet or exceed the amounts set forth above, COMPANY must pay to PENN the difference between the mandated amount listed above and the actual amount expended by COMPANY and/or its sublicensees, strategic or collaboration partner(s). Funds invested in development in a given year that are in excess of the above amounts shall be creditable up to [*] against the diligence requirements of the following year.

 

 

 

3.3.2.3   SECONDARY STRATEGIC FIELDS: By the [*] anniversary of the EFFECTIVE DATE, COMPANY must either (i) initiate research and development programs for the SECONDARY STRATEGIC FIELDS of infectious disease, allergy, and autoimmune disease, at an initial annual expense level of at least [*] per field, or (ii) partner with or grant one or more third parties rights for the commercial development of PENN LICENSED PRODUCTS in one or more of such SECONDARY STRATEGIC FIELDS.

 

3.3.2.4   In the event COMPANY develops PENN LICENSED PRODUCTS in any SECONDARY STRATEGIC FIELDS pursuant to Section 3.3.2.3, part (i), the parties will negotiate in good faith due diligence requirements for subsequent years for such SECONDARY STRATEGIC FIELD under development at that time. If COMPANY fails to complete either part (i) or (ii) as described in Section 3.3.2.3 above for such SECONDARY STRATEGIC FIELD(S) by the [*] anniversary of the EFFECTIVE DATE, COMPANY will forfeit all rights for development of commercial products in such SECONDARY STRATEGIC FIELDS, and rights will return to PENN for such SECONDARY STRATEGIC FIELD(S). PENN will thereafter be free to enter into agreements for such forfeited rights with any third party for commercial development in the respective SECONDARY STRATEGIC FIELD(S).

 

 

3.4   REPORTS AND RECORDS

 

3.4.1   On each December 1 arising during the term of this AGREEMENT, COMPANY must provide PENN with written progress reports (each a “DEVELOPMENT PLAN PROGRESS REPORT”), setting forth COMPANY’S progress regarding its efforts to develop and commercialize PENN LICENSED PRODUCTS, including activities of AFFILIATES and sublicensees, for the preceding year. COMPANY shall also notify PENN within thirty (30) days of the first commercial SALE by the COMPANY, an AFFILIATE, or any sublicensee of each PENN LICENSED PRODUCT. Each DEVELOPMENT PLAN PROGRESS REPORT shall include, without limitation:

 

 

 

3.4.1.1   The date of the DEVELOPMENT PLAN PROGRESS REPORT and the time covered by such report.

 

3.4.1.2   Major activities and accomplishments completed by COMPANY, any AFFILIATE or any sublicensee since the last DEVELOPMENT PLAN PROGRESS REPORT.

 

3.4.1.3 Significant research and development projects currently being performed by COMPANY, any AFFILIATE, or any sublicensee and projected dates of completion.

 

3.4.1.4 Future development activities expected to be undertaken by COMPANY, any AFFILIATE, or any sublicensee during the next reporting period.

 

3.4.1.5 Current development stage (e.g., pre-clinical, Phase I, Phase II or Phase III) of each PENN LICENSED PRODUCT and targeted date of NDA or BLA approval, if any.

 

3.4.1.6 Significant changes to the DEVELOPMENT PLAN, including the reasons for the changes.      

 

3.4.1.7 Summary of development efforts related to PENN PATENT RIGHTS being performed by third parties including the nature of the relationship between the COMPANY and such third parties.

 

3.4.2   COMPANY must deliver to PENN within forty-five (45) days after the end of each CALENDAR QUARTER a report, certified by the chief financial officer of COMPANY, setting forth the calculat