ASSET PURCHASE AND LICENSE AGREEMENT, DATED AS OF JUNE 8, 2007

Exhibit 10.3

CONFIDENTIAL

Portions of this Exhibit were omitted and have been filed separately with the Secretary of

the Commission pursuant to the Company’s application requesting confidential treatment

under Rule 24b-2 of the Exchange Act.

ASSET PURCHASE AND LICENSE AGREEMENT

BY AND AMONG

3M COMPANY, 3M INNOVATIVE PROPERTIES COMPANY,

AND COLEY PHARMACEUTICAL GROUP, INC.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

ASSET PURCHASE AND LICENSE AGREEMENT

THIS AGREEMENT, made this 8 ^th of June, 2007, (“Signing Date”) by and among 3M COMPANY (hereinafter “3M”), 3M INNOVATIVE PROPERTIES COMPANY (hereinafter “3M IPC”), Delaware corporations having offices at 3M Center, St. Paul, Minnesota 55144, USA and COLEY PHARMACEUTICAL GROUP, INC. a Delaware corporation having its address at 93 Worcester Street, Suite 101, Wellesley, MA 02481 USA (hereinafter “COLEY”). 3M IPC is a wholly owned subsidiary of 3M. Hereinafter a reference to “3M” or “COLEY” shall include their respective Affiliates where performance would be expected from or required by an Affiliate.

WITNESSETH:

WHEREAS , 3M has conducted extensive research and development in the area of small-molecule immune response modifier compounds and other small molecule compounds, some of which act by stimulating basic immune cell receptors known as toll-like receptors (TLRs) 7 and/or 8, for possible treatment of various conditions, including, for example, cancers, viral, bacterial, and fungal infections, inflammatory diseases such as asthma and allergic rhinitis, autoimmune diseases, wound-healing, photoaged skin, scar-reduction, as well as being useful as Vaccine Adjuvants (as defined below).

WHEREAS , 3M has discovered and tested many thousands of such compounds, and has conducted preclinical and, in some cases, clinical testing on a number of them, such as imiquimod, the active drug in 3M’s Aldara™ topical cream product, and others designated [***] and others.

WHEREAS , 3M has already entered into transactions conveying some or all rights in [***] to third parties, but still retains rights to the remaining compounds for most uses.

AND WHEREAS , 3M and 3M IPC wish to sell and license, and COLEY wishes to purchase and license the rights set forth herein.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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NOW, THEREFORE , in consideration of the foregoing premises and mutual promises set forth in this Agreement, the Parties agree as follows:

ARTICLE 1. DEFINITIONS

The terms defined in Article 1 shall have the following meanings (applicable both to the singular and the plural forms):

“ 3M Compound(s) ” means any compound that is covered by an Existing Claim within any of the patent families identified as the “Compound Cases” in the Assigned Patent Rights and Licensed Patent Rights including any prodrug or any hydrate, solvate, conjugate, salt, ester, stereoisomer or polymorph of such compound or prodrug, or otherwise provided to Coley by 3M as a Tangible Asset under this Agreement, other than Excluded 3M Compounds. Provided, however, that 3M Compound(s) does not include (i) metabolites of, or compounds used as intermediates for making, compounds that otherwise do not constitute 3M Compounds, and (ii) the conjugation compounds identified as [***] for use as Vaccine Adjuvants.

“ Affiliate ” means with respect to any of the Parties to this Agreement, any person, firm, trust, corporation, company or other entity or combination thereof, whether now existing or created in the future, that directly or indirectly (a) owns or controls said Party, (b) is owned or controlled by said Party or (c) is under common ownership or control with said Party. The term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Party, whether through the ownership of voting securities, by contract or otherwise. Control will be presumed if any person, firm, trust, corporation, company or other entity or combination thereof owns, either of record or beneficially, fifty percent (50%) or more of the voting stock of any Party.

“ Assigned Agreements ” means the agreements listed on Schedule A.

“ Assigned Patent Rights ”. means the Patent Rights listed on Schedule B-1.

“ Closing” and “Closing Date ” shall be as set forth in Section 2.2.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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“ Excluded 3M Compound(s) ” means [***].

“Excluded Field” has the meaning set forth in the definition of the term “Field” below.

“Existing Claim” means a claim of (i) an issued and unexpired patent, which claim has not been revoked or held invalid or unenforceable by a court or other government agency of competent jurisdiction from which no appeal can be or has been taken and has not been held or admitted to be invalid or unenforceable through re-examination or disclaimer, reissue, opposition procedure, nullity suit or otherwise, or (ii) a pending patent application that has not been cancelled, withdrawn or abandoned, provided, however, that if a claim of a pending patent application shall not have issued within five (5) years after the earliest filing date from which such claim takes priority, such claim shall not constitute an Existing Claim for the purposes of this Agreement unless and until a patent issues with such claim.

“ Field ” means the diagnosis, treatment, mitigation, or prevention of any disease or condition in humans or animals, other than uses that are within the “Excluded Fields.” The Excluded Fields are:

“First Commercial Sale” means the first sale of a Product by COLEY, a Sublicensee of COLEY, or one of their respective Affiliates, to a third party.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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“Issued Patents” has the meaning provided in the definition of the term “Patent Rights” below.

“ Know-How ” means all non-public data and information owned by, used by or licensed to 3M, or its Affiliates, existing on the Closing Date and contained in the items described on Schedule D, including all processes, methods, compounds, regulatory and clinical information, formulae, pharmacophores, discoveries, developments, designs, techniques, improvements, trade secrets, molecules, know-how, specifications, inventions, assays and other research tools, and other scientific or technical data or information conceived, memorialized, developed and/or reduced to practice, set forth therein.

“Licensed Patent Rights” means the Patent Rights listed on Schedule C.

“Major Market Country” means the United States, Great Britain, Germany, France, Italy, Spain, India, Japan and China.

“ Net Sales ” shall mean, for any period, COLEY and COLEY Affiliates’ gross invoiced sales for such period, less (i) promotional allowances, rebates, pre-bates, administrative fees, profit share payments, quantity and cash discounts, and other customary discounts to customers, wholesalers, distributors, buying groups or health care insurance carriers, (ii) excise, sales and other consumption taxes, value added taxes, taxes and duties paid, absorbed or allowed which are directly related to the sale, (iii) the amount of charge backs, and amounts repaid or credited by reason of rejections, allowances, billing errors, rejected goods, recalls, damages or returns of goods, or because of retroactive price adjustments, (iv) freight and insurance costs, and (v) discounts or rebates or other payments required by law to be made under governmental special medical assistance programs, all determined in accordance with United States generally accepted accounting principles consistently applied. If COLEY or a COLEY Affiliate sells any Product in a non-arms-length transaction, then the gross invoiced sales amount shall be equitably adjusted by COLEY as necessary to make it equivalent to an arms-length price.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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“Patent Rights” means (i) issued and existing letters patent, U.S. and foreign, including extensions (whether arising from patent or regulatory law), supplemental protection certificates, registrations, confirmations, reissues, reexaminations or renewals thereof (“Issued Patents”); and (ii) pending patent applications, U.S. and foreign (including any continuation, divisional, reissues, continuation-in-part or division thereof, or any substitute application therefor or equivalent thereof) on which a patent application may be filed, and all Issued Patents arising therefrom. For avoidance of doubt, it is understood that Patent Rights in family [***] are not included even though they claim common priority with [***]

“ Parties ” means COLEY, 3M, their permitted assignees, and as the context requires, 3M IPC; and a “PARTY” means individually COLEY, 3M, their permitted assignees and/or 3M IPC, as the context requires.

“ Product ” means a product, the manufacture, use or sale of which in a particular country, or the importation of which into a particular country, is covered by an Existing Claim within the Licensed Patent Rights or Assigned Patent Rights and/or contains a 3M Compound.

“ Purchased Assets ” means the Assigned Patent Rights, Assigned Agreements, Tangible Assets, and transferred Regulatory Filings.

“ Regulatory Filings ” means the items listed on Schedule E.

“Royalty Term” has the meaning provided in Section 4.3.

“ Tangible Assets ” means the items listed on Schedule F.

“ Topical Field” has the meaning provided in the definition of the term “Field” above.

“ Third Party ” means a party other than COLEY, 3M, 3M IPC, RIKER or any of their respective Affiliates.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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“Vaccine Adjuvant” means a compound which is used to induce, augment, fine-tune, enhance, or desensitize an antigen-specific immune response to an antigen contained in a vaccine or generated by a DNA vaccine for the therapeutic treatment of an existing disease or prophylactic use as protection against future disease (including desensitization to allergens). The antigen and the vaccine adjuvant may be admixed, delivered simultaneously, conjugated, or delivered separately, provided however, that the separate administration of the antigen and vaccine adjuvant is (a) limited to the topical (dermal or mucosal) or intradermal routes of administration and (b)  must be administered within 48 hours at substantially the same site and (c) labeled as such by the applicable regulatory authority. For avoidance of doubt, aside from vaccination through the topical and intradermal routes, the antigen and the vaccine adjuvant must be co-formulated (including the use of dual barrel syringes or tamper-proof kits for co-formulation prior to injection) and co-administered. The antigen may not be administered intra-tumorally and may not be administered more than once in any four (4) week period. When the antigen and the vaccine adjuvant are admixed, delivered simultaneously, conjugated or delivered separately, except in the case of topical or intradermal administration, the maximum dose for the vaccine adjuvant shall not be unreasonably in excess of an adjuvant dose for the purpose of enhancing immune response to the vaccine antigen and shall not be for the purpose of effecting an immune response independent of the vaccine. Any administration of the vaccine adjuvant and the antigen may include other adjuvant compounds and pharmaceutical formulations such as nanoparticles, microparticles, liposomes, or emulsions. For example, applying resiquimod gel topically as an adjuvant at the site of and in conjunction with topical or intradermal vaccination (within 48 hours) would be a Vaccine Adjuvant. Also for avoidance of doubt, vaccine adjuvants may be used with any and all types of antigens, including DNA vaccines, allergens for desensitization, and patient-derived antigens that are removed and processed with dendritic cells and administered as a vaccine, but not a patient’s endogenous disease antigens residing within the body or non-tumor cells derived from the body.

“Vaccine Adjuvant Patents” means the patents and applications listed on Schedule H.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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ARTICLE 2. CLOSING

2.1 Mutual Cooperation . Each Party shall use good faith reasonable efforts to cooperate with the other Party in overcoming any objection raised by any government authority regarding the legality of the transaction proposed herein, including, if required by federal or state antitrust authorities, each Party promptly taking all reasonable steps to secure government antitrust clearance. Each Party shall cooperate in good faith at its own cost with any government investigation regarding the legality of the transaction proposed herein and promptly produce documents, witnesses, and information demanded by a request for documents and witnesses if requested by the governmental authority; provided, however, that nothing herein shall require either Party to make any changes to this Agreement that would materially affect the value of the Agreement to a Party.

2.2 Closing Date and Location . Subject to the terms and conditions of this Agreement, the sale and purchase of the Purchased Assets shall take place at a closing (the “Closing”) no later than June 29, 2007, at a location or in a manner agreeable to 3M and COLEY or at such other date as 3M and COLEY may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date” with the Closing effective as of 12:01 a.m. on the Closing Date).

2.3 Conditions to Closing . The Parties agree to be bound by the terms and conditions of this Agreement as of the Effective Date, but the rights and obligations of the Parties shall be subject to the following closing conditions: (i) the representations and warranties of the Parties shall have been true and correct in all material respects when made and shall be true and correct in all respects on and as of the Closing Date, and each Party shall have performed all agreements and covenants required by this Agreement to be performed by it on or prior to the Closing Date, and (ii) no actions or proceedings that question the validity or legality of the transactions contemplated hereby shall have been instituted by a Third Party and not settled or otherwise terminated.

ARTICLE 3. TRANSFER OF RIGHTS AND ASSETS

3.1 Assigned Patent Rights . Subject to the terms of this Agreement, 3M and 3M IPC shall assign their entire right, title and interest in the Assigned Patent Rights to COLEY and, for avoidance of doubt, 3M shall retain no right to license, assign or otherwise exploit, develop or commercialize any of the 3M Compounds as active pharmaceutical ingredient (as opposed to intermediates) for any use outside the Field, including specifically any use as

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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Vaccine Adjuvant or as a component of a vaccine. Such assignment shall be evidenced by delivery of the attached Schedule B Patents Assignment at Closing. 3M IPC shall deliver the patent files relating to the Assigned Patent Rights to COLEY or COLEY’s selected outside patent firm prior to or on the Closing Date, from which time COLEY shall assume full responsibility and bear all costs for the further filing, prosecution, maintenance, defense, and enforcement of the Assigned Patent Rights. Such patent files shall contain and include all applications, patents, correspondence with patent offices, legal memoranda and opinions, correspondence with patent agents as kept in such files in the normal course of 3M IPC’s practice .

3.2 Assigned Agreements . 3M and 3M IPC shall as of the Closing Date assign, and COLEY shall accept, all of their rights and obligations under the Assigned Agreements. The Parties shall provide each other reasonable cooperation in efforts to transfer such rights and obligations under the Assigned Agreements. In the event, any material rights and obligations under such agreements are not assignable despite reasonable efforts to do so, the Parties shall cooperate to the extent reasonably practical to provide COLEY the effective rights and obligations thereunder. Further, subject to the written approval of both Parties, such approval not be unreasonably withheld, in the six months following Closing, other agreements which are useful to develop or commercialize the Products in the Field which are available for assignment, they will be assigned to COLEY and added to the list of Assigned Agreements on Schedule A. Further, in the event that an Assigned Agreement relates to subject matter outside the Field the rights and obligations shall be deemed assigned only commensurate in scope with the Field.

3.3 Regulatory Filings . Subject to the terms of this agreement, 3m and 3M IPC shall, and hereby do, assign their entire right, title and interest in the Regulatory Filings to COLEY. Promptly following the Closing Date, 3M will assign and transfer all of its right, title and interest in and to the Regulatory Filings to COLEY, or, if such assignment is not permitted, 3M shall provide access and a right of reference under the Regulatory Filings to COLEY, and shall promptly take such other measures as are reasonably requested by COLEY in order for COLEY to obtain substantially all of the rights and benefits of such Regulatory Filings as if they were fully assigned to COLEY hereunder.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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3.4 Tangible Assets . 3M and 3M IPC will deliver an executed Bill of Sale on the Closing Date and will delivery the Tangible Assets on the Closing Date or within ten (10) business days thereafter (unless later delivery or other arrangements are indicated on Schedule F). It is understood that Tangible Assets and Know-How reflected therein, may be provided in the form of copies and that 3M and 3M IPC may retain copies as set forth in Section 3.8. Further, subject to the written approval of both Parties, such approval not be unreasonably withheld, in the six months following Closing, other assets and items may be added to the list of Tangible Assets on Schedule F which are useful to develop or commercialize the Products in the Field and if the relevant tangible asset is available, it would be provided to COLEY.

3.5. License Grants by 3M . 3M, 3M IPC and their Affiliates hereby grant to COLEY, as of the Closing Date:

3.5.1 a royalty-bearing, exclusive license, with right to sublicense through one or more tiers, under the Licensed Patent Rights to make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import and have imported Products in the Field. Provided, such license does not include any rights under family [***] for any products not containing 3M Compounds.

3.5.2 a royalty-bearing, exclusive license, with right to sublicense through one or more tiers, under the Know-How, to make, have made, use, have used, sell, have sold, offer for sale, have offered for sale, import and have imported Products in the Field and a nonexclusive license to any other know-how existing on the Closing Date and provided to Coley which is useful to develop or commercialize the Products in the Field. 3M will provide such other know-how to Coley after Closing only to the extent it is readily available or accessible to 3M, but, for the avoidance of doubt, 3M is not obligated to develop or transfer any know-how which is not pre-existing or readily available or accessible to 3M.

3.6 License Grant Back from COLEY . Once the Assigned Patent Rights are transferred pursuant to Section 3.1, COLEY hereby grants back to 3M IPC, as of the Closing Date, a permanent and irrevocable, fully paid, royalty-free, exclusive license, with right to sublicense, under the Assigned Patent Rights, to make, use, sell, offer for sale, and import products not containing the 3M Compounds as an active pharmaceutical ingredient outside the Field.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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3.7 Post-Closing Cooperation . 3M and 3M IPC will, at COLEY’s request and expense for any filing fees or other external out-of-pocket costs, take all such other and further acts and execute, acknowledge and deliver all instruments of conveyance, assignment, transfer, consent and assumption as COLEY may reasonably request to confirm the conveyance and transfer to COLEY of any of the rights or assets conveyed or transferred hereunder.

3.8 Retention of Certain Records . It is understood and agreed that 3M reserves the right to retain copies of written records related to the Purchased Assets as required by law or as reasonably necessary for use outside the Field or in connection with defending any claims, losses, causes of action or lawsuits, including those related to the sale of the Purchased Assets by 3M, and for the purpose of preparing any tax returns or financial statements or reports. Use and disclosure of any such information shall be subject to the terms and conditions of this Agreement, including without limitation, Section 6.1.

3.9 No Implied Licenses . Except as expressly set forth in this Agreement, no right, license or immunity from suit under any Patent Rights, trademark, or other proprietary rights is granted by either Party or any of its Affiliates pursuant to this Agreement.

3.10 Post-Closing Liabilities . Unless otherwise provided in this Agreement or expressly agreed in writing by the Parties, any formal written legal claims pending or asserted, and any actual liabilities incurred (whether such liabilities were formally asserted, known or unknown prior to the Closing Date) in connection with the Purchased Assets the Licensed Patent Rights and Know-How, existing prior to the Closing Date shall be the responsibility of 3M and 3M IPC, and those that are incurred on or after the Closing Date shall be the responsibility of COLEY. For avoidance of doubt, with regard to any liabilities or obligations under Assigned Agreements, 3M shall only be responsible for payments owed or incurred prior to the Closing Date and COLEY shall have liability for all other obligations arising under such Assigned Agreements.

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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3.11 Covenant . 3M and its Affiliates will not market, nor assign, license or otherwise transfer any rights to the Vaccine Adjuvant Patents to a Third Party to market any product containing a compound claimed under the Compound Cases of the Vaccine Adjuvant Patents for any use other than as a Vaccine Adjuvant.

ARTICLE 4. PAYMENTS

4.1 Upfront Payments . COLEY shall be obligated, unconditionally guaranteed without exception or offset under any circumstances, to pay 3M IPC a total of twenty million dollars ($20,000,000) in four (4) equal, non-refundable payments, by wire transfer, as follows:

$5 million within ten (10) days after the Signing Date.

$5 million on the first anniversary of the Closing Date.

$5 million on the second anniversary of the Closing Date.

$5 million on the third anniversary of the Closing Date.

4.2 Milestone Payments . COLEY will pay 3M IPC the indicated milestone payments within 10 days upon achievement by COLEY of each of the following milestone events. For avoidance of doubt, each milestone payment shall be payable only one time.

4.3 Royalty Payments . COLEY shall pay 3M IPC, or a designated Affiliate, a nonrefundable royalty of [***] of Net Sales of any and all Products during the applicable Royalty Term. Such royalty shall be payable on Net Sales of each Product for the longer of (i)

Portions of this Exhibit were omitted and have been filed separately with the Secretary of the Commission pursuant to the Company’s application requesting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.

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ten (10) years from the First Commercial Sale of such Product in a Major Market Country or (ii) until the expiration or termination of the last Existing Claim within the Assigned Patent Rights or Licensed Patent Rights that claims the manufacture, use or sale of such Product in a country, or the importation of such Product into a country (such period is the “Royalty Term”). For avoidance of doubt, the Royalty Term for each Product shall be determined on a Product-by-Product and country-by-country basis.

4.3.1 Combination Products . In the event that a Product is sold in combination with another product or active component for a single price, Net Sales from sales of such combination product, for purposes of calculating royalties due under this Agreement, shall be calculated by multiplying the Net Sales of such combination product by the fraction A/(A+B), where A is the average per unit Net Sales of the Product sold separately in the country of sale and B is the average per unit Net Sales of the other product(s) or component(s) sold separately in the country of sale. In the event that no such separate sales are made, Net Sales, for purposes of determining royalty payments on such combination products, shall be a reasonable apportionment of the gross amount invoiced therefore based upon the relative contribution of the Product to the price of the combination product. Such apportionment shall be negotiated in good faith between the parties and, if they are unable to agree, resolved in accordance with the dispute resolution mechanism in Section 10.7.

4.4 License Income . COLEY shall also pay 3M IPC [***] of any non-royalty license income that COLEY receives during each calendar quarter in connection with the grant of licenses or sublicenses by COLEY of rights in the Assigned Patent Rights, and Licensed Patent Rights. For these purposes, “non-royalty license income” means and includes upfront payments and milestone payments received in connection with such licenses and sublicenses but does not include royalties (that is, payments made in connection with the sale of products) received from such licensees or sublicensees, amounts paid to reimburse COLEY for actual development costs, or amounts paid for other assets unrelated to the Purchased Assets or Licensed Patent Rights sold by COLEY, or reimbursing the cost of services provided by COLEY, to such licensees or sublicensees in connection with the grant of such licenses or sublicenses. In addition to the foregoing, COLEY shall pay to 3M IPC twenty