EXCLUSIVE LICENSE AGREEMENT BETWEEN THE UNIVERSITY OF ARIZONA AND PROLX PHARMACEUTICALS CORPORATION

Exhibit 10.18

EXCLUSIVE LICENSE AGREEMENT

BETWEEN

THE UNIVERSITY OF ARIZONA

AND

PROLX PHARMACEUTICALS CORPORATION

        Effective as of 29 day of July, 2004 ("Effective Date"), the Arizona Board of Regents on behalf of the University of Arizona, having its principal offices in Tucson, Arizona 85721 (the "LICENSOR"), and PROLX PHARMACEUTICALS CORPORATION, having a principal place of business at 221 E. Sixth Street, Tucson, Arizona 85705 ("LICENSEE"), agree as follows:

1. BACKGROUND

        1.1   An Interinstitutional Agreement, effective September 28, 2002, between and among the Arizona Board of Regents on behalf of the University of Arizona, the University of Pittsburgh of the Commonwealth System of Higher Education, and The Burnham Institute grants to the LICENSOR the right to administer and commercialize through licensing the Technical Information and Licensed Patents, as described in section 1.2 below.

        1.2   The LICENSOR wishes to exercise its right to administer and license valuable intangible property rights in the technologies described in:

• • 1.2.1

    U.S. Patent No. 5,378,725, issued January 3, 1995 as described in UA Case # 94-030 and entitled "Inhibition of phosphatidylinositol 3-kinase with wortmannin and analogs thereof, assigned to the Arizona Board of Regents and Eli Lilly and Company;
    
    

    1.2.2

    U.S. Provisional Patent Application Serial Number 60/322,143, filed September 14, 2001, as described in UA Case # 02-049 and entitled "Device and method for treating restenosis;"
    
    

    1.2.3

    U.S. Provisional Patent Application Serial Number 60/322,139, filed September 14, 2001, as described in UA Case # 02-050 and entitled "Inhibition of Phosphatidylinositol 3-kinase with wortmannin analogs;"
    
    

    1.2.4

    U.S. Patent No. 6,703,414, issued March 9, 2004 as described in UA Case # 02-049 entitled "Device and Method for Treating Restenosis;"
    
    

    1.2.5

    PCT Application No. US03/28920 filed September 15, 2003 as described in UA Case # 02-049 entitled "Device and Method for Treating Restenosis;"
    
    

    1.2.6

    U.S. Application Serial No. 10/245,779 filed September 16, 2002 as described in UA Case # 02-050 and entitled "Wortmannin Analogs and Methods of Using Same;"
    
    

    1.2.7

    PCT Application No. US02/29635 filed September 16, 2002 as described in UA Case # 02-050 and entitled "Wortmannin Analogs and Methods of Using Same;"

[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED FOR CONFIDENTIALITY PURPOSES.

• • 1.2.8

    EP Application No. 02766286.5 filed September 16, 2002 as described in UA Case # 02-050 and entitled "Wortmannin Analogs and Methods of Using Same;"
    
    

    1.2.9

    Japan Application No. 504100813 filed March 15, 2004 as described in UA Case # 02-050 and entitled "Wortmannin Analogs and Methods of Using Same;"
    
    

    1.2.10

    Mexico Application No.                        filed March 15, 2004 as described in UA Case # 02-050 and entitled "Wortmannin Analogs and Methods of Using Same;"
    
    

    1.2.11

    Australia Application No. 2002330029 filed September 16, 2002 as described in UA Case # 02-050 and entitled "Wortmannin Analogs and Methods of Using Same;" and
    
    

    1.2.12

    Canada Application No.                        filed March 12, 2004 as described in UA Case # 02-050 and entitled "Wortmannin Analogs and Methods of Using Same;"

        1.3   The LICENSEE wishes to acquire an Exclusive license from LICENSOR for the purpose of undertaking development, to manufacture, use, import and sell products incorporating said Technology and the LICENSOR is willing to grant such an exclusive license in order to have the Technology developed into products and marketed at the earliest possible time for use and benefit to the public and the LICENSOR.

2. DEFINITIONS

        2.1   " Exclusive " means that, subject to certain rights to the United States Government, LICENSOR has not granted and shall not grant further licenses under the Licensed Patents so long as this Agreement is in effect, and shall not make or have made Licensed Products for use by third parties for commercial use nor sell or offer to sell Licensed Products to third parties for commercial use.

        2.2   " First Commercial Sale " means the first sale of a Licensed Product at an arms length transaction with a third party unaffiliated with any party to this Agreement.

        2.3   " Licensed Application(s )" means the applications identified in Section 1.2 and any U.S. or foreign patent applications and equivalents thereto that claim priority therefrom and claim Technology, including any continuations, divisions, confirmations, substitutions, registrations, revalidations, additions, extensions, re-examination certificates, supplementary protection certificates and reissues thereof, but excluding continuations-in-part, unless priority to such applications or patents is perfected.

        2.4   " Licensed Patent(s) " means the patents identified in Section 1.2 and any U.S. or foreign patents issued or granted from the Licensed Applications and any and all existing or future foreign counterparts of the patents listed in Section 1.2 or of patents issued or granted from the Licensed Applications that claim priority therefrom and claim Technology, including any continuations, divisions, confirmations, substitutions, registrations, revalidations, additions, extensions, re-examination certificates, supplementary protection certificates and reissues thereof, but excluding continuations-in-part, unless priority to such applications or patents is perfected.

[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED FOR CONFIDENTIALITY PURPOSES.

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        2.5   " Licensed Product(s) " means any compound, product or part thereof, device, kit, method or service for which the manufacture, use, import or sale is covered by a valid claim of an issued, unexpired Licensed Patent(s). A claim of an issued, unexpired Licensed Patent(s) shall be presumed to be valid unless and until it has been held to be invalid by a final judgment of a court of competent jurisdiction from which no appeal can be or is taken.

        2.6   " LICENSEE " is understood to include ProlX Pharmaceuticals Corporation and any and all of its Affiliates. An Affiliate of LICENSEE shall mean any corporation or other business entity controlled by, controlling, or under common control with LICENSEE during the term of this Agreement. For this purpose, "control" means direct or indirect beneficial ownership:

• • (a)

    of at least fifty percent (50%) of the voting stock; or
    
    

    (b)

    of at least fifty percent (50%) interest in the income of such corporation or other business.

        2.7   " Net Sales " means the gross invoice price generated by sale or use, including provision of service involving the use, of the Licensed Product(s) in the form in which it is sold or used, less the following items:

• • (a)

    Import, export, excise, value added and sales taxes, plus custom duties;
    
    

    (b)

    Costs of insurance, packing and transportation from the place of manufacture to the customer's premises or point of installation;
    
    

    (c)

    Normal and customary quantity and cash discounts; and
    
    

    (d)

    Credit for returns, allowances, or trades actually given.

        For Licensed Products sold or otherwise provided in combination with other products or services, or provided in other than a sale transaction, Net Sales shall be based on the quantity of products or services provided times the price for a similar product or service when sold or otherwise provided separately by LICENSEE in an arms-length transaction in similar quantities.

        2.8   " Regulatory Approval " means any approval or clearance by any governmental agency or agencies having authority to regulate the use or sale of any Licensed Product(s) in the pertinent jurisdiction or territory.

        2.9   " Technical Information " means the information in Licensed Application(s) and Licensed Patents as well as any technical data and material necessary to enable LICENSOR to make, have made, use, sell, have sold, offer for sale, import, and otherwise obtain or provide Licensed Product or technical data or material provided to LICENSEE by LICENSOR or its employees or contractors including, without limitation, any biochemical, preclinical, clinical, manufacturing, formulation, and scientific research information of a confidential nature whether patentable or unpatentable, relating to, but limited to the general subject matter described or claimed in, the Licensed Application(s) and/or Licensed Patent(s).

[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED FOR CONFIDENTIALITY PURPOSES.

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        2.10 "Technology" means the technology described in the patents and applications identified in Section 1.2.

        2.11 " Verifiable Research Costs " means any costs of research and development of Licensed Product, but excluding costs that are paid for or reimbursed by research grants, contracts with third parties, or other non-contractual agreements.

        2.12 "LICENSOR(S)" means the Arizona Board of Regents on behalf of the University of Arizona, which represents the University of Pittsburgh of the Commonwealth System of Higher Education and The Burnham Institute as set forth in Sec. 1.1 above.

3. GRANT

        3.1   LICENSOR hereby grants under LICENSOR's valuable intangible property rights and subject to the terms of this Agreement, and LICENSEE hereby accepts, an Exclusive worldwide license to make, have made, use, sell, have sold, offer for sale, import, and otherwise obtain or provide Licensed Product(s) and a non-exclusive worldwide license to use Technical Information. For the avoidance of doubt, nothing in the preceding grant shall be interpreted as limiting retained rights of the University of Arizona, the University of Pittsburgh of the Commonwealth System of Higher Education or The Burnham Institute to use Licensed Patents for educational and research purposes.

        3.2   LICENSOR grants LICENSEE the right to grant sublicenses to third parties, so long as the grant to any sublicensee is within the scope of the grant of Article 3.1 to LICENSEE and as long as LICENSEE possesses an Exclusive License under this Agreement. Any and all sublicense agreements granted by LICENSEE shall also include all of the rights and obligations due under this Agreement by LICENSEE to LICENSOR and, if applicable, the United States government. These rights due LICENSOR in all sublicenses include, but are not limited to, the right of LICENSOR to receive all royalties and fees under Articles 4 and 5.

        LICENSEE shall notify the LICENSOR of each sublicense granted hereunder and provide LICENSOR with a copy of each sublicense. LICENSEE shall collect and pay all fees and royalties due LICENSOR and guarantee all such payments due from sublicensees. LICENSEE shall require sublicensees to provide payments with royalty reports, and LICENSEE shall collect and summarize for LICENSOR all such reports due from sublicensees. LICENSEE shall monitor sublicensees and assure license terms are met and product quality is equal to or greater than that required by this Agreement. Upon termination of this Agreement for any reason, LICENSOR, at its sole discretion, shall determine whether any or all sublicenses shall be canceled or assigned to LICENSOR.

4. FEES, ROYALTIES, PAYMENTS AND MILESTONES

        4.1   LICENSEE agrees to pay an upfront License Fee of [+] One half of the payment is due within fourteen (14) days of the Effective Date; the balance is due six (6) months after the Effective Date.

[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED FOR CONFIDENTIALITY PURPOSES.

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        4.2   LICENSEE agrees to cover the costs incurred in connection with the preparation, filing and prosecution of the Licensed Applications and the maintenance of Licensed Patents. After the effective date, and during the term of this Agreement, LICENSEE agrees to assume responsibility for future patent prosecution and maintenance costs as provided in the following Article 7.1.

        4.3   LICENSEE shall pay to LICENSOR milestone royalties relating to Regulatory Approval for Licensed Product as follows:

• • (1)

    [+]
    
    

    (2)

    [+]
    
    

    (3)

    [+]
    
    

    (4)

    [+]

        LICENSEE may investigate more than one Licensed Product through Phase II tests without paying more than one set of milestone royalties. If LICENSEE should choose to submit multiple NDAs covering the same Licensed Product or an NDA covering more than one Licensed Product, then the milestone royalties relating to additional Licensed Products are as set forth in 4.2 (3) and (4) above being reduced by [+] of the first amount due. If, after obtaining Regulatory Approval for an NDA or its equivalent, LICENSEE attempts to develop additional Licensed Products, milestone royalties relating to such products will be reduced by [+].

        4.4   In addition, LICENSEE shall pay LICENSOR earned royalties on Net Sales of Licensed Product sold directly by LICENSEE in the country in which the Licensed Product is made, used or sold. [+]

        4.5   LICENSEE shall pay to LICENSOR [+].

        4.6   The royalty on sales in currencies other than U.S. Dollars shall be calculated using the appropriate foreign exchange rate for such currency quoted by the Wall Street Journal, on the close of business on the last banking day of each calendar quarter. Royalty payments to LICENSOR shall be in U.S. Dollars.

[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED FOR CONFIDENTIALITY PURPOSES.

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5. REPORTS, PAYMENTS AND ACCOUNTING

        5.1     Quarterly Royalty Payment and Report .    LICENSEE shall make written reports and royalty payments to LICENSOR within ninety (90) days after the end of each calendar quarter following the First Commercial Sale ("Quarterly Report"). This Quarterly Report shall state the number, description, and aggregate Net Sales of Licensed Product(s) during such completed calendar quarter, and resulting calculation of earned royalty payment due the LICENSOR for such completed calendar quarter. Concurrent with the making of each such report, LICENSEE shall include payment due LICENSOR of royalties for the calendar quarter covered by such report.

        All Payments pursuant to the License shall be made and sent to the following address:

• • Director
    Office of Technology Transfer
    The University of Arizona
    P.O. Box 210158
    Tucson, AZ 85721-0158

        5.2     Annual Progress Reports .    LICENSEE shall provide to LICENSOR annual written progress reports with the first Quarterly Report for each calendar year after the Effective Date of this agreement. The reports shall include sufficient detail to allow LICENSOR to determine progress on research and development, manufacturing, sublicensing, marketing and sales during the previous twelve (12) months as well as plans for the coming year.

        5.3     Accounting .    LICENSEE agrees to keep records for a period of seven (7) years showing the manufacturing, sales, use, and other disposition of products sold or otherwise disposed of under the license herein granted in sufficient detail to enable the royalties payable hereunder by LICENSEE to be determined, and further agrees to permit its books and records to be examined from time to time by a certified public accountant of a nationally recognized accounting firm (the "Auditor"), who is selected and paid for by LICENSOR, but no more than once per calendar year to the extent necessary to verify reports provided for in Paragraph 5.1. The information obtained shall be treated as a Confidential Item pursuant to Article 9.

        5.4   If the Auditor determines that LICENSEE has, for any reason, failed to pay the full royalties as due under this Agreement, the Auditor shall inform LICENSOR and LICENSEE. LICENSEE shall immediately upon notice thereof pay to LICENSOR any owed royalties plus interest at the rate of [+] per annum above the average prime rate for that calendar year, compounded daily, calculated from the date upon which such royalties should have been paid to the date of actual payment of LICENSOR. If the Auditor determines that LICENSEE has overpaid royalties due under this Agreement, such overpayments shall be credited against future royalties due LICENSOR. In the event that underpayments of royalties due exceed [+] then the cost of the next two examinations of LICENSEE's books and records shall be borne by LICENSEE.

[+] DESIGNATES PORTIONS OF THIS DOCUMENT THAT HAVE BEEN OMITTED FOR CONFIDENTIALITY PURPOSES.

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6. REPRESENTATIONS

        6.1   LICENSOR represents that it has the right to grant LICENSEE the license granted herein and that it has not granted any license to the Licensed Patents or Licensed Applications or any rights in any Licensed Product(s) to any third party, except for United States government rights which may have been required by law.

        6.2   LICENSOR represents that, to LICENSOR's knowledge, information and belief at the time of execution of this Agreement:

• • (a)

    there are no other patents, applications, or invention disclosures naming one or more of the inventors of Licensed Applications or Licensed Patents owned or assigned to LICENSOR which dominate or are dominated by the claimed subject matter of Licensed Patents; and
    
    

    (b)

    other than the LICENSOR, there are no co-owners of the Licensed Applications and Licensed Patents, except as set forth herein.

        6.3   LICENSEE represents to LICENSOR that LICENSEE shall diligently perform all of its obligations under the Agreement.

         6.4   EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, A