FIRST AMENDMENT TO LICENSE AGREEMENT

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Exhibit 10.5

*** Text Omitted and Filed Separately
CONFIDENTIAL TREATMENT REQUESTED
Under 17 C.F.R. §§ 200.80(b)(4) and 230.406

FIRST AMENDMENT TO LICENSE AGREEMENT

Between
Optimer Pharmaceuticals, Inc.
and
Sloan-Kettering Institute for Cancer Research

        This First Amendment confirms the mutual understanding between Optimer Pharmaceuticals, Inc., a corporation, having a place of business at 10110 Sorrento Valley Road, Suite C, San Diego, California 92121 ("LICENSEE") and the Sloan-Kettering Institute for Cancer Research, a not-for-profit corporation organized under the laws of New York State, having a place of business at 1275 York Avenue, New York, New York 10021 ("SKI").

WHEREAS, LICENSEE and SKI have entered into a license agreement (SK#6637) related to carbohydrate cancer vaccines with an Effective Date of July 31, 2002 ("Agreement"), a copy of which is attached hereto; and

WHEREAS, the parties wish to amend the Agreement as LICENSEE no longer desires to develop Licensed Products II, effective as of June 30, 2005 ("Amendment Effective Date"),

NOW, THEREFORE, the parties, intending to be legally bound, hereby amend the Agreement as follows:

1.

Definitions. All capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Agreement.

2.

Article 2.1 of the Agreement is hereby replaced in its entirety to read:

SKI hereby grants to LICENSEE:

(i)

an exclusive, worldwide license, to SKI Patents A in Field I, to make, have made, use, sell, have sold, import and develop Licensed Products I, with the right to grant and authorize sublicenses;

(ii)

a nonexclusive, worldwide license to SKI Patents D in Field I, to make, have made, use, sell, have sold, import and develop Licensed Products I, with the right to grant and authorize sublicenses; and

(iii)

a non-exclusive, worldwide, royalty-free license, without the right to grant and authorize sublicenses, to SKI's entire interest in and to the Know-How pursuant to the licenses granted in this Section 2.1.

3.

Articles 4.1(d), 4.1(e), 4.1(g), and 4.1(h) of the Agreement are hereby made void.

4.

LICENSEE's responsibility to pay for all costs and expenses incurred for the preparation, filing, prosecution, issuance, and maintenance of SKI Patents B under Article 6.1 of the Agreement shall be limited to such costs and expenses incurred up to and including the Amendment Effective Date. Such costs and expenses incurred subsequent to the Amendment Effective Date shall be done by SKI.

5.

All other terms and conditions of the Agreement not specifically modified by this First Amendment shall remain in full force and effect.

6.

On and after the Amendment Effective Date, each reference in the Agreement to this "Agreement", "hereunder", "herein", "hereof" or words of like import referring to the Agreement shall mean and be a reference to the Agreement as amended by this First Amendment.

7.

This First Amendment may be executed in two counterparts, each of which will be deemed an original, but both of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this First Amendment to the Agreement to be executed by their duly authorized representatives.

OPTIMER PHARMACEUTICALS, INC.		SLOAN-KETTERING INSTITUTE FOR CANCER RESEARCH
/s/  MICHAEL N. CHANG       Michael N. Chang, Ph.D. CEO		/s/  G. BERNHARDT       James S. Quirk Senior Vice President, Research Resources Management
Date:    11-16-05		Date:    12/22/05

LICENSE AGREEMENT

for SKI's technology

"Carbohydrate Cancer Vaccines"
(SK#6637)

TABLE OF CONTENTS

PREAMBLE ARTICLES:
I		DEFINITIONS		2
II		GRANT		3
III		DUE DILIGENCE, REGULATORY MATTERS		4
IV		PAYMENTS		5
V		REPORTS AND RECORDS		7
VI		PATENT PROSECUTION		8
VII		INFRINGEMENT		8
VIII		INDEMNIFICATION, PRODUCT LIABILITY, WARRANTIES		9
IX		EXPORT CONTROLS		10
X		NON-USE OF NAMES		10
XI		ASSIGNMENT		10
XII		TERMINATION		10
XIII		PAYMENTS, NOTICES AND OTHER COMMUNICATIONS		12
XIV		MISCELLANEOUS PROVISIONS		12

        This Agreement is effective on the date last subscribed below (the "Effective Date"), and is by and between Sloan-Kettering Institute for Cancer Research (hereinafter referred to as "SKI"), a New York membership corporation with principal offices at 1275 York Avenue, New York, New York 10021, and Optimer Pharmaceuticals, Incorporated , a corporation with principal offices located at 10110 Sorrento Valley Road, Suite C, San Diego, California 92121 (hereinafter referred to as "LICENSEE").

WITNESSETH

        WHEREAS, SKI is the owner of certain SKI Patents (as later defined herein) and has the right to grant licenses under said SKI Patents; and

        WHEREAS, SKI desires to have the SKI Patents utilized in the public interest and is willing to grant a license to its interest thereunder; and

        WHEREAS, LICENSEE seeks to commercially develop the SKI Patents through a thorough, vigorous and diligent program of exploiting the SKI Patents whereby public utilization shall result therefrom.

1

 

        NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

ARTICLE I—DEFINITIONS

        For the purpose of this Agreement, the following words and phrases shall have the following meanings:

1.1

"LICENSEE" shall include Affiliates, that is, any person, firm, corporation or other entity controlling, controlled by, or under common control with a party hereto. The term "control" wherever used throughout this Agreement shall mean ownership, directly or indirectly, of more than 50% of the equity capital. With regard to SKI, "Affiliate" shall mean the Memorial Sloan-Kettering Cancer Center and the Memorial Hospital for Cancer and Allied Diseases.

1.2

"SKI Patents A", "SKI Patents B", "SKI Patents C", and "SKI Patents D" shall have meanings as defined in Exhibit A . "SKI Patents" shall mean SKI Patents A, SKI Patents B, SKI Patents C, and SKI Patents D.

1.3

"Field I" shall mean the treatment or prevention of human cancer with a carbohydrate vaccine comprising Globo H as the sole antigen. Specifically excluded from Field I are (i) vaccines comprising mixtures of more than one type of carbohydrate antigen, one of which may be Globo H, and (ii) vaccines comprising Clustered Carbohydrate Antigens (defined as an immunogenic molecule consisting of two or more identical or different carbohydrate antigens attached to a common peptide backbone).

1.4

"Field II" shall mean the treatment or prevention of human cancer with a vaccine comprising Clustered Carbohydrate Antigens wherein the carbohydrate antigens have been synthesized using Optimer's OP _op S™ Technology.

1.5

"Know-How" shall mean any technical information, know-how, processes, procedures, compositions, devices, methods, formulas, protocols, techniques, designs, data or other subject matter owned or controlled by SKI which is necessary for the manufacture, sale and/or use of Licensed Products I and Licensed Products II (collectively, "Licensed Products"), in each case, which is not in the public domain.

1.6

"Licensed Products I" shall mean any and all products which fall within Field I and which would either (i) infringe a Valid Claim of SKI Patents A but for this agreement, or (ii) are produced or used using a process or method that would infringe a Valid Claim of SKI Patents A but for this agreement.

1.7

"Licensed Products II" shall mean any and all products which fall within Field II and which would either (i) infringe at least one Valid Claim of SKI Patents A, B, C or D but for this agreement, or (ii) are produced or used using a process or method that would infringe at least one Valid Claim of SKI Patents A, B, C or D but for this agreement.

1.8

"Net Sales" of a product shall mean LICENSEE's or sublicensee's, as indicated, billings for sales of that product less the sum of the following:

a)

Discounts allowed in amounts customary in the trade;

b)

Sales, tariff duties and/or use taxes directly imposed and with reference to particular sales;

c)

Outbound transportation prepaid or allowed;

d)

Amounts allowed or credited on returns; and

2

e)

Bad debts and uncollectible receivables provided that, in any calendar year, such deduction will not exceed four percent (4%) of the total billings for sales of Licensed Products and Licensed Services sold in that year.

No deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by LICENSEE or its Affiliates and on its payroll, or for cost of collections. Licensed Products shall be considered "sold" when billed or invoiced. As LICENSEE agrees to pay royalties in countries where patent protection has not been sought, and SKI is willing to forgo its rights to seek patent protection in such countries, Net Sales of a product shall explicitly include billings for sales of that product in such countries.

1.9

"Royalty Year" shall mean each twelve month period commencing January 1 and ending December 31 during the term of this Agreement. For the first year of this Agreement, the Royalty Year shall be the period of time between the signing of the Agreement and December 31.

1.10

"Foreign Major Market Countries" shall mean the United Kingdom, Germany, France, Italy, Spain and Japan.

1.11

"Net Royalty" shall mean the total royalty compensation received by LICENSEE from a sublicensee in a given Royalty Year.

1.12

"Valid Claim" shall mean a claim of an issued and unexpired patent, or a claim of a pending patent application, which has not been held unpatentable, invalid or unenforceable by a court or other government agency of competent jurisdiction in a final decision from which no appeal may be taken, and has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise. Should any issued Valid Claim be challenged and held invalid or unenforceable by a court or other government agency of competent jurisdiction from which appeal may be taken, royalty payments that, but for the holding of invalidity or unenforceability would be due under this Agreement, shall be made by LICENSEE and shall be held in escrow by SKI until no further appeals are available. If the claim is finally held to be valid and enforceable, the amounts held in escrow, including interest, shall be released to SKI and the relevant claim shall be reinstated as a Valid Claim hereunder. If it is finally held to be invalid or unenforceable, the amounts held in escrow, including interest, shall be released to LICENSEE.

ARTICLE II—GRANT

2.1

SKI hereby grants to LICENSEE:

(i)

an exclusive, worldwide license, to SKI Patents A in Field I, to make, have made, use, sell, have sold, import and develop Licensed Products I, with the right to grant and authorize sublicenses;

(ii)

an exclusive, worldwide license, to SKI Patents B in Field II, to make, have made, use, sell, have sold, import and develop Licensed Products II, with the right to grant and authorize sublicenses;

(iii)

a nonexclusive, worldwide license to SKI Patents A and SKI Patents C in Field II, and to SKI Patents D in Field I and Field II, to make, have made, use, sell, have sold, import and develop Licensed Products I and Licensed Products II with the right to grant and authorize sublicenses; and

(iv)

SKI hereby grants to LICENSEE a non-exclusive, worldwide, royalty-free license, without the right to grant and authorize sublicenses, to SKI's entire interest in and to the Know-How pursuant to the licenses granted in this Section 2.1.

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2.2

Notwithstanding any other provisions of this Agreement, it is agreed that SKI and its Affiliates shall retain the right to practice the licensed rights granted under Section 2.1 for its own teaching, research and patient care activities.

2.3

All rights reserved to the United States Government and others under 35 USC §§200-212, as amended, shall remain and shall in no way be affected by this Agreement.

2.4

LICENSEE hereby agrees that every sublicensing agreement to which it shall be party and which shall relate to the rights, privileges and license granted hereunder shall contain a statement describing the date upon which LICENSEE'S exclusive rights, privileges and license hereunder shall terminate.

2.5

LICENSEE agrees that any sublicenses granted by it shall provide that the obligations to SKI of Article III, Sections 3.1 and 3.3, V, VII, VIII, IX, X, XI, XII, and XIV of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. LICENSEE further agrees to attach copies of these Articles to sublicense agreements.

2.6

LICENSEE agrees to forward to SKI a copy of any and all fully executed sublicense agreements, and further agrees to timely forward to SKI a copy of sublicensing revenue reports received by LICENSEE from its sublicensees during the preceding Royalty Year.

2.7

If LICENSEE receives from sublicensees anything of value in lieu of cash payments based upon payment obligations of any sublicense under this Agreement, LICENSEE shall pay SKI royalty or other payments as required by Section 4.1, based on the fair market value of such payment, unless SKI waives in writing such payment obligation.

2.8

The license granted hereunder shall not be construed to confer any rights upon LICENSEE by implication, estoppel or otherwise as to any technology not included in the SKI Patents, except as expressly set forth herein.

2.9

All rights not specifically granted herein are reserved to SKI. SKI explicitly retains the right to grant to third parties (i) exclusive licenses to SKI Patents A outside of Field I and Field II, (ii) exclusive licenses to SKI Patents B outside of Field II, (iii) exclusive licenses to SKI Patents C outside of Field II, and (iv) exclusive licenses to SKI Patents D outside of Field II.

2.10

SKI shall cooperate to transfer to LICENSEE all Know-How, and all data, reports, analyses and other information necessary for the manufacture, use, and sale of Licensed Products I and/or Licensed Products II in its possession or control, in a format reasonably acceptable to LICENSEE.

ARTICLE III—DUE DILIGENCE, REGULATORY MATTERS

3.1

LICENSEE and its sublicensees shall use commercially reasonable efforts to bring Licensed Products to market through a thorough, vigorous and diligent program for exploitation of the SKI Patents and to continue active, diligent marketing efforts for one or more Licensed Products or throughout the life of this Agreement.

3.2

Within sixty (60) days of the Effective Date, SKI and Licensee shall mutually agree upon a timeline for clinical development of Licensed Products I and research development of Licensed Products II ("Timeline"). Such Timeline shall be appended as Exhibit B to this Agreement, and may be amended from time to time as necessary and by mutual consent. In the event that agreement cannot be reached on the Timeline within sixty (60) days of the Effective Date, or any developmental milestone specified in the Timeline are not met by LICENSEE, SKI shall have the right to terminate this Agreement in accordance with Section 12.4.

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3.3

In addition, LICENSEE shall adhere to the following milestones:

(a)

LICENSEE shall have delivered to SKI prior to the execution of this Agreement, its detailed business, research and development plan including, for example, relevant schedules of capital investments needed to implement the plan, financial, equipment, facility plans, number and kind of personnel and time planned for each phase of development of the SKI Patents for a three year period, to the extent formed by LICENSEE. Similar reports shall be provided to SKI annually to relay update and status information on LICENSEE's business, research and development progress, including projections of activity anticipated for the next reporting year.

(b)

LICENSEE shall be responsible for diligently and promptly taking all reasonable steps to secure all required and/or necessary governmental approvals to sell, exploit, or market any and all Licensed Products. LICENSEE shall advise SKI, through annual reports described in Section 3.3(a) above of its program of development for obtaining said approvals.

3.4

LICENSEE's failure to perform in accordance with Sections 3.1 and 3.2 above shall be grounds for SKI to terminate this Agreement pursuant to Section 12.4 below.

3.5

SKI shall cooperate, at its sole discretion, with LICENSEE before the Food and Drug Administration, and any other regulatory agencies in all matters regarding to Licensed Products I and Licensed Products II.

ARTICLE IV—PAYMENTS

4.1

For the rights, privileges and licenses granted hereunder, LICENSEE shall pay to SKI, in the manner hereinafter provided, until the end of the last to expire patent of the SKI Patents or until this Agreement shall be terminated, as hereinafter provided, whichever occurs first:

(a)

A license issue fee of fifty thousand dollars ($[***]) payable on the Effective Date of this Agreement.

(b)

One hundred and twenty thousand (120,000) shares of Optimer Pharmaceuticals, Inc. common stock, par value $0.001 per share (the "Shares"), issuable immediately on the Effective Date of this Agreement. In connection with the issuance of the Shares, SKI shall enter into the Common Stock Issuance Agreement, attached hereto as Exhibit C ("Common Stock Issuance Agreement").

(c)

For Licensed Products I, a royalty in an amount equal to [***] percent ([***]%) of the Net Sales of Licensed Products I by LICENSEE or any sublicensee.

(d)

Subject to Section 4.1(e), for Licensed Products II, (a) for sales made by LICENSEE, a royalty in an amount equal to [***] percent ([***]%) of the Net Sales of Licensed Products II and (b) for sales made by a sublicensee, the greater of (i) twenty percent ([***]%) of the Net Royalty received by LICENSEE from the sublicensee or (ii) [***] percent of Net Sales of Licensed Products II by the sublicensee.

(e)

For any product in Field II that is not covered by a Valid Claim of SKI Patents B, (a) for sales made by LICENSEE, a royalty in an amount equal to [***] percent ([***]%) of the Net Sales of such product and (b) for sales made by a sublicensee, the greater of (i) [***] percent ([***]%) of the Net Royalty received by LICENSEE from the sublicensee or (ii) [***] percent of Net Sales of such product by the sublicensee.

(f)

For each of Licensed Products I, milestone payments as follows in the event that such milestone is achieved by LICENSEE and not a sublicensee:

•

[***] dollars ($[***]) upon commencement of Phase III clinical studies;

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•

[***] dollars ($[***]) upon first New Drug Application (NDA) filing;

•

[***] dollars ($[***]) upon marketing approval in the United States;

•

[***] dollars ($[***]) upon market approval in each and any of the Foreign Major Market Countries.

(g)

Subject to Section 4.1(h), for each of Licensed Products II, milestone payments as follows in the event that such milestone is achieved by LICENSEE and not a sublicensee:

•

[***] dollars ($[***]) upon commencement of Phase I clinical studies;

•

[***] dollars ($[***]) upon commencement of Phase II clinical studies;

•

[***] dollars ($[***]) upon commencement of Phase III clinical studies;

•

[***] dollars ($[***]) upon first New Drug Application (NDA) filing;

•

[***] dollars ($[***]) upon marketing approval in the United States;

•

[***] dollars ($[***]) upon market approval in each and any of the Foreign Major Market Countries.

(h)

For any product in Field II that is not covered by a Valid Claim of SKI Patents B, milestone payments as follows in the event that such milestone is achieved by LICENSEE and not a sublicensee:

•

[***] dollars ($[***]) upon commencement of Phase I clinical studies;

•

[***] dollars ($[***]) upon commencement of Phase II clinical studies;

•

[***] dollars ($[***]) upon commencement of Phase III clinical studies;

•

[***] dollars ($[***]) upon first New Drug Application (NDA) filing;

•

[***] dollars ($[***]) upon marketing approval in t