LICENSE AGREEMENT

License Agreement

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Coley Pharmaceutical Grou | The University of Iowa Research Foundation

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Title: LICENSE AGREEMENT
Governing Law: Iowa Date: 4/20/2005

Exhibit 10.26

LICENSE AGREEMENT

This Agreement is made and entered into by and between the University of Iowa Research Foundation (hereinafter “UIRF”) having offices at 214 Technology Innovation Center, Iowa City, Iowa 52242-5000 and Coley Pharmaceutical Group, having a principal place of business at 93 Worcester Road, Suite 101, Wellesley, Massachusetts, 02481 (hereinafter “LICENSEE”).

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

WHEREAS, UIRF, the [*********************************] (hereinafter “[**]”), The [***********] [**********************************] (hereinafter “[*********]”) and the [************************], (hereinafter “[***]”) are the joint owners by assignment (hereinafter “CO-OWNERS”) from their respective inventors of certain PATENT RIGHTS as defined below;

WHEREAS, UIRF is co-owner, with [**], by assignment from [**********************] of his entire right, title and interest in United States Patent No. [***********], issued [***********], titled “[************************************************************************************]”, the associated Divisional Patent, U.S. [*******] (issued [*********]), and the second Divisional Patent, U.S. [*******] (issued [******************]), and the third Divisional Application, filed [*************], (UIRF #[*******]), and is co-owner, along with [**], [*******], and [***] of United States Patent [*******], issued [************] based on U. S. Patent Application Serial No. [**********] and International Patent Application No. [**********************] filed [*******], and the associated European and Canadian Patent Applications, titled “[********************************************************************************************************** ******************************]” (UIRF # [*******]), the inventions described and claimed therein, and any divisions, to the extent the claims are directed to subject matter specifically described therein, patents issuing thereon or reissues thereof; which will be automatically incorporated in and added to the Agreement;

WHEREAS, the development of these inventions was sponsored in part by grants and/or fellowships from the Department of the Army, and as a consequence this license is subject to overriding obligations to the Federal Government under 35 U.S.C. §200-212 and applicable regulations;

WHEREAS, UIRF, [*******] and [***] entered into an Inter-Institutional Agreement dated February 26, 2002 whereby UIRF is appointed as the sole licensing agent and manager of PATENT RIGHTS on behalf of UIRF, [*******] and [***], a copy of which is attached at Appendix B;

WHEREAS, UIRF and [**] entered into an Inter-Institutional Agreement dated September 18, 2001 whereby UIRF is appointed as the sole licensing agent and manager of PATENT RIGHTS on behalf of [**], a copy of which is attached at Appendix C;

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

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

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

ARTICLE I — DEFINITIONS

1.1 PATENT RIGHTS shall mean United States Patent No. [**********], issued [**********], titled “[**********************************************]”, the associated Divisional Patent, U.S.

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 406 of the Securities Act.

[*********] (issued [**************]), the second associated Divisional Patent, U.S. [*********] (issued [****************]), and the third Divisional Application, filed [**************] (UIRF #[******]). [************************] is the sole inventor in United States Patent [*******] and the associated divisional filings.

PATENT RIGHTS shall also mean United States Patent [*********], issued [*****************], based on United States Patent Application Serial No. [*********], and International Patent Application No. [***************] filed [*********], and the associated European and Canadian Patent Applications, titled “[********************************************************************************************************** **” (UIRF # [*****]), the inventions described and claimed therein, and any divisions, to the extent the claims are directed to subject matter specifically described therein, patents issuing thereon or reissues thereof; and any and all foreign patents and patent applications corresponding thereto; which will be automatically incorporated in and added to this Agreement and shall periodically be added to Appendix A attached to this Agreement and made part thereof. Inventorship of the U.S. Patent Application [************] is as follows: University of Iowa inventor(s)-[**************]; [**************] inventor(s)- [**************] [*************] and [********************] inventor(s)-[*************************] (assigning to [******************************************];[*********************************************] inventor(s) [****************************] (assigning to the UIRF); [******************************] inventor(s)-[*****************************].

PATENT RIGHTS shall not include European Application No. [*********], filed on [*****************], “[***************************************************************]”, the inventions described and claimed therein, patents issuing thereon or reissues thereof; and any and all foreign patents and patent applications corresponding thereto. [**************] is the sole inventor in European Application No. [**********], which is based on a PCT application corresponding to United States Patent [*********]

1.2 LICENSED PRODUCTS shall mean products claimed in PATENT RIGHTS and any product, the making, selling or using of which would infringe PATENT RIGHTS but for this Agreement or which are made in accordance with or be means of LICENSED PROCESSES.

1.3 LICENSED PROCESSES shall mean the processes claimed in PATENT RIGHTS or some portion thereof.

1.4 MAJOR MARKET shall mean Germany, the United Kingdom or the United States.

1.5 NET SALES shall mean the amount billed or invoiced by LICENSEE, AFFILIATES, or sub-licensees on sales of LICENSED PRODUCTS less: (a) Customary trade, quantity or cash discounts and non-affiliated brokers’ or agents’ commissions actually allowed and taken; (b) Amounts repaid or credited by reason of rejection or return; and/or (c) To the extent separately stated on purchase orders, invoices or other documents of sale, taxes levied on and/or other governmental charges made as to production, sale, transportation, delivery or use and paid by or on behalf of LICENSEE.

In the event that a LICENSED PRODUCT under this Agreement is sold in combination with another active ingredient or component having independent therapeutic effect or diagnostic utility, the “NET SALES”, for purposes of determining royalty payments on the combination, shall be calculated using one of the following methods:

(a)

By multiplying the NET SALES of the combination by the fraction A/A+B, where A is the gross selling price, during the royalty paying period in question, of the LICENSED PRODUCT sold separately, and B is the gross selling price, during the royalty period in question, of the other active ingredients or components sold separately; or

(b)

In the event that no such separate sales are made of the LICENSED PRODUCT or any of the active ingredients or components in such combination package during the royalty paying period in question, NET SALES, for the purposes of determining royalty payments, shall be calculated using the above formula where A is the reasonably estimated commercial value of the LICENSED PRODUCT sold separately and B is the reasonably estimated commercial value of the other active ingredients or components sold separately. Any such estimates shall be reported to UIRF with the reports provided to UIRF pursuant to section 4.3 hereof.

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

1.9 FIELD shall include all fields

ARTICLE II — GRANT

2.1 UIRF on behalf of itself and CO-OWNERS hereby grants to LICENSEE and LICENSEE accepts, subject to the terms and conditions hereof, a worldwide exclusive license in the FIELD under PATENT RIGHTS to make and have made, to use and have used, to sell and have sold the LICENSED PRODUCTS, and to practice LICENSED PROCESSES. Such license shall include the right to grant sublicenses, subject to UIRF’s approval, which approval shall not be unreasonably withheld In order to provide LICENSEE with a period of exclusivity, UIRF agrees it will not grant licenses under PATENT RIGHTS in the FIELD to others except as required by UIRF’s obligations in paragraph 2.3 (a) or as permitted in paragraph 2.3 (b). LICENSEE agrees during the period of exclusivity of this license in the United States that any LICENSED PRODUCT produced for sale in the United States will be manufactured substantially in the United States.

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

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

(a)

The UI Patent Policy approved in 1983, Public Law 96-517, Public Law 98-620 and UIRF’s obligations under agreements with other sponsors of research. Any right granted in this Agreement greater than that permitted under Public Law 96-517 or Public Law 98-620 shall be subject to modification as may be required to conform to the provision of that statute.

(b)

UIRF, [**********] and CO-OWNERS shall have the right to make and to use and to grant non-exclusive licenses to make and to use, for research purposes only and not for any commercial purpose the subject matter described and claimed in PATENT RIGHTS.

(c)

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

(d)

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

(e)

UIRF shall have the right to terminate or render this license non-exclusive at any time after three (3) years from the date of license if, in UIRF’s reasonable judgment, LICENSEE:

(i)

has not put the licensed subject matter into commercial use in the country or countries where licensed, directly or through a sublicense, and is not keeping the licensed subject matter reasonably available to the public, or

(ii)

is not demonstrably engaged in a research, development, manufacturing, marketing, or licensing program, as appropriate, directed toward this end.

In making this determination UIRF shall take into account the normal course of such programs conducted with sound and reasonable business practices and judgment and shall take into account the reports provided hereunder by LICENSEE.

(f)

All sublicenses granted by LICENSEE hereunder shall include a requirement that the sublicensee use its best efforts to bring the subject matter of the sublicenses into commercial use as quickly as is reasonably possible and shall bind the sublicensee to meet LICENSEE’s obligations to UIRF and co-owning

parties under this Agreement and a copy of this Agreement shall be attached to such sublicense agreements. Royalties charged for sublicenses by LICENSEE shall not be in excess of normal trade practice. Copies of all sublicense agreements shall be provided to UIRF and co-owning parties.

(g)

In accordance with the rights reserved to the Government of the United States of America under the laws set forth in 37 CFR Part 401 et. al., 35 U.S.C. §§200-212 and succeeding statutes, the Government shall have the nonexclusive, nontransferable, irrevocable, royalty-free, paid-up right to practice or have practiced the Patent Rights throughout the world by or on behalf of the Government and on behalf of any foreign government or international organization pursuant to any existing or future treaty or agreement to which the Government is a signatory.

(h)

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

2.4 UIRF on behalf of itself and CO-OWNERS, hereby grants to LICENSEE the right to extend the licenses granted or to be granted in paragraphs 2.1 and 2.3 to an AFFILIATE subject to the terms and conditions hereof.

ARTICLE III — ROYALTIES, PAYMENTS

3.1 LICENSEE shall pay to UIRF a non-refundable license fee in the sum of $[******] execution of this Agreement. UIRF shall distribute said fee according to its Inter-Institutional Agreement with CO-OWNERS.

3.2 LICENSEE shall pay UIRF within thirty (30) days after the end of each calendar quarter, during the term of the license of paragraph 2.1, the following royalties, based on the NET SALES of all LICENSED PRODUCTS sold by LICENSEE and its AFFILIATES.

(a)

[***]% royalties on Net Sales of Licensed Products sold by Licensee and its AFFILIATES, if total royalties being paid on the LICENSED PRODUCT to all parties, other than by LICENSEE to QIAGEN and its AFFILIATES for anything other than licenses under issued patents, is less than or equal to [***]%;

(b)

[****]% royalties on Net Sales of Licensed Products sold by Licensee and its AFFILIATES, if total royalties being paid on the LICENSED PRODUCT to all parties, other than by LICENSEE to QIAGEN and its AFFILIATES for anything other than licenses under issued patents, is greater than [***]%, but less than or equal to [***]%;

(c)

(d)

[*]% royalties on Net Sales of Licensed Products sold by Licensee and its AFFILIATES, if total royalties being paid on the LICENSED PRODUCT to all parties, other than by LICENSEE to

QIAGEN and its Affiliates for anything other than licenses under issued patents, is greater than [****]%;

(e)

[***]% royalties on Net Sales of Licensed Products sold by Licensee and its AFFILIATES in the animal field.

3.3 In the case of sublicense, options to sublicense, and similar agreements to exploit PATENT RIGHTS, LICENSEE shall also pay to UIRF [********] percent ([**]%) of any royalty or non-royalty SUBLICENSE REVENUES. SUBLICENSEE shall mean any third party that is not an AFFILIATE of LICENSEE to whom LICENSEE, or an AFFILIATE of LICENSEE, grants a sublicense or an option to sublicense under the PATENT RIGHTS pursuant to Section 2.1 hereof to make and have made, to use and have used, to import and have imported, to offer for sale and have offered for sale, and/or to sell and have sold the LICENSED PRODUCTS, and/or to practice the LICENSED PROCESSES. SUBLICENSE REVENUES shall mean all revenues received by LICENSEE or an AFFILIATE from a SUBLICENSEE pursuant to a sublicense under the PATENT RIGHTS, an option for a sublicense under the PATENT RIGHTS, or a similar agreement providing for the exploitation of the PATENT RIGHTS, in each case granted pursuant to Section 2.1 hereof, including license issue fees, license maintenance fees, milestone fees and royalties, but excluding equity investments in LICENSEE, any funds received by LICENSEE for the conduct of research and development, payments received for manufacturing, and the reimbursement of costs and expenses.

3.4 If this license is converted to a non-exclusive one and if other non-exclusive licenses are granted, the above royalties shall not exceed the royalty being paid by other licensees during the term of the non-exclusive license.

3.5 Royalties shall not apply to sales among LICENSEE, its AFFILIATES and their respective sublicensees for resale. On sales between LICENSEE and its AFFILIATES for resale, the royalty shall be paid on the resale.

3.6 A payment of [**********************] dollars ($[*******]) for each of the first four (4) Licensed Products to successfully complete Phase I FDA, or equivalent European governmental body, trials. Such payment shall accrue for each Licensed Product upon approval by FDA for the product to proceed to Phase II FDA trials and shall be payable within thirty (30) days of accrual. This payment would accrue and be payable regardless of the date of execution of this Agreement. If such milestone event has occurred and associated payment has accrued prior to the execution of this Agreement, Licensee shall pay such amount(s) immediately to UIRF upon execution of this Agreement.

3.7 A payment of [**********************] dollars ($[*******]) for each of the first four (4) Licensed Products to receive FDA, or equivalent European governmental body, approval for marketing. Such a payment for each Licensed Product shall accrue upon receipt of FDA approval for the product and shall be payable within thirty (30) days of accrual. This payment would accrue and be payable regardless of the date of execution of this Agreement. If such milestone event has occurred and associated payment has accrued prior to the execution of this Agreement, Licensee shall pay such amount(s) immediately to UIRF upon execution of this Agreement.

3.8 A payment of [**************] dollars ($[******]) for each of the Licensed Products that do not require FDA ap

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