NON-EXCLUSIVE LICENSE AGREEMENT

Exhibit 10.4

NON-EXCLUSIVE LICENSE AGREEMENT

     This Agreement, effective as of January 10, 2007 (the “Effective Date”), is between the University of Massachusetts (“University”), a public institution of higher education of the Commonwealth of Massachusetts as represented by its Worcester campus, and, RXi Pharmaceuticals Corporation (“Company”), a Delaware corporation.

RECITALS

     WHEREAS, University owns intellectual property rights which relate to therapeutic applications of RNAi, as described in University’s invention disclosures numbered UMMC 06-08, entitled “Methods of Synthesis and Formulation of New Reagents for Efficient Nucleic Acids Delivery in Cells and Animals” and UMMC 07-08 entitled “Microwave Assisted Method of Synthesis of New Cationic Reagents for Efficient Drug Delivery in Cells and Animals”;

     WHEREAS, Company is engaged in business relating to the development and commercialization of products that use or incorporate University’s intellectual property rights and has the capability of developing commercial applications of the intellectual property;

     WHEREAS, Company desires to obtain a non-exclusive license to University’s intellectual property rights, and University is willing to grant a non-exclusive license to its intellectual property rights under the following conditions so that these intellectual property rights may be developed to their fullest and the benefits enjoyed by the general public; and

     WHEREAS, the license that is granted in this Agreement promotes the development of publicly funded intellectual property to practical application for the public good.

     THEREFORE, University and Company agree as follows:

1. Definitions .

     1.1 “ Affiliate ” means an entity that controls, is controlled by, or is under common control with a party to this Agreement. The term “control” as used in the preceding sentence means possession of the power to direct or call for the direction of the management and policies of an entity, whether through ownership of a majority of the outstanding voting securities, by contract, or otherwise.

     1.2 “ Companion UMass License Agreements ” means this Agreement and the license agreements with University that are executed on the same date as this Agreement for University technologies, UMMC 03-75, UMMC 03-68, UMMC 06-38, UMMC 06-39, and UMMC 06-21, collectively.

     1.3. “ Confidential Information ” means any confidential or proprietary information furnished by one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in

connection with this Agreement that is specifically designated as confidential, as further described in Article 7.

     1.4. “ Field ” means Primary Field and Secondary Field collectively. Any commercial sale of research reagents covered by the Patent Rights is specifically excluded from the Field. The foregoing shall not be interpreted to prevent Company or its Affiliates from performing research related to discovery or development of Licensed Products for itself or any Affiliate. (a) “ Primary Field ” means therapeutic, prophylactic, or diagnostic health care applications for amyotrophic lateral sclerosis (ALS), diabetes, and obesity, in humans. (b) “ Secondary Field ” means therapeutic, prophylactic, or diagnostic health care applications in humans that are not included in the Primary Field.

     1.5. “ Licensed Product ” means any product that cannot be developed, manufactured, used, or sold without infringing one or more Valid Claims.

     1.6. “ Net Sales ” means the gross amount billed or invoiced on sales of Licensed Products by Company and its Affiliates less the following: (a) customary trade, quantity, or cash discounts to non-affiliated brokers or agents to the extent actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a Licensed Product which is paid by or on behalf of Company; and (d) outbound transportation costs prepaid or allowed and costs of insurance in transit.

     In any transfers of Licensed Products between any of Company and Affiliates Net Sales are calculated based on the final sale of the Licensed Product to an independent third party. If Company or an Affiliate receives non-monetary consideration for any Licensed Products, Net Sales are calculated based on the fair market value of that consideration. If Company or its Affiliates use or dispose of a Licensed Product in the provision of a commercial service, the Licensed Product is sold and the Net Sales are calculated based on the sales price of the Licensed Product to an independent third party during the same Royalty Period or, in the absence of sales, on the fair market value of the Licensed Product as determined by the parties in good faith.

     1.7. “ Patent Rights ” means the United States patent applications listed in Exhibit A, patent applications covering invention disclosures listed in Exhibit A, and any divisional, continuation, or continuation-in-part of those patent applications to the extent the claims are directed to subject matter specifically described therein as well as any patents issued on these patent applications and any reissues or reexaminations or extensions of the patents, and any foreign counterparts to any of the foregoing.

     1.8. “ Royalty Period ” means the partial calendar quarter commencing on the date on which the first Licensed Product is sold or used and every complete or partial calendar quarter thereafter during which either (a) this Agreement remains in effect or (b) Company has the right to complete and sell work-in-progress and inventory of Licensed Products pursuant to Section 8.5.

     1.9. “ Valid Claim ” means (a) a claim of an issued and unexpired patent covering the Patent Rights which has not been permanently revoked or held unenforceable or invalid by an unappealable or unappealed decision of a court or government agency of competent jurisdiction or (b) a claim of a pending patent application within the Patent Rights that has not been abandoned or finally disallowed without the possibility of appeal or refiling.

2. Grant of Rights

     2.1. License Grant . University grants to Company a nonexclusive, worldwide, royalty-bearing license (without the right to sublicense ) in the Patent Rights to make, have made, use, offer to sell, sell, have sold and imported Licensed Products in the Field, including research for development of Licensed Products.

     2.3. Assignment of UMass/CytRx Licenses . On or before March 31, 2007, Company shall obtain assignment from CytRx Corporation of the license agreements that cover the following RNAi technologies that CytRx has licensed from University and the Carnegie Institution, UMMC 01-36, UMMC 02-01, UMMC 03-17, UMMC 03-33, UMMC 03-60, and UMMC 98-22, in a manner compliant with the relevant license agreements. University shall consent to any assignment as necessary. If Company does not obtain assignment of those license agreements on or before March 31, 2007, this Agreement immediately terminates.

3. Company Obligations Relating to Commercialization .

     3.1. Diligence Requirements . Company shall use diligent efforts or cause its Affiliates to use diligent efforts to develop Licensed Products and to introduce Licensed Products into the commercial market. Thereafter, Company or its Affiliates shall make Licensed Products reasonably available to the public. Specifically, Company shall fulfill the following obligations:

          (a) Financing the Company . On or before March 31, 2007, Company shall raise at least Fifteen Million Dollars ($15,000,000) from investors which may include CytRx Corporation (the “Initial Financing”) or this Agreement automatically terminates, and Company shall pay University Seventy-Five Thousand Dollars ($75,000) due April 1, 2007 (payable only once under the Companion UMass License Agreements). However, if Company demonstrates to the reasonable satisfaction of University that, on March 31, 2007, investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, University grants Company a thirty (30) day extension from March 31, 2007, to fulfill the financing obligation set forth in this Subsection 3.1(a). If Company can demonstrate to the reasonable satisfaction of University that investors are performing due diligence for, or, in the case of CytRx Corporation, is otherwise taking actions that are reasonably likely to result in, the financing of Company of at least $15,000,000, Company shall be granted up to two additional thirty (30) day extensions to fulfill the financing obligation by paying to University Twenty-Five Thousand Dollars ($25,000) each on the last day of the previous extension. The extension fees are non-refundable but creditable to the upfront license fee.

          (b) Development of Licensed Products .

               (i) On or before execution of this Agreement, Company shall furnish University with a written business plan under which Company intends as of the Effective Date to develop Licensed Products. University acknowledges that this business plan is a statement of Company’s current intention regarding the development of Licensed Product and that Company’s plans regarding the development of Licensed Products may change.

               (ii) Within sixty (60) days after the start of each calendar year, beginning on January 1, 2008, Company shall furnish University with a written report on progress during the prior year to develop and commercialize Licensed Products, including without limitation research and development, efforts to obtain regulatory approval, marketing, and sales figures. The Company shall also include in the report a discussion of its intended development and commercialization efforts and sales projections for the current year.

               (iii) Within four (4) years after the Effective Date, Company or its Affiliate shall file an IND or its equivalent with the FDA covering at least one (1) Licensed Product.

               (iv) Within twelve (12) years after the Effective Date, Company, its Affiliate or Sublicensee shall file an NDA or BLA with the FDA covering at least one (1) Licensed Product.

               (v) Within three (3) months after receiving FDA approval of the NDA or BLA for each Licensed Product, Company or its Affiliate shall market the approved Licensed Product in the United States.

     3.2. If University determines that Company has not fulfilled its obligations under Subsection 3.1(b), University shall furnish Company with written notice of the determination. Within sixty (60) days after receipt of the notice, Company shall either (a) fulfill the relevant obligation or (b) negotiate with University a mutually acceptable schedule of revised diligence obligations, failing which University may, immediately upon written notice to Company, terminate this Agreement.

     3.3. Indemnification .

          (a) Indemnity . Company shall indemnify, defend, and hold harmless University and its trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses of litigation) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability (including without limitation actions in the form of tort, warranty, or strict liability and regardless of whether the action has any factual basis) concerning any product, process, or service that is made, used, or sold pursuant to any right or license granted under this Agreement. However, indemnification does not apply to any liability, damage, loss, or expense to the extent directly attributable to (i) the gross negligence or intentional misconduct of the Indemnitees or (ii) the settlement of a claim, suit, action, or demand by Indemnitees without the prior written approval of Company.

          (b) Procedures . The Indemnitees agree to provide Company with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under this Agreement. Company agrees, at its own expense, to provide attorneys reasonably acceptable to University to defend against any claim. The Indemnitees shall cooperate fully with Company in the defense and will permit Company to conduct and control the defense and the disposition of the claim, suit, or action (including all decisions relative to litigation, appeal, and settlement). However, any Indemnitee may retain its own counsel, at the expense of Company, if representation of the Indemnitee by the counsel retained by Company would be inappropriate because of actual or potential conflicts in the interests of the Indemnitee and any other party represented by that counsel. Company agrees to keep University informed of the progress in the defense and disposition of the claim and to consult with University regarding any proposed settlement.

          (c) Insurance . Company shall maintain insurance or self-insurance that is reasonably adequate to fulfill any potential obligation to the Indemnitees, but not less than one million dollars ($1,000,000) for injuries to any one person arising out of a single occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of a single occurrence. Company shall provide University, upon request, with written evidence of insurance or self-insurance. Company shall continue to maintain the insurance or self-insurance after the expiration or termination of this Agreement while Company or its Affiliate continues to make, use, or sell a Licensed Product and thereafter for five (5) years.

     3.4. Use of University Name . In accordance with Section 7.2., Company and its Affiliates may not use the name “University of Massachusetts” or any variation of that name in connection with the marketing or sale of any Licensed Products.

     3.5. Marking of Licensed Products . To the extent commercially feasible and consistent with prevailing business practices, Company shall mark and shall cause its Affiliates to mark all Licensed Products that are manufactured or sold under this Agreement with the number of each issued patent under the Patent Rights that applies to a Licensed Product.

     3.6. Compliance with Law . Company shall comply with, and shall ensure that its Affiliates comply with, all local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of Licensed Products. Company expressly agrees to comply with the following:

          (a) Company or its Affiliates shall obtain all necessary approvals from the United States Food & Drug Administration and any similar foreign governmental authorities in which Company or Affiliate intends to make, use, or sell Licensed Products.

          (b) Company and its Affiliates shall comply with all United States laws and regulations controlling the export of commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce. Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries and foreign nationals. Company hereby gives written assurance that it will comply with and will cause its Affiliates to comply with all United States export control laws and regulations, that it bears sole responsibility

for any violation of those laws and regulations by itself or its Affiliates, and that it will indemnify, defend, and hold University harmless (in accordance with Section 3.3.) for the consequences of any violation.

          (c) If any invention claimed in the Patent Rights has been partially funded by the United States government, and only to the extent required by applicable laws and regulations, Company agrees that any Licensed Products used or sold in the United States will be manufactured substantially in the United States or its territories. Current law provides that if domestic manufacture is not commercially feasible under the circumstances, University may seek a waiver of this requirement from the relevant federal agency on behalf of Company.

4. Consideration for Grant of Rights .

     4.1. License Fees .

          (a) On the Effective Date, Company shall pay to University{***}.

          (b) Within thirty (30) days after the closing of the Initial Financing, Company shall pay to University {***}.

The license fees are nonrefundable and are not creditable against any other payments due to University under this Agreement.

     4.2. Equity .

          (a) Within thirty (30) days after the closing of the Initial Financing, Company shall issue to University that number shares of Common Stock of Company having an aggregate valuation equal to {***} according to the Company valuation at the Initial Financing. In connection with the issuance of stock pursuant to this Subsection 4.2(a), the University agrees to become a party to other agreements of Company to the same extent (except any limitations relating to the University’s status as an agency of the Commonwealth of Massachusetts, e.g., prohibition on indemnification) as holders of more than five percent (5%) of the Common Stock of Company (such as, voting agreement and stock restriction agreement). University acknowledges that all certificates representing the shares described in this Subsection 4.2(a) may bear customary legends that require compliance with the Securities Act of 1933 and related state securities laws upon any transfer of the shares. Company shall use commercially reasonable efforts to register the stock issued to University pursuant to this Subsection 4.2(a) as soon as possible, subject to customary terms in connection with the registration.

     (b) Beginning on the Effective Date, Company shall notify University reasonably prior to each Company board of directors meeting and provide University with related documentation to the same extent that is supplied to the board of directors. Company shall permit one representative of University to attend all board of director meetings until the earlier of five (5) years after the Effective Date or the commencement by the Company of a Phase II clinical trial relating to a Licensed Product. The University attendee may not be a voting member of the board. The University attendee shall comply with restrictions to which other board members are subject, such as, confidentiality requirements relating to Board

discussions and shall execute any agreement reasonably required by Company to effect those restrictions. The Company board of directors may exclude University representative from those portions of board meetings that pertain to compensation and personnel issues and as deemed reasonably necessary for the board members to exercise their fiduciary responsibilities and to comply with applicable laws and regulations.

     4.3. License Maintenance Fee . At the beginning of each calendar year during the term of this Agreement, commencing on January 1, 2008, Company shall pay to University {***}. This annual license maintenance fee is nonrefundable and is not creditable against any other payments due to University under this Agreement.

     4.4. Milestone Payments . Company shall pay University the following milestone payments within thirty (30) days after the occurrence of each event for each Licensed Product: [IS THERE NO MILESTONE PAYMENT FOR NDA?]

If a m