Non-Exclusive Product License Agreement

Exhibit 10.37

***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2

Non-Exclusive Product License Agreement

      This Non-Exclusive Product License Agreement (“ Agreement ”) is made and entered into effective as of September 3, 2003 (the “ Effective Date ”), by and between Cambridge Antibody Technology Limited , having its principal offices at The Milstein Building, Granta Park, Cambridgeshire CB1 6GH, England (“ CAT ”), and Micromet AG , having its principal offices at Staffelseestrasse 2, 81477 Munich, Germany (“ Micromet ”). CAT and Micromet each may be referred to herein individually as a “ Party ,” or collectively as the “ Parties .”

      Whereas , CAT is the owner of (or licensee of) certain patents and know-how in the field of Antibody Phage Display and is authorised to grant the licenses and other rights to Licensee pursuant to the terms of this Agreement;

      Whereas , Micromet is developing the MT201 Product (defined below) and desires to commercially develop the MT201 Product for the treatment of human diseases or conditions using the CAT Licensed Patents (defined below) and pursuant to the terms and conditions set forth in this Agreement and furthermore owns or controls certain patents that have claims relating to Phage Display; and

      Whereas , CAT desires to grant a license to Micromet on a non-exclusive basis of the right to use the CAT Licensed Patents for the purpose of researching, developing and commercializing the MT201 Product and other products in respect of the EpCAM target.

      Now, Therefore , in consideration of the premises and the mutual covenants and agreements herein contained, the Parties agree as follows:

1. Definitions

     When used in this Agreement, capitalized terms will have the meanings as defined below and throughout the Agreement.

      1.1 “ Affiliate ” means a legal entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Party. For purposes of this definition only, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means (a) the possession, directly or indirectly, of the power to direct the management or policies of a legal entity, whether through the ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) the ownership, directly or indirectly, of more than 50% of the voting securities or other ownership interest of a legal entity; provided that, if local law restricts foreign ownership, control will be established by direct or indirect ownership of the maximum ownership percentage that may, under such local law, be owned by foreign interests.

      1.2 “ Antibody ” means a molecule or gene encoding such a molecule comprising or containing more than one immunoglobulin variable domain or parts of such domain or any existing or future fragments, variants, modifications or derivatives thereof.

      1.3 “ Antibody Product ” means any composition or formulation containing or comprising one or more Antibodies in any format for the prognosis, diagnosis, prophylaxis or treatment of human diseases or conditions or for use as a research reagent.

      1.4 “ Antigen ” means any structure, including an entire protein, post-translational modifications, lipids, or glyco-lipids, for which Antibody variable domains have binding affinity.

      1.5 “ BiTE Product ” means any composition or formulation containing or comprising a bi-specific Single Chain Antibody, wherein one arm of the Single Chain Antibody binds to T-cells.

      1.6 “ Business Day ” means any day (other than a Saturday or Sunday) upon which major commercial banks are open for business in the cities of London and Munich.

      1.7 “ CAT Background Know-How ” means the Know-How Controlled by CAT relating to the CAT Licensed Patents and described in Schedule II , which the Parties may amend from time to time at their sole discretion in accordance with Section 2.5.

      1.8 “ CAT Licensed Patents ” means (a) those Patents identified in Schedule I , and (b) any Patents that claim or cover any CAT Phage Display Improvements and that are selected by Micromet for inclusion pursuant to Section 9.2.

      1.9 “ CAT Phage Display Improvements ” means any Improvement of a Phage Display process or any other technology, process, or methodology (each as claimed in or covered by either of the CAT Licensed Patents or CAT Background Know-How) that satisfies all of the following criteria: (a) is first conceived or reduced to practice within [***] of the Effective Date; provided , however , that upon the request of Micromet at any time during the [***] period following the date that is [***] from the Effective Date and upon demonstration by Micromet of good commercial, technical, or legal reasons for extension of the foregoing [***] period, the Parties agree to negotiate in good faith the potential extension of such period for one (1) additional[***] period, with the consent by CAT to such extension not to be withheld absent demonstration of good commercial, technical, or legal reasons for opposing such extension; and (b) is developed by or on behalf of CAT or its Affiliates; provided , however , that the foregoing will exclude in respect of CAT only any such improvement, modification or adaptation to the extent that CAT is not permitted to disclose, license or sublicense such improvement, modification or adaptation as a result of an obligation of CAT to a Third Party.

      1.10 “ Combination Product ” means any product manufactured or sold by or on behalf of Micromet in the Micromet Licensed Field which contains a Licensed Product and one or more other [***].

      1.11 “ Controlled ” or “ Controls ” means, with respect to any Know-How, Patent, or other intellectual property right, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise, to assign, or grant a license, sublicense or other right

to or under, such Know-How, Patent or right as provided for herein without violating the terms of any agreement or other arrangements with any Third Party.

      1.12 “ Development ” means any development work carried out on a Lead directed towards eventual commercialization of such Lead as an Antibody Product.

      1.13 “ Diagnostic Licensed Product ” means any Licensed Product (including a composition, formulation, device, assay or other product, but excluding Microarrays (as defined in Schedule V )) (a) for sale as an in vitro or in vivo diagnostic for use in or in relation to humans, or (b) for sale separately from but in support of a therapeutic product for use in or in relation to humans.

      1.14 “ Dossier ” means a written summary setting forth a brief description of the proposed use, application or clinical indication of a particular product composition or formulation (including the MT201 Product) applicable to the EpCAM Target Program and its origin, amino acid sequence, nucleotide sequence and Genbank or other accession number (if available); provided , however, that the foregoing will exclude any information that is subject to an obligation of confidentiality between Micromet and a Third Party.

      1.15 “ EpCAM Target ” means the whole or part of the human epithelial cell adhesion molecule EpCAM identified by the SWISS-PROT entry name TTD1_HUMAN and accession number P16422 with the amino acid sequence as set out in Schedule III which is specifically recognized by an Antibody binding to the foregoing.

      1.16 “ EpCAM Target Program ” means (a) the discovery of Antibodies binding to the EpCAM Target by practising inventions claimed in any CAT Licensed Patents or utilizing the CAT Background Know-How; and (b) development of Antibody Products binding to the EpCAM Target by practising inventions claimed in any CAT Licensed Patents or utilizing the CAT Background Know-How.

      1.17 “ Excluded Field ” means the field of research and development as set out in Schedule IV .

      1.18 “ Excluded Technology ” means the applications and technologies as set out in Schedule V .

      1.19 “ Exploit ” or “ Exploitation ” means to make, have made, import, export, use, sell, offer for sale, or otherwise dispose of a product, including all discovery, research, development, registration, modification, enhancement, improvement, manufacture, storage, formulation, exportation, transportation, distribution, promotion and marketing activities related thereto.

      1.20 “ FDA ” means the United States Food and Drug Administration, or any successor agency thereto having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products, delivery systems and devices in the United States of America.

      1.21 “ Gatekeeping Procedure ” means the process by which [***] whether, with respect to a [***], prior to a [***], (a) such

[***]

Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

[***] or which [***] or (b) [***].

      1.22 “ Improvement ” means any improvement, modification or adaptation of any technology, process or methodology each as claimed in or covered by either of the CAT Licensed Patents or CAT Background Know-How, as applicable, which may be developed by or on behalf of a Party, its sublicensees or its Affiliates during the Term.

      1.23 “ Insolvency Event ” means, except for the event of a solvent reorganization or amalgamation, (i) the filing by a Party in court or agency pursuant to any applicable statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of a Party or of its assets, or (ii) the filing by a Third Party against a Party of an involuntary petition in bankruptcy or seeking reorganization, liquidation, dissolution, winding up arrangement, composition or readjustment of such Party’s debts or any other relief under any bankruptcy, insolvency, reorganization or other similar act or law of any jurisdiction now or hereafter in effect, or the issuance of a warrant of attachment, execution or similar process against a Party, and, in each case, only if the applicable petition, warrant of attachment, execution or similar process is not dismissed within ninety (90) days after the filing thereof, or (iii) if any Party proposes or is a Party to any dissolution or liquidation under applicable law, or makes an assignment for the benefit of creditors.

      1.24 “ Know-How ” means all non-public inventions, data, information, methods, procedures, processes and materials, including but not limited to, biological, chemical, biochemical, toxicological, pharmacological, metabolic, formulation, clinical, analytical and stability information and data (other than such Know-How which is or becomes the subject of a patent or of a provisional or filed patent application or which otherwise becomes public).

      1.25 “ Lead ” means an Antibody that is selected from a pool of Antibodies against the EpCAM Target and that has been generated by Phage Display, in relation to which a Party carries out further development including, but not limited to, lead optimization.

      1.26 “ Licensed Product ” means (a) the MT201 Product and (b) any other product, substance or formulation arising from the EpCAM Target Program, in each case, the Development, manufacture, importation, use or sale of which (i) would, but for the provisions of this Agreement, infringe one or more Valid Claims under the CAT Licensed Patents, or (ii) utilizes the CAT Background Know-How.

      1.27 “ MAA ” means a marketing approval application filed with the European Medicines Evaluation Agency or a Biologics License Application filed with the FDA, and any corresponding applications in other countries or territories.

      1.28 “ Major Market Country ” means the [***].

      1.29 “ Marketing Approval ” means the approval of an MAA for a Licensed Product and any pricing and reimbursement approvals to the extent the applicable Regulatory Authorities in a country require a pricing or reimbursement approval prior to the marketing and sale of such Licensed Product in such country.

      1.30 “ Micromet Licensed Field ” means the prognosis, diagnosis, prophylaxis or treatment of human diseases or conditions by modulation of the EpCAM Target; provided , however , that the foregoing will exclude the Excluded Field.

      1.31 “ Micromet MT201 Patents ” means the following Patents owned as of the Effective Date by Micromet: [***].

      1.32 “ Micromet Phage Display Improvement ” means any Improvement of a Phage Display process or any other technology, process, or methodology that is developed by or on behalf of Micromet, its Affiliates or sublicensees and that satisfies all of the following criteria: (a) is first reduced to practice, or described in a patent application, publication, or abstract within [***] after the Effective Date; provided , however , that upon the request of CAT at any time during the [***] period following the date that is [***] from the Effective Date and upon demonstration by CAT of good commercial, technical, or legal reasons for extension of the foregoing [***] period, the Parties agree to negotiate in good faith the potential extension of such period for one (1) additional[***] period, with the consent by Micromet to such extension not to be withheld absent demonstration of good commercial, technical, or legal reasons for opposing such extension; (b) may not lawfully be Exploited without a license to one or more Valid Claims within the CAT Licensed Patents; (c) is not a human therapeutic or diagnostic product, a manufacturing method applicable to that product, or a method of using that product; (d) is not claimed in or covered by any Patent Controlled by Micromet and is not an improvement, modification or adaptation of any such invention; and (e) does not relate to any BiTE Product.

      1.33 “ Micromet Research Field ” means the identification or development of Antibody Products for the prognosis, diagnosis, prophylaxis or treatment of human diseases or conditions by modulation of the EpCAM Target; provided , however , that the foregoing will exclude any research and development activities (a) in the Excluded Field, or (b) that involve administration of any composition or formulation of Antibodies to humans.

      1.34 “ [***] Agreement ” means that certain license agreement by and between [***] [***] and CAT dated as of [***], as may be then in effect, pursuant to which CAT is the exclusive licensee of certain of the CAT Licensed Patents and certain other Know-How related thereto.

      1.35 “ MT201 Product ” means a human Antibody developed by Micromet binding to the EpCAM Target, as described in further detail in the Dossier to be submitted by Micromet to CAT pursuant to Section 3.1.2.

      1.36 “ Net Sales ” means the gross amount invoiced by Micromet, its Affiliate or its sublicensee for sales of Licensed Products to any Third Party (and in all cases amounts actually

received to the extent not invoiced), less any (a) normal trade, cash and quantity discounts actually allowed, including charge backs; (b) amounts allowed for returned or defective Licensed Products; (c) insurance and transportation charges to the extent included in the invoiced amount; and (d) custom duties, VAT, sales taxes or other governmental charges paid in connection with such sales (but excluding what is commonly known as income taxes). Any of the deductions listed above that involves a payment by Micromet, its Affiliate or sublicensee will be taken as a deduction in the calendar quarter in which the payment is actually made by such entity; provided , however , to the extent that the aggregate of such deductions in any calendar quarter for a Licensed Product exceeds the gross amount invoiced by Micromet, its Affiliate or its sublicensee for sales of such Licensed Product, then Micromet may carry forward any excess amounts and reduce the gross amounts invoiced in connection with the applicable sale of Licensed Products in one or more subsequent calendar quarter(s).

     Any amounts received on account of transfers of Licensed Products between Micromet, its Affiliates or sublicensees of Licensed Products hereunder will be excluded from the calculation of Net Sales, and Net Sales will be calculated based on the final sale of such Licensed Product by Micromet, its Affiliates or sublicensees to any Third Party.

     In the event a Licensed Product is sold in the form of a Combination Product, Net Sales for purposes of royalty payments on the Combination Product will be calculated by multiplying the Net Sales of the Combination Product by the fraction A/(A+B), where A is the invoice price of the Licensed Product if sold separately ( i.e. , without the other active ingredients or components) by Micromet, its Affiliate or sublicensee; and B is the aggregate invoice price of the other active ingredients or components in the Combination Product, if sold separately by Micromet, its Affiliate or sublicensee. In the event that no such separate sales are made by Micromet, its Affiliate or sublicensee, then Net Sales for purposes of royalty payments on the Combination Product will be calculated by multiplying the Net Sales of the Combination Product by the fraction C/(C+D) where C is the fully allocated cost of the Licensed Product taken separately from the Combination Product ( i.e. , not including the other active ingredients or components); and D is the aggregate fully allocated cost of the other active ingredients or components; in each case, such costs being determined using generally accepted accounting procedures consistently applied by Micromet, its Affiliate or sublicensee, as applicable.

      1.37 “ Patents ” means (a) all patents and patent applications in any country or supranational jurisdiction, and (b) any substitutions, divisions, continuations, continuations-in-part, reissues, renewals, registrations, confirmations, re-examinations, extensions, supplementary protection certificates and the like, and any provisional applications, of any such patents or patent applications.

      1.38 “ Phage Display ” means the technology, process or methodology whereby Antibodies are cloned, expressed, produced and screened on the surface of filamentous bacteriophage.

      1.39 “ Primary Application ” means a major application of a product containing an Antibody binding to a target, as ascertained at the time of assessment of such Antibody as a potential Licensed Product using objective and reasonable scientific and/or commercial criteria, data and/or information. Primary Application does not mean any minor or incidental application.

      1.40 “ Regulatory Authorities ” means the European Medicines Evaluation Agency, the FDA, any successor agencies thereto, and any equivalent health regulatory authorities in any applicable country or territory.

      1.41 “ Ribosome Display ” means the technology, process or methodology whereby Antibodies are cloned, expressed, produced and screened in vitro involving a step where an Antibody or Antibodies are tested for binding to Antigen when said Antibody or Antibodies are attached to its coding RNA and to ribosomes.

      1.42 “ Single Chain Antibody ” means an Antibody having binding affinity for an Antigen whereby such Antibody comprises (i) a polypeptide segment having a light chain variable region, (ii) a polypeptide having a heavy chain variable region, and (iii) at least one peptide linker linking those polypeptides into a single chain polypeptide.

      1.43 “ Term ” has the meaning assigned to it in Section 10.1.

      1.44 “ Therapeutic Licensed Product ” means any Licensed Product sold for therapeutic or prophylactic use in humans.

      1.45 “ Third Party ” means any party other than CAT, Micromet or their respective Affiliates.

      1.46 “ Valid Claim ” means (i) any claim of an issued and unexpired patent within the CAT Licensed Patents which has not been held unenforceable or invalid by a court or other governmental agency of competent jurisdiction in a decision that is not appealed or cannot be appealed, and which has not been disclaimed or admitted to be invalid or unenforceable through reissue or otherwise, or (ii) a pending claim in a pending patent application within the CAT Licensed Patents. Notwithstanding the foregoing clause (ii), in the event that a pending claim in a pending patent application does not issue as a valid and enforceable claim in an issued patent within [***] after the earliest date from which such patent application claims priority, such a pending claim will not be a Valid Claim, unless and until such pending claim subsequently issues as a valid and enforceable claim in an issued patent, in which case such claim will be reinstated and be deemed to be a Valid Claim as of the date of issuance of such patent.

2. Grant Of Licenses

      2.1 Research License . Subject to the terms and conditions of this Agreement, CAT hereby grants to Micromet a nonexclusive, worldwide license under the CAT Licensed Patents and the CAT Background Know-How to perform research and development activities in the Micromet Research Field. Subject to the terms and conditions of this Agreement, Micromet will have the right to grant a sublicense to any of its rights under the foregoing license to (i) its Affiliates and (ii) any Third Party that enters into a research and/or collaboration agreement with Micromet in order to perform research activities on behalf of Micromet in the Micromet Research Field; provided , however , that any such sublicense will be consistent with the terms and conditions of this Agreement, and will impose on the sublicensee the obligations of

Micromet and grant CAT the rights contained in Sections 2.4, 5.5, 5.7, 7, 8 and 9 of this Agreement; and provided , further , that Micromet has no right to grant to such Third Party a right to grant further sublicenses, except to Affiliates of such Third Party. Micromet will provide CAT with the identity of each Third Party licensee of Micromet that receives a sublicense of the rights under this Section 2.1 within thirty (30) days of execution of the applicable agreement. Micromet hereby covenants and agrees not to use or sublicense any of its rights under the foregoing license except as expressly permitted in this Agreement.

      2.2 Commercialization License . Subject to the terms and conditions of this Agreement, CAT hereby grants to Micromet a nonexclusive, worldwide, royalty-bearing license under the CAT Licensed Patents and the CAT Background Know-How to Exploit Licensed Products in the Micromet Licensed Field. Subject to the terms and conditions of this Agreement, Micromet may grant and authorize the grant of further sublicenses under the foregoing license to any of its Affiliates or to a Third Party; provided , however , that any such sublicense will be consistent with the terms and conditions of this Agreement, and will impose on the sublicensee the obligations of Micromet and grant CAT the rights contained in Sections 2.4, 5.5, 5.7, 7, 8 and 9 of this Agreement. Micromet will provide CAT with the identity of each Third Party licensee of Micromet that receives a sublicense of the rights under this Section 2.2 within thirty (30) days of execution of the applicable agreement. The Parties understand and agree that the terms and conditions of this Section 2.2 (including the right to sublicense and authorize further sublicenses) will apply to any product, composition, or formulation upon the submission by Micromet of a Dossier for such product pursuant to Section 3.1.1. Micromet hereby covenants and agrees not to use or sublicense any of its rights under the foregoing license except as expressly permitted in this Agreement.

      2.3 Reservation of Rights . Except for the rights specifically granted herein, CAT reserves all rights to all CAT Licensed Patents and the CAT Background Know-How Controlled by it and reserves the right to utilize or allow Third Parties to utilize the CAT Licensed Patents and the CAT Background Know-How consistent with the terms of this Agreement. No implied licenses are granted under this Agreement.

      2.4 Excluded Technology . Notwithstanding anything in this Agreement to the contrary, CAT grants no rights to Micromet under this Agreement (a) to research, develop, manufacture, use, or sell Licensed Products using the Excluded Technology set forth in items [***] of Schedule V , or (b) to Develop, manufacture, use, or sell any Licensed Product that is a Research Product or Microarray, as those terms are defined in Schedule V . CAT will notify Micromet promptly if:

           (a) CAT ceases to be bound by the Excluded Field restriction pursuant to its agreement with [***]dated[***]; or

           (b) CAT no longer needs to exclude Research Products from the license granted hereunder pursuant to its agreement with [***] dated [***](the “ [***] License Agreement ”), a copy of which has been provided to Micromet by CAT as of the Effective Date.

CAT will promptly notify Micromet of any modification or amendment to the [***] License Agreement and deliver to Micromet a redacted copy of any such amended agreement.

     The restrictions set out in this Agreement relating to the Excluded Field or Research Products set forth above (as the case may be) will, subject to any other restrictions on CAT and to the provisions of this Agreement, cease to apply from the date of removal of such restriction pursuant to the terms of the foregoing agreements.

      2.5 Know-How Transfer . Within ninety (90) days after the Effective Date, CAT will disclose in writing and deliver to Micromet all CAT Background Know-How. CAT may during the Term at its sole discretion propose to Micromet that additional CAT Background Know-How (developed by or on behalf of CAT after the Effective Date) be disclosed to Micromet and added to Schedule II . Micromet will be entitled to accept or reject such additional Know-How at its sole discretion. If Micromet accepts such additional Know-How, then Schedule II of this Agreement will be amended in accordance with Section 13.5.

3. Identification of Licensed Products and Reporting

      3.1 Identification of Licensed Products .

           3.1.1 General . Micromet will provide to CAT a Dossier in respect of each Licensed Product conceived or developed within the EpCAM Target Program that Micromet desires to Exploit under this Agreement. During the Term, Micromet will submit such a Dossier to CAT for a particular product composition or formulation prior to the time Micromet begins administration to humans of such composition or formulation in a human clinical trial with respect to such product composition or formulation.

           3.1.2 MT201 Product . The Parties agree and acknowledge that MT201 Product is a Licensed Product hereunder (and has already been administered to humans in a clinical trial) and Micromet will submit a Dossier in respect of the MT201 Product within [***] following the Effective Date.

           3.1.3 Confidentiality . CAT will treat all information contained in any Dossier (or update thereto) provided to CAT under this Section 3.1 or Section 3.3 as Micromet’s Confidential Information in accordance with the confidentiality provisions of Section 7.

      3.2 Abandonment of a Licensed Product . If at any time during the Term, Micromet decides in its discretion that it no longer wishes to Exploit a Licensed Product itself or with or through an Affiliate or Third Party (an “ Abandoned Product ”), Micromet will promptly notify CAT in writing of such decision and any license granted by Section 2.2 of this Agreement will be deemed to have been terminated solely with regard to such Abandoned Product from the date Micromet sets forth in such notification. In the case of any Abandoned Product, the Parties will [***].

      3.3 Dossier Updates . Within [***] Business Days of each anniversary of the Effective Date during the Term, Micromet will prepare and provide to CAT an update to any Dossier submitted that summarizes the current status of the research and development regarding each Licensed Product. Such update may include, by way of example, a brief description of any collaborations, business transactions, changes of control, publications, conference presentations and intellectual property or legal matters where such events are relevant to CAT as licensor or Micromet as licensee under this Agreement, unless such update would constitute a breach by Micromet of a non-disclosure obligation to a Third Party.

4. Gatekeeping and the Excluded Field

      4.1 EpCAM Target . The Parties hereby acknowledge and agree that the EpCAM Target has been cleared through CAT’s Gatekeeping Procedure as of the Effective Date.

      4.2 Micromet Representations . Subject to Section 4.3 below, Micromet hereby represents and warrants to CAT that as of the Effective Date: (a) it is not developing and does not intend to develop a Licensed Product for a Primary Application in the Excluded Field; (b) its primary purpose in using the CAT Licensed Patents under the licenses granted under this Agreement is outside the Excluded Field; (c) it has provided CAT with the sequence of the EpCAM Target detailed in Schedule III to allow CAT (i) to conduct an assessment, as of the Effective Date, of [***] containing Antibodies to the EpCAM Target and the intended or actual use of such Licensed Products, and (ii) to subject the EpCAM Target to such [***] or other customary or scientifically established techniques as may be used to determine whether or not [***] of the Licensed Products containing Antibodies to the EpCAM Target is [***]; and (d) it believes that the Primary Application of the Licensed Products containing Antibodies to the EpCAM Target is outside the Excluded Field.

      4.3 Limitation . Notwithstanding Section 4.2, if, following the Effective Date, it is subsequently discovered by either Party that products containing Antibodies to the EpCAM Target do have a Primary Application in the Excluded Field, the discovering Party will promptly notify the other in writing of such discovery. Notwithstanding any such discovery or notice thereof, Micromet will be entitled to continue with the research, development, use, or sale of any Antibody or Licensed Product, including any application within the Excluded Field, under the terms and conditions set forth herein, and such research, development, use or sale (together with any prior research, development, use or sale) will not constitute a breach of Section 4.2 or any other provision of this Agreement.

5. Payments

      5.1 Initial License Fee . On the Effective Date, Micromet will pay to CAT a non-refundable, non-creditable license fee of US$[***].

      5.2 Therapeutic Licensed Product Milestone Payments and Royalty Rates . The milestone payments and royalty rates set forth in this Section 5.2 will apply to each Therapeutic Licensed Product.

      5.2.1 Milestones . Micromet will pay to CAT the following non-refundable, non-creditable milestone payments for each Therapeutic Licensed Product Exploited by Micromet, its Affiliates or sublicensees:

Milestone Event		Milestone Payment
Acceptance of the filing of the first Marketing Approval for such Therapeutic Licensed Product in the first Major Market Country		US$[***]
Receipt of first Marketing Approval for such Therapeutic Licensed Product in the first Major Market Country		US$[***]

      5.2.2 Royalties .

           (a) Subject to the terms and conditions of this Agreement, Micromet will pay to CAT a royalty payment equal to [***]% of Net Sales of each Therapeutic Licensed Product sold by Micromet, its Affiliates or sublicensees throughout the world. The royalty payment obligation of Micromet under this Section 5.2.2 will expire on a Therapeutic Licensed Product-by-Therapeutic Licensed Product and country-by-country basis (in which such Therapeutic Licensed Product is sold) upon the later of: (a) expiration of the last to expire Valid Claim of the CAT Licensed Patents which, but for the license granted in this Agreement, would be infringed by the Development, manufacture, importation, use or sale of such Therapeutic Licensed Product in such country; and (b) ten (10) years from first commercial sale for use or consumption by the general public of such Therapeutic Licensed Product by or on behalf of Micromet anywhere in the world. In the event that the period described in clause (b) of the preceding sentence extends beyond the period described in clause (a) of the preceding sentence with respect to a Therapeutic Licensed Product in a country (a “ Therapeutic Product Extended Period ”), then the royalty rate of [***]% set out above will be reduced to [***]% of Net Sales of such Therapeutic Licensed Product in such country during such Therapeutic Product Extended Period.

           (b) Notwithstanding anything herein to the contrary, the Parties agree that no royalties will be payable by Micromet for a particular country in respect of any Therapeutic Licensed Product which does not utilize the CAT Background Know-How and which is first sold commercially after the expiration of the last to expire Valid Claim of the CAT Licensed Patents in such country, which, but for the license granted in this Agreement, would be infringed by the Development, manufacture, importation, use or sale of such Therapeutic Licensed Product in such country.

      5.3 Diagnostic Licensed Product Milestone Payments and Royalty Rates . The milestone payments and royalty rates set forth in this Section 5.3 will apply to each Diagnostic Licensed Product.

      5.3.1 Milestones . Micromet will pay to CAT the following non-refundable, non-creditable milestone payments for each Diagnostic Licensed Product Exploited by Micromet, its Affiliates or sublicensees:

Milestone Event		Milestone Payment
Acceptance of the filing of the first Marketing Approval for each such Diagnostic Licensed Product in the first Major Market Country		US$[***]
Receipt of first Marketing Approval for each such Diagnostic Licensed Product in the first Major Market Country		US$[***]

      5.3.2 Royalties .

           (a) Subject to the terms and conditions of this Agreement, Micromet will pay to CAT a royalty payment equal to [***]% of Net Sales of each Diagnostic Licensed Product sold by Micromet, its Affiliates or sublicensees throughout the world. The royalty payment obligation of Micromet under this Section 5.3.2 will expire on a Diagnostic Licensed Product-by-Diagnostic Licensed Product and country-by-country basis (in which such Diagnostic Licensed Product is sold) upon the later of: (a) expiration of the last to expire Valid Claim of the CAT Licensed Patents which, but for the license granted in this Agreement, would be infringed by the Development, manufacture, importation, use or sale of such Diagnostic Licensed Product in such country; and (b) ten (10) years from first commercial sale for use or consumption by the general public of such Diagnostic Licensed Product by or on behalf of Micromet anywhere in the world. In the event that the period described in clause (b) of the preceding sentence extends beyond the period described in clause (a) of the preceding sentence with respect to a Diagnostic Licensed Product in a country (a “ Diagnostic Product Extended Period ”), then the royalty rate of [***]% set out above will be reduced to [***]% of Net Sales of such Diagnostic Licensed Product in such country during such Diagnostic Product Extended Period.

           (b) Notwithstanding anything herein to the contrary, the Parties agree that no royalties will be payable by Micromet for a particular country in respect of any Diagnostic Licensed Product which does not utilize the CAT Background Know-How and which is first sold commercially after the expiration of the last to expire Valid Claim of the CAT Licensed Patents in such country, which, but for the license granted in this Agreement, would be infringed by the Development, manufacture, importation, use or sale of such Diagnostic Licensed Product in such country.

      5.3.3 Acceleration of Milestones . If the first commercial sale of a Diagnostic Licensed Product by Micromet, its Affiliate or sublicensee is made in a Major Market Country where no Marketing Approval has been granted for such Licensed Product, then both of the

milestone payments set forth in Section 5.3.1 will be payable as if the relevant milestone events had occurred as of the date of such first commercial sale.

      5.4 Payment .

           5.4.1 Payment of Milestones . Upon Micromet achieving a development milestone that triggers a milestone payment obligation pursuant to Sections 5.2.1 or 5.3.1, Micromet will give notice to CAT within [***] days of achieving each milestone, and will make the corresponding milestone payment within [***] days of the achievement of the corresponding milestone event.

           5.4.2 Payment of Royalties . For any quarterly period for which royalties are payable by Micromet to CAT under Sections 5.2.2 or 5.3.2, Micromet will provide notice to CAT within [***] days after the end of each such calendar quarter and a written report with Micromet’s good faith estimate of Net Sales accrued in the preceding calendar quarter and the royalties payable thereon. Micromet will make royalty payments to CAT for Licensed Products or Diagnostic Licensed Products sold during a calendar quarter within [***] of the last day of that calendar quarter. Each royalty payment will be accompanied by a written report for that calendar quarter showing the cumulative Net Sales of the applicable product sold by Micromet, its Affiliates and its sublicensees on a country-by-country basis worldwide during the quarterly reporting period and the corresponding royalties payable under this Agreement.

           5.4.3 Payment Method . All amounts due hereunder will be paid in US Dollars by wire transfer in immediately available funds to Barclays Bank Plc, Benet Street Business Centre, P O Box No 2, Cambridge, CB2 3PZ, England, Account Number [***]; Sort Code: [***], Swift Code: [***] (payments may be routed through Barclays Bank Plc, New York, ABA Routing Code: [***]; Swift Code: [***]) or such other bank account as CAT may from time to time notify Micromet. Any payments or portions thereof due hereunder which are not paid on the date such payments are due will bear interest from the due date until the date of payment at the rate which is the lower of (i) [***]percentage points above the overnight London Interbank Offering Rate in effect on the due date or (ii) the highest rate permitted by applicable law.

           5.4.4 Currency Conversion for Milestone Payments and Calculation of Net Sales . For any currency conversion required in connection with any payment hereunder, or in determining the amount of royalties due, such conversion will be made at the prevailing commercial rate of exchange for purchasing the currency into which an amount is to be converted as publicly announced as the spot rate quoted by Barclays Bank Plc (or its successor) in London on (i) the day which is fifteen (15) Business Days following the date of the achievement of any milestone for which payment is due pursuant to Sections 5.2.1 or 5.3.1 and (ii) the day which is the last Business Day of the applicable quarterly period for any royalty payments made pursuant to Sections 5.2.2 or 5.3.2. For purposes of determining the amount of royalties due, the amount of Net Sales in any foreign currency will be computed by converting such amount into US Dollars as provided in this Section. All payments due under this Agreement will be paid exclusive of value added tax.

           5.4.5 Credit for Royalties Paid on Uncollected Amounts . As set forth in this Section 5.4.5, Micromet will be entitled to a credit on royalties paid by Micromet hereunder with respect to any invoiced amounts that are included in Net Sales but are not collected by Micromet, its Affiliate or sublicensee, as applicable (each such amount, an “ Uncollected Amount ”). Such credit may be taken in the calendar quarter in which the applicable Uncollected Amount is no longer recorded as a receivable or in one or more subsequent calendar quarter(s) to the extent that such credit exceeds the amount payable by Micromet to CAT in any calendar quarter. The amount of such credit will be equal to the difference between (x) the royalty actually paid by Micromet to CAT hereunder for the Uncollected Amount, and (y) the royalty actually paid by CAT to [***] [***], its successors or assigns pursuant to the [***] Agreement for the Uncollected Amount. Upon the request of Micromet in connection with this Section 5.4.5, CAT will provide to Micromet payment records supporting payment to [***] by CAT in respect of such Uncollected Amount. Micromet agrees that an Uncollected Amount will only be recorded as not receivable once Micromet has used its reasonable endeavors to recover such amount from the relevant Third Party in accordance with its usual practice for recovering unpaid debts. To the extent that an Uncollected Amount recorded as not receivable is in fact subsequently received by Micromet, Micromet will pay to CAT the corresponding amount of any credit previously taken by Micromet in accordance with Section 5.4.2.

      5.5 Records; Audits . Micromet will at all times keep or cause or procure to be kept and for at least [***] retain accurate data, accounts and supporting documentation of all Licensed Products produced and/or sold, used or disposed of by or on behalf of Micromet and the Net Sales thereof (collectively, “ Records ”) to the extent such Records are reasonably required for the computation and verification of royalties and all other sums payable under this Agreement. Micromet will give to or procure for CAT’s nominated re