PATENT LICENSE AGREEMENT

1)  

The National Institutes of Health (“NIH”), the Centers for Disease Control and Prevention (“CDC”), or the Food and Drug Administration (“FDA”), hereinafter singly or collectively referred to as “ PHS ”, agencies of the United States Public Health Service within the Department of Health and Human Services (“ DHHS ”); and

2)  

The person, corporation, or institution identified above and/or on the Signature Page, having offices at the address indicated on the Signature Page, hereinafter referred to as “ Licensee ”.

1.

BACKGROUND

1.01  

In the course of conducting biomedical and behavioral research, PHS investigators made inventions that relate to certain therapeutic compounds and processes useful in the treatment of cancer and that may have commercial applicability.

1.02  

PHS represents that by assignment of rights from PHS employees and other inventors, DHHS , on behalf of the United States Government, owns intellectual property rights claimed in any United States and/or foreign patent applications or patents corresponding to the assigned inventions. DHHS also owns any tangible embodiments of these inventions actually reduced to practice by PHS .

1.03  

PHS further represents that the Secretary of DHHS has delegated to PHS the authority to enter into this Agreement for the licensing of rights to these inventions and that PHS has the right to grant the licenses provided herein and to perform such other obligations as are provided in this Agreement .

1.04  

PHS desires to transfer these inventions to the private sector through commercialization licenses to facilitate the commercial development of products and processes for public use and benefit.

1.05  

Licensee desires to acquire commercialization rights to certain of these inventions in order to develop processes, methods, and/or marketable products for public use and benefit and has submitted a license application for review by PHS outlining Licensee’s capabilities and commercial expectations for the assigned inventions.

1.06  

Licensee and PHS have entered into simultaneously herewith a collaborative research and development agreement (“ CRADA ”) entitled “Development of Anti-CD22 Immunotoxins, BL22 and HA22, as Therapeutic Agents” (CRADA No. 1975) and related to the technology licensed under this Agreement . By virtue of the CRADA and this Agreement , the Parties intend to vest in Licensee a license in rights owned and/or controlled by PHS that are relevant and/or necessary to the treatment of cancer with therapeutic and diagnostic compounds related to BL-22 and other CD-22 binding therapeutics developed by the National Cancer Institute, as defined in the Licensed Field of Use .

2.

DEFINITIONS

2.01  

“Affiliates” means any corporation or business entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with Licensee . For the purposes of this definition, “control” shall mean the possession, direct or indirect, of the power to cause the direction of the management and policies of then corporation or business entity, whether through ownership of fifty percent (50%) or more of the voting securities of such corporation or business entity, by contract or otherwise.

“Benchmarks” mean the performance milestones that are set forth in Appendix E.

2.02  

“Commercial Development Plan” means the written commercialization plan attached as Appendix F.

2.03  

“Expanded Access” shall mean any procedures, such as compassionate use, parallel track, and treatment protocols that distribute drugs to patients who are failing on currently available treatments for their condition and also are unable to participate in ongoing clinical trials.

2.04  

“First Commercial Sale” means the initial transfer after FDA approval, by or on behalf of Licensee or its sublicensees of Licensed Products to a Third Party in an arms-length transaction or the initial practice after FDA approval, of a Licensed Process by or on behalf of Licensee or its sublicensees to manufacture Licensed Products in exchange for cash or some equivalent to which value can be assigned for the purpose of determining Net Sales .

2.05  

“Government” means the Federal Government of the United States of America.

2.06  

“Licensed Fields of Use” means the fields of use identified in Appendix B.

2.07  

“Licensed Patent Rights” shall mean:

a)  

Patent applications (including provisional patent applications and PCT patent applications) and/or patents listed in Appendix A, all divisions and continuations of these applications, all patents issuing from such applications, divisions, and continuations, and any reissues, reexaminations, extensions of all such patents, and all foreign counterparts thereof; and

b)  

to the extent that the following contain one or more claims required for or commercially desirable for the practice of the invention or inventions disclosed in a) above: i) continuations-in-part of a) above; ii) all divisions and continuations of these continuations-in-part; iii) all patents issuing from such continuations-in-part, divisions, and continuations; iv) priority patent application(s) of a) above; v) any reissues, reexaminations, and extensions of all such patents; and vi) all foreign equivalents corresponding to any of the applications and/or patents recited in this paragraph 2.07(b).

2.08  

“Licensed Process(es)” means (a) processes which, in the course of being practiced, would be within the scope of one or more Valid Claims of the Licensed Patent Rights, or (b) where the manufacture, use, sale, or importation of products produced practicing such processes would be within the scope of one or more Valid Claims of the Licensed Patent Rights .

2.09  

“Licensed Product(s)” means tangible materials which, in the course of manufacture, use, sale, or importation thereof, would be within the scope of one or more Valid Claims of the Licensed Patent Rights .

2.10  

“Licensed Territory” means the geographical area identified in Appendix B.

2.11  

“Net Sales” means the total gross receipts for sales of Licensed Products or practice of Licensed Processes by or on behalf of Licensee or its sublicensees, and from leasing, renting, or otherwise making Licensed Products available to Third Parties without sale or other dispositions, whether

invoiced or not, less; trade, quantity and cash discounts and other reasonable rebates actually allowed; product returns, recalls, credits and allowances; packing costs, insurance costs, freight out, and taxes; excise and/or sales taxes, tariffs, duties, value added taxes or other governmental charges (other than income taxes) imposed and actually paid in connection with the production, importation, sale, delivery or use of Licensed Products or the practice of the Licensed Processes , and wholesaler and cash discounts in amounts customary in the trade to the extent actually granted. No deductions shall be made for commissions paid to individuals, whether they be with independent sales agencies or regularly employed by Licensee , or sublicensees, and on its payroll, or for the cost of collections.

Only sales of Licensed Products or practice of Licensed Processes to persons and entities other than Licensee and /or its Affiliates and/or sublicensees are to be included in Net Sales . Sales of Licensed Product or practice of Licensed Processes between Affiliates , Affiliates and Licensee and/or sublicensees and Licensee are not to be included within Net Sales unless such Affiliate or sublicensee is the end user of the Licensed Product or Licensed Process and further provided that subsequent sales from such Affiliates or sublicensees to a non-affiliated Third Party shall be included within Net Sales .

2.12  

“ Pivotal Trial ” shall mean a controlled study in humans of the efficacy and safety of a Licensed Product which is prospectively designed to demonstrate statistically whether such Licensed Product is effective and safe for use in a particular indication in a manner sufficient to obtain regulatory approval to market such Licensed Product . (i.e. Phase III or Phase II/III)

2.13  

“Practical Application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms. “ Practical Application ” shall be achieved if Licensee [ *** ] and [ *** ], including any [ *** ] under this Agreement .

2.14  

“Research License” means a nontransferable, nonexclusive license to make and to use the Licensed Products or Licensed Processes as defined by the Licensed Patent Rights for purposes of research and not for purposes of commercial manufacture or distribution or in lieu of purchase.

2.15  

“Third Party” means any entity not a Party or an Affiliate .

2.16  

“Valid Claim” means a pending or granted, unexpired claim of a Licensed Patent Right that has not been held to be invalid or unenforceable by an unappealed or unappealable judgment of a court of competent jurisdiction.

3.  

GRANT OF RIGHTS

3.01  

PHS hereby grants and Licensee accepts, subject to the terms and conditions of this Agreement , an exclusive license under the Group II Licensed Patent Rights in the Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell, and to import any Licensed Products in the Licensed Fields of Use and to practice and have practiced any Licensed Processes in the Licensed Fields of Use .

3.02  

PHS hereby grants and Licensee accepts, subject to the terms and conditions of this Agreement , a non-exclusive license under the Group I Licensed Patent Rights in the Licensed Territory to make and have made, to use and have used, to sell and have sold, to offer to sell, and to import any Licensed Products in the Licensed Fields of Use and to practice and have practiced any Licensed Processes in the Licensed Fields of Use.

3.03  

This Agreement confers no license or rights by implication, estoppel, or otherwise under any patent applications or patents of PHS other than Licensed Patent Rights regardless of whether such patents are dominant or subordinate to Licensed Patent Rights .

4.  

SUBLICENSING

4.01  

Upon written approval by PHS , which approval will not be unreasonably withheld, Licensee may enter into sublicensing agreements under the Licensed Patent Rights . In the event that PHS does not provide a written objection to Licensee within thirty (30) days of receiving written notice under the preceding sentence, PHS shall be deemed to have given its approval to the sublicense arrangement described in the notice.

4.02  

Licensee shall notify PHS regarding such sublicenses and agrees that any sublicenses granted by it shall provide that the obligations to PHS of Paragraphs 5.01-5.04, 8.01, 12.05, and 13.07-13.09 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 Paragraphs to all sublicense agreements. For the purposes of clarity, it is understood that the efforts of a sublicensee shall be considered the efforts of Licensee , including adherence to the Benchmarks contained in this Agreement , and substantial adherence to the Commercial Development Plan contained in this Agreement , including any modifications thereto under this Agreement .

4.03  

Any sublicenses granted by Licensee shall provide for the termination of the sublicense, or the conversion to a license directly between such sublicensees and PHS upon termination of this Agreement under Article 13. Such conversion is subject to PHS approval and contingent upon acceptance by the sublicensee of the remaining provisions of this Agreement .

4.04  

Licensee agrees to forward to PHS a copy of each fully executed sublicense agreement postmarked within thirty (30) days of the execution of such agreement. To the extent permitted by law, PHS agrees to maintain each such sublicense agreement in confidence.

5.  

STATUTORY AND PHS REQUIREMENTS AND RESERVED GOVERNMENT RIGHTS

5.01  

PHS reserves on behalf of the Government an irrevocable, nonexclusive, nontransferable, royalty-free license for the practice of all inventions licensed under the Licensed 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. Any obligations of Licensee to provide PHS quantities of Licensed Products or materials made through the Licensed Processes for PHS research use shall be governed by the CRADA . In the event that PHS desires to obtain Licensed Products or materials made through Licensed Processes for purposes outside of the CRADA or after its termination or expiration, PHS may request from Licensee reasonable quantities thereof and Licensee will honor such requests to the extent commercially reasonable, provided that PHS shall reimburse Licensee for the cost of such materials. Any provision of materials to PHS by Licensee under this Agreement will be within Licensee’s discretion.

5.02  

Licensee agrees that products used or sold in the United States embodying Licensed Products or produced through use of Licensed Processes shall be manufactured substantially in the United States, unless a written waiver is obtained in advance from PHS .

5.03  

Licensee acknowledges that PHS may enter into future Cooperative Research and Development Agreements (CRADAs) with Third Parties under the Federal Technology Transfer Act of 1986 that relate to the subject matter of this Agreement . Licensee agrees not to unreasonably deny requests for a Research License in the Licensed Field of Use under the Licensed Patent Rights from such future collaborators with PHS when acquiring such rights is necessary in order to make

a Cooperative Research and Development Agreement (CRADA) project feasible. Licensee may request an opportunity to join as a party to the proposed Cooperative Research and Development Agreement (“ Third Party CRADA”).

5.04  

In addition to the reserved license of Paragraph 5.01 above, PHS reserves the right to grant nonexclusive Research Licenses directly or to require Licensee to grant nonexclusive Research Licenses on reasonable terms. The purpose of this Research License is to encourage basic research, whether conducted at an academic or corporate facility. In order to safeguard the Licensed Patent Rights , however, PHS shall consult with Licensee before granting to commercial entities a Research License or providing to them research samples of materials made through the Licensed Processes . In no event will PHS provide [ *** ] that are [ *** ] or [ *** ] to [ *** ].

6.  

ROYALTIES AND REIMBURSEMENT

6.01  

Licensee agrees to pay to PHS a noncreditable, nonrefundable license issue royalty as set forth in Appendix C within thirty (30) days from the date that this Agreement becomes effective.

6.02  

Licensee agrees to pay to PHS a nonrefundable minimum annual royalty as set forth in Appendix C. The minimum annual royalty is due and payable on January 1 of each calendar year and may be credited against any earned royalties due for sales made in that year. The minimum annual royalty due for the first calendar year of this Agreement shall be prorated according to the fraction of the calendar year remaining between the effective date of this Agreement and the next subsequent January 1.

6.03  

Licensee agrees to pay PHS earned royalties as set forth in Appendix C.

6.04  

Licensee agrees to pay PHS benchmark royalties as set forth in Appendix C.

6.05  

Licensee agrees to pay PHS sublicensing royalties as set forth in Appendix C.

6.06  

A patent or patent application licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing earned royalty payments in any given country on the earliest of the dates that a) the application has been abandoned and not continued, b) the patent expires or irrevocably lapses, or c) such that no Valid Claim remains, d) the claim has been irrevocably abandoned or disallowed or e) the claim has failed to issue within five (5) years of the first office action from the patent office of that country, provided that such claim subsequently issues as a claim within an issued patent, such claim shall be restored to the Licensed Patent Rights , and then shall again be used to compute earned royalty payments for the given country.

6.07  

No multiple royalties shall be payable because any Licensed Products or Licensed Processes are covered by more than one of any of the Licensed Patent Rights and/or patent rights licensed under the CRADA .

6.08  

On sales of Licensed Products made in other than an arm’s-length transaction, the value of the Net Sales attributed under this Article 6 to such a transaction shall be that which would have been received in an arm’s-length transaction, based on sales of like quantity and quality products on or about the time of such transaction.

6.09  

With regard to expenses associated with the preparation, filing, prosecution, and maintenance of all patent applications and patents included within the Licensed Patent Rights incurred by PHS on or after the effective date of this Agreement , Licensee shall [ *** ] of such expenses

directly to the law firm employed by PHS to handle such functions upon receipt by Licensee of an invoice from such law firm. However, in such event, [ *** ].

6.10  

Licensee may elect to surrender its rights in any country of the Licensed Territory under any Licensed Patent Rights upon thirty (30) days written notice to PHS and owe no payment obligation under Article 6.10 for patent-related expenses incurred in that country after thirty (30) days of the effective date of such written notice.

6.11  

If Licensee or sublicensee is required to pay a third party earned royalties with respect to a Licensed Product(s) and/or Licensed Process(es) under agreements for patent rights or other technologies which Licensee or sublicensee, in its reasonable judgment, determines are necessary or desirable to license or acquire with respect to such Licensed Product , and the total royalties due to such third parties [ *** ], Licensee may [ *** ] such earned royalties owed to such third parties by [ *** ] due to said third parties (prior to any reductions) from the payments owing to PHS for such Licensed Product under this Article 6. Notwithstanding the foregoing provisions of this Paragraph 6.11, in no event shall the earned royalties due to PHS be [ *** ].

7.  

PATENT FILING, PROSECUTION, AND MAINTENANCE

7.01  

Except as otherwise provided in this Article 7, PHS agrees to take responsibility for, but to consult with, the Licensee in the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights and shall furnish copies of relevant patent-related documents to Licensee .

7.02  

Upon PHS ’s written request, Licensee shall assume the responsibility for the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights and shall on an ongoing basis promptly furnish copies of all patent-related documents to PHS . In such event, Licensee shall, subject to the prior approval of PHS , select registered patent attorneys or patent agents to provide such services on behalf of Licensee and PHS . PHS shall provide appropriate powers of attorney and other documents necessary to undertake such actions to the patent attorneys or patent agents providing such services. Licensee and its attorneys or agents shall consult with PHS in all aspects of the preparation, filing, prosecution and maintenance of patent applications and patents included within the Licensed Patent Rights and shall provide PHS sufficient opportunity to comment on any document that Licensee intends to file or to cause to be filed with the relevant intellectual property or patent office. Licensee shall be responsible for costs associated with transferring patent prosecution responsibilities to an attorney or agent of Licensee’s choice. Notwithstanding the above, in the event that PHS licenses the Licensed Patent Rights to one or more Third Parties in outside the Licensed Fields of Use , Licensee shall be responsible for a pro-rata share, based on the total number of licensees under the Licensed Patent Rights , of the costs associated with preparation, filing, prosecution and maintenance of each relevant patent or patent application licensed to such Third Party .

7.03  

For Licensed Patent Rights to which Licensee has assumed responsibility for the preparation, filing, prosecution and maintenance thereof, at any time, PHS may provide Licensee with written notice that PHS wishes to reassume control of the preparation, filing, prosecution, and maintenance of such Licensed Patent Rights . If PHS elects to reassume such responsibilities, Licensee agrees to cooperate fully with PHS , its attorneys, and agents in the preparation, filing, prosecution, and maintenance of any and all patent applications or patents included in the Licensed Patent Rights and to provide PHS with complete copies of documents or other materials necessary to undertake such responsibilities. PHS shall be responsible for all costs associated with transferring patent prosecution responsibilities to an attorney or agent of PHS ’s choice.

7.04  

Each party shall promptly inform the other as to all matters that come to its attention that may affect the preparation, filing, prosecution, or maintenance of the Licensed Patent Rights and shall permit each other to provide comments and suggestions with respect to the preparation, filing, prosecution, and maintenance of Licensed Patent Rights , which comments and suggestions shall be considered by the other party.

8.  

RECORD KEEPING

8.01  

Licensee agrees to keep accurate and correct records of Licensed Products made, used, sold, or imported and Licensed Processes practiced by Licensee under this Agreement . Such records shall be appropriate to determine the amount of royalties due PHS and shall be retained for at least five (5) years following a given reporting period. Licensee shall make such records available pursuant to Paragraph 8.02.

8.02  

Licensee agrees to have an audit of sales and royalties co