COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT

Exhibit 10.12

PUBLIC HEALTH SERVICE

COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT

This Cooperative Research and Development Agreement, hereinafter referred to as the “CRADA,” consists of this Cover Page, an attached Agreement, and various Appendices referenced in the Agreement. This Cover Page serves to identify the Parties to this CRADA:

(1) the following Bureau(s), Institute(s), Center(s) or Division(s) of the National Institutes of Health (“NIH”), the Food and Drug Administration (“FDA”), and the Centers for Disease Control and Prevention (“CDC”):

The National Cancer Institute (“NCI”), hereinafter singly or collectively referred to as the Public Health Service (“PHS”); and

(2) Biovest International, which has offices at 540 Sylvan Avenue, Englewood Cliffs, NJ 07632-3022, hereinafter referred to as the “Collaborator.”

COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT

Article 1. Introduction

This Cooperative Research and Development Agreement (CRADA) between PHS and the Collaborator will be effective when signed by all Parties. The research and development activities which will be undertaken by each of the Parties in the course of this CRADA are detailed in the Research Plan (RP) which is attached as Appendix A. The funding and staffing commitments of the Parties are set forth in Appendix B. Any exceptions or changes to the CRADA are set forth in Appendix C. This CRADA is made under the authority of the Federal Technology Transfer Act, 15 U.S.C. 3710a and is governed by its terms.

Article 2. Definitions

As used in this CRADA, the following terms shall have the indicated meanings:

Article 3. Cooperative Research

Article 4. Reports

Article 5. Financial and Staffing Obligations

Article 6. Patent Applications

Article 7. Licensing

Article 8. Proprietary Rights and Publication

Article 9. Representations and Warranties

(a) The Collaborator hereby represents and warrants to PHS that the Collaborator has the requisite power and authority to enter into this CRADA and to perform according to its terms, and that the Collaborator’s official signing this CRADA has authority to do so. The Collaborator further represents that it is financially able to satisfy any funding commitments made in Appendix B.

(b) The Collaborator certifies that the statements herein are true, complete, and accurate to the best of its knowledge. The Collaborator is aware that any false, fictitious, or fraudulent statements or claims may subject it to criminal, civil, or administrative penalties.

Article 10. Termination

Article 11. Disputes

Article 12. Liability

Article 13. Miscellaneous

Article 14. Duration of Agreement

SIGNATURES BEGIN ON THE NEXT PAGE

Mailing Address for Notices:

National Cancer Institute-Frederick

Technology Transfer Branch

1003 West Seventh Street, Suite 502

Frederick MD 21701

Phone: 301-846-5465

FAX: 301-846-6820

Mailing Address for Notices:

Biovest International, Inc.

8500 Evergreen Boulevard

Minneapolis MN 55433

763-786-0302

763-786-0915

APPENDIX A

RESEARCH PLAN

Clinical Development of Hybridoma-Based Idiotypic Vaccines for

Treatment of Follicular B-Cell Lymphoma

NCI Principal Investigator(s)

Larry W. Kwak, M.D., Ph.D.

Center for Cancer Research (CCR)

National Cancer Institute (NCI)

Collaborator Principal Investigator(s)

Christopher Kyriakides, M.D., FAAPMR

Chief Executive Officer

Biovest International, Inc.

Term of CRADA

Eight (8) years from the date of the final CRADA signature.

A Letter of Intent (LOI) for this CRADA was executed

by and between the Parties on January 9, 2001.

An Extension to the LOI was executed by and between

the Parties on June 25, 2001

GOALS OF THIS CRADA

The goal of this project is to develop an efficacious hybridoma-based idiotype vaccine to produce long-term disease-free survival in follicular B-cell lymphoma patients who have attained a complete clinical response from chemotherapy and to compile data required to support a Biological License Application (BLA) to the U.S. Food and Drug Administration (FDA) for hybridoma-based idiotype follicular B-cell lymphoma vaccine.

The Center for Cancer Research (CCR), National Cancer Institute (NCI) and Collaborator shall work together toward the successful development of the hybridoma-based idiotype vaccine as a safe and effective novel anti-cancer treatment for follicular B-cell lymphoma. The CCR will work closely with Collaborator to obtain and evaluate the clinical data that may be required to allow Collaborator to obtain regulatory approval by the FDA. Collaborator will provide expertise in the development, formulation and Good Manufacturing Practice (GMP) production of the vaccine. Additionally, CCR will work with Collaborator in the ongoing clinical trial planned under this CRADA as well as all regulatory aspects and the BLA filings necessary for Collaborator to obtain marketing approval.

The scope of this CRADA includes the development of the processes required for large-scale GMP production of adequate numbers of GMP-produced and formulated idiotype vaccines-to complete the clinical development of this treatment for follicular B-Cell lymphoma. This vaccine strategy involves the use of an immunological adjuvant, granulocyte-macrophage colony-stimulating factor (GM-CSF), which is currently being provided to NCI for this study under a Clinical Trial Agreement with Immunex.

BACKGROUND

INTRODUCTION

Current Treatment of Indolent Follicular Lymphomas

The indolent follicular lymphomas (FL) are follicular small-cleaved cell (FSC) and follicular mixed lymphoma (FM). Stage I and II patients comprise only 10% to 15% of all cases of follicular lymphomas and are best managed with radiation therapy. Eighty-five percent of patients with follicular lymphomas present with stage III or IV disease. The optimal management of these patients remains controversial and has generally followed two divergent approaches (1, 2). An aggressive approach, which has included radiation therapy, combination chemotherapy, or combined modality therapy; and a conservative approach that involves no initial treatment followed by a single-agent chemotherapy or involved-field radiotherapy when required (3, 4). Most forms of systemic therapy have the capacity to produce high complete response rates. However, they have failed to produce long-term disease-free survival or to prolong overall survival; thus, it has become clear that the vast majority of patients with this disease will relapse and die of their lymphoma, despite its usually indolent course.

Technology Summary

The development of a vaccine against human malignancies has been a long-sought goal, which has yet to be achieved. Many of the efforts toward this end have been frustrated by the lack of identification of a tumor-specific antigen which would allow tumor cells to be distinguished from normal cells. Conceptually, such an antigen could be used as a vaccine to induce the host’s immune system to reject cells bearing that antigen.

Immunoglobulin (Ig) molecules are composed of heavy and light chains, which possess highly specific variable regions at their amino termini. The variable regions of heavy and light chains combine to form the unique antigen-recognition site of the Ig protein. These variable regions contain determinants that can themselves be recognized as antigens, or idiotypes . B-cell malignancies are composed of clonal proliferations of cells synthesizing a single antibody molecule with unique variable regions in the heavy and light chains. B-cell lymphomas are neoplasms of mature resting and reactive lymphocytes, which generally express synthesized Ig on the cell surface. The idiotypic determinants of the surface Ig of a B-cell lymphoma can thus serve as a tumor-specific marker for the malignant clone.

Studies in experimental animals, as well as in man, have demonstrated the utility of the Ig idiotype as a tumor-specific antigen (5, 6). Lynch and Eisen were the first to demonstrate that active immunization against idiotypic determinants on malignant B cells could produce resistance to tumor growth, and this phenomenon of idiotype tumor resistance has been reproduced subsequently in a number of syngeneic experimental tumor models, as well as specific anti-tumor therapy against established tumors (7-16). These results, taken together, provided the rationale for testing autologous tumor-derived idiotypic surface Ig (Id) as a therapeutic “vaccine” against human B-cell lymphoma.

Summary of Previous Clinical Studies Sponsored by NCI

Phase 1 Clinical Trial.

Kwak et al. first immunized human patients with B-cell lymphoma with autologous Id protein (17). The Id-keyhole limpet hemocyanin (Id-KLH) was emulsified in a Pluronic polymer-based adjuvant vehicle formulation. Ultimately, approximately 40 patients were treated on this protocol. Because the study population was heterogeneous, it was not designed to answer the question of anti-tumor efficacy. Rather, this first study assessed the question of immunogenicity; i.e., is it even possible to immunize a patient against a self-tumor antigen? In this context, this study was important, because it demonstrated that patients with B-cell lymphoma could be induced to make primarily idiotype-specific antibody responses, but with little evidence for T-cell immunity.

Improving the potency of the Id-KLH Vaccine.

At the NCI, the objective of Id vaccine development has been to further optimize the immunogenicity of this vaccine. To this end, NCI focused on the use of novel immunological adjuvants, which were 1), more potent and 2) more effective in the induction of cell-mediated immune responses, particularly CD8+ T-cells, compared with the pluronic polymer-based adjuvant used in the pilot study.

As a preclinical aim, Kwak et al. utilized a murine B cell tumor as a model system in which to screen promising immunological adjuvants. A number of these included cytokines, and among these, GM-CSF emerged as a promising adjuvant for idiotypic Ig antigen (18).

The results demonstrated that the augmented survival benefit afforded by immunization with relevant Id-KLH alone could significantly enhanced by the addition of GM-CSF at either the 100 or 10,000 unit dose. A curious but reproducible observation was the loss of this protective effect at a higher dose of GM-CSF of 50,000 units. These data suggest that GM-CSF may have a potent adjuvant effect in vivo for Id-KLH antigen, especially at relatively low doses.

Furthermore, T-cell subset depletion experiments demonstrated that effector CD8+ T-cells were required for anti-tumor immunity.

Phase 2 Clinical Trial.

Based on the findings of this preclinical study, the NCI sponsored a Phase 2 clinical study to evaluate the ability of this new idiotype vaccine to elicit tumor-specific T-cell immunity, as measured by the ability of patient T cells to specifically lyse their own tumor cells in vitro, and to exert antitumor effects as measured by the elimination of t(14; 18)-bearing cells from the peripheral blood of uniformly treated FL patients in first CR (complete remission). Patients in this study were previously untreated and received a uniform chemotherapy regimen, PACE; Prednisone, Adriamycin, Cytoxan, and Etoposide. (modified ProMACE without methotrexate). By design, therefore, they comprised a very homogeneous patient population in a minimal residual disease state. Of 35 patients, 23 (66%) achieved CR by standard clinical criteria. One of the patients was lost to analysis because of early relapse within six months, and two were excluded because a vaccine could not be made. This left a total study group of 20 patients in CR. Six to 15 months after completion of chemotherapy, these 20 patients were treated with a series of five monthly vaccinations with autologous FL Ig protein (0.5 mg) conjugated to KLH, together with local granulocyte-macrophage colony-stimulating factor (GM-CSF, 100 or 500 mcg/m2) subcutaneously (19).

Eighteen of 20 patients remain in continuous, first complete remission (median: 42+ months from completion of chemotherapy, range: 28+ to 53+). UPN 9 and 14 relapsed at 15 and 7 months after completion of vaccine therapy, respectively. UPN 9 had never cleared the t(14; 18)-bearing cells from the peripheral blood; UPN 14 did not have the MBR rearrangement and thus, molecular CR status could not be established.

The rationale for a pivotal, randomized trial, which is the subject of this CRADA is thus based on three independent results from this completed Phase 2 study: (1) tumor-specific CD8+ T-cell responses (cytotoxicity against autologous FL targets and cytokine production) were seen in 17 of 20 (85%) vaccinated patients, (2) 8 of 11 (73%) patients sampled after completion of vaccination converted to PCR negative and have maintained both PCR negativity and clinical CR, and (3) with a median follow-up of 36+ months after completion of chemotherapy (range 22+ to 47+ months), 18 of 20 (90%) patients remain in continuous clinical CR.

Taken together, these data suggest that idiotype vaccination can elicit a tumor-specific response that is associated with clearance of residual tumor cells from the blood in the majority of patients with FL. It remains to be determined whether molecular CR is associated with prolonged disease-free survival. However, this systematic analysis of molecular response rate provides the first evidence for an anti-tumor effect of vaccination. Finally, this study established GM-CSF as an essential component of the vaccine strategy, particularly for induction of CD8+ T-cell responses.

CCR, NCI

Dr. Kwak and his group pioneered the first human studies of vaccines for B-cell malignancies. Dr Kwak’s group has a broad range of scientific and clinical interests spanning tumor immunology, adoptive T cell therapy, and management of lymphomas and myelomas.

Specific work in his laboratory is focused on studies of immunobiology and immunotherapy of hematological malignancies. The laboratory’s principal objective is to obtain conclusive proof for the cancer vaccine concept; i.e., simply that it is possible to induce an immune response against a self protein, which is inherently poorly immunogenic, in human cancer patients. The goals for vaccine development are: (1) to increase the potency of vaccine formulations, and (2) to develop formulations which are more effective in activating the cellular arm of the immune response. The working hypothesis is that achieving the eventual goal of demonstrating clinical efficacy will depend on the ability of vaccines to elicit sustained, potent cell-mediated responses.

The current clinical trial of Id vaccination in previously untreated patients with follicular lymphomas initiated by the laboratory, which is the subject of this CRADA, features a new formulation of the prototype Id-KLH conjugate vaccine using GM-CSF as a potent immunological adjuvant. CD8+ T cell responses, capable of lysing autologous tumor targets, and molecular remissions have been observed in the vast majority of vaccinated patients.

BIOVEST INTERNATIONAL INC.

INTRODUCTION

The proprietary technology of Biovest (hollow fiber bioreactor instrumentation) that will be applied under this CRADA utilizes a patented process that optimizes fluid flow dynamics within perfused bioreactors to maintain high cell densities and continuously harvest secreted protein for extended periods of time. An experienced team of mechanical, electrical, software and biochemical engineers was established at Biovest to develop this technology. As a result of these efforts, the company gained significant expertise in the large-scale application of cGMP mammalian cell culture, which has subsequently been applied to a wide variety of cell lines for hollow fiber bioreactor production of recombinant or fusion based proteins. Combined with this existing expertise, a cGMP process will be developed that will be designed to facilitate commercial application of patient-specific vaccines.

Biovest’s cell culture expertise was recognized when the National Center for Research Resources, NIH, awarded the National Cell Culture Center to Biovest. This research resource facility was awarded to Biovest in 1990 through a competitive five-year Cooperative Agreement Award, which has been renewed twice, currently funded through September 2005 This resource was created to provide the biomedical research community with subsidized access to professional large-scale cell culture services. During that time, Biovest has received hundreds of cell lines from academic investigators within many major research institutions in the United States, for the purpose of large-scale production. The majority of these lines are hybridoma, transfected or chimeric lines, created for the production of immunoglobulin.

In addition, for the past ten years, Biovest has provided contract services to biotechnology and pharmaceutical companies for use in clinical (cGMP) applications, produced in isolation suites within Biovest’s manufacturing facility. For the vast majority of these cell lines, automated hollow fiber bioreactor instrumentation is utilized for protein production. Biovest instrumentation, combined with years of process development experience for high-cell density perfusion culture, is one principal advantage of Biovest’s contract laboratory. This ability to modify hardware and understand the biochemical aspects of high-density culture has allowed us to develop successfully many processes unique to large-scale culture, which are typically incorporated into cGMP manufacture of the final product. Currently, a documentation system exists that addresses cGMP production requirements for

numerous specialized cell lines and processes with hollow fiber bioreactor technology in a multi-use facility. .

Similar to cGMP cell culture procedures, the existing instrumentation was developed as a Class I medical device, suitable for clinical application. This experience will be an important asset to the development and large-scale manufacture of instrumentation that can be applied to vaccine production.

Biovest International, Inc. (formerly Cellex Biosciences) is a leading manufacturer of hollow fiber bioreactor instrumentation and contract production services worldwide. In 1984, the corporation began development of instrumentation that automated the culture of mammalian cells on a large scale. Subsequently, the company utilized this hollow fiber bioreactor technology to create a cGMP production process that accommodates economic production of large amounts of specific cell-secreted protein (e.g. monoclonal antibodies) from numerous cell lines within one facility. During the past two decades, Biovest has developed a range of hollow fiber bioreactor instruments to address production at the research level through large-scale pharmaceutical needs. This patented technology is now widely accepted by numerous biotechnology and pharmaceutical companies throughout the world. As a result, Biovest, with perfusion cell culture methodology (hollow fiber bioreactor), offers a well-defined cGMP approach to large-scale commercial production of clinical and pharmaceutical grade proteins.

In December 1999, Biovest was awarded a contract with NCI to produce idiotype (antibody) as crude supernatant from heteromyeloma patient cell lines, created in Dr. Kwak’s laboratory. This idiotype was subsequently used to create the Id-keyhole limpet hemocyanin (Id-KLH) lymphoma vaccine for study in an ongoing Phase 3 clinical trial, which is the subject of this CRADA. Creation of this vaccine is extremely labor intensive and Biovest, along with Dr. Kwak, recognized that commercial application would ultimately be dependent on research and development of a simplified or automated process. As such, Biovest responded to an NCI CRADA announcement and proposed a collaboration toward this end. Biovest will leverage its cell culture, purification, and clinical instrument expertise to facilitate production and commercialization of the idiotype tumor vaccine for B-cell lymphoma. Under the CRADA, a process and accompanying automated technology will be designed to produce and purify idiotype from each patient-specific cell line, both rapidly and cost effectively in a cGMP environment. Biovest recognizes that this patient-specific approach is dependent on technology designed to address these needs. Unlike conventional biologicals or drugs, which benefit from mass production or economy of scale, this new technology will be designed with the aim of allowing thousands of patient-specific vaccines to be manufactured efficiently each year.

Work Under this CRADA: The Phase 3 Clinical Trial.

To definitively answer the question of clinical efficacy, the NCI opened a multi-institutional, controlled, randomized Phase 3 clinical trial in January 2000 under the auspices of the NCI Vaccine Working Group and with support from the Office of the Director. Given the fact that no cancer vaccine has been licensed for use in the United States, designing this trial as a scientifically rigorous test of the cancer vaccine hypothesis, with scientific proof of principle as the primary objective, was felt to be paramount. Therefore, no changes in the key variables were (or will be) considered. Specifically, the design of the study remains identical to that of the Phase 2 study. Specifically, only patients with previously untreated lymphoma of follicular types are eligible, all patients receive uniform PACE chemotherapy, and vaccination is therefore administered to a homogeneous group of patients in first complete remission. Importantly, the vaccine formulation is also identical to that used in the Phase 2 trial, using the same hybridoma fusion technology to generate the vaccine, and using the same dose, schedule, and route of

vaccine administration. A multi-center consortium of clinical sites has been assembled, including Northwestern University, University of Pennsylvania, Duke University, Moffitt Cancer Center, and the NIH Clinical Center with additional sites under consideration. As of March 2001, approximately 50 patients have been enrolled on this study, which is currently being sponsored under NCI Investigational New Drug Application (IND) 5427.

The trial is anticipated to enroll a total of 563 patients, approximately 2/3 of whom are expected to achieve a clinical complete remission from PACE chemotherapy. Patients achieving a complete remission are randomized to begin treatment with either a specific vaccine consisting of Id-KLH + GM-CSF, or non-specific vaccine consisting of KLH + GM-CSF, in a 2:1 ratio (in favor of specific vaccine) starting six months after completion of chemotherapy.

This trial anticipates accrual over five years, and because of the long natural history of follicular lymphoma, an additional three years of follow-up time is projected to observe at least a 20% improvement in disease-free survival (study endpoint) for the experimental group.

The achievement of scientific proof of concept remains the primary objective of this Phase 3 trial. The addition of a CRADA partner will allow the data from this trial to be put together in support of a BLA with the FDA, which is necessary to help bring this vaccine to market. Furthermore, the CRADA partner’s contribution of intellectual property will allow for development of an automated system for the practical production of a vaccine to be brought to market and fulfill a currently unmet public health need. Finally, the addition of a corporate partner may make it possible to accelerate patient accrual in order to complete the trial and provide data necessary to support a BLA with the FDA in a shorter period of time.

Production of Id Vaccines .

Since Id is a clonal marker unique to each lymphoma, vaccines must be produced on an individualized basis for each patient. The strategy used to isolate immunogloblin from the surfaces of human B-cell lymphomas consists of performing a hybridization between the lymphoma cell and a modified, mouse/human heteromyeloma cell that grows in vitro and that has the cellular machinery to synthesize and secrete large quantities of immunoglobulin. Such myeloma fusion partners have been engineered not to secrete any immunoglobulin of their own; therefore, the immunoglobulin that is secreted following fusion is derived purely from the human tumor.

The production of Id protein begins with the isolation of malignant cells from tumor biopsy specimens, most commonly involved lymph nodes, although tumor cells isolated from peripheral blood, bone marrow or spleen can be used. The minimal starting material consists of about 75 million tumor cells. These cells are then fused with a hypoxanthine-aminopterin-thymidine (HAT) - sensitive fusion partner, and hybridomas selected in HAT medium that secrete immuoglobulin with the type of heavy and light chains corresponding to the known immunophenotype of the tumor specimen are identified. This is vaccine production process step 1.

Polymerase chain reaction (PCR) amplification of the immunoglobulin variable region genes from both the hybridoma and the primary tumor specimen are performed, and the sequences are compared to establish the identify of the secreted immunoglobulin. This is vaccine production step 2.

Heterohybridomas identified in this way are expanded. This is vaccine production process step 3.

Id protein is the purified from collected culture supernatants by affinity chromatography depending on the isotype of the lymphoma immunoglobulin. Each idiotype protein is then conjugated to KLH. These two processes are collectively referred to as vaccine production process step 4.

This Id-conjugate is then used to immunize the patient from whose tumor it was originally isolated.

Vaccine production process Steps 1-2 are currently performed in Dr. Kwak’s laboratory at NCI-Frederick. Vaccine production process Step 3 is presently being conducted at Biovest under the Letter of Intent to this CRADA between Biovest and NCI executed January 9, 2001, and Step 4 is being performed under contract with Charles River Discovery & Development Services (CRDDC), Rockville, MD through Science Applications International Corporation (SAIC), a contractor in the Government-Owned, Contractor Operated (GOCO) facility at NCI-Frederick . While currently performed in Dr. Kwak’s laboratory at NCI, the technology for heterohybridoma fusion and selection and PCR sequencing will be transferred and optimized for GMP production at Biovest International. As noted above, the ultimate goal of this CRADA is to fully develop the technology allowing optimized Id vaccine production under GMP conditions that would be necessary for FDA approval for human clinical use. As part of that goal, NCI and Biovest will investigate the automation of this stepwise production of Id vaccines using Biovest’s proprietary instrument.

Under optimal conditions, approximately three months are required for production of the final product. This time period does not constitute a limitation, as the vaccine administration occurs following six to eight months of cytoreduction with conventional chemotherapy and an additional six month rest period.

Overall, the CRADA is an extension and combination of existing NCI and Biovest systems and procedures for cell culture, purification and clinical instrument development. NCI and Biovest staff will undertake the cell fusion, gene sequencing, and purification/conjugation procedures. Combined with Biovest’s existing intellectual property and instrument manufacturing experience, these procedures will be incorporated into a single instrument that can be applied to production and purification of personalized cancer vaccines in a clinica