Exclusive License And Research Collaboration Agreement, Dated December 8, 2006.

Exhibit 10.1


Confidential Materials omitted and filed separately with the


Securities and Exchange Commission. Asterisks denote omissions.


EXCLUSIVE LICENSE AND
RESEARCH COLLABORATION AGREEMENT


BY AND BETWEEN


MERCK & CO., INC.


AND


IDERA PHARMACEUTICALS, INC.


TABLE OF CONTENTS


1. DEFINITIONS............................................................. 1


2. RESEARCH PROGRAM........................................................ 11


2.1 General........................................................ 11


2.2 Conduct of Research............................................ 11


2.3 Use of Research Funding; FTE Commitments....................... 11


2.4 Principal Scientists........................................... 12


2.5 Joint Research Committee....................................... 12


2.6 Exchange of Information........................................ 13


2.7 Records and Reports............................................ 13


2.8 Disclosure, Evaluation and Selection of Collaboration
Compounds................................................... 14


2.9 Ownership of Materials, Information and Inventions............. 15


2.10 Research Program Term.......................................... 16


2.11 Merck Materials................................................ 16


2.12 Exclusive Efforts.............................................. 16


2.13 Use of Human Materials......................................... 16


3. LICENSES; DEVELOPMENT AND COMMERCIALIZATION............................. 17


3.1 License Grants to Merck........................................ 17


3.2 License Grants to Idera........................................ 18


3.3 No Implied Licenses............................................ 18


3.4 Development and Commercialization.............................. 18


3.5 Excused Performance............................................ 18


3.6 Exclusive Negotiation Period................................... 19


3.7 Adverse Experience Reporting................................... 19


4. CONFIDENTIALITY AND PUBLICATION...................................... 20


4.1 Nondisclosure Obligation....................................... 20


4.2 Idera Know-How................................................. 21


4.3 Publication.................................................... 21


4.4 Publicity/Use of Names......................................... 22


5. PAYMENTS; ROYALTIES AND REPORTS......................................... 22


5.1 License Fee.................................................... 22


5.2 Research Program FTE Funding; Additional Supply................ 22


5.3 Milestone Payments............................................. 23


5.4 Royalties...................................................... 25


5.5 Reports; Payment of Royalty.................................... 28


5.6 Audits......................................................... 28


5.7 Payment Exchange Rate.......................................... 29


5.8 Income Tax Withholding......................................... 29


6. REPRESENTATIONS AND WARRANTIES; COVENANTS............................... 29


6.1 Representations and Warranties of Idera........................ 29


6.2 Representations and Warranties of Merck........................ 30


6.3 Covenants of Idera............................................. 30


7. PATENT PROVISIONS....................................................... 30


7.1 Filing, Prosecution and Maintenance of Patents................. 30


7.2 Option of Merck to Prosecute and Maintain Patents.............. 31


7.3 Interference, Opposition, Reexamination and Reissue............ 32


7.4 Enforcement and Defense........................................ 32


7.5 Cooperation; Patent Term Extension and Restoration............. 34


8. TERM AND TERMINATION.................................................... 34


8.1 Term and Expiration............................................ 34


8.2 Termination by Merck........................................... 34


8.3 Termination for Cause.......................................... 35


8.4 Effect of Expiration or Termination; Survival.................. 37


9. INDEMNIFICATION......................................................... 37


9.1 Indemnification by Merck....................................... 37


9.2 Indemnification by Idera....................................... 37


9.3 Claims for Indemnification..................................... 37


9.4 Limitation of Liability........................................ 38


10.MISCELLANEOUS........................................................... 38


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10.1 Force Majeure.................................................. 38


10.2 Assignment/ Change of Control.................................. 38


10.3 Severability................................................... 39


10.4 Notices........................................................ 40


10.5 Applicable Law................................................. 40


10.6 Dispute Resolution............................................. 40


10.7 Entire Agreement; Amendments................................... 41


10.8 Affiliates..................................................... 42


10.9 Headings....................................................... 42


10.10 Independent Contractors........................................ 42


10.11 Waiver......................................................... 42


10.12 Cumulative Remedies............................................ 42


10.13 Waiver of Rule of Construction................................. 42


10.14 Counterparts................................................... 42


SCHEDULES


SCHEDULE 1.18 EVALUATION CRITERIA.................................... i


SCHEDULE 1.25 IDERA BACKGROUND PATENT RIGHTS......................... ii


SCHEDULE 1.29 IDERA MATERIALS........................................ ix


SCHEDULE 1.50 MERCK MATERIALS........................................ x


SCHEDULE 1.73 SELECTION CRITERIA..................................... xi


SCHEDULE 2.1 RESEARCH PROGRAM....................................... xii


SCHEDULE 2.3.2 DEPLOYMENT OF FTEs..................................... xvi


SCHEDULE 2.12 IDERA OBLIGATIONS UNDER THE IMMUNE RESPONSE CORPORATION
AGREEMENT........................................... xvii


SCHEDULE 4.4 FORM OF PRESS RELEASE.................................. xviii


SCHEDULE 5.4.4 ROYALTY REDUCTION...................................... xxii


SCHEDULE 6.1(d) SCHEDULE OF EXCEPTIONS................................. xxiii


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EXECUTION COPY


EXCLUSIVE LICENSE AND RESEARCH COLLABORATION AGREEMENT


THIS AGREEMENT (this "Agreement"), effective as of December 8, 2006 (the "Effective Date"), by and between Merck & Co., Inc., a corporation organized and existing under the laws of New Jersey ("Merck"), and Idera Pharmaceuticals, Inc., a corporation organized and existing under the laws of Delaware ("Idera").


RECITALS:


WHEREAS, Idera has expertise and possesses Idera Technology (as hereinafter defined) relating to certain Toll-like Receptor agonists;


WHEREAS, Merck has expertise and possesses Merck Technology (as hereinafter defined) relating to the research, development, manufacturing and marketing of Vaccines and other related biological products;


WHEREAS, Merck and Idera desire to enter into a research collaboration to develop Collaboration Compounds (as hereinafter defined) for use in Merck's Vaccines upon the terms and conditions set forth herein;


WHEREAS, Merck desires to obtain a license upon the terms and conditions set forth herein and Idera desires to grant such a license; and


WHEREAS, Merck and Idera have entered into a Stock Purchase Agreement and Registration Rights Agreement as of the Effective Date;


NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, the Parties hereby agree as follows:


1. DEFINITIONS


Unless specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below:


1.1 "ACT" shall mean, as applicable, the United States Federal Food, Drug and
Cosmetic Act, 21 U.S.C. Sections 301 et seq., and/or the Public Health
Service Act, 42 U.S.C. Sections 262 et seq., as such may be amended from
time to time.


1.2 "ADJUVANT" shall mean a compound, complex or other agent that enhances the
immune response to an Antigen or Antigens and is intended to act as an
agonist to TLR 7, TLR 8, TLR 7/8 and/or TLR 9.


1.3 "AFFILIATE" shall mean, with respect to a Person, any corporation or
business entity of which more than fifty percent (50%) of the securities or
other ownership interests representing the equity, the voting stock or
general partnership interest are owned, controlled or held, directly or
indirectly, by such Person.


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1.4 "ALZHEIMER'S DISEASE FIELD" shall mean the use of Evaluation Collaboration
Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
in or administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of Alzheimer's disease.


1.5 "ANTIGEN" shall mean any ingredient that either alone or as part of a
Vaccine elicits a specific immune response to itself and/or to a pathogenic
micro-organism or a human self molecule, including, without limitation,
live attenuated or modified micro-organisms, whole killed micro-organisms,
proteins, polysaccharides, polysaccharide conjugates, peptides, recombinant
proteins, glycolipids and fragments thereof.


1.6 "CALENDAR QUARTER" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.


1.7 "CALENDAR YEAR" shall mean each successive period of twelve (12) months
commencing on January 1 and ending on December 31.


1.8 "CHANGE OF CONTROL" shall mean with respect to a Party: (i) the sale of all
or substantially all of such Party's assets or business relating to this
Agreement; (ii) the closing of a merger, reorganization or consolidation
involving such Party in which the voting securities of such Party
outstanding immediately prior thereto cease to represent at least fifty
percent (50%) of the combined voting power of the surviving entity
immediately after such merger, reorganization or consolidation; or (iii) a
person or entity, or group of persons or entities, acting in concert to
acquire more than [**] percent ([**]%) of the voting equity securities or
management control of such Party.


1.9 "CLINICAL TRIAL" shall mean a Phase I Clinical Trial, Phase II Clinical
Trial or Phase III Clinical Trial, as applicable.


1.10 "COLLABORATION COMPOUNDS" shall mean (a) any IMO provided by Idera to Merck
under this Agreement, (b) any other IMO created, modified or developed by
the Parties pursuant to the Research Program and (c) any improvement or
enhancement to the IMOs described in (a) or (b).


1.11 "COMPETING PHARMA CHANGE OF CONTROL" means a Change of Control involving a
Person or group of Persons acting in concert (a) with annual worldwide
sales of human pharmaceutical, vaccine and/or biological products greater
than [**] Dollars ($[**]) or (b) having a market capitalization greater
than [**] U.S. Dollars ($[**]) or (c) having an active clinical development
or commercialization program for any prophylactic and/or therapeutic
Vaccine for the prevention and/or treatment of Alzheimer's Disease, any
type of cancer and/or any disease within the Infectious Disease Field.


1.12 "COMBINATION PRODUCT" shall mean, on a country by country basis, with
respect to a given Product, a Product that contains one or more Antigens in
addition to the Antigen(s) contained in the given Product at the time it
achieves First Commercial Sale in such country. For example, if a given
Product in a country, at the time it achieves First Commercial Sale
contains Antigens A and B, a Combination Product with respect to such given
Product in such country would be a Product that contains at least one other
Antigen, in addition to Antigens A and B, and achieves First Commercial
Sale in such country after the given Product has achieved First Commercial
Sale.


1.13 "COMPETING PRODUCT" shall mean, with respect to a Product in a country, a
Vaccine product that (a) contains a compound targeting the same TLR as the
Adjuvant contained in the Product and


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has received Marketing Authorization for the same Indication in a Field for
which the Product has received Marketing Authorization in such country and
(b) has safety and efficacy equivalent or materially similar to the Product
and has or attains on a Calendar Year basis a market share of [**] percent
([**]%) or more in the country as measured by prescriptions or other
similar information.


1.14 "CONTROL," "CONTROLS" OR "CONTROLLED BY" shall mean with respect to any
item or right under Patent Rights, know-how or other intellectual property
right or technology, the possession of (whether by ownership or license,
other than pursuant to this Agreement), or the ability of a Party to grant
access to, or a license or sublicense of, such item or right as provided
for herein without violating the terms of any agreement or other
arrangement with any Third Party existing at the time such Party would be
required hereunder to grant the other Party such access or license or
sublicense.


1.15 "DATA PROTECTION" shall mean the exclusive right to reference data filed in
a Marketing Authorization with a Regulatory Authority in such country for
Selected Collaboration Compound or Product under a pharmaceutical law,
regulation or any other governmental decree or order of such country within
the Territory. For the purposes of clarity, such exclusive right to
reference data shall exclude any party other than Merck or its Related
Parties from referencing such data in such party's own regulatory filings
for authorization to register or sell a generic product in such country
filed with the Regulatory Authority.


1.16 "EMEA" shall mean the European Medicines Agency.


1.17 "EVALUATION COLLABORATION COMPOUND" shall have the meaning given such term
in Section 2.8.1.


1.18 "EVALUATION CRITERIA" shall mean the criteria set forth in Schedule 1.18
attached hereto.


1.19 "FIELDS" shall mean the Oncology Field, the Infectious Disease Field and
the Alzheimer's Disease Field, collectively.


1.20 "FILING" of an IND or NDA shall mean the acceptance by a Regulatory
Authority of an IND or NDA for filing, if such a legally-recognized concept
applies to filings in the applicable jurisdiction or, if such concept does
not apply, the filing of the IND or NDA.


1.21 "FIRST COMMERCIAL SALE" shall mean, with respect to any Product, the first
sale for end use or consumption of such Product in a country, excluding,
however, any sale or other distribution for use in a Clinical Trial.


1.22 "FULL TIME EQUIVALENT" or "FTE" shall mean the equivalent of a full-time
scientist's work time over a twelve (12) month period (including normal
vacations, sick days and holidays), provided that a single person cannot
account for more than one FTE over the course of any Calendar Year. For
example, a single person cannot equal one FTE plus a portion of an
additional FTE resulting in more than one FTE (i.e. 1.5 FTE's) in a given
Calendar Year, regardless of the aggregate number of hours worked by such
person during that Calendar Year. The portion of an FTE year devoted by a
scientist to the Research Program shall be determined by dividing the
number of full days during any twelve-month period devoted by such employee
to the Research Program by the total number of working days during such
twelve-month period.


3


1.23 "FTE RATE" shall mean the amount Merck will pay Idera over a consecutive
twelve (12) month period during the Research Program Term to support one
(1) Idera FTE dedicated to the Research Program. The FTE Rate shall be [**]
dollars (USD $[**]) per FTE. The FTE Rate shall include all personnel,
equipment, reagents and all other expenses including support staff and
overhead for or associated with an FTE.


1.24 "GLP" or "GOOD LABORATORY PRACTICE" shall mean the applicable then-current
standards for laboratory activities for pharmaceuticals or biologicals, as
set forth in the Act and any regulations or guidance documents promulgated
thereunder, as amended from time to time, together with any similar
standards of good laboratory practice as are required by any Regulatory
Authority in the country in which the laboratory activities are conducted.


1.25 "IDERA BACKGROUND PATENT RIGHTS" shall mean any and all Patent Rights
Controlled by Idera on the Effective Date that claim or cover (a) the
composition of matter or method of use of an Evaluation Collaboration
Compound or a Selected Collaboration Compound or (b) Idera Materials, and
any divisionals, continuations, continuations-in-part, reissues, renewals,
substitutions, registrations, re-examinations, revalidations, supplementary
protection certificates, pediatric exclusivity periods, any other patent
term extensions and exclusivity periods and the like of any such Patent
Rights, and any and all U.S. and foreign equivalents of the foregoing. As
of the Effective Date, the Idera Background Patent Rights include, without
limitation, the Patent Rights set forth on Schedule 1.25.


1.26 "IDERA FIELD" shall mean the use of Non-Selected Collaboration Compounds
for any and all purposes outside of the Fields.


1.27 "IDERA INFORMATION AND INVENTIONS" shall mean (a) all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that is developed or invented solely by
employees of Idera or its Affiliates or other Persons acting on their
behalf (other than Merck, its Affiliates or other Persons acting on their
behalf) and (b) Idera Oligonucleotide Inventions but shall exclude Merck
Materials Inventions.


1.28 "IDERA KNOW-HOW" shall mean all information and materials, including but
not limited to discoveries, improvements, processes, methods, protocols,
formulas, data, inventions (including, without limitation, Idera
Information and Inventions and Idera's rights in Joint Information and
Inventions), know-how and trade secrets, patentable or otherwise, which
during the term of this Agreement (i) are in the Control of Idera, (ii) are
not generally known and (iii) are necessary or useful to Merck with respect
to an Evaluation Collaboration Compound or Selected Collaboration Compound
in the Fields, including without limitation, in connection with the
Research Program and the research, development, manufacture, marketing, use
or sale of Product in the Territory.


1.29 "IDERA MATERIALS" shall mean those IMOs to be provided by Idera as set
forth on Schedule 1.29, which may be amended from time to time.


1.30 "IDERA OLIGONUCLEOTIDE INVENTIONS" shall mean all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas, data, composition of
matter, article of manufacture, know-how and trade secrets, that is
conceived and/or reduced to practice as a result of the Research Program,
whether or not patentable, that are solely related to the modification of,
derivatives of, manufacture or use of immunomodulatory oligonucleotide
structures which do not include Merck Technology, regardless of whether the


4


invention is conceived and/or reduced to practice (a) solely by employees
of Idera or its Affiliates or other Persons acting on their behalf (other
than Merck, its Affiliates or a Third Party acting on their behalf); (b)
solely by employees of Merck or its Affiliates or other Persons acting on
their behalf (other than Idera, its Affiliates or a Third Party acting on
their behalf); or (c) jointly by employee(s) of Merck, its Affiliate or a
Third Party acting on behalf of Merck or its Affiliate within the scope of
the Research Program, on the one hand, and employee(s) of Idera, its
Affiliate or a Third Party acting on behalf of Idera or its Affiliate
within the scope of the Research Program, on the other hand.


1.31 "IDERA PATENT RIGHTS" shall mean any Idera Background Patent Rights and
Idera Program Patent Rights.


1.32 "IDERA PROGRAM PATENT RIGHTS" shall mean any and all Patent Rights other
than Idera Background Patent Rights, that (a) during the term of this
Agreement are Controlled by Idera and claim or cover (i) the composition of
matter or method of use of an Evaluation Collaboration Compound or a
Selected Collaboration Compound or (ii) Idera Materials, Idera Information
and Inventions or Joint Information and Inventions; or (b) claim or cover
Idera Oligonucleotide Inventions. For avoidance of doubt, Idera Program
Patent Rights shall not include any Patent Rights that claim or cover Merck
Materials, including, without limitation, any modifications, derivatives,
or methods of manufacture thereof.


1.33 "IDERA TECHNOLOGY" shall mean Idera Patent Rights, Idera Know-How, Idera
Materials and Idera Information and Inventions.


1.34 "IMO" shall mean any and all immune modulatory oligonucleotides, the
primary purpose of which is to induce or modulate an immune response and
that are targeted to and intended to act as agonists of TLR 7, TLR 8, TLR
7/8 or TLR 9, as the case may be.


1.35 "IND" shall mean an Investigational New Drug application, Clinical Study
Application, Clinical Trial Exemption, or similar application or submission
for approval to conduct human clinical investigations filed with or
submitted to a Regulatory Authority in conformance with the requirements of
such Regulatory Authority.


1.36 "INDICATION" shall mean a separate and distinct disease or medical
condition in humans which a Product is intended to treat and/or prevent and
for which the Product has received Marketing Authorization.


1.37 "INFECTIOUS DISEASE FIELD" shall mean the use of Evaluation Collaboration
Compound(s) and Selected Collaboration Compound(s) as an Adjuvant contained
in or administered in conjunction with any prophylactic and/or therapeutic
Vaccine(s) for the prevention and/or treatment of any viral and/or
microbial infectious disease, provided that the following diseases shall be
excluded: (i) [**]; (ii) [**]; (iii) [**]; and (iv) [**].


1.38 "INFORMATION" shall mean any and all information and data, including
without limitation all Merck Know-How, Idera Know-How, and all other
scientific, pre-clinical, clinical, regulatory, manufacturing, marketing,
financial and commercial information or data, whether communicated in
writing or orally or by any other method, which is provided by one Party to
the other Party in connection with this Agreement.


1.39 "JOINT INFORMATION AND INVENTIONS" shall mean all information and
inventions, including, but not limited to, all discoveries, findings,
improvements, processes, methods, protocols, formulas,


5


data, composition of matter, article of manufacture, know-how and trade
secrets combining Merck Technology and Idera Technology, that is conceived
and/or reduced to practice as a result of the Research Program, whether or
not patentable, and is conceived and/or reduced to practice jointly by
employee(s) of Merck, its Affiliate or a Third Party acting on behalf of
Merck or its Affiliate within the scope of the Research Program, on the one
hand, and employee(s) of Idera, its Affiliate or a Third Party acting on
behalf of Idera or its Affiliate within the scope of the Research Program,
on the other hand. Idera Oligonucleotide Inventions and Merck Materials
Inventions shall be excluded from Joint Information and Inventions.


1.40 "JOINT PATENT RIGHTS" shall mean any and all Patent Rights which claim
Joint Information and Inventions. For avoidance of doubt, Joint Patent
Rights shall exclude Idera Patent Rights and Merck Patent Rights.


1.41 "JOINT PROGRAM TECHNOLOGY" shall mean Joint Patent Rights and Joint
Information and Invention ...