Research And License Agreement

Exhibit 10.1

Portions of this exhibit have been omitted pursuant to a request for confidential treatment. The omitted portions, marked by [***], have been separately filed with the Securities and Exchange Commission.

RESEARCH AND LICENSE AGREEMENT

Made in Jerusalem this 8th day of August 2007, by and between:

YISSUM RESEARCH DEVELOPMENT COMPANY OF THE HEBREW UNIVERSITY OF JERUSALEM , of Hi Tech Park, Edmond J. Safra Campus, Givat Ram, Jerusalem 91390, Israel (" Yissum" ), and THE BOYCE THOMPSON INSTITUTE , of Tower Road, Ithaca, NY 14850 (" BTI" ) (collectively, the " Licensors" ) of the one part; and

PROTALIX LTD. , of 2 Snunit Street, Science Park, Carmiel 21000 Israel; (the " Company" ), of the second part;


WHEREAS:


Yissum has represented to the Company that the rights and title to all inventions and research results of the Researcher (as defined below) vest solely with Yissum and BTI has represented to the Company that the rights and title to all inventions and research results of Charles J Arntzen, Hugh S Mason and Tsafrir Mor vest solely with BTI; and

WHEREAS:


the Company is engaged, inter alia, in the development and production of recombinant proteins in plant cell culture and that, either by itself or through third parties, it will have the financial capacity and the strategic commitment to facilitate the development, production, marketing and distribution of products; and

WHEREAS:


the Company wishes to obtain an exclusive license from the Licensors for the development and commercialization of certain inventions and research results belonging to the Licensors; and

WHEREAS:


the Licensors agrees to grant the Company such a license, all in accordance with the terms and conditions of this Agreement.

NOW THEREFORE THE PARTIES DO HEREBY AGREE AS FOLLOWS:

1.

Interpretation and Definitions


1.1.

The preamble and appendices annexed to this Agreement constitute an integral part hereof and shall be read jointly with its terms and conditions.


1.2.

In this Agreement, unless otherwise required or indicated by the context, the singular shall include the plural and vice-versa , the masculine gender shall include the female gender, and the use of the word " or" shall mean " and/or" .


1.3.

The headings of the sections in this Agreement are for the sake of convenience only and shall not serve in the interpretation of the Agreement.


1.4.

In this Agreement, the following capitalized terms shall have the meanings appearing alongside them, unless provided otherwise:


1.4.1.

" Affiliate" shall mean any person, organization or other legal entity which controls, or is controlled by, or is under common control with, the Company. Control shall mean the holding of [***] or more of (i) the capital or (ii) the voting rights or (iii) the right to elect or appoint directors.


1.4.2.

" Background Technology" shall mean any unpatented information, assays, ancillary materials, results, devices and/or know-how developed by the Researcher at the University prior to the execution of this Agreement, to the extent that they are useful in the Field and are conveyed to the Company by the Licensor or the Researcher, in writing. Technology that is or becomes part of the public domain, for any reason other than publication by the Company, shall not be deemed as part of the Licensed Technology.


1.4.3.

" Combination Product" shall mean a Product which is manufactured and commercialized by the Company, an Affiliate or Sublicensee which comprises (i) a Product and (ii) at least one other active ingredient or medical device , which, if administered independently of the Product, would have a clinical effect.


1.4.4.

" Development Plan" shall mean the written plan, and any amendments thereof, produced by the Company, which sets forth how the Company, from time to time, intends to develop and commercialize the Licensed Technology.


1.4.5.

" Development Technology" shall mean all inventions, development, improvements, data and other information in any form, patentable or unpatentable, which shall be developed by the Researcher following the execution of this Agreement, as a result of activities other than the performance of the Research, to the extent that they are useful in the Field and to the extent that they are not in the public domain and Yissum shall then have the legal right to


[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


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disclose and grant rights therein to the Company as contemplated herein.


1.4.6.

" Field" shall mean the use of plant expressed AChE and variants and peptides derived therefrom for all therapeutic and prophylactic indications . " Derived" shall be construed to mean any chemical modification of AChE or a variant or peptide thereof, including, inter alia and for the avoidance of doubt the addition, deletion and /or modification of amino acids, as well as nucleic acid sequences, with codons modified for optimal production in plants, coding for the said AChE variants.


1.4.7.

" First Commercial Sale" shall mean the first sale of a Product by the Company, an Affiliate or a Sublicensee.


1.4.8.

" Foreground Technology" shall mean all inventions, development, improvements, data and other confidential information in any form, patentable or unpatentable, patented or unpatented, conceived, developed or otherwise acquired by Yissum in the course of any Research, including any such inventions, development, improvements, data or other information conceived or developed jointly by the Researcher and the Company.


1.4.9.

" Licensed Patents" shall mean all patent applications or registered patents, any patent application that claims priority therefrom; all divisions, continuations, continuations-in-part, re-examinations, reissues, substitutions, or extensions, including European Supplementary Protection Certificates (" SPCs" ), and any and all patents issuing from, and inventions, methods, processes, and other patentable subject matter disclosed or claimed in, any and all of the foregoing, as listed on Appendix A. For the avoidance of doubt, the [***] Patent and the [***] Patent are among the Licensed Patents.


1.4.10.

" Licensed Technology" means the Licensed Patents, the Background Technology, the Foreground Technology, the Research Results and the Development Technology.


1.4.11.

" Net Sales" - means


(a)

revenues recognized in accordance with United States generally accepted accounting principles from the sale or other disposition of Products by the Company, an Affiliate or Sublicensee to a third party; or


(b)

the fair market value of non-monetary consideration received in connection with such sales, leases or transfers;


[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


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after deduction of: (i) all trade, quantity, or cash discounts and credits by reason of rejection, return, price adjustment, rebates, recalls and unaffiliated third party agents' commissions; (ii) commercially reasonable quantities of samples used for promotional purposes, clinical trials purposes and/or compassion clinical experiments; (iii) sales taxes (including VAT, customs, duties or other governmental charges levied on the production, sale, transportation, import or export, delivery or use of a Product (but specifically excluding income tax); (iv) insurance and transportation expenses paid by such party; and (v) Third Party Royalties; provided that such deductions shall be directly related to the sale of Products in the course of business of the Company, Affiliate or Sublicensee, all as determined from the books and records of the Company, its Affiliate or Sublicensee, maintained in accordance with generally accepted accounting principles consistently applied. For the sake of clarity, any payment or rebate received by the Company, Affiliate or Sublicensee from any governmental agency directly in relation to sales of Products shall be considered as Net Sales.

In the event of sales or deductions not made at " arms length" , then for the purpose of calculation of Royalties (as defined below) to the Licensors, Net Sales shall be calculated in accordance with arms length prices for sale of Products to end users and arm' s length deductions, to be determined by the current market conditions, or in the absence of such conditions, according to the assessment of a independent appraiser to be selected by the parties.

Net Sales shall be furthermore adjusted in the event that a Product is sold as part of a Combination Product as set forth in section 7.1 hereto.


1.4.12.

" [***] Patent" means [***], all patents that issue thereon and all divisions, continuations, continuations-in-part, re-examinations, reissues, substitutions, or extensions, including European Supplementary Protection Certificates (" SPCs" ), and any and all patents issuing from, and inventions, methods, processes, and other patentable subject matter disclosed or claimed in, any and all of the foregoing.


1.4.13.

" Product" means any plant recombinant AChE based products, the sale of which would infringe a Valid Claim but for the grant of the License or that uses the Licensed Technology as a basis for subsequent modifications.


[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


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1.4.14.

" [***] Patent(s)" shall mean any [***] patent application filed by the Licensors after [***], which discloses [***].


1.4.15.

" Research" shall mean research sponsored by the Company to be conducted by the Researcher at the University pursuant to a Research Program.


1.4.16.

" Research Program" shall mean any mutually agreed program under which Research shall carried out from time to time.


1.4.17.

" Researcher" shall mean Prof. Hermona Soreq, or such other person as determined and appointed from time to time by Yissum with the Company' s prior consent, to supervise and to perform the Research, if applicable.


1.4.18.

" Research Results" shall mean the results of the Research, including any patent applications and patents (which shall be added to the list of Licensed Patents set forth on Appendix A) and information, material, results, devices or know-how arising from such Research.


1.4.19.

" Royalty Term" shall mean, on a country by country basis, the later of (i) the date of expiration of the last Valid Claim; (ii) the end of any exclusivity on the Product granted by a regulatory or government body; or (iii) the end of a period of [***] from the date of the First Commercial Sale. Should the periods referred to in subsections (i) or (ii) expire prior to [***] from the date of the First Commercial Sale in a particular country or countries, the license in that country or those countries shall be deemed a license to the non-patent Background, Foreground or Development Technology.


1.4.20.

" Sublicense" shall mean any grant by the Company or its Affiliates of any of the rights granted under this Agreement or any part thereof; including the right to develop, manufacture, market or distribute the Licensed Technology or any Product.


1.4.21.

" Sublicense Considerations" shall mean any proceeds or consideration or benefit of any kind whatsoever, other than (i) royalties on Net Sales; (ii) research and development funding; (iii) grants; or (iv) manufacturing and other service or development payments, that the Company or an Affiliate may receive from a Sublicensee as a direct or indirect result of the grant of a Sublicense or an option to obtain such Sublicense.


[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


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1.4.22.

" Sublicensee" shall mean any third party to whom the Company shall grant a Sublicense or option to obtain such Sublicense. For the sake of clarity, Sublicensee shall include any other third party to whom such rights shall be transferred, assigned, or who may assume control thereof by operation of law or otherwise.


1.4.23.

" Third Party Royalties" shall mean royalties calculated on any amount invoiced by the Company, an Affiliate or a Sublicensee for the sale of a Product and actually paid by the Company, an Affiliate or a Sublicensee to a third party for the right to use patents or technology of such third party, without which right of use the Company would not be entitled to develop, manufacture and sell such Product, provided that the duty to pay the royalty to such third party has been established at arm' s-length and in good faith, and is set out in a written agreement


1.4.24.

" University" shall mean the Hebrew University of Jerusalem and each of its branches.


1.4.25.

" Valid Claim" shall mean any claim in any issued and unexpired patent included in the Licensed Patents, including any patent extensions or Supplementary Protection Certificates which have not been disallowed or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through re-issue or disclaimer or otherwise.

2.

Research; Research Grants


2.1.

The parties may agree on the conduct of a Research Program or any amendment thereof from time to time. Such Research Program will require [***] to pay the costs of such Research Program [***].


2.2.

The Research shall be conducted by and under the supervision of the Researcher. Should the Researcher be unable to complete the Research for any reason, Yissum shall notify the Company of the identity of a suitable replacement researcher. If the Company does not object to the replacement researcher on reasonable grounds within twenty (20) days of this notification, the substitute researcher shall be deemed acceptable to the Company. Alternatively, the Company shall have the right to terminate the Research, provided that (i) no monies paid to Yissum for the Research will be refundable; and (ii) the Company shall be responsible for the payment of any accrued fees and expenses due to Yissum based on work duly performed up to the date of termination and those irrevocable commitments


[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


Page 6 of 33


entered into by Yissum prior to having received the Company' s written notice of termination.


2.3.

For the avoidance of doubt, nothing herein shall prevent Yissum or the University or the Researcher from obtaining further finance or grants from other entities for research regarding the Licensed Technology, provided that such entities shall not be granted rights in the results and the same shall be treated as Development Technology or Research Results hereunder. The Company and Yissum will make best efforts to apply jointly to the US Army and DARPA to fund collaboration programs. The program and budget will be jointly agreed between the parties before the filing such applications.


2.4.

Nothing contained in this Agreement shall be construed as a warranty on the part of Yissum that any results or inventions will be achieved by Research, or that the Research Results, if any, are or will be commercially exploitable. Yissum makes no warranties whatsoever as the commercial or scientific value of any Research Results.


2.5.

Should the Company choose to (i) retain the services of the Researcher or any other employee of the University or BTI or their respective institutions, as a consultant in connection with the License; or (b) grant any benefit, including but not limited to, cash payments or securities of any kind, to the Researcher or any other employee of the University or BTI or their respective institutions, it shall do so only through a written agreement executed between the Company and, as appropriate Yissum or BTI.

3.

The License; Transfer of Licensed Technology


3.1.

Subject to the full performance by the Company of its obligations in accordance with this Agreement, the Licensors hereby grant the Company an exclusive worldwide right and license to develop, test, make, have made, use, have used, sell and have sold materials, devices, processes and the like which incorporate or otherwise utilize the Licensed Technology, all within the Field only, subject to and in accordance with the terms and conditions of this Agreement (the " License" ). Notwithstanding the foregoing, the License to the [***] Patent and the [***] Patent(s) shall be exclusive without any field restriction.


3.2.

Notwithstanding the provisions of section 3.1, above, the Licensors, on behalf of their respective institutions, shall retain the right (i) to make, use and practice the Licensed Technology for internal research and educational purposes; ] and (ii) to license or otherwise convey to any organization the Licensed Technology, (with the exception of the technology protected by the [***] Patent and the [***] Patent), for research and development relating to commercial applications outside the Field. In the event Yissum


[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


Page 7 of 33


receives requests for the Licensed Technology from researchers at academic and/or not-for-profit research organizations for use in non-commercial research, Yissum will forward the requests to the Company and the Company, and the Company, in consultation with the Researcher, will determine whether it is willing to supply Licensed Technology for such purpose. Any such disclosure or other supply of Licensed Technology shall be made pursuant to the Company' s standard form confidentiality or material transfer agreement (as the case may be) and will acknowledge Yissum' s contribution.


3.3.

Yissum and/or the University, through the Researcher or otherwise, shall convey the Licensed Technology to the Company on a current basis and provide reasonable assistance to the Company in implementing the same, provided that such assistance does not interfere with the Researcher' s academic responsibilities. Other than as provided herein, the Licensors shall not be obliged to provide any technical support to the Company, its Affiliates or its Sub-licensees.

4.

RESERVED

5.

Development and Commercialization; Advisory Committee


5.1.

The Company [***] shall use commercially reasonable efforts to develop and commercialize the Licensed Products. A preliminary written plan and timetable for the development and the commercialization of Products (the " Development Plan" ) is attached to this Agreement as Appendix B. The Development Plan shall be modified from time to time by the Company with notification to the Licensors. All terms and conditions of the License and this Agreement shall apply to the modified Development Plan.


5.2.

The parties shall establish an advisory committee of up to four (4) persons (the " Advisory Committee" ) to provide technical input on the development of Licensed Products The Licensors shall be entitled to designate up to two representatives to the Advisory Committee (the " Licensors' Representatives" ) which shall meet at least twice per calendar year. The Licensors' Representatives shall be bound by the confidentiality arrangements set out in this Agreement. The Company shall consult with the Licensors, via the Licensors' Representatives, in respect of significant scientific decisions related to Product development. For the avoidance of doubt, the Advisory Committee shall be a forum for the exchange of information between the parties with respect to the foregoing matters, shall act only in an advisory capacity and shall not have decision-making powers. The Company shall provide the Licensors via the Licensors' Representatives with periodic written reports not less than once per every six (6) months concerning all material research and development activities undertaken in


[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


Page 8 of 33


respect of the exercise of the License. The periodic reports shall include a summary of the development results and any other related work effected by the Company or by any Affiliate or Sub-Licensee during the six month period prior to the report (" Development Reports" ). Development Reports shall also set forth a non-binding general assessment regarding the projected completion date of the development of a Product and shall detail all changes to the Development Plan as well as the actual completion date of the development of a Product.


5.3.

Upon completion of the development of any Product, the Company undertakes to perform commercially reasonable actions to market, distribute and sell such Product. Payments of the License Maintenance Fee as set forth in section 7, below, shall not release the Company from its obligation as stated in this section.

6.

Sublicenses


6.1.

The Company shall be entitled to grant sublicenses under the License on terms and conditions consistent and compliant with the terms and conditions of this Agreement (except that the consideration may be different than the consideration set forth in this Agreement) to (i) an Affiliate; or (ii) a third party for consideration and in an arms-length transaction. All sublicenses granted by the Company must be in writing and a copy of such written agreement must be provided to the Licensors within ten (10) days after its execution.


6.2.

If the Company is unable or unwilling to serve or develop a potential market or market territory for which there is another party willing to be a sublicensee, the Company will, at the Licensors' request, negotiate in good faith a sublicense with such party.


6.3.

Any Sublicense shall be dependent on the validity of the License and shall terminate upon termination of the License.


6.4.

The Company shall ensure that any Sublicense shall include terms that bind the Sublicensee to observe the terms of this Agreement, including section 14, the breach of which shall be a fundamental breach resulting in the prompt termination of the Sublicense. In such an event, the Company undertakes to take all reasonable steps to enforce such terms upon the Sublicensee, including the termination of the Sublicense. In all cases, the Company shall immediately notify the Licensors of any breach of the terms of a Sublicense, and shall copy the Licensors on all correspondence with regard such breach.


6.5.

Any act or omission of the Sublicensee which is not promptly remedied by the Company or the Sublicensee and which would have constituted a breach


Page 9 of 33


of this Agreement by the Company had it been an act or omission of the Company, and which the Company has not made best efforts to promptly cure, including termination of the Sublicense, shall constitute a breach of this Agreement by the Company.


6.6.

For the avoidance of any doubt it is hereby declared that under no circumstance whatsoever shall a Sublicensee be entitled to grant a Sublicense or any part thereof to any third party.

7.

Consideration

In consideration for the grant of the License, the Company shall pay the Licensors the following considerations:


7.1.

Royalties on Net Sales of any Product (the " Royalties" ) on a [***] basis as follows:


Net Sales


Rate

On the first [***]

[***]

On the next Net Sales of between [***] and [***]


[***]

On the next Net Sales of between [***] and [***]


[***]

On Net Sales in excess of [***]


[***]

On a country-by-country basis, in the event a third party commercializes either a competing product that does not infringe a Licensed Patent or an authorized generic, the applicable Royalty rate will be reduced by a percentage equal to [***], but in no event shall the Royalty payable to the Licensors be less than [***] of the Royalty rates set forth above. A competing product' s market share will be based on the share of the total market for products acting through the same mechanism as a Product based on data provided by IMS International or such other data mutually agreed by the Company and the Licensors.

In the event that any Product is sold in form of a Combination Product, the proportion of such Combination Product to be attributed to the Product and therefore subject to the Royalties shall be calculated based on [***].

Thus, provided that both the Product and the other constituent of the Combination Product are each sold on a stand-alone basis at the time in question, the proportion shall be as follows: [***], where A is the Net

[***]

Portions of this exhibit were omitted and filed separately with the Secretary of the Securities and Exchange Commission pursuant to the Registrant' s application requesting confidential treatment under Rule 24b-2 of the Exchange Act.


Page 10 of 33


Sales price, of the Product sold separately, and B is the Net Sales price, of the other component sold separately.

In the event that the Product and the other constituent of the Combination Product are not each sold on a stand-alone basis at the time in question, the fraction above shall be calculated where A is the reasonably estimated commercial value of the Product sold separately and B is the reasonably estimated commercial value of the other component sold separately. Any such estimates shall be determined using criteria to be mutually agreed upon by the parties.

Net Sales from such Combination Product for the purposes of determining Royalties thereon shall be determined by multiplying the actual Net Sales of such Combination Product by such proportion, and the Company shall make payments of Royalties to the Licensors accordingly.

Notwithstanding any of the foregoing, if the use or sale of Product(s) by the Company, its Affiliate or Sublicensees in the country in which Product(s) are sold or used is not covered by a Valid Claim in such country, the Royalties payable with respect to Net Sales in such country shall be [***] of the amounts otherwise set forth above. For the avoidance of doubt, a Product will not be deemed to be covered by a Valid Claim if there is only a patent application pending but not yet issued. In the event that such an application is granted during the Royalty Term, the Company shall pay Yissum the full Royalty on all Net Sales from the date the application was filed.


7.2.

Beginning on the [***] anniversary of the execution of this Agreement and each [***] thereafter, the Company shall pay the Licensors an annual License maintenance fee of [***] (the " License Maintenance Fee" ). The License Maintenance Fee shall increase by [***] ea ...