Patent License Agreement Dated 5/6/2002

EXHIBIT 10.13


PATENT LICENSE AGREEMENT


This Agreement (the "Agreement") is made and entered into this day of May 6, 2002, (the "Effective Date") by and between Aderis Pharmaceuticals Inc., having its principal office at 85 Main Street, Hopkinton, Massachusetts, USA (hereinafter referred to as "Aderis"), and Can-Fite Biopharma Ltd, a corporation duly organized under the laws of Israel and having its principal office at 10 Bareket St., Petah-Tikva, Israel (hereinafter referred to as "Can-Fite").


WITNESSETH


WHEREAS, Can-Fite has been granted a non-exclusive license under US patent No. 5,773,423 and its counterpart European Patent No. 708,781 from The United States Public Health Service within the Department of Health and Human Services (hereinafter referred to as the "NIH") (the "NIH License") (the "NIH Patent(s)") and is currently in final stages of converting its license under the NIH Patent(s) into an exclusive license (the "NIH Exclusive License"); and


WHEREAS, Can-Fite is developing a variety of compounds, inter alia under the NIH patent, whereas one of said compounds (IB-MECA or N6-3-iodobenzyl-52-N-methylcarboxamidoadenosine as an active ingredient (the "Active Ingredient" is that referred to by Can-Fite as CF101 (the "Drug")) and the Drug is being developed by Can-Fite for use in the Licensed Field of Use as defined in Appendix C; and


WHEREAS, in order to be able to use the Active Ingredient, Can-Fite needs to be granted a license from Aderis under certain patents, listed in Appendix A owned and held by Aderis (the "Aderis Patent(s)"), with regard to certain compounds that fall within the scope of the Aderis Patent(s), as detailed in Appendix B (the "Licensed Compound(s)") and for certain field of use as defined in Appendix C (the "Licensed Field of Use"); and


WHEREAS, Aderis hereby represents and warrants that it is the sole owner of the Aderis Patent(s), and has the right to grant a license to Can-Fite under the Aderis Patent(s); and


WHEREAS, Can-Fite desires to obtain a license under the Aderis Patent to the Licensed Compound(s) for the Licensed Field of Use and Aderis desires to grant such a license to Can-Fite, according to the terms and conditions set forth herein.


NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:


1. DEFINITIONS


1.1 "Aderis Patent(s)" shall mean the patents listed in Appendix A attached hereto, and as far as encompassing the Licensed Compound(s), all divisions, continuations, Reexaminations or Reissues of these patents as well as all other patents owned by Aderis that encompass the Licensed Compound(s) within their scope.


1.2 "Licensed Compound(s)" means one or more of the compounds listed in Appendix B.


1.3 "Licensed Patent Rights" means the Aderis Patent(s) as far as encompassing the Licensed Compound(s) as long as such patents have not expired or not held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.


1.4 "Licensed Territory" means the countries in which the Aderis Patent(s) are registered and as long as they are registered in these countries.


1.5 "Net Sales" means the total gross receipts for sales of Licensed Compound(s) or drugs containing the Licensed Compound(s) by or on behalf of Can-Fite or its sublicensees, less returns and allowances actually granted, packing costs, insurance costs, freight out, taxes or excise duties imposed on the transaction (if separately invoiced), and wholesaler and cash discounts in amounts customary in the trade, in all cases after deduction of: (a) sales taxes (including value added taxes) to the extent applicable to such sale and not collected separate from the counter-party to the sale; and (b) credits or allowances, if any, actually granted on account of price adjustments, recalls, rejections or return of Licensed Products previously sold; and (c) freight and insurance charges in CIF sales. No deductions shall be made for commissions paid to individuals, whether they be with independent sales agencies or regularly employed by Can-Fite, or sublicensees, and on its payroll, or for the cost of collections.


1.6 "First Commercial Sale" means the initial transfer by or on behalf of Can-Fite or its sublicensees of Licensed Products by or on behalf of Can-Fite or its sublicensees in exchange for cash or some equivalent to which value can be assigned for the purpose of determining Net Sales.


1.7 "Licensed Field of Use" means the fields of use identified in Appendix C.


2. GRANT OF RIGHTS


2.1 Aderis hereby grants to Can-Fite and Can-Fite accepts, subject to the terms and conditions of this Agreement, an exclusive license under the Aderis Patent(s) in the Licensed Territory to make and have made, to use and have used, and to sell and have sold any Licensed Compound(s) or drugs containing the Licensed Compound(s) in the Licensed Fields of Use.


2.2 This Agreement confers no license or rights by implication, estoppel or otherwise under the Aderis Patent(s) other than to the Licensed Compound(s) for use within the Licensed Field of Use.


3. SUBLICENSING AND MARKETING


3.1 Can-Fite has the right under the Agreement to enter into sublicensing agreements with respect to the Licensed Compound(s) under the Licensed Patent(s) in the Licensed Fields of use or any other agreement for commercialization of Licensed Compound(s) or drugs containing the Licensed Compound(s) in the Licensed Field of Use.


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3.2 Aderis may submit to Can-Fite at any time a proposal for commercialization of Licensed Compound(s) or drugs containing the Licensed Compound(s) (the "Aderis Proposal"). Can-Fite will consider the Aderis Proposal in good faith. It is agreed, however, that Can-Fite is under no obligation to accept the Aderis Proposal and Can-Fite can have the sole, absolute and final discretion, to accept, enter into negotiations or decline the Aderis Proposal.


3.3 Can-Fite and Aderis will convene for a periodical good faith discussion, approximately every nine (9) months, on such time and in such manner as shall be coordinated in good faith between the parties. Can-Fite will then brief Aderis on its drug development activities relating to the Licensed Compound(s). In such discussions Can-Fite shall not be obligated to disclose any information with respect of which Can-Fite is bound by confidentiality undertaking to an unaffiliated third party.


3.4 The right of Aderis to submit to Can-Fite the Aderis Proposal at any time does not limit Can-Fite in any way from entering into a sublicensing agreement with respect to the Licensed Compound(s) under the Licensed Patent(s) in the Licensed Field of Use or any other agreement for commercialization of Licensed Compound(s) or drugs containing the Licensed Compound(s) in the Licensed Field of Use.


3.5 Can-Fite agrees that any sublicenses granted by it shall provide that the obligations of Can-Fite to Aderis of Sections 4.1, 4.3-4.5 and 9 of this Agreement shall be binding upon the sublicensee as if it were a party to this Agreement. Can-Fite further agrees to include such provisions in all such sublicense agreements.


3.6 Any sublicenses granted by Can-Fite shall provide for the termination of the sublicense, or the conversion to a license directly between such sublicensees and Aderis, at the option of the sublicensee, upon termination of this Agreement under Section 10. Such conversion is subject to Aderis's prior approval and contingent upon acceptance by the sublicensee of the remaining provisions of this Agreement.


4. ROYALTIES


4.1 Can-Fite agrees to pay to Aderis an annual royalty as set forth in Appendix D attached hereto (the "Royalty") in respect of sales made in a Licensed Territory (irrespective of where the product was manufactured). The Royalty due for a calendar year shall be paid until March 31 of the next calendar year.


4.2 In addition to any payments of Royalties set forth above, Aderis will receive two hundred forty-six thousand eight hundred fourteen (246,814) shares in Can-Fite that represent 1% of the current share capital of Can-Fite (the "Aderis Shares"). The Aderis Shares shall be issued to Aderis only immediately after closing of the current Series B preferred financing of Can-Fite.


4.3 An Aderis Patent(s) licensed under this Agreement shall cease to fall within the Licensed Patent Rights for the purpose of computing the Royalty in any given country within the territory on the earliest of the dates that (a) the patent expires or irrevocably lapses, or


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(b) the claim has been held to be invalid or unenforceable by an unappealed or unappealable decision of a court of competent jurisdiction or administrative agency.


4.4 On sales of Licensed Compound(s) or drugs containing the Licensed Compound(s) by Can-Fite to sublicensees or on sales made in other than an arm's-length transaction, the value of the Net Sales attributed under this Section 5 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.


4.5 Can-Fite may elect to surrender its rights in any country of the Licensed Territory under any Licensed Patent Rights upon ninety (90) days written notice to Aderis and owe no payment obligation under this Section 4 for patent-related expenses incurred in that country after ninety (90) days of the effective date of such written notice.


5. PATENT PROSECUTION AND MAINTENANCE


5.1 Aderis agrees to take full and absolute responsibility for prosecution and maintenance of the Aderis Patent(s).


5.2 Aderis undertakes to keep the Aderis Patent(s) in force for the maximal duration of their term and, if applicable, to obtain the necessary patent term extension.


6. RECORD KEEPING


6.1 Can-Fite agrees to keep accurate and correct records of Licensed Compound(s) made, used, or sold under this Agreement appropriate to determine the amount of Royalties due to Aderis. Such records shall be retained for at least five (5) years following a given reporting period. They shall be available during normal business hours for inspection at the expense of Aderis by an accountant or other designated aud ...