Immune Design Corp. (Form: 10-Q, Received: 11/09/2016 16:45:13)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2016



¨	TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number: 001-36561

Immune Design Corp.

(Exact name of registrant as specified in its charter)



Delaware		26-2007174
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1616 Eastlake Ave. E., Suite 310

Seattle, Washington 98102

(206) 682-0645

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes ¨ No x

As of November 7, 2016 , the number of outstanding shares of the registrant’s common stock was 25,409,177 .

TABLE OF CONTENTS




			Page
NOTE REGARDING FORWARD-LOOKING STATEMENTS			ii

PART I. FINANCIAL INFORMATION			1

	Item 1.	Financial Statements	1

		Condensed Consolidated Balance Sheets	1

		Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2016 and 2015	2

		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015	3

		Notes to Condensed Consolidated Financial Statements	4

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23

	Item 4.	Controls and Procedures	24

PART II. OTHER INFORMATION			25

	Item 1.	Legal Proceedings	25

	Item 1A.	Risk Factors	26

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

	Item 3.	Defaults Upon Senior Securities	53

	Item 4.	Mine Safety Disclosures	53

	Item 5.	Other Information	53

	Item 6.	Exhibits	53

In this report, unless otherwise stated or as the context otherwise requires, references to “Immune Design,” “the Company,” “we,” “us,” “our” and similar references refer to Immune Design Corp. “ZVex” is our registered trademark, and the Immune Design logo and “GLAAS” are our unregistered trademarks. This report also contains registered marks, trademarks and trade names of other companies. All other trademarks, registered marks and trade names appearing in this report are the property of their respective holders.

Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, which are subject to the “safe harbor” created by those sections. In some cases you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect,” or similar expressions, or the negative or plural of these words or expressions. These forward-looking statements include statements concerning the following:


•	our estimates regarding our expenses, revenues, anticipated capital requirements and our needs for additional financing;


•	the implementation of our business model and strategic plans for our business and technology;


•	the timing of the commencement, progress and receipt of data from any of our preclinical and clinical trials;


•	the expected results of any clinical trial and the impact on the likelihood or timing of any regulatory approval;


•	the scope of protection we are able to establish and maintain for intellectual property rights covering our technology and product candidates;


•	the timing or likelihood of regulatory filings and approvals;


•	the outcome of any current or future litigation;


•	developments relating to our competitors and our industry; and


•	our expectations regarding licensing, acquisitions and strategic operations.

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements, including, without limitation, the risks set forth in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (SEC). You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected or implied in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this report.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

IMMUNE DESIGN CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)



	September 30, 2016			December 31, 2015
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	70,434		$	112,921
Short-term investments	42,037			—
Accounts receivable	7,494			972
Inventory	709			13
Prepaid expenses and other current assets	4,552			1,654
Total current assets	125,226			115,560
Property and equipment, net	433			585
Total assets	$	125,659		$	116,145
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,863		$	3,074
Accrued liabilities	4,696			3,959
Accrued litigation-related settlement, current	4,600			—
Deferred revenue and other current liabilities	2,931			78
Total current liabilities	17,090			7,111
Accrued litigation-related settlement, noncurrent	1,250			—
Other noncurrent liabilities	60			41
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized at September 30, 2016 (unaudited) and December 31, 2015; 25,409,177 and 20,153,202 shares issued and outstanding at September 30, 2016 (unaudited) and December 31, 2015, respectively	25			20
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding	—			—
Additional paid-in capital	276,519			239,181
Accumulated other comprehensive income	7			—
Accumulated deficit	(169,292		)	(130,208		)
Total stockholders’ equity	107,259			108,993
Total liabilities and stockholders’ equity	$	125,659		$	116,145

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

IMMUNE DESIGN CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share amounts)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(unaudited)
Revenues:
Licensing revenue	$	7,000		$	3,500		$	7,000		$	3,500
Product sales	426			824			$	1,166		932
Collaborative revenue	780			329			3,036			3,939
Total revenues	8,206			4,653			11,202			8,371
Operating expenses:
Cost of product sales	72			298			347			421
Research and development	11,173			8,263			33,129			24,209
General and administrative	9,554			3,506			17,416			11,086
Total operating expenses	20,799			12,067			50,892			35,716
Loss from operations	(12,593		)	(7,414		)	(39,690		)	(27,345		)
Interest and other income	150			7			606			15
Net loss	$	(12,443	)	$	(7,407	)	$	(39,084	)	$	(27,330	)
Other comprehensive income (loss):
Unrealized (loss) gain on investments	(23		)	—			7			—
Comprehensive loss	$	(12,466	)	$	(7,407	)	$	(39,077	)	$	(27,330	)
Basic and diluted net loss per share	$	(0.60	)	$	(0.37	)	$	(1.92	)	$	(1.45	)
Weighted-average shares used to compute basic and diluted net loss per share	20,803,776			20,131,260			20,372,376			18,822,517

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

IMMUNE DESIGN CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)



	Nine Months Ended September 30,
	2016			2015
	(unaudited)
Operating activities
Net loss	$	(39,084	)	$	(27,330	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	228			177
Amortization of premium/discount on investments	(30		)	—
Stock-based compensation expense	6,907			4,451
Changes in operating assets and liabilities:
Accounts receivable	(6,522		)	(1,173		)
Inventory	(696		)	(282		)
Prepaid expenses and other current assets	(2,898		)	(792		)
Accounts payable	1,277			(4,224		)
Accrued liabilities	737			(557		)
Accrued litigation-related settlement	5,850			—
Deferred revenue and other current liabilities	2,872			(528		)
Net cash used in operating activities	(31,359		)	(30,258		)
Investing activities
Purchases of property and equipment	(76		)	(308		)
Maturities of short-term investments	23,000			—
Purchases of short-term investments	(65,000		)	—
Net cash used in investing activities	(42,076		)	(308		)
Financing activities
Issuance of common stock to the public, net of offering costs	30,822			75,359
Proceeds from exercise of stock options and employee stock purchases	126			343
Net cash provided by financing activities	30,948			75,702
Net (decrease) increase in cash and cash equivalents	(42,487		)	45,136
Cash and cash equivalents, beginning of period	112,921			75,354
Cash and cash equivalents, end of period	$	70,434		$	120,490
Supplemental cash flow information
Stock offering costs incurred, not yet paid	$	512		$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

1. Description of the Business

Immune Design Corp. (we, us or our) is a clinical-stage immunotherapy company focused on cancer with next-generation in vivo approaches designed to enable the body’s immune system to fight disease. We have engineered our technologies to activate the immune system’s natural ability to create tumor-specific cytotoxic T cells (CTLs) to fight cancer. We are developing multiple product candidates from our two discovery platforms, ZVex ^® and GLAAS™. Our primary product candidates, CMB305 and G100, utilize multiple immuno-oncology approaches and are in Phase 1 and Phase 2 clinical trials. In addition, we have licensed to third parties the right to use the GLAAS platform in select infectious disease and allergy indications. We were incorporated in February 2008 in the State of Delaware. Our operations are headquartered in Seattle, Washington, and we have an additional facility in South San Francisco, California.

2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). To conform with GAAP, the preparation of our financial statements requires management to make judgments, assumptions, and estimates that affect the amounts reported in our condensed consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, accruals for clinical trial activity, other accrued liabilities, and assumptions used in determining stock-based compensation expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable. Actual results could differ materially from those estimates.

Principles of Consolidation

Our condensed consolidated financial statements include the financial position and results of operations of Immune Design Corp. and Immune Design Ltd., our wholly owned subsidiary. Immune Design Ltd. was incorporated in the United Kingdom in February 2016 and to date there have been no financial transactions or balances related to this entity.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated financial statements as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 and the related interim information contained within the notes to the condensed consolidated financial statements are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited financial statements and in the opinion of management, reflect all normal recurring adjustments necessary for a fair statement of our financial position for the interim periods presented. The results of operations for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ended December 31, 2016 or for other future interim periods or years.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2015 included in our Annual Report on Form 10-K for the year ended December 31, 2015 , filed with the Securities and Exchange Commission (SEC) on March 15, 2016 (Annual Report).

Short-Term Investments

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed consolidated statements of operations and comprehensive income (loss) using the specific-identification method.

Comprehensive Loss

Comprehensive loss is composed of net loss and other comprehensive income or loss that are excluded from net loss. For the periods presented, other comprehensive income consists of unrealized gains on our available-for-sale securities.

Revenue Recognition

We derive our revenue from collaboration and licensing agreements and the sale of products associated with material transfer, collaboration and supply agreements.

Licensing fees are recognized when the amounts are earned and determinable during the applicable period. We recognize up-front nonrefundable license fees when due under contractual agreements and when we do not have a continuing obligation to provide services related to the agreement. Revenue associated with nonrefundable up-front license fees under arrangements where the license fees and research and development activities cannot be accounted for as separate units of accounting is deferred and recognized as revenue on a straight-line basis over the expected term of our continued involvement in the research and development process. Revenues from the achievement of research and development milestones, if deemed substantive, are recognized as revenue when the milestones are achieved, and the milestone payments are due and collectible. If not deemed substantive, we recognize such milestones as revenue on a straight-line basis over the remaining expected term of continued involvement in the research and development process.

Milestones are considered substantive if all of the following conditions are met: (1) the milestone is nonrefundable, (2) achievement of the milestone was not reasonably assured at the inception of the arrangement, (3) substantive effort is involved to achieve the milestone, and (4) the amount of the milestone appears reasonable in relation to the effort expended, the other milestones in the arrangement and the related risk associated with the achievement of the milestone and any ongoing research and development or other services are priced at fair value. Payments received in advance of work performed are recorded as unearned revenue.

Certain agreements from which we derive our revenue include multiple deliverables. We recognize the revenue for each deliverable at fair value determined to be the estimated selling price in cases when neither vendor specific objective evidence nor third-party evidence is available.

Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the price to the customer is fixed or determinable and (4) collectability is reasonably assured. The evaluation of these revenue recognition criteria requires significant management judgment. For instance, we use judgment to assess collectability based on factors such as the customer’s creditworthiness and past collection history, if applicable. If we determine that collection of a payment is not reasonably assured, revenue recognition is deferred until receipt of payment. We also use judgment to assess whether a price is fixed or determinable including, but not limited to, reviewing contractual terms and conditions related to payment terms.

Revenue from product sales of glucopyranosyl lipid A (GLA), a product from our GLAAS platform, is recognized when the risk of loss has passed to the customer or deferred until such time that risk of loss has passed. All revenues associated from the sale of GLA products supplied by us are reported under product sales with the applicable costs reported under cost of product sales. Cost of product sales consist of the direct costs associated with the manufacture and formulation of GLA, including costs to purchase raw materials, third-party contract manufacturing costs, assay testing and ongoing product stability testing.

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB), issued Accounting Standards Update (ASU) No. 2014-09, related to the recognition of revenue. ASU 2014-09 requires entities to recognize revenue through the application of a five step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations. The FASB has continued to issue ASUs to clarify and provide implementation guidance related to this standard, including ASU No. 2016-08, which clarifies the implementation guidance on principal versus agent considerations, ASU No. 2016-10, which clarifies the identification of performance obligations and the implementation of licensing guidance and ASU No. 2016-12 which provides narrow scope improvements and practical expedients. These standards are effective retrospectively for annual or interim reporting periods beginning after December 15, 2017, with early application permitted for annual reporting periods beginning after December 15, 2016. Early adoption prior to that date is not permitted. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures.

In February 2016, FASB issued ASU 2016-02 related to lease accounting. This standard will require organizations that lease assets to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases that are greater than 12 months in duration. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases; however, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the balance sheets. For capital or finance leases, lessees will recognize amortization of the right-of-use asset separately from interest on the lease liability. For operating leases, lessees will recognize a single total lease expense. This standard is effective for public companies for the fiscal years and interim reporting periods beginning after December 15, 2018. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures.

In March 2016, FASB issued ASU No. 2016-09 related to stock-based compensation, which primarily changes the accounting for forfeitures and taxes in connection with share-based payment transactions. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. We are evaluating the guidance to determine the potential impact on our results of operations, financial condition, cash flows, and financial statement disclosures.

3. Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of shares of common stock outstanding during the period. Because of net losses recognized in each period, potential shares of common stock issuable upon the exercise of outstanding stock options have not been reflected in the calculation of diluted net loss per share due to the anti-dilutive effect. Diluted net loss per share, therefore, does not differ from basic net loss per share.

The common stock equivalents issuable upon the exercise of the following dilutive securities have been excluded from the computation of the diluted net loss per share calculation because their effect would have been antidilutive for the periods presented:



	September 30,
	2016	2015
	(unaudited)
Outstanding options to purchase common stock	3,481,952	2,307,967
Unvested restricted stock units	115,250	—
Total outstanding shares of common stock equivalents	3,597,202	2,307,967

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

4. Cash Equivalents and Short-Term Investments

The amortized cost and fair value of our cash equivalents and short-term investments are as follows (in thousands):



	September 30, 2016
	(unaudited)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Money market funds	$	70,398	$	—	$	—		$	70,398
U.S. Treasury securities	42,030		35		(28		)	42,037
Total	$	112,428	$	35	$	(28	)	$	112,435
Classified as:
Cash equivalents								$	70,398
Short-term investments								42,037
Total								$	112,435

All U.S. Treasury securities held as of September 30, 2016 were classified as available-for-sale securities and had contractual maturities of less than one year. There were no realized gains or losses on these securities for the period presented.

5. Fair Value of Financial Instruments

We measure and record cash and cash equivalents and short-term investments at fair value in the accompanying condensed consolidated financial statements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is as follows:

Level 1 : Quoted prices in active markets for identical assets or liabilities.

Level 2 : Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 : Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Level 1 securities consist of highly liquid money market funds and U.S. Treasury securities. The fair value of Level 1 assets has been determined using quoted prices in active markets for identical assets.

The following table summarizes our financial assets measured at fair value on a recurring basis (in thousands):



	September 30, 2016
	(unaudited)
Assets:	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Money market funds	$	70,398	$	—	$	—	$	70,398
U.S. Treasury securities	42,037		—		—		42,037
	$	112,435	$	—	$	—	$	112,435

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)



	December 31, 2015
Assets:	LEVEL 1		LEVEL 2		LEVEL 3		TOTAL
Money market funds	$	110,657	$	—	$	—	$	110,657

6. Inventory

Inventory consists of the following (in thousands):



	September 30, 2016		December 31, 2015
	(unaudited)
Work in process	$	669	$	—
Finished goods	40		13
Total inventory	$	709	$	13

7. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):



	September 30, 2016		December 31, 2015
	(unaudited)
Research and development services	$	3,603	$	2,043
Legal and professional services	—		378
Employee compensation	1,093		1,538
Total accrued liabilities	$	4,696	$	3,959

8. Commitments and Contingencies

Operating Leases

We lease laboratory and office space under an operating lease in Seattle, Washington. The lease commenced in February 2013 and continues through November 2016, with an option to extend the term for an additional month.

We also lease office space under an operating lease in South San Francisco, California. The lease commenced in January 2015 and continues through January 2020, with an option to extend for an additional five years . In connection with this lease, we were required to provide a $121,000 letter of credit as a security deposit. As of September 30, 2016 , no funds had been drawn on the letter of credit.

In January 2016, we entered into a lease agreement to lease approximately 20,133 square feet of office and laboratory space in the building located at 1616 Eastlake Ave. E., Seattle, Washington. This lease includes and expands on the space we currently sublease for our headquarters. The term of the lease is five years with one option to extend the lease term by three years . The lease term is expected to commence on January 1, 2017. The annual base rent due under the lease is $1.1 million for the first year and will increase by 2.5% each year thereafter. In connection with this lease agreement, we will be required to provide a $200,000 letter of credit as a security deposit.

Contingencies

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

In June 2015, we entered into a clinical supply agreement with NanoPass Technologies LTD (NanoPass) for the use of its intradermal delivery device in certain of our clinical trials. In July 2015, in connection with the execution of the clinical supply agreement, we paid NanoPass an upfront fee of $600,000 for access and rights to use its device. In December 2015, we initiated our Phase 2 clinical trial of CMB305 in patients with soft tissue sarcoma which triggered a milestone payment to NanoPass of $500,000 . Both the upfront fee and milestone payment were capitalized to prepaid expenses on the accompanying condensed consolidated balance sheets and are being amortized to research and development expense over the related milestone periods. As of September 30, 2016 , $111,000 of the payments remain in prepaid expenses. We amortized to research and development expense $111,000 and $150,000 during the three months ended September 30, 2016 and 2015 , respectively, and $633,000 and $150,000 during the nine months ended September 30, 2016 and 2015 , respectively. In addition, we agreed to pay certain future milestone fees up to an aggregate of $4.0 million upon the achievement of certain clinical milestones using the device.

Under our license agreements with the Infectious Disease Research Institute (IDRI), we are contingently obligated to pay potential future milestone payments for products developed from our GLAAS platform, which could total up to $2.3 million and $1.3 million , respectively, for the first and each subsequent exclusive licensed product we develop, and $1.3 million and $625,000 , respectively, for the first and each subsequent non-exclusive licensed product we develop.

We are contingently obligated to pay potential future milestone payments to third parties as part of certain licensing agreements for the ZVex products we develop, which could total up to $2.0 million in aggregate payments.

We also have potential future royalty payments under our licensing agreements as described in Note 9. Payments under these agreements are uncertain due to the occurrence of the events requiring payment under these agreements, including our share of potential future milestone and royalty payments. These payments generally become due and payable only upon achievement of certain clinical development, regulatory or commercial milestones.

9. License and Collaboration Agreements

Licenses Granted

In August 2014, we entered into an agreement with Sanofi under which we granted Sanofi an exclusive license for use of our GLAAS platform to discover, develop and commercialize products to treat peanut allergy. Sanofi may terminate the agreement at any time upon six months' written notice. We recognized milestone revenue under this agreement of $7.0 million for the three and nine months ended September 30, 2016 , and $1.0 million for the three and nine months ended September 30, 2015 , respectively. The agreement provides for additional payments of up to $160.0 million based upon the attainment of certain development and commercialization milestones, and tiered royalties on sales of approved products.

In October 2010, we entered into three separate license agreements with MedImmune, LLC (MedImmune) pursuant to which we granted MedImmune a worldwide, sublicensable, exclusive license to use GLA to develop and sell vaccines in three different infectious disease indications. Two of the three agreements remain in full force and effect, and the rights granted under the third have returned to us. Under the license agreements, MedImmune is obligated to use commercially reasonable efforts to develop and obtain regulatory approval for a licensed product in certain markets and to market and sell licensed products in any country where it obtains regulatory approval. In 2010, MedImmune paid us upfront payments under the license agreements. Under each license agreement, MedImmune is obligated to make additional payments based on achievement of certain development, regulatory, and commercial milestones for the licensed indication. MedImmune is also obligated to pay us a low double-digit percentage share of non-royalty payments that it receives from sublicensees and a mid single-digit percentage royalty payment on net sales of licensed products, which royalty is subject to reduction under certain circumstances. Under each license agreement, MedImmune is obligated to make additional aggregate payments of up to $62.9 million to $72.5 million , depending on the infectious disease indication, upon the achievement of certain development, regulatory and commercial milestones for the licensed indication. We did not recognize any revenue

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

under these agreements for the three and nine months ended September 30, 2016 . For the three and nine months ended September 30, 2015 , we recognized $2.5 million .

Licenses Acquired

In July 2008, we licensed certain patent rights, know-how and technology related to our GLAAS platform from IDRI, specifically products and formulations containing GLA and another synthetic TLR4 agonist referred to as SLA. This license was first amended and restated in 2010.

In November 2015, we entered into a separate agreement with IDRI to license a patent related to our GLAAS technology in the field of cancer. Under this agreement, we paid IDRI an upfront license fee in the amount of $250,000 , which was recognized as research and development expense. Upon the achievement of certain developmental and regulatory milestones, we will be obligated to pay IDRI up to $250,000 and $125,000 , respectively, for the first and each subsequent licensed product we develop.

In December 2015, we entered into a second amended and restated license agreement with IDRI, in which we obtained additional rights under the licensed technology, which rights vary by disease indication, and we returned to IDRI certain previously licensed GLA rights in select, primarily developing-world infectious disease indications. We received an exclusive license for SLA products in oncology, human allergy and addiction, as well as an option to obtain additional exclusive licenses in select infectious disease indications. In December 2015, in connection with the execution of the second amended and restated license agreement, we paid an upfront fee of $2.3 million , which was recorded as research and development expense. We are obligated to pay IDRI up to $2.3 million and $1.3 million , respectively, in additional payments for the first and each subsequent exclusive licensed product we develop, and $1.3 million and $625,000 , respectively, for the first and each subsequent non-exclusive licensed product we develop, based on the achievement of certain developmental and regulatory milestones. In addition, we will be obligated to pay certain commercialization milestones and royalty payments of single-digit percentage of net sales, if and when a licensed product is commercialized. We are also obligated to share with IDRI a percentage of payments received from any third-party sublicensees. Additionally, if we exercise our option for additional infectious disease indications, we will be required to make upfront, milestone and royalty payments for such additional indications, which payments are subject to similar terms and conditions as are applicable to other milestone and royalty payments.

We recognized $225,000 of IDRI license-related milestone fees for the three and nine months ended September 30, 2016 , and nothing in IDRI license-related milestone fees for the three and nine months ended September 30, 2015 .

In 2009, we licensed certain patent rights utilized in our ZVex development platform from the California Institute of Technology (Caltech). As part of acquiring this license, we issued shares of our common stock to Caltech valued at $25,000 . We make annual minimum royalty payments under the license. In addition, we are obligated to pay Caltech up to an aggregate of $1.6 million upon the achievement of certain development and regulatory milestones and will owe royalty payments on net sales of licensed products in the low single-digit percentage, if and when commercialized. We recognized no Caltech milestone fees for the three and nine months ended September 30, 2016 and 2015 .

In June 2015, we entered into a clinical supply agreement with NanoPass for the use of their intradermal delivery device in certain of our clinical trials. See Note 8 for additional information.

Collaborations

In October 2014, we entered into a collaboration with Sanofi Pasteur, the vaccines division of Sanofi, for the development of a Herpes Simplex Virus (HSV) immune therapy. Sanofi Pasteur and Immune Design are each contributing product candidates to the collaboration: Sanofi Pasteur is contributing HSV-529, a clinical-stage replication-defective HSV vaccine product candidate, and we are contributing G103, our preclinical trivalent vaccine product candidate. The collaboration will explore the potential of various combinations of agents, including leveraging our GLAAS platform, with the goal to select the best potential immune therapy for patients. Each

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

company will develop the products jointly through Phase 2 clinical trials, at which point Sanofi Pasteur intends to continue development of the most promising candidate and be responsible for commercialization. Sanofi Pasteur will bear the costs of all preclinical and clinical development, with Immune Design providing a specific formulation of GLA from the GLAAS platform at its cost through Phase 2 studies. Immune Design will be eligible to receive future milestone and royalty payments on any product developed from the collaboration.

We recognize funding from collaborative research and development efforts as revenue as we perform or deliver the related services in accordance with contract terms as long as we will receive payment for such services upon standard payment terms. The costs of the related services performed are recorded as research and development expenses on the condensed consolidated statements of operations and comprehensive income (loss). We recognized revenue under this collaboration of $780,000 and $329,000 for the three months ended September 30, 2016 and 2015 , respectively, and $3.0 million and $3.9 million for the nine months ended September 30, 2016 and 2015 , respectively. As of September 30, 2016 , we have $2.9 million in unearned revenue on our accompanying condensed consolidated balance sheets related to this agreement.

10. Stockholders’ Equity

Preferred Stock

Our board of directors has the authority to fix and determine and to amend the number of shares of any series of preferred stock that is wholly unissued or to be established and to fix and determine and to amend the designation, preferences, voting powers and limitations, and the relative, participating, optional or other rights, of any series of shares of preferred stock that is wholly unissued or to be established. There was no preferred stock issued and outstanding as of September 30, 2016 or December 31, 2015 .

Common Stock

In September 2016, we completed an underwritten follow-on public offering of 4,800,000 shares of our common stock at a price of $6.25 per share. Also that same month, we sold an additional 426,369 shares when our underwriters when they exercised a portion of their option to purchase additional shares at $6.25 per share. We received net proceeds of $30.3 million (inclusive of the exercise of a portion of the underwriters' option to purchase additional shares), after underwriting discounts and commissions and offering expenses totaling $2.4 million .

In April 2015, we closed an underwritten public offering of 3,000,000 shares of our common stock at a price of $26.50 per share. In May 2015, we sold an additional 47,409 shares directly to our underwriters when they exercised a portion of their option to purchase additional shares at $26.50 per share. We received net proceeds of $75.4 million (inclusive of the exercise of a portion of the underwriters' option to purchase additional shares), after underwriting discounts and commissions and offering expenses totaling $5.4 million .

We had 25,409,177 and 20,153,202 shares of common stock outstanding as of September 30, 2016 and December 31, 2015 , respectively. Shares of common stock reserved for future issuance were as follows:



	September 30, 2016	December 31, 2015
	(unaudited)
Shares available for issuance under the employee stock purchase plan	507,498	316,322
Options granted and outstanding	3,481,952	2,832,467
Unvested restricted stock units	115,250	—
Shares available for future stock option grants	825,164	804,553
Shares of common stock reserved for future issuance	4,929,864	3,953,342

Equity Incentive Plans

On January 1, 2016, in accordance with provisions of our 2014 Employee Stock Purchase Plan (2014 ESPP) the authorized shares available under the 2014 ESPP were increased by 200,000 shares.

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

On January 1, 2016, in accordance with provisions of our 2014 Omnibus Incentive Plan (2014 Plan), the authorized shares available under the 2014 Plan were increased by 806,128 shares. There were a total of 2,918,334 shares of common stock authorized under the 2014 Plan as of September 30, 2016 .

Employee Stock Purchase Plan

During the nine months ended September 30, 2016 , 8,824 shares were issued under the 2014 ESPP at a purchase price of $6.94 .

Restricted Stock Units

In 2016, we began issuing restricted stock units (RSUs) to employees under the 2014 Plan. The fair value of the RSUs is determined on the date of grant based on the market price of our common stock. RSUs are recognized as expense ratably over the vesting period and our RSUs generally vest over four years with 25% of the total award vesting on each anniversary of the vesting commencement date.

The activity for our RSUs is summarized as follow:



	Shares		Weighted Average Grant Date Fair Value
Outstanding at December 31, 2015	—		—
Granted	118,000		$	19.39
Vested	—		$	—
Forfeited	(2,750	)	$	19.39
Outstanding at September 30, 2016	115,250		$	19.39

Stock Option Activity

Summary stock option information is as follows:



	OPTIONS OUTSTANDING		WEIGHTED- AVERAGE EXERCISE PRICE		WEIGHTED- AVERAGE REMAINING CONTRACT TERM (in years)	AGGREGATE INTRINSIC VALUE (in thousands)
Outstanding at December 31, 2015	2,832,467		$	11.48	8.24
Granted (unaudited)	827,088		$	17.38
Exercised (unaudited)	(20,782	)	$	3.12
Expired (unaudited)	(29,797	)	$	25.65
Forfeited (unaudited)	(127,024	)	$	19.06
Outstanding at September 30, 2016 (unaudited)	3,481,952		$	12.53	7.86	$	7,591
Vested and expected to vest after September 30, 2016 (unaudited)	3,331,546		$	12.32	7.81	$	7,542
Exercisable as of September 30, 2016 (unaudited)	1,517,001		$	7.95	6.65	$	6,304

As of September 30, 2016 , there was $18.4 million of total unrecognized stock-based compensation expense related to nonvested stock options that is expected to be recognized over a weighted-average period of 2.5 years . The total intrinsic value of options exercised during the nine months ended September 30, 2016 and 2015 was $124,000 and $4.9 million , respectively.

Stock-Based Compensation Expense

Employee stock-based compensation expense recognized was calculated based on awards ultimately expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, as

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

necessary, in subsequent periods if actual forfeitures differ from those estimates. Total stock-based compensation expense recognized in our condensed consolidated statements of operations and comprehensive income (loss) is as follows (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2016		2015			2016		2015
	(unaudited)
Employee:
Research and development	$	957	$	480		$	2,893	$	1,369
General and administrative	1,198		866			3,753		2,811
Non-Employee:
Research and development	165		(8		)	202		88
General and administrative	6		69			59		183
Total stock-based compensation expense	$	2,326	$	1,407		$	6,907	$	4,451

We use the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date.

The fair values of stock options granted to employees were calculated using the following assumptions:



	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
	(unaudited)

Weighted-average estimated fair value	$3.25	$12.60	$11.72	$21.20
Risk-free interest rate	1.10% - 1.26%	1.64% - 1.86%	1.10% - 1.84%	1.50% - 1.86%
Expected term of options (in years)	6.08	6.08	5.50 - 6.08	5.50 - 6.08
Expected stock price volatility	77%	78% - 83%	77% - 80%	78% - 91%
Expected dividend yield	—	—	—	—

11. Subsequent Event

Settlement and License Agreements with TheraVectys SA

On October 17, 2016, we entered into a Settlement Agreement and a License Agreement with TheraVectys SA (TVS) obtaining certain present and future intellectual property rights and resolving the litigation initiated against us by TVS in July 2014, as well as related claims and counterclaims. The history of the litigation with TVS is described in our quarterly report on Form 10-Q for the quarter ended June 30, 2016.

As a non-contingent fee for a license to certain present and future intellectual property of TVS and in consideration for the settlement of all claims and disputes between the parties, we are required to pay $6.0 million into an escrow account within 30 days of the effective date of the Settlement Agreement(Escrowed Payment). As an additional fee for a license to certain present and future intellectual property of TVS and for the settlement of all claims and disputes between the parties, we will be required to pay $1.25 million to TVS when, following the effective date of the Settlement Agreement, we raise $25.0 million , in the aggregate, through equity sales, debt or licensing revenue.

Table of Contents

IMMUNE DESIGN CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Information as of September 30, 2016 and for the three and nine months ended September 30, 2016 and 2015 is unaudited)

Institut Pasteur and the litigation in the United States and Belgium has been dismissed; and (b) fifty percent ( 50% ) upon the final resolution of the EPO Proceeding if the scope of the EU Patent remains unchanged; provided, that the events described in item (a) are a condition to the release of any portion of the Escrowed Payment to TVS and must occur by certain agreed time periods. Currently, we believe that the condition under item (b) has been satisfied, because following an oral hearing in front of the EPO in September 2016, the EU Patent was maintained without a reduction in scope, and TVS has withdrawn from the EPO proceeding, thereby waiving the right to appeal the EPO's decision.

The License Agreement provides us with a field limited, non-exclusive, sublicensable license for oncology uses to certain current and future intellectual property rights owned, controlled and licensed by TVS. For licensed products developed under the License Agreement, we would be obligated to pay certain development and commercial milestones and royalties.

For each licensed product under the License Agreement, we will be obligated to pay TVS: (a) up to an aggregate of $5.75 million upon achievement of certain development and regulatory milestones, except that the first two milestone payments are waived for CMB305/LV305; (b) royalties on net sales made directly by us or our affiliates; (c) a mid-single digit percentage of sublicensing revenues received by us attributable to the sublicensing of TVS' intellectual property; and (d) a single commercial milestone payment based on the product achieving a specified net sales amount. The royalties on the first four licensed products (including CMB305/LV305 as a single product) will be on a low-single digit percentage of net sales, and royalties on subsequent licensed products will be tiered on low-to-mid-single digit percentages of net sales, in each case subject to royalty-offset provisions.

The term of the License Agreement expires upon the last to expire valid patent claim that is licensed to us under the License Agreement. The License Agreement may also be terminated by either party for customary reasons, such as an uncured material breach by the other party, or the other party’s insolvency. We may terminate the License Agreement upon 30 days’ prior written notice to TVS.

Per the terms of the Settlement Agreement, we determined that the aggregate payment amount expected to be paid to TVS is $7.25 million and as such, the aggregate payment amount should be allocated between (1) dismissal of the litigation; and (2) license to current and future TVS intellectual property (IP). As we are not able to reliably estimate the fair value of the litigation dismissal, we assigned a fair value to the aggregate amount of the license to current and future TVS IP through the use of a benchmarking approach and determined the fair value of the license to current and future IP obtained from TVS by benchmarking this deal against similar recent (within the last 5 years) deals within our industry. The metrics we used in our benchmarking approach included similarities in industry, product type, therapeutic area, stage of product development and exclusivity. Based upon the results of our benchmark approach, we determined that the fair value assigned to the license to current and future TVS IP to be $1.4 million with the remaining residual amount of $5.85 million allocated to the dismissal of the litigation.

Because the litigation existed as of September 30, 2016, the dismissal of the litigation per the terms of the Settlement Agreement entered into on October 17, 2016 is deemed to be a recognized subsequent event, and the $5.85 million allocated to the dismissal of litigation is recorded as general and administrative expense for the three and nine months ended September 30, 2016 . Since the $1.4 million allocated to the license acquired is for current and future TVS IP granted to us subsequent to September 30, 2016 , this is considered a nonrecognized subsequent event, and will be recognized in the quarter ended December 31, 2016.

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following management’s discussion and analysis of financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto for the year ended December 31, 2015, included in our Annual Report on Form 10-K (Annual Report), filed with the SEC.

Overview

We are a clinical-stage immunotherapy company employing next-generation in vivo approaches to enable the body's immune system to fight disease. Although we believe our approaches have broad potential across multiple therapeutic areas, we are focused in oncology and have engineered our technologies to activate the immune system’s natural ability to generate and expand tumor-specific cytotoxic T cells to fight cancer. Our two primary product candidates, CMB305 and G100, utilize distinct immuno-oncology approaches that, we believe, address the shortcomings of existing therapies and have the potential to treat a broad patient population either as individual therapies or in combination with other mechanisms of action, such as checkpoint inhibitors. We have also been executing a strategy to partner individual indications outside of oncology in infectious and allergic diseases, which provide potential downstream economics while preserving growth opportunity in the future.

We have devoted substantially all of our resources since inception to our drug development efforts, including undertaking clinical trials of our product candidates, development of our ZVex and GLAAS discovery platforms, conducting preclinical studies, protecting our intellectual property and providing general and administrative support to our product development activities. To date, we have funded our operations primarily through proceeds from the issuance of our stock, payments received under license and collaboration agreements and GLA product sales.

Our net loss was $12.4 million and $39.1 million for the three and nine months ended September 30, 2016 , respectively, compared to $7.4 million and $27.3 million for the three and nine months ended September 30, 2015 , respectively. As of September 30, 2016 , we had an accumulated deficit of $169.3 million . We have incurred net losses to date and we expect to continue to incur significant expenses and increasing operating losses for at least the next several years.

Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will significantly increase as we:


•	complete our current and planned Phase 1 and Phase 2 clinical trials, as well as potentially initiate new clinical trials for existing product candidates, including pivotal trials;


•	continue research and development efforts to build our pipeline beyond the current product candidates;


•	perform additional process development for our product candidates, including initial commercial scale up efforts;


•	seek regulatory approvals for our product candidates, if any, that successfully complete clinical trials;


•	establish a sales, marketing and distribution infrastructure to commercialize and market products for which we obtain regulatory approval;


•	maintain, expand and protect our intellectual property portfolio;


•	hire additional clinical, quality control, scientific and management personnel; and


•	add operational and financial personnel to support our product development efforts and operational support applicable to operating as a public company.

We do not expect to generate significant revenue unless and until we successfully complete development of, obtain marketing approval for and commercialize our product candidates, either alone or in collaboration with third parties. We expect these activities will take a number of years and our success in these efforts is subject to significant uncertainty. Accordingly, we will need to raise additional capital prior to the regulatory approval and commercialization of any of our product candidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our operating activities through public or private equity or debt financings,

Table of Contents

collaborations or licenses, capital lease transactions or other available financing transactions. However, additional capital may not be available on reasonable terms, if at all, and if we raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders and increased fixed payment obligations.

Management’s discussion and analysis of financial condition and results of operations is based upon the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which we prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) for interim periods and with Regulation S-X promulgated under the Securities and Exchange Act of 1934, as amended.

Third Quarter 2016 and Other Recent Highlights

In September 2016, we completed an underwritten follow-on public offering, which resulted in the sale of 4,800,000 shares of our common stock to the public at a price of $6.25 per share. We sold an additional 426,369 shares when our underwriters exercised a portion of their option to purchase additional shares at $6.25 per share. We received net proceeds from the offering of $30.3 million (inclusive of the exercise of a portion of the underwriters' option to purchase additional shares) after deducting underwriting discounts and commissions and estimated expenses.

In September 2016, Sanofi initiated a Phase 1 clinical trial applying our GLAAS platform with Sanofi's novel therapeutic candidate for the treatment of peanut allergy. For beginning this trial, we received milestone revenue of $7.0 million under our License Agreement with Sanofi.

In October 2016, we entered into a Settlement Agreement and a License Agreement with TheraVectys SA (TVS) resolving litigation initiated by TVS in July 2014 against the Company, as well as related claims and counterclaims. As a non-contingent fee for a license to certain present and future intellectual property of TVS and in consideration for the settlement of all claims and disputes between the parties, within 30 days of the effective date of the Settlement Agreement we are required to pay $6.0 million into an escrow account, which amount will be released from escrow to TVS upon achieving certain conditions of the Settlement Agreement. Additional information relating to the Settlement Agreement and License Agreement is described in this Quarterly Report under Note 11 to the Financial Statements (Subsequent Event).

Clinical Development Programs

In June 2016, we announced and presented results from the following three Phase 1 clinical trials of our immuno-oncology product candidates at medical meetings and investor events, including data on LV305 and G100 at the 2016 annual meeting of the American Society of Clinical Oncology (ASCO):

•

CMB305 . Enrollment is ongoing in the expansion arm of our Phase 1 single agent trial of CMB305 in patients with cancers expressing the NY-ESO-1 tumor antigen. Shortly after ASCO, we presented early patient data from a completed first-in-human dose-escalation trial and an early subset of patients from an expansion trial of CMB305 in patients with soft tissue sarcoma showed that CMB305 had a favorable safety profile with only grade 1 and 2 adverse events and without dose-limiting toxicities. In addition, patients who responded immunologically had a greater degree of antigen-specific T cell response than previously reported in the Phase 1 trial of LV305 alone, which is consistent with the rationale of the prime boost approach. We also observed preliminary clinical benefit in the form of a median progression-free survival (PFS) of 5.5 months, with a 93% patient survival as of the data review date.

•

LV305 . We completed enrollment in our Phase 1 single agent trial of LV305 in 24 patients with advanced or metastatic sarcoma expressing NY-ESO-1. At ASCO, we presented data showing that 58% had clinical benefit in the form of stable disease (SD) and one patient showed a partial response (PR), and median PFS was 4.6 months. In addition, median OS had not yet been reached, with 81% survival at one year. A different arm of this trial will explore the use of LV305 with Merck’s anti-PD-1 agent, KEYTRUDA ^® , in melanoma patients who have an inadequate response to anti-PD1 therapy, pursuant to a collaboration with Merck.


•	G100 . We completed enrollment of our Phase 1 trial of G100, in combination with radiation, in patients with Merkel cell carcinoma (MCC). At ASCO, we presented data on all 10 patients, which showed an overall

Table of Contents

response rate (ORR) of 50% per protocol, a favorable safety profile with no treatment-related serious adverse events observed, and that G100 significantly altered the tumor microenvironment in responding patients..

In later stage clinical development, enrollment is ongoing in both of our randomized Phase 2 trials: (1) CMB305 in patients with NY-ESO-1 positive soft tissue sarcoma who receive either CMB305 combined with Genentech’s investigational cancer immunotherapy, atezolizumab (anti-PD-L1), or atezolizumab alone, pursuant to a collaboration with Genentech; and (2) G100 in patients with follicular non-Hodgkin Lymphoma in combination with local radiation and Merck’s anti-PD-1 agent, KEYTRUDA®, or G100 in combination with local radiation alone, pursuant to a collaboration with Merck.

Financial Overview

Revenue

Collaboration and Licensing Revenue

We derive our revenue from collaboration and licensing agreements and the sale of products associated with material transfer, collaboration and GLA supply agreements. We may generate revenue in the future from payments from future license or collaboration agreements, product sales or government contracts and grants. We expect that any revenue we generate will fluctuate from quarter to quarter.

GLA Product Sales

We sell formulations of GLA to selected companies for use in ongoing preclinical studies and clinical trials. All revenues associated with the sale of GLA supplied by us are reported as GLA product sales with the applicable costs reported under cost of product sales.

Research and Development Expenses

We focus our resources on our internal and collaborative research and development activities, including the conduct of preclinical studies, product development, and activities related to regulatory filings for our product candidates and clinical trials. We recognize our research and development expenses as they are incurred. Research and development costs consist of salaries and benefits, including stock-based compensation, lab supplies and facility costs, as well as fees paid to other entities that conduct certain research and development activities, including clinical studies and manufacturing, on our behalf.

We are conducting research and development activities on several oncology disease targets and account for research and development costs on a program-by-program basis.

The table below summarizes our direct research and development expenses for the periods indicated. Our direct research and development expenses consist principally of external costs, such as fees paid to contract manufacturing organizations (CMOs), clinical research organizations (CROs), consultants, clinical trial sites and for contract research services. We typically use our employee and infrastructure resources across multiple research and development programs, and therefore do not allocate salaries, stock-based compensation, employee benefit or other indirect costs related to our research and development to specific product candidates. Those expenses are included in “Indirect research and development expense by type” in the table below (in thousands):

Table of Contents



	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(unaudited)
Direct research and development expense by platform:
ZVex	$	2,641	$	4,911	$	12,309	$	11,712
GLAAS	2,628		656		4,479		1,747
G103	832		314		2,943		3,735
Total direct research and development program expense	6,101		5,881		19,731		17,194
Indirect research and development expense by type:
Personnel related costs	2,720		2,003		8,048		5,920
Research and development supplies and services	1,779		141		3,985		408
Allocated facility, equipment, travel and other expense	573		238		1,365		687
Total indirect research and development expense	5,072		2,382		13,398		7,015
Total research and development expense	$	11,173	$	8,263	$	33,129	$	24,209

We expect our research and development expenses to continue to increase for the foreseeable future as we continue to develop our product candidates. At this time, we cannot reasonably estimate the nature, timing or costs of the efforts that will be necessary to complete the remainder of the development of any of our product candidates or the period in which material net cash, if any, from these product candidates may commence. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:


•	the scope, rate of progress, expense and results of our ongoing and additional clinical trials that we may conduct;


•	the scope, rate of progress and expense of process development;


•	other research activities; and


•	the timing of regulatory approvals.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for employees in executive, finance, information technology and human resources functions. Other significant general and administrative expenses include professional fees for accounting and legal services, expenses associated with obtaining and maintaining patents and other intellectual property and allocation of facilities costs.

We expect that our general and administrative expenses will increase as we continue to expand infrastructure to support operating as a public company and our advancing development efforts. These increases have and will likely include costs related to the hiring of additional personnel, director and officer liability insurance and increased fees for directors, outside consultants, lawyers and accountants. We also expect to incur significant costs to comply with corporate governance, internal controls and similar requirements applicable to public companies.

Interest and Other Income (Expense)

Interest and other income (expense) consists of interest income earned on our cash and cash equivalents and marketable securities, foreign currency gain or loss and the gain or loss on the disposal of property and equipment, if any.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an on-going basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

Table of Contents

Our significant accounting policies are more fully described in Note 2 of the accompanying unaudited condensed consolidated financial statements and in Note 2 to the audited financial statements contained in our Annual Report. There have been no significant or material changes in our critical accounting policies during the nine months ended September 30, 2016 , as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Use of Estimates” in our Annual Report, except the following:

Principles of Consolidation

Short-term Investments

Our short-term investments include funds invested in U.S. Treasury securities with a final maturity of each security of less than one year. All investments are classified as available-for-sale securities and are recorded at fair value based on quoted prices in active markets, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Realized gains and losses and declines in fair value that are deemed to be other than temporary are reflected in the condensed consolidated statements of operations and comprehensive income (loss) using the specific-identification method.

Comprehensive Income (Loss)

Results of Operations

Comparison of Three Months Ended September 30, 2016 and 2015

The following table summarizes our results of operations for the three months ended September 30, 2016 and 2015 :



	Three Months Ended September 30,						Increase/ (Decrease)
	2016			2015			Increase/ (Decrease)
	(in thousands)
	(unaudited)
Total revenues	$	8,206		$	4,653		$	3,553
Operating expenses:
Cost of product sales	72			298			(226		)
Research and development	11,173			8,263			2,910
General and administrative	9,554			3,506			6,048
Total operating expenses	20,799			12,067			8,732
Loss from operations	(12,593		)	(7,414		)	(5,179		)
Interest and other income	150			7			143
Net loss	$	(12,443	)	$	(7,407	)	$	(5,036	)

Total Revenues and Cost of Product Sales

The $3.6 million increase in total revenues was primarily attributable to a $3.5 million increase in licensing revenue as a result of the $7.0 million milestone revenue recognized under our License Agreement with Sanofi during the three months ended September 30, 2016 compared to $3.5 million in licensing revenue recognized in the same period in prior year. In addition, we had a $0.5 million increase in collaboration revenue related to timing of research services associated with the Sanofi Pasteur G103 collaboration that was entered into in the fourth quarter of 2014. These increases were partially offset by a $0.4 million decrease in product sales related to the timing of product shipments to our collaboration partners.

Table of Contents

Research and Development Expenses

The $2.9 million increase in research and development expenses was primarily attributable to an increase of $2.5 million in our clinical trials costs related to the continuing advancement of our Phase 1 and Phase 2 clinical trials. In addition, we had an increase of $0.9 million in personnel-related expenses, which was primarily due to an increase in compensation and benefits and higher stock-based compensation as a result of an increase in research and development headcount to support our advancing research and clinical pipeline, and an increase of $0.5 million in license and royalty fees due to other third parties. These increases were partially offset by a decrease of $0.9 million in our ongoing contract manufacturing and process development programs due primarily to the timing of services.

General and Administrative Expenses

The $6.0 million increase in general and administrative expenses was primarily attributable to the $5.85 million litigation-related settlement recorded during the three months ended September 30, 2016, as part of our Settlement Agreement with TVS. In addition, we had an increase of $0.3 million in personnel-related expenses due to higher stock-based compensation expense.

Comparison of Nine Months Ended September 30, 2016 and 2015

The following table summarizes our results of operations for the nine months ended September 30, 2016 and 2015 :




	Nine Months Ended September 30,						Increase/ (Decrease)
	2016			2015			Increase/ (Decrease)
	(in thousands)
	(unaudited)
Total revenues	$	11,202		$	8,371		$	2,831
Operating expenses:
Cost of product sales	347			421			(74		)
Research and development	33,129			24,209			8,920
General and administrative	17,416			11,086			6,330
Total operating expenses	50,892			35,716			15,176
Loss from operations	(39,690		)	(27,345		)	(12,345		)
Interest and other income	606			15			591
Net loss attributable to common stockholders	$	(39,084	)	$	(27,330	)	$	(11,754	)

Total Revenues and Cost of Product Sales

The $2.8 million increase in total revenues was primarily attributable to a $3.5 million increase in licensing revenue as a result of the $7.0 million milestone revenue recognized under our License Agreement with Sanofi during the nine months ended September 30, 2016 compared to $3.5 million in licensing revenue recognized in the same period in prior year. In addition, we had a $0.2 million increase in product sales related to product shipments to our collaboration partners. These increases were partially offset by a $0.9 million decrease in collaboration revenue related to timing of research services associated with the Sanofi Pasteur G103 collaboration that was entered into in the fourth quarter of 2014.

Research and Development Expenses

The $8.9 million increase in research and development expenses was primarily attributable to an increase of $6.8 million in our clinical trials costs related to the continuing advancement of our Phase 1 and Phase 2 clinical trials. In addition, we had an increase of $2.3 million in personnel-related expenses, which was primarily due to an increase in compensation and benefits and higher stock-based compensation as a result of an increase in research and development headcount to support our advancing research and clinical pipeline, an increase of $0.5 million in license and royalty fees due to other third parties and an increase of $0.3 million in facility-related expenses as a result of our growth in research and development. These increases were partially offset by a decrease of $1.0 million in our ongoing contract manufacturing and process development programs due primarily to the timing of services.

Table of Contents

General and Administrative Expenses

The $6.3 million increase in general and administrative expenses was primarily attributable to the $5.85 million litigation-related settlement recorded during the nine months ended September 30, 2016 , as part of our Settlement Agreement with TVS. In addition, we had an increase of $0.7 million in personnel-related expenses due to higher stock-based compensation expense. These increases were partially offset by a decrease of $0.3 million in professional services due primarily to a decrease in legal costs related to defending our litigation with TVS.

Liquidity and Capital Resources

Liquidity

As of September 30, 2016 , we had cash and cash equivalents and short-term investments totaling $112.5 million . In addition to our existing cash, cash equivalents and short-term investments, we are eligible to receive research and development funding and to earn milestone and other contingent payments for the achievement of defined collaboration objectives and certain development, regulatory and commercial milestones and royalty payments under our collaboration agreements. Our ability to earn these milestone and contingent payments and the timing of achieving these milestones is primarily dependent upon the outcome of our collaborators’ research and development activities and is uncertain at this time.

In September 2016, we completed an underwritten follow-on public offering, which resulted in the sale of 4,800,000 shares of our common stock to the public at a price of $6.25 per share. We sold an additional 426,369 shares when our underwriters exercised a portion of their option to purchase additional shares at $6.25 per share. We received net proceeds from the offering of $30.3 million (inclusive of the exercise of a portion of the underwriters' option to purchase additional shares), after deducting underwriting discounts and commissions and estimated expenses totaling $2.4 million .

In April 2015, we closed an underwritten public offering (Secondary Offering) of 3,000,000 shares of our common stock at a price of $26.50 per share. In May 2015, we sold an additional 47,409 shares directly to our underwriters when they exercised a portion of their option to purchase additional shares at $26.50 per share. We received net proceeds of $75.4 million (inclusive of the exercise of a portion of the underwriters' option to purchase additional shares), after underwriting discounts and commissions and offering expenses totaling $5.4 million .

Capital Resources

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical and preclinical research and development services, including manufacturing, laboratory and related supplies, legal, patent and other regulatory expenses and general overhead costs. We believe our use of CROs and CMOs provides us with flexibility in managing our spending and limits our cost commitments.

Because our product candidates are in various stages of clinical and preclinical development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability. Until such time, if ever, that we can generate substantial product revenues, we expect to finance our cash needs through equity or debt financings and, potentially, collaboration arrangements. Except for any obligations of our collaborators to reimburse us for research and development expenses or to make milestone or royalty payments under our agreements with them, we do not have any committed external source of liquidity. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. If we raise additional funds through collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Table of Contents

Based on our research and development plans and our timing expectations related to the progress of our programs, we expect that our existing cash and cash equivalents as of September 30, 2016 will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of developing products and testing them in clinical trials is costly, and the timing of progress and expenses in these trials is uncertain. Our future capital requirements will depend on many factors, including, among others:


•	the scope, rate of progress, results and costs of our clinical trials, preclinical studies and other research and development activities;


•	the scope, rate of progress and costs of our manufacturing development and commercial manufacturing activities;


•	the cost, timing and outcomes of regulatory proceedings, including the U.S. Food and Drug Administration (FDA) review of any Biologics License Application (BLA) we file;


•	payments required with respect to development milestones we achieve under our in-licensing agreements;


•	the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims;


•	the costs associated with commercializing our product candidates, if they receive regulatory approval;


•	the cost and timing of developing our ability to establish sales and marketing capabilities;


•	the costs of current or future litigation or judgments;


•	competing technological efforts and market developments;


•	changes in our existing research relationships;


•	our ability to establish collaborative arrangements to the extent necessary;


•	revenues received from any existing or future products; and


•	payments received under any current or future strategic partnerships.

Cash Flows

The following is a summary of our cash flows (in thousands) for the nine months ended September 30, 2016 and 2015 :



	Nine Months Ended September 30,
	2016			2015

	(unaudited)
Net cash used in operating activities	$	(31,359	)	$	(30,258	)
Net cash used in investing activities	(42,076		)	(308		)
Net cash provided by financing activities	30,948			75,702

Net Cash Used in Operating Activities

Net cash used in operating activities was $31.4 million during the nine months ended September 30, 2016 and consisted primarily of our net loss of $39.1 million , partially offset by non-cash charges of $6.9 million for stock-based compensation expense and a net increase in operating assets and liabilities of $0.6 million .

Net cash used in operating activities was $30.3 million during the nine months ended September 30, 2015 and consisted of our net loss of $27.3 million , partially offset by non-cash charges of $4.5 million for stock-based compensation expense and a net decrease in operating assets and liabilities of $7.6 million .

Net Cash Used in Investing Activities

Net cash used in investing activities was $42.1 million during the nine months ended September 30, 2016 and consisted primarily of our purchase of $65.0 million in short-term investments in U.S. Treasury securities, partially offset by $23.0 million in maturities of these investments. Net cash used in investing activities was $0.3 million for the nine months ended September 30, 2015 and primarily relates to the purchase of property and equipment, primarily lab equipment, to support research and development efforts.

Table of Contents

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $30.9 million for the nine months ended September 30, 2016 , primarily attributable to net proceeds of $30.8 million from an underwritten public equity offering completed in September 2016, as well as cash received from the exercise of stock options and purchase of ESPP shares. Net cash provided by financing activities was $75.7 million for the nine months ended September 30, 2015 , which consisted of $75.4 million in net proceeds received from our Secondary Offering plus cash received for the exercise of stock options and purchase of ESPP shares.

Contractual Obligations and Contingent Liabilities

During the nine months ended September 30, 2016 , there were no material changes to our contractual obligations and commitments described under the section titled "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

JOBS Act

On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (JOBS Act) was enacted. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period; and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

We will remain an “emerging growth company” until the earliest of (a) the last day of the fiscal year in which we have total annual gross revenues of $1.0 billion or more, (b) the last day of our fiscal year following the fifth anniversary of the completion of the our IPO in July 2014, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates and concentration of credit risk. As of September 30, 2016 , we had cash and cash equivalents of $70.4 million consisting of bank deposits and interest-bearing money market accounts and short-term investments of $42.0 million consisting of U.S. Treasury securities. Our cash balances deposited in a bank in the United States may be in excess of insured levels. We do not believe our cash, cash equivalents and short-term investments have significant risk of default or illiquidity.

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because the majority of our investments are in short-term marketable debt securities. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive from our investments without significantly increasing risk. In an attempt to limit interest rate risk, we follow guidelines to limit the average and longest single maturity dates, place our investments with high quality issuers and follow internally developed guidelines to limit the amount of credit exposure to any one issuer. Some of the securities that we invest in may be subject to market risk. This means that a change in prevailing interest rates may cause the value of the investment to fluctuate. For example, if we purchase a security that was issued with a fixed interest rate and the prevailing interest rate later rises, the value of our investment may decline. If a ten percent change in interest rates were to have occurred on September 30, 2016 , this change would not have had a material effect on the fair value of our investment portfolio as of that date. In general, money market funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate.

Table of Contents

We contract with contract manufacturers internationally. Transactions with these providers are predominantly settled in U.S. dollars and, therefore, we believe that we have only minimal exposure to foreign currency exchange risks. We do not hedge against foreign currency risks.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures. Management, including our President and Chief Executive Officer and Executive Vice President, Strategy & Finance, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the period covered by this report. Based upon the evaluation, the President and Chief Executive Officer and Executive Vice President, Strategy & Finance concluded that the disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including the President and Chief Executive Officer and Executive Vice President, Strategy & Finance, as appropriate to allow timely discussion regarding required disclosure.

Changes in internal control over financial reporting. There have been no significant changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

TheraVectys SA v. Immune Design Corp.

Under the Settlement Agreement, TVS has agreed to dismiss all pending litigation brought by TVS against us and to withdraw patent opposition proceedings (EPO Proceeding) brought by TVS against our European Patent No EP 2 456 786 (EU Patent). Also under the Settlement Agreement, both parties have agreed to a broad release of claims against one another based on acts or omissions arising out of the litigation, or the facts and circumstances giving rise to the litigation. Neither party made any admission of liability or wrongdoing under the Settlement Agreement. The Settlement Agreement includes customary representations and warranties that each party has made to the other party, as well as an agreement that TVS will not use certain manufacturers with lentiviral vector manufacturing expertise for a defined period of time or for so long as we are making use of those manufacturers.

As a non-contingent fee for a license to certain present and future intellectual property of TVS and in consideration for the settlement of all claims and disputes between the parties, we are required to pay $6.0 million into an escrow account within 30 days of the effective date of the Settlement Agreement (Escrowed Payment). As an additional fee for a license to certain present and future intellectual property of TVS and for the settlement of all claims and disputes between the parties, we will be required to pay $1.25 million to TVS when, following the effective date of the Settlement Agreement, we raise $25.0 million , in the aggregate, through equity sales, debt or licensing revenue.

The Escrowed Payment will be disbursed to TVS as follows: (a) fifty percent (50%) when Institut Pasteur consents to the granting by TVS to us of a sublicense to certain patents licensed by TVS (or to be licensed by TVS) from Institut Pasteur and the litigation in the United States and Belgium has been dismissed; and (b) fifty percent (50%) upon the final resolution of the EPO Proceeding if the scope of the EU Patent remains unchanged; provided, that the events described in item (a) are a condition to the release of any portion of the Escrowed Payment to TVS and must occur by certain agreed time periods. Currently, we believe that the condition under item (b) has been satisfied, because following an oral hearing in front of the EPO in September 2016, the EU Patent was maintained without a reduction in scope, and TVS has withdrawn from the EPO proceeding, thereby waiving the right to appeal the EPO's decision.

Table of Contents

European Patent Opposition

In February 2013, a third party filed an opposition at the European Patent Office (EPO) requesting revocation of European Patent No. 2068918 directed to GLA formulations and uses. This patent is owned by Infectious Disease Research Institute (IDRI) and under license to us. We are vigorously defending the grant of this patent, with a reply to the opposition brief having been filed on September 27, 2013. The oral proceedings for this opposition were held in September 2016. At the oral proceedings, the EPO maintained the patent in an amended form, which continues to cover the GLAAS products being developed by us and our licensees. We and the opponent may appeal this outcome, and we cannot be certain that this patent will be maintained by the EPO at an appeal hearing, or if any reduction to the scope would adequately cover our products. Revocation of this patent, or maintenance of an amended patent with inadequate coverage, could impair our ability to prevent competition from third parties in Europe, which could have an adverse impact on our business. The outcome of an appeal to this proceeding would not be known for several years.

Item 1A. Risk Factors

This Quarterly Report on Form 10-Q contains forward-looking information based on our current expectations. Because our business is subject to many risks and our actual results may differ materially from any forward-looking statements made by or on behalf of us, this section includes a discussion of important factors that could affect our business, operating results, financial condition and the trading price of our common stock. You should carefully consider these risk factors, together with all of the other information included in this Quarterly Report on Form 10-Q as well as our other publicly available filings with the SEC.

Risks Related to Our Financial Position and Capital Needs

We have incurred net losses since our inception and anticipate that we will continue to incur net losses for the foreseeable future.

We are a clinical-stage biotechnology company with a limited operating history. Investment in biotechnology product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, obtain regulatory approval or become commercially viable. We have no products approved for commercial sale and have generated only limited revenue to date. We continue to incur significant research and development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since our inception in 2008. For the three and nine months ended September 30, 2016 , we reported net losses of $12.4 million and $39.1 million , respectively, compared with net losses of $7.4 million and $27.3 million for the three and nine months ended September 30, 2015 , respectively. As of September 30, 2016 , we had an accumulated deficit of $169.3 million .

We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. We may also encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues, if any. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

Table of Contents

We currently have limited revenues and may never achieve or maintain profitability.

To date, we have only generated limited revenues from sales of GLA and such revenues have not been sufficient to cover our operating expenses. Our ability to generate significant product revenue and become profitable depends upon our ability to successfully commercialize our current product candidates or any other future product candidates. We do not anticipate generating revenue from the sale of our current or future product candidates for the foreseeable future. Our ability to generate significant product revenue from our current or future product candidates also depends on a number of additional factors, including but not limited to our ability to:


•	successfully complete the research and clinical development of and receive regulatory approval for current and future product candidates, including those of our licensees for the use of GLA in specific indications;


•	launch, commercialize and achieve market acceptance of our product candidates for which we obtain marketing approval, if any, and if launched independently, successfully establish a sales, marketing and distribution infrastructure;


•	establish and maintain supplier and manufacturing relationships with third parties, and ensure adequate and legally compliant manufacturing of bulk drug substances and drug products to maintain that supply;


•	obtain coverage and adequate product reimbursement from third-party payors, including government payors;


•	establish, maintain and protect our intellectual property rights; and


•	attract, hire and retain qualified personnel.

In addition, because of the numerous risks and uncertainties associated with biotechnology product development, including that our product candidates may not achieve the clinical endpoints of applicable trials, we are unable to predict the timing or amount of increased expenses and if or when we will achieve or maintain profitability. In addition, our expenses could increase beyond expectations if we decide to or are required by the FDA or foreign regulatory authorities to perform additional studies or trials in addition to those that we currently anticipate. Even if we complete the development and regulatory processes described above, we anticipate incurring significant costs associated with launching and commercializing these products.

Even if we generate revenues from the sale of any of our product candidates that may be approved, we may not become profitable and may need to obtain additional funding to continue operations. If we fail to become profitable or do not sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce our operations or even shut down.

We will require additional capital to finance our operations, which may not be available to us on acceptable terms, if at all. As a result, we may not complete the development and commercialization of our product candidates or develop new product candidates.

Development of our product candidates will require substantial additional funds to conduct research, development and clinical trials necessary to bring such product candidates to market and to establish manufacturing, marketing and distribution capabilities. Our future capital requirements will depend on many factors, including, among others:


•	the scope, rate of progress, results and costs of our clinical trials, preclinical studies and other research and development activities;


•	the scope, rate of progress and costs of our manufacturing development and commercial manufacturing activities;


•	the cost, timing and outcomes of regulatory proceedings, including FDA review of any BLA we file;


•	payments required under our existing or future in-licensing agreements;


•	the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims;


•	the costs associated with commercializing our product candidates, if they receive regulatory approval;


•	the cost and timing of developing our ability to establish sales and marketing capabilities;


•	the costs of current or future litigation, judgments or settlements;

Table of Contents


•	competing technological efforts and market developments;


•	changes in our existing research relationships;


•	our ability to establish collaborative arrangements to the extent necessary;


•	revenues received from any existing or future products; and


•	payments received under any current or future strategic partnerships.

We anticipate that we will continue to generate significant losses for the next several years as we incur expenses to complete our clinical trial programs for our product candidates, build commercial capabilities, develop our product pipeline and expand our corporate infrastructure. We believe that our existing cash and cash equivalents will allow us to fund our operating plan for at least the next 12 months. However, our operating plan may change as a result of factors currently unknown to us.

There can be no assurance that our revenue and expense forecasts will prove to be accurate, and any change in the foregoing assumptions could require us to obtain additional financing earlier than anticipated. Actual research and development costs could substantially exceed budgeted amounts.

We may never be able to generate a sufficient amount of product revenue to cover our expenses. To finance our operations, we expect to seek additional funding through public or private equity or debt financings, collaborations or licenses, capital lease transactions or other available financing transactions. However, we cannot be certain that additional financing will be available on acceptable terms, if at all. Moreover, in the event that additional funds are obtained through arrangements with collaborative partners, such arrangements may require us to relinquish rights to certain of our technologies, product candidates or products that we would otherwise seek to develop or commercialize ourselves. Our failure to obtain adequate financing when needed and on acceptable terms could force us to delay, reduce the scope of or eliminate one or more of our research or development programs.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies.

Until we can generate a sufficient amount of revenue from our product candidates, if ever, we expect to finance future cash needs through public or private equity or debt offerings or from other sources. Additional capital may not be available on reasonable terms, if at all. If we raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders and increased fixed payment obligations. Furthermore, these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these restrictions could significantly harm our business, financial condition and prospects.

We plan to use potential future operating losses and our federal and state net operating loss (NOL) carryforwards to offset taxable income from revenue generated from operations or corporate collaborations. However, our ability to use NOL carryforwards could be limited as a result of issuance of equity securities.

We plan to use our current year operating losses to offset taxable income from any revenue generated from operations or corporate collaborations. To the extent that our taxable income exceeds any current year operating losses, we plan to use our NOL carryforwards to offset income that would otherwise be taxable. However, under the Tax Reform Act of 1986, the amount of benefits from our NOL carryforwards may be impaired or limited if we incur a cumulative ownership change of more than 50%, as interpreted by the U.S. Internal Revenue Service, over a three-year period. As a result, our use of federal NOL carryforwards could be limited by the provisions of Section 382 of the U.S. Internal Revenue Code of 1986, as amended, depending upon the timing and amount of additional equity securities that we issue. In addition, we have not performed an analysis of limitations, and we may have experienced an ownership change under Section 382 as a result of past financings. State NOL carryforwards may be similarly limited. Any such disallowances may result in greater tax liabilities than we would incur in the absence of such a limitation and any increased liabilities could adversely affect our business, results of operations, financial condition and cash flow.

Table of Contents

Risks Related to Our Business and Industry

Our product candidates are in early stages of development. We cannot predict if we will receive regulatory approval to commercialize our product candidates.

All of our product candidates are in early stages of development, including product candidates that are in Phase 1 and Phase 2 clinical development. We cannot predict with any certainty if or when we might submit a BLA for regulatory approval for any of our product candidates or whether any such BLA will be accepted for review or approved by the FDA.

Even if our clinical trials are completed as planned, we cannot be certain that their results will support our proposed indications. Success in preclinical testing and early clinical trials does not ensure that later clinical trials will be successful. If our clinical results are not successful, we may terminate the clinical trials for a product candidate and abandon any further research or testing of the product candidate. Any delay in, or termination of, our clinical trials will delay and possibly preclude the filing of any BLAs with the FDA and, ultimately, our ability to commercialize our product candidates and generate product revenues.

If our product candidates fail to meet safety and efficacy endpoints in clinical trials, they will not receive regulatory approval, and we will be unable to market and sell them.

Our product candidates may not prove to be safe and effective in clinical trials and may not meet all of the applicable regulatory requirements needed to receive regulatory approval. As part of the regulatory process, we must conduct clinical trials for each product candidate to demonstrate safety and efficacy to the satisfaction of the FDA and other regulatory authorities abroad. The number and design of clinical trials that will be required may vary depending on factors such as the product candidate, the medical indication being evaluated, the role of other products being evaluated in combination, results of previous trials and the regulations or guidance applicable to any particular product candidate. The design of our clinical trials is based on many assumptions about the expected effect of our product candidates, and if those assumptions prove incorrect, the clinical trials may not demonstrate the safety or efficacy of our product candidates. Preliminary results may not be confirmed upon full analysis of the detailed results of a trial, and prior clinical trial program designs and results may not be predictive of future clinical trial designs or results. Product candidates in later stage clinical trials may fail to show the desired safety and efficacy despite having progressed through initial clinical trials with acceptable endpoints. If our product candidates fail to meet the necessary safety or efficacy endpoints, we may not be able to receive regulatory approval.

If we experience delays in clinical testing, we will be delayed in commercializing our product candidates, our costs may increase and our business may be harmed.

We have not completed the clinical trials necessary to support an application with the FDA for approval to market any of our product candidates. Our current and future clinical trials may be delayed or terminated as a result of many factors, including:


•	delays in initiating clinical trial sites to conduct our clinical trials and reaching agreement on acceptable terms and budgets with prospective clinical trial sites;


•	delays in, or failure to obtain, approval from institutional review boards (IRBs), ethics committees (ECs) or institutional biosafety committees, to begin clinical trials at study sites;


•	imposition of a clinical hold by the FDA or other regulatory authorities, or a decision by the FDA, other regulatory authorities, IRBs, ECs, or recommendation by a data safety monitoring board, to suspend or terminate clinical trials at any time for safety issues or for any other reason;


•	deviations from the trial protocol by clinical trial sites and investigators, or failure to conduct the trial in accordance with regulatory requirements;


•	failure of third parties, such as CROs, to satisfy their contractual duties or meet expected deadlines;


•	delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites;

Table of Contents


•	for clinical trials in selected patient populations, delays in identification and auditing of central or other laboratories and the transfer and validation of assays or tests to be used to identify selected patients;


•	delays in having patients enroll in a trial, complete participation in a trial or return for post-treatment follow-up;


•	delays caused by patients dropping out of a trial due to side effects, disease progression or other reasons;


•	slow patient enrollment because of the perceived risk of contracting HIV because the viral vector we use in LV305 and CMB305 was constructed from genetic sequences, some of which were derived from HIV;


•	withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials; or


•	changes in government regulations or administrative actions or lack of adequate funding to continue the clinical trials.

Any inability of us or our partners to timely complete clinical development could result in additional costs to us or impair our ability to generate product revenues or development, regulatory, commercialization and sales milestone payments and royalties on product sales.

If we encounter difficulties enrolling patients in our clinical trials, our clinical trials could be delayed or otherwise adversely affected.

We may not be able to enroll a sufficient number of patients, or those with required or desired characteristics to complete our clinical trials in a timely manner. Patient enrollment is affected by factors including:


•	the nature and size of the patient population;


•	the number and location of clinical sites we enroll;


•	competition with other companies for clinical sites and patients;


•	design of the trial protocol;


•	eligibility criteria for the study in question;


•	slow enrollment because of the perceived risk by patients of contracting HIV because the viral vector we use in LV305 and CMB305 was constructed from genetic sequences, some of which were derived from HIV;


•	ability to obtain and maintain patient consents; and


•	clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating.

If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay or terminate ongoing or planned clinical trials, either of which would have an adverse effect on our business.

Our product candidates may cause undesirable side effects or have other properties that could halt clinical trials or prevent their regulatory approval, limit the commercial scope of their approved uses, or result in significant negative consequences.

Undesirable side effects caused by our product candidates, alone or in combination with other therapies being studied in our clinical trials, could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. In such an event, we could suspend or terminate our clinical trials or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. Drug-related side effects could affect patient recruitment or

Table of Contents

the ability of enrolled subjects to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by any such products, a number of potentially significant negative consequences could result, including:


•	we may suspend marketing of, or withdraw or recall, such product;


•	regulatory authorities may withdraw approvals of such product;


•	regulatory authorities may require additional warnings on the label;


•	the FDA or other regulatory authorities may issue safety alerts, “Dear Healthcare Provider” letters, press releases or other communications containing warnings about such product;


•	the FDA may require the establishment or modification of a Risk Evaluation and Mitigation Strategy (REMS) or a comparable foreign regulatory authority may require the establishment or modification of a similar strategy that may, for instance, restrict distribution of our products and impose other implementation requirements on us;


•	regulatory authorities may require that we conduct post-marketing studies;


•	we could be sued and held liable for harm caused to subjects or patients; and


•	our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate or class of product candidates or otherwise materially harm the commercial prospects for the product candidate, if approved, and could significantly harm our business, results of operations and prospects.

We may be required to suspend, repeat, redesign or terminate our clinical trials if they are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the trials are not well designed.

Clinical trials must be conducted in accordance with the FDA’s current Good Clinical Practices (cGCP) or other applicable foreign government guidelines. Clinical trials are subject to oversight by the FDA, other foreign governmental agencies and IRBs and ECs at the study sites where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced in accordance with applicable current Good Manufacturing Practices (cGMP). Clinical trials may be suspended by the FDA, other foreign governmental agencies, or us for various reasons, including:


•	deficiencies in the conduct of the clinical trials, including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols;


•	deficiencies in the clinical trial operations or trial sites;


•	the product candidate may have unforeseen adverse side effects;


•	deficiencies in the trial design necessary to adequately demonstrate efficacy;


•	fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments;


•	the product candidate may not appear to be more effective than current therapies; or


•	the quality or stability of the product candidate may fall below acceptable standards.

Our ZVex platform is novel, which may raise new regulatory issues that could delay or make regulatory approval of our product ZVex candidates more difficult.

The process of obtaining required FDA and other regulatory approvals, including foreign approvals, is expensive, often takes many years and can vary substantially based upon the type, complexity and novelty of the products involved. Because our ZVex platform is novel, regulatory agencies lack experience with product candidates such as LV305 and CMB305, which may lengthen the regulatory review process, increase our development costs and delay or prevent commercialization of our ZVex product candidates.

Table of Contents

The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time consuming and inherently unpredictable. Our inability to obtain regulatory approval for our product candidates would substantially harm our business.

The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable but typically takes many years following the commencement of preclinical studies and clinical trials and depends upon numerous factors. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval vary among jurisdictions. We have not obtained regulatory approval for any product candidate, and it is possible that none of our existing product candidates or any future product candidates will ever obtain regulatory approval.

Our product candidates could fail to receive regulatory approval from the FDA or a comparable foreign regulatory authority for many reasons, including:


•	disagreement with the design or implementation of our clinical trials;


•	failure to demonstrate that a product candidate is safe and effective for its proposed indication;


•	failure of clinical trials’ endpoints to meet the level of statistical significance required for approval;


•	failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;


•	disagreement with our interpretation of data from preclinical studies or clinical trials;


•	the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a BLA or other submission or to obtain regulatory approval;


•	failure to obtain approval of the manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies; or


•	changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.

The FDA or a comparable foreign regulatory authority may require more information, including additional preclinical or clinical data to support approval, which may delay or prevent approval and our commercialization plans, or we may decide to abandon the development program. If we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Regulatory authorities’ assessment of the data and results required to demonstrate safety and efficacy can change over time and can be affected by many factors, such as the emergence of new information, including on other products, changing policies and agency funding, staffing and leadership.

Our failure to obtain regulatory approval in international jurisdictions would prevent us from marketing our product candidates outside the United States.

In order to market and sell our products in jurisdictions outside the United States, we must obtain separate marketing approvals for those jurisdictions and comply with their numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The regulatory approval process outside the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, we must secure product reimbursement approvals before regulatory authorities will approve the product for sale in that country. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not ensure approval in any other country, while a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory approval process in others. Also, if regulatory approval for any of our product candidates is granted, it may be later withdrawn. If we fail to comply with the regulatory requirements in international markets and receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed and our business will be adversely

Table of Contents

affected. We may not obtain foreign regulatory approvals on a timely basis, if at all. Our failure to obtain approval of any of our product candidates by regulatory authorities in countries outside of the United States may significantly diminish the commercial prospects of that product candidate and our business prospects could decline.

Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.

Even if we obtain regulatory approval for a product candidate, it will be subject to ongoing regulation by the FDA and comparable foreign regulatory authorities, including requirements governing the manufacture, quality control, further development, labeling, packaging, tracking, storage, distribution, safety surveillance, import, export, advertising, promotion, record-keeping and reporting of safety and other post-market information. The FDA and comparable foreign regulatory authorities continue to closely monitor the safety profile of any product even after approval. If the FDA or comparable foreign regulatory authorities become aware of new safety information after approval of any of our product candidates, they may, among other measures, require labeling changes or establishment of a REMS or similar strategy, impose significant restrictions on a product’s indicated uses or marketing, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.

In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations and standards. If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or us, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If we or the manufacturing facilities for our product candidates, if approved, fail to comply with applicable regulatory requirements, a regulatory agency may:


•	issue warning letters or untitled letters;


•	mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;


•	impose a consent decree, which can include various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;


•	seek an injunction or other court actions to impose civil or criminal penalties or monetary fines;


•	suspend or withdraw regulatory approval;


•	suspend any ongoing clinical trials;


•	refuse to approve pending applications or supplements to applications filed by us;


•	suspend or impose restrictions on operations, including costly new manufacturing requirements; or


•	seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.

The occurrence of any event or penalty described above may inhibit our ability to commercialize our products and generate revenue.

Advertising and promotion of any product candidate that obtains approval in the United States will be heavily scrutinized by the FDA, the Department of Justice, the Department of Health and Human Services’ Office of Inspector General, state attorneys general, members of Congress and the public. Violations, including promotion of our products for unapproved, or off-label, uses, may be subject to enforcement letters, inquiries and investigations, as well as civil and criminal sanctions. Additionally, comparable foreign regulatory authorities will heavily scrutinize advertising and promotion of any product candidate that obtains approval in their respective jurisdictions.

In the United States, engaging in the impermissible promotion of our products for off-label uses can also subject us to false claims litigation under federal and state statutes, which can lead to administrative, civil and criminal penalties, damages, monetary fines, disgorgement, individual imprisonment, exclusion from participation in Medicare, Medicaid and other federal healthcare programs, curtailment or restructuring of our operations and agreements that materially restrict the manner in which a company promotes or distributes drug products. These

Table of Contents

false claims statutes include, but are not limited to, the federal civil False Claims Act, which allows any individual to bring a lawsuit against an individual or entity, including a pharmaceutical or biopharmaceutical company on behalf of the federal government alleging the knowing submission of false or fraudulent claims, or causing to present such false or fraudulent claims, for payment or approval by a federal program such as Medicare or Medicaid. If the government decides to intervene and prevails in the lawsuit, the individual initiating the lawsuit will share in any fines or settlement funds. These False Claims Act lawsuits against pharmaceutical and biopharmaceutical companies have increased significantly in number and breadth, leading to several substantial civil and criminal settlements regarding certain sales practices, including promoting off-label drug uses involving fines in excess of $1.0 billion. This growth in litigation has increased the risk that a pharmaceutical or biopharmaceutical company will have to defend a false claim action, pay settlement fines or restitution, agree to comply with burdensome reporting and compliance obligations, and be excluded from Medicare, Medicaid and other federal and state healthcare programs. If we do not lawfully promote our approved products, if any, we may become subject to such litigation, which would have a material adverse effect on our business, financial condition and results of operations. Promotion prior to marketing approval or for off-label uses may also give rise to criminal prosecution in the European Union.

The FDA’s and other applicable government agencies’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval, and thus the sale and promotion, of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

Our product candidates may not achieve adequate market acceptance among physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

Even if our product candidates receive regulatory approval, they may not gain adequate market acceptance among physicians, patients, healthcare payors and others in the medical community. Our commercial success also depends on coverage and adequate reimbursement and pricing of our product candidates by third-party payors, including government payors, which may be difficult or time-consuming to obtain, may be limited in scope and may not be obtained in all jurisdictions in which we may seek to market our products. The degree of market acceptance of any of our approved product candidates will depend on a number of factors, including:


•	the efficacy and safety profile as demonstrated in clinical trials;


•	the timing of market introduction of the product candidate as well as competitive products;


•	the clinical indications for which the product candidate is approved;


•	acceptance of the product candidate as a safe and effective treatment by physicians, clinics and patients;


•	the potential and perceived advantages of product candidates over alternative treatments;


•	the perceived risk of contracting HIV because the viral vector we use in LV305 and CMB305 was constructed from genetic sequences, some of which were derived from HIV;


•	the cost of treatment in relation to alternative treatments;


•	the availability of coverage and adequate reimbursement and pricing by third-party payors, including government payors and the willingness of patients to pay out-of-pocket in the absence of coverage by third-party payors;


•	the willingness of the target patient population to try new therapies based on new technologies and of physicians to prescribe these therapies;


•	the strength of marketing and distribution support;


•	relative convenience, frequency and ease of administration;


•	the frequency and severity of adverse events;


•	the effectiveness of sales and marketing efforts; and


•	unfavorable publicity relating to the product candidate.

Table of Contents

Our competitors may develop and market products that are less expensive, more effective, safer or reach the market sooner than our product candidates, which may diminish or eliminate the commercial success of any products we may commercialize.

The biotechnology industry is intensely competitive and subject to rapid and significant technological change. We face competition with respect to our current product candidates and will face competition with respect to any future product candidates from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. Many of our competitors have significantly greater financial, technical and human resources. Smaller and early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

Our competitors may obtain regulatory approval of their product candidates more rapidly than we may or may obtain patent protection or other intellectual property rights that limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are more effective, more convenient, more widely used and less costly or have a better safety profile than our products and these competitors may also be more successful than us in manufacturing and marketing their products.

Our competitors will also compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.

Although there are only a few approved in vivo immuno-oncology therapies, there are numerous currently approved therapies to treat cancer. Many of these approved drugs are well-established therapies or products and are widely accepted by physicians, patients and third-party payors. Some of these drugs are branded and subject to patent protection, and others are available on a generic basis. Insurers and other third-party payors may also encourage the use of generic products or specific branded products. We expect that if our product candidates are approved, they will be priced at a significant premium over competitive generic, including branded generic, products. It may be difficult for us to differentiate our products from currently approved therapies, which may adversely impact our business strategy. In addition, many companies are developing new therapeutics, and we cannot predict what the standard of care will be as our product candidates progress through clinical development.

We believe that our ability to successfully compete will depend on, among other things:


•	the efficacy and safety profile of our product candidates, including relative to marketed products and product candidates in development by third parties;


•	the time it takes for our product candidates to complete clinical development and receive marketing approval;


•	the ability to commercialize any of our product candidates that receive regulatory approval;


•	the price of our products, including in comparison to branded or generic competitors;


•	whether coverage and adequate levels of reimbursement are available under private and governmental health insurance plans, including Medicare;


•	the ability to establish, maintain and protect intellectual property rights related to our product candidates;


•	the ability to manufacture commercial quantities of any of our product candidates that receive regulatory approval; and


•	acceptance of any of our product candidates that receive regulatory approval by physicians and other healthcare providers.

If any product candidate is approved but does not achieve an adequate level of acceptance by physicians, hospitals, healthcare payors and patients, we may not generate or derive sufficient revenue from that product candidate and may not become or remain profitable.

Table of Contents

We may encounter delays in our clinical enrollment or other unforeseen challenges because the viral vector used in LV305 and CMB305 was constructed from genetic sequences, some of which were derived from HIV.

The viral vector in our LV305 and CMB305 product candidates was constructed from many genetic sequences, some of which were derived from HIV. While the vector will not cause an HIV infection, patients may test positive for HIV under certain screening tests and perceive the use of our product candidates as putting themselves at risk of contracting HIV. We disclose the origination of the vector in the consent forms used in our trial enrollments, which may cause patients to be deterred from enrolling in our trials resulting in delays in the enrollment for our clinical trials. Furthermore, we may encounter other difficulties, such as lack of market adoption of any commercialized product candidate, due to the public’s negative perception of the risk of contracting HIV.

We will need to develop or acquire additional capabilities in order to commercialize any product candidates that obtain regulatory approval, and we may encounter unexpected costs or difficulties in doing so.

We will need to acquire additional capabilities and effectively manage our operations and facilities to successfully pursue and complete future research, development and commercialization efforts. Currently, we have no experience in preparing applications for marketing approval, commercial-scale manufacturing, managing of large-scale information technology systems or managing a large-scale distribution system. We will need to add personnel and expand our capabilities, which may strain our existing managerial, operational, regulatory compliance, financial and other resources. To do this effectively, we must:


•	train, manage and motivate a growing employee base;


•	accurately forecast demand for our products; and


•	expand existing operational, financial and management information systems.

We plan to conduct process development activities to support late stage development and commercialization activities and seek approval of our product candidates. Should we not receive timely approval of our production process, our ability to produce the immunotherapy products following regulatory approval for sale could be delayed, which would further delay the period of time when we would be able to generate revenues from the sale of such products, if we are even able to generate revenues at all.

We have no internal sales or marketing capability and may rely on alliances with others possessing such capabilities to commercialize our products successfully.

We intend to market our product candidates, if and when such product candidates are approved by the FDA or comparable foreign regulatory authorities, either directly or through other strategic alliances and distribution arrangements with third parties. There can be no assurance that we will be able to enter into third-party marketing or distribution arrangements on advantageous terms or at all. To the extent that we do enter into such arrangements, we will be dependent on our marketing and distribution partners. In entering into third-party marketing or distribution arrangements, we expect to incur significant additional expense. If we are unable to enter into such arrangements on acceptable terms, or at all, we may not be able to successfully commercialize any of our product candidates that receive regulatory approval. Depending on the nature of the third party relationship, we may have little control over such third parties, and any of these third parties may fail to devote the necessary resources and attention to sell, market and distribute our products effectively. If we are not successful in commercializing our product candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer and we may incur significant additional losses.

We depend on key personnel for our continued operations and future success and a loss of certain key personnel could significantly hinder our ability to move forward with our business plan.

To succeed, we must recruit, retain, manage and motivate qualified clinical, scientific, technical and management personnel, and we face significant competition for experienced personnel. If we do not succeed in attracting and retaining qualified personnel, particularly at the management level, it could adversely affect our ability to execute our business plan and harm our operating results. In particular, the loss of one or more of our executive officers could be detrimental to us if we cannot recruit suitable replacements in a timely manner. The competition for qualified personnel in the immuno-oncology field is intense and as a result, we may be unable to continue to attract

Table of Contents

and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.

Many of the other biopharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. If we are unable to continue to attract and retain high-quality personnel, the rate and success at which we can discover and develop product candidates and our business will be limited.

Even if we commercialize a product candidate, it or any other product candidates that we develop may become subject to unfavorable pricing regulations, third-party coverage or reimbursement practices or healthcare reform initiatives, which could harm our business.

Our ability to commercialize any product candidates successfully will depend in part on the extent to which coverage and adequate reimbursement for our product candidates will be available from government health administration authorities, private health insurers and other organizations. The laws that govern marketing approvals, pricing and reimbursement for new drug products vary widely from country to country. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If coverage and reimbursement are not available or reimbursement is available only to limited levels, we may not successfully commercialize any product candidate for which we obtain marketing approval.

Current and future legislation may increase the difficulty and cost for us to commercialize our drug candidates and affect the prices we may obtain.

In the United States and many foreign jurisdictions, the legislative landscape continues to evolve. There have been a number of enacted or proposed legislative and regulatory changes affecting the healthcare system and pharmaceutical and biopharmaceutical industries that could, among other things, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidate for which we obtain marketing approval.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or, collectively, the Affordable Care Act. Among other things, the Affordable Care Act expanded manufacturers’ rebate liability under the Medicaid Drug Rebate Program by increasing the minimum rebate for both branded and generic drugs, effective the first quarter of 2010 and revising the definition of “average manufacturer price,” or AMP, for calculating and reporting purposes. This could increase the amount of Medicaid drug rebates manufacturers are required to pay to states. The Affordable Care Act further created a separate AMP for certain categories of drugs generally provided in non-retail outpatient settings. The legislation also expanded manufacturers' rebate liability under the Medicaid program from fee-for-service Medicaid utilization, to include utilization of Medicaid managed care organization as well and created an alternative rebate formula for certain new formulations of certain existing products that is intended to increase the amount of rebates due on those drugs. Federal law requires that any company that participates in the Medicaid rebate program also participate in the Public Health Service’s 340B drug pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid and Medicare Part B. The 340B drug pricing program requires participating manufacturers to agree to charge statutorily-defined covered entities no more than the 340B “ceiling price” for the manufacturer’s covered outpatient drugs. The Affordable Care Act expanded the types of entities eligible to receive discounted 340B pricing. In addition, because 340B pricing is determined based on AMP and Medicaid drug rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discounts to increase.

The Affordable Care Act also imposes a significant annual fee on companies that manufacture or import branded prescription drug products. Furthermore, as of 2011, this law changed the Medicare Part D coverage gap discount program by requiring manufacturers to provide a 50% point-of-sale-discount off the negotiated price of applicable brand drugs to certain eligible beneficiaries during their coverage gap period as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D. On February 1, 2016, the Centers for Medicare and Medicaid

Table of Contents

Services, the federal agency that administers the Medicaid Drug Rebate Program, issued final regulations to implement the changes to the Medicaid Drug Rebate program under the Affordable Care Act. These regulations become effective on April 1, 2016.

Additionally, the Affordable Care Act created a new licensure framework for follow-on biologic products. The Affordable Care Act also created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with providing funding for such research. Additionally, the Affordable Care Act created the Independent Payment Advisory Board, which has the authority to recommend certain changes to the Medicare program that could result in reduced payments for prescription drugs and those recommendations could have the effect of law, even if Congress does not act on the recommendation.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, in August 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee on Deficit Reduction did not achieve a targeted deficit reduction. The legislation’s automatic reduction to several government programs was triggered. This includes aggregate reductions to Medicare payments to providers, on average, of up to 2% through 2025. The Bipartisan Budget Act of 2013, enacted on December 26, 2013, and Public Law 113-82, enacted on February 15, 2014, expanded sequestration through fiscal year 2024. These cuts will remain in effect unless Congress repeals or amends the reductions in future legislation. Continuation of sequestration or enactment of other reductions in Medicare reimbursement for drugs could affect our ability to achieve a profit on any candidate products that are approved for marketing.

Moreover, the recently enacted Drug Supply Chain Security Act imposes new obligations on manufacturers of pharmaceutical products, related to product tracking and tracing. Among the requirements of this new legislation, manufacturers will be required to provide certain information regarding drug products to individuals and entities to which product ownership is transferred, label drug product with a product identifier, and keep certain records regarding the drug product. The transfer of information to subsequent product owners by manufacturers will eventually be required to be done electronically. Manufacturers will also be required to verify that purchasers of the manufacturers’ products are appropriately licensed. Further, manufacturers will have drug product investigation, quarantine, disposition, and notification responsibilities related to counterfeit, diverted, stolen, and intentionally adulterated products, as well as products that are the subject of fraudulent transactions or that are otherwise unfit for distribution such that they would be reasonably likely to result in serious health consequences or death. In the European Union, the Falsified Medicines Directive imposes similar requirements which are expected to add materially to product costs.

In addition to federal reforms, individual states have become increasingly aggressive in passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and marketing cost disclosure and transparency measures, and designed to encourage importation from other countries and bulk purchasing. Legally-mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce ultimate demand for our products or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.

In addition, given recent federal and state government initiatives directed at lowering the total cost of healthcare, Congress and state legislatures will likely continue to focus on healthcare reform, the cost of prescription drugs and biologics and the reform of the Medicare and Medicaid programs. While we cannot predict the full outcome of any such legislation, it may result in decreased reimbursement for drugs and biologics, which may further exacerbate industry-wide pressure to reduce prescription drug prices. This could harm our ability to generate revenues. In addition, legislation has been introduced that, if enacted, would permit more widespread importation or re-importation of pharmaceutical products from foreign countries into the United States, including from countries where the products are sold at lower prices than in the United States. Such legislation, or similar regulatory changes, could put competitive pressure on our ability to profitably price our products, which, in turn, could adversely affect

Table of Contents

our business, results of operations, financial condition and prospects. Alternatively, in response to legislation such as this, we might elect not to seek approval for or market our products in foreign jurisdictions in order to minimize the risk of re-importation, which could also reduce the revenue we generate from our product sales.

We expect that the Affordable Care Act, as well as other healthcare reform measures that have and may be adopted in the future, may result in more rigorous coverage criteria and exert downward pressure on the price that we receive for any approved product, and could seriously harm our future revenues. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate sufficient revenue, attain profitability or successfully commercialize our products. The full impact of these new laws, as well as laws and other reform measures that may be proposed and adopted in the future, remains uncertain, but may continue the downward pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs, which could have a material adverse effect on our business operations.

Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of our product candidates.

We face an inherent risk of product liability exposure related to the testing of our product candidates in human trials and may face greater risk if we commercialize any products that we develop. Product liability claims may be brought against us by subjects enrolled in our trials, patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against such claims, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:


•	decreased demand for our products;


•	termination of clinical trial sites or entire trial programs;


•	injury to our reputation and significant negative media attention;


•	withdrawal of trial participants;


•	significant costs to defend the related litigation;


•	substantial monetary awards to trial subjects or patients;


•	diversion of management and scientific resources from our business operations; and


•	the inability to commercialize any products that we may develop.

While we currently hold $5.0 million in trial liability insurance coverage, this may not adequately cover all liabilities that we may incur. We also may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise in the future. We intend to expand our insurance coverage for products to include the sale of commercial products if we obtain marketing approval for our product candidates, but we may be unable to obtain commercially reasonable product liability insurance. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business and financial condition.

Our relationships with healthcare providers, physicians, customers and third-party payors will be subject to applicable transparency, anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.

Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our future arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute our products for which we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations, include, but are not limited to, the following:


•	the Physician Payment Sunshine Act (federal Open Payments program), created under Section 6002 of the Affordable Care Act and its implementing regulations, requires manufacturers of drugs, devices,

Table of Contents

biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the U.S. Department of Health and Human Services information related to “payments or other transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to the U.S. Department of Health and Human Services ownership and investment interests held by physicians (as defined above) and their immediate family members;

•

the federal Anti-Kickback Statute prohibits persons from, among other things, knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, the referral of an individual for the furnishing or arranging for the furnishing, or the purchase, lease or order, or arranging for or recommending purchase, lease or order, any good or service for which payment may be made under a federal healthcare program such as Medicare and Medicaid;


•	the federal false claims laws impose civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

•

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal liability for knowingly and willfully executing a scheme to defraud any healthcare benefit program, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense, or knowingly and willfully making false statements relating to healthcare matters;

•

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and its implementing regulations, also imposes obligations on certain covered entity health care providers, health plans, and health care clearinghouses as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;


•	analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers;


•	state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers;


•	state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and


•	state and foreign laws that govern the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, that person or entity may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.

Risks Related to our Dependence on Third Parties

Table of Contents

We rely on the assistance of third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties, comply with budgets and other financial obligations or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates in a timely or cost-effective manner.

We rely, and expect to continue to rely, on the assistance of third-party CROs to conduct our clinical trials. Because we do not conduct our own clinical trials, we must rely on the efforts of others and cannot always control or accurately predict the timing of such trials, the costs associated with such trials or the procedures that are followed for such trials. We do not anticipate significantly increasing our personnel in the foreseeable future and therefore, expect to continue to rely on the assistance of third parties to conduct our future clinical trials. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they do not carry out the trials in accordance with budgeted amounts, if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical protocols or for other reasons, or if they fail to maintain compliance with applicable government regulations and standards, our clinical trials may be extended, delayed or terminated or may become prohibitively expensive, and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates.

We currently depend on third parties for the development and commercialization of our non-cancer treatment product candidates.

We have entered into exclusive licenses and development agreements with MedImmune pursuant to which we have granted MedImmune exclusive licenses to develop and commercialize product candidates relating to certain infectious diseases. We also have entered into an exclusive license agreement with Sanofi for use of our GLAAS discovery platform to develop therapeutic agents to treat peanut allergy and a collaboration agreement with Sanofi Pasteur for the development of a herpes simplex virus immune therapy. We cannot control whether or not these partners will devote sufficient time and resources to the ongoing clinical and preclinical programs or whether these partners will fulfill their obligations under the agreements. The product candidates developed pursuant to these agreements may not be scientifically, medically or commercially successful.

In addition, we could be adversely affected by:


•	our partners’ failure to timely perform their obligations under our agreements;


•	our partners’ failure to timely or fully develop or effectively commercialize the product candidates; and


•	a material contractual dispute between us and our partners.

Any of the foregoing could adversely impact the likelihood and timing of any milestone or royalty payments we are eligible to receive from MedImmune, Sanofi or Sanofi Pasteur, and could result in a material adverse effect on our business, results of operations and prospects and would likely cause our stock price to decline.

We may not succeed in establishing and maintaining additional development collaborations, which could adversely affect our ability to develop and commercialize product candidates.

In addition to our current agreements with MedImmune, Sanofi and Sanofi Pasteur, a part of our strategy is to enter into additional product development collaborations in the future, including collaborations with major biotechnology or pharmaceutical companies. We face significant competition in seeking appropriate development partners and the negotiation process is time-consuming and complex. Moreover, we may not succeed in our efforts to establish a development collaboration or other alternative arrangements for any of our other existing or future product candidates and programs because our research and development pipeline may be insufficient, our product candidates and programs may be deemed to be at too early a stage of development for collaborative effort and third parties may not view our product candidates and programs as having the requisite potential to demonstrate safety and efficacy. Even if we are successful in our efforts to establish new development collaborations, the terms that we agree upon may not be favorable to us and we may not be able to maintain such development collaborations if, for example, development or approval of a product candidate is delayed or sales of an approved product candidate are disappointing.

Table of Contents

Moreover, if we fail to establish and maintain additional development collaborations related to our product candidates:


•	the development of certain of our current or future product candidates may be impaired or delayed;


•	our cash expenditures related to development of certain of our current or future product candidates would increase significantly and we may need to seek additional financing;


•	we may be required to hire additional employees or otherwise devote resources and develop expertise, such as sales and marketing expertise, for which we have not budgeted; and


•	we will bear all of the risk related to the development of any such product candidates.

If we enter into one or more collaborations, we may be required to relinquish important rights to and control over the development of our product candidates or otherwise be subject to unfavorable terms.

Any future collaborations we enter into could subject us to a number of risks, including:


•	we may not be able to control the amount and timing of resources that our collaborators devote to the development or commercialization of our product candidates;


•	collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing;


•	collaborators may not pursue further development and commercialization of products resulting from the strategic partnering arrangement or may elect to discontinue research and development programs;


•	collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products;


•	disputes may arise between us and our collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources;


•	collaborators may experience financial difficulties;


•	collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation;


•	business combinations or significant changes in a collaborator’s business strategy may also adversely affect a collaborator’s willingness or ability to complete its obligations under any arrangement;


•	collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and


•	collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates.

We have no internal manufacturing capacity and anticipate continued reliance on third-party manufacturers for the development and commercialization of our products.

We do not currently operate manufacturing facilities for clinical or commercial production of our product candidates. We have limited experience in manufacturing our product candidates, and we lack the resources and the capabilities to do so on a clinical or commercial scale. We do not intend to develop facilities for the manufacture of products for clinical trials or commercial purposes in the foreseeable future. We rely on CMOs to produce bulk drug substance and formulated drug products as well as fill/finish required for our clinical trials. We plan to continue to rely upon CMOs and, potentially, collaboration partners, to manufacture commercial quantities of our product candidates. We do not have a long-term commercial supply arrangement in place with any of our contract manufacturers. If we need to identify additional manufacturers, we may experience delay and additional cost. We have not secured commercial supply agreements with any contract manufacturers and can give no assurance that we will enter commercial supply agreements with any contract manufacturers on favorable terms or at all.

Table of Contents

Our contract manufacturers’ failure to achieve and maintain high manufacturing standards, in accordance with applicable regulatory requirements, or the incidence of manufacturing errors, could result in patient injury or death, product shortages, product recalls or withdrawals, delays or failures in product testing or delivery, cost overruns or other problems that could seriously harm our business. Contract manufacturers often encounter difficulties involving production yields, quality control and quality assurance, as well as shortages of qualified personnel. Our existing manufacturers and any future contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business. In the event of a natural disaster, business failure, strike or other difficulty, we may be unable to replace CMOs in a timely manner and the production of our product candidates would be interrupted, resulting in delays and additional costs.

Manufacturers have limited or no experience producing our product candidates and may not produce our vectors and product candidates at the quality, quantities and timing needed to support clinical trials or commercialization.

The components of our product candidates are difficult to make and require technical expertise. No manufacturer currently has the experience or ability to produce our vectors and product candidates at commercial levels. Our CMOs may encounter technical or scientific issues related to manufacturing or process development that we may be unable to resolve in a timely manner or with available funds, which could delay our clinical trials.

We currently obtain several components of our product candidates, such as the full length NY-ESO-1 protein in CMB305, from a single source. The loss of our current CMO could result in manufacturing delays for the component substitution, and we may need to accept changes in terms or price from our existing supplier in order to avoid such delays. If we utilize an alternative source, we may be required to demonstrate comparability of the drug product before releasing the product for clinical use.

Risks Related to Intellectual Property

If we are unable to obtain or protect intellectual property rights, we may not be able to compete effectively in our market.

Our success depends in significant part on our and our licensors’ and licensees’ ability to establish, maintain and protect patents and other intellectual property rights and operate without infringing the intellectual property rights of others. We have filed patent applications both in the United States and in foreign jurisdictions to obtain patent rights to inventions we have discovered. We have also licensed from third parties rights to patent portfolios. Some of these licenses give us the right to prepare, file and prosecute patent applications and maintain and enforce patents we have licensed, and other licenses may not give us such rights.

The patent prosecution process is expensive and time-consuming, and we and our current or future licensors and licensees may not be able to prepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we or our licensors or licensees will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is too late to obtain patent protection on them. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from or license to third parties and are reliant on our licensors or licensees. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. If our current or future licensors or licensees fail to establish, maintain or protect such patents and other intellectual property rights, such rights may be reduced or eliminated. If our licensors or licensees are not fully cooperative or disagree with us as to the prosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our and our current or future licensors’ or licensees’ patent rights are highly uncertain. Our and our licensors’ or licensees’ pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. The patent examination process may

Table of Contents

require us or our licensors or licensees to narrow the scope of the claims of our or our licensors’ or licensees’ pending and future patent applications, which may limit the scope of patent protection that may be obtained. We may be required to disclaim part or all of the term of certain patents or part or all of the term of certain patent applications.

There are no assurances that our patent counsel, lawyers or advisors have given us correct advice or counsel. Opinions from such patent counsel or lawyers may not be correct or based on incomplete facts. There may be prior art of which we are not aware that may affect the validity or enforceability of a patent claim. There also may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim. Even if patents do successfully issue and even if such patents cover our product candidates, third parties may challenge their validity, enforceability or scope. No assurance can be given that if challenged, our patents would be declared by a court to be valid or enforceable or that even if found valid and enforceable, a competitor’s technology or product would be found by a court to infringe our patents. The possibility exists that others will develop products which have the same effect as our products on an independent basis which do not infringe our or our licensor’s patents or other intellectual property rights, or will design around the claims of patents that we have had issued that cover our products. We may analyze patents or patent applications of our competitors that we believe are relevant to our activities, and consider that we are free to operate in relation to our product candidates, but our competitors may achieve issued claims, including in patents we consider to be unrelated, which block our efforts or may potentially result in our product candidates or our activities infringing such claims. Our and our licensors’ or licensees’ patent applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications, and then only to the extent the issued claims cover the technology. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from biosimilar or generic products. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. We expect to seek extensions of patent terms where these are available in any countries where we are prosecuting patents. However, the applicable authorities, including the U.S. Patent and Trademark Office (USPTO) and FDA in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may take advantage of our investment in development and trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting, enforcing and defending patents on product candidates in all countries throughout the world is prohibitively expensive, and our or our current or future licensors’ intellectual property rights in some countries outside the United States can be less extensive than those in the United States. Moreover, the standards applied by the USPTO and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology patents. In addition, even where patent protection is obtained, third-party competitors may challenge our patent claims in the various patent offices.

In February 2013, a third party filed an opposition at the EPO requesting revocation of European Patent No. 2068918 directed to GLA vaccine formulations and uses. This patent is licensed to us by IDRI and is an important part of our proprietary GLAAS platform in Europe. We are vigorously defending the grant of this patent. The oral proceedings for this opposition were held in September 2016. At the oral proceedings, the EPO maintained the patent in an amended form, which continues to cover the GLAAS products being developed by us and our licensees. We and the opponent may appeal this outcome, and we cannot be certain that this patent will be maintained by the

Table of Contents

EPO at an appeal hearing, or if any reduction to the scope would adequately cover our products. Revocation of this patent, or maintenance of an amended patent with inadequate coverage, could impair our ability to prevent competition from third parties in Europe, which could have an adverse impact on our business. The outcome of an appeal to this proceeding would not be known for several years.

The laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. For example, some of our patents relate to treatment methods or dosing regimens that are not considered patentable subject matter in some foreign countries. Consequently, we and our licensors may not be able to prevent third parties from practicing our and our licensors’ inventions in countries outside the United States, or from selling or importing products made using our and our licensors’ inventions in and into the United States or other jurisdictions. Competitors may use our and our licensors’ technologies in jurisdictions where we have not obtained patent protection to develop their own products and may export otherwise infringing products to territories where we and our licensors have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidates and our and our licensors’ patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us and our licensors to stop the infringement of our and our licensors’ patents or marketing of competing products in violation of our and our licensors’ proprietary rights generally. Proceedings to enforce our and our licensors’ patent rights in foreign jurisdictions could result in substantial costs and divert our attention from other aspects of our business, could put our and our licensors’ patents at risk of being invalidated or interpreted narrowly and our and our licensors’ patent applications at risk of not issuing and could provoke third parties to assert claims against us or our licensors. We or our licensors may not prevail in any lawsuits that we or our licensors initiate and the damages or other remedies awarded, if any, may not be commercially meaningful.

The requirements for patentability may differ in certain countries, particularly developing countries. Furthermore, generic drug manufacturers or other competitors may challenge the scope, validity or enforceability of our or our licensors’ patents, requiring us or our licensors to engage in complex, lengthy and costly litigation or other proceedings. Generic drug manufacturers may develop, seek approval for, and launch generic versions of our products. Certain countries in Europe and developing countries, including China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we and our licensors may have limited remedies if patents are infringed or if we or our licensors are compelled to grant a license to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our and our licensors’ efforts to enforce intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.

As is the case with other biotechnology and pharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involve technological and legal complexity, and obtaining and enforcing biopharmaceutical patents is costly, time-consuming, and inherently uncertain. The Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our and our licensors’ ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that may weaken our and our licensors’ ability to obtain new patents or to enforce existing patents and patents we and our licensors or collaborators may obtain in the future.

Table of Contents

Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our and our licensors’ patent applications and the enforcement or defense of our or our licensors’ issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation. The USPTO recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our or our licensors’ patent applications and the enforcement or defense of our or our licensors’ issued patents, all of which could have a material adverse effect on our business and financial condition.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors or collaborators fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which would have a material adverse effect on our business.

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-consuming and unsuccessful and have a material adverse effect on the success of our business.

Third parties may infringe our or our licensors’ or collaborators’ patents or misappropriate or otherwise violate our or our licensors’ or collaborators’ intellectual property rights. In the future, we or our licensors or collaborators may initiate legal proceedings to enforce or defend our or our licensors’ or collaborators’ intellectual property rights, to protect our or our licensors’ or collaborators’ trade secrets or to determine the validity or scope of intellectual property rights we own or control. Also, third parties may initiate legal proceedings against us or our licensors or collaborators to challenge the validity or scope of intellectual property rights we own or control. The proceedings can be expensive and time-consuming and many of our or our licensors’ or collaborators’ adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we or our licensors or collaborators can. Accordingly, despite our or our licensors’ or collaborators’ efforts, we or our licensors or collaborators may not prevent third parties from infringing upon or misappropriating intellectual property rights we own or control, particularly in countries where the laws may not protect those rights as fully as in the United States. Litigation could result in substantial costs and diversion of management resources, which could harm our business and financial results. In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue for various reasons, including on the grounds that our or our licensors’ or collaborators’ patents do not cover the technology in question. An adverse result in any litigation proceeding could result in one or more of our or our licensors’ or collaborators’ patents being invalidated, held unenforceable or interpreted narrowly.

Third-party preissuance submission of prior art to the USPTO, or opposition, derivation, reexamination, inter partes review or interference proceedings, or other preissuance or post-grant proceedings in the United States or other jurisdictions provoked by third parties or brought by us or our licensors or collaborators may be instituted with respect to our or our licensors’ or collaborators’ patents or patent applications. An unfavorable outcome of a third-party challenge to our owned or licensed patents or patent applications could include a determination of unpatentability, invalidity or a narrowing amendment to our patents. An unfavorable outcome in an interference

Table of Contents

proceeding that awards our patent claims to a third party could require us or our licensors or collaborators to cease using related technology. Our business could be harmed if the prevailing party does not offer us or our licensors or collaborators a license on commercially reasonable terms or at all. Even if we or our licensors or collaborators obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us or our licensors or collaborators. In addition, if the breadth or strength of protection provided by our or our licensors’ or collaborators’ patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop or commercialize current or future product candidates. Even if we successfully defend such litigation or proceeding, we may incur substantial costs and it may distract our management and other employees. We could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent.

For example, in February 2013, a third party filed an opposition at the EPO requesting revocation of European Patent No. 2068918 directed to GLA vaccine formulations and uses. This patent is licensed to us by IDRI and is an important part of our proprietary GLAAS platform in Europe. We are vigorously defending the grant of this patent. The oral proceedings for this opposition were held in September 2016. At the oral proceedings, the EPO maintained the patent in an amended form, which continues to cover the GLAAS products being developed by us and our licensees. We and the opponent may appeal this outcome, and we cannot be certain that this patent will be maintained by the EPO at an appeal hearing, or if any reduction to the scope would adequately cover our products. Revocation of this patent, or maintenance of an amended patent with inadequate coverage, could impair our ability to prevent competition from third parties in Europe, which could have an adverse impact on our business. The outcome of an appeal to this proceeding would not be known for several years.

An unfavorable outcome could require us or our licensors, collaborators or suppliers to cease using the related technology or developing or commercializing our product candidates, or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us or our licensors, collaborators or suppliers a license on commercially reasonable terms or at all. Even if we or our licensors, collaborators or suppliers obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us or our licensors, collaborators or suppliers. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our drug candidates or force us to cease some of our business operations, which could materially harm our business.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock.

If we breach the agreements under which third parties have licensed intellectual property rights to us, we could lose the ability to use certain of our technologies or continue the development and commercialization of our product candidates.

Our commercial success depends upon our ability to identify, test, develop, manufacture, market and sell product candidates and use our and our licensors’ or collaborators’ proprietary technologies without infringing the proprietary rights of third parties. Pursuant to the license agreement with IDRI, we obtained licensing rights to certain GLA technologies, which we utilize in the development of our GLA product candidates. Similarly, under our licenses with Caltech and UNC Chapel Hill, we obtained rights to certain patents which we utilize in the development of our ZVex based product candidates. If we fail to comply with the obligations under the license agreements, including a material breach by us, certain insolvency events or failure to diligently pursue the development of products, the other party may have the right to terminate the license agreements. In addition, IDRI may terminate our licenses in the event we challenge the validity, enforceability or scope of any patent licensed to us by IDRI. In the event one of these licenses is terminated, we will not be able to develop, manufacture, market or sell any product candidate that is covered by the license agreement. Such an occurrence would adversely affect our ability to continue to develop our current product candidates as well as potential future product candidates. Termination of any of these licenses or reduction or elimination of our rights under any license agreement may

Table of Contents

result in our having to negotiate a new or reinstated agreement, which may not be available to us on equally favorable terms, or at all, or cause us to lose our rights under the license agreement, including our rights to intellectual property or technology important to our development programs.

We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

Many of our employees, including our senior management, were previously employed at universities or at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed confidential information or intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defending against claims of misappropriation of trade secrets could be costly and time consuming, regardless of the outcome. If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel or sustain damages. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to commercialize our technology or products. Such a license may not be available on commercially reasonable terms or at all. Even if we successfully prosecute or defend against such claims, litigation could result in substantial costs and distract management.

Our inability to protect our confidential information and trade secrets would harm our business and competitive position.

In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts both within and outside the United States may be less willing or unwilling to protect trade secrets. If a competitor lawfully obtained or independently developed any of our trade secrets, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

Risks Related to Ownership of Our Common Stock

The market price of our stock may be volatile, and you could lose all or part of your investment.

The trading price of our common stock has been and is likely to continue to be highly volatile and subject to wide fluctuations in response to various factors, some of which we cannot control. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this report, these factors include:


•	the success of competitive products or technologies;


•	regulatory actions with respect to our products or our competitors’ products;


•	actual or anticipated changes in our growth rate relative to our competitors;


•	announcements by us or our competitors of significant acquisitions, strategic collaborations, joint ventures, collaborations or capital commitments;


•	results of clinical trials of our product candidates or those of our competitors;

Table of Contents


•	regulatory or legal developments in the United States and other countries;


•	developments or disputes concerning patent applications, issued patents or other proprietary rights;


•	the recruitment or departure of key personnel;


•	the level of expenses related to any of our product candidates or clinical development programs;


•	the results of our efforts to in-license or acquire additional product candidates or products;


•	actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;


•	variations in our financial results or those of companies that are perceived to be similar to us;


•	fluctuations in the valuation of companies perceived by investors to be comparable to us;


•	share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;


•	announcement or expectation of additional financing efforts;


•	sales of our common stock by us, our officers, directors, or their affiliated funds or our other stockholders;


•	changes in the structure of healthcare payment systems;


•	market conditions in the pharmaceutical and biotechnology sectors;


•	rumors or new announcements by third parties, including competitors; and


•	general economic, industry and market conditions.

In addition, the stock market in general, and The NASDAQ Global Market (NASDAQ) and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. The realization of any of the above risks or any of a broad range of other risks, including those described in this “Risk Factors” section, could have a dramatic and material adverse impact on the market price of our common stock.

Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

As of December 31, 2015, our executive officers, directors and holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 71% of our voting stock. These stockholders may have the ability to control us through this ownership position and be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders. The interests of this group of stockholders may not always coincide with your interests or the interests of other stockholders and they may act in a manner that advances their best interests and not necessarily those of other stockholders, including seeking a premium value for their common stock, and might affect the prevailing market price for our common stock.

We are an “emerging growth company” as defined in the JOBS Act and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors and adversely affect the market price of our common stock.

For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various requirements applicable to public companies that are not “emerging growth companies” including:


•	the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting;


•	the “say on pay” provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding

Table of Contents

shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Protection Act, or Dodd-Frank Act, and some of the disclosure requirements of the Dodd-Frank Act relating to compensation of our chief executive officer;


•	the requirement to provide detailed compensation discussion and analysis in proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation; and


•	any rules that the Public Company Accounting Oversight Board may adopt requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.

We may take advantage of these exemptions until we are no longer an “emerging growth company.” We would cease to be an “emerging growth company” upon the earliest of: (i) the first fiscal year following the fifth anniversary of our initial public offering in July 2014; (ii) the first fiscal year after our annual gross revenues are $1.0 billion or more; (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or (iv) as of the end of any fiscal year in which the market value of our common stock held by non-affiliates exceeded $700.0 million as of the end of the second quarter of that fiscal year.

We currently take advantage of some, but not all, of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an “emerging growth company.” For example, we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act. Our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of our internal control over financial reporting so long as we qualify as an “emerging growth company,” which may increase the risk that material weaknesses or significant deficiencies in our internal control over financial reporting go undetected. Likewise, so long as we qualify as an “emerging growth company,” we may elect not to provide you with certain information, including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required to provide in filings we make with the SEC which may make it more difficult for investors and securities analysts to evaluate our company. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile and may decline.

We incur significant increased costs as a result of operating as a public company, and our management devotes substantial time to meet compliance obligations.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. We are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act as well as rules subsequently implemented by the SEC and NASDAQ that impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and financial condition. In addition, on July 21, 2010, the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation-related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas such as “say on pay” and proxy access. The requirements of these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and may also place undue strain on our personnel, systems and resources. Our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud .

We are subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures

Table of Contents

or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

Our common stock is thinly traded and in the future, may continue to be thinly traded, and our stockholders may be unable to sell at or near asking prices or at all if they need to sell their shares to raise money or otherwise desire to liquidate such shares.

To date, we have a low volume of daily trades in our common stock on NASDAQ. For example, the average daily trading volume in our common stock on NASDAQ during the nine months ended September 30, 2016 was approximately 104,000 shares per day. Our stockholders may be unable to sell their common stock at or near their asking prices or at all, which may result in substantial losses to our stockholders.

As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline significantly in the event that a large number of our common stock are sold on the market without commensurate demand, as compared to a seasoned issuer that could better absorb those sales without adverse impact on its share price.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would benefit our stockholders and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove our current management. These provisions include:


•	authorizing the issuance of “blank check” preferred stock, the terms of which we may establish and shares of which we may issue without stockholder approval;


•	prohibiting cumulative voting in the election of directors, which would otherwise allow for less than a majority of stockholders to elect director candidates;


•	prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;


•	eliminating the ability of stockholders to call a special meeting of stockholders; and


•	establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at stockholder meetings.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, who are responsible for appointing the members of our management. Because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL, which may discourage, delay or prevent someone from acquiring us or merging with us whether or not it is desired by or

Table of Contents

beneficial to our stockholders. Under the DGCL, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction. Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change of control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Table of Contents

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Use of Proceeds

We completed the IPO of our common stock pursuant to a Registration Statement on Form S-1 (File No. 333-196979), which was declared effective by the SEC on July 23, 2014. The net offering proceeds to us, after deducting underwriting discounts and commissions and offering expenses, were approximately $57.8 million.

As of September 30, 2016 , we have used approximately $52.3 million of the net offering proceeds primarily to fund clinical development of our product candidates, litigation, legal and administration expenses to fund the growth of our operations.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index, which is incorporated herein by reference.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




		Immune Design Corp.
		(Registrant)

Date:	November 9, 2016	/s/ Carlos Paya, M.D., Ph.D.
		Carlos Paya, M.D., Ph.D. President and Chief Executive Officer (Principal Executive Officer)

Date:	November 9, 2016	/s/ Stephen Brady
		Stephen Brady Executive Vice President, Strategy & Finance (Principal Accounting Officer and Principal Financial Officer)

Table of Contents

EXHIBIT INDEX



Exhibit No.	Description

3.1	Amended and Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, as filed with the SEC on July 29, 2014).
3.2	Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-1 (File No. 333-196979), as filed with the SEC on June 23, 2014).
4.1	Specimen Common Stock Certificate of the Company (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (File No. 333-196979), as filed with the SEC on June 23, 2014).
10.1†	License Agreement, by and between the Company and Aventis Inc., dated August 6, 2014.
10.2	Executive Employment Agreement, by and between the Company and Sergey Yurasov, M.D., Ph.D., dated September 30, 2016.
31.1	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
31.2	Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.
32.1*	Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial statements from the Quarterly Report on Form 10-Q of Immune Design Corp. for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss); (iii) the Condensed Consolidated Statements of Cash Flow; and (iv) Notes to Condensed Consolidated Financial Statements.

_____________

Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.


†	Registrant has requested confidential treatment for certain portions of this exhibit. This exhibit omits the information subject to this confidentiality request. Omitted portions have been filed separately with the SEC.

*** INDICATES MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

CONFIDENTIAL – EXECUTION COPY

LICENSE AGREEMENT

BETWEEN

IMMUNE DESIGN CORP.

AND

AVENTIS INC.

DATED AS OF AUGUST 6, 2014

TABLE OF CONTENTS

Page



PRELIMINARY STATEMENT			1
1.	DEFINITIONS		2
2.	GRANT OF LICENSES; EXCLUSIVITY		13
	2.1	Licenses to Sanofi	13
	2.2	Sublicensing by Sanofi	13
	2.3	***	14
	2.4	Reservation of Rights; No Implied Rights.	16
	2.5	Exclusivity	16
	2.6	Rights to IMDZ	16
3.	ALLIANCE MANAGERS		18
4.	OWNERSHIP; PATENT PROTECTION		18
	4.1	Ownership of Sanofi Technology	18
	4.2	Patent Filing, Prosecution and Maintenance of Patents	18
5.	IDRI LICENSE AGREEMENT		19
	5.1	Representations and Warranties of IMDZ with respect to the IDRI License Agreement	19
	5.2	IMDZ Covenants with respect to the IDRI License Agreement	19
	5.3	Sanofi Covenants with respect to the IDRI License Agreement	20
6.	REGULATORY APPROVAL AND COMMERCIALIZATION		20
	6.1	Efforts by Sanofi.	20
	6.2	Reporting	21
	6.3	Control and Ownership of Regulatory Filings	21
	6.4	Regulatory Cooperation of IMDZ	22
	6.5	Global Safety Database; SDEA Agreement	22
	6.6	Inspection by Sanofi	23
	6.7	Trademarks	23
	6.8	Safety Data Transfer	23
7.	MONETARY OBLIGATIONS		23
	7.1	License Fee	23
	7.2	Milestone Payments by Sanofi	24
	7.3	Royalties	25
	7.4	Third Party Royalties	26



	i

TABLE OF CONTENTS

(continued)

Page



8	PAYMENTS		26
	8.1	Mode of Payment; Currency Conversion	26
	8.2	Interest on Late Payment	27
	8.3	Records Retention	27
	8.4	Audit Request	27
	8.5	Taxes	27
9	MANUFACTURING AND SUPPLY		28
	9.1	General	28
	9.2	Research and Pre-Clinical Supply	28
	9.3	***	28
	9.4	***	28
	9.5	***	28
	9.6	Product recall, withdrawal and stock recovery	29
	9.7	***	29
	9.8	Sanofi as ***	29
	9.9	Third Party Suppliers	29
	9.10	Obligation of ***	29
	9.11	Change of Control; ***	29
10	JOINT *** COMMITTEE		30
	10.1	Size and Objectives	30
	10.2	Members	30
	10.3	Responsibilities	30
	10.4	Meetings	31
	10.5	Decisions	31
	10.6	Minutes	31
	10.7	Expenses	31
	10.8	Term	32
	10.9	Sub-Committees	32
11	REPRESENTATIONS AND WARRANTIES		32
	11.1	Representations and Warranties of Both Parties	32
	11.2	Additional Representations and Warranties of IMDZ	33



	ii

TABLE OF CONTENTS

(continued)

Page



12	CONFIDENTIALITY		34
	12.1	Confidentiality; Exceptions	34
	12.2	Exclusions to Confidentiality	34
	12.3	Protection of IMDZ’s Trade Secrets	34
	12.4	Injunctive Relief	35
13	INTELLECTUAL PROPERTY		35
	13.1	Patent Enforcement	35
	13.2	Infringement Actions by Third Parties	36
14	INDEMNIFICATION AND INSURANCE		36
	14.1	Indemnification of IMDZ	36
	14.2	Indemnification of Sanofi	37
	14.3	Notice of Claim	37
	14.4	Control of Defense	37
	14.5	Right to Participate in Defense	37
	14.6	Settlement	38
	14.7	Cooperation	38
	14.8	Expenses	38
	14.9	Insurance	38
15	TERM; TERMINATION		39
	15.1	Term	39
	15.2	Effect of Expiration	39
	15.3	Termination by Either Party	39
	15.4	Termination by Sanofi	40
	15.5	Termination by IMDZ	40
	15.6	Effect of Termination	41
	15.7	***	42
	15.8	Accrued Rights, Surviving Obligations	43
16	FORCE MAJEURE		44
17	MISCELLANEOUS		44
	17.1	Relationship of Parties	44
	17.2	Assignment	44



	iii

TABLE OF CONTENTS

(continued)

Page



17.3	Disclaimer of Warranties	45
17.4	Further Actions	45
17.5	Notice	45
17.6	Use of Name	46
17.7	Public Announcements.	46
17.8	Publications	47
17.9	Waiver	47
17.10	Compliance with Export Laws	47
17.11	Severability	48
17.12	Amendment	48
17.13	Governing Law; Dispute Resolution	48
17.14	No Consequential Damages	49
17.15	Entire Agreement	49
17.16	Parties in Interest	49
17.17	Descriptive Headings	50
17.18	Counterparts	50



	iv

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this “ Agreement ”), dated as of August 6, 2014, is between IMMUNE DESIGN CORP., a company duly organized and existing under the laws of the State of Delaware, with a principal place of business at 601 Gateway Blvd, Suite 1020, South San Francisco, California, United States of America, for and on behalf of itself and its Affiliates (“ IMDZ ”), and Aventis Inc., a corporation organized and existing under the laws of Pennsylvania, having offices at 55 Corporate Drive in Bridgewater, New Jersey 08807, for and on behalf of itself and its Affiliates (“ Sanofi ”).

PRELIMINARY STATEMENT

A. Whereas, IMDZ is a biopharmaceutical company focused on identifying and developing product candidates from its two discovery platforms, DCVex ^TM and GLAAS ^TM , that activate, guide or strengthen patient-specific immune responses to fight cancer, food allergies, and other chronic diseases.

B. Whereas, Sanofi is a diversified global healthcare company focused on patient needs.

C. Whereas, as component of its GLAAS platform, IMDZ controls certain patent rights for the use of ***, and Sanofi intends to develop and commercialize a product containing *** for the treatment of Peanut allergies, and possibly other allergies, in connection with certain aspects of such efforts pursuant to the terms and conditions of this Agreement.

D. Whereas, IMDZ entered into that certain Amended and Restated License Agreement with the Infectious Disease Research Institute (“ IDRI ”) effective July 10, 2008 (as amended, the “ IDRI License Agreement ”), pursuant to which IMDZ has been granted an exclusive license, with the right to sublicense, to certain ***, the manufacture, sale and/practice of which are covered by certain patent rights ***.

E. IMDZ wishes to grant to Sanofi, and Sanofi wishes to take from IMDZ, a license under certain patent rights and know-how owned by IMDZ, upon the terms and conditions set forth in this Agreement.

F. IMDZ wishes to grant to Sanofi, and Sanofi wishes to take from IMDZ, a sublicense under certain rights granted to IMDZ under such IDRI License Agreement and a license under other relevant patent rights and know-how owned by IMDZ, upon the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing preliminary statements and the mutual covenants and agreements of the Parties contained in this Agreement, the Parties hereby agree as follows:


1.	DEFINITIONS

As used in this Agreement, the following terms have the meanings set forth in this Section 1 unless the context dictates otherwise.

1.1 “ AAA ” has the meaning assigned thereto in Section 17.13(c) .

1.2 “ Affiliate ” with respect to a Party, means any Person controlling, controlled by, or under common control with, such Party. For the purpose of this definition only, “control” and, with correlative meanings, the terms “controlled by” and “under common control with”, shall refer to (a) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, or (b) the beneficial ownership (as such term is defined in the 1934 Act) of at least 50% of the voting securities or other ownership interest of a Person.

1.3 “ Agreement ” has the meaning assigned thereto in the Preamble.

1.4 “ Alliance Manager ” has the meaning assigned thereto in Article 3 .

1.5 “ Annual Net Sales ” means for an Indication for any given Calendar Year during the term of this Agreement, the total of all Net Sales of Licensed Products in all countries in the Territory during such Calendar Year.

1.6 “ Applicable Law ” means individually and collectively, any federal, state, local, national and supra-national laws, treaties, statutes, ordinances, rules and regulations, including any rules, regulations, guidance, guidelines or requirements having the binding effect of law of national securities exchanges, automated quotation systems or securities listing organizations, Regulatory Authorities, courts, tribunals, agencies other than Regulatory Authorities, legislative bodies and commissions that are in effect from time to time during the Term and applicable to a particular activity hereunder.

1.7 “ BLA ” means a Biologics License Application filed with the FDA or an equivalent application submitted to any other Regulatory Authority within the Territory requesting marketing approval for a new biological product (or a New Drug Application (“ NDA ”)), or equivalent application submitted to any other Regulatory Authority within the Territory, in the event that the FDA or other Regulatory Authority determines that an NDA or its equivalent, rather than a BLA or its equivalent, is the appropriate mechanism for requesting such approval).

1.8 “***” means ***, that is, ***.

1.9 “ Business Day ” means a day on which banking institutions in New York, New York, United States *** open for business.

1.10 “ Calendar Quarter ” means any one of the four three-month time periods in any Calendar Year commencing on January 1, April 1, July 1 and October 1 of such year.

– 2 –

1.11 “ Calendar Year ” means a period of twelve (12) consecutive calendar months beginning on January 1 and ending on December 31.

1.12 “ Change of Control ” means with respect to any Party (the “ Acquired Entity ”) (a) any sale, exchange, transfer, or issuance to or acquisition in one transaction or a series of related transactions by one or more Third Parties of shares representing more than fifty percent (50%) of the aggregate ordinary voting power entitled to vote for the election of directors represented by the issued and outstanding stock of the Acquired Entity or any Affiliate that directly or indirectly controls the Acquired Entity, whether such sale, exchange, transfer, issuance or acquisition is made directly or indirectly, by merger or otherwise, or beneficially or of record, but excluding the issuance of shares in a financing transaction; (b) a merger or consolidation under Applicable Law of the Acquired Entity with a Third Party in which the shareholders of the Acquired Entity or any Affiliate that directly or indirectly controls the Acquired Entity immediately prior to such merger or consolidation do not continue to hold immediately following the closing of such merger or consolidation at least fifty percent (50%) of the aggregate ordinary voting power entitled to vote for the election of directors represented by the issued and outstanding stock of the entity surviving or resulting from such consolidation; or (c) a sale or other disposition of all or substantially all of the assets of the Acquired Entity to one (1) or more Third Parties in one transaction or a series of related transactions.

1.13 “***” has the meaning assigned thereto in Section 9.3 .

1.14 “***” means the chemistry, manufacturing and controls data required by Applicable Law to be included in a BLA or NDA for a Licensed Product.

1.15 “***” has the meaning assigned thereto in Section 9.4 .

1.16 “ Commercialization, ” “ Commercialize ” or “ Commercial ” means any and all activities directed toward marketing, promoting, detailing, distributing, importing, having imported, exporting, having exported, selling or offering to sell a product or therapy.

1.17 “ Confidential Information ” has the meaning assigned thereto in Section 12.1 .

1.18 “ Development ” or “ Develop ” means all preclinical and clinical drug development activities undertaken to obtain Regulatory Approval of a Licensed Product in accordance with this Agreement after the Effective Date and up until the obtaining of Regulatory Approval of such Licensed Product or the termination of such activity with respect thereto, excluding all Research activities. Develop or Development shall also include any clinical drug development activities required in connection with obtaining Regulatory Approval, such as post-approval studies. These activities will include, among other things, test method development and stability testing, toxicology, formulation, process development, quality assurance/quality control development and performance with respect to clinical materials, statistical analysis and report writing, clinical trials and regulatory affairs, and Regulatory Approvals. When used as a verb, “Develop” means to engage in Development.

1.19 “ Disclosing Party ” has the meaning assigned thereto in Section 12.1 .

– 3 –

1.20 “ Dispute ” has the meaning assigned thereto in Section 17.13(b) .

1.21 ***

1.22 “ Effective Date ” means the date first set forth above.

1.23 “ EMA ” means the European Medicines Agency, or any successor agency thereto.

1.24 “*** Major Markets ” has the meaning assigned thereto in Section 6.1 .

1.25 “ European Commission ” means the executive body of the European Union that has legal authority to grant marketing authorization approvals for pharmaceutical products in the European Union following scientific evaluation and recommendation from the EMA or other applicable Regulatory Authorities.

1.26 “ European Union ” means all countries that are officially recognized as member states of the European Union at any particular time during the Term.

1.27 “ Excluded ***” has the meaning assigned thereto in Section 2.6(b) .

1.28 “ Executive Officers ” has the meaning assigned thereto in Section 10.5 .

1.29 “ Expanded License ” has the meaning assigned thereto in Section 2.3 .

1.30 “ FDA ” means the United States Food and Drug Administration, or any successor thereto.

1.31 “ Field ” means ***.

1.32 “ First Commercial Sale ” means, with respect to any Licensed Product, the first sale by Sanofi, its Affiliates or Sublicensees for use or consumption by the general public of such Licensed Product in a country in the Territory ***.

1.33 “ Force Majeure ” has the meaning assigned thereto in Article 16 .

1.34 ***

1.35 “ GLA ” means ***.

1.36 “ GLP ” means current Good Laboratory Practices as defined in Part 58 of Title 21 of the U.S. Code of Federal Regulations, as may be amended from time to time, or any successor thereto and foreign equivalents thereof.

1.37 “ GMP ” means current Good Manufacturing Practices as defined in Parts 210 and 211 of Title 21 of the U.S. Code of Federal Regulations, as may be amended from time to time, or any successor thereto and foreign equivalents thereof.

– 4 –

1.38 “ Governmental Authority ” means any government, court, regulatory or administrative agency or commission, or other governmental authority, agency or instrumentality, whether federal, state or local (domestic or foreign), including, without limitation, the U.S. Patent and Trademark Office.

1.39 “ IDRI ” has the meaning assigned thereto in the Preliminary Statement.

1.40 “***” has the meaning assigned thereto in Section 5.3 .

1.41 “***” means that certain ***.

1.42 “IDRI License Agreement ” has the meaning assigned thereto in the Preliminary Statement.

1.43 “ IDRI Licensed Patents ” means any patent rights, to which ***, including but not limited to those Patents listed on Exhibit B to the Supplemental Information Package.

1.44 “ IFRS ” means the International Financial Reporting System as adopted by the European Union, consistently applied by Sanofi.

1.45 “ IMDZ ” has the meaning assigned thereto in the Preamble.

1.46 “ IMDZ ***” has the meaning assigned thereto in Section 6.4(d) .

1.47 “ IMDZ Indemnitee ” has the meaning assigned thereto in Section 14.1 .

1.48 “ IMDZ Licensed Technology ” means the Materials and all Patents, Know-How and Inventions owned or controlled by, or licensed to, IMDZ, on or after the Effective Date, including the IDRI Licensed Patents, which are related to or useful in the identification, Development, Manufacture, use or sale of Licensed Products *** in the Field. A list of Patents included in the IMDZ Licensed Technology is included in Exhibit B to the Supplemental Information Package.

1.49 “***” has the meaning assigned thereto in Section 12.3 .

1.50 “***” means ***.

1.51 “***” means the *** for a Licensed Product.

1.52 “ Indemnification Claim Notice ” has the meaning assigned thereto in Section 14.3 .

1.53 “ Indemnified Party ” has the meaning assigned thereto in Section 14.3 .

1.54 “ Indemnifying Party ” has the meaning assigned thereto in Section 14.3 .

1.55 “ Indemnitee ” and “ Indemnitees ” have the meaning assigned thereto in Section 14.3 .

1.56 “ Indications ” means (a) the Initial Indication, and ***.

– 5 –

1.57 “ Initial Indication ” means *** diseases and disorders provoked by any antigens found in Peanuts that ***.

1.58 “ Invention ” means any method, process, manufacture, compound or composition of matter, whether or not patentable or copyrightable, or any improvement thereof.

1.59 “ Joint *** Committee ” or “***” has the meaning assigned thereto in Section 10.1 .

1.60 “ Know-How ” means unpatented technical and other information which is not in the public domain including information comprising or relating to discoveries, Inventions, data, designs, formulae, methods, models, assays, research plans, procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development), processes (including manufacturing processes, specification and techniques), laboratory records, chemical, pharmacological, toxicological, pre-clinical, clinical, analytical and quality control data, trial data, case report forms, data analyses, reports or summaries and information contained in submissions to and information from ethical committees and Governmental Authorities. Know-How includes rights protecting Know-How. The fact that an item is known to the public shall not be taken to exclude the possibility that a compilation including the item, and/or a development relating to the item, is (and remains) not known to the public.

1.61 “ Licensed Product ” means any product or formulation containing GLA ***.

1.62 “ Licensing Revenue ” means the *** consideration (including, but not limited to, ***) received by IMDZ under any sublicense of the Sanofi Technology by IMDZ to a Third Party *** in the following categories:

(a) bona fide support for future research, development and manufacturing activities corresponding directly to the development of Licensed Products ***;

(b) proceeds derived from ***;

(d) ***.

1.63 “ Losses ” has the meaning assigned thereto in Section 14.1 .

1.64 “***” means a ***.

1.65 “ Manufacturing ” or “ Manufacture ” means, as applicable, the production, manufacture, processing, filling, packaging, labeling, shipping, and storage of ***, Licensed Products and/or any components thereof, including process and formulation development, process validation, in-process testing, stability testing, release testing, manufacturing scale-up, preclinical, clinical and Commercial manufacture and analytical methods development and validation, quality assurance and quality control development, testing and release.

– 6 –

1.66 “ Materials ” means ***.

1.67 “ MHLW ” means the Ministry for Health, Labor and Welfare of Japan, or the Pharmaceutical and Medical Devices Agency, or any successor to either of them.

1.68 “***” shall mean ***.

1.69 “*** Patents ” mean any Patents that are related to ***.

1.70 “***” has the meaning assigned thereto in Section 2.3(a)(iii) .

1.71 “ Net Sales ” means, with respect to any Licensed Product, the gross amount invoiced to Third Parties by Sanofi, its Affiliates or its Sublicensees, as the case may be, for such Licensed Product, commencing with the First Commercial Sale of a Licensed Product, less deductions for: ***. For clarity, Net Sales shall not include samples, compassionate use and the like.

Notwithstanding the foregoing, in the event a Licensed Product is sold in conjunction with another active component so as to be a combination product (whether packaged together or in the same therapeutic formulation), Net Sales of the Licensed Product shall be calculated by ***.

Sanofi’s or any of its Affiliate’s transfer of Licensed Product to an Affiliate or Sublicensee shall not result in any Net Sales, unless such Licensed Product is consumed by such Affiliate or Sublicensee in the course of its Commercial activities. Further, the disposition of Licensed Product for, or the use of Licensed Product in, pre-clinical or clinical (Phase I – III) trials, other market-focused (Phase IV) trials, or other Regulatory Approvals or free samples shall not result in any Net Sales.

In the event ***, the definition of Net Sales shall ***; provided , that references to IFRS shall be references to United States generally accepted accounting standards, or the accounting standard applicable to IMDZ at the time.

1.72 “ 1934 Act ” means the Securities Exchange Act of 1934, as amended, and all regulations promulgated pursuant thereto from time to time.

1.73 “***” has the meaning assigned thereto in Section 2.3(a)(ii) .

1.74 “***” has the meaning assigned thereto in Section 2.3(a)(i) .

1.75 “***” means ***.

1.76 “ Out-of-Pocket Costs ” means, in accordance with IFRS, expenses incurred by a Party and for the avoidance of doubt, not including pre-paid amounts and capital expenditures.

1.77 “ Party ” means IMDZ or Sanofi and, when used in the plural, means IMDZ and Sanofi.

1.78 “*** Agreement ” has the meaning assigned thereto in Section 17.15(b) .

– 7 –

1.79 “*** Field ” has the meaning assigned thereto in Section 17.15(b) .

1.80 “ Patents ” means all letters patents, patent applications and statutory invention registrations throughout the Territory, as well as any and all substitutions, extensions, renewals, continuations, continuations-in-part, divisions, patents-of-addition and/or reissues thereof.

1.81 “ Patent Challenge” means a challenge to the validity, patentability, enforceability and/or non-infringement of any of the Patents within IMDZ Licensed Technology or otherwise opposing any of such Patents, *** including by means of a declaratory judgment.

1.82 “ Peanut ” means arachis hypogaea.

1.83 “ Person ” means any natural person, corporation, firm, business trust, joint venture, association, organization, company, partnership or other business entity, or any government or any agency or political subdivision thereof.

1.84 “ Phase I Study Initiation ” means the dosing of the first subject in a clinical trial, whether conducted in subjects in the United States or outside the United States, that falls within the definition of a “Phase 1” study in Section 312.21(a) of Title 21 of the U.S. Code of Federal Regulations, as amended from time to time, or the equivalent in any foreign country, and is designed to determine the metabolism and pharmacologic actions of the subject drug in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on safety and effectiveness, as well as to obtain sufficient information about the drug’s pharmacokinetics and pharmacological effects to permit the design of well-controlled, scientifically valid, Phase II studies.

1.85 ***

1.86 ***

1.87 “***” has the meaning assigned thereto in Section 15.7(a) .

1.88 “ Receiving Party ” has the meaning assigned thereto in Section 12.1 .

1.89 “ Recovery ” has the meaning assigned thereto in Section 13.1(c) .

1.90 “ Regulatory Approval ” means ***.

1.91 “ Regulatory Authorities ” means the FDA, and any health regulatory authority in any country in the Territory that is a counterpart to the FDA and holds responsibility for granting regulatory marketing approval for a Licensed Product in such country, and any successor(s) thereto, including the European Commission and the MHLW.

1.92 “ Regulatory Exclusivity ” means, with respect to a Licensed Product, any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to such Licensed Product other than a patent right, that prevents others from *** such Licensed Product, from relying on the approval of such Licensed Product to submit a marketing application, or receiving marketing approval, for any other product, including but not limited to ***. By way of

– 8 –

example, in the United States this would include without limitation (a) five-year new chemical entity exclusivity, as provided for by Sections 355(c)(3)(E)(ii) and (j)(5)(F)(ii) of Title 21 of the U.S. Code, as amended from time to time; (b) three-year exclusivity for new clinical trials, as provided for by Sections 355(c)(3)(E)(iii) and (j)(5)(F)(iii) of Title 21 of the U.S. Code, as amended from time to time; (c) pediatric exclusivity, as provided for by Section 355a of Title 21 of the U.S. Code, as amended from time to time; (d) orphan drug exclusivity, as provided for Section 360cc of Title 21 of the U.S. Code, as amended from time to time; and (e) exclusivity for a biological product, as provided for in Section 262(k)(7) of Title 42 of the U.S. Code, as amended from time to time.

1.93 “ Regulatory Filings ” has the meaning assigned thereto in Section6.3 .

1.94 “ Research ” means the discovery, identification, research, characterization, modification, derivatization, optimization, and pre-clinical testing of Licensed Products in the Field.

1.95 “ Royalty Term ” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period commencing *** and ending upon ***.

1.96 “ Sanofi ” has the meaning assigned thereto in the Preamble.

1.97 “ Sanofi *** Team ” includes any Sanofi employee who ***.

1.98 “ Sanofi Exclusive License ” has the meaning assigned thereto in Section 2.6(a) .

1.99 “ Sanofi *** Improvements ” has the meaning assigned thereto in Section 2.6(a) .

1.100 “ Sanofi Indemnitee ” has the meaning assigned thereto in Section 14.2 .

1.101 “ Sanofi ***” has the meaning assigned thereto in Section 9.11 .

1.102 “ Sanofi ***” has the meaning assigned thereto in Section 2.3 .

1.103 “ Sanofi Technology ” means all Inventions and Know-How discovered, conceived, created, reduced to practice or shown to have utility solely by employees of Sanofi, or of any Third Party working on behalf of Sanofi and/or in whose Inventions and Know-How Sanofi otherwise has rights, in connection with Research, Development and Commercialization of Licensed Products, as well as any and all Patents covering same.

1.104 “ SDEA ” has the meaning assigned thereto in Section 6.5 .

1.105 “ Service Provider ” means any Third Party service providers such as contract research organizations, clinical research organizations, contract manufacturing organizations, consultants, subcontractors or other independent contractors performing on behalf of a Party such Party’s obligations under this Agreement.

1.106 “ Sub-Committee ” has the meaning assigned thereto in Section 10.9 .

– 9 –

1.107 “ Sublicensee ” means, as applicable, a Third Party to which Sanofi has granted sublicense rights under the IMDZ Licensed Technology ***, or a Third Party to which IMDZ has granted sublicense rights under the Sanofi Technology.

1.108 “ Supplemental Information Package ” means the Supplemental Information Package delivered in connection with the execution of this Agreement by the Parties on the Effective Date.

1.109 “ Term ” has the meaning assigned thereto in Section 15.1(b) .

1.110 “ Territory ” means ***.

1.111 “ Third Party ” means any Person who or which is neither a Party nor an Affiliate of a Party.

1.112 “ Third Party Claim ” has the meaning assigned thereto in Section 14.1 .

1.113 “***” has the meaning assigned thereto in Section 2.3(b)(i) .

1.114 “***” has the meaning assigned thereto in Section 2.3(b)(i) .

1.115 “ Third Party Royalties ” has the meaning assigned thereto in Section 7.4(a) .

1.116 “***” means ***.

1.117 “ Trademarks ” has the meaning assigned thereto in Section 6.7 .

1.118 “***” has the meaning assigned thereto in Section 15.7(a) .

1.119 “ United States ” or “ U.S. ” means the United States of America, including its territories and possessions.

1.120 “ Valid Claim ” means a ***.


2.	GRANT OF LICENSES; EXCLUSIVITY

2.1 Licenses to Sanofi. IMDZ hereby grants to Sanofi an exclusive (even as to IMDZ), world-wide, royalty-bearing right and license throughout the Territory, with the right to grant sublicenses through multiple tiers, in accordance with Section 2.2 , under all of IMDZ’s rights in the IMDZ Licensed Technology to Research, Develop, ***, import, export, market, offer for sale and sell Licensed Products in the Field.

2.2 Sublicensing by Sanofi . Sanofi shall have the right to grant sublicenses, and/or further sublicenses, as the case may be, to any of its Affiliates and/or its Sublicensees of the licenses, sublicenses or rights granted to Sanofi hereunder for purposes of such Affiliates’ or Sublicensees’ performance of Sanofi’s obligations hereunder; provided , that each such Affiliate and/or Sublicensee shall be bound by the terms and conditions of this Agreement and the performance of such obligations

– 10 –

by an Affiliate and/or Sublicensee shall not relieve Sanofi of its obligations under this Agreement. Sanofi hereby guarantees the performance of any of its Affiliates and its Sublicensees hereunder.

2.3 *** .

(a) IMDZ *** .


(i)	If at any time, and from time to time, prior to *, IMDZ , then IMDZ shall give written notice to Sanofi **.


(ii)	Sanofi shall have the right to ***.


(iii)	If Sanofi ***, as may be mutually agreed to.


(iv)	If (1) Sanofi *; provided , that if IMDZ does not , then Sanofi’s rights with respect to such **.

(b) *** . In addition to Sanofi’s right to *** in Section 2.3(a) :


(i)	If at any time prior to ***.


(ii)	Sanofi shall have the right to *. If such * is received by IMDZ after * and Sanofi * within such * period, then Sanofi shall have *.


(iii)	If (1) Sanofi has ***.


(iv)	If IMDZ does not ***.

(c) IMDZ shall not grant to any Third Party any rights under the IMDZ Licensed Technology that are inconsistent or could conflict with the rights granted by IMDZ to Sanofi under this Agreement.

(d) For any *** which Sanofi wishes to ***, Sanofi may ***.

(e) Notwithstanding anything to the contrary contained herein, ***.

2.4 Reservation of Rights; No Implied Rights . Sanofi shall have no other right to use, or interest in, any other Patents or intellectual property rights controlled by IMDZ within or outside the Field, and IMDZ makes no grant of intellectual property rights by implication. Notwithstanding the grant of the exclusive license under Section 2.1 above, IMDZ shall retain the right to use the IMDZ Licensed Technology outside of the Field. Notwithstanding anything to the contrary under this Agreement, if, but for the terms and conditions of this Agreement, Sanofi would ***.

2.5 Exclusivity . IMDZ shall not, alone or in collaboration with any Third Party, (a) Research, Develop, seek or obtain Regulatory Approvals in ***, (b) commercialize, market or conduct any activities or work directed to identifying, characterizing, developing or

– 11 –

commercializing any products in the Field, or (c) grant any licenses to any Third Party or permit or suffer any Third Party infringement of any IMDZ Licensed Technology with respect to the Initial Indication.

2.6 Rights to IMDZ .

(a) To the extent that the Sanofi Technology includes any Valid Claim that (i) is directed to *** or to ***, and (ii) would *** the “ Sanofi *** Improvements ”), Sanofi hereby grants and agrees to grant to IMDZ *** (the “ Sanofi Exclusive License ”). With respect to the Sanofi Exclusive License, IMDZ shall ***.

(b) Notwithstanding Section 2.6(a) but subject to the last sentence of Section 2.6(d) , Sanofi and its Affiliates shall *** (the “ Excluded ***”), IMDZ shall have the rights set forth in Section 2.6(c) .

(c) With respect to the Excluded ***, Sanofi shall *** to one or more of the Excluded ***, upon written request by IMDZ to Sanofi, and subject to the Parties mutually agreeing on ***. Sanofi and IMDZ shall enter into negotiations for the foregoing license within ***, or such other time period as is mutually agreed by the Parties; and thereafter, the Parties shall negotiate, in good faith, in order to reach a mutually acceptable written agreement for ***. In order for IMDZ to exercise its rights under this Section 2.6(c) , Sanofi shall *** under this Section 2.6(c) .

(d) If beginning on the Effective Date and continuing until ***, any Sanofi Technology results from *** of the provisions of Section 2.1 , then without limiting any other rights of IMDZ hereunder, such Sanofi Technology *** described in Section 2.6(a) . Following ***, IMDZ shall be entitled to *** of the provisions of Section 2.1 . The Parties acknowledge that in the course of Researching and Developing Licensed Products in the Field, *** under Section 2.1 . Additionally and for the avoidance of doubt, the development of Sanofi Technology, ***.

(e) Sanofi shall notify IMDZ promptly following the filing of a Patent claiming any Sanofi *** (including Excluded ***).


3.	ALLIANCE MANAGERS

Within thirty (30) days after the Effective Date, each of the Parties will appoint a single individual with the intent that such individual will be able to act as a single point of contact between the Parties to facilitate the effective exchange of information between the Parties and discuss the performance of this Agreement (each, an “ Alliance Manager ”). Each Party may change its designated Alliance Manager from time to time upon written notice to the other Party. Any Alliance Manager may designate a substitute to temporarily perform the functions of that Alliance Manager by written notice to the other Party.


4.	OWNERSHIP; PATENT PROTECTION

4.1 Ownership of Sanofi Technology . The entire right, title and interest in and to all Sanofi Technology shall be owned solely and exclusively by Sanofi.

– 12 –

4.2 Patent Filing, Prosecution and Maintenance of Patents .

(a) IMDZ Licensed Technology . Subject to the terms of this Section 4.2 , IMDZ will file, prosecute, defend and maintain (including the filing of any extension or supplementary protection certificate) *** any Patents claiming Inventions or Know-How included in the IMDZ Licensed Technology. IMDZ will provide Sanofi with an update of the filing, prosecution and maintenance status for each of the Patents within the IMDZ Licensed Technology to the extent related to the Field on a periodic basis, and will *** the filing, prosecution and maintenance of the IMDZ Licensed Technology to the extent related to the Field, *** the preparation, filing, prosecution, defense and maintenance of such Patents. IMDZ will file and maintain such Patents, *** in the countries specified in Exhibit C to the Supplemental Information Package and ***.

(b) Sanofi Technology . Sanofi will have the first right, at its sole discretion, to file, prosecute, defend and maintain at its costs any Patents claiming Inventions or Know-How included in the Sanofi Technology.

(c) Cooperation . Promptly following the end of each Calendar Quarter, each Party will *** such preceding Calendar Quarter. Each Party will cooperate with the other Party to execute all lawful papers and instruments and make all rightful oaths and declarations as may be necessary in the preparation, prosecution and maintenance of all Patents and other filings referred to in this Section 4.2 . If either Party does not wish to continue the prosecution of any claim in a Patent licensed to the other Party under this Agreement, then it will inform the other Party thereof in writing with sufficient advance notice to reasonably enable such Party to assume the filing or prosecution of such claim(s), at such Party’s cost and expense. If IMDZ decides to cease prosecution of a claim within a Patent licensed to Sanofi and Sanofi decides to assume the filing or prosecution of such claim(s), IMDZ will ***. In addition, *** pursuant to the terms of this Section 4.2(c) .


5.	IDRI LICENSE AGREEMENT

5.1 Representations and Warranties of IMDZ with respect to the IDRI License Agreement . IMDZ represents and warrants to Sanofi that, as of the Effective Date:

(a) the IDRI License Agreement is in full force and effect and has not been modified or amended;

(b) neither IMDZ nor, to the knowledge of IMDZ, IDRI is in default with respect to any material obligation under, and ***, the IDRI License Agreement;

(c) as between IDRI and IMDZ, the rights that IDRI has licensed to IMDZ pursuant to the IDRI License Agreement were not and are not subject to any restrictions or limitations, except as set forth in the copy of the IDRI License Agreement attached as Exhibit D to the Supplemental Information Package;

(d) IMDZ has not waived or allowed to lapse any of its material rights under the IDRI License Agreement, and no such rights have lapsed or otherwise expired or been terminated;

– 13 –

(e) ***; and

(f) IMDZ has complied with all requirements necessary to grant Sanofi the rights under the IDRI License Agreement granted pursuant to this Agreement.

5.2 IMDZ Covenants with respect to the IDRI License Agreement . IMDZ agrees that it shall *** and that during the Term:

(a) IMDZ shall *** under the IDRI License Agreement (including, without limitation, the payment of all amounts appropriately due thereunder);

(b) IMDZ shall not enter into any subsequent agreement with IDRI that ***, and IMDZ shall ***;

(c) IMDZ shall not terminate, nor take or fail to take any action that could reasonably be expected to terminate, the IDRI License Agreement in whole or in part, directly or indirectly, without ***;

(d) IMDZ shall *** which could affect the Licensed Products or any components thereof, which *** will be the Confidential Information of IMDZ; and

(e) IMDZ shall *** and, if IMDZ cannot or chooses not to ***, IMDZ shall, to the extent Sanofi is ***, allow Sanofi, ***.

5.3 Sanofi Covenants with respect to the IDRI License Agreement . Sanofi acknowledges that IDRI ***. Sanofi agrees that, as a sublicensee of IMDZ under the IDRI License Agreement, at any time following approval of a Licensed Product in *** (as such terms are defined in the IDRI License Agreement), *** and if so requested, Sanofi shall reasonably consider this request. Promptly following such a request by IDRI, Sanofi shall use reasonable efforts to have a meeting, or otherwise discuss, with IDRI ***.


6.	REGULATORY APPROVAL AND COMMERCIALIZATION

6.1 Efforts by Sanofi . Subject to this Section 6.1 , Sanofi shall *** to obtain Regulatory Approval and Commercialize *** in the Field ***; provided , that if Sanofi, in its sole discretion, elects to *** to obtain Regulatory Approval and Commercialize *** in the Field in *** (the “*** Major Markets ”), then Sanofi’s obligation to *** to obtain Regulatory Approval and Commercialize *** in the Field in *** shall be suspended until Sanofi either (a) stops *** to obtain Regulatory Approval in the *** Major Markets, or (b) receives Regulatory Approval for any Licensed Product in any of the *** Major Markets. For the purposes of this Agreement, “***” with regards to Sanofi means that Sanofi shall ***. Except as otherwise provided in this Agreement, Sanofi shall be solely responsible for (i) all Development and Commercialization activities related to Licensed Products (excluding ***), including without limitation all pre-marketing activities and all post-approval clinical studies, and (ii) booking all sales of Licensed Products in the Territory.

6.1 Reporting.

– 14 –

(a) Within thirty (30) days after the end of each Calendar Quarter ending on June 30 and December 31, and subject to Section 6.2(b) , with respect to each Licensed Product under Research and Development under this Agreement and until such Licensed Product receives Regulatory Approval, Sanofi shall furnish to IMDZ a written report generally describing Sanofi’s material Research and Development activities for such Licensed Products. Such written report shall include information on progress made during the last six (6) month period, against the planned activities. Upon the reasonable request of either IMDZ or Sanofi, once each Calendar Year during the Term, Sanofi’s Alliance Manager and senior representatives of Sanofi’s Product development team shall meet, in person, with senior members of IMDZ, with meetings *** (or, if agreed to by the two Parties, by video-conference or teleconference), for Sanofi to provide IMDZ an update on the status of the Development and Commercialization of the IMDZ Licensed Technology and the Licensed Products, and for IMDZ, subject to its confidentiality obligations to Third Parties, to provide an update on *** and observations both inside and outside of the Field.

(b) Competitively Sensitive Information . Sanofi shall not be required to include in any report furnished by Sanofi pursuant to this Agreement, or provide to any representative of IMDZ (or any successor thereto), any such information that Sanofi, acting in good faith, determines to be competitively sensitive or enabling information. Notwithstanding the preceding sentence, Sanofi shall provide IMDZ with information under Section 6.2(a) that provides IMDZ with a general description of material Research and Development activities directed toward the events that would result in a milestone payment described in Section 7.2(a) and information necessary for IMDZ to enforce its rights under this Agreement.

6.2 Control and Ownership of Regulatory Filings . Subject to Section 6.4 , Sanofi shall have sole discretion, control and responsibility to *** (collectively, “ Regulatory Filings ”) in the Territory with respect to any Licensed Products in the Field; provided , that IMDZ shall be the lead party for *** as set forth in Section 6.4(d) ; provided , further , that Sanofi shall regularly consult with and reasonably consider comments provided by IMDZ with respect to such Regulatory Filings and, with respect to any Regulatory Filings that are reasonably likely to adversely affect an IMDZ product, shall consider IMDZ’s comments with respect thereto in good faith. All such Regulatory Filings other than *** shall be in the name of, and be owned solely by, Sanofi. In addition, Sanofi shall have sole control and responsibility in the conduct of all pricing and reimbursement approval proceedings related to the Licensed Products.

6.3 Regulatory Cooperation of IMDZ . IMDZ shall cooperate, provided that Sanofi shall reimburse IMDZ for *** incurred by IMDZ in connection with such cooperation, with all reasonable requests for assistance from Sanofi with respect to obtaining and maintaining any and all Regulatory Approvals required in connection with the Development and Commercialization of Licensed Products in the Territory, including by:

(a) making its employees, consultants and other staff available upon reasonable notice during normal business hours to attend meetings with Regulatory Authorities related to obtaining Regulatory Approval of Licensed Product in the Territory, including any supplements and amendments thereto;

– 15 –

(b) making its employees, consultants and other staff available upon reasonable notice during normal business hours to attend meetings with Regulatory Authorities concerning any Licensed Product or any component or intermediate thereof;

(c) disclosing and making available to Sanofi, in whatever form Sanofi may reasonably request, all *** related to Licensed Products or *** as is reasonably necessary or desirable to prepare, file, obtain and maintain any Regulatory Approval required in connection with the sourcing of Licensed Product by Sanofi hereunder and the sale of Licensed Product in the Territory; and

(d) (i) preparing***, in accordance with Applicable Law, one or more *** relating to the *** and filing and maintaining each such *** with the FDA and those Regulatory Authorities (other than the FDA) designated by Sanofi, as applicable (collectively “ IMDZ ***”), and (ii) providing to Sanofi ***.

6.4 Global Safety Database; SDEA Agreement . Sanofi shall establish, hold and maintain (at Sanofi’s cost and expense) the global safety database for Licensed Products. IMDZ shall provide Sanofi with all information necessary or desirable for Sanofi to comply with its pharmacovigilance responsibilities in the Territory, including, as applicable, any adverse drug experiences (including those events or experiences that are required to be reported to the FDA under 21 C.F.R. sections 312.32 or 314.80 or to foreign Regulatory Authorities under corresponding Applicable Law outside the United States), from pre-clinical or clinical laboratory, animal toxicology and pharmacology studies, clinical studies and commercial experiences with a Licensed Product, in each case in the form reasonably requested by Sanofi. Subject to the terms of this Agreement, as soon as practicable following the request of Sanofi, but in any event within *** after such request, Sanofi and IMDZ (under the guidance of their respective pharmacovigilance departments, or equivalents thereof) shall negotiate and enter into a reasonable and customary safety data exchange agreement (the “ SDEA ”). Among other things, the SDEA will provide the right for each Party to cross-reference all relevant safety data of the other Party, including but not limited to the types of safety data listed on Exhibit E to the Supplemental Information Package.

6.5 Inspection by Sanofi . IMDZ agrees that Sanofi and its agents (so long as such agents have entered into binding confidentiality agreements with Sanofi for the benefit of IMDZ providing for obligations ***) shall have the right, as required by Applicable Law or otherwise, upon reasonable prior notice to IMDZ and during normal business hours, to inspect *** (provided that Sanofi shall not be able to exercise such inspection right more than *** in any *** period at the same facility unless a material *** issue related to such facility has been identified and remains unresolved) including inspection of (a) input materials, (b) ***, (c) ***, and (d) *** and the facility (to the extent they relate to the Licensed Product or any component or intermediate thereof). Following such audit, Sanofi shall discuss its observations and conclusions with IMDZ and IMDZ shall use commercially reasonable efforts to *** after notification thereof by Sanofi or such longer period as may be agreed by the Parties.

6.6 Trademarks . Sanofi shall market the Licensed Products throughout the Territory under trademarks (collectively, the “ Trademarks ”) selected by Sanofi. Sanofi shall own all right,

– 16 –

title and interest in and to such Trademarks and shall bear all costs and expenses of registering, and maintaining the registration of, such Trademarks.

6.7 Safety Data Transfer . Subject to the terms of the SDEA, if any, entered into by the Parties in accordance with Section 6.5 , which shall supersede this Section 6.8 , IMDZ will make available to Sanofi within forty-five (45) days of the Effective Date (provided, however , that if such data does not exist as of the Effective Date, IMDZ shall provide such data to Sanofi within forty-five (45) days after it is available to IMDZ) all data listed in Exhibit E to the Supplemental Information Package as well as any other safety data within the IMDZ Licensed Technology reasonably requested by Sanofi for the purposes of complying with any safety data reporting requirements under Applicable Law or Sanofi’s standard operating procedures related to drug safety or monitoring.


7.	MONETARY OBLIGATIONS

7.1 License Fee . In consideration of the rights and licenses granted to Sanofi under this Agreement, Sanofi shall pay to IMDZ a one-time, non-refundable, non-creditable license fee in the amount of US$3,500,000 within *** of the Effective Date.

7.2 Milestone Payments by Sanofi .

(a) Development Milestones . Sanofi shall pay IMDZ the following one-time, non-refundable, non-creditable milestone payments upon the first occurrence of each event set forth below with respect to a Licensed Product in the Field, in each case whether such occurrence is achieved by Sanofi or its Affiliates or its Sublicensees:


(i)	US$1,000,000 upon ***;


(ii)	US$7,000,000 upon the Phase I Study Initiation;


(iii)	US$* upon *;


(iv)	US$* upon *;


(v)	US$* upon *;


(vi)	US$* upon *; and


(vii)	US$* upon *.

Sanofi shall provide IMDZ with *** written notice upon the achievement of any of the foregoing milestones and each of the foregoing payments shall be made within *** after achievement of such milestone. ***. For the avoidance of doubt, after Sanofi has made any of the foregoing payments with respect to any Licensed Product, Sanofi shall have no further obligation to make such payment again for such Licensed Product or for any other Licensed Product.

– 17 –

(b) Sales Milestones . In partial consideration of the rights and licenses granted to Sanofi by IMDZ under this Agreement, Sanofi shall pay to IMDZ the following Net Sales milestone payments, on an *** basis, upon the first occurrence of each event set forth below, whether such occurrence is achieved by Sanofi or its Affiliates or its or their Sublicensees:


(i)	US$* in the event that *;


(ii)	US$* in the event that *; and


(iii)	US$* in the event that *.

Sanofi shall provide IMDZ with prompt written notice upon the achievement of any of the foregoing milestones and each of the foregoing payments shall be made within ***. For the avoidance of doubt, after Sanofi has made any of the foregoing sales milestone payments once, Sanofi shall have no further obligation to make such sales milestone payment again. Furthermore, ***. For purposes of example, ***. For the avoidance of doubt, the Initial Indication is a single Indication.

7.3 Royalties .

(a) Subject to Sections 7.3(b) and 7.4(b) , in partial consideration of the rights and licenses granted to Sanofi under this Agreement, Sanofi shall pay to IMDZ, during the Royalty Term, a royalty on Net Sales of all Licensed Products on *** basis in an amount equal to the applicable percentages set forth below of the Net Sales of Licensed Products by Sanofi, its Affiliates and its Sublicensees throughout the Territory during ***:



Net Sales of Licensed Products Achieved * for *	Royalty Payable Thereon
***	***%
***	***%
***	***%

For example, ***.

(b) Notwithstanding anything to the contrary, if ***, then Sanofi’s obligation to pay royalties with respect to each Licensed Product ***; provided , that if ***. The obligation to pay royalties to IMDZ under this Section 7.3 is imposed only once with respect to the same unit of Licensed Product, regardless of the number of Patents pertaining thereto.

(c) During the period during which royalties are payable by Sanofi under this Section 7.3 , Sanofi shall make written reports and Calendar Quarter payments to IMDZ within *** after the end of each Calendar Quarter covering all sales of Licensed Products in the Territory by Sanofi, its Affiliates and Sublicensees, each such written report in reasonable detail as available stating: (i) the total gross sales for each Licensed Product on a country-by-country basis; (ii) all reductions from such gross sales used to arrive at the determination of Net Sales; (iii) the total Net

– 18 –

Sales for each Licensed Product on a country-by-country basis; and (iv) a calculation of the amount of royalty payment due on Net Sales pursuant to this Section 7.3 on a country‑by‑country basis.

7.4 Third Party Royalties .

(a) Sanofi, at its sole expense, shall pay all acquisition costs (including without limitation up-front payments, milestone payments and royalties) owing to any Third Party that Sanofi determines, in its reasonable business judgment, are necessary in order to exercise Sanofi’s rights hereunder to make, have made, import, export, use, have used, market, offer for sale and sell any Licensed Product (collectively, “ Third Party Royalties ”); provided , however , that Sanofi shall not be responsible for any such costs associated with any Patents, Know-How or Inventions included in the IMDZ Licensed Technology ***.

(b) ***.


8.	PAYMENTS

8.1 Mode of Payment; Currency Conversion . Sanofi shall make all payments required under this Agreement through an Affiliate based in the United States by wire transfer in immediately available funds to an account designated by IMDZ, in United States dollars. All calculations of Net Sales and Annual Net Sales to determine the payment of sales milestones and royalties due hereunder shall first be determined in the currency of the country in which the Licensed Products in question were sold and then converted into equivalent Euro funds. For any currency conversion required in determining the sales milestones or amount of royalties due, the amount of Net Sales or Annual Net Sales in any foreign currency will be computed by converting such amount into Euros. Such conversion will be made in a manner consistent with Sanofi’s normal practices used to prepare its audited financial statements for internal and external reporting purposes, which uses a widely accepted source of published exchange rates.

8.2 Interest on Late Payment . Any undisputed amount owed by one Party to the other Party under this Agreement that is not paid within the applicable time period set forth herein shall accrue interest at the annual rate of *** or, if lower, the highest rate permitted under Applicable Law, and such interest shall be calculated on the number of days such payment is delinquent, compounded annually and computed on the basis of a three hundred sixty five (365) day year. Where the late payment is caused by the Party that is owed the payment, including for reasons such as failure to communicate in a timely manner changes to bank details, or failure to respond to communications from the Party owing the payment regarding the interpretation or dispute of the terms of such payment, then no interest will be payable by the Party owing the payment.

8.3 Records Retention . Sanofi and its Affiliates and Sublicensees shall keep complete and accurate records pertaining to the Net Sales and Annual Net Sales of Licensed Products in the Territory, and records pertaining to reductions on royalties due to Third Party Royalties, for a period of three (3) Calendar Years after the year in which such sales occurred, and in sufficient detail to permit IMDZ to confirm the accuracy of sales milestone and royalty payments due hereunder.

– 19 –

8.4 Audit Request . At the request and expense (except as provided below) of IMDZ, Sanofi and its Affiliates and Sublicensees shall permit an independent, certified public accountant appointed by IMDZ and reasonably acceptable to Sanofi, during normal business hours, no more than *** to examine those records and all other material documents relating to or relevant to Net Sales in the possession or control of Sanofi, its Affiliates and Sublicensees, for a period of three (3) years after such royalties have accrued. Only the summarized, conclusory results of any such examination shall be made available to both Parties. If, as a result of any inspection of the books and records of Sanofi or its Affiliates or Sublicensees, it is shown that Sanofi’s royalty payments under this Agreement were less than the amount which should have been paid, or that a sales milestone payment should have been paid or should have been paid earlier, then Sanofi shall make all payments required to eliminate any discrepancy revealed by said inspection within thirty (30) Business Days of the conclusion of such inspection. In addition, if such underpaid amount is in excess of *** of the amount that actually should have been paid by Sanofi, then Sanofi shall reimburse IMDZ for the reasonable cost of such audit. In the event of an overpayment, such amounts shall be deducted from IMDZ’s royalties until fully credited.

8.5 Taxes . IMDZ shall bear any and all taxes levied on account of any payment received under this Agreement. In the event that Sanofi is required, under Applicable Laws, to withhold any deduction or tax from any payment due to IMDZ under this Agreement, such amount shall be deducted from the payment to be made by Sanofi, paid to the proper taxing authority, provided that Sanofi shall take reasonable and lawful actions to avoid and minimize such withholding and promptly notify IMDZ so that IMDZ may take lawful actions to avoid and minimize such withholding. Sanofi shall promptly furnish IMDZ with copies of any tax certificate or other documentation evidencing such withholding as necessary to satisfy the requirements of the relevant Governmental Authority related to any application by IMDZ for foreign tax credit for such payment. Each Party agrees to cooperate with the other Party in claiming exemptions from such deductions or withholdings under any agreement or treaty from time to time in effect.


9.	MANUFACTURING AND SUPPLY

9.1 General .

(a) Other than the Manufacture and supply of ***, Sanofi shall be responsible for the *** of Licensed Products.

(b) IMDZ shall be responsible for *** in accordance with the parameters set forth herein.

(c) IMDZ (by itself or through its Affiliates or designated Third Party manufacturers) shall *** (unless not required by Sanofi), Sanofi’s reasonable specifications, and other Regulatory Authority requirements; provided , that Sanofi informs IMDZ in advance in writing of ***.

9.2 Research and Pre-Clinical Supply . Subject to oversight by ***, IMDZ shall be responsible for *** in conducting the Research activities in accordance with *** attached as Exhibit F to the Supplemental ***. *** .

– 20 –

9.3 ***. The Parties shall enter into a *** no later than *** pursuant to which IMDZ shall *** for Sanofi (or its applicable Affiliate) for use in the *** of Licensed Products in the Territory (the “***”). *** shall include but not be limited to the terms set forth *** to the Supplemental Information Package.

9.4 ***. Promptly following the Effective Date, both Parties agree to identify *** persons and organize a meeting to initiate the *** and agree on associated *** related responsibilities. The Parties shall enter into a *** containing the terms and conditions for the quality responsibilities associated with *** to Sanofi and any of its Affiliates aligned with responsibilities demanded of Sanofi ***.

9.5 Product recall, withdrawal and stock recovery . Sanofi shall decide whether to recall or withdraw such Licensed Product in the Territory and shall undertake any such recall or withdrawal at its own cost and expense. IMDZ shall reasonably cooperate with Sanofi in efforts to provide information involving the recall of the material provided by IMDZ.

9.6 ***. Unless otherwise mutually agreed by the Parties, the ***, and *** (provided that *** as of the Effective Date, from the then current ***). Any *** resulting from this Section 9.7 shall be implemented in accordance with ***.

9.7 Sanofi as ***. Prior to entering into a new agreement with *** to fulfill any of its *** set forth in Sections 9.2 , 9.3 or 9.4 , IMDZ shall ***. If Sanofi and IMDZ are unable to reach agreement on the terms for such *** within *** of IMDZ’s initial offer to Sanofi, then IMDZ shall be entitled to ***.

9.8 Third Party Suppliers . Any new Third Party selected by IMDZ to fulfill any of IMDZ’s *** under this Agreement must be ***; provided , however , that Sanofi ***.

9.9 Obligation of ***. IMDZ will arrange for ***, and ensure that IMDZ or *** will have ***. IMDZ shall have such *** in a time frame ***.

9.10 Change of Control; ***. Upon (i) a Change of Control of IMDZ to a Third Party that either is ***, (ii) ***, (iii) ***, or (iv) ***, Sanofi shall have *** (the “ Sanofi ***”); provided , that ***, then IMDZ will *** to Sanofi such that Sanofi will be able to ***.


10.	JOINT *** COMMITTEE

10.1 Size and Objectives . The Parties shall establish a joint *** committee within thirty (30) days after the Effective Date (the “ Joint *** Committee ” or the “***”). The Joint *** Committee shall be comprised of three representatives designated by each Party (or such other number as the Parties may agree). The Joint *** Committee shall be responsible for establishing and overseeing the *** activities for the ***; provided , that the Joint *** Committee may not change any of the rights or obligations of the Parties set forth in Article 9 .

10.2 Members . Members of the Joint *** Committee may be represented at any meeting by a designee who is appointed by such member for such meeting and who has authority to act on

– 21 –

behalf of such member. The chairperson of the Joint *** Committee shall be designated by Sanofi from one of its representative members, subject to the written approval of IMDZ, not to be unreasonably withheld, conditioned or delayed. IMDZ shall designate one of its representative members as secretary to the Joint *** Committee, subject to the written approval of Sanofi, not to be unreasonably withheld, conditioned or delayed. Each Party shall be free to replace its representative members with new appointees, subject to written notice to the other Party.

10.3 Responsibilities . The duties of the Joint *** Committee include:

(a) coordinate *** and other *** logistics;

(b) discuss ***-related issues, including ***, and *** issues;

(d) review and discuss proposals to engage, *** and maintain ***, including Third Party ***, taking into account where they are located;

(e) discuss the content and scope of any *** undertaken, or to be undertaken, relating to *** Third Party ***;

(f) discuss requirements for ***;

(g) discuss *** issues related to *** activities, including changes in ***; and

(h) perform such other functions as may be appropriate with respect to the ***.

10.4 Meetings . The Joint *** Committee shall meet either in person or by audio or video teleconference at least *** every Calendar Year, and more frequently as the Parties mutually deem appropriate, on such dates and at such times as the Parties shall agree, on ten (10) days’ written notice to each Party unless such notice is waived by the Parties. The Joint *** Committee may convene or be polled or consulted from time to time by means of telecommunications, video conferences or correspondence, as deemed necessary or appropriate by the Parties. To the extent that meetings are held in person, they shall alternate between the offices of the Parties unless the Parties otherwise agree. The chairperson shall be responsible for sending notices of meetings to all members. The Parties shall endeavor to hold the first meeting of the *** within thirty (30) days after the establishment of the ***.

10.5 Decisions . A quorum for a meeting of the Joint *** Committee shall require the presence of at least one IMDZ member (or designee) and at least one Sanofi member (or designee) in person or by telephone. All decisions made or actions taken by the Joint *** Committee shall be made by consensus. If the *** is unable to reach a consensus decision within *** after it has met and attempted to reach such decision, then either Party may, by written notice to the other, have such issue referred to the Chief Executive Officer of IMDZ, or such other person as he or she designates from time to time, and the most senior executive officer responsible for *** at the ultimate parent entity of Sanofi, or such other person as he or she designates from time to time (collectively, the “ Executive Officers ”), for resolution. The Executive Officers shall meet promptly to discuss the

– 22 –

matter submitted and to determine a resolution. If the Executive Officers are unable to determine a resolution in a timely manner, which shall in no case be more than thirty (30) days after the matter was referred to them, then the matter shall be decided by ***; provided , however , that (a) *** shall not have the final decision-making authority regarding ***, and (b) *** shall not use its final decision-making authority to impose additional obligations *** other than the obligations included in this Agreement, the *** or the *** without *** prior written consent, which consent may be withheld in *** sole discretion. The *** shall not have any power to otherwise amend, modify or waive compliance with this Agreement, the *** or the ***.

10.6 Minutes . Within fifteen (15) days after each Joint *** Committee meeting, the secretary of the Joint *** Committee shall prepare and distribute minutes of the meeting, which shall provide a description in reasonable detail of the discussions had at the meeting and a list of any actions, decisions or determinations approved by the Joint *** Committee. The secretary shall be responsible for circulation of all draft and final minutes. Draft minutes shall be first circulated to the chairperson, edited by the chairperson and then circulated in final draft form to all members of the Joint *** Committee sufficiently in advance of the next meeting to allow adequate review and comment prior to the meeting. Minutes shall be approved or disapproved, and revised as necessary, at the next meeting. Final minutes shall be distributed to the members of the Joint *** Committee.

10.7 Expenses . Each Party shall be responsible for all travel and related costs for its representatives to attend meetings of, and otherwise participate on, the Joint *** Committee.

10.8 Term . Unless otherwise agreed to by the Parties, the Joint *** Committee shall exist as long as *** under this Agreement. If any decision making authority assigned to the Joint *** Committee under this Agreement necessarily extends beyond the term of the Joint *** Committee as defined in the previous sentence, then such decision making authority shall be automatically transferred to the Alliance Managers. If the Alliance Managers (or their designees) cannot reach agreement with respect to a matter that is a subject of their decision-making authority, then the matter shall be referred for further review and resolution to the Executive Officers. The designated Executive Officers of each Party shall use reasonable efforts to resolve the matter within *** after the matter is referred to them. If the designated Executive Officers cannot resolve any such matter within such ***, the matter shall be decided by ***, subject to the proviso in Section 10.5 . Upon any termination of the Joint *** Committee, the Alliance Managers will remain the contact persons for the exchange of information between the Parties.

10.9 Sub-Committees . The *** may establish such other committees (each, a “ Sub-Committee ”) as it deems appropriate. Each Sub-Committee shall contain at least one IMDZ representative, and one Sanofi representative, and the chairperson of each such Sub-Committee shall be designated by *** (subject to the approval of ***, not to be unreasonably withheld).


11.	REPRESENTATIONS AND WARRANTIES

11.1 Representations and Warranties of Both Parties . Each Party represents and warrants to the other Party that, as of the Effective Date:

– 23 –

(a) such Party is duly organized and validly existing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to enter into this Agreement and to carry out the provisions hereof;

(b) such Party has taken all corporate action necessary to authorize the execution and delivery of this Agreement and the performance of its obligations under this Agreement;

(c) this Agreement is a legal and valid obligation of such Party, binding upon such Party and enforceable against such Party in accordance with the terms of this Agreement except as such enforceability may be affected by laws affecting creditors’ rights generally and general equitable principles; the execution, delivery and performance of this Agreement by such Party do not and shall not conflict with any agreement, instrument or understanding, oral or written, to which such Party is a party or by which such Party may be bound, or violate any law or regulation of any court, governmental body or administrative or other agency having authority over such Party; and all consents, approvals and authorizations from all Governmental Authorities or other Third Parties required to be obtained by such Party in connection with the execution, delivery and performance of this Agreement have been obtained;

(d) such Party has sufficient facilities, experienced personnel and other capabilities to enable it to perform its obligations under this Agreement; and

(e) no Person has or will have, as a result of the transactions contemplated by this Agreement, any right, interest or valid claim against or upon such Party for any commission, fee or other compensation as a finder or broker because of any act by such Party or of any agent of such Party.

11.2 Additional Representations and Warranties of IMDZ . IMDZ represents and warrants to Sanofi that, as of the Effective Date:

(a) IMDZ is the owner of, or has exclusive rights to, all of the Patents included in the IMDZ Licensed Technology, and, in each case, has the exclusive right to grant the licenses or sublicenses, as the case may be, granted to Sanofi under this Agreement;

(b) all Patents included in the IMDZ Licensed Technology consist of either patent applications that have been filed and are pending as of the Effective Date, or issued letters patent that are in full force and effect and have been maintained through the Effective Date;

(d) IMDZ is not aware of any ***;

(e) IMDZ has the right to grant the licenses or sublicenses, as the case may be, granted under this Agreement for all of the Know-How and Inventions included in IMDZ Licensed Technology in existence on the Effective Date;

(f) ***;

– 24 –

(g) IMDZ has not entered into any agreement with any Third Party which is in conflict with the rights granted to Sanofi under this Agreement, and the execution and performance of this Agreement by IMDZ does not and shall not violate any agreement or undertaking to which IMDZ is a party; and

(h) *** all of the data and information that IMDZ has provided to Sanofi prior to the Effective Date relating to the IMDZ Licensed Technology ***, and to the Field in general, are materially accurate, and IMDZ has not omitted therefrom any material data or information in IMDZ’s possession or control.


12.	CONFIDENTIALITY

12.1 Confidentiality; Exceptions . Except to the extent expressly authorized by this Agreement or otherwise agreed in writing, the Parties agree that, during the term of this Agreement and for ***, each Party, its Affiliates, Sublicensees and Service Providers, if any (collectively, a “ Receiving Party ”), shall keep completely confidential, shall not publish or otherwise disclose and shall not use for any purpose other than the performance of this Agreement both the terms of this Agreement as well as any other information (including, but not limited to, any information in reports, scientific and manufacturing information and plans, marketing and business plans and financial and personnel matters relating to a Party of its present or future products, sales, suppliers, customers, employees, investors or business) furnished to it by the other Party, its Affiliates or its Sublicensees or Service Providers, (collectively, a “ Disclosing Party ”), (and shall ensure that its and its Affiliates’ and its Sublicensees’ and Service Providers’ respective directors, officers, employees or agents do likewise), except to the extent that it can be established by the Receiving Party by competent proof that such information: (a) is, or hereafter becomes, generally available to the public other than by reason of any default by the Receiving Party with respect to its confidentiality obligations hereunder; (b) was already known to the Receiving Party at the time of disclosure by the Disclosing Party; (c) was lawfully disclosed to the Receiving Party by a Third Party who was not in default of any confidentiality obligation to the Disclosing Party; or (d) is independently developed by or for the Receiving Party without reference to or reliance upon the information furnished by the Disclosing Party (all such information to which none of the foregoing exceptions apply, “ Confidential Information ”).

12.2 Exclusions to Confidentiality . The restrictions contained in Section 12.1 shall not apply to any Confidential Information in the hands of a Receiving Party that (a) is submitted by the Receiving Party to Regulatory Authorities to facilitate the issuance of Regulatory Approvals for any Licensed Product, provided that reasonable measures shall be taken to assure confidential treatment of such information; (b) is provided by Sanofi to any Third Party under appropriate terms and conditions, including confidentiality provisions equivalent to those in this Agreement, for Research, Development, Commercialization or Manufacturing purposes, and sublicensing or potential sublicensing; or (c) is otherwise required to be disclosed in compliance with Applicable Law (including, without limitation, to comply with any governmental or stock exchange disclosure requirements) or an order by a court or other Governmental Authority having competent jurisdiction; provided , however , that if a Receiving Party is required to make any such disclosure of the Disclosing Party’s Confidential Information, such Receiving Party shall, except where impracticable for

– 25 –

necessary disclosures (for example to physicians conducting studies or to health authorities), give reasonable advance notice to the Disclosing Party of such disclosure requirement and, except to the extent inappropriate in the case of patent applications or otherwise, will use its best efforts to secure confidential treatment of such Confidential Information required to be disclosed.

12.3 Protection of IMDZ’s Trade Secrets . Sanofi expressly acknowledges that certain of IMDZ’s *** are trade secrets. In addition to Sanofi’s obligation to maintain the confidentiality of the *** as Confidential Information under Section 12.1 , Sanofi agrees to use reasonably prudent and commercially accepted practices designed to maintain and ensure the security and protection of trade secrets and highly confidential information and restrict the use and disclosure of the *** to prevent them from falling into the public domain or the possession of unauthorized Persons. This Section 12.3 shall survive the expiration or termination of this Agreement for so long as the *** remain protected as trade secrets under Applicable Law.

12.4 Injunctive Relief . The Parties acknowledge that monetary damages alone may not adequately compensate the Disclosing Party in the event of a breach by the Receiving Party of this Article 12 , and that, in addition to all other remedies available to the Disclosing Party under this Agreement, at law or in equity, it may be entitled to injunctive relief for the enforcement of its rights under this Article 12 , without the posting of a bond or other security, and to an accounting of profits made during the period of any breach of the Receiving Party’s obligations under this Article 1211.2(h) .


13.	INTELLECTUAL PROPERTY

13.1 Patent Enforcement .

(a) Each Party shall notify the other Party promptly after such Party becomes aware of any alleged infringement within the Field of any Patent licensed under this Agreement in any country in the Territory. Except as provided in Section 13.1(b) , IMDZ shall have the first right, but not the duty, to institute patent infringement actions against Third Parties with respect to any such alleged infringement of any Patent licensed to Sanofi under this Agreement. Sanofi shall execute all reasonable, necessary and proper documents and take such actions as shall be appropriate to allow IMDZ to institute and prosecute infringement actions under this Section 13.1(a) .

(b) In the event IMDZ elects not to, or does not, exercise its rights under Section 13.1(a) with respect to any alleged infringement within the Field of a Patent licensed to Sanofi under this Agreement within *** of receiving notice thereof, Sanofi shall have the right, but not the duty, to institute patent infringement actions against Third Parties with respect to any such alleged infringement. Sanofi shall take all such actions under this Section 13.1(b) in reasonable consultation with IMDZ and shall keep IMDZ apprised as to the status of any such infringement action Sanofi institutes. IMDZ shall execute all reasonable, necessary and proper documents and take such actions as shall be appropriate to allow Sanofi to institute and prosecute infringement actions under this Section 13.1(b) .

(c) The costs and expenses of bringing and maintaining any infringement action under Section 13.1(a) or Section 13.1(b) shall be ***. Any damages, settlements, accounts or profits

– 26 –

or other financial compensation recovered from a Third Party based upon such suit, after deducting the actual Out-of-Pocket Expenses of Sanofi and IMDZ (including reasonable attorney’s fees) incurred in pursuing such suit (such net amount, the “ Recovery ”), will be ***

13.2 Infringement Actions by Third Parties .

(a) Each Party shall notify the other Party promptly in writing of any claim of, or action for, infringement of any Patents owned or licensed by Third Parties which is threatened, made or brought against either Party by reason of either Party’s performance of its obligations under this Agreement or manufacture, use or sale of any Licensed Products in the Territory in the Field.

(b) Except as provided in Section 13.1 in the event that such an action for infringement is commenced solely against a Party or both Parties jointly and/or any of their respective Affiliates or Sublicensees, as the case may be, with respect to any Licensed Product Developed and Commercialized by Sanofi, its Affiliates and/or Sublicensees, Sanofi shall defend such action at its own expense, and IMDZ hereby agrees to assist and cooperate with Sanofi to the extent reasonably necessary, provided that Sanofi shall ***.

(c) The costs and expenses of defending any infringement action with respect to a Licensed Product Developed and Commercialized by Sanofi, its Affiliates, Sublicensees and/or Service Providers shall be ***.

(d) During the pendency of any such action, Sanofi shall continue to pay all royalties due hereunder. Subject to Section 7.4 , Sanofi shall be fully liable for the payment of any award for damages, or any amount due pursuant to any settlement entered into by Sanofi, to the extent that any such action pertains to a Licensed Product Developed and Commercialized by Sanofi and/or its Affiliates, Sublicensees or Service Providers.

(e) ***.

(f) Notwithstanding any provision of this Agreement to the contrary, Sanofi shall not, as a settlement or compromise of any claim by a Third Party that a Patent licensed to Sanofi hereunder is infringed, not infringed, invalid or unenforceable, grant any sublicense, covenant not to sue or agree to any similar arrangement, without the prior consent of IMDZ, which consent shall not be unreasonably withheld or delayed.


14.	INDEMNIFICATION AND INSURANCE

14.1 Indemnification of IMDZ . Sanofi will indemnify IMDZ and its Affiliates, and their respective directors, officers, and employees (each, an “ IMDZ Indemnitee ”), and defend and hold each of them harmless from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) (collectively, “ Losses ”) arising in connection with any and all claims, demands, lawsuits, or investigations by a Third Party (each a “ Third Party Claim ”) against an IMDZ Indemnitee, to the extent caused by or arising out of: (a) any breach by Sanofi of this Agreement; (b) the *** on the part of Sanofi, its Affiliates, or its or their Sublicensees or Service Providers in performing any activity contemplated by this Agreement; or (c) the Research,

– 27 –

Development, ***, use, handling, storage, supply, Commercialization or other disposition of Licensed Products by Sanofi, its Affiliates or its/their Sublicensees or Service Providers.

14.2 Indemnification of Sanofi . IMDZ will indemnify Sanofi, its Affiliates, and their respective directors, officers, and employees (each, a “ Sanofi Indemnitee ”), and defend and hold each of them harmless from and against any and all Losses arising in connection with any Third Party Claim against a Sanofi Indemnitee, to the extent caused by or arising out of: (a) any breach by IMDZ of this Agreement; (b) the *** on the part of IMDZ, its Affiliates, or its or their Sublicensees or Service Providers in performing any activity contemplated by this Agreement; or (c) from *** by IMDZ, its Affiliates, or its or their Service Providers, in each case, excluding any Losses to the extent Sanofi has an obligation to indemnify IMDZ and its Affiliates pursuant to Section 14.1 .

14.3 Notice of Claim . All indemnification claims in respect of any Sanofi Indemnitee or IMDZ Indemnitee seeking indemnity under Sections 14.1 or 14.2 (collectively, the “ Indemnitees ” and each an “ Indemnitee ”) will be made solely by the corresponding Party (the “ Indemnified Party ”). The Indemnified Party will give the indemnifying Party (the “ Indemnifying Party ”) prompt written notice (an “ Indemnification Claim Notice ”) of any Losses upon which such Indemnified Party intends to base a request for indemnification under Section 14.1 or 14.2 , but in no event will the Indemnifying Party be liable for any Losses that result from any delay in providing such notice. Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss are known at such time). Together with the Indemnification Claim Notice, the Indemnified Party will furnish promptly to the Indemnifying Party copies of all notices and documents (including court papers) received by any Indemnitee in connection with the Third Party Claim.

14.4 Control of Defense . At its option, the Indemnifying Party may assume the defense of any Third Party Claim, subject to indemnification as provided for in Sections 14.1 or 14.2 , by giving written notice to the Indemnified Party within *** after the Indemnifying Party’s receipt of an Indemnification Claim Notice. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may select and appoint the lead legal counsel for the defense of the Third Party Claim. Should the Indemnifying Party assume the defense of a Third Party Claim, the Indemnifying Party will not be liable to the Indemnified Party or any other Indemnitee for any legal expenses subsequently incurred by such Indemnified Party or other Indemnitee in connection with the analysis, defense or settlement of the Third Party Claim, except as provided in Section 14.5 .

14.5 Right to Participate in Defense . Without limiting Section 14.4 , any Indemnitee will be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided , however , that such employment will be at the Indemnitee’s own expense unless (a) the employment thereof has been specifically authorized by the Indemnifying Party in writing, or (b) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 14.4 (in which case the Indemnified Party will control the defense).

14.6 Settlement . With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that will not result in the Indemnitee’s becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnitee in

– 28 –

any manner, and as to which the Indemnifying Party has acknowledged in writing the obligation to indemnify the Indemnitee hereunder, the Indemnifying Party will have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the Indemnifying Party, in its sole discretion, will deem appropriate. The Indemnifying Party will pay all amounts on behalf of the Indemnified Party at or prior to the time of the entry of judgment. With respect to all other Losses in connection with Third Party Claims, where the Indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 14.4 , the Indemnifying Party will have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss provided it obtains the prior written consent of the Indemnified Party (which consent will be at the Indemnified Party’s sole and absolute discretion). The Indemnifying Party that has assumed the defense of the Third Party Claim in accordance with Section 14.4 will not be liable for any settlement or other disposition of a Loss by an Indemnitee that is reached without the written consent of such Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend any Third Party Claim, no Indemnitee will admit any liability with respect to, or settle, compromise or discharge, any Third Party Claim without first offering to the Indemnifying Party the opportunity to assume the defense of the Third Party Claim in accordance with Section 14.5 .

14.7 Cooperation . If the Indemnifying Party chooses to defend any Third Party Claim, the Indemnified Party will, and will cause each other Indemnitee to, cooperate in the defense thereof and will furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection with the defense of such Third Party Claim. Such cooperation will include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim, and making Indemnitees and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The Indemnifying Party will reimburse the Indemnified Party for *** in connection with such cooperation.

14.8 Expenses . Except as provided above, the reasonable and verifiable costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any claim will be reimbursed on a Calendar Quarter basis by the Indemnifying Party, without prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the Indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.

14.9 Insurance . During the Term, each Party will have and maintain such types and amounts of liability insurance, including self-insurance, as is normal and customary in the industry generally for similarly situated parties, and will upon request provide the other Party with a certificate of insurance in that regard, along with any amendments and revisions thereto.


15.	TERM; TERMINATION

– 29 –

15.1 Term . This Agreement shall commence as of the Effective Date and, unless sooner terminated as provided hereunder, shall expire as follows:

(a) As to each Licensed Product in each country in the Territory, this Agreement shall expire, subject to the provisions of this Section 15.1 , upon the expiration of all payment obligations arising under Section 7.3 of this Agreement with respect to such Licensed Product in such country.

(b) This Agreement shall expire in its entirety, subject to the provisions of this Section 15.1 , upon the expiration of the all payment obligations arising under Section 7.3 of this Agreement with respect to all Licensed Product in all countries in the Territory (the “ Term ”).

(d) If notwithstanding the expiration of all payment obligations arising under Section 7.3 , a patent application is pending that would, if issued, constitute a Valid Claim resulting in a payment obligation under Section 7.3 , then the Term shall continue for so long as such patent application is pending, or the patent application is finally abandoned or rejected and no further appeal exists.

15.2 Effect of Expiration . Following the expiration of this Agreement with respect to a Licensed Product in a country in the Territory pursuant to Section 15.1(a) , Sanofi shall have the royalty-free, perpetual right to make, have made, import, export, use, have used, market, offer for sale and sell such Licensed Products in the Field such country. Following the expiration of the Term pursuant to Section 15.1(b) , Sanofi shall have the royalty-free, perpetual right to make, have made, import, export, use, have used, market, offer for sale and sell all Licensed Products in the Field in all countries in the Territory.

15.3 Termination by Either Party . Each Party shall have the right to terminate this Agreement, upon notice to the other Party, in the event that:

(a) the other Party shall have: (i) voluntarily commenced any proceeding or filed any petition seeking relief under the bankruptcy, insolvency or other similar laws of any jurisdiction, (ii) applied for, or consented to, the appointment of a receiver, trustee, custodian, sequestrator, conciliator, administrator or similar official for it or for all or substantially all of its property, (iii) filed an answer admitting the material allegations of a petition filed against or in respect of it in any such proceeding, (iv) made a general assignment for the benefit of creditors of all or substantially all of its assets, (v) admitted in writing its inability to pay all or substantially all of its debts as they become due, or (vi) taken corporate action for the purpose of effecting any of the foregoing; or

(b) an involuntary proceeding shall have been commenced, or any involuntary petition shall have been filed, in a court of competent jurisdiction seeking: (i) relief in respect of the other Party, or of its property, under the bankruptcy, insolvency or similar laws of any jurisdiction, (ii) the appointment of a receiver, trustee, custodian, sequestrator, conciliator, administrator or similar official for such other Party or for all or substantially all of its property, or (iii) the winding-up or liquidation of such other Party, and, in each case, such proceeding or petition shall have

– 30 –

continued undismissed for sixty (60) days, or an order or decree approving or ordering any of the foregoing shall have continued unstayed, unappealed and in effect for thirty (30) days.

15.4 Termination by Sanofi .

(a) Sanofi shall have the right to terminate this Agreement, upon notice to IMDZ, in the event IMDZ defaults with respect to any of its material obligations under this Agreement and does not cure such default within *** after the receipt of a notice from Sanofi specifying the nature of, and requiring the remedy of, such default (or, if such default cannot be cured within such *** period, if IMDZ does not commence and diligently continue actions to cure same during such *** period). Any termination pursuant to this Section 15.4(a) shall be without prejudice to any of Sanofi’s other rights under this Agreement, and in addition to any other remedies available to it at law or in equity.

(b) Notwithstanding any other provision of this Agreement, Sanofi shall have the right to terminate this Agreement, in its entirety at any time upon six (6) months written notice to IMDZ.

15.5 Termination by IMDZ .

(a) IMDZ may terminate this Agreement, upon written notice to Sanofi, if Sanofi voluntarily on its own behalf (other than in response to a prior claim of infringement by IDRI, IMDZ or any of their Affiliates or licensees against Sanofi or any of its Sublicensees) institutes against IMDZ or IDRI a lawsuit or proceeding in a court or before another tribunal of competent jurisdiction in the nature of a Patent Challenge with respect to any Patent included in the IMDZ Licensed Technology. In addition, if a Sublicensee of Sanofi brings a Patent Challenge against IMDZ or IDRI with respect to any Patent included in the IMDZ Licensed Technology (other than in response to a prior claim of infringement by IDRI, IMDZ or any of their Affiliates or licensees against Sanofi or any of its Sublicensees), then IMDZ may send a written demand to Sanofi to terminate such sublicense. If Sanofi fails to so terminate such sublicense within *** after IMDZ’s demand, IMDZ may immediately terminate this Agreement and/or the licenses granted hereunder.

– 31 –

(b) IMDZ may terminate this Agreement, upon written notice to Sanofi, in the event that Sanofi defaults with respect to any of its material obligations under Section 6.1 of this Agreement and does not cure such default within *** after the receipt of a notice from IMDZ specifying the nature of, and requiring the remedy of, such default (or, if such default cannot be cured within such *** period, if Sanofi does not commence and diligently continue actions to cure same during such *** period); provided , however , that if any such default is limited to Sanofi’s obligations with respect to a particular Licensed Product and/or a particular country in the Territory, then any termination of this Agreement by IMDZ pursuant to this Section 15.5(b) due to such default shall be limited to Sanofi’s rights under this Agreement with respect to such Licensed Product and/or country and all of Sanofi’s other rights and licenses hereunder shall continue pursuant to the terms of this Agreement. Any termination pursuant to this Section 15.5(b) shall be without prejudice to any of IMDZ’s other rights under this Agreement, and in addition to any other remedies available to it by law or in equity.

(c) Additionally, without limiting any other right of IMDZ, IMDZ may terminate this Agreement, upon *** prior written notice if, ***, Sanofi, subject to the Force Majeure provisions of Article 16 , *** Development of *** Licensed Products for *** due to ***; provided , that Sanofi does not (x) within such *** period, provide IMDZ with ***, and (y) within *** from the date of the ***; provided , further , *** within *** from the date such *** shall entitle IMDZ to terminate this Agreement upon written notice with immediate effect.

15.6 Effect of Termination. Subject to Section 15.7 , if this Agreement is terminated, either in its entirety or in a particular country, by either Party, in addition to any other remedies available at law or in equity:

(a) all licenses and rights granted by IMDZ to Sanofi under this Agreement in the IMDZ Licensed Technology, either in their entirety or with respect to the terminated country, shall terminate;

(b) Sanofi shall promptly, at its own expense, (i) pay to IMDZ all outstanding costs and expenses, if any, accrued pursuant to this Agreement prior to termination; and (ii) at Sanofi’s expense, return to IMDZ all relevant records and materials, either in the Territory or with respect to the terminated countries, in Sanofi’s possession or control containing IMDZ’s Confidential Information (provided that Sanofi may keep one (1) copy of such Confidential Information for archival purposes only); provided , however , that if this Agreement is terminated by Sanofi pursuant to Section 15.3 such transfer shall be at IMDZ’s expense; and

(c) IMDZ shall promptly, at its own expense, return to Sanofi all relevant records and materials in IMDZ’s possession or control containing Sanofi’s Confidential Information (provided that IMDZ may keep one (1) copy of such Confidential Information for archival purposes only); provided , however , that, if this Agreement is terminated by IMDZ pursuant to Section 15.3(a) , 15.3(b), 15.5(a) , 15.5(b) or 15.5(c) , such transfer shall be at Sanofi’s expense.

– 32 –

15.7 ***. If this Agreement is terminated in its entirety or in a particular country by Sanofi pursuant to Section 15.4(b) , or by IMDZ pursuant to Section 15.3 or Section 15.5 , then IMDZ shall have *** to notify Sanofi in writing that it wishes to ***. After receiving a ***, Sanofi shall promptly:


(i)	transfer to IMDZ (or its designee) or provide copies of *** that relate to Licensed Products, either in the Territory or with respect to the terminated country;


(ii)	provide IMDZ (or its designee) with all information regarding, ***;


(iii)	***;


(iv)	to the extent Sanofi owns or holds any right, title and interest in any ***; and


(v)	***.

(b) ***.


(i)	Subsequent to any ***:



***	***
***	***%
***	***%
***	***%


(ii)	Notwithstanding the foregoing, IMDZ’s obligation to ***.

Subsequent to ***:



***	***
***	***
***	***
***	***

– 33 –

15.8 Accrued Rights, Surviving Obligations .

(a) Termination, relinquishment or expiration of this Agreement for any reason shall be without prejudice to any rights which shall have accrued to the benefit of either Party prior to such termination, relinquishment or expiration. Such termination, relinquishment or expiration shall not relieve either Party from obligations which are expressly indicated to survive termination or expiration of this Agreement.

(b) Termination, relinquishment or expiration of this Agreement shall not terminate each Party’s obligation to pay all royalties, milestone payments and other monetary obligations that may have accrued hereunder prior to such termination. In addition to the termination and expiration consequences set forth in this Article 15 , all of the Parties’ rights and obligations under Sections 1 , 7.3(b) (to the extent that IMDZ initiates a *** in accordance with Section 15.7 ), 8 (for amounts owed or already paid, including for amounts owed but not yet paid), 12 , 14 , 15 , 16 , and 17 , shall survive termination, relinquishment or expiration hereof. In addition to the foregoing, and any licenses granted prior to termination or expiration of this Agreement under Sections 2.6(a ) and 2.6(d) , shall survive the termination, relinquishment or expiration hereof.


16.	FORCE MAJEURE

Neither Party shall be held liable or responsible to the other Party nor be deemed to be in default under or in breach of any provision of this Agreement for failure or delay in fulfilling or performing any obligation under this Agreement when such failure or delay is due to Force Majeure, and without the fault or negligence of the Party so failing or delaying. For purposes of this Agreement, “ Force Majeure shall be defined as causes beyond the control of the Party, including, without limitation, acts of God; acts, regulations, or laws of any government; war; civil commotion; destruction of production facilities or materials by fire, flood, earthquake, explosion or storm; labor disturbances; epidemic; and failure of public utilities or common carriers. In such event IMDZ or Sanofi, as the case may be, shall immediately notify the other Party of such inability and of the period for which such inability is expected to continue. The Party giving such notice shall thereupon be excused from such of its obligations under this Agreement as it is thereby disabled from performing for so long as it is so disabled and for thirty (30) days thereafter. To the extent possible, each Party shall use reasonable efforts to minimize the duration of any Force Majeure.


17.	MISCELLANEOUS

17.1 Relationship of Parties . Nothing in this Agreement is intended or shall be deemed to constitute a partnership, agency, employment or joint venture relationship between the Parties. Neither Party shall be entitled to, or shall, incur any debts or make any commitments for the other, except to the extent, if at all, specifically provided herein.

17.2 Assignment .

(a) Either Party shall be entitled to assign or otherwise transfer this Agreement to any of its Affiliates upon sixty (60) days prior written notice to the other Party; provided , that

– 34 –

the assigning Party shall remain obligated to the other Party for the performance of its Affiliate under this Agreement.

(b) Either Party may assign this Agreement in whole or in part, including as to a specific Licensed Product, to *** in connection with ***, or ***, at any time within ***.

(c) Except as provided in Sections 17.2(a) and (b) , neither Party shall be entitled to assign, by operation of law or otherwise, its rights hereunder without the express written consent of the other Party.

17.3 Disclaimer of Warranties . EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PARTIES EXPRESSLY DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS, OR ARISING FROM A COURSE OF DEALING OR USAGE OF TRADE PRACTICE. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY DISCLAIMS ANY WARRANTIES WITH RESPECT TO: (A) THE SUCCESS OF ANY STUDY COMMENCED UNDER THIS AGREEMENT, (B) THE SAFETY OR USEFULNESS FOR ANY PURPOSE OF THE INTELLECTUAL PROPERTY LICENSED UNDER THIS AGREEMENT; AND (C) THE VALIDITY, ENFORCEABILITY, OR NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS IT PROVIDES OR LICENSES TO THE OTHER PARTY UNDER THIS AGREEMENT.

17.4 Further Actions . Each Party shall execute, acknowledge and deliver such further instruments, and take all such other acts, as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

17.5 Notice . Any notice or request required or permitted to be given under or in connection with this Agreement shall be deemed to have been sufficiently given if in writing and personally delivered or sent by certified mail (return receipt requested), facsimile transmission (receipt verified), or overnight express courier service (signature required), prepaid, to the Party for which such notice is intended, at the address set forth for such Party below:


(i)	In the case of Sanofi, to: Sanofi 54 rue La Boétie 75008 Paris, FRANCE Attention: General Counsel Facsimile No.: + 33 1 53 77 43 03


(ii)	In the case of IMDZ, to: Immune Design Corp.

1616 Eastlake Ave. E, Suite 310

Seattle, Washington 98102

United States of America

Attn: Legal Department

– 35 –

Facsimile: +1 206-682-0648

with a copy (which shall not constitute notice) to:

Immune Design Corp.

601 Gateway Boulevard, Suite 1020

South San Francisco, California 94080

United States of America

Attn: Stephen R. Brady

Facsimile: +1 855-373-3173

Hogan Lovells US LLP

100 International Drive, Suite 2000

Baltimore, Maryland 21202

United States of America

Attn: Asher M. Rubin

Facsimile: +1 410-659-2701

or to such other address for such Party as it shall have specified by like notice to the other Party, provided that notices of a change of address shall be effective only upon actual receipt thereof. If delivered personally or by facsimile transmission, the date of delivery shall be deemed to be the date on which such notice or request was given. If sent by overnight express courier service, the date of delivery shall be deemed to be the next Business Day after such notice or request was deposited with such service. If sent by certified mail, the date of delivery shall be deemed to be the fifth (5 ^th ) Business Day after such notice or request was deposited with the postal service in the country of mailing.

17.6 Use of Name . Except as otherwise provided herein, including Section 17.7 , neither Party shall have any right, express or implied, to use in any manner the name or other designation of the other Party or any other trade name or trademark of the other Party (including, without limitation, any Trademark) for any purpose in connection with the performance of this Agreement.

17.7 Public Announcements .

(a) Except as required by law (including, without limitation, the applicable disclosure requirements of any relevant regulatory authority or stock exchange) and as permitted by Section 12.2 , IMDZ shall not make any public announcement concerning *** without the prior written consent of Sanofi, which shall not be unreasonably withheld, conditioned or delayed. It shall not be unreasonable for Sanofi to withhold consent with respect to any public announcement containing any of Sanofi’s Confidential Information. Subject to the foregoing, in the event of any required or proposed public announcement by IMDZ, ***.

(b) Following Sanofi’s consent to or approval of the public announcement of any information pursuant to this Section 17.7 , IMDZ shall be entitled to make subsequent public announcements of such information without renewed compliance with this Section 17.7 , unless the scope and/or duration of such consent or approval is expressly limited.

– 36 –

(c) Notwithstanding anything in this Section 17.7 to the contrary, upon execution of this Agreement by both Parties, the Parties will jointly issue the press release attached as Exhibit H to the Supplemental Information Package.

17.8 Publications . Neither Party shall publish and/or make scientific presentations (or allow any Third Party to make any publication or presentation on its behalf), the subject matter of which relates to or concerns the Licensed Products, the IMDZ Licensed Technology exclusively within the Field, the Sanofi Technology or any activities either Party may perform pursuant to this Agreement unless such Party complies in all respects with the provisions of this Section 17.8 . The Party proposing to publish or make a presentation shall deliver to the other Party copies of all articles and papers to be published, and reasonably detailed abstracts of presentations to be made, concerning such subject matter at least *** prior to the anticipated submission or presentation date thereof. The other Party shall have *** after receipt of said copies to approve such proposed publication or presentation or to object to such proposed publication or presentation because ***. In the event that the reviewing Party makes such objection, the Party proposing to publish or make a scientific presentation shall (a) to the extent the proposed scientific publication or presentation discloses ***, and (b) in the event that any proposed scientific publication or presentation discloses ***. Proper acknowledgement will be made for the ownership of each Party’s intellectual property that is the subject of the publication or presentation, and the contributions, if any, of each Party to the research results or other information and material being published. For the avoidance of doubt, investor, partnering or similar presentations shall not be deemed to be publications under this Section 17.8 , but instead are to be addressed under Section 17.7 .

17.9 Waiver . A waiver by either Party of any of the terms and conditions of this Agreement in any instance shall not be deemed or construed to be a waiver of such term or condition for the future, or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative, and none of them shall be in limitation of any other remedy, right, undertaking, obligation or agreement of either Party.

17.10 Compliance with Export Laws . Nothing in this Agreement shall be deemed to permit a Party to export, re-export or otherwise transfer any Licensed Product sold under this Agreement without compliance with Applicable Law.

17.11 Severability . When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but if any provision of this Agreement is held to be prohibited by or invalid under Applicable Law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.

17.12 Amendment. No amendment, modification or supplement of any provisions of this Agreement shall be valid or effective unless made in writing and signed by a duly authorized officer of each Party.

17.13 Governing Law; Dispute Resolution .

(a) This Agreement, and any claim, dispute, or controversy of whatever nature arising out of or relating to this Agreement will be governed by and construed in accordance with

– 37 –

the laws of ***, without giving effect to any principles, statutory provisions or other rules of choice of law that would require the application of the laws of a different country.

(b) The Parties will try to settle their differences amicably between themselves. If any claim, dispute, or controversy of whatever nature arising out of or relating to this Agreement, including the performance or alleged non-performance of a Party of its obligations under this Agreement arises between the Parties (each a “ Dispute ”), a Party will, before initiating any proceedings pursuant to Section 17.13(c) , notify the other Party in writing of such Dispute. If the Parties are unable to resolve the Dispute within *** of receipt of the written notice by the other Party, such dispute will be referred to the Chief Executive Officer of IMDZ, or his designee, and the Executive Vice President of R&D of Sanofi’s ultimate parent company, or his designee, who will meet in person at least once and use their good faith efforts to resolve the Dispute within *** after such referral.

(c) If a Dispute is not resolved as provided in the preceding Section 17.13(b) , whether before or after termination of this Agreement, the Parties hereby agree that such Dispute will be resolved by final and binding arbitration conducted in accordance with the terms of this Section 17.13(c) . The arbitration will be held in *** according to the ***. The arbitration will be conducted by a panel of *** arbitrators with significant experience in the pharmaceutical industry, unless otherwise agreed by the Parties, appointed in accordance with applicable *** rules. Any arbitration herewith will be conducted in the English language to the maximum extent possible. The arbitrators will be instructed not to award any punitive or special damages and will render a written decision no later than *** following the selection of the arbitrators, including a basis for any damages awarded and a statement of how the damages were calculated. Any award will be promptly paid in United States dollars free of any tax, deduction or offset. Each Party agrees to abide by the award rendered in any arbitration conducted pursuant to this Section 17.13(c) . With respect to money damages, except as set forth in Section 17.14 , nothing contained herein will be construed to permit the arbitrator or any court or any other forum to award punitive or exemplary damages. By entering into this agreement to arbitrate, the Parties expressly waive any claim for punitive or exemplary damages. Each Party will pay its legal fees and costs related to the arbitration (including witness and expert fees). Judgment on the award so rendered will be final and may be entered in any court having jurisdiction thereof.

(d) Nothing in this Section 17.13 will preclude either Party from seeking equitable relief or interim or provisional relief from a court of competent jurisdiction, including a temporary restraining order, preliminary injunction or other interim equitable relief, concerning a dispute either prior to or during any arbitration if necessary to protect the interests of such Party or to preserve the status quo pending the arbitration proceeding.

17.14 No Consequential Damages . EXCEPT WITH RESPECT TO BREACHES OF ARTICLE 12 , THE PARTIES’ INDEMNIFICATION OBLIGATIONS HEREUNDER AND A PARTY’S GROSS NEGLIGENCE AND WILLFUL MISCONDUCT, IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES OR SUBLICENSEES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES OR SUBLICENSEES FOR SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES,

– 38 –

WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, OR CLAIMS OF CUSTOMERS OF ANY OF THEM OR OTHER THIRD PARTIES FOR SUCH OR OTHER DAMAGES.

17.15 Entire Agreement .

(a) Subject to 17.15(b) , this Agreement sets forth the entire agreement and understanding between the Parties as to the subject matter hereof and merges all prior discussions and negotiations between them, and neither of the Parties shall be bound by any conditions, definitions, warranties, understandings or representations with respect to such subject matter other than as expressly provided herein or as duly set forth on or subsequent to the Effective Date in writing and signed by a proper and duly authorized officer or representative of the Party to be bound thereby. Without limiting the generality of the foregoing, the terms and conditions of this Agreement shall supersede the terms and conditions of any confidentiality, non-disclosure or similar such agreement that the Parties may have executed prior to the Effective Date.

(b) At or around the same time of the execution of this Agreement, the Parties may also enter into *** (as amended, the “*** Agreement ”), wherein the “Field” (as defined therein, the “*** Field ”) is different than the Field. The Parties acknowledge and agree that any restrictions in this Agreement placed on Sanofi, its Affiliates and Sublicensees outside of the Field, or otherwise, shall not apply to, or any way restrict the rights of Sanofi under the *** Agreement in the *** Field. Furthermore, so long as the *** Agreement is in full force and effect, any rights or other benefits outside of the Field granted, bestowed, reverted, or otherwise obtained by IMDZ under this Agreement shall not be interpreted to provide IMDZ such rights within the *** Field.

17.16 Parties in Interest . All the terms and provisions of this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties hereto and their respective permitted successors and assigns.

17.17 Descriptive Headings . The descriptive headings of this Agreement are for convenience only, and shall be of no force or effect in construing or interpreting any of the provisions of this Agreement.

17.18 Counterparts . This Agreement may be executed simultaneously in two counterparts, any one of which need not contain the signature of more than one Party, but both such counterparts taken together shall constitute one and the same agreement.

* * *

– 39 –

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its duly authorized officer as of the day and year first above written.

IMMUNE DESIGN CORP.

By: /s/ Carlos V Paya

Name: Carlos V Paya

Title: President & CEO

AVENTIS INC.

By: /s/ Edgar B. Grass

Name: Edgar B. Grass

Title: Vice President, Treasurer

– 40 –

List of Exhibits to Supplemental Information Package

Exhibit A ***

Exhibit B IDRI AND IMDZ LICENSED PATENTS

Exhibit C PATENT FILING COUNTRY LIST

Exhibit D IDRI LICENSE AGREEMENT

Exhibit E SAFETY DATA

Exhibit F ***

Exhibit G ***

Exhibit H JOINT PRESS RELEASE

– 41 –

CONFIDENTIAL – EXECUTION COPY

SUPPLEMENTAL INFORMATION PACKAGE

This SUPPLEMENTAL INFORMATION PACKAGE (this “ SIP ”) is delivered on August 6, 2014 in connection with the License Agreement, dated as of August 6, 2014 (the “ Agreement ”), between IMMUNE DESIGN CORP., a company duly organized and existing under the laws of the State of Delaware, with a principal place of business at 601 Gateway Blvd., Suite 1020, South San Francisco, California, United States of America, for and on behalf of itself and its Affiliates (“ IMDZ ”), and Aventis Inc., a corporation organized and existing under the laws of Pennsylvania, having offices at 55 Corporate Drive in Bridgewater, New Jersey 08807, for and on behalf of itself and its affiliates (“ Sanofì ”). Capitalized terms used in this SIP without definition shall have the meanings given those terms in the Agreement.

IMDZ and Sanofì hereby acknowledge and agree that the exhibits attached to this SIP are the exhibits referenced in the Agreement as being attached to the SIP and shall be governed by the Agreement.

IN WITNESS WHEREOF, each of the Parties has caused this SIP to be executed by its duly authorized officer as of the day and year first above written.

IMMUNE DESIGN CORP.

By: /s/ Carlos V Paya

Name: Carlos V Paya

Title: President & CEO

AVENTIS INC.

By: /s/ Edgar B. Grass

Name: Edgar B. Grass

Title: Vice President, Treasurer

EXHIBIT A

***

*** INDICATES 4 PAGES OF MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT B

IDRI LICENSED PATENTS

***

*** INDICATES 3 PAGES OF MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT C

PATENT COUNTRY LIST

***

*** INDICATES 1 PAGE OF MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT D

IDRI LICENSE AGREEMENT

See attached.

[Please see Exhibit 10.15 filed with the Company’s Registration Statement on Form S-1 (File No. 333-196979), as filed with the Securities and Exchange Commission on June 23, 2014, which agreement was granted confidential treatment by the Securities and Exchange Commission on July 28, 2014.]

EXHIBIT E

SAFETY DATA

***

EXHIBIT F

***

*** INDICATES 2 PAGES OF MATERIAL THAT WAS OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT WAS REQUESTED. ALL SUCH OMITTED MATERIAL WAS FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 PROMULGATED UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

EXHIBIT G

***

EXHIBIT H

JOINT PRESS RELEASE

See attached.

Sanofi Licenses Immune Design's GLAAS Platform to Explore Novel Approach to Treat Food Allergy

CAMBRIDGE, Mass. and SEATTLE and SOUTH SAN FRANCISCO, Calif., Aug. 7, 2014 (GLOBE NEWSWIRE) -- Sanofi (EURONEXT:SAN) (NYSE:SNY) and Immune Design (Nasdaq:IMDZ), a clinical-stage immunotherapy company, today announced that they have entered into a licensing agreement for use of Immune Design's GLAAS ^TM discovery platform to develop therapeutic agents to treat a selected food allergy.

The incidence of food allergies is increasing worldwide in both developed and undeveloped countries, and especially in children. ¹ Globally, experts believe 220-250 million people may suffer from food allergies. ^2,3 In the United States alone, as many as 15 million people have food allergies, ⁴ with allergic reactions resulting in an emergency room visit every three minutes and averaging more than 200,000 emergency room visits per year. ⁵

"This is an exciting time in the area of immunology research, and our relationship with Immune Design is a great example of how Sanofi has changed our approach to R&D," said Kurt Stoeckli, vice president and head of Global Bio Therapeutics Organization, Sanofi. "With this partnership, we are able to tap into breakthrough science that holds great potential to transform how food allergies are treated, and the lives of those people affected. This kind of innovation is central to our new approach."

Under terms of the agreement, Immune Design has granted Sanofi an exclusive license to discover, develop and commercialize products to treat a selected food allergy. The company has received an undisclosed upfront payment and will be eligible to receive development and commercialization milestones totaling US $168 million, as well as tiered royalties on sales of approved products.

"Our fourth agreement for the use of the GLAAS platform further demonstrates the broad applicability of this approach not only in cancer and infectious diseases, but now in allergic diseases as well," said Stephen Brady, chief business officer at Immune Design. "Due to the immune dysfunction leading to allergic diseases, GLAAS' mechanism of action is well suited to correct the imbalance, allowing for the potential of new therapeutics in the targeted indication that currently uses century-old technologies. We are pleased that Sanofi has decided to develop products for this often life-threatening and growing food allergy."

Under an existing collaborative research arrangement, Sanofi and Immune Design have generated a large set of preclinical data demonstrating that certain formulations within GLAAS, when given

prophylactically or therapeutically, can shift the immune responses in a way that may result in significant protection and reduction from allergy symptoms.

About Sanofi

Sanofi, an integrated global healthcare leader, discovers, develops and distributes therapeutic solutions focused on patients' needs. Sanofi has core strengths in the field of healthcare with seven growth platforms: diabetes solutions, human vaccines, innovative drugs, and consumer healthcare, emerging markets, animal health and the new Genzyme. Sanofi is listed in Paris (EURONEXT:SAN) and in New York (NYSE:SNY).

About GLAAS

Immune Design's GLAAS platform works in vivo and is based on a small synthetic molecule called GLA, which stands for glucopyranosyl lipid adjuvant. GLA selectively binds to the TLR4 receptor and causes potent activation of dendritic cells (DCs) leading to the production of cytokines and chemokines that drive a Th1-type immune response. When GLA is accompanied by an antigen and injected into a patient, the combination is taken up by DCs and leads to the production and expansion of immune cells called CD4 T helper lymphocytes with a Th1 phenotype. These CD4 T cells play a key role in boosting pre-existing CTLs that are specific to the same antigen; and providing help to other immune cells, including B lymphocytes that are the precursor to antibodies, and natural killer cells that are also important in the overall immune response. Immune Design believes that GLAAS product candidates have the potential to target multiple types of cancer, as well as infectious, allergic and autoimmune diseases. GLAAS-based product candidates have now been evaluated in over 1000 subjects in Phase 1 and Phase 2 trials demonstrating an acceptable safety profile and efficacy.

About Immune Design

Immune Design (Nasdaq:IMDZ) is a clinical-stage immunotherapy company employing next-generation in vivo approaches to enable the body's immune system to fight disease. The company's technologies are engineered to activate the immune system's natural ability to create tumor-specific cytotoxic T cells, while enhancing other immune effectors, to fight cancer and other chronic diseases. Immune Design's three on-going Immuno-oncology clinical programs are the product of its two synergistic discovery platforms: DCVex ^TM and GLAAS ^TM , the fundamental technologies of which were licensed from the California Institute of Technology and the Infectious Disease Research Institute, respectively. Immune Design has offices in Seattle, Washington and South San Francisco, California. For more information, visit www.immunedesign.com.

Sanofi Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "plans" and similar expressions. Although Sanofi's management believes that the

expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Sanofi, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties inherent in research and development, future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when to approve any drug, device or biological application that may be filed for any such product candidates as well as their decisions regarding labelling and other matters that could affect the availability or commercial potential of such product candidates, the absence of guarantee that the product candidates if approved will be commercially successful, the future approval and commercial success of therapeutic alternatives, the Group's ability to benefit from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of cost containment policies and subsequent changes thereto, the average number of shares outstanding as well as those discussed or identified in the public filings with the SEC and the AMF made by Sanofi, including those listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in Sanofi's annual report on Form 20-F for the year ended December 31, 2013. Other than as required by applicable law, Sanofi does not undertake any obligation to update or revise any forward-looking information or statements.

Immune Design Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "expect," "plan," "anticipate," "estimate," "intend", "believe" and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. These forward-looking statements are based on Immune Design's expectations and assumptions as of the date of this press release. Each of these forward-looking statements involves risks and uncertainties. Actual results may differ materially from these forward-looking statements. Forward-looking statements contained in this press release include statements regarding the receipt of milestone and royalty payments, the potential to develop new therapeutics and the potential of any future products to prevent and reduce allergy symptoms. Factors that may cause actual results to differ from those expressed or implied in the forward-looking statements in this press release are discussed in Immune Design's filings with the U.S. Securities and Exchange Commission, including the "Risk Factors" contained therein. Except as required by law, Immune Design assumes no obligation to update any forward-looking statements contained herein to reflect any change in expectations, even as new information becomes available.

References

1. "Food Allergy - A Rising Global Health Problem," World Allergy Week 2013. 8-14 April 2013. http://www.worldallergy.org/UserFiles/file/WorldAllergyWeek2013final.pdf. Accessed online, July 28, 2014.

2. Mills EN, Mackie AR, Burny P, Beyer K, Frewer L et al. "The prevalence, cost and basis of food allergy across Europe." Allergy 2007; 62:717-722.

3. Fiocchi A, Sampson HA. "Food Allergy", Section 2.5, in WAO White Book on Allergy, Pawankar R, Canonica GW, Holgate ST, and Lockey RF, editors (Milwaukee, Wisconsin: World Allergy Organization, 2011), pp. 47-53.

4. National Institute of Allergy and Infectious Diseases, National Institutes of Health. Report of the NIH Expert Panel on Food Allergy Research. 2006. Accessed online, July 25, 2014. http://www.niaid.nih.gov/topics/foodallergy/research/pages/reportfoodallergy.aspx

5. Clark S, Espinola J, Rudders SA, Banerji, A, Camargo CA. Frequency of US emergency department visits for food-related acute allergic reactions. J Allergy ClinImmunol. 2011; 127(3):682-683.

# # #

CONTACT: Amy BA, Ph.D.

Sanofi Global R&D Communications

Amy.Ba@sanofi.com

Tel: 646-207-4935

Julie Rathbun

Rathbun Communications (Immune Design)

julie@rathbuncomm.com

Tel: 206-769-9219

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement ”) is made and entered into as of September 30, 2016 (the “ Effective Date ”), between SERGEY YURASOV, M.D., PH.D. (“ Executive ”) and IMMUNE DESIGN CORP. (“ Company ”), a Delaware corporation. Certain capitalized terms used in this Agreement are defined in Article 6.

RECITALS

A. The Company is an immunotherapy company.

B. The Company desires to employ Executive, or to continue Executive’s employment, in the position set forth below, and Executive wishes to be employed, or continue to be employed, by the Company in such position, upon the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE , in consideration of the mutual promises contained herein, the Company and Executive agree as follows:

ARTICLE 1

TERMS OF EMPLOYMENT

1.1. Appointment. Executive shall serve as Senior Vice President of Clinical Development and Chief Medical Officer, reporting to the Chief Executive Officer. During Executive’s employment with the Company, Executive shall (i) devote substantially all of Executive’s business efforts to the Company and (ii) faithfully and to the best of Executive’s abilities and experience, and in accordance with the standards and ethics of the business in which the Company is engaged, perform all duties that may be required of Executive by this Agreement, the Company’s policies and procedures, and such other duties and responsibilities as may be assigned to Executive from time to time, as well as the directives of the Board. During Executive’s employment with the Company, Executive shall not engage in any activity that conflicts with or is detrimental to the Company’s best interests, as determined by the Board or Chief Executive Officer.

1.2. Employment Term . Executive shall commence employment on October 1, 2016. Executive will be employed by the Company on an “at-will” basis. This means that either the Company or Executive may terminate Executive’s employment at any time, for any reason, with or without Cause, and with or without advance notice (provided that Resignation for Good Reason (as defined below) requires certain advanced notice by Executive of Executive’s termination of employment). It also means that Executive’s job title, duties, responsibilities, reporting level, compensation and benefits, as well as the Company’s personnel policies and procedures, may be changed with or without notice at any time in the Company’s sole discretion. This at-will employment relationship shall not be modified by any conflicting actions or representations of any Company employee or other party before or during the term of Executive’s employment.

1.3. Compensation .

a) Annual Base Salary . Executive’s annual base salary shall be $400,000 per year (“ Annual Base Salary ”). Executive’s Annual Base Salary shall be payable in equal installments, less applicable deductions and withholdings, in accordance with the Company’s standard payroll practices. Executive’s Annual Base Salary shall be subject to review by the Company’s Compensation Committee and may be increased or decreased, from time to time.

b) Performance Bonus . In addition to Annual Base Salary, Executive shall be eligible to earn an annual performance bonus of up to 35% of Executive’s Annual Base Salary, which bonus shall be earned upon Executive’s attainment of objectives to be determined by the Board (or the compensation committee thereof) and continued employment with the Company as described below (the “ Target Performance Bonus ”). The amount of and Executive’s eligibility for the Target Performance Bonus shall be determined in the sole discretion of the Board (or the compensation committee thereof). If earned, any Target Performance Bonus shall be paid to Executive, less authorized deductions and applicable withholdings, on or before March 15 ^th following the calendar year during which such bonus was earned. Except as provided in Section 2.2, Executive shall be eligible to earn the Target Performance Bonus only if Executive is actively employed with the Company on both the determination and payment dates for the Target Performance Bonus.

c) New Hire Bonus. Executive shall receive a hiring bonus in the amount of $100,000. The hiring bonus will be paid to you in advance, within 30 days from the start of your employment. You will fully earn the hiring bonus by remaining actively employed by the Company for a period of one (1) year. You agree and understand that that if you choose to terminate your employment at any time before the first anniversary of your start date, or if your employment is terminated for “Cause,” as defined in this document, within the first year of your employment, you will be required to repay to the Company one hundred percent (100%) of the hiring bonus advanced to you.

d) Option Grant . Subject to the approval of the Board, you will be awarded an option to purchase (140,000) shares of the Company’s Common Stock (“ Option Grant ”). The purchase price per share for the Option Grant will be the per share fair market value of the Company’s Common Stock as determined by the Board, or authorized delegate, which shall be the closing price on the date the Option Grant is granted. The Option Grant shall be subject to the terms and conditions of the Equity Plan, and the applicable grant notice and option agreement. The Option Grant will vest (i) with respect to twenty-five percent (25%) of the shares, on the one-year anniversary of the grant, and (ii) with respect to the balance of the shares, in equal monthly installments over the next thirty-six (36) months subject to your continued employment or service with the Company. In addition to the Option Grant, you will be eligible to receive additional stock options to be granted from time to time at the sole discretion of the Board and subject to the terms and conditions approved by the Board of the Equity Plan or any successor plan, including the applicable grant notice and option agreement.

e) Benefits . Executive will be entitled to participate in all of the employee benefits and benefit plans that the Company generally makes available to its full-time employees and executives and for which Executive is eligible in accordance with the Companies policies as in effect from time to time. These benefits are subject to the terms, conditions, and eligibility requirements that govern or apply to them.

1.4. Reimbursement of Expenses . Subject to Section 4.10(c), the Company shall reimburse Executive for Executive’s necessary and reasonable business expenses incurred in connection with Executive’s duties in accordance with the Company’s generally applicable policies.

ARTICLE 2

CHANGE IN CONTROL SEVERANCE BENEFITS


1.	Severance Benefits . Upon a Change in Control Termination, and subject to the limitations and conditions set forth in this Agreement, Executive shall be eligible to receive the benefits set forth in this Article 2.

2.1. Salary and Pro-Rata Bonus Payment . In consideration of Executive’s timely execution and non-revocation of a full release of all claims, in a form provided by the Company and in accordance

with Article 4, the Company shall pay Executive a severance payment equal to (i) the sum of Executive’s Monthly Base Salary and Pro-Rata Bonus multiplied by (ii) the number of months in the Change in Control Severance Period, less applicable withholdings. The severance payment shall be payable (except as set forth in Article 4) in a lump sum on the first regularly-scheduled payroll date occurring on or after the 60 ^th day following the Termination Date.

2.2. Health Continuation Coverage .

a) Provided that Executive is eligible and has made the necessary elections for continuation coverage pursuant to COBRA under a health, dental or vision plan sponsored by the Company, the Company shall pay the applicable premiums (inclusive of premiums for Executive’s dependents for such health, dental or vision plan coverage as in effect immediately prior to the date of the Change in Control Termination) for such continued health, dental or vision plan coverage following the date of the Change in Control Termination for up to the number of months equal to the Change in Control Benefits Period (but in no event after such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer or as Executive and Executive’s dependents are no longer eligible for COBRA coverage); provided that if continued payment by the Company of the applicable premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Internal Revenue Code of 1986, as amended, or any statute or regulation of similar effect (including, without limitation, the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing such continued payment, the Company will instead pay Executive on the first day of each month a fully taxable cash payment equal to the applicable premiums for that month, subject to applicable tax withholdings, for the remainder of the Change in Control Benefits Period. Such coverage shall be counted as coverage pursuant to COBRA. The Company shall have no obligation in respect of any premium payments (or any other payments in respect of health, dental or vision coverage from the Company) following the effective date of the Executive’s coverage by a health, dental or vision insurance plan of a subsequent employer. Executive shall be required to notify the Company immediately if Executive becomes covered by a health, dental or vision insurance plan of a subsequent employer. If Executive and Executive’s dependents continue coverage pursuant to COBRA following the conclusion of the Change in Control Benefits Period, Executive will be responsible for the entire payment of such premiums required under COBRA for the duration of the COBRA period.

b) For purposes of this Section 2.3, (i) references to COBRA shall be deemed to refer also to analogous provisions of state law, and (ii) any applicable insurance premiums that are paid by the Company shall not include any amounts payable by Executive under a Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of Executive.

2.3. Stock Awards . Upon a Change in Control Termination, (i) the vesting and exercisability of all outstanding options to purchase the Company’s common stock (or stock appreciation rights or other rights with respect to the stock of the Company issued pursuant to any equity incentive plan of the Company) (“ Preexisting Option ”) that are held by Executive on the Termination Date shall be accelerated in full, and (ii) any reacquisition or repurchase rights held by the Company with respect to common stock issued or issuable (or with respect to other rights with respect to the stock of the Company issued or issuable) pursuant to any other stock award granted to Executive pursuant to any equity incentive plan of the Company (“ Restricted Shares ”) shall lapse.

ARTICLE 4

COVERED TERMINATION SEVERANCE BENEFITS


2.	Severance Benefits . Upon a Covered Termination, and subject to the limitations and conditions set forth in this Agreement, Executive shall be eligible to receive the benefits set forth in this Article 3.

3.1. Salary Payment . In consideration of Executive’s timely execution and non-revocation of a full release of all claims, in a form provided by the Company and in accordance with Article 4, the Company shall pay Executive a severance payment equal to (i) Executive’s Monthly Base Salary multiplied by (ii) the number of months in the Covered Termination Severance Period, less applicable withholdings. The severance payment shall be payable (except as set forth in Article 4) in a lump sum on the first regularly-scheduled payroll date occurring on or after the 60 ^th day following the Termination Date.

3.2. Health Continuation Coverage .

a) Provided that Executive is eligible and has made the necessary elections for continuation coverage pursuant to COBRA under a health, dental or vision plan sponsored by the Company, the Company shall pay for the applicable premiums (inclusive of premiums for Executive’s dependents for such health, dental or vision plan coverage as in effect immediately prior to the date of the Covered Termination) for such continued health, dental or vision plan coverage following the date of the Covered Termination for up to the number of months equal to the Covered Termination Benefits Period (but in no event after such time as Executive is eligible for coverage under a health, dental or vision insurance plan of a subsequent employer or as Executive and Executive’s dependents are no longer eligible for COBRA coverage); provided that if continued payment by the Company of the applicable premiums would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Internal Revenue Code of 1986, as amended, or any statute or regulation of similar effect (including, without limitation, the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing such continued payment, the Company will instead pay Executive on the first day of each month a fully taxable cash payment equal to the applicable premiums for that month, subject to applicable tax withholdings, for the remainder of the Covered Termination Benefits Period. Such coverage shall be counted as coverage pursuant to COBRA. The Company shall have no obligation in respect of any premium payments (or any other payments in respect of health, dental or vision coverage from the Company) following the effective date of the Executive’s coverage by a health, dental or vision insurance plan of a subsequent employer. Executive shall be required to notify the Company immediately if Executive becomes covered by a health, dental or vision insurance plan of a subsequent employer. If Executive and Executive’s dependents continue coverage pursuant to COBRA following the conclusion of the Covered Termination Benefits Period, Executive will be responsible for the entire payment of such premiums required under COBRA for the duration of the COBRA period.

b) For purposes of this Section 3.3, (i) references to COBRA shall be deemed to refer also to analogous provisions of state law, and (ii) any applicable insurance premiums that are paid by the Company shall not include any amounts payable by Executive under a Code Section 125 health care reimbursement plan, which amounts, if any, are the sole responsibility of Executive.

3.3. Stock Awards . Upon a Covered Termination, (i) the vesting and exercisability of any Preexisting Option held by Executive as of the Termination Date shall be accelerated as to the number of shares of common stock issuable upon exercise of such Preexisting Option (“ Option Shares ”) as equals the number of Option Shares as would otherwise vest during the nine (9) month period following the Termination Date in accordance with the Preexisting Option’s vesting schedule were the Executive to remain an employee of the Company during such nine (9) month period (disregarding any other basis for acceleration of vesting

of Option Shares during such nine (9) month period), and (ii) any reacquisition or repurchase rights held by the Company with respect to Restricted Shares held by the Executive as of the Termination Date shall lapse as to the number of Restricted Shares as equals the number of Restricted Shares as to which such reacquisition or repurchase rights would otherwise lapse during the nine (9) month period following the Termination Date in accordance with Restricted Shares’ vesting schedule were the Executive to remain an employee of the Company during such nine (9) month period (disregarding any other basis for acceleration of the lapsing of such reacquisition or repurchase rights on Restricted Shares during such nine (9) month period).

ARTICLE 4

LIMITATIONS AND CONDITIONS ON BENEFITS


3.	Rights Conditioned on Compliance . Executive’s rights to receive all severance benefits described in Article 2 and Article 3 shall be conditioned upon and subject to Executive’s compliance with the limitations and conditions on benefits as described in this Article 4.

4.1. Continuation of Service Until Date of Termination . Executive shall continue to provide service to the Company in good faith until the Termination Date, unless such performance is otherwise excused in writing by the Company.

4.2. Release Prior to Payment of Benefits . Upon the occurrence of a Change in Control Termination or a Covered Termination, as applicable, and prior to the provision or payment of any benefits under this Agreement on account of such Change in Control Termination or Covered Termination, as applicable, Executive must execute a general waiver and release in substantially the form attached hereto and incorporated herein as Exhibit A , Exhibit B , or Exhibit C , as appropriate (each a “ Release ”), and such Release must become effective in accordance with its terms, but in no event later than sixty (60) days following the Termination Date. No amount shall be paid prior to such date. The Company may modify the Release in its discretion to comply with changes in applicable law at any time prior to Executive’s execution of such Release. Such Release shall specifically relate to all of Executive’s rights and claims in existence at the time of such execution and shall confirm Executive’s obligations under the Confidentiality Agreement and any similar obligations under applicable law. It is understood that, as specified in the applicable Release, Executive has a certain number of calendar days to consider whether to execute such Release. If Executive does not execute and deliver such Release within the applicable period, no benefits shall be provided or payable under, and Executive shall have no further rights, title or interests in or to any severance benefits or payments pursuant to this Agreement. It is further understood that if Executive is age 40 or older at the time of a Change in Control Termination or a Covered Termination, as applicable, Executive may revoke the applicable Release within seven (7) calendar days after its execution by Executive. If Executive revokes such Release within such subsequent seven (7) day period, no benefits shall be provided or payable under this Agreement pursuant to such Change in Control Termination or Covered Termination, as applicable.

4.3. Return of Company Property . Not later than the Termination Date, Executive shall return to the Company all documents (and all copies thereof) and other property belonging to the Company that Executive has in his or her possession or control. The documents and property to be returned include, but are not limited to, all files, correspondence, email, memoranda, notes, notebooks, records, plans, forecasts, reports, studies, analyses, compilations of data, proposals, agreements, financial information, research and development information, marketing information, operational and personnel information, databases, computer-recorded information, tangible property and equipment (including, but not limited to, computers, facsimile machines, mobile telephones and servers), credit cards, entry cards, identification badges and keys, and any materials of any kind which contain or embody any proprietary or confidential information of the

Company (and all reproductions thereof in whole or in part). Executive agrees to make a diligent search to locate any such documents, property and information. If Executive has used any personally owned computer, server or e-mail system to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, then within ten (10) business days after the Termination Date, Executive shall provide the Company with a computer-useable copy of all such information and then permanently delete and expunge such confidential or proprietary information from those systems. Executive agrees to provide the Company access to Executive’s system as requested to verify that the necessary copying and/or deletion is done.

4.4. Cooperation and Continued Compliance with Restrictive Covenants .

a) From and after the Termination Date, Executive shall cooperate fully with the Company in connection with its actual or contemplated defense, prosecution or investigation of any existing or future litigation, arbitrations, mediations, claims, demands, audits, government or regulatory inquiries, or other matters arising from events, acts or failures to act that occurred during the time period in which Executive was employed by the Company (including any period of employment with an entity acquired by the Company). Such cooperation includes, without limitation, being available upon reasonable notice, without subpoena, to provide accurate and complete advice, assistance and information to the Company, including offering and explaining evidence, providing truthful and accurate sworn statements, and participating in discovery and trial preparation and testimony. Executive also agrees to promptly send the Company copies of all correspondence (for example, but not limited to, subpoenas) received by Executive in connection with any such legal proceedings, unless Executive is expressly prohibited by law from so doing. The Company will reimburse Executive for reasonable out-of-pocket expenses incurred in connection with any such cooperation (excluding foregone wages, salary or other compensation) within thirty (30) days of Executive’s timely presentation of appropriate documentation thereof, in accordance with the Company’s standard reimbursement policies and procedures, and will make reasonable efforts to accommodate Executive’s scheduling needs.

b) From and after the Termination Date, Executive shall continue to abide by all of the terms and provisions of the Confidentiality Agreement (and any other comparable agreement signed by Executive), in accordance with its terms.

c) Executive agrees that the choice of law and choice of forum provisions in the Confidentiality Agreement shall be amended to conform to the choice of law and choice of forum provisions in Section 7.10 of this Agreement. No other terms of the Confidentiality Agreement are amended by this Agreement, and the Confidentiality Agreement remains in full force and effect.

d) Executive acknowledges and agrees that Executive’s obligations under this Section 4.5 are an essential part of the consideration Executive is providing hereunder in exchange for which and in reliance upon which the Company has agreed to provide the payments and benefits under this Agreement. Executive further acknowledges and agrees that Executive’s violation of this Section 4.5 inevitably would involve use or disclosure of the Company’s proprietary and confidential information. Accordingly, Executive agrees that Executive will forfeit, effective as of the date of any breach, any right, entitlement, claim or interest in or to any unpaid portion of the severance payments or benefits provided in Article 2 or Article 3. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 4.5 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

4.5. Parachute Payments .

a) Parachute Payment Limitation . If any payment or benefit (including payments and benefits pursuant to this Agreement) Executive would receive in connection with a Change in Control from the Company or otherwise (“ Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this paragraph, be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then the Company shall cause to be determined, before any amounts of the Payment are paid to Executive, which of the following two alternative forms of payment shall be paid to Executive: (A) payment in full of the entire amount of the Payment (a “ Full Payment ”), or (B) payment of only a part of the Payment so that Executive receives the largest payment possible without the imposition of the Excise Tax (a “ Reduced Payment ”). A Full Payment shall be made in the event that the amount received by the Executive on a net after-tax basis is greater than what would be received by the Executive on a net after-tax basis if the Reduced Payment were made, otherwise a Reduced Payment shall be made. If a Reduced Payment is made, (i) the Payment shall be paid only to the extent permitted under the Reduced Payment alternative, and Executive shall have no rights to any additional payments and/or benefits constituting the Payment, and (ii) reduction in payments and/or benefits shall occur in the following order: (A) reduction of cash payments; (B) cancellation of accelerated vesting of equity awards other than stock options; (C) cancellation of accelerated vesting of stock options; and (D) reduction of other benefits paid to Executive. In the event that acceleration of compensation from Executive’s equity awards is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the date of grant.

b) The independent registered public accounting firm engaged by the Company for general audit purposes as of the day prior to the effective date of the Change in Control shall make all determinations required to be made under this Section 4.6. If the independent registered public accounting firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Company shall appoint a nationally recognized independent registered public accounting firm to make the determinations required hereunder. The Company shall bear all expenses with respect to the determinations by such independent registered public accounting firm required to be made hereunder.

c) The independent registered public accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Executive within fifteen (15) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive. If the independent registered public accounting firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it shall furnish the Company and Executive with an opinion reasonably acceptable to Executive that no Excise Tax will be imposed with respect to such Payment. Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

4.6. Certain Reductions and Offsets . To the extent that any federal, state or local laws, including, without limitation, the Worker Adjustment and Retraining Notification Act or any other so-called “plant closing” laws, require the Company to give advance notice or make a payment of any kind to Executive because of Executive’s involuntary termination due to a layoff, reduction in force, plant or facility closing, sale of business, change in control or any other similar event or reason, the benefits payable under this Agreement shall be correspondingly reduced. The benefits provided under this Agreement are intended to satisfy any and all statutory obligations that may arise out of Executive’s involuntary termination of employment for the foregoing reasons, and the parties shall construe and enforce the terms of this Agreement accordingly.

4.7. Mitigation . Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced

by any compensation earned by Executive as a result of employment by another employer or by any retirement benefits received by Executive after the date of a Change in Control Termination or Covered Termination (except as expressly provided in Sections 2.3 and 3.3 above).

4.8. Indebtedness of Executive . If Executive is indebted to the Company on the effective date of a Change in Control Termination or Covered Termination, the Company reserves the right to offset any severance payments and benefits under this Agreement by the amount of such indebtedness.

4.9. Application of Section 409A .

a) Separation from Service . Notwithstanding any provision to the contrary in this Agreement, no amount deemed deferred compensation subject to Section 409A of the Code shall be payable pursuant to Article 2 or Article 3 unless Executive’s termination of employment constitutes a “separation from service” with the Company within the meaning of Section 409A of the Code and the Department of Treasury Regulations and other guidance promulgated thereunder and, except as provided under Section 4.10(b) hereof, any such amount shall not be paid, or in the case of installments, commence payment, until the first regularly-scheduled payroll date occurring on or after the 60 ^th day following Executive’s separation from service. Any installment payments that would have been made to Executive during the sixty (60) day period immediately following Executive’s separation from service but for the preceding sentence shall be paid to Executive on the first regularly-scheduled payroll date occurring on or after the 60 ^th day after Executive’s separation from service and the remaining payments shall be made as provided in this Agreement.

b) Specified Executive . Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed at the time of his or her separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of Executive’s “separation from service” with the Company (as such term is defined in the Treasury Regulations issued under Section 409A of the Code) or (ii) the date of Executive’s death. Upon the first business day following the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 4.10(b) shall be paid in a lump sum to Executive, and any remaining payments due under this Agreement shall be paid as otherwise provided herein.

c) Expense Reimbursements . To the extent that any reimbursement payable pursuant to this Agreement is subject to the provisions of Section 409A of the Code, any such reimbursement payable to Executive pursuant to this Agreement shall be paid to Executive no later than December 31 of the year following the year in which the expense was incurred; the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year; and Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

d) Installments . For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), Executive’s right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment.

4.10. Tax Withholding . All payments under this Agreement shall be subject to applicable withholding for federal, state and local income and employment taxes.

4.11. No Duplication of Severance Benefits. The severance and other benefits provided in Article 2 and Article 3 are mutually exclusive of each other, and in no event shall Executive receive any severance or other benefits pursuant to both Article 2 and Article 3.

ARTICLE 5

TERMINATION WITH CAUSE OR BY VOLUNTARY RESIGNATION;

OTHER RIGHTS AND BENEFITS

Termination for Cause by the Company . If the Company shall terminate the Executive’s employment with the Company for Cause, then upon such termination, the Company shall have no further obligation to Executive hereunder except for the payment or provision, as applicable, of (i) the portion of the Annual Base Salary for the period prior to the effective date of termination earned but unpaid (if any), (ii) all unreimbursed expenses (if any), subject to Sections 1.4 and 4.10(c), and (iii) other payments, entitlements or benefits, if any, in accordance with terms of the applicable plans, programs, arrangements or other agreements of the Company (other than any severance plan or policy) as to which the Executive held rights to such payments, entitlements or benefits, whether as a participant, beneficiary or otherwise on the date of termination (“ Other Benefits ”). For the avoidance of doubt, Executive shall have no right to receive (and Other Benefits shall not include) any amounts under any Company severance plan or policy or pursuant to Article 2 or Article 3 upon Executive’s termination for Cause.

5.1. Termination by Voluntary Resignation by the Executive (other than Resignation for Good Reason) . Upon any voluntary resignation by Executive that is not a Resignation for Good Reason, the Company shall have no further obligation to the Executive hereunder except for the payment of (i) the portion of the Annual Base Salary for the period prior to the effective date of termination earned but unpaid (if any), (ii) all unreimbursed expenses (if any), subject to Section 1.4 and Section 4.10(c), and (iii) the payment or provision of any Other Benefits. For the avoidance of doubt, Executive shall have no right to receive (and Other Benefits shall not include) any amounts under any Company severance plan or policy or pursuant to Article 2 or Article 3 upon any voluntary resignation by Executive that is not a Resignation for Good Reason.

5.2. Other Rights and Benefits. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices provided by the Company and for which Executive may otherwise qualify, nor shall anything herein limit or otherwise affect such rights as Executive may have under other agreements with the Company except as provided in Article 4, Section 5.1 and Section 5.2 above. Except as otherwise expressly provided herein, amounts that are vested benefits or that Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company at or subsequent to the date of a Change in Control shall be payable in accordance with such plan, policy, practice or program.

ARTICLE 6

DEFINITIONS

Unless otherwise provided, for purposes of this Agreement, the following definitions shall apply:


5.	“ Board ” means the Board of Directors of the Company.

6.1. “ Cause ” means Executive’s: (i) dishonest statements or acts with respect to the Company, any subsidiary or any affiliate of the Company or any subsidiary; (ii) commission by or indictment for (A) a felony or (B) any misdemeanor (excluding minor traffic violations) involving moral turpitude, deceit,

dishonesty or fraud (“indictment,” for these purposes, meaning an indictment, probable cause hearing or any other procedure pursuant to which an initial determination of probable or reasonable cause with respect to such offense is made); (iii) gross negligence, willful misconduct or insubordination with respect to the Company, any subsidiary or any affiliate of the Company or any subsidiary; (iv) material breach of any of Executive’s obligations under any agreement to which Executive and the Company or any subsidiary are a party; or (v) death or disability. With respect to clause (iv), Executive will be given notice and a 30-day period in which to cure such breach, only to the extent such breach can be reasonably expected to be able to be cured within such period. Executive agrees that the breach of any confidentiality obligation to the Company or any subsidiary shall not be curable to any extent.

6.2. “ Change in Control ” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

a) Any natural person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (“ Exchange Act Person ”), becomes the owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities other than by virtue of a merger, consolidation or similar transaction. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (i) on account of the acquisition of securities of the Company by any institutional investor, any affiliate thereof or any other Exchange Act Person that acquires the Company’s securities in a transaction or series of related transactions that are primarily a private financing transaction for the Company or (ii) solely because the level of ownership held by any Exchange Act Person (the “ Subject Person ”) exceeds the designated percentage threshold of the outstanding voting securities as a result of a repurchase or other acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of voting securities by the Company, and after such share acquisition, the Subject Person becomes the owner of any additional voting securities that, assuming the repurchase or other acquisition had not occurred, increases the percentage of the then outstanding voting securities owned by the Subject Person over the designated percentage threshold, then a Change in Control shall be deemed to occur;

b) There is consummated a merger, consolidation or similar transaction involving, directly or indirectly, the Company if, immediately after the consummation of such merger, consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not own, directly or indirectly, either (i) outstanding voting securities representing more than fifty percent (50%) of the combined outstanding voting power of the surviving entity in such merger, consolidation or similar transaction or (ii) more than fifty percent (50%) of the combined outstanding voting power of the parent of the surviving entity in such merger, consolidation or similar transaction;

c) The stockholders of the Company approve or the Board approves a plan of complete dissolution or liquidation of the Company, or a complete dissolution or liquidation of the Company shall otherwise occur; or

d) There is consummated a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries, other than a sale, lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its subsidiaries to an entity, more than fifty percent (50%) of the combined voting power of the voting securities of which are owned by stockholders of the Company in substantially the same proportion as their ownership of the Company immediately prior to such sale, lease, license or other disposition.

The term Change in Control shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company. Notwithstanding the

foregoing or any other provision of this Agreement, the definition of Change in Control (or any analogous term) in an individual written agreement between the Company or any affiliate and the participant shall supersede the foregoing definition with respect to stock awards subject to such agreement (it being understood, however, that if no definition of Change in Control or any analogous term is set forth in such an individual written agreement, the foregoing definition shall apply).

6.3. “ Change in Control Benefits Period ” means the period of twelve (12) months commencing on the Termination Date.

6.4. “ Change in Control Severance Period ” means the period of twelve (12) months commencing on the Termination Date.

6.5. “ Change in Control Termination ” means an “ Involuntary Termination Without Cause ” or “ Resignation for Good Reason , ” either of which occurs on, or within three (3) months prior to, or within twelve (12) months following, the effective date of a Change in Control, provided that any such termination is a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h). Death and disability shall not be deemed Change in Control Terminations.

6.6. “ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

6.7. “ Code ” means the Internal Revenue Code of 1986, as amended.

6.8. “ Company ” means Immune Design Corp. or, following a Change in Control, the surviving entity resulting from such transaction, or any subsequent surviving entity resulting from any subsequent Change in Control.

6.9. “ Confidentiality Agreement ” means Executive’s Proprietary Information and Inventions Agreement with the Company, dated as of the date hereof (or any successor agreement thereto).

6.10. “ Covered Termination ” means an “ Involuntary Termination Without Cause ” or “ Resignation for Good Reason , ” provided that any such termination is a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h). Death and disability shall not be deemed Covered Terminations. If an Involuntary Termination Without Cause or Resignation for Good Reason qualifies as a Change in Control Termination, it shall not constitute a Covered Termination.

6.11. “ Covered Termination Benefits Period ” means the period of nine (9) months commencing on the Termination Date.

6.12. “ Covered Termination Severance Period ” means the period of nine (9) months commencing on the Termination Date.

6.13. “ Equity Plan ” means the Company’s 2014 Omnibus Incentive Plan, as may be amended from time to time.

6.14. “ Involuntary Termination Without Cause ” means Executive’s dismissal or discharge by the Company for reasons other than Cause and other than as a result of death or disability.

6.15. “ Monthly Base Salary ” means 1/12 ^th of the greater of (i) Executive’s annual base salary (excluding incentive pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation) as in effect on the date of a Change in Control Termination or a Covered Termination, as applicable, or (ii) in the case of a Change in Control Termination, Executive’s annual base salary (excluding

incentive pay, premium pay, commissions, overtime, bonuses and other forms of variable compensation) as in effect on the date of a Change in Control.

6.16. “ Pro-Rata Bonus ” means 1/12 ^th of the greater of (i) the average Target Performance Bonus paid to Executive for the three years preceding the date of a Change in Control Termination (or such lesser number of years during which Executive has been employed by the Company), or (ii) the Target Performance Bonus, as in effect on the date of a Change in Control Termination.

6.17. “ Resignation for Good Reason ” means Executive’s resignation from all employee positions Executive then holds with the Company within sixty (60) days following any of the following events taken without Executive’s consent, provided Executive has given the Company written notice of such event within thirty (30) days after the first occurrence of such event and the Company has not cured such event within thirty (30) days thereafter:

a) A decrease in Executive’s total target cash compensation (base and bonus) of more than 10%, other than in connection with a comparable decrease in compensation for all comparable executives of the Company;

b) Executive’s duties or responsibilities are materially diminished (not simply a change in title or reporting relationships); provided, that Executive shall not be deemed to have a “ Resignation for Good Reason ” if the Company survives as a separate legal entity or business unit following the Change in Control and Executive holds materially the same position in such legal entity or business unit as Executive held before the Change in Control;

c) Either (i) Executive is required to establish residence in a location more than 50 miles from Executive’s current principal personal residence or (ii) there is an increase in Executive’s round-trip driving distance of more than fifty (50) miles from Executive’s current principal personal residence to the principal office or business location at which Executive is required to perform services (except for required business travel to the extent consistent with Executive’s prior business travel obligations) (“ Executive’s Principal Place of Business ”) as a result of a change in location by the Company of Executive’s Principal Place of Business; or

d) The failure of the Company to obtain a satisfactory agreement from any successor to materially assume and materially agree to perform under the terms of this Agreement.

6.18. “ Termination Date ” means the effective date of the Change in Control Termination or Covered Termination, as applicable.

ARTICLE 7

GENERAL PROVISIONS


6.	Employment Status . This Agreement does not constitute a contract of employment or impose upon Executive any obligation to remain as an employee, or impose on the Company any obligation (i) to retain Executive as an employee, (ii) to change the status of Executive as an at-will employee or (iii) to change the Company’s policies regarding termination of employment.

7.1. Notices . Any notices provided hereunder must be in writing, and such notices or any other written communication shall be deemed effective upon the earlier of personal delivery (including personal delivery by facsimile) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at Executive’s address as listed in the Company’s payroll records. Any payments

made by the Company to Executive under the terms of this Agreement shall be delivered to Executive either in person or at the address as listed in the Company’s payroll records.

7.2. Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

7.3. Waiver . If either party should waive any breach of any provisions of this Agreement, he, she or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

7.4. Complete Agreement . This Agreement, including Exhibit A , Exhibit B and Exhibit C , constitutes the entire agreement between Executive and the Company and is the complete, final and exclusive embodiment of their agreement with regard to this subject matter, wholly superseding all written and oral agreements with respect to payments and benefits to Executive in the event of employment termination. It is entered into without reliance on any promise or representation other than those expressly contained herein.

7.5. Amendment or Termination of Agreement; Continuation of Agreement . This Agreement may be changed or terminated only upon the mutual written consent of the Company and Executive. The written consent of the Company to a change or termination of this Agreement must be signed by an executive officer of the Company (other than Executive) after such change or termination has been approved by the Board. Unless so terminated, this Agreement shall continue in effect for as long as Executive continues to be employed by the Company or by any surviving entity following any Change in Control. In other words, if, following a Change in Control, Executive continues to be employed by the surviving entity without a Change in Control Termination and the surviving entity then undergoes a Change in Control, following which Executive is terminated by the subsequent surviving entity in a Change in Control Termination, then Executive shall receive the benefits described in Article 2 hereof.

7.6. Counterparts . This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

7.7. Headings . The headings of the Articles and Sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

7.8. Successors and Assigns . This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive, and the Company, and any surviving entity resulting from a Change in Control and upon any other person who is a successor by merger, acquisition, consolidation or otherwise to the business formerly carried on by the Company, and their respective successors, assigns, heirs, executors and administrators, without regard to whether or not such person actively assumes any rights or duties hereunder; provided, however, that Executive may not assign any duties hereunder and may not assign any rights hereunder without the written consent of the Company, which consent shall not be withheld unreasonably.

7.9. Choice of Law . Because of the Company’s and Executive’s interests in ensuring that disputes regarding this Agreement are resolved on a uniform basis, the parties agree that all questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of Delaware, without regard for any conflict of law principles. Further, the parties consent to the

jurisdiction of the state and federal courts of the State of Delaware for all purposes in connection with this Agreement. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which Executive or the Company may now or hereafter have to the laying of venue of any such dispute brought in such court or any defense of inconvenient forum for the maintenance of such dispute.

7.10. Arbitration. To ensure the rapid and economical resolution of any disputes that may arise under or relate to this Agreement or Executive’s employment relationship, Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, arising from or relating to the performance, enforcement, execution, or interpretation of this Agreement, Executive’s employment with the Company, or the termination of Executive’s employment (collectively, “ Claims ”), shall be resolved to the fullest extent permitted by law, by final, binding, and (to the extent permitted by law) confidential arbitration before a single arbitrator in the state where Executive is employed. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et seq. , as amended, and shall be administered by the Judicial Arbitration & Mediation Services, Inc. (“ JAMS ”), in accordance with its then-current Employment Arbitration Rules & Procedures (the “ JAMS Rules ”). The JAMS Rules are also available online at http://www.jamsadr.com/rules-employment-arbitration/. The parties or their representatives may also call JAMS at 800.352.5267 if they have questions about the arbitration process. If the JAMS Rules are inconsistent with the terms of this Agreement, the terms of this Agreement shall govern. Notwithstanding the foregoing, this provision shall exclude Claims that by law are not subject to arbitration. The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of all Claims and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award. The Company shall pay all JAMS fees in excess of the amount of filing and other court-related fees Executive would have been required to pay if the Claims were asserted in a court of law. EXECUTIVE AND THE COMPANY UNDERSTAND AND FULLY AGREE THAT BY ENTERING INTO THIS AGREEMENT, BOTH EXECUTIVE AND THE COMPANY ARE GIVING UP THE CONSTITUTIONAL RIGHT TO HAVE A TRIAL BY JURY, AND ARE GIVING UP THE NORMAL RIGHTS OF APPEAL FOLLOWING THE RENDERING OF A DECISION, EXCEPT AS THE FEDERAL ARBITRATION ACT AND APPLICABLE FEDERAL LAW ALLOW FOR JUDICIAL REVIEW OF ARBITRATION PROCEEDINGS. Nothing in this Agreement shall prevent either Executive or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards or final orders in such arbitrations may be entered and enforced as judgments or orders in the federal and state courts of any competent jurisdiction in compliance with Section 6.11 of this Agreement.

7.11. Construction of Agreement . In the event of a conflict between the text of this Agreement and any summary, description or other information regarding this Agreement, the text of this Agreement shall control.

7.12. Circular 230 Disclaimer . THE FOLLOWING DISCLAIMER IS PROVIDED IN ACCORDANCE WITH THE INTERNAL REVENUE SERVICE’S CIRCULAR 230 (21 C.F.R. PART 10). ANY TAX ADVICE CONTAINED IN THIS AGREEMENT IS INTENDED TO BE PRELIMINARY, FOR DISCUSSION PURPOSES ONLY AND NOT FINAL. ANY SUCH ADVICE IS NOT INTENDED TO BE USED FOR MARKETING, PROMOTING OR RECOMMENDING ANY TRANSACTION OR FOR THE USE OF ANY PERSON IN CONNECTION WITH THE PREPARATION OF ANY TAX RETURN. ACCORDINGLY, THIS ADVICE IS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, BY ANY PERSON FOR THE PURPOSE OF AVOIDING TAX PENALTIES THAT MAY BE IMPOSED ON SUCH PERSON.

[Remainder of Page Left Blank]

IN WITNESS WHEREOF, the parties have executed this Agreement on the Effective Date written above.




IMMUNE DESIGN CORP.			EXECUTIVE
By:	/s/ Carlos Paya, M.D., Ph.D.	By:	/s/ Sergey Yurasov, M.D., Ph.D.



Name:	Carlos Paya, M.D., Ph.D.	Name:	Sergey Yurasov, M.D., Ph.D.



Title:		President and Chief Executive Officer

Exhibit A: Release (Individual Termination – Age 40 or Older)

Exhibit B: Release (Individual and Group Termination – Under Age 40)

Exhibit C: Release (Group Termination – Age 40 or Older)

EXHIBIT A

RELEASE

(INDIVIDUAL TERMINATION – AGE 40 OR OLDER)

Certain capitalized terms used in this Release are defined in the Executive Severance Benefits Agreement (the “ Agreement ”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Confidentiality Agreement (or other comparable agreement that I have signed, if any).

I acknowledge that I have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to my release of any claims provided herein.

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including, but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; and claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended, the federal Age Discrimination in Employment Act of 1967, as amended (“ ADEA ”), the federal Employee Retirement Income Security Act of 1974, as amended, the federal Americans with Disabilities Act of 1990, the California Fair Employment and Housing Act, as amended, tort law, contract law, wrongful discharge, discrimination, fraud, defamation, emotional distress, and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to (1) release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to written agreement or applicable law; (2) release any claim by me against the Company relating to the validity or enforceability of this release or the Agreement; (3) prohibit me from exercising any non-waivable right to file a charge with the United States Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), or any other government agency (provided, however, that Employee shall not be entitled to recover any monetary damages or to obtain non-monetary relief if the agency were to pursue any claims relating to Employee’s employment with the Company).

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA. I also acknowledge that the consideration given under the Agreement for the waiver and

A-1

release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following my execution of this Release to revoke the Release by providing a written notice of revocation to the Company’s Compliance Officer; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8th) day after I execute this Release (provided that I do not revoke it).

I hereby represent that I have been paid all compensation owed and for all hours worked, I have received all the leave and leave benefits and protections for which I am eligible, pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, any Company policy or applicable law, and I have not suffered any on-the-job injury or illness for which I have not already filed a workers’ compensation claim.

I agree that I will not make any disparaging statements regarding the Company or its officers, directors, shareholders, members, agents or products jointly or severally. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

EXECUTIVE:




	Signature

	Printed Name

	Date:

A-2

EXHIBIT B

RELEASE

(INDIVIDUAL AND GROUP TERMINATION – UNDER AGE 40)

Certain capitalized terms used in this Release are defined in the Executive Severance Benefits Agreement (the “ Agreement ”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Confidentiality Agreement (or other comparable agreement that I have signed, if any).

Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge the Company, its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, successors, assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me based on my employment with the Company), arising out of or in any way related to agreements, events, acts or conduct at any time prior to the date I execute this Release, including, but not limited to: all such claims and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination of that employment, including, but not limited to, claims of intentional and negligent infliction of emotional distress, any and all tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other form of compensation; and claims pursuant to any federal, state or local law or cause of action including, but not limited to, the federal Civil Rights Act of 1964, as amended, the federal Employee Retirement Income Security Act of 1974, as amended, the federal Americans with Disabilities Act of 1990, the California Fair Employment and Housing Act, as amended, tort law, contract law, wrongful discharge, discrimination, fraud, defamation, emotional distress, and breach of the implied covenant of good faith and fair dealing; provided, however, that nothing in this paragraph shall be construed in any way to (1) release the Company from its obligation to indemnify me pursuant to the Company’s indemnification obligation pursuant to written agreement or applicable law; (2) release any claim by me against the Company relating to the validity or enforceability of this release or the Agreement; (3) prohibit me from exercising any non-waivable right to file a charge with the United States Equal Employment Opportunity Commission (“EEOC”), the National Labor Relations Board (“NLRB”), or any other government agency (provided, however, that Employee shall not be entitled to recover any monetary damages or to obtain non-monetary relief if the agency were to pursue any claims relating to Employee’s employment with the Company).

I acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing that: (A) my waiver and release do not apply to any

B-1

rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; and (C) I have twenty-one (21) days to consider this Release (although I may choose to voluntarily execute this Release earlier).

EXECUTIVE:




	Signature

	Printed Name

	Date:

B-2

EXHIBIT C

RELEASE

(GROUP TERMINATION – AGE 40 OR OLDER)

Certain capitalized terms used in this Release are defined in the Executive Severance Benefits Agreement (the “ Agreement ”) which I have executed and of which this Release is a part.

I hereby confirm my obligations under the Confidentiality Agreement (or other comparable agreement that I have signed, if any).

C-1

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA. I also acknowledge that the consideration given under the Agreement for the waiver and release in the preceding paragraph hereof is in addition to anything of value to which I was already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or claims that may arise on or after the date I execute this Release; (B) I have the right to consult with an attorney prior to executing this Release; (C) I have forty-five (45) days to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following my execution of this Release to revoke the Release by providing a written notice of revocation to the Company’s Compliance Officer; (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day (8th) after I execute this Release; and (F) I have received with this Release the required written disclosure for a “group termination” under the ADEA, including a detailed list of the job titles and ages of all employees who were terminated in this group termination and the ages of all employees of the Company in the same job classification or organizational unit who were not terminated.

I agree that I will not engage in any conduct that is injurious to the reputation of the Company or its parents, subsidiaries and affiliates, including but not limited to disparagement of the Company, its officers, Board members, employees and shareholders. The foregoing shall not be violated by a statement made in a deposition, trial or administrative proceeding in response to legal process; by any statement made to a government agency; or whenever I make any statement to a court, administrative tribunal or government agency as required by law.

EXECUTIVE:




	Signature

	Printed Name

	Date:

C-2

Exhibit 31.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Carlos Paya, M.D., Ph.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Immune Design Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in exchange act rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2016

/s/ Carlos Paya, M.D., Ph.D.

Carlos Paya, M.D., Ph.D.

President and Chief Executive Officer

(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephen Brady, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Immune Design Corp.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 9, 2016

/s/ Stephen Brady

Stephen Brady

Executive Vice President, Strategy & Finance

(Principal Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Immune Design Corp. (“Immune Design”) for the quarter ended September 30, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Carlos Paya, M.D., Ph.D., President and Chief Executive Officer of Immune Design, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Immune Design.

Dated: November 9, 2016

/s/ Carlos Paya, M.D., Ph.D.

Carlos Paya, M.D., Ph.D.

President and Chief Executive Officer

(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Immune Design Corp. (“Immune Design”) for the quarter ended September 30, 2016 , as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen Brady, Executive Vice President, Strategy and Finance of Immune Design, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Immune Design.

Dated: November 9, 2016

/s/ Stephen Brady

Stephen Brady

Executive Vice President, Strategy & Finance

(Principal Financial Officer)