LICENSE AGREEMENT DATED AS OF SEPTEMBER 16, 2014 BY AND BETWEEN SUTRO BIOPHARMA INC. AND MERCK KGAA

[*]   Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.

“Accepted Target” means such Additional Target that has become accepted by the Gatekeeper as foreseen in Section 2.6.

“Additional Target” means any Targets proposed by Merck under this Agreement that are not Named Targets.

“Affiliate” means a Person that controls, is controlled by or is under common control with a Party, but only for so long as such control exists. For the purposes of this Section 1.3, the word “control” (including, with correlative meaning, the terms “controlled by” or “under the common control with”) means the actual power, either directly or indirectly through one or more intermediaries, to direct the management and policies of such Person or entity, whether by the ownership of more than fifty percent (50%) of the voting stock of such entity, or by contract or otherwise.

“Antibody or Antibodies” means an unconjugated polyclonal or monoclonal antibody or antibodies (whether (a) fully human, fully mouse, humanized, phage display, chimeric, polyclonal, polyclonal mixes or any other type of antibody or antibodies, (b) multiple or single chain, recombinant, in vivo, in vitro or naturally occurring or a combination of any of the foregoing in any species or (c) monospecific, bi-specific, or multi-specific or any analog, derivative, fragment or modification thereof (including a full antibody, scFv, scFvFc, Fab, minibody, etc.)).

“Antibody-Drug-Conjugate” or “ADC” means an Antibody directed against a Named Target or an Accepted Target (that has not been replaced under Section 2.4) to which Antibody a Payload has been attached via a Linker and incorporating Sutro Platform Technology and / or Sutro Technology.

“Business Day” means a day other than Saturday or Sunday on which banking institutions in San Francisco, California and Darmstadt, Germany are open for business.

“Calendar Quarter” means each three (3) month period commencing January 1, April 1, July l or October 1 of any year; provided, however, that (a) the first Calendar Quarter of the Term shall extend from the Effective Date to the end of the first full Calendar Quarter thereafter, and (b) the last Calendar Quarter of the Term shall end upon the expiration or termination of this Agreement.

“Calendar Year” means the period beginning on the 1^st of January and ending on the 31^st of December of the same year; provided, however, that (a) the first Calendar Year of the Term shall commence on the Effective Date and end on December 31^st of the same year and (b) the last Calendar Year of the Term shall commence on January 1^st of the Calendar Year in which this Agreement terminates or expires and end on the date of termination or expiration of this Agreement.

“Cell Free Extract or CFE” means the extract from E. coli produced by Sutro that is used for the cell free protein synthesis of the Product, in order to manufacture the Product including the incorporation of non-natural amino acids into the Product. For the manufacturing of Product the Cell Free Extract shall comply with all applicable regulations and quality standards in the Territory for its respective uses.

“CFE Manufacturing Know-How” means all Know-How Controlled by Sutro as of the Effective Date or any time thereafter necessary for the manufacture of the CFE. For the avoidance of doubt, CFE Manufacturing Know-How includes the Stanford CFE Manufacturing Know-How.

“CFE Manufacturing Patents” means all Patent Rights that are Controlled by Sutro or any of its Affiliates, as of the Effective Date or at any time thereafter during the Term, and that claim CFE Manufacturing Know-How. The CFE Manufacturing Patents include all Patent Rights listed on schedule 1.11.

“CFE Manufacturing Technology” means the CFE Manufacturing Know-How and the CFE Manufacturing Patents.

“Change of Control” means, with respect to a Person: (a) a transaction or series of related transactions that results in the sale or other disposition of all or substantially all of such Person’s assets; or (b) a merger or consolidation in which such Person is not the surviving corporation or in which, if such Person is the surviving corporation, the shareholders of such Person immediately

“Clinical Trial” means a clinical trial in human subjects that has been approved by a Regulatory Authority and Institutional Review Board or Ethics Committee, and is designed to measure the safety and/or efficacy of Product. Clinical Trials shall include Phase I Clinical Trials, Phase II Clinical Trials and Phase III Clinical Trials.

“Collaboration Agreement” means the agreement named “Collaboration Agreement” between the Parties and dated May 28, 2014.

“Combination Product” means a Product that: (a) includes one or more active ingredients in addition to the ADC; or (b) is combined with one or more products, devices, pieces of equipment or components.

“Commercialization” or “Commercialize” means any and all activities undertaken before and after Regulatory Approval of a MAA for the Product and that relate to the marketing, promoting, distributing, importing or exporting for sale, offering for sale, and selling of the Product, and interacting with Regulatory Authorities regarding the foregoing.

“Commercially Reasonable Efforts” means: (a) with respect to the efforts to be expended by a Party with respect to any objective, such reasonable, diligent, and good faith efforts as such Party would normally use to accomplish a similar objective under similar circumstances; and (b) with respect to any objective relating to Development or Commercialization of the Product by a Party, the application by such Party, consistent with the exercise of its prudent scientific and business judgment, of diligent efforts and resources to fulfill the obligation in issue, consistent with the level of efforts such Party would devote to a product at a similar stage in its product life as the Product and having profit potential and strategic value comparable to that of the Product, taking into account, without limitation, commercial, legal and regulatory factors, target product profiles, product labeling, past performance, the regulatory environment and competitive market conditions in the therapeutic area, safety and efficacy of the Product, the strength of its proprietary position and such other factors as such Party may reasonably consider, all based on conditions then prevailing. For clarity, Commercially Reasonable Efforts will not mean that a Party guarantees that it will actually accomplish the applicable task or objective.

“Competing Product” means, in a country of the Territory, a product that comprises an ADC which was not developed pursuant to this Agreement and is not being sold by Merck, its Affiliate or Sublicensees.

“Confidential Information” of a Party, means information relating to the business, operations or products of a Party or any of its Affiliates, including any Know-How, that such Party discloses to the other Party under this Agreement, or otherwise becomes known to the other Party by virtue of this Agreement.

“Controlled” means, with respect to (a) Patent Rights, (b) Know-How or (c) biological, chemical or physical material, that a Party or one of its Affiliates owns or has a license or sublicense to such Patent Rights, Know-How or material (or in the case of material, has the right to physical possession of such material) and has the ability to grant a license or sublicense to, or assign its right, title and interest in and to, such Patent Rights, Know-How or material as provided for in this Agreement without violating the terms of any agreement or other arrangement with any Third Party. In the case of a Change of Control of Sutro or a Sutro Business Acquisition, then with respect to any rights granted by Sutro under this Agreement, “Controlled” shall not include, and the applicable license grant shall not include within its scope, the Patent Rights, Know-How or material of the surviving entity or acquirer or Affiliate of the surviving entity or acquirer that was not Sutro (prior to the Change of Control or Sutro Business Acquisition).

“Cost of Goods” means (a) with respect to Product or CFE manufactured by a CMO, Sutro’s actual costs to acquire the Product or CFE from the CMO together with [*] allocation for actual overhead and administrative costs for managing the CMO relationship, and (b) with respect to Product or CFE manufactured by Sutro, [*]% of Sutro’s fully burdened manufacturing cost of the Product or the CFE, as the case may be, as calculated in accordance with generally accepted accounting principles of the United States (“GAAP”) to the extent applicable and the generally applied principles, policies and procedures concerning manufacturing products. Fully burdened manufacturing cost shall consist of the following:

Material Cost, which means the standard prices paid for raw material components and purchased finished goods [*] which are purchased from outside vendors as well as any freight, duties, taxes and other foes, where applicable. Material Cost includes the quantity of the components included in the ▇▇▇▇ of material times the purchase price and the waste factor (i.e., scrap percentage) included in the ▇▇▇▇ of materials. It also includes the normal quality assurance sample quantity included in the ▇▇▇▇ of materials;

Direct Labor Costs, which means the standard labor hours required for an operation according to standard operating procedures (including internal manufacturing of components and products) multiplied by the direct labor rate for individuals within the relevant manufacturing operating unit, which labor rate, if for an employee, includes the cost of such employees salary, benefits and employer tax burden provided that such salaries and benefits are consistent with the salaries and benefits provided to employees in similar positions within Sutro not involved in manufacturing the Product or CFE, as the case may be; and

Overhead Costs, which means other costs associated with the operating unit(s) manufacturing the Product or CFE, as the case may be, provided, however, that such Overhead Costs shall exclude [*]. Overhead Costs shall include appropriate direct and identifiable costs (or appropriate allocation thereof), including expenses associated with quality control, quality assurance, manufacturing, engineering services associated with the operating unit(s) manufacturing a product. Overhead Costs shall also include the fully loaded allocation of the facility costs (such as, without limitation, rent, taxes, heat, electricity and maintenance) used to manufacture the Product or CFE, as the case may be, and the allocated costs of manufacturing administration. These costs shall be allocated to each product line in such operating unit(s) or plant(s), whichever is applicable, based on specific criteria consistent with the standard operating procedures for each product, determined and allocated in a manner consistently applied within and across its operating units.

“Cover”, “Covering” or “Covered” means, with respect to Product, and as applicable, that the making, practicing a method of manufacture, using, practicing a method that uses, selling, offering for sale or importation of Product would, but for a license granted in this Agreement under the Sutro Patents and Sutro Platform Patents, infringe a Valid Claim of the Sutro Patents or the Sutro Platform Patents in the country in which the activity occurs.

“Development” or “Develop” means, with respect to the Product, the performance of all pre-clinical and clinical development (including toxicology, pharmacology, test method development and stability testing, process development, formulation development, quality control development, statistical analysis), Clinical Trials (excluding Clinical Trials conducted after Regulatory Approval of an MAA), manufacturing and regulatory activities that are required to obtain Regulatory Approval of Product in the Territory.

“DMF” means a Drug Master File filed with the FDA, EMA or another foreign equivalent for the Sutro Platform Technology, Sutro Technology, and / or the CFE Manufacturing Technology.

“EMA” means the European Medicines Agency or a successor agency thereto.

“European Commission” means the authority within the European Union that has the legal authority to grant Regulatory Approvals in the European Union based on input received from the EMA or other competent Regulatory Authorities.

“European Union” or “EU” means the European Union, as may be redefined from time to time.

“Executive Officers” means, together, a member of the senior management of the pharmaceutical division of Merck and the Chief Executive Officer of Sutro.

“Exploit” means make, have made, use, including to research, Develop, Commercialize, register, manufacture, have manufactured, import, hold or keep (whether for disposal or otherwise), have used, transport, or have sold or otherwise dispose of. “Exploitation” means the act of Exploiting a compound, product or process.

“FDA” means the United States Food and Drug Administration or a successor federal agency thereto.

“FD&C Act” means the United States Federal Food, Drug & Cosmetic Act, as amended, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions and modifications thereto).

“Field” means all prophylactic, palliative, therapeutic or diagnostic uses in humans or animals.

“Final Report” means a report documenting the Results of Sutro Development Activities as defined in the respective Project Plan.

“Final Results” means Sutro’s delivery to Merck of at least 2 ADC molecules per Named Target or Accepted Target meeting the PS including the appropriate documentation of Results in a Final Report.

“First Commercial Sale” means, on a country-by-country basis, the first commercial transfer or disposition for value of a Product in such country to a Third Party by Merck, or any of its Affiliates or Sublicensees following, if required by Law, Regulatory Approval of such Product.

“FTE” means a full time equivalent person year of scientific or technical work on or directly related to the Sutro Development Activities, based on an average of [*] weeks per month and [*] hours per week.

“FTE Expenses” means the cost of the work performed by Sutro personnel, applying the FTE Rate.

“FTE Rate” means the fully-loaded annual cost for the work of one FTE of [*] USD ($[*]).

“GAAP” means United States generally accepted accounting principles.

“Gatekeeper” means [*], or such other Third Party as may be agreed by the Parties in writing from time to time.

“GLP” or “Good Laboratory Practices” means the then-current standards for good laboratory practices for pharmaceuticals, as set forth in the FD&C Act and applicable regulations and guidance promulgated thereunder, including the Code of Federal Regulations, as amended from time to time, or under any other Laws.

“GLP Toxicology Studies” means, with respect to a Product, animal studies conducted in accordance with GLP and intended to support an IND for such Product.

“Governmental Body” means any: (a) nation, principality, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer, official, representative, organization, unit, body or entity and any court or other tribunal); (d) multi-national or supranational organization or body; or (e) individual, entity, or body exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or taxing authority or power of any nature.

“IFRS” means the International Financial Reporting Standards, the set of accounting standards and interpretations and the framework in force on the Effective Date and adopted by the European Union as issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC), as such accounting standards may be amended from time to time.

“Indication” means a generally acknowledged disease or condition, a significant manifestation of a disease or condition, or symptoms associated with a disease or condition or a risk for a disease or condition for which a MAA may be obtained.

“IND” means an investigational new drug application submitted to applicable Regulatory Authorities for approval to commence Clinical Trials in a given jurisdiction.

“Joint Know-How” means Know-How that is invented, conceived, or developed jointly by or on behalf of both Parties in the course of conducting their activities under this Agreement. If any Know-How would otherwise constitute both Product Know-How and Joint Know-How, then such Know-How will be deemed to be Product Know-How. If any Know-How would otherwise constitute both Sutro Platform Know-How and Joint Know-How, then such Know-How will be deemed to be Sutro Platform Know-How.

“Joint Patents” means a Patent Right that claims Joint Know-How.

“Joint Technology” means the Joint Know-How and the Joint Patents.

“Know-How” means any: (a) scientific or technical information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, that is not in the public domain or otherwise publicly known, including discoveries, inventions, trade secrets, devices, databases, practices, protocols, regulatory filings, methods, processes (including manufacturing processes, specification and techniques), techniques, concepts, ideas, specifications, formulations, formulae, data (including pharmacological, biological, chemical, toxicological, clinical and analytical information, quality control, trial and stability data), case reports forms, medical records, data analyses, reports, studies and procedures, designs for experiments and tests and results of experimentation and testing (including results of research or development), summaries and information contained in submissions to and information from ethical committees, or Regulatory Authorities, and manufacturing process and development information, results and data, whether or not patentable, all to the extent not claimed or disclosed in a patent or patent application; and (b) Antibodies, compositions of matter, cells, cell lines, assays, animal models and physical, biological or chemical material, including drug substance samples, intermediates of drug substance samples, drug product samples and intermediates of drug product samples. 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. “Know-How” includes any rights including copyright, database or design rights protecting such Know-How. “Know-How” excludes Patent Rights.

“Knowledge” means, with respect to a matter that is the subject of a given representation, or warranty of Sutro, the knowledge, information or belief of any officer or director of Sutro, or such other employee of Sutro who would reasonably be expected to have knowledge of the matter in question, has, or should reasonably be expected to have. “Knowingly” means with Knowledge.

“Law” or “Laws” means all applicable laws, statutes, rules, regulations, ordinances and other pronouncements having the binding effect of law of any Governmental Body.

“Linker” means a chemical moiety by which a Payload is attached to an Antibody to create an ADC.

“MAA” means a Marketing Authorization Application submitted pursuant to the requirements of the FDA, as more fully defined in 21 U.S. C.F.R. § 314.3 et seq, a Biologics License Application submitted pursuant to the requirements of the FDA, as more fully defined in 21 U.S. C.F.R. § 601, and any equivalent application submitted in any country in the Territory, including all additions, deletions or supplements thereto, and as any and all such requirements may be amended, or supplanted, at any time.

“Major Market Countries” means U.S., France, Germany, Italy, Spain, the U.K., Japan, China, Canada, or Brazil.

“Merck Antibody” means an Antibody Controlled by Merck as of the Effective Date or anytime thereafter that is provided to Sutro under this Agreement for use under a Project Plan and derivatives thereof generated under this Agreement that continue to bind to the applicable Target.

“Merck Know-How” means all Know-How, but excluding Product Know-How, that is Controlled by Merck or any of its Affiliates, as of the Effective Date or at any time thereafter during the Term and is necessary or useful in the Exploitation of a Product or an ADC developed under this Agreement.

“Merck Linker” means a Linker Controlled by Merck during the Term.

“Merck Materials” means all chemical, biological or physical materials that are Controlled by Merck or any of its Affiliates, as of the Effective Date or at any time thereafter during the Term, and that are necessary or useful in the research, Development, manufacture, use or Commercialization of the Product, including sequence information related to Merck Antibodies and that are provided by Merck to Sutro under this Agreement.

“Merck Patents” means all Patent Rights that are Controlled by Merck or any of its Affiliates, as of the Effective Date or at any time thereafter during the Term, and that claim Merck Know-How.

“Merck Payload” means a Payload Controlled by Merck at any time during the Term.

“Merck Technology” means the Merck Patents and the Merck Know-How.

“Named Targets” means the [*] Targets ([*]) nominated by Merck and accepted by Sutro for development of ADCs under the Collaboration Agreement as set forth in Schedule 1.64.

“Net Sales” means the gross amounts invoiced by Merck or any of its Affiliates or Sublicensees for sales of Product to independent or unaffiliated Third Party purchasers of such Product, less the following deductions with respect to such sales that are either included in the billing as a line item as part of the gross amount invoiced, or otherwise documented as a deduction in accordance with IFRS to be specifically attributable to actual sales of such Product.

“Non-GLP Toxicology Studies” means, with respect to a Product, pilot toxicology studies carried out in one or more animal species and intended to determine the therapeutic index or tolerability of such Product to support its selection for GLP Toxicology Studies.

“Out-of-Pocket Expenses” means expenses actually paid by a Party or its Affiliate to any Third Party; provided, that “Out-of-Pocket Expenses” shall not include expenses paid to any consultants (or service providers of like kind).

“Patent Rights” or “Patents” means: (a) an issued or granted patent, including any extension, supplemental protection certificate, registration, confirmation, reissue, reexamination or renewal thereof; (b) a pending patent application, including any continuation, divisional, continuation-in-part, substitute or provisional application thereof; and (c) all counterparts or foreign equivalents of any of the foregoing issued by or filed in any country or other jurisdiction.

“Payload” means an active pharmaceutical ingredient, which is attached or intended to be attached to an Antibody via a Linker to create an ADC.

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

“Phase I Clinical Trial” means a Clinical Trial that provides for the first introduction into humans of a pharmaceutical product with the primary purpose of determining safety, metabolism and pharmacokinetic properties and clinical pharmacology of such product, in a manner that is generally consistent with 21 CFR § 312.21(a), as amended (or its successor regulation).

“Phase II Clinical Trial” means a Clinical Trial that is intended to initially evaluate the effectiveness of a pharmaceutical product for a particular indication or indications in patients with the disease or indication under study, in a manner that is generally consistent with 21 CFR § 312.21(b), as amended (or its successor regulation).

“Phase III Clinical Trial” means a pivotal Clinical Trial with a defined dose or a set of defined doses of a pharmaceutical product designed to ascertain efficacy and safety of such product, in a manner that is generally consistent with 21 CFR § 312.21(c), as amended (or its successor regulation), for the purpose of enabling the preparation and submission of an MAA.

“Price Approvals” means, in those countries in the Territory where Governmental Authorities may approve or determine pricing and/or pricing reimbursement for pharmaceutical products, such pricing and/or pricing reimbursement approval or determination.

“Product” means a pharmaceutical composition that consists of or incorporates an ADC based on a Merck Antibody.

“Product Know-How” means Know-How

a Named Target or Accepted Target,

a Merck Antibody,

a Merck Payload,

a Merck Linker,

a combination of a Merck Payload with a Linker that is in the public domain,

a combination of a Merck Linker with a Payload that is in the public domain,

an ADC Developed under this Agreement, or

a Product.

“Product Patent” means a Patent Right that claims Product Know-How.

“Product Technology” means the Product Know-How and the Product Patents.

“Project” means for each Named Target or Accepted Target the research activities to be conducted under the Collaboration Agreement and the Agreement with the goal to generate ADCs against a Named Target and/or Accepted Target.

“Project Budget” means the budget set forth by the timelines, required resources and the FTE Rate in each Project Plan. The Project Budget should include on a Calendar Quarter-by-Calendar Quarter basis the estimated amount of FTE Expenses associated with the specified Sutro Development Activities that are reimbursable by Merck.

“Project Plan” means the written Project description and timeline for Sutro Development Activities for each Project as appended to the Collaboration Agreement and the Agreement as Exhibit A and agreed upon in writing by the Parties.

“PS” means performance specifications, which describe Merck’s minimal performance requirement of an ADC molecule generated by Sutro. The PS are specifically defined for each Named Target and each Accepted Target, but shall be oriented at the generally defined PS in Schedule 1.82 appended to this Agreement.

“Regulatory Authority” means: (a) in the US, the FDA; (b) in the EU, the EMA or the European Commission; or (c) in any other jurisdiction anywhere in the world, any regulatory body with similar regulatory authority over pharmaceutical or biotechnology products.

“Regulatory Approval” means any and all approvals, licenses, registrations, or authorizations of the relevant Regulatory Authority, including Price Approvals, necessary for the Development, manufacture, use, storage, import, transport or Commercialization of Product in a particular country or jurisdiction. For the avoidance of doubt, Regulatory Approval to Commercialize Product shall include Price Approval.

“Results” means all results of Sutro Development Activities that have been generated in the performance of any Project Plan either under the Collaboration Agreement or the Agreement.

“Royalty Term” means, on a Product-by-Product and country-by-country basis, the period from the First Commercial Sale of such Product in such country until the later of (a) the last date on which such Product is Covered by a Valid Claim within the Sutro Patents or the Sutro Platform Patents in such country, or (b) ten (10) years after such First Commercial Sale of such Product in such country.

“Scripps In-License” means that certain license agreement by and between Sutro and The Scripps Research Institute dated May 30, 2012.

“Stanford CFE Manufacturing Know-How” means those parts of the Stanford Know-How that are relevant for the manufacture of the CFE.

“Stanford In-License” means that certain license agreement by and between Sutro and The Board Of Trustees of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Junior University, dated October 3, 2007, as may be amended from time to time.

“Stanford Manufacturing Know-How” means those parts of the Stanford Know-How that are relevant for manufacture of proteins and Antibodies using the CFE.

“Stanford Know-How” means the Know-How licensed to Sutro pursuant to the Stanford In-License.

“Stanford Patents” means the Patents licensed to Sutro pursuant to the Stanford In-License. The Stanford Patents are listed in schedule 1.92.

“Stanford Technology” means the Stanford Patents and the Stanford Know-How.

“Strategic IP Plan” means, for each Project, the plan mutually agreed between the Parties that sets out the agreed overall strategy that the Parties intend to follow for the protection by means of Patent Rights generated under this Agreement and such further Patent Rights as the Parties may agree on as part of such Strategic IP Plan. The Strategic IP Plan for each Project shall be established, agreed, updated, revised and executed as set out in Section 3.16(a).

“Sublicensee” means a Person other than an Affiliate of Merck to which Merck (or its Affiliate) has, pursuant to Section 4.4, granted sublicense rights under any of the license rights granted under Section 4.1; provided, that “Sublicensee” shall exclude distributors.

“Sutro Bankruptcy Event” means: (a) voluntary or involuntary proceedings by or against Sutro are instituted in bankruptcy under any insolvency Law, including, without limitation, the U.S. Bankruptcy Code, which proceedings, if involuntary, shall not have been dismissed within ninety (90) days after the date of filing; (b) a receiver or custodian is appointed for Sutro; (c) proceedings are instituted by or against Sutro for corporate reorganization, dissolution, liquidation or winding-up of Sutro, which proceedings, if involuntary, shall not have been dismissed within ninety (90) days after the date of filing; or (d) substantially all of the assets of Sutro are seized or attached and not released within ninety (90) days thereafter.

“Sutro Development Activities” means each of the following activities to be performed by Sutro pursuant to a Project Plan: (a) generating and optimizing drug conjugation sites in the amino acid sequence of Antibodies; (b) combining selected Payloads with an Antibody to form a library of ADCs against a specific target; and (c) characterizing the biophysical, biochemical, biological, and functional properties of the ADCs.

“Sutro Know-How” means all Know-How excluding Sutro Platform Know-How and excluding the CFE Manufacturing Know-How (a) that is Controlled by Sutro or any of its Affiliates, as of the Effective Date or at any time thereafter during the Term, and (b) is necessary or useful to Exploit Products.

“Sutro Linker” means a Linker Controlled by Sutro during the Term.

“Sutro Materials” means all chemical, biological or physical materials that are Controlled by Sutro or any of its Affiliates, as of the Effective Date or at any time thereafter during the Term, and that are necessary or useful in the research, Development, manufacture, use or Commercialization of the Product, but excluding the Delivered Materials.

“Sutro nnAA” means any non-naturally occurring amino acid Controlled by Sutro as of the Effective Date or any time thereafter.

“Sutro Patents” means all Patent Rights that are Controlled by Sutro or any of its Affiliates, as of the Effective Date or at any time thereafter during the Term and that claim Sutro Know-How. Listed on Schedule 1.102 are all Sutro Patents existing as of the Effective Date; provided, that Sutro shall update Schedule 1.102 from time-to-time to include any new Patent Rights that come to be Controlled by Sutro or any of its Affiliates at any time during the Term on or following the Effective Date that are directly related to and are necessary or useful to Exploit the Product.

“Sutro Payload” means a Payload Controlled by Sutro during the Term.

“Sutro Platform Know-How” means all Know-How excluding CFE Manufacturing Know-How

a Sutro Payload,

a Sutro Linker,

the combination of a Sutro Payload with a Linker that is in the public domain

the combination of a Payload that is in the public domain with a Sutro Linker,

a Sutro nnAA.

“Sutro Platform Patents” means a Patent Right that claims Sutro Platform Know-How, including the Stanford Patents. Sutro Platform Patent Rights include all Patent Rights listed on Schedule 1.105.

“Sutro Platform Technology” means the Sutro Platform Know-How and the Sutro Platform Patents.

“Sutro Technology” means the Sutro Patents, the Sutro Know-How and the Sutro Materials.

“Sutro’s Inability To Perform” means: (a) a material breach by Sutro of its obligation to supply the CFE to Merck under the CFE Supply Agreement or the CFE CMO Supply Agreement which is not cured within [*] days; (b) [*]; (c) a Sutro Bankruptcy Event; (d) Sutro fails to manufacture or have manufactured and deliver to Merck the CFE in quantities and quality sufficient to continuously meet Merck’s reasonable forecasted demands for CFE all as set forth in the CFE Supply Agreement and / or the CFE CMO Supply Agreement and is not cured within [*] days, where such failure results from reasons within Sutro’s reasonable control and/or results from Sutro’s failure to use Commercially Reasonable Efforts; or (e) [*].

“Target” means: [*]

“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not.

“Territory” means all the countries of the world.

“Third Party” means any Person other than Sutro, Merck or any of their respective Affiliates.

“Third Party Action” means any Action made by a Third Party against either Party that claims that the Product, or its use or Development, manufacture or sale infringes or misappropriates such Third Party’s intellectual property rights.

“Third Party Technology” means all Know-How and all Patents that are Controlled by a Third Party and are necessary or useful to Exploit the Product.

“Third Party License Agreement” means any agreement entered into by a Party or its Affiliate with a Third Party, or any amendment or supplement thereto, in each case following the Effective Date, whereby royalties, fees or other payments are to be made by a Party or its Affiliate to such Third Party in connection with the grant of rights under intellectual property rights Controlled by such Third Party, which rights are necessary or useful to Exploit the Product.

“United States” or “US” means the United States of America, its territories and possessions.

“USD” or “$” means the lawful currency of the United States.

“Valid Claim” means a claim of an issued and unexpired patent which has not lapsed or been revoked, abandoned or held unenforceable or invalid by a final decision of a court or governmental or supra-governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue, reexamination or disclaimer or otherwise.

Other Terms. The definition of each of the following terms is set forth in the section of the Agreement indicated below:

Defined Term

Section

“Action”

“Agreement”

“Antibody-Construct Sequences”

“Available”

“CFE-CMO”

“CFE Supply Agreement”

“CMO” or “Third Party Contract Manufacturer”

“Delivered Materials”

“Development Support”

“Effective Date”

“JIPC” or “Joint IP Committee”

“JPT” or “Joint Project Team”

“Sutro”

“Sutro Indemnitees”

“Manufacturing Support”

“Merck”

“Merck Indemnitees”

“Merck Notification Date”

“Party” and “Parties”

“Product Bundle”

“Product-CMO”

“Product Supply Agreement”

“Quarterly Report”

“Regulatory Support”

“Representatives”

“Sutro Business Acquisition”

“Term”

Objective and Conduct of the Projects. The Parties will conduct a number of Projects, each in accordance with a Project Plan, the terms of this Agreement and Law in good scientific manner. Each Party will use Commercially Reasonable Efforts to perform activities assigned to it under each Project Plan in accordance with the timelines set forth therein.

Projects, Project Plans. Each Project shall be conducted collaboratively as described in the mutually agreed written Project Plan. Such Project Plans, with up to three Merck Antibodies per Target, shall be appended to the Agreement. Sutro shall use all Merck Materials provided by Merck to Sutro solely to perform the Sutro Development Activities. Sutro shall use Commercially Reasonable Efforts to deliver the deliverables under each Project Plan in accordance with the PS and timelines set forth therein. The PS of each Project Plan shall be in line with the general PS in this Agreement set forth in Schedule 1.82.

Project Plan Framework. Each Project Plan will provide a framework for the applicable Project. Each Project Plan will include the following activities (all as will be more specifically set forth in the applicable Project Plan):

Merck will deliver to Sutro Antibody-construct sequences encoding for [*] directed against the applicable Named Target or Accepted Target (the “Antibody-Construct Sequences”) and, as the case may be, one or more Merck Payloads and / or one or more Merck Linkers.

Sutro will use Commercially Reasonable Efforts to create ADCs using such Merck Antibody-Construct Sequences and, as the case may be, using such Merck Payloads and / Merck Linkers in quantities and meeting the PS set forth in the respective Project Plan.

Sutro will deliver to Merck any such Antibodies generated or modified under this Agreement and / or resulting ADCs (the “Delivered Materials”) and such Sutro Payloads and / or Sutro Linkers and other appropriate reagents and reference standards each, in such quantities and otherwise as contemplated under the Project Plan or otherwise agreed to by the Parties. The ownership of the tangible Delivered Materials shall be and remain with Merck; provided that ownership of underlying intellectual property rights shall be in accordance with ARTICLE 8.

Non-GLP Toxicology Studies, GLP Toxicology Studies, and PK/PD studies with respect to such Delivered Materials will be conducted by Sutro or Merck, as specified in the applicable Project Plan.

Each Project Plan will include a budget and timeline for Sutro’s activities thereunder, including with respect to Sutro FTEs to be funded by Merck.

Project Failure. In case of technical failure, i.e., Sutro is not able to generate at [*] ADCs that meet the PS for a Named Target or Accepted Target under a Project Plan, or if the Project Leaders reasonably determine that it is scientifically or technically not feasible to create [*] ADCs directed to the applicable Named Target or Accepted Target in accordance with the PS set forth in the applicable Project Plan, then Merck may at its own discretion replace the Named Target or Accepted Target, subject to the gate keeping process set forth in Section 2.6, within three months of the JPT’s notice of its failure to produce at least [*] ADCs meeting the PS or such determination by the Project Leaders. For clarity, the exclusivity as described in Section 2.10 will be transferred from the replaced Named Target or replaced Accepted Target to the new Accepted Target, and the

Availability of Targets. Merck may designate up to six (6) Targets under this Agreement as follows: The [*] Target are the Named Targets set forth in the Collaboration Agreement. Merck may designate a [*] Additional Target as Accepted Targets in accordance with Sections 2.5 and 2.6 at any time prior to [*]. Merck may designate a [*] Additional Target as Accepted Targets in accordance with Sections 2.5 and 2.6 at any time [*]. All such Additional Targets that become Accepted Targets will be set forth on Schedule 1.1.

Gatekeeper Process. Within 10 business days of the Effective Date, the Parties shall enter into an agreement with the Gatekeeper in order to establish the below process by which Merck may designate Additional Targets. In order to designate an Additional Target under Section 2.4 or Section 2.5 Merck will provide the Gatekeeper with a confidential written description of such Additional Target, including to the extent available, the Name and UniProt/SwissProt identifier for such proposed Additional Target. Within five (5) Business Days following Gatekeeper’s receipt of such written notice with respect to a particular proposed Additional Target, Sutro will ensure that the Gatekeeper will notify Merck in writing whether the proposed Additional Target is Available for designation as an Accepted Target under a Project Plan. The Parties hereby acknowledge and agree that a proposed Additional Target will be “Available” for designation by Merck as an Accepted Target unless (a) Sutro or its Affiliate is actively conducting research and development directed to such Target with a Third Party prior to the date of receipt of the written notice from Merck to the Gatekeeper, or (b) Sutro or its Affiliate is actively engaged in its own internal program for ADC Development involving such Target (as further evidenced by written notice thereof to the Gatekeeper prior to the date of receipt of the written notice from Merck to the Gatekeeper). If for three (3) subsequent proposed Additional Targets the Gatekeeper notifies Merck that the proposed Additional Target is not Available, and the unavailability for each is by reason of clause (b) above, then Merck shall have the right to conduct an audit, upon reasonable notice during normal business hours and at Merck’s own expense, of Sutro’s internal programs directly related to such Additional Targets (and not any of its programs with, or on behalf of, a Third Party) solely to determine the accuracy of the Gatekeeper’s notification of unavailability for such proposed Additional Targets. All information obtained by Merck in conducting such audit shall be Sutro’s Confidential Information.

Non-Availability of Target. For clarity, in the event that the Gatekeeper notifies Merck that a proposed Additional Target is not Available pursuant to the procedures set forth in Section 2.6, Merck will not have exhausted any of its rights to designate an Additional Target as an Accepted Target within the applicable selection period. The applicable selection period for an Additional Target shall only be extended if the Gatekeeper responded in more than the five (5) Business Days as required under Section 2.6, and such extension shall be equal to the delay beyond such five (5) Business Days.

Availability of Named Targets. The Parties acknowledge and agree that, as of the Effective Date, the Named Targets are Available, and the procedures set forth in Section 2.6 will not apply to such Named Targets, other than with respect to replacement of such Named Targets in accordance with Section 2.4.

Availability of Additional Target and Designation as an Accepted Target under a Project Plan. In the event that the Gatekeeper notifies Merck that a proposed Additional Target is Available for designation as an Accepted Target under a Project Plan in accordance with Section 2.5, then within five (5) Business Days following Merck’s receipt of such notification, Merck shall provide the identity of the proposed Additional Target to Sutro. The Parties shall discuss the inclusion of such proposed Additional Target and Sutro shall inform Merck within ten (10) Business Days after notification from Merck whether Sutro believes in good faith that such proposed Additional Target will not be suitable for the generation of ADCs. If Sutro informs Merck during such ten (10) Business Days that Sutro believes that such proposed Additional Target will not be suitable for the generation of ADCs, then Merck shall have the right to withdraw the proposed Additional Target and submit another proposed Additional Target in accordance with Section 2.6, or Merck may provide written notification to Sutro within five (5) Business Days that it still desires to designate the proposed Additional Target as an Accepted Target. If Sutro does not inform Merck that such proposed Additional Target will not be suitable for the generation of ADCs during such ten (10) Business Days, or if Merck notifies Sutro in writing during such five (5) Business Days that it still desires to designate the proposed Additional Target as an Accepted Target, then at the expiration of such ten (10) Business Days or receipt of such written notice, as applicable (a) such proposed Additional Target shall be designated as an Accepted Target, and (b) the JPT will promptly meet to draft a Project Plan for such Accepted Target and will use good faith efforts to agree on such Project Plan within four (4) months. Upon written agreement by the Project Leaders on a proposed Project Plan for such Accepted Target the corresponding Project will commence. In addition to Section 2.10, the Parties agree that during the time period commencing with the receipt of the notification of Availability of an Additional Target from the Gatekeeper until its designation as an Accepted Target, such Target shall not be available for a collaboration between Sutro and a Third Party.

Exclusivity. During the Term on a Named Target or Accepted Target—by Named Target or Accepted Target basis, Sutro will collaborate exclusively with Merck with respect to ADCs directed against such Named Target or Accepted Target during the period commencing with (i) the effective date of the Collaboration Agreement for Named Targets, (ii) the designation of an Additional Target as an Accepted Target under a Project Plan by Merck pursuant to Section 2.9 or (iii) the replacement of a Named or Accepted Target pursuant to Section 2.4 with a new Accepted Target and ending on the earliest of (a) such date as Merck notifies Sutro of termination of the corresponding Project and directs Sutro to stop work on the corresponding Project Plan; (b) the date on which such Named Target or Accepted Target is replaced with another Accepted Target under Section 2.4 or (c) the date Merck terminates or otherwise ceases (which date Merck shall promptly notify Sutro thereof) all activities by or on behalf of Merck with respect to a Product, in each case corresponding to such Named Target or Accepted Target (each such period, a “Target Exclusivity Period”). For purposes of this Section 2.10, “collaborate exclusively” means that Sutro will not either directly, or to its Knowledge indirectly, discover, research, Develop or Commercialize ADCs, including by granting any right or license, including granting any covenant not to ▇▇▇, with respect to any of the Named Targets or Accepted Targets. In the case of a Change of Control of Sutro, or if Sutro or an Affiliate of Sutro acquires any Third Party, business or assets, or any interest therein (a “Sutro Business Acquisition”), then the aforementioned restrictions shall not apply to any research, development or commercialization program that a portion of the surviving entity or Affiliate that was not Sutro (prior to the Change of Control or Sutro Business Acquisition) had ongoing as of immediately prior to the date of such Change of Control or Sutro Business Acquisition. In the event that Sutro enters into such activities then it shall thereupon be considered to be in material breach of this Agreement and Merck shall have the right to terminate this Agreement in accordance with Section 12.3(a) or reduce payments in accordance with Section 12.4(a) (iv). Unless Merck decides to reduce payments according to Section 12.4 (a) (iv), the foregoing remedies shall not be exhaustive with respect to breach by Sutro of this Section 2.10.

[*]. In the event that a Project involves the use of a [*] Merck Antibody, and the Targets against which the Merck Antibody is directed are not Accepted Targets or Named Targets, that have not been replaced pursuant to Section 2.4, in separate, non-terminated Projects, then (a) Merck must designate [*], as the case may be, Additional Targets under Section 2.5 [*], (b) a single Project and associated Project Plan will govern the creation of an ADC incorporating such Merck Antibody Directed to all such Additional Targets and (c) Sutro will collaborate exclusively with Merck with respect to ADCs directed to each such Additional Target pursuant to Section 2.10.

Alliance Managers. Promptly following the Effective Date, each Party will designate an alliance manager to be reasonably available to the other Party to facilitate communication, respond to questions and otherwise oversee that the Parties’ activities hereunder are in line with this Agreement. Such alliance managers will regularly interact with each other on a frequency to be mutually agreed by the Parties and on an ad hoc basis if requested by the Joint Project Team or the Project Leaders. A Party may replace its alliance manager at any time by written notice to the other Party.

Appointment of Project Leaders. Within ten (10) Business Days after the Effective Date, each Party will appoint an individual from senior management of such Party with decision making authority to be a project leader (each, a “Project Leader”) to oversee the Parties’ activities under this Agreement. A Party may change its Project Leader at any time by written notice to the other Party. Such Project Leader may, but is not required to, serve as a representative of its respective Party on the JPT. The Parties may allow additional employees to attend meetings of the Project Leaders and may consult with additional employees and advisors prior to making a decision, subject to the confidentiality provisions of Article 9. The office of the Project Leaders will exist until the completion of the Sutro Development Activities under the last Project Plan.

Project Leaders Functions and Authority. The Project Leaders will be responsible for supervising and managing the Projects. Their functions will be:

overseeing and coordinating the progress, timelines, Project Budget and Results;

reviewing and approving each Project Plan (including the Project Budget) and any proposed amendments to the Project Plans; provided that the Project Plan (including the Project Budget) for the Named Targets attached hereto as Exhibit A1 shall be deemed approved by the Project Leaders;

reviewing each Party’s reports regarding its activities under each Project Plan;

deciding whether it is scientifically or technically feasible to create [*] ADCs directed to the applicable Named Target or Accepted Target in accordance with each Project Plan;

deciding whether an ADC meets the applicable PS set forth in each Project Plan;

approving, in writing, updates and amendments to the Sutro Development Activities, including all relevant timelines and Project Budget;

approval of the Strategic IP Plan and approval of any changes to the Strategic IP Plan;

resolving any disputes delegated to the Project Leaders by the JPT or the JIPC; and

performing such other functions as the Parties may mutually agree in writing.

Meetings of the Project Leaders. During the period in which there are active Projects, the Project Leaders will meet in person or by teleconference or videoconference at least once every Calendar Quarter. The Project Leaders also may choose to meet more frequently on an as needed basis. In advance of each meeting of the Project Leaders, the JPT will provide a Quarterly Report to the Project Leaders.

Decisions of the Project Leaders. The Project Leaders will take action by unanimous consent or by a written resolution signed by the Project Leaders. In the event the Project Leaders are unable to reach unanimous consent on any matter provided in Section 3.3, then the Project Leaders shall first consult with relevant members of their delegation to the JPT and, after such consultation, reconvene to attempt to reach unanimous consent on the matter. If after such effort the Project Leaders are still unable to reach unanimous consent, then except for a dispute on a matter in subclause (d) or (e) or (g) in Section 3.3, Merck acting reasonably and in good faith shall make the final determination on the applicable matter. With respect to a dispute on a matter in subclause (d) or (e) in Section 3.3, the matter shall be escalated to the Executive Officers in accordance with Section 13.2; provided that if the Executive Officers are unable to reach unanimous consent on the matter within thirty (30) days, then Merck acting reasonably and in good faith shall make the final determination on the applicable matter. With respect to a dispute on a matter in subclause (g) in Section 3.3, the matter shall be escalated to the Executive Officers in accordance with Section 13.2; provided that if the Executive Officers are unable to reach unanimous consent on the matter within thirty (30) days, then the Parties shall submit the matter to an arbitrator as follows: (a) the arbitrator will be selected by the Parties and shall have expertise in patent protection and strategy, (b) within fifteen (15) days after appointment of the arbitrator each Party shall deliver to the arbitrator and the other Party its proposal regarding the dispute, (c) the arbitrator shall give each Party the opportunity to explain to the arbitrator why its proposal is more appropriate than the other Party’s proposal, which may include conducting an oral argument or an evidentiary hearing if the arbitrator determines that it would assist the arbitrator’s decision of which proposal to select, (d) the arbitrator shall, within fifteen (15) days after receipt of the two proposals and having heard each Party’s rationale for its proposal, select one of the proposals from the two (2) submitted, and (e) the proposal selected by the arbitrator shall be binding on the Parties as if mutually agreed by the Parties and the arbitrator may not modify or alter the terms in either Party’s proposal.

Minutes and Reports of the Project Leaders. The Project Leaders will document their decisions regarding each Project Plan in the meeting minutes. Promptly after each meeting, one Project Leader will provide the other with a draft version of the meeting minutes for review and comment. Within forty (40) Business Days of each meeting, the Project Leaders will provide the Parties and the JPT with a final agreed version of the meeting minutes.

Limitations. The Project Leaders shall have no power to amend this Agreement and shall have only such powers as are specifically delegated to it hereunder. The Project Leaders, and Merck in the exercise of its final decision-making authority under Section 3.5, will not have the power to: (a) determine that Sutro has breached any obligation under this Agreement; (b) determine that a milestone event required for the payment of a milestone payment has or has not occurred; (c) make a decision that is expressly stated to require the mutual agreement of the Parties; (d) amend the Sutro Development Activities to require Sutro to conduct any other or different activities; or (e) expand Merck’s rights or reduce Merck’s obligations under this Agreement.

Formation and Composition of the Joint Project Team. The joint project team established under the Collaboration Agreement (the “JPT” or “Joint Project Team”) shall continue in its function under this Agreement. The Parties shall notify one another in writing of any change in the membership of the JPT. Each Party may exchange its representatives on the JPT upon written notice to the other Party. The JPT will exist until the completion of the Sutro Development Activities under the last Project Plan.

JPT Functions and Powers. The JPT shall manage the activities of the Parties under this Agreement during the time Sutro is performing the Sutro Development Activities. During that time the JPT shall:

draft the Project Plans (including the budgets therein) for each Project and proposing such Project Plans for approval by the Project Leaders;

oversee the implementation of, monitor, document and report the progress of, and propose amendments to each Project Plan, including the allocation of qualified personnel, timelines, Project Budget and Results;

monitor the progress of the Sutro Development Activities and review, discuss and comment on any Results thereunder;

evaluate whether it is scientifically or technically feasible to create an ADC directed to the applicable Accepted Target in accordance with each Project Plan and make a recommendation to the Project Leaders;

evaluate whether an ADC meets the applicable PS set forth in each Project Plan and make a recommendation to the Project Leaders;

prepare Quarterly Reports based on reports to be provided by each Party of such Party’s activities during the applicable Calendar Quarter;

serve as the first forum for the settlement of disputes or disagreements resulting from or arising out of this Agreement;

perform such other functions as appropriate to further the purposes of this Agreement, as mutually agreed to in writing by the Parties.

Limitations of Powers of the JPT. The JPT shall have no power to amend this Agreement or any Project Plan and shall have only such powers as are specifically delegated to it hereunder.

Determinations of the JPT. The JPT will take action by unanimous consent of the Parties, with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting, or by a written resolution signed by the designated representatives of each of the Parties. In the event the JPT is unable to secure unanimous consent on any matter, the JPT shall delegate such matter to the Project Leaders.

Meetings of the JPT. The JPT shall hold meetings twice monthly by videoconference, telephone, web conference, or face to face meetings but in no event, shall such meetings be held in person less frequently than once every six (6) months, unless otherwise agreed by the JPT. At least three (3) members of the JPT will constitute a quorum for any meeting, provided that at least one (1) representative from each Party is present. The Project Leaders will alternately be responsible for organizing the meetings of the JPT and for distributing the agenda of the meetings. The Project Leader will include on the agenda any item within the scope of the responsibility of the JPT that is requested to be included by a Party, and will distribute the agenda to the Parties no less than two (2) days before any meeting of the JPT. A Party may invite other senior personnel of their organization to attend meetings of the JPT, as appropriate, provided, however, that such other senior personnel shall not have any duties of a JPT member. Each Party shall be responsible for its travel costs incurred for attending JPT meetings.

JPT Meeting Minutes. Minutes will be kept of all JPT meetings by a member of the JPT designated by the JPT and sent to all members of the JPT for review and approval within five (5) days after each meeting. Minutes will be deemed approved unless any member of the JPT objects to the accuracy of such minutes by providing written notice to the other members of the JPT within three (3) days of receipt of the minutes. In the event of any such objection that is not resolved by mutual agreement of the Parties, such minutes will be amended to reflect such unresolved dispute. In advance of each quarterly meeting of the Project Leaders, the JPT will prepare a report for the Project Leaders detailing the progress of activities under each Research Plan, any decisions that are needed from the Project Leaders and any matters on which the JPT could not reach agreement (each a “Quarterly Report”).

Urgent Matters. Notwithstanding anything in Section 3.4 or Section 3.11 expressed or implied to the contrary, in the event that an urgent issue or matter arises, that requires prompt action by the Project Leaders and / or the JPT, the Project Leaders and / or the JPT shall meet for the purpose of resolving the issue or matter. Such meeting shall take place as promptly as possible, with the immediacy of the issue or matter requiring action determining the time, place and manner of the conduct of the meeting

Joint Intellectual Property Committee. As soon as practicable after the Effective Date, the Parties shall form a joint intellectual property committee (the “Joint Intellectual Property Committee” or “JIPC”). The JIPC shall comprise no more than four (4) members, and shall be composed of an equal number of representatives from each Party.

Functions and Authority. During the Term the JIPC shall:

for each Project, draft and propose a Strategic IP Plan (and any amendments thereto) to the Project Leaders, which Strategic IP Plan at a minimum needs to detail the countries of filing and a patent filing strategy, which strategy shall (1) be aligned between the Parties to secure the maximum protection of Merck Technology, Product Technology, Sutro

oversee the drafting, filing, prosecution and maintenance of all Patent Rights generated from the activities under this Agreement in accordance with the Strategic JP Plan and Article 8, which shall include overseeing Sutro’s reasonable opportunity to comment on all Product Patent filings and Merck’s obligation to reasonably consider in good ▇▇▇▇▇ ▇▇▇▇▇’▇ comments with respect thereto;

as necessary, take day-to-day decisions relating to the drafting, filing, prosecution and maintenance of the resulting Patent Rights in accordance with the Strategic JP Plan and Article 8;

report to the Project Leaders on the drafting, filing, prosecution and maintenance of such Patent Rights;

propose to the Project Leaders any changes or additions to the Strategic IP Plan that the JIPC deems fit, and upon approval of said changes and additions, implement said changes and additions and

consider whether it is necessary to enter into any license agreements with a Third Party in respect to a Project, ADC or Product.

Meetings of the JIPC. During the Term, the JIPC will meet in person or by teleconference or videoconference on a frequency to be determined by the JIPC.

Decisions of the JIPC. The JIPC will take action by unanimous consent of the Parties, with each Party having a single vote, irrespective of the number of representatives actually in attendance at a meeting (but provided that at least one representative from each Party is in attendance), or by a written resolution signed by the designated representatives of each of the Parties. In the event the JIPC is unable to secure unanimous consent on any matter the decision shall be escalated to the Project Leaders. The JIPC shall however have no authority to amend any Strategic IP Plan or this Agreement.

Minutes and Reports of the JIPC. The JIPC will document their decisions regarding each Strategic IP Plan in the meeting minutes. Promptly after each meeting, one member of the JIPC will provide the others with a draft version of the meeting minutes for review and comment. Within forty (40) Business Days of each meeting, the JIPC will provide the Parties and the Project Leaders with a final agreed version of the meeting minutes.

Grant of License to Merck. Subject to the terms and conditions of this Agreement, Sutro hereby grants to Merck and its Affiliates an exclusive (even as to Sutro, except to the extent necessary for Sutro to perform the obligations and exercise the rights set forth in this Agreement), worldwide, royalty-bearing right and license (with the right to sublicense, subject to the provisions of Section 4.4) under the Sutro Technology, the Sutro Platform Technology, and Sutro’s interest in Joint Technology to Exploit (subject to the provisions of Article 5) each Product in the Territory in the Field. The foregoing license shall not be deemed to grant rights to any biologic or other active pharmaceutical ingredient that may be included in a Product, apart from the ADC included in the Product. The license granted pursuant to this Section 4.1 shall not include any sublicense under the Stanford In-License, or any other rights to any Stanford Manufacturing Know-How or any other Stanford Technology, unless and until Merck receives such license pursuant to Section 5.8 to manufacture the Product itself.

CFE Manufacturing Technology Back-up License to Merck. Subject to the terms and conditions of this Agreement, Sutro hereby grants to Merck and its Affiliates a non-exclusive, worldwide, right and license (without the right to sublicense except to the Merck CMO, as provided below) under the CFE Manufacturing Technology in the Territory in the Field, which shall be exercisable solely in the event of Sutro’s Inability To Perform and solely for granting a sublicense to a contract manufacturing organization selected by Merck (“Merck CMO”) to use the CFE Manufacturing Know-How transferred to the Merck CMO in case of Sutro’s Inability To Perform. Furthermore, (i) the Merck CMO shall not, and shall be contractually required not to, share with, or disclose to, any Third Parties (other than to a Merck CMO) any such CFE Manufacturing Know-How transferred by Sutro to such Merck CMO, and (ii) upon termination of the manufacturing agreement between Merck and the Merck CMO, the Merck CMO shall return to Sutro or, at Sutro’s written request, destroy such CFE Manufacturing Know-How, and provide to Sutro a written confirmation thereof. Provided that the safeguards foreseen under this Section 4.2 are respected, Merck shall have the right to change the Merck CMO at its sole discretion. The foregoing grant of rights shall not result in a royalty payable for the manufacture of the CFE, but shall continue to incur royalties for the final sale of Product in accordance with Article 7.

Stanford In-License Requirements. The licenses granted under Section 4.1 and Section 4.2 shall be subject to, and limited by, the terms of Sections 4.3 and 15.3(D) of the Stanford In-License, and Merck agrees to comply with all such terms, including those set forth in Schedule 4.3.

Grant of Sublicense by Merck. Merck shall have the right, in its sole discretion, to grant sublicenses to the Product under the licenses granted in Section 4.1; provided, however, that the granting by Merck of a sublicense (a) shall not relieve Merck of any of its obligations hereunder or any liability under this Agreement and (b) any such sublicense shall be consistent with the terms and conditions of this Agreement.

Trade Marks. As between Sutro and Merck, Merck shall have the sole authority to select trademarks for each Product and shall own all such trademarks.

Sutro Reporting. If Sutro becomes aware of any issues related to the Sutro Technology or the Sutro Platform Technology, or the CFE Manufacturing Technology which may affect the Development, Commercialization or use of any Product, then Sutro shall provide Merck with all such information within such reasonable timelines which enable Merck to assess any impact on the Product.

Development of the Product by Merck. Merck shall have the exclusive right, and sole responsibility and decision-making authority, to research and Develop each Product and to conduct (either itself or through its Affiliates, agents, subcontractors and/or Sublicensees) all Clinical Trials and non-clinical studies Merck believes appropriate to obtain Regulatory Approval for each Product in the Field.

Sutro Support in Development. Sutro shall make its employees, consultants, contractors, advisors and agents (“Representatives”) that are knowledgeable regarding the Sutro Technology, the Sutro Platform Technology or each Product (including the properties and functions thereof) reasonably available to Merck for scientific and technical explanations, advice and on-site support that may reasonably be required by Merck relating to the Development of each Product (the “Development Support”). The reasonable agreed costs of the Development Support to be provided by Sutro shall be reimbursed by Merck.

Commercialization. Merck shall have the exclusive right, and sole responsibility and decision-making authority, to Commercialize any Product itself or through one or more Affiliates or Sublicensees or other Third Parties selected by Merck and shall have the sole decision-making authority and responsibility in all matters relating to the Commercialization of the Product.

Research Material Manufacturing. Sutro shall manufacture and supply research quantities of the Product as reasonably required in order for the Parties to perform the activities pursuant to the applicable Project Plan. The cost for the supply of such research quantities of Product is included in the Project Budget of the corresponding Project Plan. However, Merck acknowledges that Sutro’s facilities may only permit, based on generally accepted industry standards for management of high-potency pharmaceutical compounds, the handling of certain quantities of the applicable toxins necessary for inclusion in the Product, and if the quantity of Product required exceeds such quantities of toxin, Sutro will need to engage a Third Party contract manufacturer (“CMO”) to manufacture such research quantities of toxin (and associated Linker) and to conjugate such toxin and Linker to the appropriate Antibody, which will be manufactured by Sutro. Merck shall have the right to perform a quality audit of the CMO and Sutro shall only engage such CMO upon Merck’s written approval of the CMO and the associated costs, such approval not to be unreasonably withheld. In such case, Merck shall be responsible for the costs of such CMO (including technology transfer and ramp-up) to manufacture the Product.

Product Supply Agreement. In addition, the Product for use in GLP Toxicology Studies will be manufactured and supplied solely by Sutro pursuant to a separate supply agreement (the “Product Supply Agreement”), in sufficient quantities and quality (as mutually agreed by the Parties and set forth in a supply plan) at a transfer price of [*] to permit Merck to conduct the GLP Toxicology Studies. At Merck’s election, the Product Supply Agreement shall also include the supply by Sutro to Merck of Product for Phase I Clinical Trials and Phase II Clinical Trials. The Parties shall negotiate in good faith and execute such Product Supply Agreement at the latest on the date that is [*] after written notice by Merck to Sutro of its desire to enter into a Product Supply Agreement (the “Merck Notification Date”). If the Parties are unable to agree on a Product Supply Agreement by the date that is [*] months after the Merck Notification Date, Sutro will initiate the transfer of the process for production of the Product to a CMO as set forth in Section 5.7.

CFE Supply.

CMO Supply. If, at any time commencing with the GMP production of Product for use in Phase I Clinical Trials, Merck desires to have Sutro enable [*] to manufacture Product (the “Product CMOs”, [*], then Merck shall notify Sutro in writing. Following such request, Sutro will enter into appropriate agreements to transfer the process for production of the Product to [*] that [*] in order to allow for the manufacture and supply of the Product in the required quantity and quality. The agreement between Sutro and each such CMO will provide for the license and transfer of the relevant processes, documents, and materials included in any Know-How controlled by Sutro, as necessary for such manufacture and supply; provided that such CMO shall not transfer any tangible embodiments of the CFE, and Merck, its Affiliates and subcontractors shall not solicit any such sharing or transfer. Sutro shall cooperate with Merck on the final form of supply agreement to be used with each such CMO and shall include in any agreement that such CMO is authorized to manufacture and supply Product exclusively to Merck. [*].

Phase III Clinical Trial and Commercial Manufacturing Supply. Except as otherwise provided in this ARTICLE 5, and not including the right to produce Cell Free Extract (which shall be governed by Section 5.6), Merck shall have the exclusive right to manufacture the Product itself or through one or more Affiliates or Sublicensees or other Third Parties selected by Merck (including, at Merck’s election, an existing Product CMO). No earlier than [*] months prior to the planned start of the first Phase III Clinical Trial for a Product and pursuant to written notice by Merck to Sutro and a transfer plan to be agreed upon by the Parties, Sutro will transfer to Merck the process for production of the Product, including any Sutro Know-How and any Sutro Platform Know-How relating to the Product, using the Cell Free Extract. Sutro shall make representatives that are knowledgeable regarding the Sutro Platform Technology, the Sutro Technology and / or the Product reasonably available to Merck for scientific and technical explanations, advice and on-site support, that may reasonably be required by Merck, relating to the manufacture of the Product and the manufacturing technology transfer (the “Manufacturing Support”), including the subject matter of the manufacturing technology transfer and manufacturing scale-up. The reasonable agreed costs of the Manufacturing Support to be provided by Sutro shall be reimbursed by Merck consistent with standard industry rates for services of this kind. At such time as the process for the production of the Product is transferred to Merck [*], the license in Section 4.1 shall include a sublicense under the Stanford In-License to the Stanford Manufacturing Know-How and Stanford Technology necessary to produce the Product using the CFE. Sutro shall deliver or cause to be delivered the CFE to Merck and / or the Product CMOs specified by Merck pursuant to the CFE Supply Agreement set forth in Section 5.6.

Diligence by Sutro. Sutro shall use Commercially Reasonable Efforts to perform its manufacture, supply and technology transfer obligations under this Agreement, and will comply with all Laws and standards governing such manufacture and supply. Specifically, Sutro will ensure that the Cell Free Extract, in the required quality, [*] available from [*] CMOs for the production of Product.

Diligence by Merck. Subject to Sutro’s fulfillment of its obligations under this Agreement, Merck shall use Commercially Reasonable Efforts to Develop and seek Regulatory Approval for [*] for each Named Target and Accepted Target, and after receiving Regulatory Approval for any such Product, shall use Commercially Reasonable Efforts to Commercialize such Product, provided, that

Right of Merck to Subcontract. Merck may exercise any of its rights, or perform any of its obligations, under this Agreement (including any of the rights licensed in Section 4.1) by subcontracting the exercise or performance of all or any portion of such rights and obligations on Merck’s behalf. Any subcontract granted or entered into by Merck as contemplated by this Section 5.11 of the exercise or performance of all or any portion of the rights or obligations that Merck may have under this Agreement (a) shall not relieve Merck of any of its obligations hereunder or any liability under this Agreement and (b) any such subcontract shall be consistent with the terms and conditions of this Agreement.

Regulatory Filings. As between Merck and Sutro, Merck shall own and maintain all regulatory filings and Regulatory Approvals for the Product, including all INDs and ▇▇▇▇.

Communications with Authorities. Merck (or one of its Affiliates or Sublicensees) shall be responsible, and act as the sole point of contact, for communications with Regulatory Authorities in connection with the Development, Commercialization, and manufacturing of Product. Following the Effective Date, Sutro shall not initiate, with respect to Product, any meetings or contact with Regulatory Authorities without Merck’s prior written consent. To the extent Sutro receives any written or oral communication from any Regulatory Authority relating to Product, Sutro shall (a) refer such Regulatory Authority to Merck, and (b) as soon as reasonably practicable (but in any event within twenty-four (24) hours), notify Merck and provide Merck with a copy of any written communication received by Sutro or, if applicable, complete and accurate minutes of such oral communication.

Sutro Technology, Sutro Platform Technology and CFE Manufacturing Technology. If the competent Regulatory Authority in any country initiates any oral communication with Merck solely regarding the Sutro Technology, Sutro Platform Technology or CFE Manufacturing Technology incorporated into the Product, Merck shall have the right to respond to such communication to the

DMF. Sutro will file the DMF with the FDA. Sutro shall own the DMF and hereby grants to Merck the right to cross-reference the DMF for the Product, but no right to access the underlying data related to the production of the Cell Free Extract. With respect to any territories where Sutro does not have a DMF or a functional equivalent, Sutro will coordinate with Merck, at Merck’s request and expense, the preparation and submission of documents and materials [*] necessary or reasonably useful to obtain and / or maintain Regulatory Approval for a Product in such territory, it being understood that wherever possible Sutro will disclose confidentially Sutro CFE Manufacturing Technology to the applicable Regulatory Authority.

Sutro Support in Regulatory Matters. Subject to written agreement on the scope and Merck’s reimbursement of costs and expenses Sutro shall make its Representatives that are knowledgeable regarding the Sutro Technology, the Sutro Platform Technology, the CFE Manufacturing Technology or the Product available to Merck for regulatory explanations, advice and on-site support, that may reasonably be required by Merck relating to regulatory matters (including preparation and filing for any INDs and ▇▇▇▇ and obtaining and maintaining Marketing Authorizations) (the “Regulatory Support”). [*], Sutro will transfer all documentation as is necessary or reasonably useful to obtain and / or maintain Regulatory Approval for any Product to Merck.

Recalls. Merck shall have the sole right to determine whether and how to implement a recall or other market withdrawal of the Product.

Initial Fee and Research Fees. In partial consideration of ▇▇▇▇▇’▇ ▇▇▇▇▇ of the rights and licenses to Merck hereunder, Merck shall pay, or cause to be paid, to Sutro a fee of ten million Dollars (USD 10,000,000), [*] following the Effective Date and after receipt of the corresponding invoice from Sutro. Payment of the initial fee shall be subject to any withholding tax obligations set forth in Section 7.12(a).

Milestone Payments. As further partial consideration for ▇▇▇▇▇’▇ ▇▇▇▇▇ of the rights and licenses to Merck hereunder, Merck shall pay, or cause to be paid, to Sutro the following non-refundable milestone payments with respect to each Product to achieve the milestone events described below, whether such achievement is by Merck or its Affiliate or Sublicensee. Merck shall promptly notify Sutro in writing of the achievement of any such milestone event and Sutro shall issue Merck an invoice for the amount of the corresponding milestone payment, which invoice Merck shall pay within sixty (60) days following receipt of such invoice.

Milestone event for each Product

Amount in USD

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

[*]

Royalty Payments for Product.

Annual Worldwide Net Sales of Product per Calendar Year (in USD)

Incremental Royalty Rate

For Net Sales of Product from USD 0 up to and including USD $[*]

For that portion of Net Sales of Product that is greater than USD $[*] and less than or equal to USD [*]

For that portion of Net Sales of Product that is greater than USD $[*]

Additional Royalties. Merck shall pay to Sutro the following additional [*] royalty payments (the “Additional Royalties”): (i) an additional royalty of [*]% on aggregate annual worldwide Net Sales of Product generated by Merck in the [*] full Calendar Year following the First Major Commercial Sale (as defined below); (ii) an additional royalty of [*]% on aggregate annual worldwide Net Sales of Product generated by Merck in the [*] full Calendar Year following the First Major Commercial Sale; and (iii) an additional royalty of [*]% on aggregate annual worldwide Net Sales of Product generated by Merck in the [*] full Calendar Year following the First Major Commercial Sale. [*]. As used herein, the “First Major Commercial Sale” means the First Commercial Sale in any of the Major Market Countries.

Reductions, Deductions and Reimbursements.

Timing of Payment. Royalties payable under Section 7.3(a) shall be payable on actual Net Sales and shall accrue at the time the invoice for the sale of Product is delivered. Royalty obligations that have accrued during a particular Calendar Quarter shall be paid, on a Calendar Quarter basis, within [*] days after the end of each Calendar Quarter during which the royalty obligation accrued. Royalties payable under Section 7.4 shall be paid within [*] days after the end of Calendar Year during which the royalty obligation accrued.

Mode of Payment and Currency; Invoices.

Royalty Reports and Records Retention. Within [*] days after the end of each Calendar Quarter during which Product has been sold, Merck shall deliver to Sutro, together with the applicable royalty payment due for such Calendar Quarter, a written report, on a Product-by-Product and a country-by-country basis, that includes the Net Sales by country, the applicable royalty rate, the royalties payable in USD, the applicable exchange rate for such Calendar Quarter. Such report shall be deemed Confidential Information of Merck subject to the obligations of Article 9 of this Agreement. For two (2) years after each sale of Product occurs, Merck shall, and shall ensure that its Affiliates and Sublicensees, keep complete and accurate records of such sale in sufficient detail to confirm the accuracy of the royalty calculations hereunder.

Legal Restrictions. If at any time legal restrictions prevent the remittance by Merck of all or any part of royalties due on Net Sales in any country, Merck shall notify Sutro promptly in writing and Merck shall have the right and option to make such payment by depositing the amount thereof in local currency to an account in the name of Sutro in a bank or other depository selected by Sutro in such country.

Late Payments. All payments under this Agreement shall earn interest from the date due until paid at a per annum rate equal to the lesser of (a) the maximum rate permissible under Law and (b) [*] percent ([*]%) above the monthly Reuters 01 EURIBOR, measured at 2 p.m. Frankfurt/Germany time on the date payment is due. Interest will be calculated on a [*] basis. An example of the interest rate calculation follows, assuming that the Reuters interest rate is [*]% and a payment of USD $[*] is [*] overdue:

Audits.

Taxes.

Disclosure of Inventions. Merck will promptly disclose to Sutro if it invents, conceives, develops or reduces to practice any Joint Technology, or Sutro Platform Technology. Sutro will promptly disclose to Merck if it invents, conceives, develops or reduces to practice any Joint Technology or Product Technology.

Further Assurances. Sutro shall require all of its employees, and use its best efforts to require its contractors and agents, and any Affiliates and Third Parties working on its behalf under this Agreement (and their respective employees, contractors and agents), to assign to Sutro, and, as the

Ownership of Intellectual Property

Sutro Rights. The Parties acknowledge and agree that Sutro is and will be the sole and exclusive owner of all right, title and interest in and to any Sutro Technology; any Sutro Platform Technology and any CFE Manufacturing Technology.

Merck Rights. The Parties acknowledge and agree that Merck is and will be the sole and exclusive owner of all right, title and interest in and to any Merck Technology and Product Technology.

Joint Technology. The Parties acknowledge and agree that the Parties will each own an equal, undivided interest in Joint Technology. Each Party will have the right to Exploit the Joint Technology without a duty of seeking consent of or accounting to the other Party; provided, that except as provided in Section 8.3(e) below, neither Party will have the right to disclose (except as provided in Article 9) or license (except as may be permitted under Article 4) any Joint Technology without the prior written consent of the other Party.

Ownership of Linkers and Payloads. Ownership of Linkers, Payloads, or Linker-Payload combinations first developed under this Agreement, and all intellectual property rights therein, that belong neither to the Sutro Platform Technology nor to the Product Technology shall be determined according to the law of inventorship of the United States. If one of Linker or Payload used belongs to the Product Technology and the remaining moiety belongs to the Sutro Platform Technology any resulting Linker-Payload combination developed under this Agreement and all intellectual property rights therein shall be jointly owned between the Parties and belong to Joint Technology.

Rights for Replaced Targets. Each Party shall have the right to use, disclose and license its interest in any Joint Technology arising from any of the Named Targets or Accepted Targets that were replaced pursuant to Section 2.4. Merck hereby grants to Sutro a worldwide, royalty-free, non-exclusive license (with right to sublicense) to practice the Product Technology invented, conceived or developed under this Agreement from any of the Named Targets or Accepted Targets that were replaced pursuant to Section 2.4; provided that the foregoing license will not include rights to any Merck Antibody, Merck Payload or Merck Linker, or any improvements to, or molecules comprising any of the foregoing.

Patent Prosecution and Maintenance.

Merck Patents and Product Patents. Merck shall have the sole right, but not the obligation, to file, prosecute and maintain the Merck Patents and the Product Patents. Merck shall bear all costs and expenses of filing, prosecuting and maintaining Merck Patents and Product Patents, and Sutro shall have no particular rights with respect thereto.

Cooperation.

Common Ownership Under Joint Research Agreements. Notwithstanding anything to the contrary in this Article 8, neither Party will have the right to make an election under 35 U.S.C. 102(c) when exercising its rights under this Article 8 without the prior written consent of the other Party. With respect to any such permitted election, the Parties will coordinate their activities with respect to any submissions, filings or other activities in support thereof. The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in 35 U.S.C. 100(h).

Enforcement of Patents.

Third Party Actions Claiming Infringement.

Confidentiality Obligations. Each Party agrees that, for the Term and for [*] ([*]) years thereafter, such Party shall, and shall ensure that its Representatives hold in confidence all Confidential Information disclosed to it by the other Party pursuant to this Agreement, unless such information:

Use. Each Party shall not use the Confidential Information of the other Party for any purpose other than for the purpose of performing its obligations, or exercising its rights, under this Agreement, including for purposes of:

Required Disclosure. The recipient may disclose the Confidential Information to the extent required by Law or court order; provided, however, that the recipient promptly provides to the disclosing party prior written notice of such disclosure and provides reasonable assistance in obtaining an order or other remedy protecting the Confidential Information from public disclosure.

Publications. Sutro shall not publish any information relating to the Product without the prior written consent of Merck (which consent may be withheld or given in Merck’s sole discretion), unless such information has already been publicly disclosed either prior to the Effective Date or after the Effective Date through no fault of Sutro or otherwise not in violation of this Agreement. Merck shall have the right to make such publications as it chooses, in its sole discretion, without the approval of Sutro. Sutro shall submit to Merck for Merck’s written approval (which approval be granted or denied in Merck’s sole discretion) any publication or presentation (including in any seminars, symposia or otherwise) of information related directly or indirectly to the Product for review and approval at least ninety (90) days prior to submission for the proposed date of publication or presentation.

Press Releases and Disclosure.

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

Additional Representations and Warranties of Sutro. Sutro represents and warrants to Merck that, as of the Effective Date:

Sutro Covenants. Sutro covenants to Merck that:

Indemnification by Merck. Merck shall indemnify, defend and hold Sutro and its Affiliates and each of their respective employees, officers, directors and agents (the “Sutro Indemnitees”) harmless from and against any and all liability, damage, loss, cost or expense (including reasonable attorneys’ fees) to the extent arising out of Third Party claims or suits related to: (a) Merck’s negligence or willful misconduct; (b) Merck’s performance of its obligations or exercising its rights under this Agreement; or (c) breach by Merck of its representations or warranties set forth in Article 10; provided, however, that Merck’s obligations pursuant to this Section 11.1 shall not apply (i) to the extent such claims or suits result from the negligence or willful misconduct of any of the Sutro Indemnitees, or (ii) with respect to claims or suits arising out of breach by Sutro of its representations, warranties or covenants set forth in Article 10.

Indemnification by Sutro. Sutro shall indemnify, defend and hold Merck and its Affiliates and each of their respective agents, employees, officers and directors (“Merck Indemnitees”) harmless from and against any and all liability, damage, loss, cost or expense (including reasonable attorney’s fees) to the extent arising out of Third Party claims or suits (including Third Party Actions) related to: (a) Sutro’s negligence or willful misconduct; (b) Sutro’s performance of its obligations under this Agreement; or (c) breach by Sutro of its representations, warranties or covenants set forth in Article 10; provided, however, that Sutro’s obligations pursuant to this Section 11.2 shall not apply (i) to the extent that such claims or suits result from the negligence or willful misconduct of any of Merck Indemnitees or (ii) with respect to claims or suits arising out of a breach by Merck of its representations or warranties set forth in Article 10.

No Consequential Damages. EXCEPT WITH RESPECT TO EACH PARTY’S INDEMNIFICATION OBLIGATIONS UNDER SECTION 11.1 OR SECTION 11.2, AS APPLICABLE, IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS AFFILIATES BE LIABLE TO THE OTHER PARTY OR ANY OF ITS AFFILIATES FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING LOSS OF PROFITS, WHETHER IN CONTRACT, WARRANTY, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREIN OR ANY BREACH HEREOF. NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS AGREEMENT SHALL LIMIT EITHER PARTY FROM SEEKING OR OBTAINING ANY REMEDY AVAILABLE UNDER LAW FOR ANY BREACH OF BY THE OTHER PARTY OF ITS CONFIDENTIALITY AND NON-USE OBLIGATIONS UNDER ARTICLE 9 OR ANY BREACH BY SUTRO OF ITS EXCLUSIVITY OBLIGATIONS UNDER SECTION 2.10.

Notification of Claims; Conditions to Indemnification Obligations. As a condition to a Party’s right to receive indemnification under this Article 11, it shall: (a) promptly notify the other Party as soon as it becomes aware of a claim or suit for which indemnification may be sought pursuant hereto; (b) cooperate, and cause the individual indemnitees to cooperate, with the indemnifying Party in the defense, settlement or compromise of such claim or suit; and (c) permit the indemnifying Party to control the defense, settlement or compromise of such claim or suit, including the right to select defense counsel. In no event, however, may the indemnifying Party compromise or settle any claim or suit in a manner which admits fault or negligence on the part of the indemnified Party or any indemnitee without the prior written consent of the indemnified Party. Each Party shall reasonably cooperate with the other Party and its counsel in the course of the defense of any such suit, claim or demand, such cooperation to include without limitation using reasonable efforts to provide or make available documents, information and witnesses. The indemnifying Party shall have no liability under this Article 11 with respect to claims or suits settled or compromised without its prior written consent.

Insurance. During the Term, each Party shall obtain and maintain, at its sole cost and expense, insurance (including any self-insured arrangements) in types and amounts, that are reasonable and customary in the pharmaceutical and biotechnology industry for companies engaged in comparable activities. It is understood and agreed that this insurance shall not be construed to limit either Party’s liability with respect to its indemnification obligations hereunder. Each Party will, except to the extent self insured, provide to the other Party upon request a certificate evidencing the insurance such Party is required to obtain and keep in force under this Section 11.5.

Term and Expiration. The term of this Agreement (the “Term”) shall commence on the Effective Date and, unless earlier terminated as provided in this Article 12, shall continue in full force and effect, on a country-by-country and Product-by-Product basis until the date on which the Royalty Term in such country with respect to such Product expires, at which time this Agreement shall expire in its entirety with respect to such Product in such country and the terms of Section 12.4(c)(i) shall apply.

Termination of the Agreement by Merck.

Termination upon Material Breach.

Effects of Termination.

Bankruptcy or Insolvency.

Other Remedies. Termination of this Agreement for any reason shall not release either Party from any liability or obligation that already has accrued prior to such termination. Termination of this Agreement for any reason shall not constitute a waiver or release of, or otherwise be deemed to prejudice or adversely affect or limit, any rights or remedies that otherwise may be available at Law or in equity.

Disputes. The Parties recognize that disputes as to certain matters may from time to time arise during the Term which relate to either Party’s rights and/or obligations hereunder. It is the objective of the Parties to establish under this Article 13 procedures to facilitate the resolution of disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. In the event that the Parties are unable to resolve such dispute through diligent review and deliberation within thirty (30) days from the day that one Party had designated the issue as a dispute in written notice to the other Party, then either Party shall have the right to escalate such matter to the Executive Officers as set forth in Section 13.2.

Escalation to Executive Officers. Either Party may, by written notice to the other Party, request that a dispute that remains unresolved for a period of thirty (30) days as set forth in Section 13.1 arising between the Parties in connection with this Agreement, or a dispute relating to material breach, be resolved by the Executive Officers, within fifteen (15) days after referral of such dispute to them. If the Executive Officers cannot resolve such dispute within fifteen (15) days after referral of such dispute to them, then, at any time after such fifteen (15) day period, either Party may proceed to enforce any and all of its rights with respect to such dispute.

Injunctive Relief. No provision herein shall be construed as precluding a Party from bringing an action for injunctive relief or other equitable relief prior to the initiation or completion of the above procedure.

Relationship of the Parties. Nothing in this Agreement is intended or shall be deemed, for financial, tax, legal or other purposes, to constitute a partnership, agency, joint venture or employer-employee relationship between the Parties.

Assignment.

Performance and Exercise by Affiliates. Merck shall have the right to have any of its obligations hereunder performed, or its rights hereunder exercised by any of its Affiliates and the performance of such obligations by any such Affiliate shalt be deemed to be performance by Merck; provided, however, that Merck shall be responsible for ensuring the performance of its obligations under this Agreement and that any failure of any Affiliate performing obligations of Merck hereunder shall be deemed to be a failure by Merck to perform such obligations. For clarity, the foregoing means that Merck may designate an Affiliate to perform its obligations hereunder or to be the recipient of Sutro’s performance obligations hereunder.

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

Accounting Procedures. Each Party shall calculate all amounts, and perform other accounting procedures required, under this Agreement and according to applicable accounting standards.

Force Majeure. Neither Party shall be liable to the other Party or be deemed to have breached or defaulted under this Agreement for failure or delay in the performance of any of its obligations under this Agreement for the time and to the extent such failure or delay is caused by or results from acts of God, earthquake, riot, civil commotion, terrorism, war, strikes or other labor disputes, fire, flood, failure or delay of transportation, omissions or delays in acting by a governmental authority, acts of a government or an agency thereof or judicial orders or decrees or restrictions or any other reason which is beyond the control of the respective Party. The Party affected by force majeure shall provide the other Party with full particulars thereof as soon as it becomes aware of the same (including its best estimate of the likely extent and duration of the interference with its activities), and will use Commercially Reasonable Efforts to overcome the difficulties created thereby and to resume performance of its obligations hereunder as soon as practicable.

No Trademark Rights. No right, express or implied, is granted by this Agreement to a Party to use in any manner the name or any other trade name or trademark of the other Party in connection with the performance of this Agreement or otherwise.

Entire Agreement of the Parties; Amendments. This Agreement and the Schedules hereto constitute and contain the entire understanding and agreement of the Parties respecting the subject matter hereof and cancel and supersede any and all prior negotiations, correspondence, understandings and agreements between the Parties, whether oral or written, regarding such subject matter. No waiver, modification or amendment of any provision of this Agreement shall be valid or effective unless made in a writing referencing this Agreement and signed by a duly authorized officer of each Party.

Captions. The captions to this Agreement are for convenience only, and are to be of no force or effect in construing or interpreting any of the provisions of this Agreement.

Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of England and Wales, excluding application of any conflict of laws principles that would require application of the Law of a jurisdiction outside of England and Wales, and will be subject to the exclusive jurisdiction of the competent courts of England and Wales.

Notices and Deliveries. Any notice, request, approval or consent required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been sufficiently given if delivered in person, transmitted by facsimile (receipt verified) or by express courier service (signature required) to the Party to which it is directed at its address or facsimile number shown below or such other address or facsimile number as such Party shall have last given by notice to the other Party.

Language. The official language of this Agreement and between the Parties for all correspondence shall be the English language.

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 other term or condition 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.

Severability. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Law, but if any provision of this Agreement is held to be prohibited by or invalid under Law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement. The Parties shall make a good faith effort to replace the invalid or unenforceable provision with a valid one which in its economic effect is most consistent with the invalid or unenforceable provision.

No Implied License. No right or license is granted to the other Party hereunder by implication, estoppel, or otherwise to any know-how, patent or other intellectual property right owned or controlled by a Party or its Affiliates.

Interpretation. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” All references herein to Articles, Sections, and Schedules shall be deemed references to Articles and Sections of, and Schedules to, this Agreement unless the context shall otherwise require. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with IFRS or GAAP, as applicable, as in effect from time to time. Unless the context otherwise requires, countries shall include territories.

Counterparts. This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which together will be deemed to be one and the same instrument. A facsimile or a portable document format (PDF) copy of this Agreement, including the signature pages, will be deemed an original.

Title: Executive Vice President Global Business

          Development & Alliance Management

Invoice-No. 12345

Invoice Date: 01.01.2010

Item/

Position

Description of Unit

Unit Price

Net sum

010

Months of Project Management (Feb,

March, April)

020

0nn

Sum

Total

Item/

Position

Description of Unit

Unit Price

Net sum

050

060

Sum

Total

#

Target

Definition

OMIM

SwissProt

3

4

5

6

MATTER NO

COUNTRY

STATUS

SERIAL NO

PUBL NO

PATENT NO

TITLE

▇▇▇▇-459

▇▇▇▇-459AU

▇▇▇▇-459CA

▇▇▇▇-459DIV

▇▇▇▇-459EP

▇▇▇▇-459IN

▇▇▇▇-459JP

▇▇▇▇-459PRV

▇▇▇▇-459WO

#

Target

Definition

[*]

[*]

MATTER NO

TITLE

MATTER NO

TITLE

MATTER NO

TITLE

MATTER NO

TITLE

▇▇▇▇-353

▇▇▇▇-353AU

▇▇▇▇-353CA

▇▇▇▇-353CN

▇▇▇▇-353EA

▇▇▇▇-353EP

▇▇▇▇-353ID

▇▇▇▇-353JP

▇▇▇▇-353KR

▇▇▇▇-353MX

▇▇▇▇-353NO

▇▇▇▇-353NZ

▇▇▇▇-353PRV

▇▇▇▇-353SG

▇▇▇▇-353WO

MATTER NO

TITLE

MATTER NO

TITLE

MATTER NO

TITLE

▇▇▇▇-534EP

▇▇▇▇-534JP

▇▇▇▇-534PRV

▇▇▇▇-534WO

MATTER NO

TITLE

MATTER NO

TITLE

MATTER NO

TITLE