Exhibit 10.1

 

 

CONFIDENTIAL TREATMENT REQUESTED

Execution

 

UNDER 17 C.F.R. §§ 200.80(b)4, AND 240.24b-2

 

 

AMENDED AND RESTATED LICENSE AND COLLABORATION AGREEMENT

 

This Amended and Restated License and Collaboration Agreement (the  “Agreement”)
is entered into as of the 1st day of January, 2009 (the “Amendment Effective
Date”) by and among ALNYLAM PHARMACEUTICALS, INC., a Delaware corporation, with
its principal place of business at 300 Third Street, Cambridge, Massachusetts
02142 (“Alnylam”), ISIS PHARMACEUTICALS, INC., a Delaware corporation, with its
principal place of business at 1896 Rutherford Road, Carlsbad, California 92008
(“Isis”, and each of Alnylam and Isis, a “Licensor” and together, the
“Licensors”), and REGULUS THERAPEUTICS INC. (formerly Regulus Therapeutics LLC),
a Delaware corporation, with its principal place of business at 1896 Rutherford
Road, Carlsbad, California 92008 (“Regulus”).

 

RECITALS

 

WHEREAS, Isis and Alnylam each granted a license to Regulus in accordance with
that certain License and Collaboration Agreement dated September 6, 2007 (the
“Original License Agreement”);

 

WHEREAS, as of the Amendment Effective Date, Alnylam, Isis and Regulus converted
Regulus from a Delaware limited liability company into a Delaware corporation;
and

 

WHEREAS, as a result of this corporate conversion, Isis, Alnylam, and Regulus
now desire to amend and restate the Original License Agreement, as provided
herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Isis, Alnylam and Regulus each agrees as follows:

 

1.              DEFINITIONS

 

Capitalized terms used herein and not defined elsewhere herein have the meanings
set forth in Exhibit 1.

 

2.             ASSIGNMENT; LICENSES

 

2.1           ASSIGNMENTS TO REGULUS.

 

(A)       ISIS HEREBY GRANTS, SELLS, CONVEYS, TRANSFERS, ASSIGNS, RELEASES AND
DELIVERS TO REGULUS ALL RIGHT, TITLE AND INTEREST IN AND TO THE PATENT RIGHTS
AND CONTRACTS LISTED ON SCHEDULE 2.1(A) ATTACHED HERETO, TO HAVE AND HOLD THE
SAME UNTO ITSELF, ITS SUCCESSORS AND ASSIGNS FOREVER, AND REGULUS HEREBY ACCEPTS
SUCH GRANT, SALE, CONVEYANCE, ETC.

 

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(B)       ALNYLAM HEREBY GRANTS, SELLS, CONVEYS, TRANSFERS, ASSIGNS, RELEASES
AND DELIVERS TO REGULUS ALL RIGHT, TITLE AND INTEREST IN AND TO THE PATENT
RIGHTS AND CONTRACTS LISTED ON SCHEDULE 2.1(B) ATTACHED HERETO, TO HAVE AND HOLD
THE SAME UNTO ITSELF, ITS SUCCESSORS AND ASSIGNS FOREVER, AND REGULUS HEREBY
ACCEPTS SUCH GRANT, SALE, CONVEYANCE, ETC.

 

(C)       NOTWITHSTANDING THE FOREGOING, TO THE EXTENT ANY CONTRACT FOR WHICH
ASSIGNMENT IS PROVIDED FOR HEREIN IS NOT ASSIGNABLE PURSUANT TO SUCH CONTRACT
WITHOUT THE WRITTEN CONSENT OF ANOTHER PARTY OR REQUIRES NOVATION, IF ASSIGNED,
THIS AGREEMENT WILL NOT CONSTITUTE AN ASSIGNMENT OR AN ATTEMPTED ASSIGNMENT
THEREOF IF SUCH ASSIGNMENT OR ATTEMPTED ASSIGNMENT WOULD CONSTITUTE A BREACH
THEREOF.  TO THE EXTENT A CONTRACT IS NOT ASSIGNED PURSUANT TO THIS PROVISION,
THE APPLICABLE LICENSOR WILL COOPERATE WITH THE OTHER PARTIES AND WILL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO PROVIDE REGULUS THE ECONOMIC AND OTHER
BENEFITS INTENDED TO BE ASSIGNED TO REGULUS UNDER THE RELEVANT CONTRACT.

 

2.2           LICENSES GRANTED TO REGULUS.

 

(A)           GRANTS.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT
(INCLUDING BUT NOT LIMITED TO SECTION 2.4), EACH LICENSOR HEREBY GRANTS TO
REGULUS A WORLDWIDE, ROYALTY-BEARING, SUBLICENSEABLE (IN ACCORDANCE WITH
SECTION 2.5) LICENSE IN THE FIELD, UNDER SUCH LICENSOR’S LICENSED IP,

 

(I)            TO DEVELOP MIRNA COMPOUNDS AND MIRNA THERAPEUTICS,

 

(II)           TO MANUFACTURE MIRNA COMPOUNDS AND MIRNA THERAPEUTICS, AND

 

(III)          TO COMMERCIALIZE MIRNA THERAPEUTICS.

 

SUBJECT TO SECTION 2.4, THE RIGHTS GRANTED UNDER CLAUSES (I), (II) AND
(III) WILL BE (Y) EXCLUSIVE WITH RESPECT TO MIRNA COMPOUNDS WHICH ARE MIRNA
ANTAGONISTS AND MIRNA THERAPEUTICS CONTAINING SUCH MIRNA COMPOUNDS, AND
(Z) NON-EXCLUSIVE WITH RESPECT TO MIRNA COMPOUNDS WHICH ARE APPROVED PRECURSOR
ANTAGONISTS AND MIRNA THERAPEUTICS CONTAINING SUCH MIRNA COMPOUNDS.

 

(B)           REQUEST TO LICENSE MIRNA MIMICS AND ADDITIONAL MIRNA PRECURSOR
ANTAGONISTS.  REGULUS MAY REQUEST A WORLDWIDE, ROYALTY-BEARING, SUBLICENSEABLE
(IN ACCORDANCE WITH SECTION 2.5), NON-EXCLUSIVE LICENSE IN THE FIELD, UNDER EACH
LICENSOR’S LICENSED IP, TO DEVELOP, MANUFACTURE AND COMMERCIALIZE A SPECIFIC
MIRNA MIMIC OR A SPECIFIC MIRNA PRECURSOR ANTAGONIST THAT IS NOT THEN AN
APPROVED PRECURSOR ANTAGONIST, AND MIRNA THERAPEUTICS CONTAINING SUCH MIRNA
MIMIC OR MIRNA PRECURSOR ANTAGONIST, BY PROVIDING WRITTEN NOTICE TO LICENSORS
THEREOF ON A MIRNA MIMIC-BY-MIRNA MIMIC OR MIRNA PRECURSOR ANTAGONIST-BY-MIRNA
PRECURSOR ANTAGONIST BASIS.  SUCH LICENSE IS SUBJECT TO (I) REVIEW AND
AFFIRMATIVE APPROVAL BY THE LICENSORS, WHICH APPROVAL MAY BE WITHHELD BY A
LICENSOR IN SUCH PARTY’S SOLE DISCRETION, AND (II) COMPLIANCE WITH RELEVANT
THIRD PARTY RIGHTS ([***]).  FOR THE AVOIDANCE OF DOUBT, REGULUS WILL HAVE NO
RIGHTS TO SUCH MIRNA MIMIC OR MIRNA PRECURSOR ANTAGONIST HEREUNDER UNLESS AND
UNTIL THE AFFIRMATIVE APPROVAL OF THE RELEVANT LICENSOR(S) AND ANY REQUIRED
CONSENTS OR APPROVALS FROM THIRD PARTIES HAVE BEEN OBTAINED AND REGULUS AGREES
TO COMPLY WITH ALL THIRD PARTY RIGHTS, EVEN TO THE EXTENT INCONSISTENT WITH THE
TERMS OF THIS

 

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AGREEMENT, FOLLOWING WHICH SUCH MIRNA MIMIC OR MIRNA PRECURSOR ANTAGONIST WILL
BE DEEMED TO BE AN APPROVED MIMIC OR APPROVED PRECURSOR ANTAGONIST,
RESPECTIVELY.

 

(C)           RETAINED RIGHTS.  THE EXCLUSIVE LICENSE GRANTED TO REGULUS BY
ALNYLAM PURSUANT TO SECTION 2.2(A) IS SUBJECT TO ALNYLAM’S RETAINED RIGHT TO
(I) USE AND EXPLOIT ITS LICENSED IP SOLELY TO SUPPORT ITS OWN INTERNAL RESEARCH
IN THE ALNYLAM FIELD, AND (II) GRANT PERMITTED LICENSES.  THE EXCLUSIVE LICENSE
GRANTED TO REGULUS BY ISIS PURSUANT TO SECTION 2.2(A) IS SUBJECT TO ISIS’
RETAINED RIGHT TO (I) USE AND EXPLOIT ITS LICENSED IP SOLELY TO SUPPORT ITS OWN
INTERNAL RESEARCH IN THE ISIS FIELD, AND (II) GRANT PERMITTED LICENSES.  ALL
RIGHTS IN AND TO EACH LICENSOR’S LICENSED IP NOT EXPRESSLY LICENSED PURSUANT TO
SECTIONS 2.2(A) AND (B), AND ANY OTHER PATENT RIGHTS OR KNOW-HOW OF SUCH
LICENSOR, ARE HEREBY RETAINED BY SUCH LICENSOR.

 

2.3           LICENSES GRANTED TO LICENSORS UNDER REGULUS IP.  SUBJECT TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT AND TO THIRD PARTY RIGHTS:

 

(A)           REGULUS HEREBY GRANTS TO ALNYLAM A WORLDWIDE, EXCLUSIVE,
ROYALTY-FREE, PERPETUAL AND IRREVOCABLE LICENSE, WITH THE RIGHT TO GRANT
SUBLICENSES, UNDER THE REGULUS IP SOLELY TO THE EXTENT NECESSARY OR USEFUL TO
RESEARCH, DISCOVER, DEVELOP, MAKE, HAVE MADE, USE, SELL, OFFER TO SELL AND/OR
OTHERWISE COMMERCIALIZE DOUBLE-STRANDED OLIGONUCLEOTIDES (OTHER THAN APPROVED
MIMICS) AND ANY PRODUCT CONTAINING DOUBLE-STRANDED OLIGONUCLEOTIDES (OTHER THAN
APPROVED MIMICS) (THE “ALNYLAM FIELD”).

 

(B)           REGULUS HEREBY GRANTS TO ISIS A WORLDWIDE, EXCLUSIVE,
ROYALTY-FREE, PERPETUAL AND IRREVOCABLE LICENSE, WITH THE RIGHT TO GRANT
SUBLICENSES, UNDER THE REGULUS IP SOLELY TO THE EXTENT NECESSARY OR USEFUL TO
RESEARCH, DISCOVER, DEVELOP, MAKE, HAVE MADE, USE, SELL, OFFER TO SELL AND/OR
OTHERWISE COMMERCIALIZE SINGLE-STRANDED OLIGONUCLEOTIDES (OTHER THAN MIRNA
ANTAGONISTS, APPROVED PRECURSOR ANTAGONISTS, OR APPROVED MIMICS) AND ANY PRODUCT
CONTAINING SINGLE-STRANDED OLIGONUCLEOTIDES (OTHER THAN MIRNA ANTAGONISTS,
APPROVED PRECURSOR ANTAGONISTS OR APPROVED MIMICS) (THE “ISIS FIELD”).

 

2.4           THIRD PARTY RIGHTS; ADDITIONAL RIGHTS.

 

(A)           EXISTING OUT-LICENSE AGREEMENTS.  THE LICENSES GRANTED UNDER
SECTION 2.2 AND 2.3 ARE SUBJECT TO AND LIMITED BY THE LICENSES GRANTED, AND
OTHER OBLIGATIONS OWED, BY EACH LICENSOR TO A THIRD PARTY PRIOR TO THE EFFECTIVE
DATE UNDER A LICENSED PATENT RIGHT CONTROLLED BY SUCH LICENSOR, PURSUANT TO
AGREEMENTS DESCRIBED ON (I) PART 1 OF SCHEDULE 2.4(A) IN THE CASE OF LICENSED
PATENT RIGHTS CONTROLLED BY ISIS, AND (II) PART 2 OF SCHEDULE 2.4(A) IN THE CASE
OF LICENSED PATENT RIGHTS CONTROLLED BY ALNYLAM, AND (III) IN AN ADDENDUM
TRANSMITTAL INSTRUMENT DELIVERED BY EACH LICENSOR WITHIN 30 DAYS AFTER THE
EFFECTIVE DATE.  THE SCHEDULES AND INSTRUMENTS PROVIDED UNDER THIS
SECTION 2.4(A) WILL BE COLLECTIVELY REFERRED TO AS THE “OUT-LICENSE SUMMARY”,
AND THE AGREEMENTS DESCRIBED THEREIN WILL BE COLLECTIVELY REFERRED TO AS THE
“OUT-LICENSE AGREEMENTS”).

 

(B)           EXISTING IN-LICENSES FROM THIRD PARTIES.

 

(I)            CERTAIN OF THE LICENSED PATENT RIGHTS AS OF THE EFFECTIVE DATE
THAT ARE LICENSED TO REGULUS UNDER SECTION 2.2 ARE IN-LICENSED OR WERE ACQUIRED
BY THE APPLICABLE LICENSOR UNDER AGREEMENTS WITH THIRD PARTY LICENSORS OR
SELLERS THAT MAY CONTAIN RESTRICTIONS ON THE SCOPE OF THE LICENSES OR TRIGGER
PAYMENT OR OTHER MATERIAL OBLIGATIONS OR RESTRICTIONS (SUCH

 

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LICENSE OR PURCHASE AGREEMENTS IN EFFECT AS OF THE EFFECTIVE DATE BEING THE
“IN-LICENSE AGREEMENTS”).  THE LICENSES AND OTHER RIGHTS (INCLUDING SUBLICENSE
AND DISCLOSURE RIGHTS) GRANTED TO A PARTY PURSUANT TO THIS AGREEMENT ARE SUBJECT
TO, AND ARE LIMITED TO THE EXTENT OF THE TERMS OF ANY (I) IN-LICENSE AGREEMENTS
BETWEEN ISIS AND ANY THIRD PARTY LICENSOR, AS SPECIFICALLY DESCRIBED ON PART 1
OF SCHEDULE 2.4(B) AND (II) ANY IN-LICENSE AGREEMENT BETWEEN ALNYLAM AND ANY
THIRD PARTY, AS SPECIFICALLY DESCRIBED ON PART 2 OF SCHEDULE 2.4(B).  THE
SCHEDULES PROVIDED UNDER THIS SECTION 2.4(B) WILL BE COLLECTIVELY REFERRED TO AS
“IN-LICENSE SUMMARY.”  EACH PART OF THE IN-LICENSE SUMMARY SUMMARIZES ALL
MATERIAL RESTRICTIONS ON THE SCOPE OF THE LICENSES, AND ALL MATERIAL PAYMENT
OBLIGATIONS OWED, UNDER THE IN-LICENSE AGREEMENTS (OTHER THAN THE PREVIOUS
AGREEMENTS) WHICH THE APPLICABLE LICENSOR REASONABLY BELIEVES APPLY TO THE
LICENSES GRANTED TO REGULUS HEREUNDER AS OF THE EFFECTIVE DATE.  EXCEPT AS
PROVIDED IN SECTION 5.6(D), REGULUS WILL ASSUME ALL FINANCIAL AND OTHER
OBLIGATIONS TO THE RELEVANT THIRD PARTY, AND BE SUBJECT TO ALL RESTRICTIONS, SET
FORTH ON THE IN-LICENSE SUMMARY AND ARISING FROM THE GRANT TO REGULUS OF THE
LICENSES PURSUANT TO SECTION 2.2(A) AS OF THE EFFECTIVE DATE.

 

(II)           IN ADDITION TO THE FINANCIAL OBLIGATIONS AND SCOPE LIMITATIONS
SET FORTH ON THE IN-LICENSE SUMMARY AND THE OUT-LICENSE SUMMARY, AND TO THE
EXTENT ACCESS TO SUCH TERMS HAVE BEEN MADE AVAILABLE TO SUCH LICENSED PARTY IN
UNREDACTED FORM (PROVIDED, HOWEVER, THAT SUCH LICENSED PARTY HAS NOT FAILED TO
REQUEST SUCH ACCESS IN ACCORDANCE WITH SECTION 2.4(E)), A PARTY RECEIVING A
LICENSE OR SUBLICENSE UNDER LICENSED IP HEREUNDER WILL COMPLY, AND WILL CAUSE
ITS AFFILIATES AND SUBLICENSEES TO COMPLY, WITH ALL OTHER TERMS OF THE
IN-LICENSE AGREEMENTS AND OUT-LICENSE AGREEMENTS, INCLUDING WITHOUT LIMITATION
DILIGENCE REQUIREMENTS, APPLICABLE TO THE LICENSES GRANTED TO SUCH PARTY
HEREUNDER.

 

(C)           OPTIONAL IN-LICENSES.  NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN, THE LICENSES TO ISIS’ LICENSED IP HEREUNDER INITIALLY SHALL NOT INCLUDE
LICENSES TO PATENT RIGHTS OR KNOW-HOW LICENSED BY ISIS UNDER THE AGREEMENTS
LISTED AND DESCRIBED ON PART 1 OF SCHEDULE 2.4(C) AND THE LICENSES TO ALNYLAM’S
LICENSED IP HEREUNDER INITIALLY SHALL NOT INCLUDE LICENSES TO PATENT RIGHTS OR
KNOW-HOW LICENSED BY ALNYLAM UNDER THE AGREEMENTS LISTED AND DESCRIBED ON PART 2
OF SCHEDULE 2.4(C) (SUCH AGREEMENTS ON SCHEDULE 2.4(C) REFERRED TO AS THE
“OPTIONAL IN-LICENSES”).  REGULUS IS HEREBY GRANTED THE OPTION OF EXPANDING ITS
LICENSES UNDER SECTION 2.2 TO INCLUDE PATENT RIGHTS AND KNOW-HOW LICENSED TO THE
RELEVANT LICENSOR PURSUANT TO [***] OPTIONAL IN-LICENSES, WITH RESPECT TO [***]
MIRNA COMPOUNDS AND RELATED MIRNA THERAPEUTICS, BY NOTIFYING THE PARTIES IN
WRITING OF THE RELEVANT OPTIONAL IN-LICENSE, AND EACH MIRNA COMPOUND WITH
RESPECT THERETO, FOR WHICH SUCH OPTION IS EXERCISED.  UPON SUCH EXERCISE AND
REGULUS’ WRITTEN AGREEMENT TO ASSUME ALL FINANCIAL AND OTHER OBLIGATIONS AND
RESTRICTIONS IMPOSED BY THE DESIRED OPTIONAL IN-LICENSE (INCLUDING, TO THE
EXTENT ACCESS TO SUCH TERMS HAVE BEEN MADE AVAILABLE TO REGULUS IN UNREDACTED
FORM (PROVIDED, HOWEVER, THAT REGULUS HAS NOT FAILED TO REQUEST SUCH ACCESS IN
ACCORDANCE WITH SECTION 2.4(E)), ALL OTHER TERMS OF SUCH OPTIONAL IN-LICENSE
APPLICABLE TO THE LICENSES GRANTED TO REGULUS HEREUNDER), THE PATENT RIGHTS AND
KNOW-HOW LICENSED TO THE RELEVANT LICENSOR PURSUANT TO THE SPECIFIED OPTIONAL
IN-LICENSE SHALL BE DEEMED INCLUDED IN SUCH LICENSOR’S LICENSED IP SOLELY WITH
RESPECT TO THE RELEVANT MIRNA COMPOUNDS AND RELATED MIRNA THERAPEUTICS.

 

(D)           ADDITIONAL RIGHTS AFTER EFFECTIVE DATE.  IF AFTER THE EFFECTIVE
DATE, A PARTY (THE “CONTROLLING PARTY”) INVENTS OR ACQUIRES RIGHTS OR TITLE TO
AN INVENTION CLAIMED BY A PATENT RIGHT THAT WOULD BE INCLUDED IN THE LICENSED
PATENT RIGHTS OR REGULUS PATENT RIGHTS (THE “ADDITIONAL RIGHTS”), THEN, ON THE
ANNIVERSARY OF THE EFFECTIVE DATE FOLLOWING SUCH INVENTION OR

 

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ACQUISITION OF SUCH ADDITIONAL RIGHT, OR AS OTHERWISE REASONABLY REQUESTED BY A
PARTY, THE CONTROLLING PARTY MUST NOTIFY EACH OTHER PARTY (EACH, A
“NON-CONTROLLING PARTY”) OF SUCH ACQUISITION OR INVENTION.  IF A NON-CONTROLLING
PARTY WISHES TO INCLUDE SUCH ADDITIONAL RIGHTS UNDER THE LICENSES GRANTED
PURSUANT TO SECTIONS 2.2, 2.3 OR 5.6 (AS THE CASE MAY BE), SUCH NON-CONTROLLING
PARTY WILL NOTIFY THE CONTROLLING PARTY OF ITS DESIRE TO DO SO, THE CONTROLLING
PARTY WILL PROVIDE THE NON-CONTROLLING PARTY A SUMMARY OF ALL MATERIAL
RESTRICTIONS ON THE SCOPE OF THE LICENSES GRANTED, AND ALL MATERIAL PAYMENT
OBLIGATIONS OWED, UNDER ANY THIRD PARTY AGREEMENT APPLICABLE TO SUCH ADDITIONAL
RIGHTS AND THE NON-CONTROLLING PARTY MAY, UPON WRITTEN NOTICE TO THE CONTROLLING
PARTY, OBTAIN A LICENSE UNDER SUCH ADDITIONAL RIGHTS AND WILL ASSUME ALL
FINANCIAL AND OTHER OBLIGATIONS TO, AND BE SUBJECT TO ALL RESTRICTIONS IMPOSED
BY, THE CONTROLLING PARTY’S LICENSORS OR COLLABORATORS, IF ANY, ARISING FROM THE
GRANT TO SUCH NON-CONTROLLING PARTY OF SUCH LICENSE (INCLUDING, TO THE EXTENT
ACCESS TO SUCH TERMS HAVE BEEN MADE AVAILABLE TO SUCH NON-CONTROLLING PARTY IN
UNREDACTED FORM (PROVIDED, HOWEVER, THAT SUCH NON-CONTROLLING PARTY HAS NOT
FAILED TO REQUEST SUCH ACCESS IN ACCORDANCE WITH SECTION 2.4(E)), ALL OTHER
TERMS OF SUCH THIRD PARTY AGREEMENTS APPLICABLE TO THE LICENSES GRANTED TO SUCH
NON-CONTROLLING PARTY HEREUNDER).  NOTWITHSTANDING THE FOREGOING, ANY ADDITIONAL
RIGHTS THAT DO NOT CARRY FINANCIAL OR OTHER OBLIGATIONS OR RESTRICTIONS WILL BE
AUTOMATICALLY INCLUDED UNDER THE LICENSES GRANTED PURSUANT TO SECTION 2.2, 2.3
OR 5.6.  IF THE CONTROLLING PARTY PAYS ANY UPFRONT PAYMENTS OR SIMILAR
ACQUISITION COSTS TO ACCESS ADDITIONAL RIGHTS, THE CONTROLLING PARTY AND
RELEVANT NON-CONTROLLING PARTY(IES) WILL NEGOTIATE IN GOOD FAITH REGARDING
SHARING SUCH ACQUISITION COSTS AND PAYMENTS.  WHEN ACQUIRING OR CREATING SUCH
ADDITIONAL RIGHTS PURSUANT TO ANY AGREEMENT ENTERED INTO AFTER THE EFFECTIVE
DATE, EACH PARTY WILL ENDEAVOR IN GOOD FAITH TO SECURE THE RIGHT TO SUBLICENSE
SUCH ADDITIONAL RIGHTS TO THE OTHER PARTIES.

 

(E)           APPLICABLE AGREEMENTS.  EACH PARTY AGREES TO PROVIDE, UPON THE
REQUEST OF A PARTY, ACCESS TO EACH THIRD PARTY AGREEMENT THAT IS THE SUBJECT OF
ANY PROVISION OF THIS SECTION 2.4; PROVIDED, HOWEVER, THAT THE PARTIES AGREE AND
ACKNOWLEDGE THAT (I) THE THIRD PARTY AGREEMENTS SO PROVIDED MAY, TO THE EXTENT
NECESSARY TO PROTECT CONFIDENTIAL INFORMATION OF THE RELEVANT THIRD PARTY OR
FINANCIAL INFORMATION OF THE RELEVANT PARTY, BE REDACTED, AND (II) IF SO
REDACTED, THE PARTY ASSUMING ANY OBLIGATIONS OR ACCEPTING ANY LIMITATIONS UNDER
A THIRD PARTY AGREEMENT PURSUANT TO THIS SECTION 2.4, WILL ONLY BE LIABLE TO THE
EXTENT ACCESS TO SUCH TERMS HAVE BEEN MADE AVAILABLE TO SUCH LICENSED PARTY IN
UNREDACTED FORM.

 

2.5         SUBLICENSES.

 

(A)       SUBJECT TO THIRD PARTY RIGHTS, REGULUS WILL HAVE THE RIGHT TO GRANT TO
ITS AFFILIATES AND THIRD PARTIES SUBLICENSES UNDER THE LICENSES GRANTED IN
SECTIONS 2.2(A) AND (B).

 

(B)       SUBJECT TO THIRD PARTY RIGHTS, THE OPT-IN PARTY WILL HAVE THE RIGHT TO
GRANT TO ITS AFFILIATES AND THIRD PARTIES SUBLICENSES UNDER THE RIGHTS GRANTED
TO SUCH LICENSOR IN SECTION 5.6(A).

 

(C)       EACH SUCH SUBLICENSE WILL BE SUBJECT AND SUBORDINATE TO, AND
CONSISTENT WITH, THE TERMS AND CONDITIONS OF THIS AGREEMENT, AND WILL PROVIDE
THAT ANY SUCH AFFILIATE AND SUBLICENSEE WILL NOT FURTHER SUBLICENSE EXCEPT ON
TERMS CONSISTENT WITH THIS SECTION 2.5.  REGULUS OR THE OPT-IN PARTY, AS
APPLICABLE, WILL PROVIDE THE OTHER PARTIES WITH A COPY OF ANY SUBLICENSE GRANTED
PURSUANT TO THIS SECTION 2.5 WITHIN 30 DAYS AFTER THE EXECUTION THEREOF.  SUCH
COPY MAY BE REDACTED TO EXCLUDE CONFIDENTIAL SCIENTIFIC INFORMATION AND OTHER
INFORMATION

 

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REQUIRED BY A SUBLICENSEE TO BE KEPT CONFIDENTIAL; PROVIDED THAT ALL RELEVANT
FINANCIAL TERMS AND INFORMATION WILL BE RETAINED.  REGULUS OR THE OPT-IN PARTY,
AS APPLICABLE, WILL REMAIN RESPONSIBLE FOR THE PERFORMANCE OF ITS AFFILIATES AND
SUBLICENSEES, AND WILL ENSURE THAT ALL SUCH AFFILIATES AND SUBLICENSEES COMPLY
WITH THE RELEVANT PROVISIONS OF THIS AGREEMENT.  IN THE EVENT OF A MATERIAL
DEFAULT BY ANY OF ITS AFFILIATES OR SUBLICENSEES UNDER A SUBLICENSE AGREEMENT,
REGULUS OR THE OPT-IN PARTY, AS APPLICABLE, WILL INFORM THE OTHER PARTIES AND
WILL TAKE SUCH ACTION, AFTER CONSULTATION WITH SUCH OTHER PARTIES, WHICH, IN
REGULUS’ OR THE OPT-IN PARTY’S (AS APPLICABLE) REASONABLE BUSINESS JUDGMENT,
WILL ADDRESS SUCH DEFAULT.

 

3.             TECHNOLOGY TRANSFER

 

3.1           TECHNOLOGY TRANSFER TO REGULUS.  AT EACH MEETING OF THE
COLLABORATION WORKING GROUP THE REPRESENTATIVES WILL DISCUSS NEW KNOW-HOW AND
PATENT RIGHTS OF ISIS AND ALNYLAM THAT ARE INCLUDED IN SUCH LICENSOR’S LICENSED
PATENTS AND LICENSED KNOW-HOW HEREUNDER AT THE LEVEL OF DETAIL NECESSARY TO
ENABLE REGULUS TO EFFECTIVELY PRACTICE SUCH PATENT RIGHTS AND KNOW-HOW.

 

3.2           TECHNOLOGY TRANSFER FROM REGULUS; IDENTIFICATION AND
IMPROVEMENTS.  AT EACH COLLABORATION WORKING GROUP MEETING REGULUS WILL PRESENT
A DESCRIPTION OF ALL REGULUS IP DEVELOPED BY IT OR ON ITS BEHALF, OR OVER WHICH
REGULUS OTHERWISE ACQUIRED CONTROL, SINCE THE LAST MEETING.  THE DESCRIPTION
WILL BE AT A LEVEL OF DETAIL NECESSARY TO ENABLE ISIS, ALNYLAM OR BOTH, AS
APPROPRIATE, TO EFFECTIVELY PRACTICE SUCH REGULUS IP IN ACCORDANCE WITH THEIR
RESPECTIVE LICENSES UNDER SECTION 2.3.

 

4.             DILIGENCE

 

4.1         GENERAL DILIGENCE.  EXCEPT TO THE EXTENT A LICENSOR RECEIVES A
LICENSE FROM REGULUS PURSUANT TO THIS AGREEMENT TO DEVELOP, MANUFACTURE AND
COMMERCIALIZE MIRNA THERAPEUTICS, REGULUS WILL USE COMMERCIALLY REASONABLE
EFFORTS TO DEVELOP, AND COMMERCIALIZE MIRNA COMPOUNDS AND MIRNA THERAPEUTICS IN
THE FIELD.

 

4.2           COMPLIANCE WITH LAWS.  EACH PARTY WILL, AND WILL ENSURE THAT ITS
AFFILIATES AND SUBLICENSEES WILL, COMPLY WITH ALL RELEVANT LAWS IN EXERCISING
THEIR RIGHTS AND FULFILLING THEIR OBLIGATIONS UNDER THIS AGREEMENT.

 

4.3           REPORTING.  BY JANUARY 31ST OF EACH YEAR, REGULUS WILL PREPARE AND
FURNISH EACH LICENSOR WITH A WRITTEN REPORT SUMMARIZING REGULUS’ ACTIVITIES
CONDUCTED DURING THE PRIOR CALENDAR YEAR TO DEVELOP, MANUFACTURE AND
COMMERCIALIZE MIRNA THERAPEUTICS IN THE FIELD AND IDENTIFYING THE RESULTS
OBTAINED OR BENCHMARKS ACHIEVED SINCE THE LAST REPORT TO THE LICENSORS.

 

4.4           DESIGNATION OF RESEARCH PROGRAMS AND DEVELOPMENT PROJECTS. 
REGULUS’ OFFICERS WILL BE RESPONSIBLE FOR REVIEWING THE RESULTS OF RESEARCH AND
DEVELOPMENT ACTIVITIES UNDER THE OPERATING PLAN AND DESIGNATING (SUBJECT TO THE
APPROVAL OF THE MANAGING BOARD) FROM TIME TO TIME RESEARCH PROGRAMS AND
DEVELOPMENT PROJECTS.  A “RESEARCH PROGRAM” WILL BEGIN UPON THE COMMENCEMENT OF
DISCOVERY OR CHARACTERIZATION ACTIVITIES FOCUSED ON ONE OR MORE SPECIFIC
MIRNA(S) AFTER PRELIMINARY VALIDATION OF THE BIOLOGICAL FUNCTION OF SUCH
MIRNA(S) HAS BEEN IDENTIFIED (I.E., COMPOUND DISCOVERY, NOT TARGET VALIDATION)
AND WILL INCLUDE ALL ACTIVITIES WITH RESPECT TO THE DEVELOPMENT, MANUFACTURING
AND COMMERCIALIZATION OF MIRNA COMPOUNDS AND

 

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MIRNA THERAPEUTICS DIRECTED TO SUCH MIRNA(S). A RESEARCH PROGRAM WILL BECOME A
“DEVELOPMENT PROJECT” (AND THEREAFTER WILL NO LONGER BE A RESEARCH PROGRAM) WHEN
REGULUS’ OFFICERS RECOMMEND, AND THE MANAGING BOARD AGREES, THAT A SUFFICIENT
PORTFOLIO OF DATA EXISTS TO SUPPORT THE INITIATION OF A [***] ON A MIRNA
COMPOUND DRUG CANDIDATE TARGETING SUCH MIRNA(S).  REGULUS WILL MAINTAIN A
WRITTEN LIST OF THE THEN-CURRENT RESEARCH PROGRAMS AND DEVELOPMENT PROJECTS
(EACH, A “PROGRAM/PROJECT LIST”).

 

5.             RIGHT TO OPT-IN

 

5.1           NOTICE OF DEVELOPMENT PROJECT STATUS.  CONCURRENTLY WITH THE
CONVERSION OF A RESEARCH PROGRAM INTO A DEVELOPMENT PROJECT, REGULUS WILL NOTIFY
EACH LICENSOR OF SUCH CONVERSION AND WHETHER OR NOT REGULUS WILL CONTINUE TO
PURSUE THE DEVELOPMENT AND COMMERCIALIZATION OF SUCH NEWLY DESIGNATED
DEVELOPMENT PROJECT.

 

5.2           CONTINUED DEVELOPMENT BY REGULUS OF DEVELOPMENT PROJECTS.  IF
REGULUS NOTIFIES LICENSORS PURSUANT TO SECTION 5.1 THAT REGULUS WILL CONTINUE TO
PURSUE THE DEVELOPMENT AND COMMERCIALIZATION OF SUCH DEVELOPMENT PROJECT, THEN,
WITHOUT LIMITING THE GENERALITY OF SECTION 4.1, REGULUS WILL USE COMMERCIALLY
REASONABLE EFFORTS TO DEVELOP AND COMMERCIALIZE THE RELEVANT DEVELOPMENT
COMPOUNDS AND DEVELOPMENT THERAPEUTICS IN THE FIELD.  REGULUS WILL ALSO (A) PAY
TO EACH LICENSOR A ROYALTY OF [***]% OF NET SALES OF SUCH DEVELOPMENT
THERAPEUTICS WHICH ARE ROYALTY-BEARING PRODUCTS, DURING THE RELEVANT ROYALTY
TERM (PROVIDED, HOWEVER, THAT, FOR THE REMAINDER OF THE RELEVANT ROYALTY TERM
FOLLOWING THE END OF THE RELEVANT EXCLUSIVITY PERIOD, THE ROYALTY RATE WILL BE
[***]%) AND (B) BE RESPONSIBLE FOR ALL MILESTONES, ROYALTIES AND OTHER PAYMENTS
PAYABLE TO THIRD PARTIES IN RESPECT OF THE DEVELOPMENT, MANUFACTURE AND
COMMERCIALIZATION OF SUCH DEVELOPMENT THERAPEUTICS IN THE FIELD, BY REGULUS, ITS
AFFILIATES AND SUBLICENSEES, INCLUDING ANY AMOUNTS PAYABLE BY EITHER LICENSOR TO
THIRD PARTIES UNDER THE THIRD PARTY RIGHTS.  THE PARTIES WILL USE REASONABLE
EFFORTS TO [***].  REGULUS AGREES THAT THE ROYALTY DESCRIBED IN CLAUSE (A) OF
THIS SECTION 5.2 IS PAYABLE TO EACH LICENSOR, REGARDLESS OF WHETHER A PARTICULAR
ROYALTY-BEARING PRODUCT IS COVERED BY SUCH LICENSOR’S LICENSED IP.  EACH PARTY
AGREES AND ACKNOWLEDGES THAT SUCH ROYALTY STRUCTURE (I) IS FREELY ENTERED INTO
BY SUCH PARTY, (II) IS A FAIR REFLECTION OF THE VALUE RECEIVED BY REGULUS FROM
THE LICENSES GRANTED BY THE LICENSORS, AND (III) IS A REASONABLE ALLOCATION OF
THE VALUE RECEIVED BY REGULUS FROM EACH LICENSOR, DUE TO THE DIFFICULTY OF
DETERMINING THE EXTENT TO WHICH LICENSOR’S LICENSED IP COVERS OR HAS ENABLED
EACH ROYALTY-BEARING PRODUCT.

 

5.3           OPT-IN ELECTION.  IF REGULUS NOTIFIES LICENSORS PURSUANT TO
SECTION 5.1 THAT IT WILL NOT CONTINUE TO PURSUE THE DEVELOPMENT AND
COMMERCIALIZATION OF SUCH DEVELOPMENT PROJECT, EACH LICENSOR WILL HAVE THE
RIGHT, EXERCISABLE BY PROVIDING WRITTEN NOTICE TO REGULUS AND THE OTHER LICENSOR
WITHIN [***] DAYS FOLLOWING RECEIPT OF SUCH NOTICE (“INITIAL OPT-IN ELECTION
PERIOD”), TO ELECT TO CONTINUE TO PURSUE THE DEVELOPMENT AND COMMERCIALIZATION
OF SUCH DEVELOPMENT PROJECT (“OPT-IN ELECTION”).

 

(A)           OPT-IN BY ONE LICENSOR.  IF ONLY ONE, BUT NOT BOTH, OF THE
LICENSORS (THE “OPT-IN PARTY”) MAKES AN OPT-IN ELECTION WITH RESPECT TO SUCH
DEVELOPMENT PROJECT WITHIN THE INITIAL OPT-IN ELECTION PERIOD, THE HIGH TERMS
SET FORTH IN SECTION 5.4 AND THE TERMS OF SECTION 5.6 WILL APPLY FOLLOWING THE
END OF SUCH INITIAL OPT-IN ELECTION PERIOD AND THE LICENSOR WHO DID NOT ELECT TO
OPT-IN WILL WAIVE ITS RIGHT TO OPT-IN WITH RESPECT TO SUCH DEVELOPMENT PROJECT.

 

7

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(B)           NO OPT-IN; SECOND OPT-IN ELECTION.  IF, WITHIN THE INITIAL OPT-IN
ELECTION PERIOD, NEITHER LICENSOR MAKES AN OPT-IN ELECTION (OR BOTH LICENSORS
FAIL TO SUBMIT ANY RESPONSE), THEN REGULUS WILL USE DILIGENT EFFORTS TO
NEGOTIATE AND FINALIZE, WITHIN [***] MONTHS FOLLOWING THE END OF THE INITIAL
OPT-IN ELECTION PERIOD, A TERM SHEET WITH A THIRD PARTY PURSUANT TO WHICH SUCH
THIRD PARTY WILL DEVELOP AND COMMERCIALIZE, EITHER BY ITSELF OR WITH OR ON
BEHALF OF REGULUS, SUCH DEVELOPMENT PROJECT IN THE FIELD.

 

(I)            IF, DESPITE DILIGENT EFFORTS, REGULUS IS UNABLE TO FINALIZE SUCH
TERM SHEET WITH A THIRD PARTY WITH RESPECT TO THE DEVELOPMENT PROJECT WITHIN
SUCH [***] MONTH PERIOD, OR REGULUS IS ABLE TO FINALIZE SUCH TERM SHEET WITH A
THIRD PARTY WITH RESPECT TO THE DEVELOPMENT PROJECT WITHIN SUCH [***] MONTH
PERIOD, BUT REGULUS IS UNABLE TO EXECUTE A DEFINITIVE AGREEMENT SUBSTANTIALLY IN
CONFORMANCE WITH SUCH TERM SHEET WITHIN [***] MONTHS AFTER FINALIZING SUCH TERM
SHEET, REGULUS WILL NOTIFY LICENSORS THEREOF AND EACH LICENSOR WILL AGAIN HAVE
THE RIGHT, EXERCISABLE BY PROVIDING WRITTEN NOTICE TO REGULUS AND THE OTHER
LICENSOR, WITHIN [***] DAYS FOLLOWING REGULUS’ NOTICE (“SECOND OPT-IN ELECTION
PERIOD”), TO ELECT TO CONTINUE TO PURSUE THE DEVELOPMENT AND COMMERCIALIZATION
OF SUCH DEVELOPMENT PROJECT ON THE LOW TERMS SET FORTH IN SECTION 5.5.

 

(II)           IF ONLY ONE, BUT NOT BOTH, OF THE LICENSORS, MAKES AN OPT-IN
ELECTION WITHIN THE SECOND OPT-IN ELECTION PERIOD (THE “OPT-IN PARTY”), THE LOW
TERMS SET FORTH IN SECTION 5.5 AND THE TERMS OF SECTION 5.6 WILL APPLY FOLLOWING
THE END OF SUCH SECOND OPT-IN ELECTION PERIOD AND THE LICENSOR WHO DID NOT MAKE
AN OPT-IN ELECTION, WITHIN SUCH SECOND OPT-IN ELECTION PERIOD, WILL HAVE WAIVED
ITS RIGHT TO OPT-IN WITH RESPECT TO SUCH DEVELOPMENT PROJECT.

 

(III)          IF, WITHIN THE SECOND OPT-IN ELECTION PERIOD, NEITHER LICENSOR
MAKES AN OPT-IN ELECTION (OR BOTH LICENSORS FAIL TO SUBMIT ANY RESPONSE), THEN
REGULUS WILL RETAIN ALL RIGHTS TO SUCH DEVELOPMENT PROJECT.

 

(C)           OPT-IN BY BOTH LICENSORS.  IF, WITHIN THE INITIAL OPT-IN ELECTION
PERIOD OR SECOND OPT-IN ELECTION PERIOD, BOTH LICENSORS SUBMIT AN OPT-IN
ELECTION WITH RESPECT TO SUCH DEVELOPMENT PROJECT, THEN THE PARTIES WILL, TO THE
EXTENT MUTUALLY AGREED, WORK TOGETHER TO AMEND THE OPERATING PLAN TO SUPPORT
REGULUS IN DEVELOPING AND COMMERCIALIZING THE DEVELOPMENT PROJECT, INCLUDING, AS
APPLICABLE, CREATING A FUNDING AND EARLY DEVELOPMENT PLAN, AND THE DESIGNATION
OF ROLES AND RESPONSIBILITIES OF EACH PARTY IN THE EXECUTION OF SUCH OPERATING
PLAN.

 

5.4           OPT-IN ON HIGH TERMS.  IN THE EVENT THAT AN OPT-IN ELECTION IS
MADE BY ONLY ONE OF THE LICENSORS DURING THE INITIAL OPT-IN ELECTION PERIOD
PURSUANT TO SECTION 5.3(A), THE FOLLOWING TERMS WILL APPLY (“HIGH TERMS”):

 

8

--------------------------------------------------------------------------------

 

(A)           UPFRONT PAYMENT.  THE OPT-IN PARTY WILL PAY TO REGULUS, WITHIN 15
DAYS FOLLOWING THE END OF THE INITIAL OPT-IN ELECTION PERIOD, A ONE-TIME PAYMENT
OF [***] DOLLARS ($[***]).

 

(B)           ROYALTIES.  DURING THE RELEVANT ROYALTY TERM, THE OPT-IN PARTY
WILL PAY TO REGULUS THE FOLLOWING ROYALTIES ON NET SALES (AGGREGATED FROM ALL
RELEVANT COUNTRIES) OF EACH ROYALTY-BEARING PRODUCT IN A CALENDAR YEAR:

 

On the portion of Net Sales
during the calendar year:

 

Royalty Rate
on Net Sales During
Exclusivity Period

 

Royalty Rate
on Net Sales After
Exclusivity Period

 

Less than or equal to $[***]:

 

[***]

%

[***]

%

Greater than $[***]:

 

[***]

%

[***]

%

 

The Opt-In Party’s obligation to pay royalties under this Section 5.4(b) is
imposed only once with respect to the same unit of Royalty-Bearing Product.

 

(C)           MILESTONE PAYMENTS.  SUBJECT TO SECTION 5.6(F), THE OPT-IN PARTY
WILL PAY TO REGULUS THE FOLLOWING PAYMENTS UPON THE ACHIEVEMENT OF THE EVENTS
SET FORTH BELOW BY A ROYALTY-BEARING PRODUCT FOR THE RELEVANT DEVELOPMENT
PROJECT:

 

Milestone Event:

 

Payment
([***]):

 

(i) Filing of IND for first Royalty-Bearing Product

 

$

[***]

 

(ii) Upon Completion of the first Phase IIa Clinical Trial

 

$

[***]

 

(iii) Initiation (i.e., dosing of first patient) of the first Phase III Clinical
Trial

 

$

[***]

 

(iv) Filing of NDA in U.S. for first Royalty-Bearing Product

 

$

[***]

 

(v) Filing of NDA in the European Union for first Royalty-Bearing Product

 

$

[***]

 

(vi) Regulatory Approval in U.S. for the first Royalty-Bearing Product

 

$

[***]

 

(vii) Regulatory Approval in any Major Country in the European Union for the
first Royalty-Bearing Product

 

$

[***]

 

 

The Opt-In Party will notify the other Parties within 15 days following
achievement or occurrence of a milestone event.  Each milestone payment under
this Section 5.4(c) will be payable only once with respect to the first
Royalty-Bearing Product under the relevant

 

9

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Development Project to achieve the milestone event.  If an event in clause (ii),
(iii), (iv) or (v) occurs before an event in a preceding clause (i), (ii) or
(iii), the milestone payment described in such clause (i), (ii) or (iii) will be
paid when the milestone payment described in such clause (ii), (iii), (iv) or
(v) is paid.

 

Milestone payments will continue to be due for milestone events occurring after
any grant by the Opt-In Party or its Affiliates to a Third Party of a sublicense
of the Regulus IP or Licensed IP licensed to the Opt-In Party under
Section 5.6(a) with respect to the relevant Development Project.

 

(D)       SUBLICENSE INCOME.  SUBJECT TO SECTION 5.6(F), THE OPT-IN PARTY WILL
PAY TO REGULUS A PORTION OF THE SUBLICENSE INCOME RECEIVED BY THE OPT-IN PARTY
OR ITS AFFILIATES, IN ACCORDANCE WITH THE FOLLOWING TABLE:

 

Sublicense agreement initially entered into
during this timeframe:

 

Percentage of
Sublicense Income

 

Prior to Completion of first Phase IIa Clinical Trial

 

[***]

%

After Completion of first Phase IIa Clinical Trial, but prior to completion of
first Phase III Clinical Trial

 

[***]

%

After Completion of first Phase III Clinical Trial

 

[***]

%

 

5.5           OPT-IN ON LOW TERMS.  IN THE EVENT THAT AN OPT-IN ELECTION IS MADE
BY ONLY ONE, BUT NOT BOTH, OF THE LICENSORS DURING THE SECOND OPT-IN ELECTION
PERIOD PURSUANT TO SECTION 5.3(B)(II), THE FOLLOWING TERMS WILL APPLY (“LOW
TERMS”):

 

(A)           UPFRONT PAYMENT.  THE OPT-IN PARTY WILL PAY TO REGULUS, WITHIN 15
DAYS FOLLOWING THE END OF THE SECOND OPT-IN ELECTION PERIOD, A ONE-TIME PAYMENT
OF [***] DOLLARS ($[***]).

 

(B)           ROYALTIES.  DURING THE RELEVANT ROYALTY TERM, THE OPT-IN PARTY
WILL PAY TO REGULUS THE FOLLOWING ROYALTIES ON NET SALES (AGGREGATED FROM ALL
RELEVANT COUNTRIES) OF EACH ROYALTY-BEARING PRODUCT IN A CALENDAR YEAR:

 

On the portion of Net Sales
during the calendar year:

 

Royalty Rate
on Net Sales During
Exclusivity Period

 

Royalty Rate
on Net Sales After
Exclusivity Period

 

Less than or equal to $[***]:

 

[***]

%

[***]

%

Greater than $[***]:

 

[***]

%

[***]

%

 

The Opt-In Party’s obligation to pay royalties under this Section 5.5(b) is
imposed only once with respect to the same unit of Royalty-Bearing Product.

 

10

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(C)           MILESTONE PAYMENTS.  SUBJECT TO SECTION 5.6(F), THE OPT-IN PARTY
WILL PAY TO REGULUS THE FOLLOWING PAYMENTS UPON THE ACHIEVEMENT OF THE EVENTS
SET FORTH BELOW BY A ROYALTY-BEARING PRODUCT FOR THE RELEVANT DEVELOPMENT
PROJECT:

 

Milestone Event:

 

Payment for
Royalty-Bearing
Product
([***]):

 

(i)  Filing of IND for first Royalty-Bearing Product

 

$

[***]

 

(ii)  Upon Completion of the first Phase IIa Clinical Trial

 

$

[***]

 

(iii) Initiation (i.e., dosing of first patient) of the first Phase III Clinical
Trial

 

$

[***]

 

(iv) Filing of NDA in U.S. for first Royalty-Bearing Product

 

$

[***]

 

(v) Regulatory Approval in U.S. for the first Royalty-Bearing Product

 

$

[***]

 

 

The Opt-In Party will notify the other Parties within 15 days following
achievement or occurrence of a milestone event.  Each milestone payment under
this Section 5.4(c) will be payable only once with respect to the first
Royalty-Bearing Product under the relevant Development Project to achieve the
milestone event.  If an event in clause (ii), (iii), (iv) or (v) occurs before
an event in a preceding clause (i), (ii) or (iii), the milestone payment
described in such clause (i), (ii) or (iii) will be paid when the milestone
payment described in such clause (ii), (iii), (iv) or (v) is paid.

 

Milestone payments will continue to be due for milestone events occurring after
any grant by the Opt-In Party or its Affiliates to a Third Party of a sublicense
of the Regulus IP or Licensed IP licensed to the Opt-In Party under
Section 5.6(a) with respect to the relevant Development Project.

 

(D)           SUBLICENSE INCOME.  SUBJECT TO SECTION 5.6(F), THE OPT-IN PARTY
WILL PAY TO REGULUS A PORTION OF THE SUBLICENSE INCOME RECEIVED BY THE OPT-IN
PARTY OR ITS AFFILIATES, IN ACCORDANCE WITH THE FOLLOWING TABLE:

 

Sublicense agreement initially entered into
during this timeframe:

 

Percentage of
Sublicense Income

 

Prior to Completion of first Phase IIa Clinical Trial

 

[***]

%

After Completion of first Phase IIa Clinical Trial, but prior to completion of
first Phase III Clinical Trial

 

[***]

%

After Completion of first Phase III Clinical Trial

 

[***]

%

 

11

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5.6           OTHER TERMS APPLICABLE TO OPT-IN PARTY.

 

(A)           LICENSE GRANT.

 

(I)                                     REGULUS WILL, AND HEREBY DOES, GRANT TO
THE OPT-IN PARTY, SUBJECT TO AND LIMITED BY THE THIRD PARTY RIGHTS, A WORLDWIDE,
ROYALTY-BEARING, SUBLICENSEABLE (IN ACCORDANCE WITH SECTION 2.5), (X) LICENSE
UNDER ALL REGULUS IP, AND (Y) SUBLICENSE UNDER ALL LICENSED IP (WITHIN THE SCOPE
OF THE LICENSE GRANTED TO REGULUS UNDER SUCH LICENSED IP PURSUANT TO SECTIONS
2.2(A) AND 2.2(B)), SOLELY FOR PURPOSES OF DEVELOPING, MANUFACTURING AND
COMMERCIALIZING THE RELEVANT DEVELOPMENT PROJECT’S DEVELOPMENT COMPOUNDS AND
DEVELOPMENT THERAPEUTICS IN THE FIELD ON THE TERMS SET FORTH IN THIS
SECTION 5.6.  REGULUS SHALL COMPLY WITH THE PROVISIONS OF SECTION 2.4 WITH
RESPECT TO THE DISCLOSURE OF INFORMATION WITH RESPECT TO THE RELEVANT THIRD
PARTY RIGHTS.

 

(II)                                  SUBJECT TO THIRD PARTY RIGHTS, THE RIGHTS
GRANTED UNDER SECTION 5.6(A)(I) TO THE OPT-IN PARTY WILL BE EXCLUSIVE, TO THE
FULLEST EXTENT POSSIBLE, UNDER REGULUS IP AND UNDER LICENSED IP.  FOR THE SAKE
OF CLARITY, THIS MEANS THAT REGULUS IP WILL BE EXCLUSIVELY LICENSED BY REGULUS
TO THE OPT-IN PARTY WITH RESPECT TO THE RELEVANT DEVELOPMENT PROJECT, AND
REGULUS’ RIGHTS UNDER THE LICENSED IP WILL BE EXCLUSIVELY SUBLICENSED BY REGULUS
TO THE OPT-IN PARTY WITH RESPECT TO THE RELEVANT DEVELOPMENT PROJECT, BUT ANY
NON-EXCLUSIVE LICENSES GRANT BY THE RELEVANT LICENSOR TO REGULUS WITH RESPECT TO
LICENSED IP SHALL NOT BE DEEMED TO HAVE BEEN EXPANDED TO EXCLUSIVE LICENSES TO
REGULUS.

 

(B)           DILIGENCE.  THE OPT-IN PARTY WILL USE COMMERCIALLY REASONABLE
EFFORTS TO DEVELOP, MANUFACTURE AND COMMERCIALIZE THE RELEVANT DEVELOPMENT
COMPOUNDS AND DEVELOPMENT THERAPEUTICS, AT SUCH OPT-IN PARTY’S OWN EXPENSE, IN
THE FIELD, EITHER BY ITSELF OR WITH OR THROUGH ITS AFFILIATES OR SUBLICENSEES.

 

(C)           NON-COMPETE.  THE NON-OPT-IN PARTY WITH RESPECT TO A DEVELOPMENT
PROJECT WILL NOT, ITSELF OR THROUGH ITS AFFILIATES OR WITH THIRD PARTIES,
DEVELOP, MANUFACTURE OR COMMERCIALIZE DEVELOPMENT COMPOUNDS OR DEVELOPMENT
THERAPEUTICS WITH RESPECT TO SUCH DEVELOPMENT PROJECT DURING THE PERIOD
(I) [***] OF A ROYALTY-BEARING PRODUCT WITH RESPECT TO SUCH DEVELOPMENT PROJECT
ANYWHERE IN THE WORLD AS LONG AS SUCH OPT-IN PARTY REASONABLY BELIEVES THAT A
DEVELOPMENT THERAPEUTIC WOULD BE A ROYALTY-BEARING PRODUCT UPON FIRST COMMERCIAL
SALE, AND (II) [***] OF A ROYALTY-BEARING PRODUCT WITH RESPECT TO SUCH
DEVELOPMENT PROJECT ANYWHERE IN THE WORLD, UNTIL THE EXPIRATION OF [***] FOR
SUCH DEVELOPMENT PROJECT; PROVIDED, HOWEVER THAT EACH PARTY WILL BE ENTITLED TO
GRANT PERMITTED LICENSES.

 

(D)           THIRD PARTY AND INTER-LICENSOR PAYMENTS.  IN ADDITION TO THE
ROYALTIES AND MILESTONES PAYABLE UNDER SECTION 5.4 OR 5.5 ABOVE, THE OPT-IN
PARTY WILL BE RESPONSIBLE FOR ALL

 

12

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MILESTONES, ROYALTIES AND OTHER PAYMENTS PAYABLE TO THIRD PARTY LICENSORS AND
ASSUMED UNDER SECTION 2.4.  THE PARTIES WILL USE REASONABLE EFFORTS TO [***]. 
IN ADDITION, THE OPT-IN PARTY WILL BE RESPONSIBLE FOR ANY OTHER PAYMENTS TO THE
THIRD PARTIES IN RESPECT OF THE DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION
OF SUCH DEVELOPMENT COMPOUNDS AND DEVELOPMENT THERAPEUTICS IN THE FIELD.  IN
ADDITION, THE LICENSORS AGREE THAT ANY AMOUNTS OTHERWISE OWED BY ONE LICENSOR TO
ANOTHER PURSUANT TO A PREVIOUS AGREEMENT IS HEREBY WAIVED WITH RESPECT TO SUCH
DEVELOPMENT PROJECT.

 

(E)           NO LONGER A DEVELOPMENT PROJECT.  IF ONE, BUT NOT BOTH, LICENSORS
MAKE AN OPT-IN ELECTION WITH RESPECT TO A DEVELOPMENT PROJECT, SUCH DEVELOPMENT
PROJECT WILL BE PERMANENTLY REMOVED FROM THE PROGRAM/PROJECT LIST.

 

(F)            CREDIT FOR PREPAID AMOUNTS.  THE PARTIES AGREE THAT, WITH RESPECT
TO ANY DEVELOPMENT PROJECT, THE RELEVANT OPT-IN PARTY SHOULD PAY THE GREATER OF
THE CUMULATIVE GUARANTEED PAYMENTS AND THE CUMULATIVE SUBLICENSE INCOME PAYMENTS
AS OF THE END OF EACH CALENDAR QUARTER, AND, BECAUSE THE TIMING OF THE
GUARANTEED PAYMENTS AND THE SUBLICENSE INCOME PAYMENTS WITH RESPECT TO ANY GIVEN
DEVELOPMENT PROJECT MAY NOT ALIGN, THE PARTIES AGREE THAT THE RELEVANT OPT-IN
PARTY WILL NOT, WITH RESPECT TO ANY CALENDAR QUARTER, BE REQUIRED TO PAY MORE
THAN THE AMOUNT NECESSARY TO BRING THE CUMULATIVE PAYMENTS MADE BY SUCH OPT-IN
PARTY WITH RESPECT TO SUCH DEVELOPMENT PROJECT UP TO THE GREATER OF THE
CUMULATIVE GUARANTEED PAYMENTS AND THE CUMULATIVE SUBLICENSE INCOME PAYMENTS
WITH RESPECT TO SUCH CALENDAR QUARTER.  THEREFORE, WITH RESPECT TO ANY CALENDAR
QUARTER, THE RELEVANT OPT-IN PARTY SHALL PAY THE DIFFERENCE (IF POSITIVE)
BETWEEN (I) THE CUMULATIVE AMOUNT OWED AS OF THE END OF SUCH CALENDAR QUARTER,
MINUS (II) THE CUMULATIVE AMOUNT OWED (IF ANY) AS OF THE END OF THE IMMEDIATELY
PRIOR CALENDAR QUARTER.  SEVERAL EXAMPLES ARE PROVIDED IN SCHEDULE 5.6(F).

 

(A)                              “CUMULATIVE AMOUNT OWED” MEANS, WITH RESPECT TO
A DEVELOPMENT PROJECT AND A CALENDAR QUARTER, THE GREATER OF (1) THE CUMULATIVE
GUARANTEED PAYMENTS AS OF THE END OF SUCH CALENDAR QUARTER, AND (2) THE
CUMULATIVE SUBLICENSE INCOME PAYMENTS AS OF THE END OF SUCH CALENDAR QUARTER.

 

(B)                                “GUARANTEED PAYMENTS” MEANS, WITH RESPECT TO
A DEVELOPMENT PROJECT AND A CALENDAR QUARTER, (1) IF HIGH TERMS APPLY, THE
PAYMENTS PAID OR PAYABLE PURSUANT TO SECTIONS 5.4(A) AND 5.4(C) WITH RESPECT TO
SUCH CALENDAR QUARTER, AND (2) IF LOW TERMS APPLY, THE PAYMENTS PAID OR PAYABLE
PURSUANT TO SECTION 5.5(A) AND 5.5(C) WITH RESPECT TO SUCH CALENDAR QUARTER.

 

5.7         PAYMENT OF ROYALTIES.  FOLLOWING ANY DISSOLUTION OR WINDING-UP OF
REGULUS THAT RESULTS IN NO SUCCESSOR ENTITY TO REGULUS, ANY ROYALTIES,
MILESTONES AND/OR SUBLICENSE FEES DUE TO REGULUS BY A LICENSOR IN CONNECTION
WITH AN OPT-IN ELECTION UNDER THIS AGREEMENT, WILL BE REDUCED BY [***] PERCENT
([***]%) AND THIS AMOUNT WILL INSTEAD BE PAYABLE BY THE LICENSOR REQUIRED TO PAY
SUCH FEE DIRECTLY TO THE OTHER LICENSOR (THE “RECEIVING LICENSOR”); PROVIDED,
HOWEVER, IF THE RECEIVING LICENSOR HAS PASS-THROUGH OBLIGATIONS WITH RESPECT TO
A ROYALTY

 

13

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PAYMENT, MILESTONE OR SUBLICENSE FEE, THE PAYMENT TO THE RECEIVING LICENSOR WILL
NOT BE REDUCED TO AN AMOUNT LESS THAN THE AMOUNT OF THE PASS-THROUGH
OBLIGATION.(1)

 

6.                                       [Intentionally Deleted]

 

7.                                       [Intentionally Deleted]

 

8.                                       PAYMENT TERMS; REPORTS; RECORD-KEEPING
AND AUDIT RIGHTS

 

8.1           REPORTS AND PAYMENTS. THE PARTY PAYING ANY ROYALTIES, MILESTONES
OR SUBLICENSE INCOME PAYMENTS HEREUNDER (THE “PAYING PARTY”) TO ANOTHER PARTY
(EACH, A “PAYEE PARTY”) WILL DELIVER TO SUCH PAYEE PARTY(IES), WITHIN 15 DAYS
AFTER THE END OF EACH CALENDAR QUARTER, A REPORT WITH A REASONABLY DETAILED
WRITTEN ACCOUNTING OF NET SALES OF ROYALTY-BEARING PRODUCTS THAT ARE SUBJECT TO
ROYALTY PAYMENTS DUE TO THE PAYEE PARTY(IES) FOR SUCH CALENDAR QUARTER,
MILESTONES PAYABLE AND SUBLICENSE INCOME RECEIVED OR ACCRUED DURING SUCH
PERIOD.  SUCH QUARTERLY REPORTS WILL INDICATE GROSS SALES ON A
COUNTRY-BY-COUNTRY AND ROYALTY-BEARING PRODUCT-BY-ROYALTY-BEARING PRODUCT BASIS,
THE DEDUCTIONS FROM GROSS SALES USED IN CALCULATING NET SALES AND THE RESULTING
CALCULATION OF THE ROYALTIES DUE TO THE PAYEE PARTY(IES).  ROYALTIES OR OTHER
PAYMENTS ACCRUED FOR THE PERIOD COVERED BY EACH SUCH QUARTERLY REPORT WILL BE
DUE AND PAYABLE 45 DAYS AFTER THE END OF EACH RELEVANT CALENDAR QUARTER.  ALL
AMOUNTS IN THIS AGREEMENT ARE EXPRESSED IN U.S. DOLLARS AND ALL PAYMENTS DUE TO
THE PAYEE PARTY(IES) HEREUNDER WILL BE PAID IN U.S. DOLLARS.  IF ANY CONVERSION
OF FOREIGN CURRENCY TO U.S. DOLLARS IS REQUIRED IN CONNECTION WITH ANY SUCH
PAYMENTS, SUCH CONVERSION WILL BE MADE BY USING THE CONVERSION RATE EXISTING IN
THE UNITED STATES (AS REPORTED IN THE WALL STREET JOURNAL) ON THE LAST BUSINESS
DAY OF THE REPORTING PERIOD TO WHICH SUCH PAYMENTS RELATE, OR SUCH OTHER
PUBLICATION AS THE PARTIES AGREE.

 

8.2           TAX WITHHOLDING.  THE PAYING PARTY WILL USE ALL REASONABLE AND
LEGAL EFFORTS TO REDUCE TAX WITHHOLDING WITH RESPECT TO PAYMENTS TO BE MADE TO
THE PAYEE PARTY(IES).  NOTWITHSTANDING SUCH EFFORTS, IF THE PAYING PARTY
CONCLUDES THAT TAX WITHHOLDINGS ARE REQUIRED WITH RESPECT TO PAYMENTS TO THE
PAYEE PARTY(IES), THE PAYING PARTY WILL WITHHOLD THE REQUIRED AMOUNT AND PAY IT
TO THE APPROPRIATE GOVERNMENTAL AUTHORITY.  IN ANY SUCH CASE, THE PAYING PARTY
WILL PROMPTLY PROVIDE THE PAYEE PARTY(IES) WITH ORIGINAL RECEIPTS OR OTHER
EVIDENCE REASONABLY SUFFICIENT TO ALLOW THE PAYEE PARTY(IES) TO DOCUMENT SUCH
TAX WITHHOLDINGS FOR PURPOSES OF CLAIMING FOREIGN TAX CREDITS AND SIMILAR
BENEFITS.

 

8.3           LATE PAYMENTS.  ANY PAYMENTS THAT ARE NOT MADE ON OR BEFORE THE
DUE DATE WILL BEAR INTEREST AT THE LESSER OF (A) 1.5% PER MONTH OR (B) THE
MAXIMUM PERMISSIBLE RATE UNDER APPLICABLE LAW, FOR THE PERIOD FROM THE DATE ON
WHICH SUCH PAYMENT WAS DUE THROUGH THE DATE ON WHICH PAYMENT IS ACTUALLY MADE.

 

8.4           FINANCIAL RECORDS.  UNLESS OTHERWISE REQUIRED BY THE INVESTOR
RIGHTS AGREEMENT, THE PAYING PARTY WILL MAINTAIN, AND WILL REQUIRE ITS
AFFILIATES AND SUBLICENSEES TO MAINTAIN, FOR 3 YEARS AFTER THE RELEVANT
REPORTING PERIOD ALL FINANCIAL RECORDS RELATING TO THE TRANSACTIONS AND
ACTIVITIES CONTEMPLATED BY THIS AGREEMENT IN SUFFICIENT DETAIL TO VERIFY
COMPLIANCE WITH THE TERMS OF THIS AGREEMENT.

 

--------------------------------------------------------------------------------

(1) THIS SECTION 5.7 WAS TAKEN FROM SECTION 10.7 OF THE LLC AGREEMENT.

 

14

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8.5           AUDIT RIGHT.  ONCE DURING EACH CALENDAR YEAR, EACH PAYEE PARTY MAY
RETAIN AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT REASONABLY ACCEPTABLE TO THE
PAYING PARTY TO AUDIT THE FINANCIAL RECORDS DESCRIBED IN SECTION 8.4, UPON
REASONABLE NOTICE TO THE PAYING PARTY, DURING REGULAR BUSINESS HOURS AND UNDER
AN OBLIGATION OF CONFIDENTIALITY TO THE PAYING PARTY.  SUCH PAYEE PARTY WILL
BEAR ALL OF THE COSTS OF SUCH AUDIT, EXCEPT AS PROVIDED BELOW.  THE RESULTS OF
SUCH AUDIT WILL BE MADE AVAILABLE TO ALL PARTIES; PROVIDED, THAT, SUCH RESULTS
WILL BE DEEMED THE CONFIDENTIAL INFORMATION OF THE PAYING PARTY HEREUNDER.  IF
THE AUDIT DEMONSTRATES THAT THE PAYMENTS OWED UNDER THIS AGREEMENT HAVE BEEN
UNDERSTATED, THE PAYING PARTY WILL PAY THE BALANCE TO THE PAYEE PARTY, TOGETHER
WITH INTEREST IN ACCORDANCE WITH SECTION 8.3.  FURTHER, IF THE AMOUNT OF THE
UNDERSTATEMENT IS GREATER THAN 5% OF THE AMOUNT OWED TO SUCH PAYEE PARTY WITH
RESPECT TO THE AUDITED PERIOD, THEN THE PAYING PARTY WILL REIMBURSE THE PAYEE
PARTY FOR THE REASONABLE COST OF THE AUDIT.  IF THE AUDIT DEMONSTRATES THAT THE
PAYMENTS OWED UNDER THIS AGREEMENT HAVE BEEN OVERSTATED, THE PAYEE PARTY WILL
REFUND TO THE PAYING PARTY THE AMOUNT OF SUCH OVERPAYMENT.  ALL PAYMENTS OWED BY
THE PAYING PARTY OR PAYEE PARTY UNDER THIS SECTION 8.5 WILL BE MADE WITHIN 30
DAYS AFTER THE RESULTS OF THE AUDIT ARE DELIVERED TO THE PARTIES UNLESS THE
PAYING PARTY IS DISPUTING IN GOOD FAITH THE RESULTS OF THE AUDIT IN WHICH CASE
THE PAYMENT WILL BE MADE WITHIN 30 DAYS AFTER RESOLUTION OF SUCH DISPUTE.

 

9.             INTELLECTUAL PROPERTY

 

9.1           OWNERSHIP.

 

(A)           AS AMONG THE PARTIES, (I) ALL OF ALNYLAM’S LICENSED IP WILL BE
OWNED SOLELY BY ALNYLAM, (II) ALL OF ISIS’ LICENSED IP WILL BE OWNED SOLELY BY
ISIS, AND (III) SUBJECT TO THE BUY-OUT PROCESS, ALL WORK PRODUCT, AND THE
INTELLECTUAL PROPERTY THEREIN, WILL BE OWNED BY REGULUS, AND EACH LICENSOR
HEREBY ASSIGNS, AND WILL CAUSE ITS AFFILIATES TO ASSIGN, TO REGULUS ALL WORK
PRODUCT AND THE INTELLECTUAL PROPERTY THEREIN.

 

(B)           IF REGULUS ENTERS INTO AN AGREEMENT (OTHER THAN THE SERVICES
AGREEMENT) WITH ONE OF ITS AFFILIATES, A LICENSOR, AN AFFILIATE OF A LICENSOR OR
A THIRD PARTY PURSUANT TO WHICH REGULUS IP COULD BE DEVELOPED, REGULUS WILL USE
COMMERCIALLY REASONABLE EFFORTS TO REQUIRE SUCH PERSON TO ASSIGN TO REGULUS ALL
RIGHT, TITLE AND INTEREST TO REGULUS IP DEVELOPED BY SUCH PERSON, OR OTHERWISE
ENSURE THAT REGULUS CONTROLS ALL SUCH REGULUS IP.

 

9.2           PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.

 

(A)           REGULUS IP.  AS AMONG THE PARTIES, REGULUS WILL HAVE THE SOLE
RIGHT TO FILE, PROSECUTE AND MAINTAIN PATENT RIGHTS COVERING ANY REGULUS IP, AT
REGULUS’ OWN EXPENSE.

 

(B)       LICENSOR IP.

 

(I)                                     AS AMONG THE PARTIES, EACH LICENSOR WILL
HAVE THE INITIAL RIGHT TO FILE, PROSECUTE AND MAINTAIN SUCH LICENSOR’S LICENSED
PATENT RIGHTS.  SUCH ACTIVITIES WILL BE AT SUCH LICENSOR’S EXPENSE.

 

(II)                                  SUBJECT TO ANY THIRD PARTY RIGHTS, IN THE
EVENT THAT A LICENSOR DECLINES TO FILE, PROSECUTE OR MAINTAIN SUCH LICENSOR’S
LICENSED PATENT RIGHTS, ELECTS TO ALLOW ANY SUCH PATENT RIGHTS TO LAPSE, OR

 

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ELECTS TO ABANDON ANY SUCH PATENT RIGHTS BEFORE ALL APPEALS WITHIN THE
RESPECTIVE PATENT OFFICE HAVE BEEN EXHAUSTED, THEN:

 

(A)                              SUCH LICENSOR WILL PROVIDE REGULUS WITH
REASONABLE NOTICE OF ITS DECISION TO DECLINE TO FILE, PROSECUTE OR MAINTAIN ANY
SUCH PATENT RIGHTS OR ITS ELECTION TO ALLOW ANY SUCH PATENT RIGHTS TO LAPSE, OR
ITS ELECTION TO ABANDON ANY SUCH PATENT RIGHTS, SO AS TO PERMIT REGULUS TO
DECIDE WHETHER TO FILE, PROSECUTE OR MAINTAIN THE SAME, AND TO TAKE ANY
NECESSARY ACTION.

 

(B)                                REGULUS MAY ASSUME CONTROL OF THE FILING,
PROSECUTION AND/OR MAINTENANCE OF SUCH PATENT RIGHTS IN THE NAME OF SUCH
LICENSOR, AT REGULUS’ EXPENSE.

 

(C)                                SUCH LICENSOR WILL, AT REGULUS’ EXPENSE AND
REASONABLE REQUEST, ASSIST AND COOPERATE IN THE FILING, PROSECUTION AND
MAINTENANCE OF SUCH PATENT RIGHTS.

 

(D)                               REGULUS WILL PROVIDE SUCH LICENSOR,
SUFFICIENTLY IN ADVANCE FOR SUCH LICENSOR TO COMMENT, WITH COPIES OF ALL PATENT
APPLICATIONS AND OTHER MATERIAL SUBMISSIONS AND CORRESPONDENCE WITH ANY PATENT
COUNSEL OR PATENT AUTHORITIES PERTAINING TO SUCH PATENT RIGHTS.

 

(E)                                 REGULUS WILL GIVE DUE CONSIDERATION TO THE
COMMENTS OF SUCH LICENSOR, BUT WILL HAVE THE FINAL SAY IN DETERMINING WHETHER OR
NOT TO INCORPORATE SUCH COMMENTS.

 

(F)                                 REGULUS AND SUCH LICENSOR WILL PROMPTLY
PROVIDE THE OTHER WITH COPIES OF ALL MATERIAL CORRESPONDENCE RECEIVED FROM ANY
PATENT COUNSEL OR PATENT AUTHORITIES PERTAINING TO SUCH PATENT RIGHTS.

 

9.3           ENFORCEMENT.

 

(A)           COMPETITIVE INFRINGEMENT.  SUBJECT TO ANY THIRD PARTY RIGHTS, THE
TERMS OF THIS SECTION 9.3(A) WILL APPLY WITH RESPECT TO ANY ACTUAL OR SUSPECTED
INFRINGEMENT OF A LICENSOR’S LICENSED PATENT RIGHTS OR REGULUS PATENT RIGHTS BY
A THIRD PARTY MAKING, USING OR SELLING A THERAPEUTIC PRODUCT THAT CONTAINS OR
CONSISTS OF (Y) A MIRNA COMPOUND AS AN ACTIVE INGREDIENT [***] OR (Z) IF CLAUSE
(Y) DOES NOT APPLY, AN OLIGONUCLEOTIDE(S)  THAT FALLS WITHIN THE FIELD OF A
PARTY’S EXCLUSIVE LICENSE UNDER SECTION 2.3 OF THIS AGREEMENT.  IN THE CASE OF
(Z) ABOVE, THE PARTY WITH THE EXCLUSIVE LICENSE IN THE FIELD WHERE THE
INFRINGING PRODUCT MOST REASONABLY FALLS WILL BE CONSIDERED THE RELEVANT
COMMERCIALIZING PARTY FOR PURPOSES OF THIS SECTION 9.3(A).

 

(I)                                     EACH PARTY WILL PROMPTLY REPORT IN
WRITING TO THE OTHER PARTIES ANY SUCH INFRINGEMENT OF WHICH IT BECOMES AWARE,
INCLUDING, WITHOUT LIMITATION, RECEIPT OF ANY CERTIFICATION RECEIVED UNDER THE
UNITED STATES DRUG PRICE COMPETITION AND PATENT TERM RESTORATION ACT OF

 

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1984 (PUB. LAW 98-471), AS AMENDED (THE “HATCH-WAXMAN ACT”), CLAIMING THAT ANY
OF THE LICENSED PATENT RIGHTS OR REGULUS PATENT RIGHTS IS INVALID, UNENFORCEABLE
OR THAT NO INFRINGEMENT WILL ARISE FROM THE MANUFACTURE, USE OR SALE OF SUCH
PRODUCT (A “PARAGRAPH IV CERTIFICATION”).

 

(II)                                  THE RELEVANT COMMERCIALIZING PARTY WILL
HAVE THE INITIAL RIGHT, AT SUCH COMMERCIALIZING PARTY’S EXPENSE, TO INITIATE A
LEGAL ACTION AGAINST SUCH THIRD PARTY WITH RESPECT TO SUCH INFRINGEMENT OF THE
REGULUS PATENT RIGHTS AND, IF SUCH COMMERCIALIZING PARTY IS A LICENSOR, SUCH
COMMERCIALIZING PARTY’S LICENSED PATENT RIGHTS.  AT THE COMMERCIALIZING PARTY’S
REASONABLE REQUEST AND EXPENSE, THE RELEVANT LICENSOR(S) (IF REGULUS IS THE
COMMERCIALIZING PARTY) OR THE OTHER LICENSOR (IF A LICENSOR IS THE
COMMERCIALIZING PARTY) WILL USE COMMERCIALLY REASONABLE EFFORTS TO INITIATE A
LEGAL ACTION AGAINST SUCH THIRD PARTY WITH RESPECT TO AN INFRINGEMENT DESCRIBED
IN CLAUSE (Y) OF THIS SECTION 9.3(A) OF SUCH OTHER LICENSOR(S)’ LICENSED PATENT
RIGHTS.  EACH OTHER PARTY WILL JOIN IN ANY SUCH ACTION(S) AS A PARTY AT THE
COMMERCIALIZING PARTY’S REQUEST AND AT THE COMMERCIALIZING PARTY’S EXPENSE IN
THE EVENT THAT AN ADVERSE PARTY ASSERTS, THE COURT RULES OR OTHER LAWS THEN
APPLICABLE PROVIDE, OR THE COMMERCIALIZING PARTY DETERMINES IN GOOD FAITH, THAT
A COURT WOULD LACK JURISDICTION BASED ON SUCH OTHER PARTY’S ABSENCE AS A PARTY
IN SUCH SUIT.  EACH OTHER PARTY MAY ALSO AT ANY TIME JOIN IN THE COMMERCIALIZING
PARTY’S ACTION AND MAY BE REPRESENTED BY COUNSEL OF ITS CHOICE, AT SUCH PARTY’S
EXPENSE; BUT IN ANY EVENT CONTROL OF SUCH ACTION WILL REMAIN WITH THE
COMMERCIALIZING PARTY.  AT THE COMMERCIALIZING PARTY’S OR ENFORCING LICENSOR’S
REASONABLE REQUEST AND EXPENSE, THE OTHER PARTIES WILL PROVIDE REASONABLE
ASSISTANCE TO THE COMMERCIALIZING PARTY OR ENFORCING LICENSOR, AS THE CASE MAY
BE, IN CONNECTION WITH ANY SUCH ACTION.  WITHOUT THE PRIOR WRITTEN CONSENT OF
THE RELEVANT OTHER PARTY(IES), THE COMMERCIALIZING PARTY OR ENFORCING LICENSOR,
AS THE CASE MAY BE, WILL NOT ENTER INTO ANY SETTLEMENT ADMITTING THE INVALIDITY
OF, IMPACTING THE SCOPE OR INTERPRETATION OF OR OTHERWISE IMPAIRING SUCH OTHER
PARTY(IES)’ RIGHTS, AS THE CASE MAY BE, IN ANY SUCH PATENT RIGHTS.

 

(III)                               ANY RECOVERIES RESULTING FROM AN ACTION
BROUGHT UNDER SECTION 9.3(A)(II) IN CONNECTION WITH AN INFRINGEMENT DESCRIBED IN
CLAUSE (Y) OF SECTION 9.3(A) (WHETHER UNDERTAKEN BY THE COMMERCIALIZING PARTY OR
THE ENFORCING LICENSOR) WILL BE APPLIED AS FOLLOWS:

 

(A)                              FIRST, TO REIMBURSE EACH PARTY FOR ALL
LITIGATION COSTS IN CONNECTION WITH SUCH PROCEEDING PAID BY SUCH PARTY (ON A PRO
RATA BASIS, BASED ON EACH PARTY’S RESPECTIVE LITIGATION COSTS, TO THE EXTENT THE
RECOVERY WAS LESS THAN ALL SUCH LITIGATION COSTS); AND

 

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(B)                                THE REMAINDER OF THE RECOVERY WILL BE
RETAINED BY THE COMMERCIALIZING PARTY AND [***].

 

ANY RECOVERIES RESULTING FROM AN ACTION BROUGHT UNDER SECTION 9.3(A)(II) IN
CONNECTION WITH AN INFRINGEMENT DESCRIBED IN CLAUSE (Z) OF SECTION 9.3(A) WILL
BE RETAINED BY THE COMMERCIALIZING PARTY.

 

(IV)                              IF THE COMMERCIALIZING PARTY DOES NOT, WITHIN
6 MONTHS OF WRITTEN NOTICE FROM ANOTHER PARTY OR OTHERWISE BECOMING AWARE OF
SUCH INFRINGEMENT (OR WITHIN 30 DAYS OF THE COMMERCIALIZING PARTY’S RECEIPT OF A
PARAGRAPH IV CERTIFICATION), COMMENCE AND REASONABLY PURSUE A LEGAL ACTION TO
PREVENT SUCH INFRINGEMENT WITH RESPECT TO THE REGULUS PATENT RIGHTS, REGULUS
WILL BE ENTITLED, AT ITS EXPENSE, TO COMMENCE THE ACTION IN ITS NAME.  EACH
LICENSOR WILL JOIN IN SUCH ACTION AS A PARTY AT REGULUS’ REQUEST AND EXPENSE IN
THE EVENT THAT AN ADVERSE PARTY ASSERTS, THE COURT RULES OR OTHER LAWS THEN
APPLICABLE PROVIDE, OR REGULUS DETERMINES IN GOOD FAITH, THAT A COURT WOULD LACK
JURISDICTION BASED ON SUCH LICENSOR’S ABSENCE AS A PARTY IN SUCH SUIT, BUT
CONTROL OF SUCH ACTION WILL REMAIN WITH REGULUS.  ANY RECOVERIES RESULTING FROM
SUCH AN ACTION WILL BE RETAINED BY REGULUS.

 

(B)       NON-COMPETITIVE INFRINGEMENT.

 

(I)                                     AS AMONG THE PARTIES, EXCEPT AS PROVIDED
IN SECTIONS 9.3(A), REGULUS WILL HAVE THE SOLE RIGHT TO PROTECT REGULUS PATENT
RIGHTS FROM ANY ACTUAL OR SUSPECTED INFRINGEMENT OR MISAPPROPRIATION, AT
REGULUS’ OWN EXPENSE.  ANY RECOVERIES RESULTING FROM SUCH AN ACTION WILL BE
RETAINED BY REGULUS [***].

 

(II)                                  AS AMONG THE PARTIES, EXCEPT AS PROVIDED
IN SECTION 9.3(A), EACH LICENSOR WILL HAVE THE SOLE RIGHT TO PROTECT SUCH
LICENSOR’S LICENSED PATENT RIGHTS FROM ANY ACTUAL OR SUSPECTED INFRINGEMENT OR
MISAPPROPRIATION.  SUCH ACTIVITIES WILL BE AT SUCH LICENSOR’S EXPENSE.  ANY
RECOVERIES RESULTING FROM SUCH AN ACTION WILL BE RETAINED BY SUCH LICENSOR.

 

9.4           INVALIDITY CLAIMS.  SUBJECT TO ANY THIRD PARTY RIGHTS, IF A THIRD
PARTY AT ANY TIME ASSERTS A CLAIM THAT A LICENSOR’S LICENSED IP OR THE REGULUS
IP IS INVALID OR OTHERWISE UNENFORCEABLE (AN “INVALIDITY CLAIM”), WHETHER AS A
DEFENSE IN AN INFRINGEMENT ACTION BROUGHT BY A PARTY PURSUANT TO SECTION 9.3 OR
IN AN ACTION BROUGHT AGAINST A PARTY UNDER SECTION 9.5, THE GENERAL CONCEPTS OF
SECTION 9.3 WILL APPLY TO SUCH INVALIDITY CLAIM (I.E., EACH PARTY HAS THE RIGHT
TO DEFEND ITS OWN INTELLECTUAL PROPERTY, EXCEPT THAT THE COMMERCIALIZING PARTY
WILL HAVE THE INITIAL RIGHT, TO THE EXTENT PROVIDED IN SECTION 9.3(A), TO DEFEND
SUCH INVALIDITY CLAIM, AND REGULUS WILL HAVE A STEP-IN RIGHT, TO THE EXTENT
PROVIDED IN SECTION 9.3(A), TO DEFEND SUCH INVALIDITY CLAIM).

 

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9.5                                 CLAIMED INFRINGEMENT.

 

(A)                                  REGULUS WILL PROMPTLY NOTIFY THE LICENSORS
OF THE RECEIPT OF ANY CLAIM THAT THE DEVELOPMENT OR MANUFACTURE OF MIRNA
COMPOUNDS OR MIRNA THERAPEUTICS OR COMMERCIALIZATION OF MIRNA THERAPEUTICS
INFRINGES THE PATENT RIGHTS OR MISAPPROPRIATES KNOW-HOW OF ANY THIRD PARTY OR
THE COMMENCEMENT OF ANY ACTION, SUIT OR PROCEEDING WITH RESPECT THERETO,
ENCLOSING A COPY OF THE CLAIM AND ALL PAPERS SERVED.

 

(B)                                 IF A PARTY BECOMES AWARE THAT THE
DEVELOPMENT OR MANUFACTURE OF MIRNA COMPOUNDS OR MIRNA THERAPEUTICS OR THE
COMMERCIALIZATION OF MIRNA THERAPEUTICS IN THE FIELD, BY A COMMERCIALIZING
PARTY, ITS AFFILIATES OR SUBLICENSEES, INFRINGES OR MISAPPROPRIATES, OR IS
LIKELY TO OR IS ALLEGED TO INFRINGE OR MISAPPROPRIATE, THE PATENT RIGHTS OR
KNOW-HOW OF ANY THIRD PARTY, SUCH PARTY WILL PROMPTLY NOTIFY INTELLECTUAL
PROPERTY COUNSEL TO THE OTHER PARTIES, AND SUCH COMMERCIALIZING PARTY WILL HAVE
THE SOLE RIGHT AND RESPONSIBILITY TO TAKE ANY ACTION IT DEEMS APPROPRIATE WITH
RESPECT THERETO; PROVIDED, HOWEVER, THAT, TO THE EXTENT THAT ANY ACTION WOULD
INVOLVE THE ENFORCEMENT OF ANOTHER PARTY’S LICENSED IP OR THE REGULUS IP (IF THE
COMMERCIALIZING PARTY IS A LICENSOR), OR THE DEFENSE OF AN INVALIDITY CLAIM WITH
RESPECT TO SUCH OTHER PARTY’S LICENSED IP OR THE REGULUS IP, THE GENERAL
CONCEPTS OF SECTION 9.3 WILL APPLY TO THE ENFORCEMENT OF SUCH OTHER PARTY’S
LICENSED IP OR THE REGULUS IP OR THE DEFENSE OF SUCH INVALIDITY CLAIM (I.E.,
EACH PARTY HAS THE RIGHT TO ENFORCE ITS OWN INTELLECTUAL PROPERTY, EXCEPT THAT
THE RELEVANT COMMERCIALIZING PARTY WILL HAVE THE INITIAL RIGHT, TO THE EXTENT
PROVIDED IN SECTION 9.3(A), TO ENFORCE SUCH LICENSED IP OR REGULUS IP OR DEFEND
SUCH INVALIDITY CLAIM, AND REGULUS WILL HAVE A STEP-IN RIGHT, TO THE EXTENT
PROVIDED IN SECTION 9.3(A), TO ENFORCE SUCH PATENT RIGHT OR DEFEND SUCH
INVALIDITY CLAIM).

 

9.6                           ADDITIONAL RIGHT.  NOTWITHSTANDING ANY PROVISION
OF SECTION 9, ISIS WILL ACTIVELY PARTICIPATE IN THE PLANNING AND CONDUCT OF ANY
ENFORCEMENT OF REGULUS IP OR ISIS IP AND WILL TAKE THE LEAD OF SUCH ENFORCEMENT
TO THE EXTENT THAT THE SCOPE OR VALIDITY OF ANY LICENSED PATENT RIGHT CONTROLLED
BY ISIS [***].

 

10.                                 CONFIDENTIAL INFORMATION

 

10.1                           PERMITTED DISCLOSURES.  EACH PARTY MAY MAKE
PERMITTED DISCLOSURES OF ANOTHER PARTY’S CONFIDENTIAL INFORMATION.

 

10.2                           SCIENTIFIC PUBLICATIONS.  NO PARTY WILL PUBLISH,
PRESENT OR OTHERWISE DISCLOSE TO THE PUBLIC THE RESULTS OF ANY RESEARCH PROGRAM
OR DEVELOPMENT PROJECT (“RESEARCH RESULTS”), EXCEPT AS SPECIFICALLY APPROVED BY
THE COLLABORATION WORKING GROUP OR AS PROVIDED IN THIS SECTION 10.2 BELOW OR IN
SECTION 10.3.  THE COLLABORATION WORKING GROUP WILL AGREE UPON THE FORM AND
TIMING OF ANY PUBLICATION OR PRESENTATION OR OTHER DISCLOSURE (SUCH AS AN
ABSTRACT, MANUSCRIPT OR PRESENTATION) TO THE PUBLIC OF THE RESEARCH RESULTS
SUBJECT TO THE COLLABORATION WORKING GROUP’S APPROVAL.  FOR CLARIFICATION, THIS
SECTION 10.2 AND SECTION 10.3 WILL NOT APPLY WITH RESPECT TO THE USE AND
DISCLOSURE OF ANOTHER PARTY’S CONFIDENTIAL INFORMATION AS SPECIFICALLY PROVIDED
FOR IN THE INVESTOR RIGHTS AGREEMENT OR SECTION 10.1 OF THIS AGREEMENT OR FOR
DISCLOSURE OF ANY PARTY’S OWN INFORMATION TO COMPLY WITH LAW.

 

10.3                           DISCLOSURES REGARDING ROYALTY-BEARING PRODUCTS. 
IN ADDITION, EACH COMMERCIALIZING PARTY MAY, WITHOUT THE COLLABORATION WORKING
GROUP’S APPROVAL, MAKE

 

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DISCLOSURES PERTAINING SOLELY TO ITS ROYALTY-BEARING PRODUCTS; PROVIDED,
HOWEVER, THAT, (I) REGULUS WILL IMMEDIATELY NOTIFY (AND PROVIDE AS MUCH ADVANCE
NOTICE AS POSSIBLE TO) THE OTHER PARTIES OF ANY EVENT MATERIALLY RELATED TO ITS
ROYALTY-BEARING PRODUCTS (INCLUDING ANY REGULATORY APPROVAL) SO THAT THE PARTIES
MAY ANALYZE THE NEED TO OR DESIRABILITY OF PUBLICLY DISCLOSING OR REPORTING SUCH
EVENT AND (II) ANY PRESS RELEASE OR OTHER SIMILAR PUBLIC COMMUNICATION BY ANY
PARTY RELATED TO EFFICACY OR SAFETY DATA AND/OR RESULTS OF A ROYALTY-BEARING
PRODUCT WILL BE SUBMITTED TO THE OTHER PARTIES FOR REVIEW AT LEAST [***]
BUSINESS DAYS (TO THE EXTENT PERMITTED BY LAW) IN ADVANCE OF SUCH PROPOSED
PUBLIC DISCLOSURE, THE OTHER PARTIES SHALL HAVE THE RIGHT TO EXPEDITIOUSLY
REVIEW AND RECOMMEND CHANGES TO SUCH COMMUNICATION AND THE PARTY WHOSE
COMMUNICATION HAS BEEN REVIEWED SHALL IN GOOD FAITH CONSIDER ANY CHANGES THAT
ARE TIMELY RECOMMENDED BY THE REVIEWING PARTIES.  NOTWITHSTANDING THE FOREGOING,
IN EACH CASE SUCH RIGHT OF REVIEW AND RECOMMENDATION SHALL ONLY APPLY FOR THE
FIRST TIME THAT SPECIFIC INFORMATION IS TO BE DISCLOSED, AND SHALL NOT APPLY TO
THE SUBSEQUENT DISCLOSURE OF INFORMATION THAT (A) IS SUBSTANTIALLY SIMILAR TO A
PREVIOUSLY REVIEWED DISCLOSURE AND (B) IN THE CONTEXT OF THE SUBSEQUENT
DISCLOSURE, DOES NOT CARRY A SUBSTANTIALLY DIFFERENT QUALITATIVE MESSAGE THAN
THAT CARRIED BY THE PREVIOUSLY REVIEWED DISCLOSURE.

 

11.                                 INDEMNIFICATION

 

11.1                           INDEMNIFICATION BY REGULUS.  REGULUS AGREES TO
DEFEND EACH LICENSOR, THE AFFILIATES OF EACH LICENSOR, AND THEIR RESPECTIVE
AGENTS, DIRECTORS, OFFICERS AND EMPLOYEES (THE “LICENSOR INDEMNITEES”), AT
REGULUS’ COST AND EXPENSE, AND WILL INDEMNIFY AND HOLD HARMLESS THE LICENSOR
INDEMNITEES FROM AND AGAINST ANY AND ALL LOSSES, COSTS, DAMAGES, FEES OR
EXPENSES (“LOSSES”) RELATING TO OR IN CONNECTION WITH A THIRD PARTY CLAIM
ARISING OUT OF (A) ANY ACTUAL OR ALLEGED DEATH, PERSONAL BODILY INJURY OR DAMAGE
TO REAL OR TANGIBLE PERSONAL PROPERTY CLAIMED TO RESULT, DIRECTLY OR INDIRECTLY,
FROM THE MANUFACTURE, STORAGE, POSSESSION, USE OR CONSUMPTION OF, TREATMENT WITH
OR SALE, ANY MIRNA COMPOUND OR MIRNA THERAPEUTIC (OTHER THAN AS SET FORTH IN
SECTION 11.2(A) OR IN THE INVESTOR RIGHTS AGREEMENT), REGARDLESS OF THE FORM IN
WHICH ANY SUCH CLAIM IS MADE OR WHETHER ACTUAL NEGLIGENCE IS FOUND, (B) ANY
ACTUAL OR ALLEGED INFRINGEMENT OR UNAUTHORIZED USE OR MISAPPROPRIATION OF ANY
PATENT RIGHT OR OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY WITH RESPECT
TO THE ACTIVITIES OF REGULUS, ITS AFFILIATES OR SUBLICENSEES UNDER THIS
AGREEMENT OR THE SERVICES AGREEMENT, (C) BREACH BY REGULUS OF ITS
REPRESENTATIONS, WARRANTIES OR COVENANTS MADE UNDER THIS AGREEMENT OR THE
SERVICES AGREEMENT, OR (D) ANY NEGLIGENT ACT OR OMISSION OR WILLFUL MISCONDUCT
OF REGULUS, ITS AFFILIATES OR SUBLICENSEES OR ANY OF THEIR EMPLOYEES,
CONTRACTORS OR AGENTS, IN PERFORMING ITS OBLIGATIONS OR EXERCISING ITS RIGHTS
UNDER THIS AGREEMENT OR THE SERVICES AGREEMENT; PROVIDED, HOWEVER, THAT, WITH
RESPECT TO EACH LICENSOR AND ITS RELATED LICENSOR INDEMNITEES, THE FOREGOING
INDEMNITY WILL NOT APPLY TO THE EXTENT THAT ANY SUCH LOSSES (I) ARE ATTRIBUTABLE
TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH LICENSOR OR ITS RELATED
LICENSOR INDEMNITEES, OR (II) ARE OTHERWISE SUBJECT TO AN OBLIGATION BY SUCH
LICENSOR TO INDEMNIFY THE SUPERSET INDEMNITEES UNDER SECTION 11.2(A)-(D).

 

11.2                           INDEMNIFICATION BY LICENSOR(S).  EACH LICENSOR
AGREES TO DEFEND REGULUS AND ITS AFFILIATES, AND THEIR RESPECTIVE AGENTS,
DIRECTORS, OFFICERS AND EMPLOYEES (THE “REGULUS INDEMNITEES”) AND THE OTHER
LICENSOR, AND ITS RELATED LICENSOR INDEMNITEES (THE REGULUS INDEMNITEES, SUCH
OTHER LICENSOR AND ITS RELATED LICENSOR INDEMNITEES, COLLECTIVELY, THE “SUPERSET
INDEMNITEES”), AT SUCH LICENSOR’S COST AND EXPENSE, AND WILL INDEMNIFY AND HOLD
HARMLESS THE SUPERSET INDEMNITEES FROM AND AGAINST ANY AND ALL LOSSES, RELATING
TO OR IN CONNECTION WITH A THIRD PARTY CLAIM ARISING OUT OF (A) ANY ACTUAL OR
ALLEGED DEATH, PERSONAL

 

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BODILY INJURY OR DAMAGE TO REAL OR TANGIBLE PERSONAL PROPERTY CLAIMED TO RESULT,
DIRECTLY OR INDIRECTLY, FROM THE MANUFACTURE, STORAGE, POSSESSION, USE OR
CONSUMPTION OF, TREATMENT WITH OR SALE, ANY MIRNA COMPOUND OR MIRNA THERAPEUTIC
DEVELOPED, MANUFACTURED AND/OR COMMERCIALIZED BY SUCH LICENSOR, ITS AFFILIATES
OR SUBLICENSEES PURSUANT TO SECTION 5, REGARDLESS OF THE FORM IN WHICH ANY SUCH
CLAIM IS MADE OR WHETHER ACTUAL NEGLIGENCE IS FOUND, (B) ANY ACTUAL OR ALLEGED
INFRINGEMENT OR UNAUTHORIZED USE OR MISAPPROPRIATION OF ANY PATENT RIGHT OR
OTHER INTELLECTUAL PROPERTY RIGHT OF A THIRD PARTY WITH RESPECT TO THE
ACTIVITIES OF SUCH LICENSOR, ITS AFFILIATES OR SUBLICENSEES UNDER THIS AGREEMENT
OR THE SERVICES AGREEMENT, (C) ANY BREACH BY SUCH LICENSOR OF ITS
REPRESENTATIONS, WARRANTIES OR COVENANTS UNDER THIS AGREEMENT OR THE SERVICES
AGREEMENT GIVEN TO THE OTHER PARTY SEEKING INDEMNIFICATION HEREUNDER, OR (D) ANY
NEGLIGENT ACT OR OMISSION OR WILLFUL MISCONDUCT OF SUCH LICENSOR OR ITS
AFFILIATES, OR ANY OF THEIR EMPLOYEES, CONTRACTORS OR AGENTS, IN PERFORMING ITS
OBLIGATIONS OR EXERCISING ITS RIGHTS UNDER THIS AGREEMENT OR THE SERVICES
AGREEMENT; PROVIDED, HOWEVER, THAT WITH RESPECT TO REGULUS OR THE INDEMNIFIED
LICENSOR, AND THE RELEVANT SUPERSET INDEMNITEES, THE FOREGOING INDEMNITY WILL
NOT APPLY TO THE EXTENT THAT ANY SUCH LOSSES (I) ARE ATTRIBUTABLE TO THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PARTY OR ITS SUPERSET INDEMNITEES, OR
(II) ARE OTHERWISE SUBJECT TO AN OBLIGATION BY SUCH PARTY TO INDEMNIFY THE
LICENSOR INDEMNITEES UNDER SECTION 11.1(A)-(D).

 

11.3                           NOTIFICATION OF CLAIMS; CONDITIONS TO
INDEMNIFICATION OBLIGATIONS.  A PARTY ENTITLED TO INDEMNIFICATION UNDER THIS
SECTION 11 WILL (A) PROMPTLY NOTIFY THE INDEMNIFYING PARTY AS SOON AS IT BECOMES
AWARE OF A CLAIM OR ACTION FOR WHICH INDEMNIFICATION MAY BE SOUGHT PURSUANT
HERETO, (B) COOPERATE WITH THE INDEMNIFYING PARTY IN THE DEFENSE OF SUCH CLAIM
OR SUIT, AND (C) PERMIT THE INDEMNIFYING PARTY TO CONTROL THE DEFENSE OF SUCH
CLAIM OR SUIT, INCLUDING WITHOUT LIMITATION THE RIGHT TO SELECT DEFENSE COUNSEL;
PROVIDED THAT IF THE PARTY ENTITLED TO INDEMNIFICATION FAILS TO PROMPTLY NOTIFY
THE INDEMNIFYING PARTY PURSUANT TO THE FOREGOING CLAUSE (A), THE INDEMNIFYING
PARTY WILL ONLY BE RELIEVED OF ITS INDEMNIFICATION OBLIGATION TO THE EXTENT
PREJUDICED BY SUCH FAILURE. 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 WHICH IMPOSES OBLIGATIONS ON
THE INDEMNIFIED PARTY, OTHER THAN FINANCIAL OBLIGATIONS THAT ARE COVERED BY THE
INDEMNIFYING PARTY’S INDEMNIFICATION OBLIGATION, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE INDEMNIFIED PARTY. THE INDEMNIFYING PARTY WILL HAVE NO LIABILITY
UNDER THIS SECTION 11 WITH RESPECT TO CLAIMS OR SUITS SETTLED OR COMPROMISED
WITHOUT ITS PRIOR WRITTEN CONSENT AND THE INDEMNIFIED PARTY MAY NOT, WITHOUT THE
PRIOR WRITTEN CONSENT OF THE INDEMNIFYING PARTY, COMPROMISE OR SETTLE ANY CLAIM
OR SUIT IN A MANNER WHICH ADMITS FAULT OR NEGLIGENCE ON THE PART OF THE
INDEMNIFYING PARTY, OR WHICH IMPOSES OBLIGATIONS ON THE INDEMNIFIED PARTY.

 

11.4                           ALLOCATION.  IN THE EVENT A CLAIM IS BASED
PARTIALLY ON AN INDEMNIFIED CLAIM UNDER THIS AGREEMENT OR THE INVESTOR RIGHTS
AGREEMENT AND PARTIALLY ON A NON-INDEMNIFIED CLAIM OR BASED PARTIALLY ON A CLAIM
INDEMNIFIED BY ONE PARTY UNDER THIS AGREEMENT OR THE INVESTOR RIGHTS AGREEMENT
AND PARTIALLY ON A CLAIM INDEMNIFIED BY ANOTHER PARTY(IES) UNDER THIS AGREEMENT
OR THE INVESTOR RIGHTS AGREEMENT, ANY PAYMENTS IN CONNECTION WITH SUCH CLAIMS
ARE TO BE APPORTIONED BETWEEN THE PARTIES IN ACCORDANCE WITH THE DEGREE OF CAUSE
ATTRIBUTABLE TO EACH PARTY.

 

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12.                                 INSURANCE

 

12.1                           WITHOUT LIMITING A PARTY’S UNDERTAKING TO DEFEND,
INDEMNIFY, AND HOLD THE OTHER PARTIES HARMLESS AS SET FORTH IN SECTION 11, TO
THE EXTENT AVAILABLE ON COMMERCIALLY REASONABLE TERMS EACH PARTY WILL OBTAIN AND
MAINTAIN A COMMERCIAL GENERAL LIABILITY POLICY, INCLUDING COVERAGE FOR
COMMERCIAL GENERAL LIABILITY CLAIMS AND COVERAGE FOR PRODUCTS LIABILITY CLAIMS,
TAKING INTO ACCOUNT THE STAGE OF DEVELOPMENT OF THE MIRNA COMPOUND OR MIRNA
THERAPEUTIC TO WHICH SUCH PARTY HAS RIGHTS UNDER THIS AGREEMENT, IN AMOUNTS
REASONABLY SUFFICIENT TO PROTECT AGAINST LIABILITY UNDER SECTION 11.  THE
FOREGOING COVERAGE WILL CONTINUE DURING THE TERM OF THIS AGREEMENT AND FOR A
PERIOD OF 3 YEARS THEREAFTER.  THE PARTIES HAVE THE RIGHT TO ASCERTAIN FROM TIME
TO TIME THAT SUCH COVERAGE EXISTS, SUCH RIGHT TO BE EXERCISED IN A REASONABLE
MANNER.

 

13.                                 WARRANTIES

 

13.1                           MUTUAL WARRANTIES.  EACH PARTY WARRANTS THAT AS
OF THE AMENDMENT EFFECTIVE DATE:  (A) IT IS A CORPORATION DULY ORGANIZED AND IN
GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS INCORPORATION OR
ORGANIZATION, AND IT HAS FULL POWER AND AUTHORITY AND THE LEGAL RIGHT TO OWN AND
OPERATE ITS PROPERTY AND ASSETS AND TO CARRY ON ITS BUSINESS AS IT IS NOW BEING
CONDUCTED AND AS IT IS CONTEMPLATED TO BE CONDUCTED UNDER THIS AGREEMENT AND THE
SERVICES AGREEMENT; (B) IT HAS THE FULL RIGHT, POWER AND AUTHORITY TO ENTER INTO
THIS AGREEMENT AND THE SERVICES AGREEMENT AND TO GRANT THE RIGHTS AND LICENSES
GRANTED BY IT UNDER THIS AGREEMENT AND THE SERVICES AGREEMENT; (C) THERE ARE NO
EXISTING OR, TO ITS KNOWLEDGE, THREATENED ACTIONS, SUITS OR CLAIMS PENDING WITH
RESPECT TO THE SUBJECT MATTER HEREOF OR ITS RIGHT TO ENTER INTO AND PERFORM ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE SERVICES AGREEMENT; (D) IT HAS TAKEN
ALL NECESSARY ACTION ON ITS PART TO AUTHORIZE THE EXECUTION AND DELIVERY OF THIS
AGREEMENT AND THE SERVICES AGREEMENT AND THE PERFORMANCE OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE SERVICES AGREEMENT; (E) THIS AGREEMENT AND THE
SERVICES AGREEMENT HAVE BEEN DULY EXECUTED AND DELIVERED ON BEHALF OF IT, AND
EACH CONSTITUTES A LEGAL, VALID, BINDING OBLIGATION, ENFORCEABLE AGAINST IT IN
ACCORDANCE WITH THE TERMS HEREOF, SUBJECT TO THE GENERAL PRINCIPLES OF EQUITY
AND TO BANKRUPTCY, INSOLVENCY, MORATORIUM AND OTHER SIMILAR LAWS AFFECTING THE
ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY; (F) ALL NECESSARY CONSENTS,
APPROVALS AND AUTHORIZATIONS OF ALL REGULATORY AND GOVERNMENTAL AUTHORITIES AND
OTHER PERSONS REQUIRED TO BE OBTAINED BY IT IN CONNECTION WITH THE EXECUTION AND
DELIVERY OF THIS AGREEMENT AND THE SERVICES AGREEMENT AND THE PERFORMANCE OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE SERVICES AGREEMENT HAVE BEEN OBTAINED;
AND (G) THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE SERVICES AGREEMENT
AND THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE SERVICES
AGREEMENT DO NOT CONFLICT WITH, OR CONSTITUTE A DEFAULT UNDER, ANY OF ITS
EXISTING CONTRACTUAL OBLIGATIONS.

 

13.2                           ADDITIONAL LICENSOR WARRANTIES.

 

(A)                                  EACH LICENSOR WARRANTS TO REGULUS THAT, AS
OF THE EFFECTIVE DATE, EXCEPT AS SET FORTH ON SCHEDULE 2.4(A) OR IN ACCORDANCE
WITH SECTION 2.4:  (I) SUCH LICENSOR HAS THE RIGHT TO GRANT TO REGULUS THE
RIGHTS GRANTED TO REGULUS UNDER SUCH LICENSOR’S LICENSED IP HEREUNDER; AND
(II) NO WRITTEN CLAIM HAS BEEN MADE AGAINST SUCH LICENSOR ALLEGING THAT SUCH
LICENSOR’S LICENSED PATENT RIGHTS ARE INVALID OR UNENFORCEABLE.

 

(B)                                 EACH LICENSOR FURTHER WARRANTS TO EACH OTHER
PARTY THAT SUCH LICENSOR HAS PREPARED, OR WILL PREPARE, AS APPLICABLE, ITS
RESPECTIVE IN-LICENSE SUMMARY, OUT-LICENSE

 

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SUMMARY AND DESCRIPTIONS OF OPTIONAL IN-LICENSES, IN GOOD FAITH AND HAVING USED
REASONABLE AND DILIGENT EFFORTS TO DISCLOSE, IN SUMMARY FORM, ALL MATERIAL
ISSUES RELATING TO THE SCOPE OF THE LICENSE GRANTED TO REGULUS AND ALL MATERIAL
PASS-THROUGH PAYMENT OBLIGATIONS.  THE PARTIES AGREE AND ACKNOWLEDGE THAT A
LICENSOR SHALL BE DEEMED TO BE IN BREACH OF THE WARRANTY IN THIS SECTION
13.2(B) IF SUCH LICENSOR KNOWINGLY OMITTED FROM, OR KNOWINGLY MISREPRESENTED IN,
ITS IN-LICENSE SUMMARY, OUT-LICENSE SUMMARY OR OPTIONAL IN-LICENSE DESCRIPTION
ANY MATERIAL ISSUES RELATING TO THE SCOPE OF THE LICENSE GRANTED TO REGULUS OR
ANY MATERIAL PASS-THROUGH PAYMENT OBLIGATIONS.  FOR THE SAKE OF CLARITY, THE
PARTIES AGREE AND ACKNOWLEDGE, BY WAY OF EXAMPLE AND NOT LIMITATION, THAT A
LICENSOR SHALL NOT BE DEEMED TO BE IN BREACH OF THE WARRANTY IN THIS
SECTION 13.2(B) IF ITS IN-LICENSE SUMMARY, OUT-LICENSE SUMMARY OR OPTIONAL
IN-LICENSE DESCRIPTION IS INCORRECT OR MISLEADING IN LIGHT OF FACTS, ISSUES OR
TECHNOLOGY CHANGES WHICH OCCUR OR BECOME KNOWN AFTER THE DATE SUCH IN-LICENSE
SUMMARY, OUT-LICENSE SUMMARY OR OPTIONAL IN-LICENSE DESCRIPTION IS PROVIDED TO
THE OTHER LICENSOR.

 

(C)                                  EACH LICENSOR FURTHER WARRANTS TO EACH
OTHER PARTY THAT SUCH LICENSOR HAS SET FORTH ON SCHEDULE 2.2(A), IN GOOD FAITH
AND HAVING USED REASONABLE AND DILIGENT EFFORTS TO IDENTIFY, ALL PATENT RIGHTS
CONTROLLED BY SUCH LICENSOR ON THE EFFECTIVE DATE THAT (1) ARE REASONABLY
NECESSARY OR USEFUL TO THE RESEARCH, DEVELOPMENT AND COMMERCIALIZATION OF MIRNA
COMPOUNDS OR MIRNA THERAPEUTICS AS CONTEMPLATED BY THE CURRENT OPERATING PLAN
AND (2) CLAIM (A) MIRNA COMPOUNDS OR MIRNA THERAPEUTICS IN GENERAL, (B) SPECIFIC
MIRNA COMPOUNDS OR MIRNA THERAPEUTICS, (C) CHEMISTRY OR DELIVERY OF MIRNA
COMPOUNDS OR MIRNA THERAPEUTICS, (D) MECHANISM(S) OF ACTION BY WHICH A MIRNA
ANTAGONIST DIRECTLY PREVENTS THE PRODUCTION OF THE SPECIFIC MIRNA, OR
(E) METHODS OF TREATING AN INDICATION BY MODULATING ONE OR MORE MIRNAS; EXCEPT,
IN EACH CASE FOR MANUFACTURING TECHNOLOGY (INCLUDING BUT NOT LIMITED TO
ANALYTICAL METHODS).  IN THE EVENT A LICENSOR IS IN BREACH OF THIS WARRANTY, THE
PARTIES WILL WORK IN GOOD FAITH TO AMEND SCHEDULE 2.2(A) SUCH THAT THE PATENT
RIGHT THAT IS THE SUBJECT OF THE BREACH IS INCLUDING AS A LICENSED PATENT RIGHT
UNDER THIS AGREEMENT.

 

13.3                           DISCLAIMER.  EXCEPT AS OTHERWISE EXPRESSLY SET
FORTH IN THIS SECTION 13, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY
WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES OF MERCHANTABILITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE,
NONINFRINGEMENT, OR VALIDITY OF PATENT CLAIMS, WHETHER ISSUED OR PENDING.

 

14.                                 LIMITATION OF LIABILITY

 

14.1                           UNLESS RESULTING FROM A PARTY’S WILLFUL
MISCONDUCT OR FROM A PARTY’S WILLFUL BREACH OF SECTION 10, NO PARTY HERETO WILL
BE LIABLE TO ANY OTHER PARTY OR ITS AFFILIATES FOR SPECIAL, INCIDENTAL,
CONSEQUENTIAL, EXEMPLARY, PUNITIVE, MULTIPLE OR OTHER INDIRECT DAMAGES ARISING
OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOSS OF
PROFITS, LOSS OF DATA, LOSS OF REVENUE, OR LOSS OF USE DAMAGES ARISING FROM OR
RELATING TO ANY BREACH OF THIS AGREEMENT WHETHER BASED UPON WARRANTY, CONTRACT,
TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF ANY NOTICE OF
SUCH DAMAGES.  NOTHING IN THIS SECTION 14 IS INTENDED TO LIMIT OR

 

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RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER THIS
AGREEMENT.

 

15.                                 TERMINATION

 

15.1                           TERM.  THIS AGREEMENT WILL BECOME EFFECTIVE AS OF
THE AMENDMENT EFFECTIVE DATE, AND WILL REMAIN IN EFFECT UNTIL THE EARLIER OF
(A) THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 15.2, (B) THE
CESSATION OF ALL DEVELOPMENT OF POTENTIAL ROYALTY-BEARING PRODUCTS PRIOR TO THE
FIRST COMMERCIAL SALE OF A ROYALTY-BEARING PRODUCT ANYWHERE IN THE WORLD, OR
(C) FOLLOWING THE FIRST COMMERCIAL SALE OF A ROYALTY-BEARING PRODUCT ANYWHERE IN
THE WORLD, THE EXPIRATION OF THE ROYALTY TERMS FOR ROYALTY-BEARING PRODUCTS ON A
COUNTRY-BY-COUNTRY AND A ROYALTY-BEARING PRODUCT-BY-ROYALTY-BEARING PRODUCT
BASIS.

 

15.2                           TERMINATION FOR BREACH.

 

(A)                                  IF REGULUS BREACHES ANY MATERIAL PROVISION
OF THIS AGREEMENT (INCLUDING ANY REPRESENTATION OR WARRANTY), AND FAILS TO
REMEDY SUCH BREACH WITHIN SIXTY (60) DAYS AFTER WRITTEN NOTICE FROM THE
LICENSORS, ACTING JOINTLY, THEN THE LICENSORS, ACTING JOINTLY, SHALL HAVE THE
RIGHT, BUT NOT THE OBLIGATION, TO INITIATE THE BUY-OUT.  IN SUCH EVENT, THE
LICENSORS WILL DETERMINE WHICH LICENSOR WILL BE CONSIDERED THE “INITIATING
FOUNDING INVESTOR” (AS DEFINED IN THE INVESTOR RIGHTS AGREEMENT) FOR PURPOSES OF
THE BUY-OUT.

 

(B)                                 IF AN OPT-IN PARTY BREACHES ANY MATERIAL
PROVISION OF THIS AGREEMENT WITH RESPECT TO THE RELEVANT DEVELOPMENT PROJECT,
AND FAILS TO REMEDY SUCH BREACH WITHIN 60 DAYS AFTER WRITTEN NOTICE FROM
REGULUS, THEN REGULUS WILL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO TERMINATE
SUCH OPT-IN PARTY’S RIGHTS AND LICENSES WITH RESPECT TO SUCH DEVELOPMENT PROJECT
AND THE BREACHING OPT-IN PARTY WILL PROMPTLY RETURN TO THE AGGRIEVED PARTY(IES)
ALL RELATED TANGIBLE KNOW-HOW AND CONFIDENTIAL INFORMATION OF SUCH AGGRIEVED
PARTY(IES).

 

(C)                                  EXCEPT AS PROVIDED IN SECTION 15.2(B), IF A
LICENSOR BREACHES ANY MATERIAL PROVISION OF THIS AGREEMENT (INCLUDING ANY
REPRESENTATION OR WARRANTY), AND FAILS TO REMEDY SUCH BREACH WITHIN SIXTY (60)
DAYS AFTER WRITTEN NOTICE FROM ANY OTHER PARTY, THEN (I) IF SUCH OTHER PARTY IS
A LICENSOR, SUCH LICENSOR MAY INITIATE THE BUY-OUT, (II) IF SUCH OTHER PARTY IS
REGULUS, REGULUS MAY NOT TERMINATE THIS AGREEMENT, AND (III) WHETHER SUCH OTHER
PARTY IS REGULUS OR A LICENSOR, SUCH OTHER PARTY HAS THE RIGHT TO SEEK OTHER
LEGAL OR EQUITABLE REMEDIES WITH RESPECT TO SUCH BREACH.

 

(D)                                 NOTWITHSTANDING SECTION 15.2(B) OR
15.2(C)(I), IF A NON-BREACHING PARTY GIVES THE ALLEGEDLY-BREACHING PARTY A
NOTICE PURSUANT TO THIS SECTION 15.2 OF A MATERIAL BREACH BY SUCH
ALLEGED-BREACHING PARTY, AND, AS OF THE END OF THE CURE PERIOD SPECIFIED ABOVE,
TWO OR MORE PARTIES ARE ENGAGED IN AN ARBITRATION PURSUANT TO SECTION 16.7 IN
WHICH SUCH ALLEGEDLY-BREACHING PARTY IS IN GOOD FAITH DISPUTING THE OCCURRENCE
OF THE ALLEGED MATERIAL BREACH OR THE SUFFICIENCY OF THE CURE WITH RESPECT
THERETO, THEN THE NON-BREACHING PARTIES MAY NOT (I) INITIATE THE BUY-OUT IN THE
CASE OF SECTION 15.2(C)(I) OR (II) TERMINATE THE APPLICABLE LICENSE IN THE CASE
OF SECTION 15.2(B), AS A RESULT OF SUCH BREACH UNLESS AND UNTIL THE ARBITRATOR
ISSUES AN AWARD THAT SUCH BREACH OCCURRED (IF THAT ISSUE WAS IN DISPUTE) AND/OR
THAT THE CURE WAS INSUFFICIENT (IF THAT ISSUE WAS IN DISPUTE), FOLLOWING WHICH
THE BREACHING PARTY SHALL HAVE 60 DAYS TO CURE SUCH BREACH (OR UNLESS

 

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AND UNTIL SUCH ALLEGEDLY-BREACHING PARTY IS NO LONGER DISPUTING SUCH ISSUES IN
GOOD FAITH, IF EARLIER).

 

15.3                           EFFECTS OF TERMINATION.

 

(A)                                  ANY OF REGULUS’ DIRECT SUBLICENSEES MAY, BY
PROVIDING WRITTEN NOTICE TO THE LICENSORS WITHIN THE 60 DAY PERIOD IMMEDIATELY
FOLLOWING TERMINATION OF THIS AGREEMENT WITH RESPECT TO REGULUS, IN WHOLE OR IN
PART, OBTAIN FROM EACH LICENSOR A DIRECT LICENSE FROM SUCH LICENSOR, ON THE SAME
TERMS AS THE SUBLICENSE GRANTED BY REGULUS TO SUCH SUBLICENSEE WITH RESPECT TO
SUCH LICENSOR’S LICENSED IP, EXCEPT TO THE EXTENT THAT ANY SUCH TERMS ARE
INCONSISTENT WITH THE RIGHTS GRANTED BY SUCH LICENSOR TO REGULUS UNDER THIS
AGREEMENT, IN WHICH CASE ANY TERMS IN THIS AGREEMENT WHICH ARE MORE PROTECTIVE
OF SUCH LICENSOR’S RIGHTS WILL INSTEAD APPLY.  IF A SUBLICENSEE PROVIDES SUCH
NOTICE, THE LICENSORS WILL NEGOTIATE IN GOOD FAITH WITH SUCH SUBLICENSEE A
WRITTEN AGREEMENT TO REFLECT SUCH TERMS; PROVIDED, THAT, (I) SUCH SUBLICENSEE
IS, AT THE TIME OF TERMINATION OF THIS AGREEMENT, IN COMPLIANCE WITH ITS
SUBLICENSE AGREEMENT WITH REGULUS, AND (II) SUCH SUBLICENSEE CURES ANY PAYMENT
DEFAULT OF REGULUS HEREUNDER, WITH RESPECT TO ANY ROYALTIES OR SUBLICENSE INCOME
PAYMENTS DUE TO THE LICENSORS WITH RESPECT TO THE SUBLICENSE GRANTED BY REGULUS
TO SUCH SUBLICENSEE HEREUNDER.

 

15.4                           SURVIVAL.  UPON TERMINATION OF THIS AGREEMENT,
THE FOLLOWING SECTIONS OF THIS AGREEMENT WILL SURVIVE: SECTIONS 2.1, 2.3, 8,
9.1(A), 9.3, 10, 11, 12, 14, 15.2, 15.3, 15.4 AND 16, AND, TO THE EXTENT RELATED
TO SECTION 9.3, SECTIONS 9.4, 9.5 AND 9.6.  IN ADDITION, IF THIS AGREEMENT IS
TERMINATED PURSUANT TO A BUY-OUT, THEN, WITH RESPECT TO EACH DEVELOPMENT PROJECT
FOR WHICH AN OPT-IN PARTY HAS OBTAINED A LICENSE UNDER SECTION 5.6 BEFORE THE
INITIATION OF THE BUY-OUT, THE FOLLOWING SECTIONS OF THIS AGREEMENT WILL SURVIVE
WITH RESPECT TO SUCH DEVELOPMENT PROJECT:  SECTIONS 5.4 OR 5.5 (AS APPLICABLE),
AND SECTION 5.6, UNLESS AND UNTIL TERMINATED PURSUANT TO SECTION 15.2(B),
SUBJECT TO SECTION 15.2(D) (WITH REGULUS’ ROLE IN SUCH TERMINATION SECTIONS
BEING PLAYED BY THE OTHER FOUNDING INVESTOR FOLLOWING THE DISSOLUTION OF
REGULUS).  UPON ANY EXPIRATION OF THIS AGREEMENT WITH RESPECT TO A
ROYALTY-BEARING PRODUCT UNDER SECTION 15.1(C), THE LICENSE GRANTED UNDER ANY
KNOW-HOW THAT IS PART OF THE LICENSED IP AND/OR REGULUS IP TO A PARTY WITH
RESPECT TO SUCH ROYALTY-BEARING PRODUCT WILL BECOME A FULLY PAID-UP AND
PERPETUAL LICENSE TO MANUFACTURE, IMPORT, USE, SELL OR OTHERWISE COMMERCIALIZE
SUCH ROYALTY-BEARING PRODUCT.

 

16.                                 MISCELLANEOUS

 

16.1                           ASSIGNMENT.  NEITHER THIS AGREEMENT NOR ANY OF
THE RIGHTS OR OBLIGATIONS HEREUNDER MAY BE ASSIGNED BY A PARTY WITHOUT THE PRIOR
WRITTEN CONSENT OF THE OTHER PARTIES, EXCEPT (A) REGULUS SHALL ASSIGN BOTH THIS
AGREEMENT AND THE SERVICES AGREEMENT TO A PERSON THAT ACQUIRES, BY MERGER, SALE
OF ASSETS OR OTHERWISE, ALL OR SUBSTANTIALLY ALL OF THE BUSINESS OF REGULUS TO
WHICH THE SUBJECT MATTER OF THIS AGREEMENT RELATES, (B) EACH LICENSOR SHALL
ASSIGN BOTH THIS AGREEMENT AND THE SERVICES AGREEMENT ALONG WITH THE TRANSFER
(AS DEFINED IN THE INVESTOR RIGHTS AGREEMENT) OF SUCH LICENSOR’S SHARES  (AS
DEFINED IN THE INVESTOR RIGHTS AGREEMENT) AND REGISTERABLE SECURITIES, IF ANY,
AND (C) EACH PARTY MAY ASSIGN OR TRANSFER ITS RIGHTS TO RECEIVE ROYALTIES,
MILESTONES AND SUBLICENSE INCOME PAYMENTS UNDER THIS AGREEMENT (BUT NO
LIABILITIES) TO A THIRD PARTY IN CONNECTION WITH [***].  NOTWITHSTANDING THE
FOREGOING, EACH PARTY WILL HAVE THE RIGHT TO ASSIGN THIS AGREEMENT, IN WHOLE OR
IN PART, TO AN AFFILIATE OF SUCH PARTY WITHOUT THE PRIOR WRITTEN CONSENT OF THE
OTHER PARTIES; PROVIDED THAT SUCH ASSIGNEE ASSUMES IN WRITING ALL

 

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OBLIGATIONS OF THE ASSIGNING PARTY HEREUNDER.  ANY ASSIGNMENT NOT IN ACCORDANCE
WITH THE FOREGOING WILL BE VOID.  THIS AGREEMENT WILL BE BINDING UPON, AND WILL
INURE TO THE BENEFIT OF, ALL PERMITTED SUCCESSORS AND ASSIGNS.  EACH PARTY
AGREES THAT, NOTWITHSTANDING ANY PROVISIONS OF THIS AGREEMENT TO THE CONTRARY,
(Y) IN THE EVENT THAT THIS AGREEMENT IS ASSIGNED BY A PARTY IN CONNECTION WITH
THE SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE BUSINESS OF SUCH PARTY
TO WHICH THE SUBJECT MATTER OF THIS AGREEMENT RELATES, SUCH ASSIGNMENT WILL NOT
PROVIDE THE NON-ASSIGNING PARTIES WITH RIGHTS OR ACCESS TO THE KNOW-HOW OR
PATENT RIGHTS OF THE ACQUIRER OF SUCH ASSIGNING PARTY, AND (Z) IN THE EVENT OF A
CHANGE OF CONTROL OF A PARTY, THE OTHER PARTIES SHALL NOT ACQUIRE RIGHTS OR
ACCESS TO THE KNOW-HOW OR PATENT RIGHTS OF THE ACQUIRER OF SUCH ACQUIRED PARTY.

 

16.2                           FORCE MAJEURE.  NO PARTY WILL BE HELD LIABLE OR
RESPONSIBLE TO ANY OTHER PARTY NOR BE DEEMED TO HAVE DEFAULTED UNDER OR BREACHED
THIS AGREEMENT FOR FAILURE OR REASONABLE DELAY IN FULFILLING OR PERFORMING ANY
TERM OF THIS AGREEMENT (EXCEPT ANY OBLIGATION TO PAY UPFRONT PAYMENTS,
MILESTONES, ROYALTIES OR SUBLICENSE INCOME PAYMENTS) WHEN SUCH FAILURE OR DELAY
IS CAUSED BY OR RESULTS FROM CAUSES BEYOND THE REASONABLE CONTROL OF THE
AFFECTED PARTY, WHICH MAY INCLUDE, WITHOUT LIMITATION, EMBARGOES, ACTS OF WAR
(WHETHER WAR BE DECLARED OR NOT), INSURRECTIONS, RIOTS, CIVIL COMMOTIONS, ACTS
OF TERRORISM, STRIKES, LOCKOUTS OR OTHER LABOR DISTURBANCES, OR ACTS OF GOD. 
THE AFFECTED PARTY WILL NOTIFY THE OTHER PARTIES OF SUCH FORCE MAJEURE
CIRCUMSTANCES AS SOON AS REASONABLY PRACTICAL AND WILL MAKE EVERY REASONABLE
EFFORT TO MITIGATE THE EFFECTS OF SUCH FORCE MAJEURE CIRCUMSTANCES.

 

16.3                           SECTION 365(N) OF THE BANKRUPTCY CODE.  ALL
RIGHTS AND LICENSES GRANTED UNDER OR PURSUANT TO ANY SECTION OF THIS AGREEMENT
ARE AND WILL OTHERWISE BE DEEMED TO BE FOR PURPOSES OF SECTION 365(N) OF THE
UNITED STATES BANKRUPTCY CODE (TITLE 11, U.S. CODE), AS AMENDED (THE “BANKRUPTCY
CODE”), LICENSES OF RIGHTS TO “INTELLECTUAL PROPERTY” AS DEFINED IN
SECTION 101(35A) OF THE BANKRUPTCY CODE.  THE PARTIES WILL RETAIN AND MAY FULLY
EXERCISE ALL OF THEIR RESPECTIVE RIGHTS AND ELECTIONS UNDER THE BANKRUPTCY
CODE.  THE PARTIES AGREE THAT EACH PARTY, AS LICENSEE OF SUCH RIGHTS UNDER THIS
AGREEMENT, WILL RETAIN AND MAY FULLY EXERCISE ALL OF ITS RIGHTS AND ELECTIONS
UNDER THE BANKRUPTCY CODE OR ANY OTHER PROVISIONS OF APPLICABLE LAW OUTSIDE THE
UNITED STATES THAT PROVIDE SIMILAR PROTECTION FOR ‘INTELLECTUAL PROPERTY.’  THE
PARTIES FURTHER AGREE THAT, IN THE EVENT OF THE COMMENCEMENT OF A BANKRUPTCY
PROCEEDING BY OR AGAINST A PARTY UNDER THE U.S. BANKRUPTCY CODE OR ANALOGOUS
PROVISIONS OF APPLICABLE LAW OUTSIDE THE UNITED STATES, THE PARTY THAT IS NOT
SUBJECT TO SUCH PROCEEDING WILL BE ENTITLED TO A COMPLETE DUPLICATE OF (OR
COMPLETE ACCESS TO, AS APPROPRIATE) SUCH INTELLECTUAL PROPERTY AND ALL
EMBODIMENTS OF SUCH INTELLECTUAL PROPERTY, WHICH, IF NOT ALREADY IN THE NON
SUBJECT PARTY’S POSSESSION, WILL BE PROMPTLY DELIVERED TO IT UPON THE NON
SUBJECT PARTY’S WRITTEN REQUEST THEREOF.  ANY AGREEMENTS SUPPLEMENTAL HERETO
WILL BE DEEMED TO BE “AGREEMENTS SUPPLEMENTARY TO” THIS AGREEMENT FOR PURPOSES
OF SECTION 365(N) OF THE BANKRUPTCY CODE.

 

16.4                           NOTICES.  ANY NOTICE REQUIRED OR PROVIDED FOR BY
THE TERMS OF THIS AGREEMENT OR THE SERVICES AGREEMENT SHALL BE DELIVERED IN
ACCORDANCE WITH SECTION 13.9 OF THE INVESTOR RIGHTS AGREEMENT.

 

16.5                           RELATIONSHIP OF THE PARTIES.  IT IS EXPRESSLY
AGREED THAT THE PARTIES WILL BE INDEPENDENT CONTRACTORS HEREUNDER AND THAT THE
RELATIONSHIP AMONG THE PARTIES UNDER THIS AGREEMENT WILL NOT CONSTITUTE A
PARTNERSHIP, JOINT VENTURE OR AGENCY.  NO PARTY WILL HAVE THE AUTHORITY UNDER
THIS AGREEMENT TO MAKE ANY STATEMENTS, REPRESENTATIONS OR COMMITMENTS OF ANY

 

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KIND, OR TO TAKE ANY ACTION, WHICH WILL BE BINDING ON ANY OTHER PARTY, WITHOUT
THE PRIOR CONSENT OF SUCH OTHER PARTY.  THIS AGREEMENT WILL BE UNDERSTOOD TO BE
A JOINT RESEARCH AGREEMENT TO DISCOVER MIRNA COMPOUNDS AND ASSOCIATED USES AND
TO DEVELOP ROYALTY-BEARING PRODUCTS IN ACCORDANCE WITH 35 U.S.C. § 103(C)(3).

 

16.6                           GOVERNING LAW.  THIS AGREEMENT WILL BE GOVERNED
AND INTERPRETED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF
DELAWARE, EXCLUDING ITS CONFLICTS OF LAW RULES; PROVIDED THAT MATTERS OF
INTELLECTUAL PROPERTY LAW CONCERNING THE EXISTENCE, VALIDITY, OWNERSHIP,
INFRINGEMENT OR ENFORCEMENT OF INTELLECTUAL PROPERTY WILL BE DETERMINED IN
ACCORDANCE WITH THE NATIONAL INTELLECTUAL PROPERTY LAWS RELEVANT TO THE
INTELLECTUAL PROPERTY IN QUESTION.

 

16.7                           DISPUTE RESOLUTION.  EXCEPT (A) FOR MATTERS OF
INTELLECTUAL PROPERTY LAW CONCERNING THE EXISTENCE, VALIDITY, OWNERSHIP,
INFRINGEMENT OR ENFORCEMENT OF INTELLECTUAL PROPERTY, WHICH MATTERS WILL NOT BE
SUBJECT TO THE TERMS OF THIS SECTION 16.7, AND (B) AS OTHER DISPUTE RESOLUTION
PROCEDURES ARE EXPRESSLY PROVIDED HEREIN, IN THE EVENT OF ANY DISPUTE,
CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE PARTIES
WILL TRY TO SETTLE SUCH DISPUTE, CONTROVERSY OR CLAIM AMICABLY BETWEEN
THEMSELVES, INCLUDING REFERRING SUCH DISPUTE, CONTROVERSY OR CLAIM TO THE
EXECUTIVE OFFICERS OF THE PARTIES.  IF THE PARTIES ARE UNABLE TO SO SETTLE SUCH
DISPUTE, CONTROVERSY OR CLAIM WITHIN A PERIOD OF 60 DAYS FROM THE DATE OF SUCH
REFERRAL, THEN UPON NOTICE BY ANY PARTY TO THE OTHER PARTIES, ANY SUCH DISPUTE,
CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO ANY PROVISION OF THIS
AGREEMENT, OR THE INTERPRETATION, ENFORCEABILITY, PERFORMANCE, BREACH,
TERMINATION OR VALIDITY HEREOF, WILL BE FINALLY RESOLVED UNDER THE COMMERCIAL
ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION BY A SINGLE ARBITRATOR
APPOINTED IN ACCORDANCE WITH SUCH RULES.  THE PARTIES WILL BE ENTITLED TO THE
SAME DISCOVERY AS PERMITTED UNDER THE U.S. FEDERAL RULES OF CIVIL PROCEDURE;
PROVIDED THAT THE ARBITRATOR WILL BE ENTITLED IN ITS DISCRETION TO GRANT A
REQUEST FROM A PARTY FOR EXPANDED OR MORE LIMITED DISCOVERY.  THE PLACE OF
ARBITRATION WILL BE NEW YORK, NEW YORK.  THE LANGUAGE OF THE ARBITRATION WILL BE
ENGLISH.  AT ANY TIME, A PARTY MAY SEEK OR OBTAIN PRELIMINARY, INTERIM OR
CONSERVATORY MEASURES FROM THE ARBITRATORS OR FROM A COURT.

 

16.8                           SEVERABILITY.  IN THE EVENT ANY ONE OR MORE OF
THE PROVISIONS CONTAINED IN THIS AGREEMENT SHOULD BE HELD INVALID, ILLEGAL OR
UNENFORCEABLE IN ANY RESPECT, THE VALIDITY, LEGALITY AND ENFORCEABILITY OF THE
REMAINING PROVISIONS CONTAINED HEREIN WILL NOT IN ANY WAY BE AFFECTED OR
IMPAIRED THEREBY, UNLESS THE ABSENCE OF THE INVALIDATED PROVISION(S) ADVERSELY
AFFECT THE SUBSTANTIVE RIGHTS OF THE PARTIES.  THE PARTIES WILL IN SUCH AN
INSTANCE USE THEIR BEST EFFORTS TO REPLACE THE INVALID, ILLEGAL OR UNENFORCEABLE
PROVISION(S) WITH VALID, LEGAL AND ENFORCEABLE PROVISION(S) WHICH, INSOFAR AS
PRACTICAL, MAINTAINS THE BALANCE OF THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS AGREEMENT.

 

16.9                           ENTIRE AGREEMENT.  THIS AGREEMENT (INCLUDING ALL
SCHEDULES AND EXHIBITS HERETO), THE INVESTOR RIGHTS AGREEMENT AND THE SERVICES
AGREEMENT CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE
SUBJECT MATTER HEREIN AND SUPERSEDES ALL PREVIOUS AGREEMENTS (OTHER THAN THOSE
LISTED IN SCHEDULE A (THE “PREVIOUS AGREEMENTS”)), WHETHER WRITTEN OR ORAL, WITH
RESPECT TO SUCH SUBJECT MATTER, INCLUDING WITHOUT LIMITATION THE ORIGINAL
LICENSE AGREEMENT. FOR CLARITY, THE PARTIES ACKNOWLEDGE AND AGREE THAT THE
ORIGINAL LICENSE AGREEMENT REMAINS IN EFFECT IN ACCORDANCE WITH ITS TERMS WITH
RESPECT TO THE PERIOD BETWEEN SEPTEMBER 6, 2007 AND THE AMENDMENT EFFECTIVE
DATE.  UNLESS OTHERWISE EXPRESSLY INDICATED, REFERENCES HEREIN TO SECTIONS,
SUBSECTIONS, PARAGRAPHS AND THE LIKE ARE TO SUCH ITEMS WITHIN THIS

 

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AGREEMENT.  THE PARTIES ACKNOWLEDGE THAT THIS AGREEMENT IS BEING EXECUTED AND
DELIVERED SIMULTANEOUSLY WITH THE EXECUTION AND DELIVERY BY THE PARTIES AND/OR
THEIR AFFILIATES OF THE INVESTOR RIGHTS AGREEMENT AND THE SERVICES AGREEMENT. 
FOR PURPOSES OF CLARITY, NOTHING IN THIS AGREEMENT (OTHER THAN SECTION 5.6(D))
WILL BE DEEMED TO MODIFY OR AMEND ANY PROVISION OF ANY OF THE PREVIOUS
AGREEMENTS.

 

16.10                     AMENDMENT AND WAIVER.  THIS AGREEMENT MAY NOT BE
AMENDED, NOR ANY RIGHTS HEREUNDER WAIVED, EXCEPT IN A WRITING SIGNED BY THE
PROPERLY AUTHORIZED REPRESENTATIVES OF EACH PARTY.

 

16.11                     NO IMPLIED WAIVERS.  THE WAIVER BY A PARTY OF A BREACH
OR DEFAULT OF ANY PROVISION OF THIS AGREEMENT BY ANY OTHER PARTY WILL NOT BE
CONSTRUED AS A WAIVER OF ANY SUCCEEDING BREACH OF THE SAME OR ANY OTHER
PROVISION, NOR WILL ANY DELAY OR OMISSION ON THE PART OF A PARTY TO EXERCISE OR
AVAIL ITSELF OF ANY RIGHT, POWER OR PRIVILEGE THAT IT HAS OR MAY HAVE HEREUNDER
OPERATE AS A WAIVER OF ANY RIGHT, POWER OR PRIVILEGE BY SUCH PARTY.

 

16.12                     EXPORT COMPLIANCE.  THE PARTIES ACKNOWLEDGE THAT THE
EXPORTATION FROM THE UNITED STATES OF MATERIALS, PRODUCTS AND RELATED TECHNICAL
DATA (AND THE RE-EXPORT FROM ELSEWHERE OF UNITED STATES ORIGIN ITEMS) MAY BE
SUBJECT TO COMPLIANCE WITH UNITED STATES EXPORT LAWS, INCLUDING, WITHOUT
LIMITATION, THE UNITED STATES BUREAU OF EXPORT ADMINISTRATION’S EXPORT
ADMINISTRATION REGULATIONS, THE FEDERAL FOOD, DRUG AND COSMETIC ACT AND
REGULATIONS OF THE FDA ISSUED THEREUNDER, AND THE UNITED STATES DEPARTMENT OF
STATE’S INTERNATIONAL TRAFFIC AND ARMS REGULATIONS WHICH RESTRICT EXPORT,
RE-EXPORT, AND RELEASE OF MATERIALS, PRODUCTS AND THEIR RELATED TECHNICAL DATA,
AND THE DIRECT PRODUCTS OF SUCH TECHNICAL DATA.  THE PARTIES AGREE TO COMPLY
WITH ALL EXPORTS LAWS AND TO COMMIT NO ACT THAT, DIRECTLY OR INDIRECTLY, WOULD
VIOLATE ANY UNITED STATES LAW, OR ANY OTHER INTERNATIONAL TREATY OR AGREEMENT,
RELATING TO THE EXPORT, RE-EXPORT, OR RELEASE OF ANY MATERIALS, PRODUCTS OR
THEIR RELATED TECHNICAL DATA TO WHICH THE UNITED STATES ADHERES OR WITH WHICH
THE UNITED STATES COMPLIES.

 

16.13                     COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY
NUMBER OF COUNTERPARTS, EACH OF WHICH WILL BE DEEMED AN ORIGINAL, AND ALL OF
WHICH TOGETHER WILL CONSTITUTE ONE AND THE SAME INSTRUMENT.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the Parties hereby execute this Agreement as of the date
first written above.

 

 

 

ALNYLAM PHARMACEUTICALS, INC.

 

 

 

By:

/s/ Barry Greene

 

 

Name: Barry Greene

 

 

Title: President & COO

 

 

 

 

 

ISIS PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ B. Lynne Parshall

 

 

Name: B. Lynne Parshall

 

 

Title: COO & CFO

 

 

 

 

 

REGULUS THERAPEUTICS INC.

 

 

 

 

 

By:

/s/ Kleanthis G. Xanthopoulos

 

 

Name: Kleanthis G. Xanthopoulos

 

 

Title: President & CEO

 

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Exhibit 1

 

Defined Terms

 

1.1                                 “Additional Rights” will have the meaning
set forth in Section 2.4(d).

 

1.2                                 “Affiliate” of an entity means any other
entity that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with such first entity. 
For purposes of this definition only, “control” (and, with correlative meanings,
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct the management or policies of an
entity, whether through the ownership of voting securities or by contract
relating to voting rights or corporate governance.  For purposes of this
Agreement (a) Regulus will not be deemed to be an Affiliate of any Licensor and
(b) a Licensor and its Affiliates will not be considered an Affiliate of
Regulus.

 

1.3                                 “Agreement” will have the meaning set forth
in the Preamble.

 

1.4                                 “Alnylam” will have the meaning set forth in
the Preamble.

 

1.5                                 “Alnylam Field” will have the meaning set
forth in Section 2.3(a).

 

1.6                                 “Amendment Effective Date” has the meaning
set forth in the Preamble.

 

1.7                                 “Approved Mimic” will have the meaning set
forth in Section 1.61.

 

1.8                                 “Approved Precursor Antagonist” will have
the meaning set forth in Section 1.61.

 

1.9                                 “Bankruptcy Code” will have the meaning set
forth in Section 16.3.

 

1.10                           “Business Day” means a day on which the banks in
New York, New York are open for business.

 

1.11                           “Buy-Out” will have the meaning set forth in the
Investor Rights Agreement.

 

1.12                           “Change of Control” means, with respect to a
Licensor, the earlier of (x) the public announcement of or (y) the closing of: 
(a) a merger, reorganization or consolidation involving such Licensor in which
its shareholders immediately prior to such transaction would hold less than 50%
of the securities or other ownership or voting interests representing the equity
of the surviving entity immediately after such merger, reorganization or
consolidation, or (b) a sale to a Third Party of all or substantially all of
such Licensor’s assets or business relating to this Agreement.

 

1.13                           “Collaboration Working Group” means a group
having equal representation from Isis, Alnylam and Regulus which will meet on a
regular basis to share information about Know-How and Patent Rights relevant to
the joint venture and to conduct the business necessary under this Agreement. 
Each Party will designate two Collaboration Working Group members within 30 days
of the Effective Date.

 

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1.14                           “Combination Product” will have the meaning set
forth in Section 1.67.

 

1.15                           “Commercialization” or “Commercialize” means any
and all activities directed to marketing, promoting, detailing, distributing,
importing, having imported, exporting, having exported, selling or offering to
sell a miRNA Therapeutic following receipt of Regulatory Approval for such miRNA
Therapeutic.

 

1.16                           “Commercializing Party” means the Party
Manufacturing, Developing or Commercializing a miRNA Therapeutic under this
Agreement pursuant to licenses granted under Sections 2.2 or 5.6.

 

1.17                           “Commercially Reasonable Efforts” means,
reasonable, diligent, good faith efforts to accomplish an objective as such
Party would normally use to accomplish a similar objective, under similar
circumstances exercising reasonable business judgment.  With respect to the
Development, Manufacturing or Commercialization of a miRNA Therapeutic, such
efforts will be substantially equivalent to the efforts used by such Party with
respect to other products at similar stages in their development or product life
and of similar market potential, taking into account the profile of the miRNA
Therapeutic, the competitive landscape and other relevant factors commonly
considered in similar circumstances.  For all Parties the level of effort will
be at least that of a typical medium sized biopharmaceutical company.

 

1.18                           “Completion” means, with respect to any clinical
trial, the locking of the database pertaining to such clinical trial.

 

1.19                           “Confidential Information” will have the meaning
set forth in the Investor Rights Agreement.

 

1.20                           “Control” or “Controlled” means the possession of
the right (whether by ownership, license or otherwise) to assign, or grant a
license, sublicense or other right as provided for herein without violating the
terms of any agreement or other arrangement with any Third Party; provided,
however, that neither Licensor will be deemed to Control Regulus IP and no Party
other than the relevant Licensor shall be deemed to Control such Licensor’s
Licensed IP.

 

1.21                           “Controlling Party” will have the meaning set
forth in Section 2.4(d).

 

1.22                           “Cover”, “Covered” or “Covering” means, (a) with
respect to a patent, that, in the absence of a license granted to a Person under
a Valid Claim included in such patent, the practice by such Person of an
invention claimed in such patent would infringe such Valid Claim, or (b) with
respect to a patent application, that, in the absence of a license granted to a
Person under a Valid Claim included in such patent application, the practice by
such Person of an invention claimed in such patent application would infringe
such Valid Claim if it were to issue as a patent.

 

1.23                           “Develop” or “Development” means, with respect to
a miRNA Compound or miRNA Therapeutic, any discovery, characterization,
preclinical or clinical activity with respect to such miRNA Compound or miRNA
Therapeutic, including human clinical trials conducted after Regulatory Approval
of such miRNA Therapeutic to seek Regulatory Approval for additional Indications
for such miRNA Therapeutic.

 

2

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1.24                           “Development Compound” means, with respect to a
Development Project, any miRNA Compound directed to the miRNA(s) which is the
focus of such Development Project.

 

1.25                           “Development Project” will have the meaning set
forth in Section 4.4.

 

1.26                           “Development Therapeutic” means, with respect to
a Development Project, any miRNA Therapeutic containing an miRNA
Compound(s) directed to the miRNA(s) which is the focus of such Development
Project.

 

1.27                           “Disclosing Party” will have the meaning set
forth in the Investor Rights Agreement.

 

1.28                           “Effective Date” means September 6, 2007, the
date on which the Parties entered into the Original License Agreement.

 

1.29                           “Exclusivity Period” means, with respect to a
Royalty-Bearing Product in a country, that period of time beginning with the
first commercial sale of such Royalty-Bearing Product in such country and ending
on the later to expire of (a) the time during which the applicable Regulatory
Authority in such country is not permitted to grant Regulatory Approval for a
generic equivalent of such Royalty-Bearing Product and (b):

 

·                  with respect to a Royalty-Bearing Product being
Commercialized by Regulus, the last Valid Claim of the Patent Rights licensed to
Regulus pursuant to this Agreement or the Regulus Patent Rights Covering (i) the
Manufacture of such Royalty-Bearing Product in such country or (ii) the use,
sale or other Commercialization of such Royalty-Bearing Product in such country;
or

 

·                  with respect to a Royalty-Bearing Product being
Commercialized by a Licensor, the last Valid Claim of the Patent Rights licensed
to such Licensor pursuant to this Agreement Covering (i) the Manufacture of such
Royalty-Bearing Product in such country or (ii) the use, sale or other
Commercialization of such Royalty-Bearing Product in such country.

 

1.30                           “Executive Officer” means, with respect to a
Party, the Chief Executive Officer of such Party (or the officer or employee of
such Party then serving in a substantially equivalent capacity) or his/her
designee of substantially equivalent rank.

 

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

 

1.32                           “Field” means treatment and/or prophylaxis of any
or all Indications.

 

1.33                           “GAAP” means United States Generally Accepted
Accounting Principles, consistently applied.

 

1.34                           “GLP” means the then-current good laboratory
practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R.
Part 58, and comparable foreign regulatory standards.

 

3

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1.35                           “[***]” means a [***].

 

1.36                           “Hatch-Waxman Act” will have the meaning set
forth in Section 9.3(a)(i)(A).

 

1.37                           “High Terms” will have the meaning set forth in
Section 5.4.

 

1.38                           “In-License Agreement” will have the meaning set
forth in Section 2.4(b).

 

1.39                           “In-License Summary” will have the meaning set
forth in Section 2.4(b).

 

1.40                           “IND” means an Investigational New Drug
Application or similar foreign application or submission for approval to conduct
human clinical investigations.

 

1.41                           “Indication” means any disease or condition, or
sign or symptom of a disease or condition, or symptom associated with a disease
or syndrome.

 

1.42                           “Initial Opt-In Election Period” will have the
meaning set forth in Section 5.3.

 

1.43                           “Intellectual Property” will have the meaning set
forth in the Investor Rights Agreement.

 

1.44                           “Invalidity Claim” will have the meaning set
forth in Section 9.4.

 

1.45                           “Investor Rights Agreement” means the Founding
Investor Rights Agreement of Regulus among the Parties, dated as of the
Amendment Effective Date, as the same may be amended from time to time after the
Amendment Effective Date.

 

1.46                           “Isis” will have the meaning set forth in the
Preamble.

 

1.47                           “Isis Field” will have the meaning set forth in
Section 2.3(b).

 

1.48                           “Know-How” means any information, inventions,
trade secrets or technology (excluding Patent Rights), whether or not
proprietary or patentable and whether stored or transmitted in oral,
documentary, electronic or other form.  Know-How includes ideas, concepts,
formulas, methods, procedures, designs, compositions, plans, documents, data,
discoveries, developments, techniques, protocols, specifications, works of
authorship, biological materials, and any information relating to research and
development plans, experiments, results, compounds, therapeutic leads,
candidates and products, clinical and preclinical data, clinical trial results,
and Manufacturing information and plans.

 

1.49                           “Law” means any law, statute, rule, regulation,
ordinance or other pronouncement having the effect of law of any federal,
national, multinational, state, provincial, county, city or other political
subdivision, domestic or foreign.

 

1.50                           “Licensed IP” means, with respect to a Licensor,
such Licensor’s Licensed Know-How and Licensed Patent Rights.

 

1.51                           “Licensed Know-How” means, with respect to a
Licensor, all Know-How Controlled by such Licensor on the Effective Date or
during the term of this Agreement (except

 

4

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as otherwise expressly provided herein) that relates to (a) miRNA Compounds or
miRNA Therapeutics in general, (b) specific miRNA Compounds or miRNA
Therapeutics, (c) chemistry or delivery of miRNA Compounds or miRNA
Therapeutics, (d) mechanism(s) of action by which a miRNA Antagonist directly
prevents the production of a specific miRNA, or (e) methods of treating an
Indication by modulating one or more miRNAs; provided, however, that in each
case, (i) for any such Know-How that include financial or other obligations to a
Third Party, the provisions of Section 2.4 will govern whether such Know-How
will be included as Licensed Know-How and (ii) Licensed Know How does not
include manufacturing technology (including but not limited to analytical
methods).

 

1.52                           “Licensed Patent Rights” means, with respect to a
Licensor, (A) all Patent Rights Controlled by such Licensor on the Effective
Date and listed on SCHEDULE 2.2(A), and (B) all Patent Rights Controlled by such
Licensor during the term of this Agreement (except as otherwise expressly
provided herein) that claim (a) miRNA Compounds or miRNA Therapeutics in
general, (b) specific miRNA Compounds or miRNA Therapeutics, (c) chemistry or
delivery of miRNA Compounds or miRNA Therapeutics, (d) mechanism(s) of action by
which a  miRNA Antagonist directly prevents the production of the specific
miRNA, or (e) methods of treating an Indication by modulating one or more
miRNAs; provided, however, that in each case, (i) for any such Patent Rights
that include financial or other obligations to a Third Party, the provisions of
Section 2.4 will govern whether such Patent Right will be included as a Licensed
Patent Right and (ii) Licensed Patent Rights do not include manufacturing
technology (including but not limited to analytical methods).

 

1.53                           “Licensor” will have the meaning set forth in the
Preamble.

 

1.54                           “Licensor Indemnitees” will have the meaning set
forth in Section 11.1.

 

1.55                           “Losses” will have the meaning set forth in
Section 11.1.

 

1.56                           “Low Terms” will have the meaning set forth in
Section 5.5.

 

1.57                           “Major Country” means France, Germany, Italy,
Spain and the United Kingdom.

 

1.58                           “Manufacture” or “Manufacturing” means any
activity involved in or relating to the manufacturing, quality control testing
(including in-process, release and stability testing), releasing or packaging,
for pre-clinical, clinical or commercial purposes, of a miRNA Compound or a
miRNA Therapeutic.

 

1.59                           “miRNA” means a structurally defined functional
RNA molecule usually between 21 and 25 nucleotides in length, which is derived
from genetically-encoded non-coding RNA which is predicted to be  processed into
a hairpin RNA structure that is a substrate for the double-stranded RNA-specific
ribonuclease Drosha and subsequently is predicted to serve as a substrate for
the enzyme Dicer, a member of the RNase III enzyme family; including, without
limitation, those miRNAs exemplified in miRBase
(http://microrna.sanger.ac.uk/).  To the extent that [***] for purposes of this
Agreement; provided, however, that nothing contained herein shall require any
Party hereto to [***].

 

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1.60                           “miRNA Antagonist” means a single-stranded
oligonucleotide (or a single stranded analog thereof) that is designed to
interfere with or inhibit a particular miRNA.  For purposes of clarity, the
definition of “miRNA Antagonist” is not intended to include oligonucleotides
that function predominantly through the RNAi mechanism of action or the RNase H
mechanism of action.

 

1.61                           “miRNA Compound” means a compound consisting of
(a) a miRNA Antagonist, (b) to the extent listed in Schedule 1.61 or otherwise
agreed upon by Regulus and the relevant Licensor(s) pursuant to Section 2.2(b),
a miRNA Precursor Antagonist (an “Approved Precursor Antagonist”), or (c) to the
extent agreed upon by Regulus and the relevant Licensor(s) pursuant to
Section 2.2(b), a miRNA Mimic (an “Approved Mimic”).

 

1.62                           “miRNA Mimic” means a double-stranded or
single-stranded oligonucleotide or analog thereof with a substantially similar
base composition as a particular miRNA and which is designed to mimic the
activity of such miRNA.

 

1.63                           “miRNA Precursor” means a transcript that
originates from a genomic DNA and that contains, but not necessarily
exclusively, a non-coding, structured RNA comprising one or more mature miRNA
sequences, including, without limitation, (a) polycistronic transcripts
comprising more than one miRNA sequence, (b) miRNA clusters comprising more than
one miRNA sequence, (c) pri-miRNAs, and/or (d) pre-miRNAs.

 

1.64                           “miRNA Precursor Antagonist” means a
single-stranded oligonucleotide (or a single stranded analog thereof) that is
designed to bind to a miRNA Precursor to prevent the production of one or more
miRNAs. For purposes of clarity, the definition of “miRNA Precursor Antagonist”
is not intended to include oligonucleotides that function predominantly through
the RNAi mechanism of action or the RNase H mechanism of action.

 

1.65                           “miRNA Therapeutic” means a therapeutic product
having one or more miRNA Compounds as an active ingredient (s).

 

1.66                           “NDA” means a New Drug Application or similar
application or submission for approval to market and sell a new pharmaceutical
product filed with or submitted to a Regulatory Authority.

 

1.67                           “Net Sales” means, with respect to a
Royalty-Bearing Product, the gross invoice price of all units of such
Royalty-Bearing Products sold by the relevant Commercializing Party, its
Affiliates and/or their direct Sublicensees to any Third Party, less the
following items:  (a) trade discounts, credits or allowances, (b) credits or
allowances additionally granted upon returns, rejections or recalls,
(c) freight, shipping and insurance charges, (d) taxes, duties or other
governmental tariffs (other than income taxes), (e) government-mandated rebates,
and (f) a reasonable reserve for bad debts.  “Net Sales” under the following
circumstances will mean the fair market value of such Royalty-Bearing Product: 
(i) Royalty-Bearing Products which are used by such Commercializing Party, its
Affiliates or direct Sublicensees for any commercial purpose without charge or
provision of invoice, (ii) Royalty-Bearing Products which are sold or disposed
of in whole or in part for non cash consideration, or (iii) Royalty-Bearing
Products which are provided to a Third Party by such Commercializing Party, its
Affiliates or direct Sublicensees

 

6

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without charge or provision of invoice and used by such Third Party except in
the cases of Royalty-Bearing Products used to conduct clinical trials,
reasonable amounts of Royalty-Bearing Products used as marketing samples and
Royalty-Bearing Product provided without charge for compassionate or similar
uses.

 

NET SALES WILL NOT INCLUDE ANY TRANSFER BETWEEN OR AMONG A PARTY AND ANY OF ITS
AFFILIATES OR DIRECT SUBLICENSEES FOR RESALE.

 

IN THE EVENT A ROYALTY-BEARING PRODUCT IS SOLD AS PART OF A COMBINATION PRODUCT
(AS DEFINED BELOW), THE NET SALES FROM THE COMBINATION PRODUCT, FOR THE PURPOSES
OF DETERMINING ROYALTY PAYMENTS, WILL BE DETERMINED BY MULTIPLYING THE NET SALES
(AS DETERMINED WITHOUT REFERENCE TO THIS PARAGRAPH) OF THE COMBINATION PRODUCT,
BY THE FRACTION, A/A+B, WHERE A IS THE AVERAGE SALE PRICE OF THE ROYALTY-BEARING
PRODUCT WHEN SOLD SEPARATELY IN FINISHED FORM AND B IS THE AVERAGE SALE PRICE OF
THE OTHER THERAPEUTICALLY ACTIVE PHARMACEUTICAL COMPOUND(S) INCLUDED IN THE
COMBINATION PRODUCT WHEN SOLD SEPARATELY IN FINISHED FORM, EACH DURING THE
APPLICABLE ROYALTY PERIOD OR, IF SALES OF ALL COMPOUNDS DID NOT OCCUR IN SUCH
PERIOD, THEN IN THE MOST RECENT ROYALTY REPORTING PERIOD IN WHICH SALES OF ALL
OCCURRED.  IN THE EVENT THAT SUCH AVERAGE SALE PRICE CANNOT BE DETERMINED FOR
BOTH THE ROYALTY-BEARING PRODUCT AND ALL OTHER THERAPEUTICALLY ACTIVE
PHARMACEUTICAL COMPOUNDS INCLUDED IN THE COMBINATION PRODUCT, NET SALES FOR THE
PURPOSES OF DETERMINING ROYALTY PAYMENTS WILL BE CALCULATED AS ABOVE, BUT THE
AVERAGE SALES PRICE IN THE ABOVE EQUATION WILL BE REPLACED BY A GOOD FAITH
ESTIMATE OF THE FAIR MARKET VALUE OF THE COMPOUND(S) FOR WHICH NO SUCH PRICE
EXISTS.  AS USED ABOVE, THE TERM “COMBINATION PRODUCT” MEANS ANY PHARMACEUTICAL
PRODUCT WHICH CONSISTS OF A ROYALTY-BEARING PRODUCT AND OTHER THERAPEUTICALLY
ACTIVE PHARMACEUTICAL COMPOUND(S).

 

1.68                           “Non-Controlling Party” will have the meaning set
forth in Section 2.4(d).

 

1.69                           “[***]” means [***].

 

1.70                           “[***]” means the [***].

 

1.71                           “Operating Plan” has the meaning ascribed to it
in the Investor Rights Agreement.

 

1.72                           “Opt-In Election” will have the meaning set forth
in Section 5.3.

 

1.73                           “Opt-In Party” will have the meaning set forth in
Section 5.3(a) and 5.3(c).

 

1.74                           “Opt-In Product” means any miRNA Therapeutic that
is Developed, Manufactured or Commercialized pursuant to a Development Project
for which one and only one Licensor has exercised an Opt-In Election and which
the relevant Opt-In Party subsequently licensed.

 

1.75                           “Optional In-License” will have the meaning set
forth in Section 2.4(c).

 

1.76                           “Out-License Agreement” will have the meaning set
forth in Section 2.4(a).

 

1.77                           “Out-License Summary” will have the meaning set
forth in Section 2.4(a).

 

7

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1.78                           “Paragraph IV Certification” will have the
meaning set forth in Section 9.3(a)(i)(A).

 

1.79                           “Party” means Alnylam, Isis and/or Regulus;
“Parties” means Alnylam, Isis and Regulus, or any combination thereof.

 

1.80                           “Patent Rights” means (a) patent applications
(including provisional applications and for certificates of invention); (b) any
patents issuing from such patent applications (including certificates of
invention); (c) all patents and patent applications based on, corresponding to,
or claiming the priority date(s) of any of the foregoing; and (d) any
substitutions, extensions (including supplemental protection certificates),
registrations, confirmations, reissues, divisionals, continuations,
continuations-in-part, re-examinations, renewals and foreign counterparts
thereof.

 

1.81                           “Payee Party” will have the meaning set forth in
Section 8.1.

 

1.82                           “Paying Party” will have the meaning set forth in
Section 8.1.

 

1.83                           “Permitted Disclosures”  The following are
Permitted Disclosures:

 

(A)          TO THE EXTENT THAT A RECIPIENT HAS BEEN GRANTED THE RIGHT TO
SUBLICENSE UNDER THE TERMS OF THIS AGREEMENT, SUCH PARTY WILL HAVE THE RIGHT TO
PROVIDE A DISCLOSING PARTY’S CONFIDENTIAL INFORMATION TO THE EMPLOYEES,
CONSULTANTS AND ADVISORS OF SUCH RECIPIENT’S AFFILIATE AND THIRD PARTY
SUBLICENSEES AND POTENTIAL SUBLICENSEES WHO HAVE A NEED TO KNOW THE CONFIDENTIAL
INFORMATION FOR PURPOSES OF EXERCISING SUCH SUBLICENSE AND ARE BOUND BY AN
OBLIGATION TO MAINTAIN IN CONFIDENCE THE CONFIDENTIAL INFORMATION OF THE
DISCLOSING PARTY; PROVIDED, THAT SUCH PERSONS ARE BOUND TO MAINTAIN THE
CONFIDENTIALITY OF SUCH INFORMATION TO THE SAME EXTENT AS IF THEY WERE PARTIES
HERETO.

 

(B)         EACH RECIPIENT WILL HAVE THE RIGHT TO PROVIDE A DISCLOSING PARTY’S
CONFIDENTIAL INFORMATION:

 

(I)                                     TO GOVERNMENTAL OR OTHER REGULATORY
AGENCIES IN ORDER TO SEEK OR OBTAIN PATENTS, TO SEEK OR OBTAIN APPROVAL TO
CONDUCT CLINICAL TRIALS, OR TO GAIN REGULATORY APPROVAL, AS CONTEMPLATED BY THIS
AGREEMENT; PROVIDED THAT SUCH DISCLOSURE MAY BE MADE ONLY TO THE EXTENT
REASONABLY NECESSARY TO SEEK OR OBTAIN SUCH PATENTS OR APPROVALS; AND

 

(II)           AS NECESSARY, IF EMBODIED IN PRODUCTS, TO DEVELOP AND
COMMERCIALIZE SUCH PRODUCTS AS CONTEMPLATED BY THIS AGREEMENT.

 

1.84                           “Permitted License” means a license granted by a
Licensor to a Third Party to enable such Third Party to broadly manufacture or
formulate oligonucleotides, where such Third Party is primarily engaged in
[***]; provided, however, that any such license will not grant rights to
research, manufacture or formulate miRNA Compounds or miRNA Therapeutics for
which the other Licensor has obtained or later obtains a license pursuant to
Section 5 or pursuant to the Buy-Out process in the Investor Rights Agreement.

 

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1.85                           “Person” means any corporation, limited or
general partnership, limited liability company, joint venture, trust,
unincorporated association, governmental body, authority, bureau or agency, any
other entity or body, or an individual.

 

1.86                           “Phase IIa Clinical Trial” means, with respect to
a Royalty-Bearing Product, any human clinical trial conducted in patients with a
particular Indication for the purpose of studying the pharmacokinetic or
pharmacodynamic properties and preliminary assessment of safety and efficacy of
such Royalty-Bearing Product over a measured dose response, as described in 21
C.F.R. §312.21(b) or its foreign counterpart.

 

1.87                           “Phase III Clinical Trial” means, with respect to
a Royalty-Bearing Product, a controlled pivotal clinical study of such
Royalty-Bearing Product that is prospectively designed to demonstrate
statistically whether such Royalty-Bearing Product is safe and effective to
treat a particular Indication in a manner sufficient to obtain Regulatory
Approval to market such Royalty-Bearing Product, as described in 21 CFR
312.21(c) or its foreign counterpart.

 

1.88                           “Previous Agreements” will have the meaning set
forth in Section 16.9.

 

1.89                           “Program/Project List” will have the meaning set
forth in Section 4.4.

 

1.90                           “Recipient” will have the meaning set forth in
the Investor Rights Agreement.

 

1.91                           “Regulatory Approval” means the act of a
Regulatory Authority necessary for the marketing and sale (including, if
required for marketing and sales, pricing) of such product in a country or
regulatory jurisdiction, including, without limitation, the approval of an NDA
by the FDA.

 

1.92                           “Regulatory Authority” means any applicable
government regulatory authority involved in granting approvals for the marketing
and/or pricing of a product in a country or regulatory jurisdiction including,
without limitation, the FDA.

 

1.93                           “Regulus” will have the meaning set forth in the
Preamble.

 

1.94                           “Regulus Indemnitees” will have the meaning set
forth in Section 11.2.

 

1.95                           “Regulus IP” means all Regulus Know-How and
Regulus Patent Rights.

 

1.96                           “Regulus Know-How” means all Know-How conceived
and/or developed by or on behalf of Regulus (including by employees of a
Licensor or its Affiliates in performance of the Services Agreement), or over
which Regulus otherwise acquires Control, including but not limited to any
Know-How assigned to Regulus by a Licensor under Section 9.1, but specifically
excluding Licensed IP.

 

1.97                           “Regulus Patent Rights” means any Patent Right
claiming an invention conceived and/or developed by or on behalf of Regulus
(including by employees of a Licensor or its Affiliates in performance of the
Services Agreement), or over which Regulus otherwise acquires Control, including
but not limited to any Patent Right assigned to Regulus by a Licensor under
Sections 2.1 or 9.1, but specifically excluding Licensed IP.

 

9

--------------------------------------------------------------------------------

 

1.98                           “Research” means pre-clinical research including
gene function, gene expression and target validation research, which may include
small pilot toxicology studies but excludes the pharmacokinetic and toxicology
studies required to meet the regulations for filing an IND, clinical development
and commercialization.

 

1.99                           “Research Program” will have the meaning set
forth in Section 4.4.

 

1.100                     “Royalty-Bearing Product” means

 

(a)          a miRNA Therapeutic being Developed, Manufactured or Commercialized
by Regulus that, on a country-by-country basis, is, or Regulus reasonably
believes will be, at the time of first commercial sale of such miRNA
Therapeutic, Covered in such country by a Valid Claim of a Patent Right or
covered by Know-How of (i) a Licensed Patent Right licensed to it hereunder, or
(ii) any Regulus IP (except any Regulus IP solely in-licensed or acquired by
Regulus from a Third Party); or

 

(b)         an Opt-In Product that, on a country-by-country basis, is, or the
relevant Opt-In Party reasonably believes will be, at the time of first
commercial sale of such Opt-In Product, Covered in such country by a Valid Claim
of a Patent Right or covered by Know-How, which Patent Right or Know-How is
licensed to the applicable Opt-In Party hereunder.

 

1.101                     “Royalty Term” means, with respect to each
Royalty-Bearing Product in a country, the period commencing upon first
commercial sale of such Royalty-Bearing Product in such country and ending upon
the later of (a) the expiration of the Exclusivity Period, or (b) 10 years
following first commercial sale of such Royalty-Bearing Product.

 

1.102                     “Second Opt-In Election Period” will have the meaning
set forth in Section 5.3(c)(i).

 

1.103                     “Services Agreement” means that certain Amended and
Restated Services Agreement by and between Regulus, Alnylam and Isis dated the
Amendment Effective Date, as the same may be amended from time to time after the
Amendment Effective Date.

 

1.104                     “Sublicense Income” means all amounts received by the
Opt-In Party or its Affiliates with respect to any sublicense granted to a Third
Party by the Opt-In Party or its Affiliates of the Regulus IP or Licensed IP
licensed to the Opt-In Party under Section 5.6(a), including, without
limitation, upfront payments and milestones, but excluding:

 

(A)                                  AMOUNTS RECEIVED BY THE OPT-IN PARTY OR ITS
AFFILIATES AS PAYMENTS FOR ACTUAL DIRECT COSTS FOR PERFORMING FUTURE
DEVELOPMENT, MANUFACTURING OR COMMERCIALIZATION ACTIVITIES UNDERTAKEN BY THE
OPT-IN PARTY OR ITS AFFILIATES FOR, OR IN COLLABORATION WITH, SUCH SUBLICENSEE
OR ITS AFFILIATES WITH RESPECT TO THE RELEVANT OPT-IN PRODUCTS;

 

(B)                                 AMOUNTS RECEIVED BY THE OPT-IN PARTY AND/OR
ITS AFFILIATES FROM SUCH SUBLICENSEE OR ITS AFFILIATES AS THE PURCHASE PRICE FOR
THE OPT-IN PARTY’S OR ANY OF ITS AFFILIATES’

 

10

--------------------------------------------------------------------------------

 

DEBT OR EQUITY SECURITIES, EXCEPT THAT AMOUNTS WHICH EXCEED THE FAIR MARKET
VALUE OF SUCH DEBT OR EQUITY SECURITIES WILL BE CONSIDERED SUBLICENSE INCOME;

 

(C)                                  ROYALTIES PAID BY SUCH SUBLICENSEE OR ITS
AFFILIATES WITH RESPECT TO NET SALES OF ROYALTY-BEARING PRODUCTS; AND

 

(D)                                 AMOUNTS PAID BY SUCH SUBLICENSEE OR ITS
AFFILIATES TO THE OPT-IN PARTY OR ITS AFFILIATES TO PURCHASE ROYALTY-BEARING
PRODUCTS; EXCEPT THAT ANY AMOUNT GREATER THAN THE ACTUAL COST OF GOODS (WITH NO
PROFIT ADDED) OF SUCH ROYALTY-BEARING PRODUCTS, DETERMINED IN ACCORDANCE WITH
GAAP, WILL BE CONSIDERED SUBLICENSE INCOME.

 

1.105                     “Sublicense Income Payments” means, with respect to a
Development Project and a calendar quarter, the Sublicense Income received by
the relevant Opt-In Party or its Affiliates in such calendar quarter with
respect to such Development Project, multiplied by the relevant percentage
determined pursuant to Section 5.4(d) or 5.5(d), as applicable.

 

1.106                     “Sublicensee” means a Third Party to whom a Party, or
its Affiliates or Sublicensees, has granted a sublicense in accordance with the
terms of this Agreement.

 

1.107                     “Superset Indemnitees” will have the meaning set forth
in Section 11.2.

 

1.108                     “Third Party” means any Person other than the Parties
or any of their Affiliates.

 

1.109                     “Third Party Agreement” means either (i) an
out-license agreement described in the Out-License Summary, (ii) an In-License
Agreement described on the In-License Summary, (iii) an Optional In-License or
(iv) an agreement pursuant to which a Controlling Party obtained Control over an
Additional Right.

 

1.110                     “Third Party Rights” means, with respect to a Party,
any rights of, and any limitations, restrictions or obligations imposed by,
Third Parties pursuant to Third Party Agreements.

 

1.111                     “Valid Claim” means a claim (a) of any issued,
unexpired patent that has not been revoked or held unenforceable or invalid by a
decision of a court or governmental agency of competent jurisdiction from which
no appeal can be taken, or with respect to which an appeal is not taken within
the time allowed for appeal, and that has not been disclaimed or admitted to be
invalid or unenforceable through reissue, disclaimer or otherwise; or (b) of any
patent application that has not been cancelled, withdrawn or abandoned, or been
pending for more than [***] years.

 

1.112                     “Work Product” means any data, documentation,
inventions and other Know-How arising from or made in the performance of the
Services (as defined in the Services Agreement) by a Licensor.

 

11

--------------------------------------------------------------------------------

 

SCHEDULE A

 

Previous Agreements

 

Strategic Collaboration & License Agreement between Isis Pharmaceuticals, Inc.
and Alnylam Pharmaceuticals, Inc., dated March 11, 2004, as supplemented or
amended by letter agreements dated March 9, 2004 (as amended by letter agreement
dated October 28, 2005), March 11, 2004, and June 10, 2005

 

License Agreement between Max Plank Innovation GmbH (formerly Garching
Innovation GmbH), Isis Pharmaceuticals, Inc. and Alnylam Pharmaceuticals, Inc.,
dated October 18, 2004

 

Co-Exclusive License Agreement among The Board of Trustees of the Leland
Stanford Junior University, Alnylam Pharmaceuticals, Inc. and Isis
Pharmaceuticals, Inc., dated August 31, 2005

 

--------------------------------------------------------------------------------

 

Schedule 1.61

 

Initial miRNA Precursor Antagonists

 

[***]

 

Schedule 2.1(A)

Patents and License Agreements Assigned to Regulus by Isis

 

Isis Patent Applications to be Assigned to Regulus

 

IsisDocket
Number

 

Country

 

Serial Number

 

Filing
Date

 

Priority
Date

 

Title

 

 

 

 

 

 

 

 

 

 

 

[***]

 

--------------------------------------------------------------------------------

 

Isis License Agreements to be Assigned to Regulus

 

[***]

 

2

--------------------------------------------------------------------------------

 

Schedule 2.1(B)

Patents and License Agreements Assigned to Regulus by Alnylam

 

Alnylam Patent Applications to be Assigned to Regulus

 

CaseNumber

 

InvTitle

 

Country

 

CaseType

 

AppNumber

 

FilDate

 

 

 

 

 

 

 

 

 

 

 

[***]

 

Alnylam License Agreements to be Assigned to Regulus

 

LICENSE AGREEMENT BETWEEN THE ROCKEFELLER UNIVERSITY AND ALNYLAM
PHARMACEUTICALS, INC. EFFECTIVE AUGUST 15, 2005

 

[summary is attached as Exhibit 2]

 

Schedule 2.2(A)

Patents and Patent Applications Licensed to Regulus by Isis on the Effective
Date

 

Isis Docket
Number

 

Country

 

Serial
Number

 

Filing Date

 

Priority
Date

 

Title

 

Patent
Number

 

 

 

 

 

 

 

 

 

 

 

 

 

[***]

 

3

--------------------------------------------------------------------------------

 

Patents and Patent Applications Licensed to Regulus by Alnylam on the Effective
Date

 

CaseNumber

 

InvTitle

 

Co.

 

AppNumber

 

FilDate

 

PubNumber

 

PubDate

 

PatNumber

 

IssDate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[***]

 

4

--------------------------------------------------------------------------------

 

Schedule 2.4(A)

Part 1

Isis’ Existing Out-License Agreements

 

This Appendix 2.4(A) contains a list and summary of certain agreements in effect
as of the Effective Date between Isis and certain Third Parties that may, as
applicable, place certain encumbrances or limitations on the licenses or
sublicenses granted to Regulus and the representations and warranties, where
specified in the Agreement.  Copies of the listed agreements will be provided at
Regulus’ request for a complete disclosure of the encumbrances and limitations
in each agreement.

 

As set forth in the Agreement, the information and disclosures contained in this
Appendix are intended only to qualify and limit the licenses granted by Isis to
Regulus, the exclusivity covenants, and the representations and warranties given
by Isis under the Agreement and do not expand in any way the scope or effect of
any such licenses, representations or warranties.

 

Nothing herein constitutes an admission of any liability or obligation of Isis
nor an admission against any interest of Isis.  The inclusion of this Appendix
or the information contained in this Appendix does not

 

5

--------------------------------------------------------------------------------

 

indicate that Isis has determined that this Appendix or the information
contained in this Appendix when considered individually or in the aggregate, is
necessarily material to Isis.

 

Regulus acknowledges that certain information contained in this Appendix may
constitute material Confidential Information relating to Isis which may not be
used for any other purpose other than that contemplated by the Agreement.

 

Capitalized terms used herein below, but not otherwise defined herein below,
have the meanings given to such terms in the applicable agreement listed below,
unless it is clear from the context that the term has the meaning set forth in
the Agreement.

 

[***]

 

6

--------------------------------------------------------------------------------

 

Schedule 2.4(A)

Part 2

Alnylam’s Existing Out-License Agreements

 

LICENSE AND COLLABORATION AGREEMENT BETWEEN TEKMIRA PHARMACEUTICALS CORPORATION
(FORMERLY INEX PHARMACEUTICALS CORPORATION) AND ALNYLAM, DATED JANUARY 8, 2007

 

License and Collaboration Agreement dated July 8, 2007, by and among Alnylam
Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc.,
effective on August 9, 2007

 

Research Collaboration and License Agreement between Novartis Institutes for
BioMedical Research, Inc. and Alnylam Pharmaceuticals, Inc., effective
October 12, 2005, as amended by the Addendum Re: Influenza Program effective as
of December 13, 2005, Amendment No. 1 to such Addendum effective as of March 14,
2006, and Amendment No. 2 to such Addendum effective as of May 5, 2006

 

[summaries are attached as Exhibit 2]

 

7

--------------------------------------------------------------------------------

 

Schedule 2.4(B)

Part 1

Isis’ Existing In-License Agreements

 

This Appendix 2.4(B) contains a list and summary of certain agreements in effect
as of the Effective Date between Isis and certain Third Parties that may, as
applicable, place certain encumbrances or limitations on the licenses or
sublicenses granted to Regulus and the representations and warranties, where
specified in the Agreement.  Copies of the listed agreements will be provided at
Regulus’ request for a complete disclosure of the encumbrances and limitations
in each agreement.

 

As set forth in the Agreement, the information and disclosures contained in this
Appendix are intended only to qualify and limit the licenses granted by Isis to
Regulus, the exclusivity covenants, and the representations and warranties given
by Isis under the Agreement and do not expand in any way the scope or effect of
any such licenses, representations or warranties.

 

Nothing herein constitutes an admission of any liability or obligation of Isis
nor an admission against any interest of Isis.  The inclusion of this Appendix
or the information contained in this Appendix does not indicate that Isis has
determined that this Appendix or the information contained in this Appendix when
considered individually or in the aggregate, is necessarily material to Isis.

 

Regulus acknowledges that certain information contained in this Appendix may
constitute material Confidential Information relating to Isis which may not be
used for any other purpose other than that contemplated by the Agreement.

 

Capitalized terms used herein below, but not otherwise defined herein below,
have the meanings given to such terms in the applicable agreement listed below,
unless it is clear from the context that the term has the meaning set forth in
the Agreement.

 

[***]

 

--------------------------------------------------------------------------------

 

Schedule 2.4(B)

Part 2

Alnylam’s Existing In-License Agreements

 

LICENSE AGREEMENT BETWEEN THE ROCKEFELLER UNIVERSITY AND ALNYLAM
PHARMACEUTICALS, INC. EFFECTIVE MAY 8, 2006 (THE “TUSCHL AGREEMENT”)

 

CO-EXCLUSIVE LICENSE AGREEMENT AMONG THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY, ALNYLAM PHARMACEUTICALS, INC. AND ISIS
PHARMACEUTICALS, INC. EFFECTIVE AUGUST 31, 2005

 

LICENSE AGREEMENT AMONG GARCHING INNOVATION GMBH, ALNYLAM PHARMACEUTICALS, INC.
AND ISIS PHARMACEUTICALS, INC. EFFECTIVE OCTOBER 18, 2004

 

[summaries are attached as Exhibit 2]

 

2

--------------------------------------------------------------------------------

 

Schedule 2.4(C)

Part 1

Isis’ Optional In-Licenses

 

This Appendix 2.4(C) contains a list and summary of certain agreements in effect
as of the Effective Date between Isis and certain Third Parties that may, as
applicable, place certain encumbrances or limitations on the licenses or
sublicenses granted to Regulus and the representations and warranties, where
specified in the Agreement.  Copies of the listed agreements will be provided at
Regulus’ request for a complete disclosure of the encumbrances and limitations
in each agreement.

 

As set forth in the Agreement, the information and disclosures contained in this
Appendix are intended only to qualify and limit the licenses granted by Isis to
Regulus, the exclusivity covenants, and the representations and warranties given
by Isis under the Agreement and do not expand in any way the scope or effect of
any such licenses, representations or warranties.

 

Nothing herein constitutes an admission of any liability or obligation of Isis
nor an admission against any interest of Isis.  The inclusion of this Appendix
or the information contained in this Appendix does not indicate that Isis has
determined that this Appendix or the information contained in this Appendix when
considered individually or in the aggregate, is necessarily material to Isis.

 

Regulus acknowledges that certain information contained in this Appendix may
constitute material Confidential Information relating to Isis which may not be
used for any other purpose other than that contemplated by the Agreement.

 

Capitalized terms used herein below, but not otherwise defined herein below,
have the meanings given to such terms in the applicable agreement listed below,
unless it is clear from the context that the term has the meaning set forth in
the Agreement.

 

[***]

 

--------------------------------------------------------------------------------

 

Schedule 2.4(C)

Part 2

Alnylam’s Optional In-Licenses

 

[***]Amended and Restated Exclusive Patent License Agreement between
Massachusetts Institute of Technology (“MIT”) and Alnylam, dated May 9, 2007

 

LICENSE AND COLLABORATION AGREEMENT BETWEEN TEKMIRA PHARMACEUTICALS CORPORATION
(FORMERLY INEX PHARMACEUTICALS CORPORATION) (“TEKMIRA”) AND ALNYLAM, DATED
JANUARY 8, 2007

 

The Sublicense Agreement between Tekmira and Alnylam, dated January 8, 2007

 

[summaries are attached as Exhibit 2]

[***]

 

2

--------------------------------------------------------------------------------

Schedule 5.6(f)

 

Examples regarding Payments Due

 

 

Example 1:  [***]

Party opts-in at [***]

Party responsible for High Terms

Party sublicenses product mid Phase IIb at terms below

 

Milestones

 

“Guaranteed
Payments”
Due Under
High Terms

 

Paid Before
Sublicense

 

Cumulative
 “Guaranteed
 Payments”
 Payable

 

Sublicense
Milestones

 

“Sublicense
Income”

 

“Sublicense
Income
Payments”
Due ([***]%)

 

Cumulative
“Sublicense
 Income
 Payments”
 Due

 

“Cumulative
Amount
 Owed”

 

Payments
Payable By
Opt-in Party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upfont

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

IND filing

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

Completion of Phase IIa

 

[***]

 

[***]

 

[***]

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Phase III start

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

FDA filing

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

EU filing

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

FDA approval

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

EU approval

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Total

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

--------------------------------------------------------------------------------

 

Example 2:  [***]

Party opts-in at [***]

Party responsible for Low Terms

Party sublicenses product after IND at terms below

 

Milestones

 

“Guaranteed
Payments”
Due Under
Low Terms

 

Paid Before
Sublicense

 

Cumulative
“Guaranteed
Payments”
Payable

 

Sublicense
Milestones

 

“Sublicense
Income”

 

“Sublicense
Income
Payments”
Due ([***]%)

 

Cumulative
“Sublicense
Income
Payments”
Due

 

“Cumulative
Amount
Owed”

 

Payments
Payable By
Opt-in Party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upfont

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

IND filing

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

Upfront sublicense

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Completion of Phase IIa

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Phase III start

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

P3 end

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

FDA filing

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

EU filing

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

FDA approval

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

EU approval

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Japan approval

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Total

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

2

--------------------------------------------------------------------------------

 

Example 3:  [***]

Party opts-in at [***]

Party responsible for High Terms

Party sublicenses product mid Phase III at terms below

 

Milestones

 

“Guaranteed
Payments”
Due Under
High Terms

 

Paid Before
Sublicense

 

Cumulative
“Guaranteed
Payments”
Payable

 

Sublicense
Milestones

 

“Sublicense
Income”

 

“Sublicense
Income
Payments”
Due ([***]%)

 

Cumulative
“Sublicense
Income
Payments”
Due

 

“Cumulative
Amount
Owed”

 

Payments
Payable By
Opt-in Party

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upfont

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

IND filing

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

Completion of Phase IIa

 

[***]

 

[***]

 

[***]

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

Phase III start

 

[***]

 

[***]

 

[***]

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

FDA filing

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

EU filing

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

FDA approval

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

EU approval

 

[***]

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

 

 

 

 

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

Total

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

[***]

 

 

3

--------------------------------------------------------------------------------

 

Exhibit 2

 

Alnylam Agreement Summaries

 

[attached]

 

--------------------------------------------------------------------------------

 

Exhibit 2

 

Alnylam Summaries

 

Attachments to Schedules 2.1(B), 2.4(A) Part 2, 2.4(B) Part 2 and 2.4(C) Part 2

 

Copies of the following agreements, some in redacted form, have been, or shall
be, made available to Licensee as of the Effective Date:

 

Schedule 2.1(B):  Patents and License Agreements Assigned to Regulus by Alnylam

 

·              License Agreement between The Rockefeller University and Alnylam
Pharmaceuticals, Inc. effective August 15, 2005

 

Schedule 2.4(A) Part 2:  Alnylam’s Existing Out-License Agreements

 

·              License and Collaboration Agreement between Tekmira
Pharmaceuticals Corporation (formerly INEX Pharmaceuticals Corporation) and
Alnylam Pharmaceuticals, Inc., dated January 8, 2007.

 

·              License and Collaboration Agreement dated July 8, 2007, by and
among Alnylam Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd and Hoffmann-La
Roche Inc., effective on August 9, 2007

 

·              Research Collaboration and License Agreement between Novartis
Institutes for BioMedical Research, Inc. and Alnylam Pharmaceuticals, Inc.,
effective October 12, 2005, as amended by the Addendum Re: Influenza Program
effective as of December 13, 2005, Amendment No. 1 to such Addendum effective as
of March 14, 2006, and Amendment No. 2 to such Addendum effective as of May 5,
2006

 

Schedule 2.4(B) Part 2:  Alnylam’s Existing In-License Agreements

 

·              License Agreement between The Rockefeller University and Alnylam
Pharmaceuticals, Inc. effective May 8, 2006

 

·              Co-Exclusive License Agreement among The Board of Trustees of the
Leland Stanford Junior University, Alnylam Pharmaceuticals, Inc. and Isis
Pharmaceuticals, Inc. effective August 31, 2005

 

·              License Agreement among Garching Innovation GmbH, Alnylam
Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc. effective October 18, 2004

 

Schedule 2.4(C) Part 2:  Alnylam’s Optional In-Licenses

 

·              Amended and Restated Exclusive Patent License Agreement between
Alnylam Pharmaceuticals, Inc. and Massachusetts Institute of Technology, dated
May 9, 2007.

 

1

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·              The Sublicense Agreement between Tekmira Pharmaceuticals
Corporation (formerly INEX Pharmaceuticals Corporation) and Alnylam
Pharmaceuticals, Inc., dated January 8, 2007.

 

This In-License Summary, Out-License Summary and summary of assigned contracts
and Optional In-Licenses highlights certain obligations of, or restrictions on,
Alnylam and/or its assignees or sublicensees of Licensed IP under In-License
Agreements, Out-License Agreements, assigned contracts and Optional In-Licenses,
including without limitation In-License Agreement payment obligations, which are
applicable to Regulus under the Agreement, in each case subject to the terms and
conditions of such In-License Agreements.  The summaries set forth in these
summaries are not intended to be comprehensive or inclusive of all obligations
or restrictions which may be applicable to assignees of such assigned contracts
or sublicensees of Licensed IP under such In-License Agreements, Out-License
Agreements or Optional In-Licenses.

 

Unless otherwise expressly stated, capitalized terms not otherwise defined in
these summaries shall have the meanings ascribed to them in the applicable
In-License Agreement, Out-License Agreement, assigned contract or Optional
In-License and references to sections, articles, schedules or exhibits made in
these summaries shall be to sections, articles, schedules or exhibits, as the
case may be, in or to such applicable In-License Agreement, Out-License
Agreement, assigned contract or Optional In-License.

 

2

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ROCKEFELLER (Stoffel)

 

License Agreement between The Rockefeller University and Alnylam
Pharmaceuticals, Inc. effective August 15, 2005 (“Stoffel Agreement”)

 

Brief Summary of Technology Covered by License:

 

·              Alnylam and The Rockefeller University jointly own intellectual
property relating to chemically modified oligonucleotides as therapeutic agents
for reduction or elimination of microRNA expression.  These oligonucleotides or
“antagomirs” target a miRNA by complimentary base pairing to a miRNA or
pre-miRNA nucleotide sequence.  Antagomirs may be chemically modified to resist
nucleolytic degradation, or to enhance delivery into cells (e.g. by conjugation
to cholesterol).

 

Scope of License (Section 1.1)

 

·              Alnylam’s worldwide, exclusive, sublicensable license is limited
to a license to make, have made, use, have used, import, have imported, sell,
offer for sale and have sold Licensed Products for all uses.

 

·              Rockefeller reserves the right to use, and to permit other
non-commercial entities to use  the Rockefeller Patent Rights for educational
and non-commercial research purposes.

 

·              Rockefeller Patent Rights were developed with funding from the
U.S. National Institutes of Health.  The United States government retains rights
in such intellectual property, including, but not limited to, requirements that
products, which result from such intellectual property and are sold in the
United States, must be substantially manufactured in the United States.

 

Certain Sublicense Terms (Section 1.5)

 

·                  Alnylam will prohibit the sublicensee from further
sublicensing and require the sublicensee to comply with the terms and conditions
of the Stoffel Agreement.

 

·                  WITHIN THIRTY (30) DAYS AFTER ALNYLAM ENTERS INTO A
SUBLICENSE AGREEMENT, ALNYLAM WILL DELIVER TO ROCKEFELLER A COPY OF THE
SUBLICENSE AGREEMENT WHICH MAY BE REDACTED WITH RESPECT TO CONTENT THAT IS NOT
RELEVANT TO ALNYLAM’S OBLIGATIONS UNDER THE STOFFEL AGREEMENT.

 

·                  ALNYLAM IS PRIMARILY LIABLE TO ROCKEFELLER FOR ANY ACT OR
OMISSION OF A SUBLICENSEE THAT WOULD BE A BREACH OF THE STOFFEL AGREEMENT IF
PERFORMED OR OMITTED BY ALNYLAM, AND ALNYLAM WILL BE DEEMED TO BE IN BREACH OF
THE STOFFEL AGREEMENT AS A RESULT OF SUCH ACT OR OMISSION.

 

3

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Diligence (Section 2)

 

·                  By end of the year 2007, Alnylam (or sublicensees) will
select the method of delivery.

 

·                  By the end of the year 2008, Alnylam (or sublicensees) will
optimize the lead compound.

 

·                  By the end of the year 2010, Alnylam (or sublicensees) will
conclude preclinical development

 

Payment Obligations (Sections 3 and 4)

 

·              The following milestones are payable:

 

·         First issuance in the U.S. of a patent under the Rockefeller Patent
Rights covering a Licensed Product

 

· $

[***]

 

 

 

 

 

 

·         First dosing of a subject in a Phase II clinical trial for the first
Licensed Product

 

· $

[***]

 

 

 

 

 

 

·         Approval by the U.S. FDA of a New Drug Application for the first
Licensed Product

 

· $

[***]

 

 

·              A [***]% royalty is payable to Rockefeller on Net Sales of
Licensed Products by Alnylam, its Affiliates and its sublicensees (no offsets).

 

·              If Alnylam grants a sublicense under the Stoffel Agreement and
receives payment in connection with such grant in the form of upfront fees,
maintenance fees and milestone payments (net of any sums due to Rockefeller
under this Agreement for the same milestone event), Alnylam will pay Rockefeller
[***]% of such payments, excluding payments for costs incurred by Alnylam,
Payments to Alnylam in the form of royalties paid by a sublicensee, equity
investments in Alnylam by a sublicensee, loan proceeds paid to Alnylam by a
sublicensee in an arms length transaction, full recourse debt financing and
research and development funding paid to Alnylam in a bona fide transaction are
also excluded from the sublicense income calculation.

 

·              Payments are due to Rockefeller within 60 days after the end of
the quarter in which the royalties or fees accrue.

 

Books and Records (Sections 4.3 and 4.4)

 

·              Sub-licensees are required to keep complete and accurate books
and records to verify Net Sales, and all of the royalties, fees, and other
payments payable under the

 

4

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Stoffel Agreement.  The records for each quarter will be maintained for at least
three (3) years after submission of the applicable report required under the
Stoffel Agreement.

 

·              Upon reasonable prior written notice to Alnylam, sublicensees
will provide an independent, reputable CPA appointed by Rockefeller and
reasonably acceptable to Alnylam with access to all of the books and records
required by the Stoffel Agreement to conduct a review or audit of Net Sales, and
all of the royalties, fees, and other payments payable under the Stoffel
Agreement.  If the audit determines that Alnylam has underpaid any royalty
payment by 5% or more, Alnylam will also promptly pay the costs of the review or
audit.

 

Non-Use of Name (Section 5.4)

 

·              Sublicensees may not use the name, logo, seal, trademark, or
service mark (including any adaptation of them) of Rockefeller or any
Rockefeller school, organization, employee, student or representative, without
the prior written consent of Rockefeller, except for purposes of compliance with
securities regulations.

 

Termination (Section 6.2)

 

·              Alnylam may terminate for convenience

 

·              Sublicenses will survive for 90 days following termination and
Rockefeller agrees to enter into license agreement(s) directly with sublicensees
upon the same terms as the terms of the Stoffel Agreement

 

·              Alnylam must promptly inventory all finished product and
works-in-product of Licensed Products of its sublicensees.  Inventory may be
sold off unless Rockefeller terminates for a breach by Alnylam or its
sublicensees or Alnylam’s bankruptcy.

 

Prosecution and Enforcement (Section 7)

 

·              Alnylam will prepare the Rockefeller Patent Rights, but
Rockefeller will prosecute and maintain the Rockefeller Patent Rights with
Alnylam’s input.  Alnylam has a right to manage the prosecution and
enforcement.  Alnylam will reimburse Rockefeller’s prosecution and maintenance
costs.

 

·              Alnylam must inform Rockefeller promptly, but no later than 30
days, after learning of infringement of the Rockefeller Patent Rights.  Alnylam
and Rockefeller will consult each other concerning response to infringement. 
Alnylam may enforce the Rockefeller Patent Rights; recoveries, after the
parties’ expenses are reimbursed, are treated as Net Sales subject to
royalties.  Rockefeller has step-in enforcement rights.

 

Definitions

 

“Licensed Products” means products that are made, made for, used, used for,
imported, imported for, sold, sold for or offered for sale by Alnylam or its
Affiliates or

 

5

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sublicensees and that either (i) in the absence of this Agreement, would
infringe at least one Valid Claim of the Rockefeller Patent Rights, or (ii) use
a process or machine covered by a Valid Claim of Rockefeller Patent Rights.

 

“Net Sales” means with respect to each Licensed Product the gross amount
invoiced by Alnylam or its Affiliates or sublicensees on sales or other
dispositions of such product to third parties less Qualifying Costs directly
attributable to a sale and actually taken and/or identified on the invoice and
borne by Company, or its Affiliates or sublicensees.  “Qualifying Costs” means: 
(a) customary discounts in the trade for quantity purchased, prompt payment or
wholesalers and distributors; (b) credits, allowances or refunds for claims or
returns or retroactive price reductions (including government healthcare
programs and similar types of rebates) that do not exceed the original invoice
amount; (c) prepaid outbound transportation expenses and transportation
insurance premiums; and (d) sales, transfer, excise and use taxes and other fees
imposed by a governmental agency.  Sales for clinical study purposes or
compassionate, named patient or similar use shall not constitute Net Sales

 

“Rockefeller Patent Rights” means Rockefeller’s interests in a specified patent
application ([***]) and related patent family relating to reduction or
elimination of miRNA expression.

 

6

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TEKMIRA

 

License and Collaboration Agreement between Tekmira Pharmaceuticals Corporation
(formerly INEX Pharmaceuticals Corporation) (“Tekmira”) and Alnylam, dated
January 8, 2007 (“Effective Date”) (“Tekmira Agreement”)

 

Brief Summary of Technology Covered by License:

 

·                  Tekmira (f.k.a. Inex Pharmaceuticals Corp.) granted Alnylam a
license relating to liposomal delivery of siRNA and miRNA products.  Alnylam
granted Tekmira (i) an option to obtain exclusive, royalty-bearing, worldwide 
licenses under its fundamental siRNA intellectual property for 3 genetic targets
and (ii) an exclusive, royalty bearing license to certain intellectual property
relating to immunostimulatory RNA oligonucleotide compositions (“IOC
Technology”).  Alnylam retained certain rights to participate with Tekmira in
commercialization of IOC Technology.  In addition, Alnylam provided funding for
a 2-year formulation development collaboration with Tekmira, a multi-year loan
for capital expenditure purposes, and Tekmira will provide exclusive
manufacturing services for Alnylam’s development programs up until completion of
Phase 2 clinical studies.

 

Limitations on Scope of License (Sections 6.1 and 6.4)

 

·              The license granted to Alnylam is limited to an exclusive,
royalty-bearing, worldwide license under Inex Technology, Inex Collaboration IP
and Tekmira’s interest in Joint Collaboration IP to Develop, Manufacture and
Commercialize Alnylam Royalty Products in the Alnylam Field, subject to
(a) Tekmira’s non-exclusive license under Alnylam’s rights in Inex Technology
and Collaboration IP for purposes of performing Tekmira’s obligations under the
Collaboration with respect to Alnylam Royalty Products, and the Manufacturing
Activities, and (b) Tekmira’s exclusive, worldwide license under Alnylam’s
rights in Inex Technology and Collaboration IP to Develop, Manufacture and
Commercialize Inex Development Products (as defined below) in the Alnylam Field.

 

·              Any license granted by Alnylam to a Third Party under Alnylam
RNAi Technology and Alnylam Collaboration IP would be subject to a
non-exclusive, worldwide license granted to Tekmira for purposes of performing
Tekmira’s obligations under the Collaboration with respect to Alnylam Royalty
Products, and the Manufacturing Activities.

 

·              Any license granted by Alnylam to a Third Party under Alnylam
Core Patent Rights, Alnylam Lipidoid Patent Rights, Alnylam Collaboration IP and
Alnylam’s interest in Joint Collaboration IP would be subject to an exclusive,
worldwide license granted to Tekmira to Develop, Manufacture and Commercialize
RNAi Products directed to up to three (3) Targets (each such Target, an “Inex
Development Target,” and such RNAi Products, the “Inex Development Products”)
which Tekmira may select (as described below) in the Alnylam Field.  During the
Selection Term, Tekmira has the right to nominate a Target, subject to
(a) Alnylam’s contractual obligation to a Third Party that would be breached by
the inclusion of such Target as an Inex Development Target under

 

7

--------------------------------------------------------------------------------

 

the Tekmira Agreement, and (b) Alnylam’s determination after good faith review
of its ongoing or planned scientific and/or business activities that such Target
is a Target of interest to Alnylam.  If neither of these criteria apply, the
Target is deemed to have been successfully nominated as an “Inex Development
Target” and Alnylam is obligated to use Commercially Reasonable Efforts
consistent with the terms of the Novartis Agreement to obtain Novartis’ consent
to such selection.  If an Inex Development Target is not available for license,
then Tekmira may nominate an additional Target, until an aggregate of 3 Inex
Development Targets have been identified and approved for selection.  If all 3
Inex Development Targets have not been approved for selection by the expiration
of the Selection Term, the Selection Term will be extended until the earlier of
(i) the date on which an aggregate of 3 such Inex Development Targets have been
identified and approved for selection, and (ii) January 8, 2014.

 

·              Any license granted by Alnylam to a Third Party under Alnylam IOC
Technology, Alnylam Collaboration IP and Alnylam’s interest in Joint
Collaboration IP would be subject to an exclusive license granted to Develop,
Manufacture and Commercialize IOC Products in the Inex IOC Field in and for the
United States.

 

Restrictions on Sublicensing by Alnylam (Sections 6.2 and 6.4)

 

·              Alnylam may grant sublicenses to Third Parties to Develop,
Manufacture and Commercialize Alnylam Royalty Products; provided, that (i) with
respect to any sublicense of Alnylam’s rights under Section 6.1.1(a) (i.e., the
exclusive license under Inex Technology to develop and commercialize Alnylam
Royalty Products in the Alnylam Field) of the Tekmira Agreement in respect of
any Alnylam Royalty Product for which Tekmira has not initiated Manufacturing of
batches of finished dosage form for GLP toxicology studies, Alnylam is required
to use Commercially Reasonable Efforts to facilitate a business discussion
between Tekmira and Alnylam’s Sublicensee (other than Tekmira or its Affiliates)
with respect to the provision of manufacturing services by Tekmira to such
Sublicensee; and (ii) with respect to any sublicense of Alnylam’s rights under
Section 6.1.1(a) of the Tekmira Agreement in respect of any Alnylam Royalty
Product for which Tekmira has initiated Manufacturing of batches of finished
dosage form for GLP toxicology studies, Alnylam’s Sublicensee (other than
Tekmira or its Affiliates) will be required to obtain its requirements of the
bulk finished dosage form of such Alnylam Royalty Product from Tekmira on the
terms set forth in Article 5 of the Tekmira Agreement.  However, Tekmira agrees
to negotiate in good faith with Alnylam and/or Alnylam’s Sublicensee either an
alternate or modified supply arrangement or the release of such Sublicensee from
such exclusive supply obligation in return for reasonable compensation to
Tekmira.

 

·              Each license and/or sublicense granted by Alnylam under the
Tekmira Agreement to develop, manufacture and commercialize Alnylam Royalty
Products must be subject and subordinate to the terms and conditions of the
Tekmira Agreement and must contain terms and conditions consistent with those in
the Tekmira Agreement, including, without limitation, the requirements of
Section 6.4 of the Tekmira Agreement (see below).  Commercializing Sublicensees
are also required to: (i) submit applicable sales or other reports consistent
with those required under the Tekmira Agreement; (ii) comply with an

 

8

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audit requirement similar to the requirement set forth in Section 7.6 of the
Tekmira Agreement; and (iii) comply with the confidentiality and non-use
provisions of Article 8 of the Tekmira Agreement with respect to both Parties’
Confidential Information.  If Alnylam becomes aware of a material breach of any
sublicense by a Third Party Sublicensee, Alnylam is required to promptly notify
Tekmira of the particulars of same and take all Commercially Reasonable Efforts
to enforce the terms of such sublicense.

 

·              Section 6.4 of the Tekmira Agreement states that all licenses and
other rights granted to Alnylam with respect to Inex Technology under Article 6
of the Tekmira Agreement are subject to (i) the rights granted to Tekmira, and
to Tekmira’s ability to grant rights to Alnylam under the Inex In-Licenses, and
(ii) the provisions of the UBC Sublicense Documents governing or relating to the
rights sublicensed to Alnylam.

 

Diligence and Annual Reports (Section 6.7)

 

·              Alnylam is required to use Commercially Reasonable Efforts to
Develop and Commercialize an Alnylam Royalty Product.

 

·              Alnylam is required to deliver to Tekmira an annual report, due
no later than December 31 of each Contract Year during the Agreement Term, which
summarizes the major activities undertaken by Alnylam during the preceding 12
months to Develop and Commercialize its Royalty Products in the applicable
field.  The report will include an outline of the status of any such Royalty
Products in clinical trials and the existence of any sublicenses with respect to
such Royalty Products which have not been previously disclosed.

 

Financial Obligations (Sections 7.2-7.4 and 6.1.3)

 

Milestone Payments:

 

·              (a) Alnylam will make milestone payments to Tekmira as set forth
below on a Target-by-Target basis, no later than 30 calendar days after the
earliest date on which the corresponding milestone event has been achieved with
respect to the first Alnylam Royalty Product directed to a Target (other than a
Biodefense Target) to achieve such milestone event:

 

Milestone Event

 

Payment

 

 

 

 

 

Initiation of first Phase I Study

 

$

[***]

 

 

 

 

 

Initiation of first Phase II Study

 

$

[***]

 

 

 

 

 

Acceptance by a Regulatory Authority in a Major Market of the first NDA for
filing

 

$

[***]

 

 

 

 

 

First NDA Regulatory Approval in a Major Market

 

$

[***]

 

 

 

 

 

Aggregate worldwide cumulative Net Sales equals or exceeds $[***]

 

$

[***]

 

 

9

--------------------------------------------------------------------------------

 

·              (b) If, however, the Target is a Biodefense Target, in lieu of
the milestone payments set forth above, the following milestone payments will be
payable, on a Target-by-Target basis, no later than 30 calendar days after the
later of (i) the earliest date on which the corresponding milestone event has
been achieved with respect to the first Alnylam Royalty Product directed to a
Biodefense Target to achieve such milestone event and (ii) receipt by Alnylam of
all funding from a Funding Authority that Alnylam is eligible to receive for the
achievement of such milestone event:

 

Milestone Event

 

Payment

 

 

 

 

 

Approval of the first IND filed by Alnylam

 

$

[***]

 

 

 

 

 

Positive safety data from the first Phase I Study to be completed

 

$

[***]

 

 

 

 

 

First Commercial Sale

 

$

[***]

 

 

·              Notwithstanding the foregoing: (i) if the first Alnylam Royalty
Product directed to a Target to achieve a milestone event as set forth in clause
(a) or (b) above is comprised of a formulation Covered by or employing any Third
Party Liposome Patent Rights, then only [***]% of the corresponding milestone
payment will be payable to Tekmira; and (ii) notwithstanding that a Target is a
Biodefense Target, if Alnylam or its Related Parties Commercialize or sell an
Alnylam Royalty Product directed to such Target other than to a Funding
Authority, the milestone payment amounts set forth in clause (a) will then apply
in lieu of the amounts set forth in clause (b).

 

·              Each milestone payment by Alnylam to Tekmira hereunder will be
payable only once for each Target, regardless of the number of times the
milestone is achieved with respect to one or more Alnylam Royalty Products
directed to such Target.

 

·              On and after [***], Alnylam will be entitled to reduce each
milestone payment payable by Alnylam under the Tekmira Agreement (after
application of appropriate deductions by [***]% of such milestone payment, until
such time as the aggregate amount of all such reductions hereunder equals
$[***].  For clarity, Alnylam may offset (i) its obligation to pay the resulting
milestone payment against (ii) certain obligations of Tekmira owed to Alnylam
pursuant to the Loan Agreement, as provided in the Loan Agreement.

 

Royalty Payments:

 

·              Royalties are payable to Tekmira on Net Sales of Alnylam Royalty
Products worldwide as follows:

 

10

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Aggregate Calendar Year Net Sales of the
Alnylam Royalty Product

 

Royalty
(as a percentage of Net Sales)

 

on the first $[***] - $[***]

 

[***]

%

On the subsequent $[***] - $[***]

 

[***]

%

Greater than $[***]

 

[***]

%

 

·              Notwithstanding the foregoing, if an Alnylam Royalty Product is
comprised of a formulation Covered by or employing any Third Party Liposome
Patent Rights then royalties on Net Sales of Alnylam Royalty Products will be
calculated as follows:

 

Aggregate Calendar Year Net Sales of the
Alnylam Royalty Product

 

Royalty
(as a percentage of Net Sales)

 

on the first $[***] - $[***]

 

[***]

%

On the subsequent $[***] - $[***]

 

[***]

%

Greater than $[***]

 

[***]

%

 

·              If the Development, Manufacture or Commercialization of an
Alnylam Royalty Product in accordance with the Tekmira Agreement infringes
Necessary Third Party IP, the applicable royalties in each country payable to
Tekmira will be reduced by [***]% of the amount paid by Alnylam of any royalties
under all licenses of such Necessary Third Party IP that are reasonably
allocable to the Development, Manufacture and Commercialization of the Alnylam
Royalty Product in or for such country in the Alnylam Field; provided, however,
that, on a country-by-country basis, in no event will the royalties payable to
Tekmira with respect to Net Sales in a country for any Calendar Quarter be
reduced below the greater of: (i) [***]% of the royalties otherwise payable to
Tekmira for such Calendar Quarter, and (ii) the amount of any royalties payable
under the In-licenses of Alnylam that are reasonably allocable to the
Commercialization or Manufacture of the Alnylam Royalty Product in or for such
country in the Field (where the royalties are calculated by adding one
percentage point to the applicable royalty rate(s) in the applicable
In-License(s)).

 

·              If Alnylam is required to make any payments to UBC in respect of
the Inex Technology or Inex Collaboration IP licensed to Alnylam pursuant to the
UBC Sublicense Agreement, then Alnylam will be entitled to offset any amounts
payable by Alnylam to Tekmira under the Tekmira Agreement by the amount of
Alnylam’s payments to UBC until such amounts have been credited in full.

 

Royalty Reports; Payment and Audit Rights (Sections 7.3.4 and 7.6)

 

·              Commencing upon the First Commercial Sale of an Alnylam Royalty
Product, Alnylam is required to provide to Tekmira a quarterly written report
showing the quantity of Alnylam Royalty Products sold in each country (as
measured in saleable units of product), the gross sales of such Alnylam Royalty
Product in each country, total deductions for such Alnylam Royalty Product for
each country included in the calculation of Net Sales, the Net Sales in each
country of such Alnylam Royalty Product subject to royalty payments and the
royalties payable with respect to such Alnylam Royalty

 

11

--------------------------------------------------------------------------------

 

Product.  Quarterly reports are due no later than the 25th day following the
close of each Calendar Quarter.  Royalties shown to have accrued by each royalty
report are due and payable on the date such royalty report is due.

 

·              Complete and accurate records must be kept in sufficient detail
to enable the royalties and other payments payable under the Tekmira Agreement
to be determined.

 

·              Upon the written request of Tekmira and not more than once in
each Calendar Year, a Sublicensee must permit an independent certified public
accounting firm of nationally recognized standing selected by Tekmira and
reasonably acceptable to such Sublicensee to have access during normal business
hours to such of the records of Sublicensee as may be reasonably necessary to
verify the accuracy of the royalty and other financial reports required to be
delivered under the Tekmira Agreement for any Calendar Year ending not more than
[***] months prior to the date of such request, for the sole purpose of
verifying the basis and accuracy of payments made under Article 7 of the Tekmira
Agreement.

 

Prosecution and Enforcement (Sections 10.2, 10.3 and 10.4)

 

·              Alnylam is solely responsible, at Alnylam’s discretion, for
filing, prosecuting, conducting ex parte and inter partes proceedings (including
the defense of any interference or opposition proceedings) and maintaining all
Patent Rights comprising Alnylam RNAi Technology, Alnylam IOC Technology or
Alnylam Collaboration IP, in Alnylam’s name.

 

·              Tekmira, at Tekmira’s discretion, for filing, prosecuting,
conducting ex parte and inter partes proceedings, (including the defense of any
interference or opposition proceedings), and maintaining all Patent Rights
comprising Inex Technology or Inex IOC Technology, in Tekmira’s name, or Inex
Collaboration IP, in UBC’s name.

 

·              Subject to Tekmira’s continuing right to the prior review of,
comment on, revision to and approval of material documents, which will not be
unreasonably delayed or withheld, Alnylam is solely responsible, at Alnylam’s
discretion, for filing, conducting ex parte and inter partes prosecution, and
maintaining (including the defense of any interference or opposition
proceedings) all Patent Rights comprising Joint Collaboration IP, in the names
of both Tekmira and Alnylam.

 

·              If Alnylam elects not to seek or continue to seek or maintain
patent protection on any Alnylam IOC Technology or Alnylam Collaboration IP
which is subject to Tekmira’s licensed rights under the Tekmira Agreement, or
Joint Collaboration IP, then Tekmira will have step-in rights.  If Alnylam
declines to file, prosecute and/or maintain Valid Claims at Tekmira’s request in
Joint Collaboration IP, then Tekmira will have step-in rights.

 

·              If Tekmira elects not to seek or continue to seek or maintain
patent protection on any Inex Technology or Inex Collaboration IP, which is
subject to Alnylam’s licensed rights under the Tekmira Agreement, then subject
to the provisions of the UBC

 

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Sublicense Documents, Alnylam will have rights (but not the obligation), at its
expense, to prosecute and maintain in any country patent protection on such Inex
Technology in the name of Tekmira or Inex Collaboration IP in the name of UBC.

 

·              Each Party agrees: (a) to make its employees, agents and
consultants reasonably available to the other Party (or to the other Party’s
authorized attorneys, agents or representatives), to the extent reasonably
necessary to enable such Party to undertake patent prosecution; (b) to provide
the other Party with copies of all material correspondence pertaining to
prosecution with the patent offices; (c) to cooperate, if necessary and
appropriate, with the other Party in gaining patent term extensions wherever
applicable to Patent Rights; and (d) to endeavor in good faith to coordinate its
efforts with the other Party to minimize or avoid interference with the
prosecution and maintenance of the other Party’s patent applications.

 

·              The patent filing, prosecution and maintenance expenses incurred
after the Effective Date with respect to Patent Rights comprised of Alnylam Core
Patent Rights, Alnylam IOC Technology, Alnylam Lipidoid Patent Rights, Inex
Technology, Inex IOC Technology and Collaboration IP will be borne by each Party
having the right to file, prosecute and maintain such Patent Rights under the
Tekmira Agreement.

 

·              Subject to the provisions of any Inex In-License and the
provisions of the UBC Sublicense Documents, in respect of the Alnylam Royalty
Products in the Alnylam Field, Alnylam will have the sole and exclusive right to
initiate an infringement or other appropriate suit anywhere in the world against
any Third Party who at any time has infringed, or is suspected of infringing,
any Patent Rights, or of using without proper authorization, any Know-How,
comprising any Inex Technology or Collaboration IP that is licensed to Alnylam
under the Tekmira Agreement.

 

·              Alnylam will have the sole and exclusive right to initiate an
infringement or other appropriate suit anywhere in the world against any Third
Party who at any time has infringed, or is suspected of infringing, any Patent
Rights, or of using without proper authorization any Know-How, comprising
Alnylam RNAi Technology, Alnylam IOC Technology or Alnylam Collaboration IP;
provided, that if Alnylam fails to initiate a suit or take other appropriate
action with respect to Alnylam IOC Technology in the United States with respect
to an IOC Product that it has the initial right to initiate or take pursuant
thereto within 90 days after becoming aware of the basis for such suit or
action, then Tekmira may, in its discretion, provide Alnylam with written notice
of Tekmira’s intent to initiate a suit or take other appropriate action with
respect to such IOC Product.  If Alnylam fails to initiate a suit or take such
other appropriate action within 30 days after receipt of such notice from
Tekmira, then Tekmira will have the right to initiate a suit or take other
appropriate action that it believes is reasonably required to protect its
licensed interests under the Alnylam IOC Technology and Alnylam Collaboration IP
with respect to such IOC Product.

 

·              Alnylam may defend any Infringement Claim brought against either
Party or its Affiliates or Sublicensees arising out of the Development,
Manufacture or Commercialization of any Alnylam Royalty Product in the Alnylam
Field.  Tekmira may

 

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defend any Infringement Claim brought against either Party or its Affiliates or
Sublicensees arising out of the Development, Manufacture or Commercialization of
any Inex Royalty Product and in (a) the Alnylam Field, in the case of Inex
Development Products or (b) the Inex IOC Field, in the case of Inex IOC
Products.

 

·              As the responsible party, Alnylam must keep Tekmira informed, and
from time to time consult with Tekmira regarding the status of any such claims
and provide Tekmira with copies of all documents filed in, and all written
communications relating to, any suit brought in connection with such claims. 
Tekmira also has the right to participate and to be presented in any such claim
or related suit.  If Alnylam fails to exercise its right to assume such defense
within 30 days following written notice of such Infringement Claim, Tekmira has
the sole and exclusive right to control the defense of such Infringement Claim.

 

Termination for Patent Challenge (Section 11.5)

 

·              If any Sublicensee asserts in any court or other governmental
agency of competent jurisdiction that an Inex Patent Right or a Patent Right
Controlled by Tekmira by virtue of the Inex-UBC License Agreement and
sublicensed to Alnylam pursuant to the UBC Sublicense (in either case, an “Inex
Patent”) is invalid, unenforceable, or that no issued Valid Claim embodied in
such Inex Patent excludes a Third Party from making, having made, using,
selling, offering for sale, importing or having imported an Alnylam Royalty
Product in such jurisdiction, then Tekmira may, upon written notice to Alnylam,
terminate all licenses granted to Alnylam for such Alnylam Royalty
Product(s) covered by such Inex Patent that is under challenge in the applicable
jurisdiction; provided, however, that Tekmira will not terminate such license if
within 30 days of Alnylam’s receipt of Tekmira’s notification under the Tekmira
Agreement (a) it is confirmed by written notice to Tekmira that Sublicensee no
longer intends to challenge the validity or enforceability of such Inex Patent;
or (b) documentation is provided to Tekmira to confirm Sublicensee’s withdrawal
of its filing, submission, or other process commenced in any court or other
governmental agency of competent jurisdiction to challenge the validity or
enforceability of any such Inex Patent.

 

Definitions

 

“Alnylam Collaboration IP” means, generally (a) any improvement, invention, or
Know-How first discovered or developed by employees of Alnylam or its Affiliates
or other persons not employed by Tekmira acting on behalf of Alnylam, in the
performance of the Collaboration, the Manufacturing Activities, and/or Alnylam’s
obligations under the Original Agreements, and (b) any Patent Rights which
claim, cover or relate to such Know-How.  Alnylam Collaboration IP excludes
Alnylam’s interest in Joint Collaboration IP.

 

“Alnylam Core Patent Rights” means those Patent Rights set forth in Schedule 1.3
of the Tekmira Agreement, including various Tuschl I and Tuschl II patents and
patent applications, as such Schedule is supplemented from time to time pursuant
to Section 6.5.1 of the Tekmira Agreement.

 

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“Alnylam Field” means the treatment, prophylaxis and diagnosis of diseases in
humans using an RNAi Product or miRNA Product.

 

“Alnylam IOC Technology” mean, generally (a) Know-How Controlled by Alnylam as
of the Effective Date that is useful or necessary to Develop, Commercialize
and/or Manufacture an IOC Product in the Inex IOC Field (excluding any Alnylam
Collaboration IP and Alnylam’s interest in Joint Collaboration IP), and
(b) those Patent Rights set forth in Schedule 1.5 of the Tekmira Agreement,
including USSN [***].

 

“Alnylam Lipidoid Patent Rights” means those Patent Rights Controlled by Alnylam
under a license from the Massachusetts Institute of Technology pursuant to the
MIT License Agreement and that are set forth in Schedule 1.6 of the Tekmira
Agreement, including USSN [***].

 

“Alnylam RNAi Know-How” means, generally, Know-How Controlled by Alnylam that
Alnylam determines in its reasonable judgment to be useful or necessary to
Develop, Commercialize and/or Manufacture an Alnylam Royalty Product in the
Alnylam Field (excluding any Alnylam Collaboration IP and Alnylam’s interest in
Joint Collaboration IP).

 

“Alnylam RNAi Patent Rights” means, generally, Patent Rights Controlled by
Alnylam that claim (a) Alnylam RNAi Know-How, or (b) the identification,
characterization, optimization, construction, expression, formulation, use or
production of an Alnylam Royalty Product, as the case may be, and which Alnylam
determines in its reasonable judgment to be useful or necessary to Develop,
Commercialize and/or Manufacture an Alnylam Royalty Product in the Alnylam Field
(including, without limitation, the Alnylam Core Patent Rights and the Alnylam
Lipidoid Patent Rights, but specifically excluding Alnylam IOC Technology and
any Patent Rights included in Alnylam Collaboration IP or Alnylam’s interest in
Joint Collaboration IP).

 

“Alnylam RNAi Technology” means, collectively, Alnylam RNAi Know-How and 
Alnylam RNAi Patent Rights.

 

“Alnylam Royalty Product” means any RNAi Product or a miRNA Product that, but
for the licenses granted hereunder, would be Covered by one or more Valid Claims
of the Inex Patent Rights.

 

“Biodefense Target” means (a) a Target within the genome of one or more Category
A, B and C pathogens, as defined by the National Institute of Allergy and
Infectious Diseases, including without limitation, pathogens listed on Schedule
1.12 of the Tekmira Agreement, but specifically excluding influenza virus, or
(b) an endogenous cellular Target against which Alnylam Develops and/or
Commercializes an Alnylam Royalty Product for commercial supply to one or more
Funding Authorities.

 

“Collaboration IP” means, collectively, Alnylam Collaboration IP, Inex
Collaboration IP and Joint Collaboration IP.

 

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“Existing Inex In-Licenses” means the Third Party agreements listed on Schedule
1.30 to the Tekmira Agreement.

 

“IOC” or “Immunostimulatory Oligonucleotide Composition” means a single-stranded
or double-stranded ribonucleic acid (“RNA”) composition, or derivative thereof,
that has activity solely through an immunostimulatory mechanism and has no RNAi
activity against a human gene transcript or viral genomic sequence.

 

“IOC Product” means a product containing, comprised of or based on IOCs or IOC
derivatives.

 

“Inex Collaboration IP” means, generally (a) any improvement, invention or
Know-How first discovered or developed by employees of Tekmira or its Affiliates
or other persons not employed by Alnylam acting on behalf of Tekmira, in the
performance of the Collaboration, the Manufacturing Activities, and/or Tekmira’s
obligations under the Original Agreements, and (b) any Patent Rights which
claim, cover or relate to such Know-How.  Inex Collaboration IP excludes
Tekmira’s interest in Joint Collaboration IP.

 

“Inex In-License” means an agreement between Tekmira or its Affiliates, and a
Third Party, pursuant to which Tekmira or any of its Affiliates Control(s) Inex
Technology relating to the Alnylam Field under a license or sublicense from such
Third Party, including without limitation, the Existing Inex In-Licenses.

 

“Inex IOC Field” means the treatment, prophylaxis and diagnosis of diseases in
humans using an IOC Product.

 

“Inex IOC Technology” means, generally (a) Know-How Controlled by Tekmira or its
Affiliates with respect to IOC Products and/or IOCs, and (b) Patent Rights
Controlled by Tekmira and its Affiliates that claim such Know-How or the
identification, characterization, optimization, construction, expression,
formulation, delivery, use or production of an IOC Product and/or IOC, and are
useful or necessary to Develop, Commercialize and/or Manufacture IOC Products in
the Field.

 

“Inex Know-How” means, generally, Know-How Controlled by Tekmira or its
Affiliates with respect to an RNAi Product or miRNA Product (excluding any Inex
Collaboration IP, Tekmira’s interest in Joint Collaboration IP and any such
Know-How sublicensed to Alnylam pursuant to the UBC Sublicense).

 

“Inex Patent Rights” means, generally, Patent Rights Controlled by Tekmira or
its Affiliates that claim (a) Inex Know-How or (b) the identification,
characterization, optimization, construction, expression, formulation, delivery,
use or production of an RNAi Product or miRNA Product, and are useful or
necessary to Develop, Commercialize and/or Manufacture RNAi Products or miRNA
Products in the Alnylam Field (excluding any Patent Rights included in Inex
Collaboration IP, Tekmira’s interest in Joint Collaboration IP and any such
Patent Rights licensed to Alnylam pursuant to the UBC Sublicense).

 

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“Inex Royalty Product” means any (a) Inex Development Product that, but for the
licenses granted hereunder, would be Covered by one or more Valid Claims under
the Alnylam Core Patent Rights or the Alnylam Lipidoid Patent Rights, or (b) IOC
Product that but for the licenses granted hereunder, would be Covered by one or
more Valid Claims under the Alnylam IOC Technology.

 

“Inex Technology” means, collectively, Inex Know-How and Inex Patent Rights.

 

“Inex-UBC License Agreement” means that certain license agreement between
Tekmira and the University of British Columbia (“UBC”) dated effective July 1,
1998, as amended by Amendment Agreement between Tekmira and UBC dated effective
July 11, 2006, and Second Amendment Agreement dated effective the Effective
Date.

 

“Joint Collaboration IP” means, generally (a) any improvement, discovery or
Know-How first discovered or developed jointly by the Parties or their
Affiliates or others acting on behalf of Tekmira and Alnylam in the performance
of the Collaboration, the Manufacturing Activities and/or the obligations of the
Parties under the Original Agreements, and (b) any Patent Rights which claim,
cover or relate to such Know-How.

 

“Manufacturing Activities” means those activities performed by a party relating
to the manufacture and supply of Alnylam Royalty Products.

 

“miRNA Product” means a product containing, comprised of or based on native or
chemically modified RNA oligomers designed to either modulate an miRNA and/or
provide the function of an miRNA.

 

“Necessary Third Party IP” means, on a country-by-country basis, Know-How or
Patent Rights in such country owned or controlled by a Third Party that cover a
Royalty Product.

 

“Pre-Existing Alliance Agreements” are listed on Schedule 1.79 to the Tekmira
Agreement.

 

“RNAi Product” means a product containing, comprised of or based on siRNAs or
siRNA derivatives or other moieties effective in gene function modulation and
designed to modulate the function of particular genes or gene products by
causing degradation of a Target mRNA to which such siRNAs or siRNA derivatives
are complementary (“RNAi Interference Mechanism”), and that is not an miRNA
Product.

 

“Royalty Product” means, either (a) an Alnylam Royalty Product, or (b) an Inex
Royalty Product.

 

“Selection Term” means the period commencing on the Effective Date and
continuing for five (5) Contract Years thereafter, unless such period is
extended pursuant to Section 2.2 of the Tekmira Agreement.

 

“Small Interfering RNA” or “siRNA” means a double-stranded ribonucleic acid
(RNA) composition designed to act primarily through an RNA Interference
Mechanism that

 

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consists of either (a) two separate oligomers of native or chemically modified
RNA that are hybridized to one another along a substantial portion of their
lengths, or (b) a single oligomer of native or chemically modified RNA that is
hybridized to itself by self-complementary base-pairing along a substantial
portion of its length to form a hairpin.

 

“Target” means: (a) a polypeptide or entity comprising a combination of at least
one polypeptide and other macromolecules, that is a site or potential site of
therapeutic intervention by a therapeutic agent; or a nucleic acid which is
required for expression of such polypeptide; (b) variants of a polypeptide,
cellular entity or nucleic acid described in clause (a); (c) a defined
non-peptide entity, including a microorganism, virus, bacterium or single cell
parasite; provided that the entire genome of a virus will be regarded as a
single Target; or (d) a naturally occurring interfering RNA or miRNA or
precursor thereof.

 

“Third Party Liposome Patent Rights” means, with respect to an Alnylam Royalty
Product, (a) the Alnylam Lipidoid Patent Rights and/or (b) other technology
comprising a lipid component or liposomal formulation useful or necessary for
the Development, Manufacture or Commercialization of such Alnylam Royalty
Product and Controlled by Alnylam under a license from a Third Party, and in
each case with respect to which Intellectual Property Rights Alnylam has granted
to Tekmira a non-exclusive, royalty- and milestone fee-bearing (on a
pass-through basis) license to Develop, Manufacture and Commercialize Inex
Royalty Products in the Alnylam Field in the case of Inex Development Product,
and in the Inex IOC Field in the case of IOC Products.

 

“UBC Sublicense Documents” means the collective reference to (a) the Sublicense
Agreement dated as of the Effective Date between the Parties (the “UBC
Sublicense”), (b) the Consent and Agreement dated as of the Effective Date among
the Parties and UBC, and (c) the Assignment dated the Effective Date between
Tekmira and UBC.

 

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ROCHE

 

License and Collaboration Agreement dated July 8, 2007, by and among Alnylam
Pharmaceuticals, Inc., F. Hoffmann-La Roche Ltd (“Roche Basel”) and Hoffmann-La
Roche Inc. (together with Roche Basel, “Roche”) (“Roche Agreement”), effective
on August 9, 2007 (“Effective Date”)

 

Brief Description of Technology Covered by License

 

·              Alnylam granted Roche and its Affiliates a non-exclusive,
worldwide license under Alnylam’s rights to Architecture and Chemistry IP and
Delivery IP as it existed at the effective time of the Agreement, to develop and
commercialize RNAi Products for treatment/prophylaxis of indications in at least
the fields of cancer, certain liver diseases, metabolic disease and pulmonary
disease.  Roche has the option to enter additional therapeutic fields and, prior
to granting exclusive licenses in the other Fields, Alnylam must give Roche a
right of first negotiation.

 

Limitations on Scope of License

 

Any license granted by Alnylam to a Third Party under Architecture and Chemistry
IP or Delivery IP would be subject to the following limitations:

 

·              License Grant to Roche.  Roche and its Affiliates have a
non-exclusive, worldwide license to develop and commercialize RNAi Products for
the treatment/prophylaxis of indications in at least the primary fields of
cancer, certain liver diseases, metabolic disease and pulmonary disease) and any
additional fields (which are listed in a schedule to the Roche Agreement) to
which Roche acquires non-exclusive rights (collectively, “Field”).

 

·              Designated Targets.  If Roche selects a Target which is not a
Blocked Target and such Target is cleared through the Novartis ROFO mechanism,
Roche has non-exclusive rights within the scope of its basic license grant to
develop and commercialize RNAi Products directed to such “Designated Target” in
the Field.

 

·              Alnylam/Roche Discovery Collaboration.  Roche and Alnylam have
agreed to collaborate on a specified number of targets during the term of the
agreement.

 

·              ROFN.  If Alnylam intends to grant to any Third Party an
exclusive license to any particular additional field which has not yet been
acquired by Roche, Alnylam must first offer Roche the right to extend its
non-exclusive licenses into such additional field upon payment of a specified
field option fee.

 

·              Extension into Additional Fields.  Roche may extend its
development and commercialization activities directed to a Target into any
additional field, provided that Roche notify Alnylam of such extension and pay
certain milestone payments.

 

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Prosecution and Enforcement

 

·              Alnylam is obligated to take reasonable measures to protect and,
to the extent Alnylam has such a right, to enforce the IP being licensed to
Roche under the Roche Agreement.

 

·              Alnylam is also obligated to assume control of the defense of any
aspects of any third party infringement claim that involves the validity, scope
and/or enforceability of such licensed IP.  Roche has the right to control the
defense of any other third party infringement claim or aspect thereof related to
the licensed IP.  Alnylam must keep Roche advised of status and consider Roche’s
recommendations.

 

Definitions

 

·              “Architecture and Chemistry Intellectual Property” refers,
generally, to Know-How and Patent Rights listed on Schedule C to the Roche
Agreement, in each case Controlled by Alnylam as of the Effective Date, and
covering (a) the general structure, architecture, or design of double-stranded
oligonucleotide molecules which engage RNAi mechanisms in a cell; (b) chemical
modifications of double-stranded oligonucleotides (including any modification to
the base, sugar or internucleoside linkage, nucleotide mimetics, and any end
modifications) which do not abolish the RNAi activity of the double-stranded
oligonucleotides in (a); (c) manufacturing techniques for the double-stranded
oligonucleotide molecules or chemical modifications of (a) and (b); or (d) all
uses or applications of double-stranded oligonucleotide molecules or chemical
modifications in (a) or (b); but excluding (i) IP to the extent specifically
related to Blocked Targets, and (ii) Delivery IP.  Includes future Patent Rights
that claim priority to or common priority with any of the aforementioned Patent
Rights.

 

·              “Blocked Target” means any Target that is subject to a
contractual obligation of a Pre-Existing Alliance Agreement that would be
breached by the inclusion of such Target as a Designated Target under this
Agreement

 

·              “Delivery Intellectual Property” refers, generally, to Know-How
and Patent Rights listed on Schedule C to the Roche Agreement, in each case
Controlled by Alnylam as of the Effective Date, and covering (a) delivery
technologies necessary or useful for delivery of double-stranded oligonucleotide
molecules; or (b) manufacturing techniques for such delivery technologies of
(a); but excluding Patent Rights which relate specifically to Blocked Targets. 
Includes future Patent Rights that claim priority to or common priority with any
of the aforementioned Patent Rights.

 

·              “RNAi Compound” means any compound that, in vitro or otherwise,
functions through the mechanism of RNAi and consists of or encodes
double-stranded oligonucleotides, and which double-stranded oligonucelotides
optionally may be chemically modified to contain modified nucleotide bases or
non-RNA nucleotides, and optionally may be administered in conjunction with a
delivery vehicle or vector.

 

·              “RNAi Product” means any product that contains one or more RNAi
Compounds as an active ingredient.

 

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·              “Target” means (a) a polypeptide or entity comprising a
combination of at least one polypeptide and other macromolecules, that is a site
or potential site of therapeutic intervention by a therapeutic agent; or a
nucleic acid which is required for expression of such polypeptide; (b) variants
of a polypeptide (including any splice variant thereof), cellular entity or
nucleic acid described in clause (a); or (c) a defined non-peptide entity,
including a microorganism, virus, bacterium or single cell parasite; provided
that the entire genome of a virus shall be regarded as a single Target.

 

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NOVARTIS

 

Research Collaboration and License Agreement between Novartis Institutes for
BioMedical Research, Inc. and Alnylam Pharmaceuticals, Inc., effective
October 12, 2005, as amended by the Addendum Re: Influenza Program effective as
of December 13, 2005, Amendment No. 1 to such Addendum effective as of March 14,
2006, and Amendment No. 2 to such Addendum effective as of May 5, 2006
(“Novartis Agreement”)

 

Brief Description of Technology Covered by License

 

·                  Alnylam granted Novartis a right to exclusively develop a
certain number of Targets using intellectual property controlled by Alnylam
during the term of the Agreement.  Some of the Targets would be developed
through collaborative work between Novartis and Alnylam.  In addition, Novartis
has the right to convert their license from an exclusive license with respect to
certain Targets to a broad, non-exclusive license.

 

Scope of Rights

 

·              Novartis may select a specified number of Targets (“Selected
Targets”).  Alnylam and Novartis entered into a Research Collaboration to
identify and optimize RNAi Compounds directed against Selected Targets and
develop improved RNAi technology to enable and enhance the utility of such RNAi
Compounds. (Section 2)

 

·              Alnylam granted Novartis and its Affiliates worldwide licenses
under Alnylam Intellectual Property to (i) perform Novartis’s obligations under
the Research Collaboration, (ii) Discover RNAi Compounds, (iii) Discover RNAi
Compounds directed at the Selected Targets, and (iv) Discover, Develop,
Commercialize or Manufacture Discovered RNAi Compounds and Collaboration
Products.  The rights under clauses (i) and (ii) are non-exclusive and
non-sublicenseable, under clause (iii) are exclusive and non-sublicenseable, and
under clause (iv) are exclusive and sublicenseable.  (Sections 3.1(a) and (b))

 

·              For a period of time, Novartis has an option, exercisable upon
notice and payment of a fee, to obtain for itself and its Affiliates a
non-exclusive, non-sublicenseable (except to third party contractors),
worldwide, perpetual license under Broad RNAi Intellectual Property for any
human, veterinary or agricultural applications (the “Adoption License”). 
Alnylam may not grant any exclusive rights or licenses under any Broad RNAi
Intellectual Property except with respect to an opportunity Novartis does not
acquire under the ROFO or in accordance with agreements existing before the
effective date of the Novartis Agreement.  (Section 3.1(c) and (e))

 

·              Exclusivity:  Alnylam and its Affiliates may not, either alone or
directly or indirectly in conjunction with a Third Party, conduct Discovery of
any RNAi Compound or RNAi Products directed to a Selected Target, or Discovery,
Development, Commercialization or Manufacture of Discovered RNAi Compounds,
Collaboration

 

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Products, or RNAi Compounds or RNAi Products directed to Selected Targets. 
Alnylam and its Affiliates may not grant to any Third Party any rights under
Alnylam Intellectual Property to engage in any of the foregoing activities. 
(Section 2.6(a))

 

·              ROFO:  If Alnylam or any of its Affiliates seek, directly or
indirectly in conjunction with a Third Party (with limited exceptions), or to
license a Third Party (with limited exceptions) the right, to Discover, Develop,
Commercialize or Manufacture any RNAi Compounds or RNAi Products directed at a
Target(s), Alnylam must first provide written notice to Novartis.  Novartis has
a period of time to accept or reject the opportunity.  If Novartis rejects an
opportunity for a program for which no IND has been filed in the US or Major
Market Countries, or Novartis and Alnylam are unable to come to terms on a
post-IND program, Alnylam may, within a specified period of time, enter an
agreement with a Third Party, which can be no more favorable overall to such
Third Party than those offered to Novartis under Section 2.6(c)(i).  (Sections
2.6(b) and (c))

 

·              In-Licensing IP:  To the extent applicable, Alnylam must comply
with Sections 2.6(b) and (c) when acquiring or licensing rights from Third
Parties.  In the course of acquiring or licensing additional Broad RNAi
Intellectual Property or any other Alnylam Intellectual Property covering a
Collaboration Product, Alnylam must use its best efforts to ensure that such
rights include the right to sublicense to Novartis such Broad RNAi Intellectual
Property or other Alnylam Intellectual Property.  (Sections 2.6(d), 3.1(f))

 

·              Technology Transfer:  Alnylam will periodically deliver to
Novartis all Alnylam Intellectual Property specifically relating to the
Discovered RNAi Compounds, relating to the Research Collaboration, or otherwise
necessary or useful to the Discovery, Development, Commercialization or
Manufacture of Discovered RNAi Compounds or Collaboration Products.  Once
Novartis acquires the Adoption License, Alnylam will periodically deliver to
Novartis all Broad RNAi Intellectual Property.  The deliveries will include
un-redacted copies of agreements that directly or indirectly grant or restrict
rights in Alnylam Intellectual Property, which may be redacted to comply with
confidentiality obligations and to exclude terms that do not relate to
Novartis’s rights or obligations; provided, that Alnylam will use commercially
reasonable efforts to ensure that Novartis is granted access to un-redacted
copies of such agreements.

 

·              Alnylam may not assign, license or otherwise grant any rights or
dispose of any Broad RNAi Intellectual Property or other Alnylam Intellectual
Property covering a Collaboration Product without making such disposition
expressly subject to Novartis’s rights.  (Section 3.1(g))

 

IP Ownership, Prosecution and Enforcement (Section 6)

 

·              Novartis owns all IP jointly created by the parties in the
Research Collaboration.  Novartis grants Alnylam a worldwide, non-exclusive,
sublicenseable (solely to Controlled Contractors) license under such
jointly-created IP that is Broad RNAi Intellectual Property, to engage in any
and all research activities directed to human, veterinary or agricultural
applications.

 

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·              Novartis has a step-in right to prosecute Alnylam Patent Rights
that pertain to a Discovered RNAi Compound or a Licensed Product.

 

·              Alnylam will promptly report in writing to Novartis any known or
suspected infringement or misappropriation of Alnylam Intellectual Property and
will provide Novartis with all available evidence supporting such infringement
or misappropriation.

 

·              Alnylam has the right to protect the Alnylam Intellectual
Property, and Alnylam will consult with Novartis regarding the status of any
such action and will provide Novartis with copies of all material documents
relating to such action.  Notwithstanding the foregoing, Novartis has the sole
and exclusive right to initiate a suit under Alnylam Intellectual Property to
protect a Discovered RNAi Compound, a Licensed Product or IP created solely by
Novartis or jointly by Novartis and Alnylam in the Research Collaboration;
Alnylam must provide reasonable assistance at Novartis’ request.  Recoveries
will be shared in a specified manner.

 

·              Novartis and Alnylam will cooperate in responding to a claim
challenging the validity of any Alnylam Patent Right covering a Discovered RNAi
Compound or a Licensed Product.

 

Definitions

 

“Adopted Product” means a product containing RNAi Compound(s) that are
Discovered, Developed, Commercialized or Manufactured pursuant to the Adoption
License.

 

“Alnylam Intellectual Property” means Know-How and Patent Rights now or in the
future owned or licensed by Alnylam or its Affiliates, including Broad RNAi
Intellectual Property.

 

“Broad RNAi Intellectual Property” means all Know-How and Patent Rights now or
in the future owned or licensed by Alnylam or its Affiliates that relate to RNAi
technology, products or processes, including (a) the general structure,
architecture, or design of nucleic acid based molecules which engage RNAi
mechanisms in a cell; (b) chemical modifications of nucleic acids (including any
modification to the base, sugar or internucleoside linkage, nucleotide mimetics,
and any end modifications) which do not abolish the RNAi activity of the nucleic
acid molecules in (a); (c) manufacturing techniques for the nucleic acid based
molecules or chemical modifications of (a) and (b); and (d) all uses or
applications of nucleic acid based molecules or chemical modifications in (a) or
(b); but excluding Patents which relates solely to (i) a specific Target or
small group of Targets; or (ii) delivery technologies which may be broadly
employed for delivery of nucleic acid based molecules.

 

“Collaboration Product” means any product that contains one or more Discovered
RNAi Compound(s) as active ingredient(s).

 

24

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“Discovered RNAi Compound” means an RNAi Compound directed to a Selected Target
that is Discovered during the course of a program under the Novartis Agreement,
together with all derivatives of such RNAi Compound, where “derivative” means a
compound that may contain modified nucleotides or may have been modified by
chemical or molecular genetic means but which still, at least in vitro,
functions through an RNAi mechanism against the same Target.

 

“Licensed Products” means the Collaboration Products and the Adopted Products.

 

“RNAi Compound” means any compound that in vitro or otherwise functions through
the mechanism of RNAi and consists of or encodes double-stranded RNA, and which
double-stranded RNA is optionally chemically modified to contain modified
nucleotide bases or non-RNA nucleotides, and optionally may be administered in
conjunction with a delivery vehicle or vector.

 

“RNAi Product” means any product that contains one or more RNAi Compounds as an
active ingredient.

 

“Target” means: (a) a polypeptide or entity comprising a combination of at least
one polypeptide and other macromolecules, that is a site or potential site of
therapeutic intervention by a therapeutic agent; or a nucleic acid which is
required for expression of such polypeptide; (b) variants of a polypeptide,
cellular entity or nucleic acid described in clause (a); (c) a defined
non-peptide entity, including a microorganism, virus, bacterium or single cell
parasite; provided that the entire genome of a virus shall be regarded as a
single Target; or (d) a naturally occurring interfering RNA or microRNA or
precursor thereof.

 

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ROCKEFELLER (Tuschl)

 

License Agreement between The Rockefeller University and Alnylam
Pharmaceuticals, Inc. effective May 8, 2006 (“Tuschl Agreement”)

 

Brief Summary of Technology Covered by License:

 

The Rockefeller University granted Alnylam a license to intellectual property
developed by Dr. Thomas Tuschl relating to sequence-specific inhibition of
microRNAs (RU 681) (also known as “Tuschl IV”).

 

Scope of License (Section 1.1)

 

·              Alnylam’s non-exclusive, world-wide, sublicensable license is
limited to a license to research, develop, make, have made, use, have used,
import, have imported, sell, offer for sale and have sold Licensed Products for
human and animal therapeutics.

 

·              Rockefeller Patent Rights were developed with funding from the
U.S. National Institutes of Health.  The United States government retains rights
in such intellectual property, including, but not limited to, requirements that
products, which result from such intellectual property and are sold in the
United States, must be substantially manufactured in the United States.

 

Certain Sublicense Terms (Section 1.5)

 

·                  Alnylam will only have the right to grant sublicenses if such
sublicense (a) is granted in conjunction with a license or sublicense of
Alnylam’s rights under proprietary intellectual property that is in addition to
the Rockefeller Patent Rights, and (b) is granted in connection with a bona fide
collaboration with one or more third parties established by written agreement
that is for purposes of research and/or development of products under a jointly
prepared research plan.

 

·                  Alnylam will prohibit the sublicensee from further
sublicensing and require the sublicensee to comply with the terms and conditions
of the Tuschl Agreement (other than Alnylam’s payment and reporting
obligations).

 

·                  WITHIN THIRTY (30) DAYS AFTER ALNYLAM ENTERS INTO A
SUBLICENSE AGREEMENT, ALNYLAM WILL DELIVER TO ROCKEFELLER A COPY OF THE
SUBLICENSE AGREEMENT WHICH MAY BE REDACTED EXCEPT WITH RESPECT TO TERMS,
INCLUDING FINANCIAL TERMS THAT RE NOT RELEVANT TO ALNYLAM’S OBLIGATIONS UNDER
THE TUSCHL AGREEMENT.

 

·              Upon an Alnylam bankruptcy event, payments due to Alnylam from
its Affiliates or sublicensees under the sublicense agreement in the form of
milestone payments and royalties on Licensed Products will, upon notice from
Rockefeller to such Affiliate or sublicensee, become payable directly to
Rockefeller for the account of Alnylam.  Upon receipt of such funds, Rockefeller
will remit to Alnylam the amount by which such payments exceed the amounts owed
by Alnylam to Rockefeller.

 

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·                  ALNYLAM IS PRIMARILY LIABLE TO ROCKEFELLER FOR ANY ACT OR
OMISSION OF A SUBLICENSEE THAT WOULD BE A BREACH OF THE STOFFEL AGREEMENT IF
PERFORMED OR OMITTED BY ALNYLAM, AND ALNYLAM WILL BE DEEMED TO BE IN BREACH OF
THE STOFFEL AGREEMENT AS A RESULT OF SUCH ACT OR OMISSION.

 

Diligence (Section 2)

 

·                  Alnylam must provide Rockefeller within 30 days of the third
and each subsequent anniversary of the Effective Date with written progress
reports discussing the development, evaluation, testing and commercialization of
all Licensed Products.

 

Payment Obligations (Sections 3 and 4)

 

·              The following milestones are payable for each Licensed Product
against an individual Gene Target:

 

Receipt of IND approval.

 

$

[***]

 

Dosing of first patient in Phase II Clinical Trials.

 

$

[***]

 

Dosing of first patient in Phase III Clinical Trials.

 

$

[***]

 

Receipt of NDA approval.

 

$

[***]

 

 

·              A [***]% royalty is payable to Rockefeller on Net Sales of
Licensed Products by Alnylam, its Affiliates and its sublicensees (no offsets).

 

·              If Rockefeller grants a license under the Rockefeller Patent
Rights to any third party, which will permit such third party to manufacture or
sell for any use within the scope of the license at a lower royalty rate than
that provided in the Tuschl Agreement, Rockefeller will promptly notify Alnylam
of such license, including all material terms and conditions of such license,
and offer to Alnylam the lower royalty rates and all of the material terms and
conditions of such license. If Alnylam accepts such terms in writing, the
royalty rate and all material terms and conditions of such notice shall
thereafter apply to Alnylam and the parties will promptly execute an amendment
to the Tuschl Agreement reflecting such terms and conditions.

 

·              Alnylam must pay Rockefeller a one-time fee of $[***] within 30
days after granting a sublicense to a permitted sublicensee.

 

·              Payments are due to Rockefeller within 60 days after the end of
the quarter in which the royalties or fees accrue.

 

Books and Records (Sections 4.3 and 4.4)

 

·              Sub-licensees are required to keep complete and accurate books
and records to verify Sales, Net Sales, and all of the royalties, fees, and
other payments payable under

 

27

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the Tuschl Agreement. The records for each quarter will be maintained for at
least 3 years after submission of the applicable report required under the
Tuschl Agreement.

 

·              Upon reasonable prior written notice to Alnylam, sublicensees
will provide an independent, reputable CPA appointed by Rockefeller and
reasonably acceptable to Alnylam with access to all of the books and records
required by the Tuschl Agreement to conduct a review or audit of Sales, Net
Sales, and all of the royalties, fees, and other payments payable under the
Tuschl Agreement. If the audit determines that Alnylam has underpaid any royalty
payment by 5% or more, Alnylam will also promptly pay the costs of the review or
audit.

 

Non-Use of Name (Section 5.4)

 

·              Sublicensees may not use the name, logo, seal, trademark, or
service mark (including any adaptation of them) of Rockefeller or any
Rockefeller school, organization, employee, student or representative, without
the prior written consent of Rockefeller.

 

Termination (Section 6.2)

 

·              Alnylam may terminate for convenience

 

·              Alnylam must promptly inventory all finished product and
works-in-product of Licensed Products of its sublicensees. Inventory may be sold
off unless Rockefeller terminates for a breach by Alnylam or its sublicensees or
Alnylam’s bankruptcy.

 

Prosecution and Enforcement (Section 7)

 

·              Rockefeller controls the preparation, prosecution and maintenance
of the Rockefeller Patent Rights and the selection of patent counsel, with input
from Alnylam. Alnylam will be copied on, and allowed to comment upon, all
substantive issues in the patent prosecution.

 

·              Alnylam shall pay a pro rata share, not to exceed [***]%, for all
reasonable out of pocket attorney charges and official fees incident to the
preparation, prosecution, and maintenance of such patent applications and
patents, not exceeding $[***]/year. If Rockefeller chooses not to prosecute or
maintain the patent rights, Alnylam may do so and receive a credit against its
royalty obligations in an amount equal to its expenses.

 

·              Alnylam must inform Rockefeller promptly after learning of
infringement of the Rockefeller Patent Rights. Alnylam and Rockefeller will
consult each other concerning response to infringement. Rockefeller may enforce
any infringement of the Rockefeller Patent Rights at Rockefeller’s expense and
retain the recoveries. If Rockefeller requests Alnylam to join such enforcement
litigation and Alnylam elects to do so, the recoveries will be shared between
Company and Rockefeller in proportion with their respective shares of the
aggregate litigation expenditures. Alnylam has step-in enforcement rights.
Alnylam must not settle or compromise any such litigation in a manner that
imposes any

 

28

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obligations or restrictions on Rockefeller or grants any rights to the
Rockefeller Patent Rights without Rockefeller’s prior written permission.
Step-in recoveries, after Alnylam’s expenses are reimbursed, are treated as Net
Sales subject to royalties.

 

Definitions

 

“Gene Target” means a genomic microRNA locus, any portion thereof, any RNA
transcribed from within or overlapping such locus or portion, and all transcript
and allelic variants thereof.

 

“Licensed Products” means products that are researched, developed, made, made
for, used, used for, imported, imported for, sold, sold for or offered for sale
by Alnylam or its Affiliates or sublicensees and that either (i) in the absence
of this Agreement, would infringe at least one Valid Claim of the Rockefeller
Patent Rights, or (ii) use a process or machine covered by a Valid Claim of
Rockefeller Patent Rights.

 

“Net Sales” means with respect to each Licensed Product the gross amount
invoiced by Alnylam or its Affiliates or sublicensees on sales or other
dispositions of such product to third parties less Qualifying Costs directly
attributable to a sale and actually taken and/or identified on the invoice and
borne by Company, or its Affiliates or sublicensees. “Qualifying Costs” means:
(a) customary discounts in the trade for quantity purchased, prompt payment or
wholesalers and distributors; (b) credits, allowances or refunds for claims or
returns or retroactive price reductions (including government healthcare
programs and similar types of rebates) that do not exceed the original invoice
amount; (c) prepaid outbound transportation expenses and transportation
insurance premiums; and (d) sales, transfer, excise and use taxes and other fees
imposed by a governmental agency. Sales for clinical study purposes or
compassionate, named patient or similar use shall not constitute Net Sales

 

“Rockefeller Patent Rights” means a patent application entitled “Anti Micro-RNA
Oligonucleotide Molecules” and related patent family, relating to
sequence-specific inhibition of microRNAs (RU 681).

 

29

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STANFORD (Sarnow/miR-122)

 

CO-EXCLUSIVE LICENSE AGREEMENT AMONG THE BOARD OF TRUSTEES OF THE LELAND
STANFORD JUNIOR UNIVERSITY, ALNYLAM PHARMACEUTICALS, INC. AND ISIS
PHARMACEUTICALS, INC. EFFECTIVE AUGUST 31, 2005 (EACH OF ALNYLAM AND ISIS, A
“LICENSEE”) (“SARNOW/MIR-122”)

 

Brief Summary of Technology Covered by License:

 

·              Co-exclusive license to use of mir-122 to reduce HCV replication
(Stanford Docket S04-097); research done in Sarnow lab supported by NIAID.

 

Scope of License (Section 3):

 

·              Stanford grants to each of the Licensees a co-exclusive,
worldwide right and license under the Licensed Patents in the Exclusive Licensed
Field of Use to develop, make, have made, use, have used, import, offer to sell,
and sell Licensed Products in the Licensed Territory.

 

·              Stanford grants to each of Licensees a non-exclusive, worldwide
right and license under the Licensed Patent in the Non-Exclusive Licensed Field
of Use to develop, make, have made, use, have used, import, offer to sell and
sell Licensed Products in the Licensed Territory.

 

·              Stanford retains the right, on behalf of itself and all other
non-profit academic research institutions, to practice the Licensed Patents for
any non-profit purpose, including sponsored research and collaborations.
Licensee agrees that, notwithstanding any other provision of this Agreement, it
has no right to enforce the Licensed Patents against any such institution.
Stanford and any such other institution have the right to publish any
information included in the Licensed Patents. If Stanford alters its
requirements for license agreements with respect to the subjects addressed in
this Section, or enters into a license agreement with terms more favorable to a
licensee than those set forth in this Section, Stanford agrees to negotiate in
good faith with the Licensees to amend the terms of this Section based upon the
reasonable written request of either Licensee.

 

·              The Bayh-Dole Act, including U.S. manufacturing obligations,
applies.

 

Sublicensing Rights (Section 4):

 

·              Each Licensee may grant sublicenses in connection with
(Section 4.1):

 

·              a bona fide collaboration with one or more third parties
established by written agreement (i) for purposes of research and/or development
of products under a jointly prepared research plan; and (ii) which includes a
license or sublicense of such Licensee’s rights under related intellectual
property covering proprietary know-how or patent rights in addition to a
sublicense to the Licensed Patents; and/or

 

30

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·              provision of services to such Licensee, including without
limitation contract manufacturing, and other services relating to development
and commercialization of Licensed Products.

 

·              If both of Licensees or their sublicensees are unable or
unwilling to serve or develop a potential market or market territory for which
there is a company willing to be a sublicensee, Stanford may request the
Licensees to negotiate in good faith a sublicense under the Licensed Patents.

 

·              Any sublicense:

 

·              will prohibit any grant of a further sublicense by a sublicensee;

 

·              will expressly include the provisions of Articles 8 (Royalty
Reports, Payments, and Accounting), 9 (Exclusions and Negations of Warranties)
and 10 (Indemnity) for the benefit of Stanford;

 

·              will require the assumption of all obligations, including the
payment of royalties specified in the sublicense, to Stanford or its designee,
if this Agreement is terminated; and

 

·              is subject to this Agreement.

 

·              Each Licensee will submit to Stanford a copy of each sublicense
after it becomes effective, which copy may be redacted except as to matters
directly pertinent to such Licensee’s obligations under this Agreement.

 

·              If either Licensee grants a sublicense pursuant to
Section 4.1(A), and receives an upfront payment in connection therewith, the
following amounts, if applicable, will be due to Stanford from such Licensee
within 60 days of the full execution of the agreement establishing such
collaboration:

 

·              (A)          if such agreement includes an upfront payment equal
to or less than $[***], a payment will be due to Stanford in the amount of
$[***];

 

·              (B)           if such agreement includes an upfront payment
greater than $[***] and equal to or less than $[***], a payment will be due to
Stanford in the amount of $[***];

 

·              (C)           if such agreement includes an upfront payment
greater than $[***], a payment will be due to Stanford in the amount of $[***].

 

·              If Licensees jointly enter into a bona fide collaboration with a
third party, the relevant upfront payment shall be due only once for such
collaboration. Any amounts representing the reimbursement of costs previously
incurred by a Licensee, including fully burdened personnel costs and patent
expenses, will not be included in determining the amount of any up front
payment.

 

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·              If Licensee pays all royalties due Stanford from a sublicensee’s
Net Sales, Licensee may grant that sublicensee a royalty-free or non-cash
sublicense or cross-license.

 

Diligence:

 

·              Each Licensee will use commercially reasonable efforts to
(a) develop, manufacture, and sell Licensed Products and develop markets for
Licensed Products; and (b) meet the milestones shown in its respective Appendix
(see below). If a Licensee does not meet a milestone in its Appendix by its
corresponding date, it will have 30 days to submit to Stanford a specific
written plan designed to meet its obligations under this Section as promptly as
possible using commercially reasonable efforts. Each plan shall be subject to
Stanford’s written approval, which will not be unreasonably withheld. Such
Licensee will have 3 months to demonstrate to Stanford’s reasonable satisfaction
its compliance with such plan.

 

·              (Appendices) Each Licensee will be solely responsible for meeting
the following diligence milestones in its development programs:

 

·              By the end of the year 2006, such Licensee will commence
optimization of miRNA inhibitors.

 

·              By the end of the year 2007, such Licensee will select the method
of delivery for such miRNA inhibitors.

 

·              By the end of the year 2008, such Licensee (i) optimize a lead
miRNA inhibitor and (ii) propose additional clinical milestones to Stanford.

 

·              By the end of the year 2010, such Licensee will complete
preclinical development

 

·              If Alnylam and Isis are jointly developing a given Licensed
Product, both will be deemed in compliance with their respective diligence
obligations if either of Alnylam and Isis is fulfilling such obligations.

 

·              By March 1 of each year, each Licensee will submit a written
annual report to Stanford covering the preceding calendar year.

 

Payment Obligations (Section 7):

 

·              The following annual maintenance fees are due under this
Agreement:

 

·              (A)          $[***] on the first 4 anniversaries of the Effective
Date;

 

·              (B)           $[***] on the 5th through 8th anniversaries of the
Effective Date; and

 

·              (C)           $[***] on the 9th anniversary of the Effective Date
and each anniversary thereafter.

 

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Unless instructed otherwise by Licensees, Stanford will send invoices for one
half of the above amounts to each Licensee.

 

·              (Section 7.3)The following milestones are payable for each
Licensee for the first Licensed Product in the Exclusive Field of Use:

 

IND acceptance in U.S. or first dosing of a subject outside the U.S.

 

$

[***]

 

Dosing of first subject in first Phase III Clinical Trial

 

$

[***]

 

NDA approval in U.S. or a foreign equivalent

 

$

[***]

 

 

·

 

·

 

·              Milestones payable with respect to the first Licensed Product of
each Licensee in the Non-Exclusive Field of Use are [***]%) of those above..

 

·              Milestones payable with respect to the second Licensed Product
(i.e. a new molecular entity) of each Licensee in the Non-Exclusive Field of Use
are [***]%) of those in the first chart above.

 

·              For clarity, if Alnylam achieves any of the above milestone
events, it does not relieve Isis of the obligation to pay similar milestones
when Isis, or its sublicensee achieves the same milestone events; provided,
however, that if Alnylam and Isis are jointly developing a given Licensed
Product, payments are due only once in respect of the achievement of a milestone
event for such Licensed Product.

 

·              (Section 7.4)  Each Licensee will pay Stanford earned royalties
on Net Sales of [***]% of Net Sales of such Licensee’s Licensed Product.  If a
Licensee becomes obligated to pay royalties to any third parties in connection
with the sale of a Licensed Product, the royalties due to Stanford from such
Licensee under this Section for such Licensed Product will be reduced in
connection with amounts paid to such third parties as follows:  for every [***]%
of Net Sales which is paid to such third parties (in the aggregate) in a given
calendar year, the royalty rate due to Stanford will be reduced by [***]%.  In
no event, however, will the royalty payable to Stanford by such Licensee be
reduced below a floor of [***]%.  If the Licensees are jointly developing and/or
commercializing a Licensed Product, the royalty set forth above shall be due
only once with respect to such Licensed Product.

 

·              Royalty payments due to Stanford under Section 7.4 above in a
particular year will be reduced by the license maintenance fee paid by such
Licensee and applicable to such year.

 

Non-Use of Names (Section 12.2):

 

·              The Licensees will not identify Stanford in any promotional
statement, or otherwise use the name of any Stanford faculty member, employee,
or student, or any

 

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trademark, service mark, trade name, or symbol of Stanford or its affiliated
hospitals and clinics, including the Stanford name, unless Stanford has given
its prior written consent or as required by law, rule or regulation.  Permission
may be withheld at Stanford’s sole discretion.

 

Prosecution and Enforcement (Section 13):

 

·              Subject to Stanford’s approval, Isis will coordinate and be
responsible for preparing, filing, prosecuting and maintaining the Licensed
Patents in Stanford’s name.  The parties shall work together to develop a
prosecution strategy and decide in which countries the Licensed Patents will be
filed.

 

·              Isis will

 

·              (i) keep Stanford and Alnylam informed as to the filing,
prosecution, maintenance and abandonment, as applicable, of the Licensed
Patents;

 

·              (ii) furnish Stanford and Alnylam copies of documents relevant to
any such filing, prosecution maintenance and abandonment, as applicable;

 

·              (iii) allow Stanford and Alnylam reasonable opportunity to timely
comment on documents to be filed with any patent office which would affect the
Licensed Patents;

 

·              (iv) give good faith consideration to the comments and advice of
Stanford and Alnylam; provided however that Stanford will have the opportunity
to provide Isis with final approval on how to proceed in any response or taking
any such action; and

 

·              (v) provide copies of any official written communications
relating to the Licensed Patents to Stanford and Alnylam within 10 days of Isis
receiving such communication and Stanford and Alnylam will provide any
applicable comments to Isis no later than 5 days prior to the first deadline
(without extensions) to file a response or take any action relating to such
communication.

 

·              Isis may use counsel of its choice, which must be acceptable to
Stanford and Alnylam, for the filing, prosecution and maintenance of the
Licensed Patents and the Licensees shall be billed directly by such counsel.

 

·              A Licensee or the Licensees will reimburse Stanford the following
costs:

 

·              all Stanford’s reasonable and actual out-of-pocket patenting
expenses incurred after the Effective Date related to the Licensed Patents.

 

·              If one and only one Licensee decides to abandon ongoing
prosecution and/or maintenance of any of the Licensed Patents, on a
country-by-country and Licensed Patent-by-Licensed Patent basis, the continuing
Licensee will pay 100% of the ongoing expenses for such Licensed Patent. 
Stanford shall have the right to continue payment for such Licensed Patent in
its own discretion and at its own expense if both Licensees

 

34

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decide to abandon ongoing prosecution and/or maintenance of the Licensed
Patents.   If Stanford decides to maintain such Licensed Patent, the license
with respect to such Licensed Patent in such country under this Agreement shall
terminate with respect to the ceasing Licensee(s).  Cessation of payment by one
Licensee as to a Licensed Patent will not affect the rights of the other
Licensee with respect to such Licensed Patent.  If Isis is the Licensee wishing
to cease payment of a Licensed Patent, the responsibility for the prosecution of
such Licensed Patent will transfer to Stanford.

 

·              Each Licensee may assign its rights and obligations under
Sections 13.1 and 13.2 to a sublicensee, subject to prior notification to and
approval from Stanford.

 

·              Stanford has the first right to institute action against a third
party infringer which will be executed (if at all) within 90 days after Stanford
first becomes aware of the infringing activity, and may name one or both
Licensees as a party for standing purposes.  Each Licensee may elect to jointly
prosecute the action (with Stanford) by providing written notice within 30 days
after the date of the notice from Stanford.  If both Licensees elect not to
jointly prosecute, Stanford may pursue the suit, at its sole cost (including
costs of litigation) and in such event will be entitled to retain the entire
amount of any recovery or settlement that is in excess of the parties’ costs; if
one or both Licensees elect to jointly prosecute, Stanford and the jointly
prosecuting Licensees will proceed in accordance with the Joint Suit
provisions.  If a Licensee elects not to join a suit, that Licensee will discuss
in good faith with Stanford the assignment of rights, causes of action, and
damages necessary for Stanford to prosecute the alleged infringement.

 

·              Joint Suit.  If Stanford and either or both Licensees are jointly
prosecuting an action against a third party infringer, they will share the
out-of-pocket costs and any recovery or settlement equally; and agree how they
will exercise control over the action.

 

·              (Sections 13.6 and 13.7)  If Stanford elects not to participate
in a suit, either or both Licensee(s) may institute and prosecute a suit so long
as it conforms with the requirements of this Section.  The Licensee(s) will
reach agreement on the institution and prosecution of such suit and the sharing
of such costs among themselves and will diligently pursue the suit and the
Licensee(s) instituting the suit will bear the entire cost (including necessary
expenses incurred by Stanford) of the litigation.  The Licensee(s) will keep
Stanford reasonably apprised of all developments in the suit, and will seek
Stanford’s input and approval on any substantive submissions or positions taken
in the litigation regarding the scope, validity and enforceability of the
Licensed Patents.  The Licensee(s) will not prosecute, settle or otherwise
compromise any such suit in a manner that adversely affects Stanford’s interests
without Stanford’s prior written consent.  If either or both Licensees sue under
Section 13.6, then any recovery in excess of any unrecovered litigation costs
and fees will be shared with Stanford as follows:

 

·              Any recovery for past sales by the infringer of products, which,
if sold by a Licensee, would be Licensed Products will be deemed Net Sales for
purposes of this Agreement, and such Licensees will pay Stanford royalties;

 

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·              Licensee and Stanford will negotiate in good faith appropriate
compensation to Stanford for any non-cash settlement, non-cash cross-license or
payment for the right to make future sales.

 

Term and Termination (Section 14, 18.1):

 

·              Any termination shall only terminate this Agreement between
Stanford and the affected Licensee, and it shall remain in full force and effect
between Stanford and the non-affected Licensee.

 

·              Each Licensee may terminate its rights and obligations under this
Agreement by giving Stanford at least 30 days written notice.

 

·              A breach by one Licensee of its obligations to Stanford under
this Agreement may not be used as a basis for termination of this Agreement by
the non-breaching Licensee, nor may a breach of any obligation arising between
the Licensees under this Agreement be used as a basis for termination by one
Licensee.

 

Assignment (Section 15):

 

·              Each Licensee may assign this Agreement as part of a sale,
regardless of whether such a sale occurs through an asset sale, stock sale,
merger or other combination, or any other transfer of such Licensee’s entire
business, or that part of the Licensee’s business to which this Agreement
relates.

 

Definitions:

 

                “Exclusive Licensed Field of Use” means the research,
development, commercialization and monitoring of therapeutics for the treatment
and prevention of Hepatitis C and directly related conditions and diseases
(including without limitation chronic hepatitis, cirrhosis and primary liver
cancer).  The Exclusive Field of Use specifically excludes:

 

(A) diagnostics;  and

 

(B) commercialization of reagents.

 

“Licensed Patents” means Stanford’s U.S. Provisional Patent Application, Serial
Number [***], and the related patent family.  “Licensed Patent” excludes any
continuation-in-part (CIP) patent application or patent unless the subject
matter of such CIP patent application is specifically described or claimed in
another Licensed Patent and is filed within three (3) years of the Effective
Date.  Licensed Patents exclude any claims relating to new matter that is
invented by Stanford after the Effective Date.

 

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“Licensed Product” means a product in either the Exclusive Licensed Field of Use
or the Non-Exclusive Licensed Field of Use the making, using, importing or
selling of which, absent this license, infringes a Valid Claim of a Licensed
Patent.

 

“Non-Exclusive Licensed Field of Use” means the research, development,
commercialization and monitoring of therapeutics for the treatment and
prevention of all conditions or diseases other than Hepatitis C and directly
related conditions or diseases.

 

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GARCHING (Co-Exclusive)

 

License Agreement among Garching Innovation GmbH (“GI”), Alnylam
Pharmaceuticals, Inc. and Isis Pharmaceuticals, Inc. effective October 18, 2004

 

Brief Summary of Technology Covered by License:

 

·      The Max Planck Society granted co-exclusive rights Alnylam and Isis to
patent applications (known as “Tuschl III”) based on the microRNA work of
Dr. Thomas Tuschl. These microRNAs have the potential to be new drug targets or
therapeutic products and are the subjects of the licensed patent applications.

 

Scope of License (Section 2.1):

 

·              GI hereby grants to each Alnylam and ISIS and their Affiliates a
royalty-bearing co-exclusive worldwide license, with the right to grant
sublicenses, under the Patent Rights to develop, make, have made, use, sell and
import Licensed Products in the Field.

 

·              MPG retains the right to practice under the Patent Rights for
non-commercial scientific research, teaching, education, non-commercial
collaboration (including industry-sponsored scientific collaborations) and
publication purposes.

 

·              Alnylam and ISIS acknowledge that the German government retains a
royalty-free, non-exclusive, non-transferable license to practice any
government-funded invention claimed in any Patent Rights for government
purposes.

 

Sublicensing (Section 2.2):

 

·              Alnylam and ISIS may each grant sublicenses to the rights granted
to them under Section 2.1 to Third Parties, however only (i) as Naked
Sublicenses, (ii) in connection with a Drug Discovery Collaboration or
Development Collaboration, or (iii) to a Sales Partner.

 

·              Each Naked Sublicense shall be subject to the prior written
approval of GI, which shall not unreasonably be withheld.  Alnylam or ISIS, as
applicable, shall inform GI in writing at least 30 days prior to the intended
signature of any such sublicense agreement in sufficient detail (in particular
regarding financial terms and other relevant information) to permit GI to decide
whether or not to approve.  Any requested approval is deemed to be granted if GI
does not refuse the approval in writing within 30 days after receiving the
necessary information; in particular, GI may withhold its approval if GI deems
the received information not sufficient.

 

·              Each sublicense granted under this Agreement shall be subject and
subordinate to, and consistent with, the terms and conditions of this Agreement.
Alnylam or ISIS, as applicable, shall be liable that any subsequent sublicenses
granted by the Sublicensees are subject and subordinate to, and consistent with,
the terms and conditions of this Agreement.  In the event of a material default
by any sublicensee under an Isis or

 

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Alnylam sublicense, the applicable party will inform GI and take commercially
reasonable efforts to cause the sublicensee to cure the default or will
terminate the sublicense. (Section 4.6)

 

·              Within 30 days after the signature of each sublicense granted
under this Agreement, Alnylam or ISIS, as applicable, shall provide GI with a
reasonably redacted copy of the signed sublicense agreement.

 

Diligence (Section 4):

 

·              Alnylam and ISIS shall each use commercially reasonable efforts,
and shall oblige their Affiliates and Sublicensees to use commercially
reasonable efforts, to develop and commercialize their respective Licensed
Products.

 

·              Semi-annual progress reports.  ALNYLAM and ISIS shall each
furnish, and require their Affiliates to furnish to ALNYLAM and ISIS, to GI in
writing, semi-annually, within 60 days after the end of each calendar half year,
with a report, stating in reasonable detail the activities and the progress of
their efforts (including the efforts of their Sublicensees) during the
immediately preceding half year to develop and commercialize their respective
Licensed Products, on a product-by-product and country-by-country basis.  The
report shall also contain a discussion of intended development and
commercialisation efforts for the calendar half year in which the report is
submitted.

 

Financial Obligations (Section 5):

 

·              Alnylam and ISIS shall each pay to GI the following milestone
payments for each of their respective Licensed Products (including Licensed
Products of their Affiliates and Sublicensees) within 30 days:

 

Milestone Event

 

Milestone Payment

 

First Initiation of Phase I Clinical Study

 

$

[***]

 

First Initiation of Phase II Clinical Study

 

$

[***]

 

First Initiation of Phase III Clinical Study

 

$

[***]

 

Regulatory Approval in USA, Japan or Europe

 

$

[***]

 

 

Each of the above milestone payment is due from the Party that is engaged in the
development and commercialization of such Licensed Product.

 

For each Licensed Product, milestone payments will only be due the first time
such Licensed Product achieves such milestone.  A Licensed Product will be
considered the same Licensed Product as long as it has not been modified in such
a way (unless as the result of stabilizing, formulation or delivery technology)
that would require the filing of a different IND for such Licensed Product.

 

·              Royalties (Section 5.3):

 

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·              Alnylam and ISIS shall each pay to GI for each of their
respective Licensed Products (including Licensed Products of their Affiliates
and Sublicensees) covered by Valid Claims the following running royalties on the
incremental portion of annual Net Sales:

 

·

Less than or equal to $[***] US Dollars

 

[***]

%

 

 

 

 

 

·

Between $[***] US Dollars and $[***] US Dollars

 

[***]

%

 

 

 

 

 

·

Between $[***] US Dollars and $[***] US Dollars

 

[***]

%

 

 

 

 

 

·

Greater than $[***] US Dollars

 

[***]

%

 

·              Alnylam and ISIS shall each pay to GI for each of their
respective Licensed Products (including Licensed Products of their Affiliates
and Sublicensees) covered by Pending Claims [***]% of running royalties above

 

·              If Alnylam or ISIS, or any of their Affiliates or Sublicensees,
licenses any patents or patent applications Controlled by a Third Party in order
to make, use, or sell a Licensed Product (explicitly excluding, without
limitation, any Third Party patents and patent applications covering any
formulation, stabilization, or delivery technology, or any target for a Licensed
Product) the running royalties set forth in Sec. 5.3 will be reduced, on a
country-by-country and product-by-product basis, from the date running royalties
have to be actually paid to such Third Party, by [***]% of any running royalty
owed to a Third Party for the manufacture, use or sale of a Licensed Product,
provided however that the running royalties due to GI will not be reduced to
less than [***]%.

 

·              The running royalties stated in Section 5.3 shall in no event be
reduced by the application of this Section 5.4 to less than a minimum royalty
rate of (i) [***]% for Licensed Products covered by Valid Claims, and
(ii) [***]% for Licensed Products covered by Pending Claims.

 

·              In no event shall the total cumulative running royalty burden of
Alnylam or Isis for a Licensed Product arising out of this Agreement and any
Existing GI Licenses, calculated on a product-by-product and country-by-country
basis, exceed [***]% for such a Licensed Product.

 

·              Sublicense Revenues (Section 5.5):

 

·              Subject to Section 5.5(d), in the event that Alnylam or ISIS
grant a Naked Sublicense to a Third Party pursuant to Section 2.2 (a), Alnylam
or ISIS, as applicable, shall pay to GI [***]% of their respective Sublicense
Consideration received, due within 30 days after receipt.

 

·              Subject to Section 5.5(d), in the event that Alnylam or ISIS
grant a sublicense to a Third Party pursuant to Section 2.2 (a) in connection
with a Drug Discovery Collaboration or Development Collaboration, Alnylam or
ISIS, as applicable, shall pay to

 

40

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GI the following percentages of their respective Sublicense Consideration
received, due within 30 days after receipt:

 

 

 

 

Percentage due to GI

 

·

Sublicense granted

 

[***]

%

 

 

 

 

 

·

Up to, but not including, filing of an IND:

 

[***]

%

 

 

 

 

 

·

After filing of an IND

 

[***]

%

 

 

 

 

 

·

After initiation of Phase II Clinical Study

 

[***]

%

 

 

 

 

 

·

After initiation of Phase III Clinical Study

 

[***]

%

 

 

 

 

 

·

After filing of a NDA

 

[***]

%

 

·              If Alnylam or ISIS receives any non-cash Sublicense
Consideration, Alnylam or ISIS, as applicable, shall pay GI, at GI’s election,
either (i) a cash payment equal to the fair market value of the Sublicense
Consideration, or (ii) the in-kind portion, if practicable, of the Sublicense
Consideration.

 

·              (Section 5.5(d)) If Alnylam or ISIS grant a sublicense that
includes, in addition to the Patent Rights, patents or patent applications
Controlled by Alnylam or ISIS, the percentage of the Sublicense Consideration
due to GI shall be based on the value reasonably attributable to the Patent
Rights relative to the value of the patents or patent applications Controlled by
Alnylam or ISIS included in such sublicense (such relative value of the Patent
Rights hereinafter the “Patent Rights Value”).

 

·              Together with the copy of any sublicense agreement to be provided
to GI according to Sec. 2.2, Alnylam or ISIS, as applicable, shall suggest to GI
the Patent Rights Value based on a good faith fair market value determination,
together with any information reasonably necessary or useful for GI to evaluate
such suggestion.

 

·              If a “fair market value” has to be determined, the Party obliged
to suggest such fair market value shall provide the other Party in due time with
a good faith determination of the fair market value, together with any
information necessary or useful to support such determination. The other Party
shall have the right to provide the suggesting Party in due time with a
counter-determination of the fair market value, which shall include any
information necessary or useful to support such counter-determination.

 

Prosecution and Enforcement (Section 6):

 

·              GI shall, in its sole discretion, apply for, seek issuance of,
maintain, or abandon the Patent Rights during the Term.

 

·              Alnylam, ISIS and GI shall cooperate, if necessary and
appropriate, with each other in gaining patent term extension wherever
applicable to the Patent Rights, and shall use reasonable efforts to agree upon
a joint strategy relating to patent term extensions.

 

41

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·              Alnylam and ISIS shall together pay to GI [***]%, and each of
Alnylam and ISIS shall pay [***]% of such [***]% share, of all fees and costs,
including attorneys fees, relating to the filing, prosecution, maintenance and
extension of the Patent Rights, which incur during the Term.

 

·              If Alnylam or ISIS wish to cease payment for any of the Patent
Rights, GI shall have the right to continue payment for such Patent Rights in
its own discretion and at its own expense; such Patent Rights shall no longer be
covered by this Agreement with respect to the ceasing party from the date
Alnylam or ISIS informs GI of its cessation of payments.

 

·              Enforcement (Section 6.3):

 

·              Alnylam and ISIS shall each promptly inform GI in writing if they
become aware of any suspected or actual infringement of the Patent Rights by any
Third Party, and of any available evidence thereof.

 

·              Subject to the right of each Alnylam and ISIS to join in the
prosecution of infringements set forth below, GI shall have the right, but not
the obligation, to prosecute (whether judicial or extrajudicial) in its own
discretion and at its own expense, all infringements of the Patent Rights.  The
total costs of any such sole infringement action shall be borne by GI, and GI
shall keep any recovery or damages (whether by way of settlement or otherwise)
derived therefrom.  In any such infringement suits, Alnylam and ISIS shall each,
at GI’s expense, cooperate with GI in all respects.

 

·              Alnylam and ISIS shall each have the right at their sole
discretion to join GI’s prosecution of any infringements of the Patent Rights. 
GI and the joining Party(ies) will agree in good faith on the sharing of the
total cost of any such joint infringement action and the sharing of any recovery
or damages derived therefrom.

 

·              If GI decides not to prosecute infringements of the Patent
Rights, neither solely nor jointly with Alnylam or ISIS, GI shall offer to
Alnylam and ISIS to prosecute (whether jointly by Alnylam and ISIS or solely by
one of them) any such infringement in their own discretion and at their own
expense. GI shall, at the expense of the prosecuting Party(ies), cooperate.  The
total cost of any such sole infringement action shall be borne by the
prosecuting Party(ies), and the prosecuting Party(ies) shall keep any recovery
or damages derived therefrom.

 

·              If a Party prosecuting infringements intends to settle the
infringement (such as granting a license or entering a settlement agreement),
any such arrangement needs the prior written approval of the other Parties,
which shall not unreasonably be withheld. Any sublicense granted by Alnylam or
ISIS to a Third Party infringer shall be regarded and treated as a Naked
Sublicense under this Agreement.

 

42

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Term and Termination (Section 9):

 

·              Alnylam and ISIS shall each have the right to terminate this
Agreement, for any reason, upon at least 3 months prior written notice to GI. 
Termination of this Agreement by either Isis or Alnylam shall not be deemed to
be termination by the other.

 

·              If at least 50% of issued and outstanding shares of Alnylam or
ISIS are assigned or transferred to a Third Party, Alnylam or ISIS, as
applicable, shall provide GI, upon GI’s request, with written reports in
reasonable detail on the actual and intended future activities of Alnylam or
ISIS, as applicable, to develop and commercialize Licensed Products.  If the
reports are not provided to GI in due time and/or in sufficient detail, after 60
days written notice from GI, such failure will be a material breach, and GI
shall have the right to terminate this Agreement with respect to such breaching
party in accordance with the procedures set forth in Section 9.6. Alnylam or
ISIS, as applicable, shall inform GI promptly of the implementation of any such
assignment or transfer.

 

·              GI shall have the right to terminate this Agreement upon 30 days
prior written notice to Alnylam or ISIS, if Alnylam or ISIS, as applicable, or
any of their Affiliates, attack, or have attacked or support an attack through a
Third Party, the validity of any of the Patent Rights.

 

·              If any license granted to Alnylam or ISIS under this Agreement is
terminated, any sublicense under such license granted prior to termination of
said license shall remain in full force and effect, provided that (i) the
Sublicensee is not then in breach of its sublicense agreement, and (ii) the
Sublicensee agrees, in writing within 30 days after the effective date of
termination, to be bound to GI as licensor under the terms and conditions of the
sublicense agreement, provided that GI shall have no other obligation than to
leave the sublicense granted by Alnylam or ISIS in place.

 

Non-Use of Names (Section 4.5):

 

·              Neither Alnylam nor ISIS, nor their Affiliates or Sublicensees,
may use the name of “Max Planck Institute”, “Max Planck Society”, “Garching
Innovation” or any variation, adaptation, or abbreviation thereof, or of any of
its trustees, officers, faculty, students, employees, or agents, or any
trademark owned by any of the aforementioned, in any promotional material or
other public announcement or disclosure without the prior written consent of GI
or in the case of an individual, the consent of that individual.

 

Assignment (Section 10.4):

 

·              Neither this Agreement no any rights or obligations may be
assigned or otherwise transferred by Alnylam or ISIS to a Third Party without
the prior written consent of GI. Notwithstanding the foregoing, Alnylam and ISIS
each may assign this Agreement to a Third Party in connection with the merger,
consolidation, or sale of all or substantially all of their assets or that
portion of their business to which this Agreement relates; provided, however,
that this Agreement shall immediately terminate if the proposed Third Party
assignee fails to agree in writing to be bound by the terms and conditions of
this

 

43

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Agreement on or before the effective date of assignment.  After the effective
date of assignment, the Third Party assignee shall provide GI, upon GI’s
request, with written reports in reasonable detail on the actual and intended
future activities of the Third Party assignee to develop and commercialize
Licensed Products.  If the Third Party assignee does not maintain a program to
develop and commercialize Licensed Products that is substantially similar or
greater in scope to the program of Alnylam or ISIS after the effective date of
assignment, then GI has the right to limit the scope of the co-exclusive license
granted under this Agreement to such Licensed Products actually covered by the
program of the Third Party assignee.

 

Definitions:

 

“Development Collaboration” means a collaboration by Alnylam and/or ISIS with a
Third Party whose purpose is the (i) further development and/or
commercialization of a Licensed Product discovered by Isis or Alnylam either on
their own or as part of a Drug Discovery Collaboration or (ii) further joint
development and/or joint commercialization of Licensed Products, in each case,
beginning after the initiation of IND-Enabling Tox Studies for such Licensed
Products. Collaborations that do not include or involve the licensed Patent
Rights shall not constitute Development Collaborations.

 

“Drug Discovery Collaboration” means a collaboration by Alnylam and/or ISIS with
a Third Party whose purpose is the joint discovery, joint development and/or
joint optimization of Licensed Products up to, but not including, IND-Enabling
Tox Studies for such Licensed Products.

 

“Existing GI Licenses” means any license agreement between Alnylam and GI in
force and effect prior to the Effective Date of this Agreement and relating to
patents or patent applications of MPG that also cover the manufacture, use and
sale of Licensed Products.

 

“Field” means use of Licensed Products

 

(i)            for each Party’s internal and collaborative research use, and

 

(ii)           for all therapeutic and prophylactic uses in human diseases,

 

specifically excluding any commercial provision of Licensed Products as research
reagents for research purposes, and any diagnostic use.

 

“Licensed Products” means any product, or part thereof, the manufacture, use or
sale of which, absent the license granted hereunder, would infringe one or more
Pending Claims or one or more Valid Claims of the Patent Rights.

 

“Naked Sublicenses” means any sublicense to the Patent Rights granted by Alnylam
and/or ISIS to a Third Party that is not a license in connection with a Drug
Discovery Collaboration, Development Collaboration or Sales Partner agreement.
Licenses that do not include or involve rights to the Patents Rights shall not
constitute Naked Sublicenses.

 

44

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“Patent Rights” means the patents and applications listed on Exhibit A and the
related patent family.

 

“Sales Partner” means any legal entity that is granted a sublicense to the
Patent Rights by Alnylam, ISIS, their Affiliates or Sublicensees solely to
market, promote, distribute or sell, or otherwise dispose of, Licensed Products
in finished form.

 

“Sublicense Consideration” means any consideration, whether in cash (e.g.
initial or upfront payments, technology access fees, annual fixed payments) or
in kind (e.g. devices, services, use rights, equity), received by Alnylam or
ISIS and their Affiliates from Sublicensees as consideration for the sublicense
granted. Sublicense Consideration specifically excludes (i) any milestone
payments relating to the achievement of certain clinical events, (ii) any
running royalties on sales of products, (iii) payments specifically committed to
reimburse Alnylam or ISIS for the fully-burdened cost of research and
development, (iv) payments made by the Sublicensee in consideration of equity
(shares, options, warrants or any other kind of securities) of Alnylam or ISIS
at fair market value, and (iv) equity (shares, options, warrants or any other
kind of securities) of the Sublicensee purchased by Alnylam or ISIS at fair
market value.

 

45

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MIT

 

Amended and Restated Exclusive Patent License Agreement between Massachusetts
Institute of Technology (“MIT”) and Alnylam, dated May 9, 2007 (“MIT Agreement”)

 

Brief Summary of Technology Covered by License:

 

·      M.I.T. granted Alnylam exclusive rights to develop and commercialize for
human RNAi therapeutics certain technology relating to novel lipid compositions
that are potential components of cationic liposomal formulations for cellular
delivery of oligonucleotides.  The technology was developed in the laboratory of
Professor Robert Langer.

 

Limitations on Scope of License (Sections 2.1, 2.3 and 2.5)

 

·              The license granted to Alnylam is limited to a exclusive (for the
Exclusive Period), worldwide license under the Patent Rights to develop, make,
have made, use and import Library Products and Licensed Processes to develop,
make, have made, use, sell, offer to sell, lease, and import Licensed Products
in the Field and to develop and perform Licensed Processes in the Field.

 

·              Alnylam does not have the right to sell or offer for sale the
Library Products separately from a sale or offer for sale of a Licensed Product.

 

·              MIT retains the right to practice under the Patent Rights for
research, teaching, and educational purposes.  The U.S. federal government
retains a royalty-free, non-exclusive, non-transferable license to practice any
government-funded invention claimed in any Patent Rights as set forth in 35 USC
201-211, and the regulations promulgated thereunder, including the requirement
that Library Products, whether or not part of Licensed Products, used or sold in
the U.S. must be manufactured substantially in the U.S.

 

·              The Patent Rights may not be asserted against non-for-profit
research institutions that practice the Patent Rights for research funded by
(i) the institutions themselves, (ii) not-for profit foundations, or (iii) any
federal, state or municipal government.  Alnylam may assert the Patent Rights
against not-for-profit research institutions only if the infringement activity
of the not-for-profit research institution was performed in the fulfillment of
research sponsored by a for-profit entity and the assertion of infringement must
be limited to those specific activities.

 

Restrictions on Sublicensing by Alnylam (Sections 2.1 and 2.3)

 

·              Alnylam may grant sublicenses under commercially reasonable terms
and conditions only during the Exclusive Period.  Any sublicenses by Alnylam may
extend past the expiration date of the Exclusive Period, but any exclusivity of
such sublicense will expire upon the expiration of the Exclusive Period.

 

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·              The sublicense must incorporate terms and conditions sufficient
to enable Alnylam and its Affiliates to comply with the MIT Agreement.  Such
sublicenses will also include provisions to provide that if Sublicensee brings a
Patent Challenge against MIT (except as required under a court order or
subpoena), Alnylam may terminate the sublicense.

 

·              Upon termination of the MIT Agreement, any Sublicensee not then
in default will have the right to seek a license from MIT, and MIT agrees to
negotiate such licenses in good faith under reasonable terms and conditions.

 

·              Alnylam may permit third parties (i) to use Library Products and
Licensed Processes for the purpose of research with academic or nonprofit
institutions and contract research, including for the conduct of clinical trials
of a Licensed Product, and (ii) to sell Licensed Products under an agency,
consignment or equivalent arrangement, wherein such rights are not sublicense
rights.

 

·              Alnylam will promptly furnish MIT with a fully signed photocopy
of any sublicense agreement, which copy may be redacted except with respect to
terms directly relevant to Alnylam’s obligations under the MIT Agreement.

 

Diligence and Reporting (Sections 3.1 and 3.2)

 

·              Sublicensees are required to use diligent efforts to develop
Library Products and Licensed Products and to introduce Licensed Products into
the commercial market; thereafter Sublicensees are required to make Licensed
Products reasonably available to the public.  Specifically, the following
obligations must be fulfilled:

 

·              Written reports are due within [***] days after the end of each
calendar year on the progress of efforts during the immediately preceding
calendar year to develop and commercialize Licensed Products.  Such reports will
include the number of [***], a description of [***], and the [***]that have been
tested.  The report will also contain a discussion of intended efforts and sales
projections for the year in which the report is submitted.

 

·              Funding for research at MIT pursuant to the Budget set forth in
Attachment C of the Research Agreement.

 

·              By [***], Library Products will be evaluated for use in [***].

 

·              Prior to [***], at least [***] will be advanced to [***] studies
in support of [***] for [***] studies.

 

·              Filing of [***] for Licensed Product [***]by [***].

 

·              Commencement of [***] trial for a Licensed Product within [***]
years of IND filing for such Licensed Product.

 

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·              First Commercial Sale of a Licensed Product within [***] for each
such Licensed Product.

 

·              If any Sublicensee is determined to have failed to fulfill any
obligation under Sections 3.1(a) and 3.1(c) - (g) above, MIT may treat such
failure as a material breach, subject to any changes to such diligence
requirements as may be mutually-agreed by the parties below.

 

·              If Alnylam anticipates a failure to meet an obligation set forth
in Section 3.1(c), (d), (e), (f) or (g) above will occur, Alnylam will promptly
advise MIT, and representatives of each party will meet to review the reasons
for anticipated failure.  Alnylam and MIT will enter into a written amendment to
the MIT Agreement with respect to any mutually agreed upon change(s) to the
relevant obligation.  If, after good faith discussion, Alnylam and MIT are
unable to agree upon an amendment to the obligation, Alnylam, at its discretion,
may elect to extend the due date to meet the obligation for such diligence
obligation by one year by providing written notice to MIT along with payment in
the amount of $[***].  Alnylam may extend the due date of each diligence
obligation set forth in Section 3.1(c), (d), (e), (f) or (g) of the MIT
Agreement only once during the term.

 

Financial Obligations (Section 4.1)

 

License Maintenance Fees:

 

·              Alnylam will pay MIT the following license maintenance fees on
the dates set forth below:

 

Each January 1st for 2008 and 2009

 

$

[***]

 

Each January 1st for 2010 and 2011

 

$

[***]

 

Each January 1st for 2012 and 2013

 

$

[***]

 

Each January 1st for 2014 and 2015

 

$

[***]

 

Each January 1st of every year thereafter

 

$

[***]

 

 

·              The annual license maintenance fee is nonrefundable, but may be
credited to running royalties subsequently due on Net Sales earned during the
same calendar year, if any.  License maintenance fees paid in excess of running
royalties due in such calendar year will not be creditable to amounts due for
future years.

 

Royalty Payments:

 

·              Running royalties of [***]% of Net Sales of Licensed Products and
Licensed Processes are due within [***] days of the end of each calendar
quarter.

 

·              If Alnylam or an Affiliate is legally required to pay royalties
to one or more third parties in order to obtain a license or similar right
necessary to practice the Patent Rights, Alnylam will be entitled to credit up
to [***]% of the amounts payable to such third

 

48

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parties against the royalties due to MIT for the same reporting period;
provided, however, that (i) in no event will the running royalties due to MIT,
when aggregated with any other offsets and credits allowed under the MIT
Agreement, be less than [***]% of Net Sales in any reporting period, and
(ii) royalties due to third parties with respect to [***] patents (see Appendix
B to MIT Agreement) will not qualify for purposes of the foregoing offset
against royalties.

 

Milestone Payments:

 

·              Alnylam will pay MIT the amounts set forth below upon achievement
by Alnylam or any of its Affiliates or Sublicensees of certain milestone events
as set forth below.  Payments will be due in respect of the achievement of such
milestone events for each first Licensed Product containing an miRNA
Therapeutic(s) and/or an siRNA Therapeutic(s) towards a specific Target or a
specific combination of Targets; provided, however, that if in the course of
development a given Licensed Product is discontinued and replaced with a
different Licensed Product for the same therapeutic indication containing an
miRNA Therapeutic(s) and/or an siRNA Therapeutic(s) towards at least one Target
that was also a Target of the discontinued Licensed Product, milestone payments
already paid for the discontinued Licensed Product will not be due for
achievement of the same milestone event(s) by the substituted Licensed Product.

 

Milestone Event

 

Payment

 

 

 

 

 

 

Filing of an Investigational New Drug Application (or equivalent)

 

$

[***]

 

Dosing of first patient in a Phase 2 clinical trial (or equivalent)

 

$

[***]

 

Dosing of first patient in a Phase 3 clinical trial (or equivalent)

 

$

[***]

 

First Commercial Sale

 

$

[***]

 

 

·              In the event of an assignment as described in Article 10 of the
MIT Agreement, the milestone payments set forth above that have not yet come
due, will instead be replaced with the milestone events and payments set forth
below.

 

Milestone Event

 

Payment

 

 

 

 

 

 

Filing of Investigational New Drug Application (or equivalent)

 

$

[***]

 

Dosing of first patient in a Phase 2 clinical trial (or equivalent)

 

$

[***]

 

Dosing of first patient in a Phase 3 clinical trial (or equivalent)

 

$

[***]

 

First Commercial Sale

 

$

[***]

 

 

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·              The milestone events set forth in the two tables above are
intended to be successive.  In addition and notwithstanding the foregoing, if
any milestone is reached without achieving a preceding milestone, then the
amount which would have been payable on achievement of the preceding milestone
will be payable upon achievement of the next successive milestone.  Alnylam will
notify MIT within ten (10) days of the achievement of any of the above
milestones by Alnylam or any of its Affiliates or Sublicensees.

 

Sublicense Income:

 

·              If Alnylam or an Affiliate grants a sublicense of its rights
under Section 2.1 of the MIT Agreement, Alnylam will pay MIT, as applicable:

 

·              [***]% of all Sublicense Income received by Alnylam or Affiliates
from Sublicensees which are also receiving rights to substantial technology
and/or patent rights owned or controlled by Alnylam or Affiliates related to the
development of Licensed Products, whether such Sublicense Income is received
under the same agreement as the sublicense to Alnylam’s rights under Section 2.1
of the MIT Agreement and/or in a separate agreement.  (To the extent that the
only other patents and/or technology rights received by Sublicensees are
sublicense rights under the patent rights listed in Appendix B, then any sharing
of Sublicense Income will fall under clause (b) below); and

 

·              [***]% of all Sublicense Income received by Alnylam or Affiliates
from Sublicensees if such Sublicensees are receiving a sublicense to Alnylam’s
rights under Section 2.1 of the MIT Agreement alone or with a sublicense to the
patent rights listed in Appendix B, without substantial additional technology
and/or other patent rights from Alnylam or Affiliates, whether or not in the
same agreement, as part of the same business arrangement related to Licensed
Products.

 

·              Such amount will be payable for each reporting period and will be
due to MIT within [***] days of the end of each reporting period.

 

Reports (Sections 5.1 and 5.2)

 

·              Prior to First Commercial Sale of a Licensed Product or first
commercial performance of a Licensed Process, Alnylam is required to deliver
annual reports within [***] days of the end of each calendar year, containing
information concerning the immediately preceding year, as further described in
Section 5.2 of the MIT Agreement (see below).  The date of First Commercial Sale
of a Licensed Product or commercial performance of a Licensed Process must be
reported to MIT within [***] days of its occurrence.

 

·              After First Commercial Sale of a Licensed Product or commercial
performance of a Licensed Process, reports are required to be delivered to MIT
within [***] days of the end of each reporting period containing information
concerning the immediately preceding reporting period, as further described in
Section 5.2 of the MIT Agreement (see below).

 

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·              Section 5.2 states that reports must include at least the
following information for the immediately preceding reporting period:

 

·              the number of Licensed Products sold, leased, or distributed to
independent third parties in each country and, if applicable, the number of
[***] used in the provision of services in each country;

 

·              a description of Licensed Processes performed in each country as
may be pertinent to a royalty accounting under the MIT Agreement;

 

·              gross price charged in each country and, if applicable, the gross
price charged for each Licensed Product used to provide services in each
country; and the gross price charged for each Licensed Process performed in each
country;

 

·              calculation of Net Sales in each country, including a listing of
applicable deductions;

 

·              total royalty payable on Net Sales in U.S. dollars, together with
the exchange rate used for conversion;

 

·              the amount of Sublicense Income received by Alnylam and its
Affiliates and the amount due to MIT from such sublicense income, including an
itemized breakdown of the sources of income comprising the Sublicense Income;

 

·              [***] categorized by rights relating to [***];

 

·              the dates on which milestone events are achieved and the
milestone payments due; and

 

·              [***] in accordance with the requirements of Article [***] of the
MIT Agreement.

 

If no amounts are due to MIT for any reporting period, the report will so state.

 

Recordkeeping and Audit Rights (Section 5.4)

 

·              Sublicensees are required to maintain complete and accurate
records reasonably relating to (i) the rights and obligations under the MIT
Agreement, and (ii) any amounts payable to MIT in relation to the MIT Agreement,
which records will contain sufficient information to permit MIT to confirm the
accuracy of any reports and payments delivered to MIT and compliance in other
respects with the MIT Agreement.  Such records will be retained for at least
[***] years following the end of the calendar year to which they pertain, during
which time a certified public accountant selected by MIT (who will be required
to enter into a confidentiality obligation with Sublicensee) may inspect such
records upon advance notice and during normal business hours solely for the
purpose of verifying any reports and payments or compliance in other respects
with the MIT Agreement.

 

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Prosecution and Enforcement (Sections 6.1, 7.1-7.3 and 7.7)

 

·              MIT will prepare, file, prosecute, and maintain all of the Patent
Rights.  Alnylam will cooperate with MIT in such filing, prosecution and
maintenance.

 

·              So long as Alnylam remains the exclusive licensee of the Patent
Rights in the Field, Alnylam, to the extent permitted by law, will have the
right, under its own control and at its own expense, to prosecute any third
party infringement of the Patent Rights in the Field, subject to
Sections 2.5(c) (Non-assert), 7.4 (Offsets) and 7.5 (Recovery) of the MIT
Agreement.  Prior to commencing any such action, Alnylam will consult with MIT
and will consider the views of MIT regarding the advisability of the proposed
action and its effect on the public interest.

 

·              If Alnylam is unsuccessful in persuading the alleged infringer to
desist or fails to have initiated an infringement action within a reasonable
time after Alnylam first becomes aware of the basis for such action, MIT will
have the right, at its sole discretion, to prosecute such infringement under its
sole control and at its sole expense, and to keep any recovery.

 

·              If a Patent Challenge is brought against Alnylam by a third
party, MIT, at its option, will have the right within 20 days after commencement
of such action to take over the sole defense of the action.  If MIT does not
exercise this right, Alnylam may take over the sole defense of such action.

 

·              So long as Alnylam remains the exclusive licensee of the Patent
Rights in the Field, Alnylam will have the sole right to sublicense any alleged
infringer in the Field for future use of the Patent Rights in accordance with
Alnylam’s rights under and the terms and conditions of this Agreement.  Any
upfront fees as part of such sublicense will be shared equally between Alnylam
and MIT; other revenues to Alnylam pursuant to such sublicense will be treated
as set forth in Article 4 of the MIT Agreement.

 

Consequences of a Patent Challenge by Sublicensee (Sections 12.5 and 4.3)

 

·              If a Sublicensee brings a Patent Challenge against MIT (except as
required under a court order or subpoena), MIT may send a written demand to
Alnylam to terminate the sublicense.  If Alnylam fails to so terminate such
sublicense within 30 days of MIT’s demand, MIT may immediately terminate the MIT
Agreement and/or the license granted thereunder.

 

·              Notwithstanding the foregoing, if MIT decides not to terminate
the MIT Agreement and the Patent Challenge is successful, Alnylam will have no
right to recoup any royalties paid during the period of challenge.  If the
Patent Challenge is unsuccessful, Alnylam will reimburse MIT for all of its
costs and expenses it incurred as a result of such Patent Challenge, including
without limitation attorneys fees, court costs, litigation related
disbursements, and third party and expert witness fees (collectively,
“Litigation Costs”).  Reimbursement for Litigation Costs will be made within
thirty (30) days of receipt of one or more invoices from MIT for such Litigation
Costs.

 

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Certain Termination Rights (Sections 12.1, 12.2 and 12.4)

 

·              Alnylam has the right to terminate the MIT Agreement for any
reason upon at least 6 months’ prior written notice to MIT and payment of all
amounts due to MIT through the effective date of termination.

 

·              If Alnylam ceases to carry on its business related to the MIT
Agreement, MIT will have the right to terminate the MIT Agreement immediately
upon written notice to Alnylam.

 

·              MIT, at its sole discretion, may terminate the Exclusive Period
upon ten (10) days written notice to Alnylam if any of the following events
occurs:  (a) Alnylam is in uncured material default under the Research
Agreement, including uncured failure to make any payments due thereunder; or
(b) the Research Agreement is terminated for any reason other than for
(i) material breach by MIT, (ii) the inability of Dr. Robert Langer to continue
to serve as Principal Investigator, and the inability of the parties to agree
upon a replacement Principal Investigator, an interim Principal Investigator, or
an alternate arrangement for the performance of the Research after Dr. Langer is
no longer able to serve as Principal Investigator (capitalized terms used in the
foregoing clause have the meanings ascribed to them in the Research Agreement);
or (iii) circumstances beyond MIT’s reasonable control that preclude the
continuation of the Research, as provided for under the Research Agreement.

 

Definitions

 

“Development Candidate” means a pre-clinical Licensed Product which possesses
desirable properties of a therapeutic agent for the treatment of a clinical
condition based on in vitro and animal proof-of-concept studies.

 

“Exclusive Period” means the term of the MIT Agreement.

 

“Field” means therapeutic use in humans.

 

“Immunomodulatory Nucleic Acid” means a nucleic acid molecule that
(i) stimulates or blocks immune system functions, and (ii) the nucleotide
sequence of which does not specifically target and modulate gene expression. 
Immunomodulatory Nucleic Acid specifically excludes siRNA, miRNA and nucleic
acids that function through an RNA interference mechanism.

 

“Library Component” means a Library Product which is a set of reaction products
formed by an addition reaction between two individual monomers, which set will
include all reaction products and combinations within such set, including all
isomers; and any compounds identical to any of the foregoing, including
individual reaction products within such set, regardless of the means by which
said compounds are prepared, manufactured or synthesized.

 

“Library Product” means any product that, in whole or in part: (i) absent the
license granted hereunder, would infringe one or more Valid Claims of the Patent
Rights; or

 

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(ii) is manufactured by using a Licensed Process or that, when used, practices a
Licensed Process.

 

“Licensed Process” means any process that, in whole or in part: (i) absent the
license granted hereunder, would infringe one or more Valid Claims of the Patent
Rights; or (ii) when practiced, uses a Library Product.

 

“Licensed Product” means any product that contains both (i) an RNAi Product and
(ii) a Library Product.  Licensed Product specifically excludes any products
containing or incorporating any other therapeutically or pharmaceutically active
agents, including without limitation proteins or peptides, antibodies, Small
Molecules, non-siRNA and non-miRNA nucleic acids, and Immunomodulatory Nucleic
Acids.

 

“miRNA” (“microRNA”) means a class of endogenous, non-coding, sequence specific
ribonucleic acid (RNA) between 21 to 25 nucleotides in length that modulates
gene expression.  miRNA specifically excludes messenger RNA, and any other RNA
that encodes a polypeptide, and Immunomodulatory Nucleic Acids.

 

“miRNA Therapeutic” means a therapeutic containing, composed of or based on
oligomers of native or chemically modified RNA designed to either modulate an
miRNA and/or provide the function of an miRNA.

 

“ND98 Library Component” means the Library Component which is described in
Appendix C of the MIT Agreement.

 

“Patent Rights” means the patent applications listed on Appendix A to the MIT
Agreement entitled “Amine-Containing Lipids and Uses Thereof” and “A Combination
Library of Lipidoids:  Efficient Systemic siRNA Delivery”, and resulting patents
and patent applications.

 

“Research Agreement” means the sponsored research agreement between MIT and
Alnylam effective on May 8, 2007.

 

“Research Support Payment” means payments to Alnylam or an Affiliate from a
Sublicensee for the purposes of funding the costs of bona fide research and
development of Licensed Products and/or Library Products under a jointly
prepared research plan and only to the extent such payments were spent on such
research and development of Licensed Products and/or Library Products, and only
to fund or pay for direct and indirect costs and fully loaded personnel costs,
all as calculated under GAAP.  For the avoidance of doubt, Research Support
Payments will mean payments that are expressly intended only to fund or pay for
(i) equipment, supplies, products or services, and (ii) the use of employees
and/or full time consultants, incurred or to be incurred on behalf of such
Sublicensee to achieve a research or development goal for Licensed Products
and/or Library Products.

 

“RNAi Product” means a product containing one or more siRNA Therapeutics and/or
miRNA Therapeutics towards one or more Targets.  For the avoidance of doubt,
RNAi Product specifically includes siRNA Therapeutics and miRNA Therapeutics in

 

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association with other molecules which are not therapeutically or
pharmaceutically active, but which function to improve delivery to cells,
including, without limitation, siRNA and miRNA Therapeutics which are covalently
linked to, or otherwise associated with, lipids, carbohydrates, peptides,
proteins, aptamers and Small Molecules.

 

“siRNA” (“small interfering RNA”) means a double-stranded ribonucleic acid (RNA)
molecule designed to act through an RNA interference mechanism that consists of
either (a) two separate oligomers of native or chemically modified RNA that are
hybridized to one another along a substantial portion of their lengths, or (b) a
single oligomer of native or chemically modified RNA that is hybridized to
itself by self-complementary base-pairing along a substantial portion of its
length to form a hairpin.  siRNA specifically excludes messenger RNA, and any
other RNA that encodes a polypeptide, and Immunomodulatory Nucleic Acids.

 

“siRNA Therapeutic” means a therapeutic containing, composed of or based on
siRNA and designed to modulate the function of particular genes or gene products
by causing degradation of a messenger RNA to which such siRNA is complementary,
and that is not an miRNA Therapeutic.

 

“Small Molecule” means a non-polymeric bioactive molecule that is not a peptide,
protein, DNA, RNA or a complex carbohydrate.

 

“Sublicense Income” means any payments that Alnylam or an Affiliate receives
from a Sublicensee in consideration of the sublicense of the rights granted
Alnylam and Affiliates under Section 2.1 of the MIT Agreement, including without
limitation equity, license fees, milestone payments (net of any sums due to MIT
under this Agreement for the same milestone event), license maintenance fees,
and other payments, but specifically excluding:

 

·                  royalties on Net Sales;

 

·                  minimum royalty upfront payments only to the extent such
payments equal actual royalties due to Alnylam;

 

·                  fair market value of equity investments in Alnylam or an
Affiliate by a Sublicensee;

 

·                  reimbursement of out of pocket patent expenses for the Patent
Rights;

 

·                  Research Support Payments;

 

·                  loan proceeds paid to Alnylam by a Sublicensee in an arms
length, full recourse debt financing; and

 

·                  any amounts received under an indemnification obligation.

 

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For clarity, the amounts received by Alnylam or its affiliates related to the
development of Licensed Products will be considered Sublicense Income.

 

“Target” means (a) a single gene, as defined in the NCBI Entrez Gene database or
any successor database thereto, or a product of such gene, that is a site or
potential site of therapeutic intervention by an siRNA Therapeutic and/or an
miRNA Therapeutic; (b) naturally occurring variants of a gene or gene product
described in clause (a); or (c) a naturally occurring interfering RNA or miRNA
or precursors thereof; provided that for the purposes of this definition a viral
genome will be regarded as a single gene, and that the DNA sequence encoding a
specific miRNA precursor will also be regarded as a single gene.

 

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TEKMIRA/UBC

 

The Sublicense Agreement between Tekmira and Alnylam, dated January 8, 2007
(“UBC Sublicense Agreement”)

 

Brief Summary of Technology Covered by License:  See Tekmira-Alnylam Agreement
above.

 

Limitations on Scope of License (Sections 3.1 and 3.3)

 

·              The sublicense granted to Alnylam is limited to an exclusive,
worldwide license under the rights granted to Tekmira in the University License
Agreement (see below) with respect to Technology to research, develop,
manufacture, have made, distribute, import, use, sell and have sold Products in
and for the Alnylam Field.  In addition, any sublicense granted by Tekmira to
Alnylam would be subject to Tekmira’s sublicense to Esperion Technologies, Inc.
of certain technology relating to liposome compositions and methods for the
treatment of atherosclerosis.

 

·              Under the University License Agreement, Tekmira obtained from the
University an exclusive, worldwide license to use and sublicense the Technology
and to make, have made, distribute, import and use goods, the manufacture, use
or sale of which would, but for the license granted herein, infringe a Valid
Claim of any Patent, including a license to use and sublicense the Technology
for (a) the delivery of and use with nucleic acid constructs, and (b) the
treatment, prophylaxis and diagnosis of diseases in humans using an RNAi Product
or miRNA Product, and to research, develop, make, have made, distribute, import,
use, sell and have sold RNAi Products and miRNA Products.

 

·              University retains the right to use the Technology without charge
in any manner whatsoever for non-commercial research, scholarly publication,
educational or other non-commercial use.

 

Restrictions on Sublicensing by Alnylam (Sections 3.2 and 4.2)

 

·              Any further sublicense granted by Alnylam to a third party would
be subject to the grant of the following licenses by Alnylam to Tekmira under
Alnylam’s rights in the Technology: (a) to perform Tekmira’s obligations under
the Collaboration with respect to Products, and the Manufacturing Activities, on
a non-exclusive basis, and (b) to develop, manufacture and commercialize Inex
Royalty Products for the treatment, prophylaxis and diagnosis of diseases in
humans, on an exclusive basis.

 

·              Alnylam may grant sublicenses to third parties with respect to
the Technology only upon written notice to Tekmira and the University, and
provided that the Sublicensee agrees (i) to perform the terms of the UBC
Sublicense Agreement as if such Sublicensee were Alnylam under the UBC
Sublicense Agreement; (ii) to represent that Sublicensee is not, as of the
effective date of the relevant sublicense agreement, engaged in a dispute with
the University; and (iii) to be subject to a written sublicense agreement that
contains terms consistent with “the terms of this Agreement” described in
Section

 

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4.2(c) of the UBC Sublicense Agreement (see below) and that provides that the
University is a third party beneficiary of, and has the right to enforce
directly against the sublicensee, the terms in such sublicense agreement that
are consistent with the terms listed in Section 4.2(c)(ii) of the UBC Sublicense
Agreement.

 

·              Section 4.2(c)(ii) of the UBC Sublicense Agreement states that
the “terms of this Agreement” means (i) the terms set forth in the UBC
Sublicense Agreement; (ii) terms in such sublicense agreement consistent with
Sections 1.3 (Alnylam Consent to Certain Disclosures to the University), 1.7
(Rights of the University), 2.1 (Limited Warranties), 2.2 (Disclaimer of Product
Liability), 2.3 (Indemnification of the University), 2.4 (Monetary Cap
Respecting UBC License), 2.5 (Disclaimer of Consequential Losses by the
University), 2.6 (Litigation), 2.7 (UBC Trademark), 2.8 (Confidentiality of
Terms) and 2.13 (Alnylam Warranties) of the Consent Agreement among Alnylam,
Tekmira and the University of even date with the UBC Sublicense Agreement
(“Consent Agreement”); and (iii) other customary and reasonable terms, including
but not limited to terms relating to breach and termination, that are consistent
with Alnylam’s obligations to Tekmira under the UBC Sublicense Agreement and the
Tekmira Agreement.

 

·              Any sublicense granted by Alnylam under the UBC Sublicense
Agreement will survive termination of the licenses or other rights granted to
Alnylam under the UBC Sublicense Agreement, and be assumed by Tekmira, as long
as (i) the sublicensee is not then in breach of its sublicense agreement,
(ii) the sublicensee agrees in writing to be bound to Tekmira as a sublicensor
and to the University under the terms and conditions of the UBC Sublicense
Agreement, and (iii) the sublicensee agrees in writing that in no event will
Tekmira assume any obligations or liabilities, or be under any obligation or
requirement of performance, under any such sublicense extending beyond Tekmira’s
obligations and liabilities under the UBC Sublicense Agreement.

 

·              Alnylam is required to furnish Tekmira with a copy of each
sublicense granted within 30 days after execution.  Any such copy may contain
reasonable redactions as Alnylam may make, provided that such redactions do not
include provisions necessary to demonstrate compliance with the requirements of
the UBC Sublicense Agreement.  If University requests of Tekmira that a less
redacted version of any sublicense be provided to University, Alnylam agrees to
discuss in good faith with Tekmira and the University the University’s concerns.

 

Financial Obligations (Section 5.0)

 

·              The consideration for the rights granted to Alnylam to the
Technology under the UBC Sublicense Agreement, and the consideration for the
rights granted by Tekmira to Alnylam to other technologies under the Tekmira
Agreement, is the payment by Alnylam of milestones and royalties in accordance
with Article 7 of the Tekmira Agreement.

 

Prosecution and Enforcement (Section 7.7)

 

·              Tekmira will have the right, with reasonable input from Alnylam,
to identify any process, use or products arising out of the Technology that may
be patentable and will

 

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take all reasonable steps to apply for a patent in the name of the University,
provided that Tekmira pays all costs of applying for, registering, and
maintaining the patent in those jurisdictions in which Tekmira determines that a
Patent is required.

 

·              On the issuance of a patent for the Technology, Tekmira will have
the right to become, and will become the licensee of the same, all pursuant to
the terms contained in the University License Agreement, and Alnylam will have
the right to become, and will become the sublicensee of such rights pursuant to
the terms contained in the UBC Sublicense Agreement.

 

·              Should Tekmira:

 

·              discontinue pursuing one or more patent applications, patent
protection or patent maintenance in relation to the Patent(s) or any
continuation, continuation in-part, division, reissue, re-examination or
extension thereof; or

 

·              not pursue patent protection in relation to the Patent(s) in any
specific jurisdiction; or

 

·              discontinue or not pursue patent protection in relation to any
further process, use or products arising out of the Technology in any
jurisdiction;|

 

·              then Tekmira will provide Alnylam with notice of its decision to
discontinue or not to pursue such patent protection concurrently with the notice
provided to the University by Tekmira pursuant to Section 6.6 of the University
License Agreement.

 

·              In the event of an alleged infringement by a third party of the
Technology or any right with respect to the Technology, or any complaint by
Alnylam alleging any infringement by a third party with respect to the
Technology or any right with respect to the Technology, in each case that is
licensed to Alnylam under the UBC Sublicense Agreement, Alnylam will, subject to
Tekmira having first obtained the University’s consent as required by Article 7
of the University License Agreement, have the right to prosecute such litigation
at Alnylam’s expense.

 

·              In the event of any litigation, Alnylam will keep Tekmira fully
informed of the actions and positions taken or proposed to be taken by Alnylam
(on behalf of itself or a sublicensee) and actions and positions taken by all
other parties to such litigation.

 

·              In the event of an alleged infringement of the Technology or any
third party use of the Technology which is Confidential Information, Alnylam and
Tekmira agree that they will reasonably cooperate to enjoin such third party’s
use of the Technology.

 

·              If any complaint alleging infringement or violation of any patent
or other proprietary rights is made against Alnylam (or a sublicensee of
Alnylam) with respect to the manufacture, use or sale of Product, then:

 

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·              Alnylam will promptly notify Tekmira upon receipt of any such
complaint and will keep Tekmira fully informed of the actions and positions
taken by the complainant and taken or proposed to be taken by Tekmira (on behalf
of itself or a sublicensee);

 

·              Alnylam (or any sublicenseee, as the case may be) will pay all
costs and expenses incurred by Alnylam (or any sublicensee of Alnylam) in
investigating, resisting, litigating and settling such a complaint, including
the payment of any award or damages and/or costs to any third party; and

 

·              if as a result of such suit it is decided that a Product
infringes any valid claim on a patent owned by another, Tekmira will consider
fair distribution of Royalty Income.

 

Diligence and Reporting (Section 10.2)

 

·              Alnylam is required to use its reasonable commercial efforts to
promote, market and sell the Products and utilize the Technology and to meet or
cause to be met the market demand for the Products and the utilization of the
Technology.

 

·              Alnylam is required to deliver to Tekmira an annual report, due
on December 31 of each year, which summarizes the major activities Alnylam has
undertaken in the course of the preceding 12 months to develop and commercialize
and/or market the Technology.  The report must include an outline of the status
of any Products in clinical trials and the existence of any sublicenses of the
Technology.

 

Certain Termination Rights (Section 16.1)

 

·              If Alnylam’s rights to Inex Technology are terminated under the
Tekmira Agreement, the UBC Sublicense Agreement and the license granted to
Alnylam thereunder also terminates.

 

Definitions

 

Capitalized terms not otherwise defined below have the meanings given to them
under the Tekmira Agreement.

 

“1999 CRA” means the Collaborative Research Agreement between Tekmira and the
University dated effective January 1, 1999 and successor agreements to such
Know-How.

 

“2007 CRA” means the Collaborative Research Agreement between Tekmira and the
University dated effective January 1, 2007 and successor agreements to such
Know-How.

 

“Alnylam Field” means the use of Products for the treatment, prophylaxis and
diagnosis of diseases in humans.

 

“Improvements” means, generally (i) any and all patents and any and all patent
applications that claim priority to Patents; and (ii) any and all inventions
arising therefrom.  Notwithstanding anything to the contrary in the University
License Agreement, ownership of all Improvements (A) that fall within clause
(i) above will be

 

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assigned to the University; and (B) that fall within clause (ii) above will
follow inventorship as determined by U.S. patent law, except that the University
will own all Improvements made by its employees, whether alone or jointly with
Tekmira, under the 1999 CRA or 2007 CRA.

 

“miRNA Product” means a product containing, comprised of or based on native or
chemically modified RNA oligomers designed to either modulate a micro RNA
transcript and/or provide the function of a micro RNA transcript.

 

“Patent(s)” means, generally, the patents and patent applications, including
certain “Wheeler Patents,” listed on Schedule A to the UBC Sublicense Agreement,
and any claims of CIPs and of resulting patents which are to the UBC Sublicense
Agreement, and any reissues of such patents.

 

“Product(s)” means any RNAi Product or miRNA Product that, the manufacture, use
or sale of which would, but for the license granted herein, infringe a Valid
Claim of one or more of the Patent(s).

 

“RNAi Product” means a product containing, comprised of or based on small
interfering RNAs or small interfering RNA derivatives or other moieties
effective in gene function modulation and designed to modulate the function of
particular genes or gene products by causing degradation of a target mRNA to
which such small interfering RNAs or small interfering RNA derivatives are
complementary, and that is not an miRNA Product.

 

“Technology” means the Patent(s) and any and all knowledge, know-how and/or
technique or techniques invented, developed and/or acquired, being invented,
developed and/or acquired by the University solely or jointly with Tekmira
relating to the Patent(s), including, without limitation, all research, data,
specifications, instructions, manuals, papers or other materials of any nature
whatsoever, whether written or otherwise, relating to same.

 

“University License Agreement” means the License Agreement dated effective
July 1, 1998, as amended, pursuant to which Tekmira is the exclusive licensee of
certain Patents owned by the University of British Columbia (the “University”).

 

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